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BP Says It Spent $8 Billion in Response to Oil Spill

Source: WSJ

Posted on 03 Sep 2010

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According to reports published in the Wall Street Journal and Reuters, BP PLC says it has spent so far approximately $8 billion on the massive oil spill in the Gulf of Mexico and anticipates resuming relief-well drilling shortly.

The money spent includes the cost of the spill response; containment; relief-well drilling; the "static kill" operation of providing mud and cementing; grants to the Gulf states; compensation claims paid; and federal costs.

According to BP, individuals and businesses had submitted more than 42,000 claims since the claims processing was transferred to the Gulf Coast Claims Facility on Aug. 23. They relate to compensation sought for damages resulting from an explosion in April on the Deepwater Horizon rig, which caused the U.S.'s largest offshore oil spill. BP has made 127,000 claims payments, totaling about $399 million so far.

A bill was passed by the U.S. House of Representatives on July 30 that includes a ban on Gulf of Mexico drilling permits for any company with more than 10 fatalities at its offshore or onshore facilities. Eleven workers died when the rig BP was leasing exploded in April.

BP faces a huge challenge in raising funds in the wake of the environmental disaster. The oil major plans to raise $30 billion from asset sales to help meet the cost of the spill. So far it has raised just shy of $10 billion from asset sales, a company spokesman said.

The U.K.-based company is now focused on replacing the Deepwater Horizon rig's failed blowout preventer, which is designed to prevent oil leaks, with the blowout preventer from the Development Driller II rig in order to resume drilling on the relief well.

Depending on weather conditions, BP expects the relief well will intersect with the area between the Macondo well's drilling pipe and the surrounding rock formation around mid-September.