The US government has sent a sharply worded letter to BP plc (NYSE: BP) about the pace at which it needs to cap the oil spill from the Deepwater Horizon wreck.
Coast Guard Rear Admiral,James A. Watson, the US on-scene coordinator, wrote:
“BP must in the next 48 hours identify additional leak containment capacity that can be operationalized and expedited to avoid the additional discharge of oil” from the well.The letter made it clear that the federal government would not accept the current timetable that BP has said may take more than a month–this is to put in a new “kill line.” The other alternative, which will take at least 60 days, it to drill a relief well to take pressure off the current leak.
New research says that the rates at which the spill is increasing may be as high as 40,000 barrels a day. The earliest estimates were that the figure was closer to 5,000. The cap the BP has on the well now is collecting about 15,000 barrels a day.
Watson warned that the current BP plans were not a “maximum mobilization of resources.”
The letter did not mention sanctions if BP’s efforts to improve crude collection are not improved.
The letter is a farce. It is not likely that BP has any incentive to hold back on expertise or financial resources.
The UK-based firm has a number of reasons to decrease the amount of crude leaking. Some experts believe that the total cost of the clean up and liabilities related to the incident, the largest of its size in US history, could be $40 billion. There have been some financial experts who believe that BP may face an eventual bankruptcy. The company has said it may defer its dividend for the next quarter. The huge oil firm has lost about 50% of its market cap since the spill began.
Douglas A. McIntyre
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