BP plc was able early Thursday to shear off the damaged riser pipe connected to the Macondo well in the deepwater Gulf of Mexico but “it’s simply the beginning,” CEO Tony Hayward said in Houston.
During a brief press conference the BP chief affirmed earlier statements in the day by U.S. Coast Guard Commander Thad Allen that the last of the pipes had been cut using a pincher-like device, which was used after a diamond-edged cutter failed. A containment dome was to be placed on top of the open pipe as soon as possible, and oil siphoning to surface vessels was to begin soon thereafter.
“This has been an extraordinary endeavor on the part of many, many people,” Hayward said. Through the next two or three days, BP engineers plan to try to optimize the containment system to siphon as much oil as possible. “This is simply the beginning…The next 12 to 24 hours will give us an indication how successful this attempt will be,” he said at midday.
BP is drilling two relief wells at a faster pace than expected, but they still are not due to be completed until early August. Engineers also are building two additional oil containment systems, and one should be available by the middle of next week. By the end of June a more permanent containment system should be ready; it would be better able to deal with serious storms, including hurricanes.
The producer also is considering whether to build an additional platform at the well site to protect the equipment from a devastating storm, said officials.
In any case, Hayward said it is BP’s mission to clean up the massive oil spill and defend shorelines. The company aims to return the region to its original state and to compensate those whose livelihoods have been disrupted, said Hayward.
“BP will be here for a very long time,” he said. “We recognize that this is just the beginning.”
Allen was asked in a Thursday morning press conference whether he thought BP would “make this right” as its advertising now claims.
“It’s their assertion and duty to stand by it,” Allen said. “This word ‘trust’ comes up a lot…When I have a conversation with anyone like Tony Hayward the expectation is he will do what I ask.”
Whenever BP has been asked to provide more information regarding the spill — on anything — “they’ve given it to me,” Allen said. “I don’t know how else to put it, but when I deal frankly and openly with Mr. Hayward I get an answer.”
Hayward is scheduled to address shareholders on Friday about the disastrous situation in the U.S. Gulf waters — and the deteriorating outlook for the company.
On Thursday Fitch Ratings and Moody’s Investors Service both downgraded the mighty supermajor in response to fallout from the spill and warned of further cuts.
Fitch downgraded the producer to “AA” from “AA+” and placed it on “rating watch negative” reflecting “concern that BP is still facing substantial additional risks in relation to the oil spill…” that “include the possibility of U.S. legislative changes that materially widen BP’s immediate payment responsibility beyond containment and clean-up (e.g., long-term unemployment benefits to affected Gulf Coast residents, job training and added costs of environmental tests beyond the $500 million already pledged by the company); the impact of any potential criminal charges filed against the company; and BP permanently halting drilling activity in the Gulf of Mexico.”
Fitch “remains concerned that despite the current high oil price environment that supports the strength of the company’s balance sheet to finance the cost of the spill response, BP could face potential criminal or civil penalties. Specific negative rating action, however, would depend on the size and timing of these payments.”
Moody’s moved BP to “AA2” from “AA1” and said its review was “intended to enable a more complete assessment of the various scenarios the group may have to contend with in terms of the ultimate containment and clean-up costs, the allocation of liability for the Macondo accident, and mounting litigation exposure.
“Moody’s review will consider which steps management is able and willing to take in order to protect BP’s financial profile and flexibility, particularly in view of the mounting political pressures it faces from the U.S. authorities, as well as the significant overhang of litigation exposure and financial liability that is likely to persist in the years to come.”
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