Original Story: latimes.com
The giant oil company BP doesn't do small-scale.
Not only is it responsible for the 2010 Deepwater Horizon oil spill -- "unprecedented" in its "volume, depth, and spatial scale," in the words of the National Research Council -- but the firm has mounted what certainly looks like an unprecedented PR campaign to minimize the damage, along with a years-long effort to dodge the financial consequences of its spill.
This week, Politico provided the company with another valuable platform for its PR -- a two-page online spread titled "No, BP Didn't Ruin the Gulf." The piece was written by one Geoff Morrell, who turns out to be the oil company's spokesman, as you'll discover if you read down to the bottom of the screen.
As we honor the life and career of the just-departed former Washington Post editor Ben Bradlee, we should mark this groundbreaking advance in Washington journalism: a corporate advertisement presented as "opinion." It's not evident that BP paid for its placement in Politico, but whether it forked over nothing, a little or a lot, it scored well: as we write, Morrell's piece is demurely sharing space on Politico Magazine's home page with reported articles on Ebola policy, the Supreme Court's influence on election rules, and the fall of Atlantic City. A Corpus Christi Energy Lawyer is experienced in legal issues that arise from energy disputes.
But it's not Politico's credibility that's at issue here; it's BP's. Let's examine whether the oil company has any.
Morrell begins by posing an overarching question: "What impact did the spill actually have on the Gulf Coast environment?"
The answer, if you study the findings of experts, is that the spill has had massive impacts. These include immediate effects on sea fowl, marine mammals, and coral; and long-term effects on dolphins, sea turtles, fish and wildlife populations, and the gulf food web. Moreover, many effects are still imponderable at this time, because no one has studied an oil spill of this magnitude in a unique ecosystem such as the gulf. Assessing the damage may take decades, covering generations of animals. A Charleston Environmental Lawyer has experience representing clients in all areas of general environmental law.
BP sidesteps that point. Morrell mentions several predictions that were made in the immediate aftermath of the spill, and that were manifestly conjectural -- "tar balls...all the way to Europe," "a permanent end" to the gulf seafood industry, tourism revenues depressed for years.
"None of those things happened," Morrell states, as if that proves that there were no major effects. The only effects he acknowledges are short-term--11 workers killed, birds, fish and wildlife killed. "And with a camera trained 24/7 on the wellhead," he writes, "a sense of alarm was understandable while the well was flowing." (Yes, durn that camera -- if only the spill unfolded without witnesses, things would have been so much better.) A Boston Business Lawyer is experienced in providing legal advice to business clients on a variety of legal matters.
As for longer-term effects, Morrell attributes many of the reports to "advocacy groups (that) cherry-pick evidence and promote studies that paint an incomplete and inaccurate picture." He then proceeds to cherry-pick ostensibly exaggerated impacts: "For example, these groups claim the spill harmed the Gulf’s oyster population," he writes. "What they don’t say is that government sampling in 2010, 2011 and 2012 did not document a single visibly oiled oyster bed.
Here's what Morrell didn't say: The gulf oyster harvest is today near a historical low. Because oysters take three years to reach maturity, according to the Gulf Seafood Institute, gulf harvesters fear that they're seeing the oil spill impacts right now. According to historical cycles, oyster landings "currently should be trending upwards; but they’re not." Is this a consequence of the Deepwater Horizon spill? The most anyone can say is that the jury is still out. But it's certainly way too early to declare the impact "fiction," as BP would prefer.
In short, the questions about the impact of the oil spill haven't yet been answered. Not even close. BP has an obvious corporate interest in treating the spill as yesterday's news. It's not. BP has been adjudicated the legally responsible party for the Deepwater Horizon disaster. It's a litigant facing billions of dollars in claims and penalties. It doesn't have an "opinion" worth reading, only a legal interest to promote. When a news organization such as Politico helps it promote its own interest, neither partner looks good.
Showing posts with label BP. Show all posts
Showing posts with label BP. Show all posts
Monday, October 27, 2014
Tuesday, February 26, 2013
BP Talking Settlement for 2010 Oil Spill
Story first appeared on The New York Times -
With a major civil trial scheduled to start Monday in New Orleans against BP over damages related to the explosion of an offshore drilling rig in 2010, federal officials and those from the five affected Gulf Coast states are trying to pull together to strike an 11th-hour settlement in the case.
A lawyer briefed on those talks said that the Justice Department and the five states — Alabama, Florida, Louisiana, Mississippi and Texas — had reportedly prepared an offer to resolve the two biggest issues central to a series of trials against BP, the first of which starts Monday.
One of those issues is the fines that the company would pay for violations of the Clean Water Act related to the four million barrels of oil spilled after the explosion of the Deepwater Horizon rig, which BP had leased from Transocean. The other point of dispute is how much the company will have to pay in penalties under a different environmental statute for damage caused by the oil to the area: beaches, marshes, wildlife and fisheries.
The Wall Street Journal reported late Friday that federal and state officials were preparing a $16 billion settlement offer that would cover both the Clean Water Act fines and environmental penalties related to the spill. “The ball is on BP’s side of the table,” said the lawyer, who spoke on the condition of anonymity because he was not authorized to speak publicly on the matter.
Justice Department officials and state officials could not be reached Saturday to comment on any possible offer. A spokesman for BP, Geoff Morrell, said, “BP doesn’t talk about possible offers or negotiations, but I can tell you we are ready for trial and looking forward to the opportunity to present our case starting Monday.”
The lawyer briefed on the talks said that one problem with the current proposal was that it did not cover economic damages claimed by the states related to the spill. Such claims could still leave BP on the hook for billions more, in addition to the environmental damages.
The late negotiations among federal and state officials to find common ground represents progress, even if limited, in the search for a settlement. The five states have had sharp disagreements over how much BP should pay and how billions of dollars in potential settlement funds should be divided.
For example, only Louisiana and Alabama, are participating in the trial starting on Monday, though Florida, Mississippi and Texas could be part of any settlement. Officials in Louisiana believe their state deserves the bulk of any settlement since its coastal waters, fisheries and businesses suffered the most. Florida and other states that escaped serious coastal damage instead want money for economic losses that they sustained.
“There are a lot of moving parts,” said Luther Strange, the attorney general of Alabama. “Personalities aside, the issues are so complex.” Another lawyer briefed on the talks said he believed any proposal involving Louisiana would be significant because its participation would be critical to any settlement.
Also, billions of dollars could be assessed against BP in several ways, either through fines, or through penalties to redress environmental damage and payments to cover economic losses. And each of those methods represents a different set of stakes and consequences for each of the states and for BP.
For instance, BP would prefer to limit the fines and make more payments through environmental damage penalties, because those penalties can be written off as tax deductions while fines cannot. But the states have more flexibility in spending money derived from fines.
To date, BP has agreed to pay an estimated $30 billion in fines, settlement payments and cleanup costs related to the Deepwater Horizon explosion, which killed 11 workers aboard the rig. And so far, company officials have said they have no intention of acceding to demands from the states for huge economic damages.
Still, the stakes for BP in the trial are high. If the company is found in this first phase of the trial to have acted with gross negligence, it could face up to $17.5 billion in penalties, much of that in fines that would hit the bottom line hardest because they do not qualify as tax deductions.
The lack of a unified strategy to date among the states has also posed another problem for BP; companies are less likely to settle a major lawsuit if they know yet another one is waiting.
“There is no question that a settlement has been made more challenging because the states have competing interests,” said David M. Uhlmann, a law professor at the University of Michigan and former head of the Justice Department’s environmental crimes division.
Efforts to resolve the case through settlement were also inadvertently complicated by Congress when it passed a law in 2011 known as the Restore Act.
Essentially, the law was an effort by Congressional lawmakers from the Gulf Coast states to make sure the bulk of fines and penalties paid by BP for violations of federal pollution laws ended up with the states instead of the federal government.
Senator Mary Landrieu, Democrat of Louisiana, said that she and other lawmakers from the region were involved in intense negotiations giving each state a part of the funds to recover from both environmental or economic damages.
The law “was an attempt to distribute the money fairly,” Ms. Landrieu said in an interview.
But the statute worsened what were already growing tensions among the states over how they could use any funds from BP, between environmental damage and economic losses. “Up until last year, all the states were rowing together,” said one lawyer who also spoke on the condition of anonymity.
The split among the Gulf Coast states surfaced again in November when the Justice Department announced the $4.5 billion settlement of criminal charges against BP. At the time, federal and state officials were also seeking to resolve the civil damage claims.
But those talks failed largely because of disagreements between Louisiana and other states on issues like the size of the settlement that BP was offering, said people briefed on the talks.
Mississippi officials are apparently seeking to bring a separate action against BP in state court, a forum that can be favorable to plaintiffs. Jan Schaefer, a spokeswoman for Attorney General Jim Hood of Mississippi, said he declined to comment.
Mr. Uhlmann of the University of Michigan said the BP case could be resolved, but at this moment it might be more up to the states than the company.
“A settlement is still possible, but not if the states demand more in a settlement than BP is likely to pay even if it loses on every single issue at trial,” he said.
With a major civil trial scheduled to start Monday in New Orleans against BP over damages related to the explosion of an offshore drilling rig in 2010, federal officials and those from the five affected Gulf Coast states are trying to pull together to strike an 11th-hour settlement in the case.
A lawyer briefed on those talks said that the Justice Department and the five states — Alabama, Florida, Louisiana, Mississippi and Texas — had reportedly prepared an offer to resolve the two biggest issues central to a series of trials against BP, the first of which starts Monday.
One of those issues is the fines that the company would pay for violations of the Clean Water Act related to the four million barrels of oil spilled after the explosion of the Deepwater Horizon rig, which BP had leased from Transocean. The other point of dispute is how much the company will have to pay in penalties under a different environmental statute for damage caused by the oil to the area: beaches, marshes, wildlife and fisheries.
The Wall Street Journal reported late Friday that federal and state officials were preparing a $16 billion settlement offer that would cover both the Clean Water Act fines and environmental penalties related to the spill. “The ball is on BP’s side of the table,” said the lawyer, who spoke on the condition of anonymity because he was not authorized to speak publicly on the matter.
Justice Department officials and state officials could not be reached Saturday to comment on any possible offer. A spokesman for BP, Geoff Morrell, said, “BP doesn’t talk about possible offers or negotiations, but I can tell you we are ready for trial and looking forward to the opportunity to present our case starting Monday.”
The lawyer briefed on the talks said that one problem with the current proposal was that it did not cover economic damages claimed by the states related to the spill. Such claims could still leave BP on the hook for billions more, in addition to the environmental damages.
The late negotiations among federal and state officials to find common ground represents progress, even if limited, in the search for a settlement. The five states have had sharp disagreements over how much BP should pay and how billions of dollars in potential settlement funds should be divided.
For example, only Louisiana and Alabama, are participating in the trial starting on Monday, though Florida, Mississippi and Texas could be part of any settlement. Officials in Louisiana believe their state deserves the bulk of any settlement since its coastal waters, fisheries and businesses suffered the most. Florida and other states that escaped serious coastal damage instead want money for economic losses that they sustained.
“There are a lot of moving parts,” said Luther Strange, the attorney general of Alabama. “Personalities aside, the issues are so complex.” Another lawyer briefed on the talks said he believed any proposal involving Louisiana would be significant because its participation would be critical to any settlement.
Also, billions of dollars could be assessed against BP in several ways, either through fines, or through penalties to redress environmental damage and payments to cover economic losses. And each of those methods represents a different set of stakes and consequences for each of the states and for BP.
For instance, BP would prefer to limit the fines and make more payments through environmental damage penalties, because those penalties can be written off as tax deductions while fines cannot. But the states have more flexibility in spending money derived from fines.
To date, BP has agreed to pay an estimated $30 billion in fines, settlement payments and cleanup costs related to the Deepwater Horizon explosion, which killed 11 workers aboard the rig. And so far, company officials have said they have no intention of acceding to demands from the states for huge economic damages.
Still, the stakes for BP in the trial are high. If the company is found in this first phase of the trial to have acted with gross negligence, it could face up to $17.5 billion in penalties, much of that in fines that would hit the bottom line hardest because they do not qualify as tax deductions.
The lack of a unified strategy to date among the states has also posed another problem for BP; companies are less likely to settle a major lawsuit if they know yet another one is waiting.
“There is no question that a settlement has been made more challenging because the states have competing interests,” said David M. Uhlmann, a law professor at the University of Michigan and former head of the Justice Department’s environmental crimes division.
Efforts to resolve the case through settlement were also inadvertently complicated by Congress when it passed a law in 2011 known as the Restore Act.
Essentially, the law was an effort by Congressional lawmakers from the Gulf Coast states to make sure the bulk of fines and penalties paid by BP for violations of federal pollution laws ended up with the states instead of the federal government.
Senator Mary Landrieu, Democrat of Louisiana, said that she and other lawmakers from the region were involved in intense negotiations giving each state a part of the funds to recover from both environmental or economic damages.
The law “was an attempt to distribute the money fairly,” Ms. Landrieu said in an interview.
But the statute worsened what were already growing tensions among the states over how they could use any funds from BP, between environmental damage and economic losses. “Up until last year, all the states were rowing together,” said one lawyer who also spoke on the condition of anonymity.
The split among the Gulf Coast states surfaced again in November when the Justice Department announced the $4.5 billion settlement of criminal charges against BP. At the time, federal and state officials were also seeking to resolve the civil damage claims.
But those talks failed largely because of disagreements between Louisiana and other states on issues like the size of the settlement that BP was offering, said people briefed on the talks.
Mississippi officials are apparently seeking to bring a separate action against BP in state court, a forum that can be favorable to plaintiffs. Jan Schaefer, a spokeswoman for Attorney General Jim Hood of Mississippi, said he declined to comment.
Mr. Uhlmann of the University of Michigan said the BP case could be resolved, but at this moment it might be more up to the states than the company.
“A settlement is still possible, but not if the states demand more in a settlement than BP is likely to pay even if it loses on every single issue at trial,” he said.
Friday, February 22, 2013
BHP Marrying Oil & Chemistry
Story first appeared on Bloomberg News -
When BHP Billiton Ltd. (BHP)’s new chief executive officer Andrew Mackenzie got his doctorate in chemistry in 1980, the ground-breaking research attracted the attention of oil producers including Chevron Corp. (CVX)
It wasn’t until three years later that Mackenzie, 56, joined BP Plc (BP/) and stayed for 22 years, while the findings of his research are still in routine use by academics and oil explorers. He will take the lead at Melbourne-based BHP, the biggest mining company, on May 10, succeeding Marius Kloppers.
Mackenzie, who had about 12 months enforced gardening leave after Kloppers, 50, poached him from Rio Tinto Group (RIO) in 2007 to head BHP’s copper division, used the time to master Spanish -- his fifth language -- to help him conduct contract talks in South America as soon as he started, a person familiar with his appointment said yesterday. Mackenzie said he’s uniquely placed to wring more efficiencies out of BHP’s mining and oil operations, which include shale assets in the U.S.
Mackenzie “brings a level of knowledge within both management and within industry, which is clearly new if you look at the past people in that job,” said Tim Barker, who helps manage investments, including BHP, at BT Financial Group Pty in Sydney. “The market has still got a bit of a question mark over the acquisition of the shale oil division. It’ll probably be two or three years before we know if it was a good one or not.”
‘Very Aggressive’
BHP is spending $4 billion this fiscal year on shale, and spent $20 billion on acquiring the assets in 2011. Kloppers cleared the decks for his successor by booking a $2.84 billion charge in August on the value of the assets after prices fell to a 10-year low in April. He defended the purchases as a long-term investment in a shale liquids boom that’s now poised to make the U.S. the world’s largest crude producer by 2020.
Mackenzie’s appointment “is very aggressive from a timing point-of-view,” Evan Lucas, market strategist at IG Markets Ltd., said in an e-mail. “We knew it was coming, but this shows BHP is looking to get onto the front foot with a division it has been keen to invest in over the last few years -- petroleum.”
BHP, whose oil and gas operations span more than a dozen countries, fell 3.8 percent to A$37.17 at the close of trading in Sydney. The key S&P/ASX 200 Index declined 2.3 percent. As of yesterday, the company’s London-traded stock gained 23 percent during Kloppers’ tenure from Oct. 1 2007, while Rio gained 3.8 percent, Xstrata Plc (XTA) declined about 38 percent and Anglo American Plc (AAL) fell about 42 percent.
There are some “quite powerful synergies” that you can unlock in mining and petroleum, Mackenzie told reporters yesterday. “We’re one of the few, possibly the only company, that can create value through unlocking those synergies.”
BHP Jewel
The company’s oil projects include Shenzi in the Gulf of Mexico and Pyrenees off the coast of Western Australia. BHP plans to spend about $775 million this financial year on oil and gas exploration, with most of the drilling scheduled for the Gulf of Mexico, BHP said in a Jan. 23 statement.
BHP’s oil and gas business is “one of the jewels,” for the company, Andrew Williams, a Melbourne-based analyst at RBC Capital Markets, said by phone. “U.S. gas prices at some point are going to rally, so they will get a bit more value out of that, particularly if they can leverage that into perhaps some of the liquefied natural gas opportunities.”
Mackenzie got his doctorate from the University of Bristol, and has published more than 50 research papers and pioneered extraction techniques in the North Sea for BP, BHP said yesterday in a statement. He founded the BP Institute at the University of Cambridge as well as institutes at Princeton and Berkeley universities and the California Institute of Technology. He joined Rio in 2004 and as chief executive of industrial minerals he built a $5 billion titanium mine in Madagascar.
Brilliant Scientist
“Andrew was a brilliant academic research scientist who chose to leave the world of academe for the wider world, becoming not only a captain, but dare I say admiral, of industry,” Professor James Maxwell, emeritus professor of chemistry at the University of Bristol, said when Mackenzie was awarded an honorary degree of Doctor of Science in February 2011 at the university.
While both Kloppers and Mackenzie have high IQs, the new CEO has a higher EQ, or emotional quotient, according to the person familiar. Kloppers isn’t a money-focused person and felt the loss of privacy that came with the role, the person said.
Third Strike
Kloppers, who yesterday reported a 58 percent decline in first-half profit, is the third head of a global mining company to step down since October as mining companies struggle with project write-downs, escalating costs and the aftermath of failed deals. He sold $4.3 billion of assets in the half and put about $68 billion of projects on hold last year.
Some mining company executives and shareholders are paying the price for a $1.1 trillion mergers and acquisitions binge over a decade. Failed deals in aluminum and coal caused $14 billion in write-downs at Rio and cost CEO Tom Albanese his job. Cost overruns contributed to Cynthia Carroll’s departure as CEO of Anglo American, which slashed $4 billion off the value of an iron ore project in Brazil. She leaves in April.
“Sometimes it becomes easier culturally to effect a cultural change with a new person,” Paul Phillips, a fund manager in Melbourne with Perennial Growth Management Pty who holds BHP shares, said by phone. “Now it’s about preserving cash. It’s around making sure you do the right projects.”
No Pushing
Under Kloppers, deals totaling about $200 billion were aborted or rejected, including hostile bids for Rio Tinto and Potash Corp. of Saskatchewan Inc. Kloppers could have remained as CEO if he wanted and nothing pushed him out, according to the person familiar.
BHP’s decision to abandon the bid for Rio Tinto during the depths of the global financial crisis laid the foundations for the company’s growth since then, Kloppers told reporters yesterday, adding that BHP’s returns to shareholders had “dwarfed” its peer group of global mining companies.
The company returned $36 billion to shareholders in the past five years - more than any of its peers, Chairman Jac Nasser told the reporters.
“I’d say out of all the large diversified mining companies he’s the one who’s, how do I put it nicely, he destroyed the least amount of value,” said John Goldsmith, deputy head of equities at Montrusco Bolton Investments, who helps manage C$5.2 billion ($5.1 billion).
There will be no major shift in strategy expected, the person familiar said. It was good that Mackenzie can sit down with iron ore, copper or oil and gas people and understand all of them, the person said. BHP, as well as other major mining companies, is going back to basics, with no more large acquisitions, or mega projects, the person added.
“It’s a leadership change that needs to occur,” said Paul Xiradis, chief executive officer at fund manager Ausbil Dexia Ltd., which holds BHP stock. “Their focus now will be just on driving the costs down and improving the operation within the group.”
When BHP Billiton Ltd. (BHP)’s new chief executive officer Andrew Mackenzie got his doctorate in chemistry in 1980, the ground-breaking research attracted the attention of oil producers including Chevron Corp. (CVX)
It wasn’t until three years later that Mackenzie, 56, joined BP Plc (BP/) and stayed for 22 years, while the findings of his research are still in routine use by academics and oil explorers. He will take the lead at Melbourne-based BHP, the biggest mining company, on May 10, succeeding Marius Kloppers.
Mackenzie, who had about 12 months enforced gardening leave after Kloppers, 50, poached him from Rio Tinto Group (RIO) in 2007 to head BHP’s copper division, used the time to master Spanish -- his fifth language -- to help him conduct contract talks in South America as soon as he started, a person familiar with his appointment said yesterday. Mackenzie said he’s uniquely placed to wring more efficiencies out of BHP’s mining and oil operations, which include shale assets in the U.S.
Mackenzie “brings a level of knowledge within both management and within industry, which is clearly new if you look at the past people in that job,” said Tim Barker, who helps manage investments, including BHP, at BT Financial Group Pty in Sydney. “The market has still got a bit of a question mark over the acquisition of the shale oil division. It’ll probably be two or three years before we know if it was a good one or not.”
‘Very Aggressive’
BHP is spending $4 billion this fiscal year on shale, and spent $20 billion on acquiring the assets in 2011. Kloppers cleared the decks for his successor by booking a $2.84 billion charge in August on the value of the assets after prices fell to a 10-year low in April. He defended the purchases as a long-term investment in a shale liquids boom that’s now poised to make the U.S. the world’s largest crude producer by 2020.
Mackenzie’s appointment “is very aggressive from a timing point-of-view,” Evan Lucas, market strategist at IG Markets Ltd., said in an e-mail. “We knew it was coming, but this shows BHP is looking to get onto the front foot with a division it has been keen to invest in over the last few years -- petroleum.”
BHP, whose oil and gas operations span more than a dozen countries, fell 3.8 percent to A$37.17 at the close of trading in Sydney. The key S&P/ASX 200 Index declined 2.3 percent. As of yesterday, the company’s London-traded stock gained 23 percent during Kloppers’ tenure from Oct. 1 2007, while Rio gained 3.8 percent, Xstrata Plc (XTA) declined about 38 percent and Anglo American Plc (AAL) fell about 42 percent.
There are some “quite powerful synergies” that you can unlock in mining and petroleum, Mackenzie told reporters yesterday. “We’re one of the few, possibly the only company, that can create value through unlocking those synergies.”
BHP Jewel
The company’s oil projects include Shenzi in the Gulf of Mexico and Pyrenees off the coast of Western Australia. BHP plans to spend about $775 million this financial year on oil and gas exploration, with most of the drilling scheduled for the Gulf of Mexico, BHP said in a Jan. 23 statement.
BHP’s oil and gas business is “one of the jewels,” for the company, Andrew Williams, a Melbourne-based analyst at RBC Capital Markets, said by phone. “U.S. gas prices at some point are going to rally, so they will get a bit more value out of that, particularly if they can leverage that into perhaps some of the liquefied natural gas opportunities.”
Mackenzie got his doctorate from the University of Bristol, and has published more than 50 research papers and pioneered extraction techniques in the North Sea for BP, BHP said yesterday in a statement. He founded the BP Institute at the University of Cambridge as well as institutes at Princeton and Berkeley universities and the California Institute of Technology. He joined Rio in 2004 and as chief executive of industrial minerals he built a $5 billion titanium mine in Madagascar.
Brilliant Scientist
“Andrew was a brilliant academic research scientist who chose to leave the world of academe for the wider world, becoming not only a captain, but dare I say admiral, of industry,” Professor James Maxwell, emeritus professor of chemistry at the University of Bristol, said when Mackenzie was awarded an honorary degree of Doctor of Science in February 2011 at the university.
While both Kloppers and Mackenzie have high IQs, the new CEO has a higher EQ, or emotional quotient, according to the person familiar. Kloppers isn’t a money-focused person and felt the loss of privacy that came with the role, the person said.
Third Strike
Kloppers, who yesterday reported a 58 percent decline in first-half profit, is the third head of a global mining company to step down since October as mining companies struggle with project write-downs, escalating costs and the aftermath of failed deals. He sold $4.3 billion of assets in the half and put about $68 billion of projects on hold last year.
Some mining company executives and shareholders are paying the price for a $1.1 trillion mergers and acquisitions binge over a decade. Failed deals in aluminum and coal caused $14 billion in write-downs at Rio and cost CEO Tom Albanese his job. Cost overruns contributed to Cynthia Carroll’s departure as CEO of Anglo American, which slashed $4 billion off the value of an iron ore project in Brazil. She leaves in April.
“Sometimes it becomes easier culturally to effect a cultural change with a new person,” Paul Phillips, a fund manager in Melbourne with Perennial Growth Management Pty who holds BHP shares, said by phone. “Now it’s about preserving cash. It’s around making sure you do the right projects.”
No Pushing
Under Kloppers, deals totaling about $200 billion were aborted or rejected, including hostile bids for Rio Tinto and Potash Corp. of Saskatchewan Inc. Kloppers could have remained as CEO if he wanted and nothing pushed him out, according to the person familiar.
BHP’s decision to abandon the bid for Rio Tinto during the depths of the global financial crisis laid the foundations for the company’s growth since then, Kloppers told reporters yesterday, adding that BHP’s returns to shareholders had “dwarfed” its peer group of global mining companies.
The company returned $36 billion to shareholders in the past five years - more than any of its peers, Chairman Jac Nasser told the reporters.
“I’d say out of all the large diversified mining companies he’s the one who’s, how do I put it nicely, he destroyed the least amount of value,” said John Goldsmith, deputy head of equities at Montrusco Bolton Investments, who helps manage C$5.2 billion ($5.1 billion).
There will be no major shift in strategy expected, the person familiar said. It was good that Mackenzie can sit down with iron ore, copper or oil and gas people and understand all of them, the person said. BHP, as well as other major mining companies, is going back to basics, with no more large acquisitions, or mega projects, the person added.
“It’s a leadership change that needs to occur,” said Paul Xiradis, chief executive officer at fund manager Ausbil Dexia Ltd., which holds BHP stock. “Their focus now will be just on driving the costs down and improving the operation within the group.”
BP Excluding Billions In Possible Claims, Arguing U.S. Benefited
Story first appeared on Bloomberg News -
Bill Floyd, owner of an upscale seafood restaurant near downtown Houston, is a poster-child for the type of damage claim BP Plc left out of its $8.5 billion settlement for the biggest offshore oil spill in U.S. history.
When the energy company’s blown-out Macondo well dumped more than 4 million barrels of crude oil into the Gulf of Mexico in 2010, Floyd saw his costs for fresh shrimp, crab and oysters almost double overnight while his sales flat-lined. A Business Interruption Insurance policy might have benefited this company.
“Ninety percent of our menu comes out of the Gulf,” said Floyd, whose eatery, Reef, was named the best seafood restaurant in the U.S. in 2008 by Bon Appetit magazine. “Our shrimp prices went through the roof while our increase in sales, which had been averaging about 20 percent each year, went almost dead.”
Floyd’s is one of thousands of businesses, banks and municipalities excluded from the settlement last March. Many of those left out stretch tens or hundreds of miles inland from the once-blackened coastlines. Next week, fault for the spill will be determined in a sprawling trial in New Orleans federal court, the first step for claimants like Floyd seeking what may total billions of dollars from the companies behind the accident.
But their path may be difficult, as BP has pledged to “vigorously” fight their claims. Lawyers for claimants said BP didn’t settle with them because it sees a chance of victory.
And in some cases, the U.K.-based company said in court filings, it may even argue U.S. businesses and governments benefited from the spill, claiming spending and taxes paid by cleanup crews exceeded the losses caused by the catastrophe that brought them there in the first place.
Prove Damages
All victims whose claims were excluded from the settlement must prove the spill directly caused their physical or economic injury, as required under the Oil Pollution Act, which governs spill-damage compensation, legal experts said.
“Causation is the main hurdle, because the bulk of claims for economic loss are by people without physical damage,” said David Robertson, a University of Texas law professor who has advised lawyers leading the spill suits. “There’s a whole huge block of the economy that was heavily affected by the spill, and some of these are very large claims.”
U.S. District Judge Carl Barbier will preside over the Feb. 25 trial without a jury, under maritime law, which governs this phase of the litigation.
As the sole finder of fact, he will apportion fault for the explosion and spill among BP and subcontractors Transocean Ltd. (RIG), which owned and operated the Deepwater Horizon rig, and Halliburton Co. (HAL), which was responsible for cementing services. The subcontractors would only be responsible for punitive damages, based on Barbier's ruling that the project contract required BP to indemnify them for compensatory damages.
Fault Findings
The judge’s findings of fault will be applied to subsequent trials where specific dollar-amounts for spill damages will be determined, including those on claims excluded from the initial settlement. Plaintiffs’ lawyers said those damages trials, unlike the phase beginning next week, will be heard by juries.
BP’s settlement addressed damages to waterfront property owners, coastal tourism and seafood-industry interests, as well as some medical injuries suffered by residents who worked in the spill or live within a mile of the beach.
Medical-injury claims from people living further inland, and economic-loss claims from industries such as offshore drillers hurt by a federal moratorium and Houston seafood restaurants like Reef, weren’t addressed by the accord. State and local governmental claims for lost tax revenues were also excluded from the deal.
“Oil and gas industry losses were directly and immediately caused by the spill, and that’s an excluded category,” Robertson said. “Yet BP has also settled with some bait-and- tackle shops that were pretty far inland.”
Loss Claims
BP’s settlement assigned some value to economic-loss claims throughout Louisiana and Mississippi, with claim values decreasing the further away they were from the coast. In Texas and Florida, economic-loss claims were allowed only if they originated within a narrow coastal zone.
Reef is a 45-minute drive from the beach and outside that loss demarcation. So are owners of certain Mississippi coastal wetlands that were covered in oil during the spill, although similarly damaged properties in Louisiana were covered by the settlement, according to court papers.
“It looks like BP tried to resolve as many claims as it could for as little as it could as quickly as it could,” New Orleans lawyer Mike Stag, who represents about 3,000 spill victims, said of how the exclusions were determined.
“BP wants these claims sunk to the bottom of the ocean, like their oil,” Stag said.
Scott Dean, a spokesman for BP, said the company will fight the claims excluded from the earlier settlement, “including those based on the U.S. government’s decision to institute a drilling moratorium in the Gulf.”
Claims Administrator
Patrick Juneau, the court-appointed administrator for BP’s Deepwater Horizon Claims Center, said it paid a total of $1.5 billion in damage claims to 22,178 economic victims as of Feb. 19. The center, which administers the $8.5 billion settlement fund, is awaiting answers on another $500 million in compensation offered to victims, Juneau said. Reviews of all but about 30,000 of the 131,055 claims the center has received have been started, he said. New claims will be accepted until April 2014. Juneau said he can’t attach dollar amounts to the excluded claims because, by court order, he can only process claims that are included in the settlement.
Claims Received
To date, he said, he’s received more than 3,500 claims from victims excluded from the spill settlement, including 103 from the oil and gas industry, 249 from gaming firms, 61 from financial institutions, 43 from insurance companies and 170 from state and local governments.
“One of the biggest categories of excluded claims is losses tied to the deep-water drilling moratorium” imposed by the Obama administration after the spill, Stag said. They were specifically allowed by Barbier, the judge overseeing all BP spill-loss cases.
“Those claims will have substantial value, with all the rigs that were shut down and the onshore support-services demand that fell off as a result,” he said. “We’re talking billions of dollars in lost revenue and lost business.”
One offshore drilling company represented by Houston attorney Richard Mithoff suffered damage of as much as $250 million because of the spill, he said. The company, which he declined to name, lost favorable financing terms for a rig it was building at the time of the disaster, Mithoff said.
“These big offshore rigs can cost more than $1 billion, and my client had to go replace its financing when the credit market shut down” for offshore drilling companies when the spill began, Mithoff said.
‘No Choice’
“My client had no choice but to complete the financing at significantly higher rates,” he said. “We’re talking a difference of $200 million to $250 million.” His client hasn’t yet sued, he said.
Stag, who represents several banks alleging spill-related losses, said financial institutions are another large category of excluded claims. He also declined to name his clients.
“When the offshore business slows down and no lines of credit are being taken out for capital investment for ongoing drilling and everyone scales back, that’s going to have a substantial effect on banks’ revenues,” he said.
Stag said he represents a regional radio-communications company, which he declined to identify, that was selling its business when the deep-water drilling ban went into effect and killed the deal.
$8 Billion-Plus
“That’s a $10 million to $20 million loss right there,” Stag said. “I wouldn’t be surprised if there’s another $4 billion to $8 billion in total spill-related losses out there. If we include all the moratorium-related losses, it might be even more than that.”
Also excluded from BP’s settlement are Gulf Coast residents with certain medical injuries who live more than half a mile off the beach or a mile inland from a wetland.
Michael Robichaux, a Raceland, Louisiana doctor, said he has treated scores of spill patients for “the exact same injuries” he treated in U.S. veterans of the Persian Gulf War. The injuries range from skin and eye irritations to chronic headaches, he said.
All of these patients were exposed to oil or toxic chemical dispersants used to break up the spill, including ones who live outside the settlement boundaries, Robichaux said.
‘Screwed’ Patients
“I’m treating patients with chronic illnesses that will affect them for the rest of their lives, and they’re not even included in what was negotiated with BP,” Robichaux said. “These patients and their injuries are screwed, and that’s the nicest thing I can say about it.”
Stag said he opted-out about 600 medical victims from BP’s settlement because the compensation offered was too low.
“A lot of health effects have yet to be seen,” he said. “The result is some of these people are going to die. It’s just a matter of how many.”
Following next week’s trial, claimants may pursue their claims individually, with the court’s determination of fault in hand. However, they will have to then prove they were injured, and that it was caused by the spill defendants.
Thomas McGarity, another University of Texas law professor, said the more directly a victim can prove his loss was caused by the spill, the better his chances of making BP pay.
“With businesses that can say they lost this particular deal with this direct economic harm, they may have a chance” at a trial, McGarity said.
BP can be expected to dispute claims from the excluded categories, Mithoff said, adding: “They’re putting that fight off for another day.”
Cleanup Helped
The company said in court papers that it may try to prove that tax-revenue losses by some governmental entities and revenue-loss claims by some tourism businesses, such as casinos, were offset by increases in economic activity generated by BP’s cleanup crews.
Thousands of BP workers swarmed the coastline in 2010 and 2011 to clean up the spill, and BP said in court filings that spending by these workers largely replaced lost tourist dollars.
“I don’t think that argument will resonate well with a jury,” Stag said.
The case is In re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).
Bill Floyd, owner of an upscale seafood restaurant near downtown Houston, is a poster-child for the type of damage claim BP Plc left out of its $8.5 billion settlement for the biggest offshore oil spill in U.S. history.
When the energy company’s blown-out Macondo well dumped more than 4 million barrels of crude oil into the Gulf of Mexico in 2010, Floyd saw his costs for fresh shrimp, crab and oysters almost double overnight while his sales flat-lined. A Business Interruption Insurance policy might have benefited this company.
“Ninety percent of our menu comes out of the Gulf,” said Floyd, whose eatery, Reef, was named the best seafood restaurant in the U.S. in 2008 by Bon Appetit magazine. “Our shrimp prices went through the roof while our increase in sales, which had been averaging about 20 percent each year, went almost dead.”
Floyd’s is one of thousands of businesses, banks and municipalities excluded from the settlement last March. Many of those left out stretch tens or hundreds of miles inland from the once-blackened coastlines. Next week, fault for the spill will be determined in a sprawling trial in New Orleans federal court, the first step for claimants like Floyd seeking what may total billions of dollars from the companies behind the accident.
But their path may be difficult, as BP has pledged to “vigorously” fight their claims. Lawyers for claimants said BP didn’t settle with them because it sees a chance of victory.
And in some cases, the U.K.-based company said in court filings, it may even argue U.S. businesses and governments benefited from the spill, claiming spending and taxes paid by cleanup crews exceeded the losses caused by the catastrophe that brought them there in the first place.
Prove Damages
All victims whose claims were excluded from the settlement must prove the spill directly caused their physical or economic injury, as required under the Oil Pollution Act, which governs spill-damage compensation, legal experts said.
“Causation is the main hurdle, because the bulk of claims for economic loss are by people without physical damage,” said David Robertson, a University of Texas law professor who has advised lawyers leading the spill suits. “There’s a whole huge block of the economy that was heavily affected by the spill, and some of these are very large claims.”
U.S. District Judge Carl Barbier will preside over the Feb. 25 trial without a jury, under maritime law, which governs this phase of the litigation.
As the sole finder of fact, he will apportion fault for the explosion and spill among BP and subcontractors Transocean Ltd. (RIG), which owned and operated the Deepwater Horizon rig, and Halliburton Co. (HAL), which was responsible for cementing services. The subcontractors would only be responsible for punitive damages, based on Barbier's ruling that the project contract required BP to indemnify them for compensatory damages.
Fault Findings
The judge’s findings of fault will be applied to subsequent trials where specific dollar-amounts for spill damages will be determined, including those on claims excluded from the initial settlement. Plaintiffs’ lawyers said those damages trials, unlike the phase beginning next week, will be heard by juries.
BP’s settlement addressed damages to waterfront property owners, coastal tourism and seafood-industry interests, as well as some medical injuries suffered by residents who worked in the spill or live within a mile of the beach.
Medical-injury claims from people living further inland, and economic-loss claims from industries such as offshore drillers hurt by a federal moratorium and Houston seafood restaurants like Reef, weren’t addressed by the accord. State and local governmental claims for lost tax revenues were also excluded from the deal.
“Oil and gas industry losses were directly and immediately caused by the spill, and that’s an excluded category,” Robertson said. “Yet BP has also settled with some bait-and- tackle shops that were pretty far inland.”
Loss Claims
BP’s settlement assigned some value to economic-loss claims throughout Louisiana and Mississippi, with claim values decreasing the further away they were from the coast. In Texas and Florida, economic-loss claims were allowed only if they originated within a narrow coastal zone.
Reef is a 45-minute drive from the beach and outside that loss demarcation. So are owners of certain Mississippi coastal wetlands that were covered in oil during the spill, although similarly damaged properties in Louisiana were covered by the settlement, according to court papers.
“It looks like BP tried to resolve as many claims as it could for as little as it could as quickly as it could,” New Orleans lawyer Mike Stag, who represents about 3,000 spill victims, said of how the exclusions were determined.
“BP wants these claims sunk to the bottom of the ocean, like their oil,” Stag said.
Scott Dean, a spokesman for BP, said the company will fight the claims excluded from the earlier settlement, “including those based on the U.S. government’s decision to institute a drilling moratorium in the Gulf.”
Claims Administrator
Patrick Juneau, the court-appointed administrator for BP’s Deepwater Horizon Claims Center, said it paid a total of $1.5 billion in damage claims to 22,178 economic victims as of Feb. 19. The center, which administers the $8.5 billion settlement fund, is awaiting answers on another $500 million in compensation offered to victims, Juneau said. Reviews of all but about 30,000 of the 131,055 claims the center has received have been started, he said. New claims will be accepted until April 2014. Juneau said he can’t attach dollar amounts to the excluded claims because, by court order, he can only process claims that are included in the settlement.
Claims Received
To date, he said, he’s received more than 3,500 claims from victims excluded from the spill settlement, including 103 from the oil and gas industry, 249 from gaming firms, 61 from financial institutions, 43 from insurance companies and 170 from state and local governments.
“One of the biggest categories of excluded claims is losses tied to the deep-water drilling moratorium” imposed by the Obama administration after the spill, Stag said. They were specifically allowed by Barbier, the judge overseeing all BP spill-loss cases.
“Those claims will have substantial value, with all the rigs that were shut down and the onshore support-services demand that fell off as a result,” he said. “We’re talking billions of dollars in lost revenue and lost business.”
One offshore drilling company represented by Houston attorney Richard Mithoff suffered damage of as much as $250 million because of the spill, he said. The company, which he declined to name, lost favorable financing terms for a rig it was building at the time of the disaster, Mithoff said.
“These big offshore rigs can cost more than $1 billion, and my client had to go replace its financing when the credit market shut down” for offshore drilling companies when the spill began, Mithoff said.
‘No Choice’
“My client had no choice but to complete the financing at significantly higher rates,” he said. “We’re talking a difference of $200 million to $250 million.” His client hasn’t yet sued, he said.
Stag, who represents several banks alleging spill-related losses, said financial institutions are another large category of excluded claims. He also declined to name his clients.
“When the offshore business slows down and no lines of credit are being taken out for capital investment for ongoing drilling and everyone scales back, that’s going to have a substantial effect on banks’ revenues,” he said.
Stag said he represents a regional radio-communications company, which he declined to identify, that was selling its business when the deep-water drilling ban went into effect and killed the deal.
$8 Billion-Plus
“That’s a $10 million to $20 million loss right there,” Stag said. “I wouldn’t be surprised if there’s another $4 billion to $8 billion in total spill-related losses out there. If we include all the moratorium-related losses, it might be even more than that.”
Also excluded from BP’s settlement are Gulf Coast residents with certain medical injuries who live more than half a mile off the beach or a mile inland from a wetland.
Michael Robichaux, a Raceland, Louisiana doctor, said he has treated scores of spill patients for “the exact same injuries” he treated in U.S. veterans of the Persian Gulf War. The injuries range from skin and eye irritations to chronic headaches, he said.
All of these patients were exposed to oil or toxic chemical dispersants used to break up the spill, including ones who live outside the settlement boundaries, Robichaux said.
‘Screwed’ Patients
“I’m treating patients with chronic illnesses that will affect them for the rest of their lives, and they’re not even included in what was negotiated with BP,” Robichaux said. “These patients and their injuries are screwed, and that’s the nicest thing I can say about it.”
Stag said he opted-out about 600 medical victims from BP’s settlement because the compensation offered was too low.
“A lot of health effects have yet to be seen,” he said. “The result is some of these people are going to die. It’s just a matter of how many.”
Following next week’s trial, claimants may pursue their claims individually, with the court’s determination of fault in hand. However, they will have to then prove they were injured, and that it was caused by the spill defendants.
Thomas McGarity, another University of Texas law professor, said the more directly a victim can prove his loss was caused by the spill, the better his chances of making BP pay.
“With businesses that can say they lost this particular deal with this direct economic harm, they may have a chance” at a trial, McGarity said.
BP can be expected to dispute claims from the excluded categories, Mithoff said, adding: “They’re putting that fight off for another day.”
Cleanup Helped
The company said in court papers that it may try to prove that tax-revenue losses by some governmental entities and revenue-loss claims by some tourism businesses, such as casinos, were offset by increases in economic activity generated by BP’s cleanup crews.
Thousands of BP workers swarmed the coastline in 2010 and 2011 to clean up the spill, and BP said in court filings that spending by these workers largely replaced lost tourist dollars.
“I don’t think that argument will resonate well with a jury,” Stag said.
The case is In re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).
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