BP News - 2010

News summaries from BP press releases and from unaffiliated news agencies are provided below. The summaries are sorted by month and are further categorized as upstream news, downstream news, and business/finance news.

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January

• Upstream news:

• Downstream news:

• Business/Finance news:

- The board of BP announced that it has appointed Mr. Paul Anderson as a non-executive director of BP p.l.c. with effect from February 1, 2010. Mr. Anderson is a non-executive director of BAE Systems plc and of Spectra Energy Corp. He has just stood down as a non-executive director of BHP Billiton. Mr. Anderson served as Chief Executive of BHP and subsequently BHP Billiton between 1998 and 2002, and as a non-executive director of BHP Billiton from 2002 until 2010.

February

• Upstream news:

- BP announced the launch of a major research collaboration with the Massachusetts Institute of Technology (MIT) and the University of Manchester. BP and the universities will work together on materials and corrosion research, as it applies to oilfield applications. The initial investment from BP has been $2 million, with the company intending to match this for up to a further four years. The initial emphasis of the research collaboration will be on materials and corrosion science - including corrosion and corrosion-fatigue modelling, environmental cracking, novel coatings and new monitoring technology. This will extend over time to other mechanical integrity and reliability related subject areas.

• Downstream news:

- BP has received an offer from Delek Europe B.V., one of the largest fuel retailers in Europe and a subsidiary of the Delek Group Ltd, to buy its French retail fuels and convenience business including selected fuels terminals. The proposed purchase price is €180million (approximately US$251 million), in cash, subject to working capital adjustments. On receipt of the offer to purchase BP's approximately 416 petrol stations in France, BP has entered into a period of exclusivity with Delek Europe and has started discussions with the relevant works councils. The sale would also include interests or ownership in three fuel distribution depots and it is expected to include a long term agreement for acceptance of fuel cards. The proposed transaction is currently expected to be completed in the second half of this year.

• Business/Finance news:

- BP reported a sharp year-on-year increase in fourth quarter profits as it announced that its oil and gas production increased by more than four per cent in 2009 and the company continued its industry-leading 17-year run of increasing reserves. The increase in production was well ahead of the company’s expected long-term average growth rate of 1-2 per cent and reflected the ramp-up and start-up of major new projects, including the first full year of production from the Thunder Horse field in the US Gulf of Mexico. BP’s reserve replacement ratio for the year was 129 per cent – making 2009 the seventeenth consecutive year of reserve replacement of at least 100 per cent. The company announced that underlying replacement cost profit for the fourth quarter of 2009, before non-operating items and fair value accounting effects, was $4.4 billion – an increase of 70 per cent on the same period in 2008. Full year replacement cost profit for 2009 was $14 billion, down 45 per cent on the record full year profit of 2008, mainly reflecting the weaker market environment of lower average oil and gas prices and depressed refining margins.

- BP's fourth-quarter replacement cost profit was $3,447 million, compared with $2,587 million a year ago, an increase of 33%. For the full year, replacement cost profit was $13,955 million compared with $25,593 million a year ago, down 45%. Non-operating items and fair value accounting effects for the fourth quarter had a net $937 million unfavourable impact compared with a net $18 million unfavourable impact in the fourth quarter of 2008. For the full year, the respective amounts were $622 million unfavourable and $650 million unfavourable. Non-operating items for the fourth quarter and full year 2009 included a goodwill impairment of $1.6 billion relating to our US West Coast fuels value chain in Refining and Marketing.

- BP will be a sponsor of the 2010 and 2012 U.S. Olympic and Paralympic Teams, as well as the 2011 U.S. Pan American Team.

March

• Upstream news:

- The Steering Committee for the development of the Azeri, Chirag and deepwater portion of the Gunashli (ACG) fields today sanctioned investment in the new Chirag Oil Project (COP). The $6 billion development plan is the next major step in the ongoing development of the ACG field in the Azerbaijan sector of the Caspian Sea. The project is planned to increase oil production and recovery from the ACG field through a new offshore facility which is designed to fill a critical gap in the field infrastructure between the existing Deepwater Gunashli (DWG) and Chirag-1 platforms.

- BP announced a transaction that will deliver a material exploration position in the deepwater offshore Brazil and significantly enhance its position in core strategic areas. In a broad-ranging deal, BP will pay Devon Energy $7.0 billion in cash for assets in Brazil, Azerbaijan and the US deepwater Gulf of Mexico. These include interests in ten exploration blocks in Brazil, including seven in the prolific Campos basin; a major portfolio of deepwater exploration acreage and prospects in the US Gulf of Mexico; and an interest in the BP-operated Azeri-Chirag-Gunashli (ACG) development in the Caspian Sea, Azerbaijan. In addition, BP will sell to Devon Energy a 50 per cent stake in BP's Kirby oil sands interests in Alberta, Canada, for $500 million. The parties have agreed to form a 50/50 joint venture, operated by Devon, to pursue the development of the interest. Devon will commit to fund an additional $150 million of capital costs on BP’s behalf.

- BP, on behalf of its partners in the Rumaila Technical Services Contract, announced the first major contracts to support the rehabilitation of the Rumaila field in Southern Iraq. Formal contracts will be signed in due course. Three contractor groups were selected for drilling wells, worth around $500 million in total and will provide 7 additional drilling rigs from the second half of 2010. The contracts will be awarded to: Schlumberger in partnership with the Iraqi Drilling Company has been awarded contracts for three rigs, Daqing Drilling has also been awarded contracts for three rigs, Weatherford has been awarded a contract for one rig.

• Downstream news:

- BP has announced to governments and employees in the countries of Namibia, Malawi, Tanzania, Zambia and Botswana that it is to sell the marketing businesses in these countries. This follows a strategic review by BP into its refining and marketing businesses in southern Africa which showed the company should focus on those countries which offered the greatest synergies with its supply portfolio which are Mozambique and South Africa.

- BP Solar announced it has taken another significant step to provide its customers with cost competitive solar energy products and services by shifting its remaining in-house manufacturing to its low cost joint ventures and regional supply partners. As a result of this decision, the company has ceased silicon casting, wafering, and cell manufacturing at its Frederick, MD facility effective today. Approximately 320 positions will be eliminated out of 430 positions at the Frederick location. BP Solar will maintain its US presence in sales and marketing, research and technology, project development, as well as key business support activities.

• Business/Finance news:

- The board of BP announced that it has appointed Mr. Ian Davis as a non-executive director of BP p.l.c. with effect from April 2, 2010. Mr. Davis has worked for McKinsey & Company since 1979. Between 2003 and 2009 he was Chairman and Worldwide Managing Director of the firm. He will be retiring from McKinsey in July 2010.

- BP outlined plans to further boost efficiency and reduce costs with the aim of improving its annual underlying pre-tax profitability by more than $3 billion over the next two to three years. The company also extended its medium-term oil and gas production outlook, projecting that annual output would rise by 1-2 per cent a year on average to 2015, at $60 per barrel from a 2008 base, and expressing increased confidence in further production growth out to 2020. Previewing BP's annual strategy presentation to the financial community, Group Chief Executive Tony Hayward said the company had established strong momentum in its core businesses and had made great progress in reducing costs and improving absolute and relative financial performance in the past two years.

- In accordance with Section 203.01 of the New York Stock Exchange Listed Company Manual, BP plc announces that on March 5, 2010 it filed with the Securities and Exchange Commission an Annual Report on Form 20-F that included audited financial statements for the year ended December 31, 2009. BP’s Annual Report on Form 20-F is available online at BP’s website at www.bp.com and also online at www.sec.gov.

April

• Upstream news:

- BP confirms that Transocean Ltd issued the following statement: "Transocean Ltd. Reports Fire on Semisubmersible Drilling Rig Deepwater Horizon" “Transocean Ltd. (NYSE: RIG) (SIX: RIGN) today reported a fire onboard its semisubmersible drilling rig Deepwater Horizon. The incident occurred April 20, 2010 at approximately 10:00 p.m. central time in the United States Gulf of Mexico. The rig was located approximately 41 miles offshore Louisiana on Mississippi Canyon block 252.” “Transocean's Emergency and Family Response Teams are working with the U.S. Coast Guard and lease operator BP Exploration & Production, Inc. to care for all rig personnel and search for missing rig personnel. A substantial majority of the 126 member crew is safe but some crew members remain unaccounted for at this time. Injured personnel are receiving medical treatment as necessary. The names and hometowns of injured persons are being withheld until family members can be notified.” “For more information about Transocean, please visit our website at www.deepwater.com. Among the documents posted on our web site is the Transocean Ltd. Proxy Statement and 2009 Annual Report. SOURCE: Transocean Ltd.”

- BP offered its full support to drilling contractor Transocean Ltd. and its employees after fire caused Transocean's semisubmersible drilling rig Deepwater Horizon to be evacuated overnight, saying it stood ready to assist in any way in responding to the incident. Group Chief Executive Tony Hayward said: "Our concern and thoughts are with the rig personnel and their families. We are also very focused on providing every possible assistance in the effort to deal with the consequences of the incident." BP, which operates the licence on which Transocean's rig was drilling an exploration well, said it was working closely with Transocean and the U.S. Coast Guard, which is leading the emergency response, and had been offering its help - including logistical support. Transocean reported the fire earlier on the rig, located approximately 41 miles offshore Louisiana on Mississippi Canyon block 252, saying that a "substantial majority" of the 126 personnel on board were safe, but some crew members remained unaccounted for. A number of personnel were reported to be injured.

- BP activated an extensive oil spill response in the US Gulf of Mexico following the fire and subsequent sinking of the Transocean Deepwater Horizon drilling rig 130 miles south-east of New Orleans. BP is assisting Transocean in an assessment of the well and subsea blow out preventer with remotely operated vehicles. BP has also initiated a plan for the drilling of a relief well, if required. A nearby drilling rig will be used to drill the well. The rig is available to begin activity immediately.

- BP offered its deepest sympathy and condolences to the families, friends and colleagues of those who have been lost following the fire on the Deepwater Horizon oil rig in the Gulf of Mexico this week.

- BP, as lease operator of Mississippi Canyon Block 252 (MC252), continues to forge ahead with a comprehensive oil well intervention and spill response plan following the April 22 sinking of the Transocean Deepwater Horizon drilling rig 130 miles south-east of New Orleans. BP continues to assist Transocean’s work below the surface on the subsea equipment, using remotely operated vehicles to monitor the Macondo/MC252 exploration well, and is planning and mobilizing to activate the blow-out preventer. BP is preparing to drill relief wells to permanently secure the well. The drilling rig Development Driller III is moving into position to drill a second well to intercept the Macondo well and inject a specialized heavy fluid to securely prevent flow of oil or gas and allow work to be carried out to permanently seal the well. As of Saturday, April 24, the oil spill response team had recovered more than 1,000 barrels of an oil-water mix of which the vast majority is water. The material has been collected by skimming vessels and vessels towing containment boom. Dispersants have also been applied to the spill.

- BP is accelerating offshore oil recovery and continuing well control efforts in Mississippi Canyon Block 252 (MC252) following improvements in weather conditions in the Gulf of Mexico. BP, operating with the U.S. Coast Guard and other agencies, has launched its comprehensive, pre-approved oil spill response plan following the April 22 sinking of the Transocean Deepwater Horizon drilling rig 130 miles south-east of New Orleans. According to National Oceanic and Atmospheric Administration (NOAA) experts participating in the spill response, the spill is "very thin" and consists of "97 per cent sheen." In Houma, Louisiana where the field operations response is being coordinated, more than 1,000 personnel on and offshore are deployed to coordinate the oil spill response. BP, as lease operator of MC252, also continues to work below the surface on Transocean’s subsea equipment using remotely operated vehicles to monitor the Macondo/MC252 exploration well, and is working to activate the blow-out preventer. The Transocean drilling rig Development Driller III will arrive on location to drill the first of two relief wells to permanently secure the well. A second drilling rig, Transocean’s Discoverer Enterprise, is en route.

- BP announced its support for and cooperation with U.S. government investigations arising from the sinking of the Transocean drilling rig Deepwater Horizon in Mississippi Canyon Block 252 (MC252) in the Gulf of Mexico. The Department of the Interior and Department of Homeland Security announced a joint enquiry into the explosion and sinking of the Transocean Deepwater Horizon on April 22. The U.S. House of Representatives Committee on Energy and Commerce Subcommittee on Oversight and Investigations and Senate Committee on Energy and Natural Resources have also announced investigations. BP launched its own investigation into the incident and has an investigation team at work in Houston, Texas.

- BP, operating with the U.S. Coast Guard and other agencies, conducted a controlled burn on parts of an offshore oil spill in the Gulf of Mexico as it continues to escalate its response plan following the sinking of the Transocean drilling rig Deepwater Horizon and subsequent release from the Mississippi Canyon 252 well. On the surface, BP continues to aggressively move forward with its oil spill plan. BP launched its comprehensive, pre-approved oil spill response plan following the April 22 sinking of the Transocean Deepwater Horizon 130 miles south-east of New Orleans. Improved weather for vessels and aircraft is aiding in the dispersion of the sheen that comprises the vast majority of the spill and is enabling skimming vessels to operate far offshore and aircraft to fly multiple dispersant sorties. Weathering and dispersion tactics are breaking down the oil into a frothy emulsion. Fire boom has also been deployed to contain and burn heavier pockets of oil.

- BP continued to ramp up its response to the oil spill in the US Gulf of Mexico. Over 2,500 personnel are now involved in the response effort and well-advanced preparations are being made for a major protection and cleaning effort on the shorelines of Louisiana, Mississippi, Alabama and Florida. A fourth onshore command centre, in Mobile, Alabama, opened. Work is progressing to install marine protection booms along the coast. As well as almost 220,000 feet of boom already in the water, an additional 300,000 feet is staged or in the process of being deployed, with more on the way. The onshore activity is focused on five locations in the potentially affected states: Venice, Louisiana; Pascagoula and Biloxi, Mississippi; Mobile, Alabama; and Pensacola, Florida. Staging posts are in place stocked with people and material, including about 100,000 feet of boom, to protect the shoreline in each area. In addition, a sixth staging post is now being set up in Port Sulphur, Louisiana. The oil spill follows the sinking of Transocean's drilling rig Deepwater Horizon in the Mississippi Canyon 252 block. BP continues to attack the spill on many fronts – making continuing attempts to prevent oil escaping from the subsea well, 5,000 feet below the surface; collecting and separating the oil which enters the water; deploying innovative technology to disperse the oil at its seabed source; and drilling a relief well to permanently isolate and secure the leaking well. In parallel, at the surface, BP's response is expanding to mobilise shoreline protection teams and equipment, and numbers of community liaison staff, while planning for in-situ burning several miles offshore. BP has called on expertise from other companies including Exxon, Shell, Chevron and Anadarko to help it activate the blow out preventer, and to offer technical support on other aspects of the response. Preliminary estimates indicate that current efforts to contain the spill and secure the well are costing the MC252 owners about $6 million per day. This figure is expected to rise as activity increases.

- BP announced it has launched the next phase of its effort to contain and clean up the Gulf of Mexico oil spill, with a significant expansion of onshore preparations in case spilled oil should reach the coast. The company is ramping up preparations for a major protection and cleaning effort on the shorelines of Louisiana, Mississippi, Alabama and Florida. To supplement its Houma, Louisiana incident command post, which oversees the offshore containment effort and onshore response in Louisiana, BP is now establishing a similar onshore incident command post in Mobile, Alabama to oversee the onshore response in Mississippi, Alabama and Florida. Work will continue to complete installing marine protection booms along the coast. As well as 180,000 feet of boom already in the water, an additional 300,000 feet is staged or in the process of being deployed, with more on the way. BP is mobilizing its full resources to fight the oil spill, which follows the sinking of the Transocean Deepwater Horizon drilling rig in the Mississippi Canyon 252 block. This includes efforts to stem the flow of oil into the water from the sub-sea well, to contain the spill offshore and to protect the Gulf coast. The massive offshore operation that has been running for a week has been addressing the spill on the surface offshore, both by skimming and collecting oil and by applying dispersants. There is concern, however, that weather and current patterns will shift and move the sheen closer to shore or onshore in the coming days. The new onshore activity is focussed on five locations in the potentially affected states: Venice, Louisiana; Pascagoula and Biloxi, Mississippi; Mobile, Alabama; and Pensacola, Florida. Staging posts are in place stocked with people and material, including about 100,000 feet of boom, to protect the shoreline in each area. Each of the states has oil spill response plans already in place and trained community groups and volunteers will also be available to aid the response to the oil spill and deploy resources. Parallel to these, BP is today setting up offices in each of these communities manned by company staff to provide information on what is happening, what is being done and any developments. These will connect with local government officials, community and other groups to provide information on developments. To harness the many offers of help BP has received, these offices will also collect names of any people wanting to assist with the response, and will co-ordinate identification of activities with which untrained personnel may be able to assist. These efforts are in addition to the ongoing work with Transocean, MMS, the US Coast Guard, and the other organizations within the Unified Command to do everything possible to stop the flow of oil on the sea bed. Efforts to stem the flow of oil from the well, currently estimated at up to 5,000 barrels a day, are continuing with six remotely-operated vehicles (ROVs) continuing to attempt to activate the blow out preventer (BOP) on the sea bed. Transocean Development Driller III is scheduled to spud a relief well intended to secure the existing well. Drilling of this well is expected to take two to three months. Work is also continuing to produce a subsea collection system capable of operating in deep water to funnel leaking oil to the surface for treatment. This is expected to be ready for deployment in the next few weeks. Preliminary estimates indicate that current efforts to contain the spill and secure the well are costing the MC252 owners about $6 million per day. This figure is expected to rise as activity increases. It is too early to quantify other potential costs and liabilities associated with the incident.

- Senator Bill Nelson, the Florida Democrat, has drafted legislation that would suspend the Obama administration’s plan to move forward with offshore exploration and drilling for new oil deposits until a full investigation of the Gulf of Mexico explosion and spill is completed and new protocols developed to prevent future accidents of this sort. This is probably only the beginning, given that the oil has yet to reach coasts.

• Downstream news:

• Business/Finance news:

- BP's first-quarter replacement cost profit was $5,598 million, compared with $2,387 million a year ago, an increase of 135%. Non-operating items and fair value accounting effects for the first quarter had a net $49 million unfavourable impact compared with a net $194 million unfavourable impact in the first quarter of 2009.

- BP says that the offshore drilling accident that is spewing thousands of barrels of oil a day into the Gulf of Mexico could cost the company several hundred million dollars. Nobody really knows whether the London-based oil giant is being too conservative about the cost for the April 20 accident, which some experts say could end up as the biggest oil spill in history. The 1989 grounding of the Exxon Valdez off Alaska, for example, cost Exxon Mobil more than $4.3 billion, including compensatory payments, cleanup costs, settlements and fines. But regardless of the out-of-pocket costs, the long-term damage to BP’s reputation — and possibly, its future prospects for drilling in the Gulf of Mexico — is likely to be far higher, according to industry analysts. The magnitude of the Deepwater Horizon disaster seems to be finally sinking in with investors. BP’s stock plunged more than 8 percent in American trading in an otherwise strong day for stocks. Since the accident, the American depositary receipts of the company have fallen about 13 percent, closing at $52.56. For Tony Hayward, who has led BP for the last three years, the accident threatens to overshadow all of the efforts he has made to burnish the tattered reputation of the company after a refinery explosion in Texas in 2005 and a pipeline leak in Alaska in 2006. As Mr. Hayward said to fellow executives in his London office recently, “What the hell did we do to deserve this?” A BP spokesman said no executives were available for an interview. But in response to a written question, Mr. Hayward said, “Reputationally, and in every other way, we will be judged by the quality, intensity, speed and efficacy of our response.” So far, the company’s failure to stop the seepage from the underwater well has frustrated government officials. President Obama offered the assistance of an array of government agencies, including the military, while noting that, under federal law, “BP is ultimately responsible for funding the cost of response and cleanup operations.” Mr. Hayward, who has blamed the rig’s owner and operator, Transocean, for the accident, said that it was nevertheless BP’s responsibility to deal with the immediate problem. “We take it with the utmost seriousness,” he wrote. “Nothing else matters right now.” Wall Street experts say that while the company is spending an estimated $6 million a day on fixing the mess, it is impossible to accurately estimate how much the incident will eventually cost. BP, which leased the platform from Transocean, has said that drilling and operating relief wells to plug the runaway well may cost as much as $300 million, but those same wells will eventually be used to produce profitable oil. The cost of an environmental cleanup will depend largely on how much oil reaches shore. The government could assess fines or other penalties. And lawyers have already filed a flurry of suits on behalf of commercial fisherman, shrimpers and injured oil workers against BP; Transocean; Cameron, the company that manufactured the blowout preventer; and other companies involved in the drilling process. Cleanup costs will be divided among BP, which has a 65 percent ownership of the field, and minority partners Anadarko and Mitsui. Transocean’s stock price fell nearly 7.5 percent, and is down more than 14 percent since the accident. The company has insurance that covers the rig that was lost, but any broader assessment of Transocean’s liability will be determined after investigators understand what caused the accident. Regardless of the final assessment of blame, Wall Street analysts warned that everything BP does from now on will come under increased scrutiny by regulators and that potential partners in drilling ventures may well look elsewhere. Under Mr. Hayward’s predecessor, John Browne, BP rebranded itself as “Beyond Petroleum,” a company that was environmentally conscious and wanted to develop alternative energy sources like solar and wind power. Its insignia of a blooming flower was intended to portray the company as one that was responsive to growing public concerns about climate change. But the company seemed to lose its focus on maintenance and safety, BP executives later acknowledged. The 2005 explosion at a refinery in Texas City, Tex., killed 15 workers and injured hundreds more. The Occupational Safety and Health Administration fined BP a record $87 million for neglecting to correct safety violations. Only a year later, a leaky BP oil pipeline in Alaska forced the shutdown of one of the nation’s biggest oil fields. BP was fined $20 million in criminal penalties after prosecutors said the company had neglected corroding pipelines. Soon after the incident, Mr. Browne quit amid tabloid headlines about his private life. Mr. Hayward, a geologist who had been in charge of exploration and production, took over and promised to refocus the company and change the culture, emphasizing safety.

May

• Upstream news:

- "The US government leadership here has been excellent since day one. I agree with the President that the top priority right now is to stop the leak and mitigate the damage. I reiterated my commitment to the White House today that BP will do anything and everything we can to stop the leak, attack the spill off shore, and protect the shorelines of the Gulf Coast. We appreciate the tireless efforts of the many federal, state and local responders and the volunteers, men and women who have worked tirelessly since the date of the accident to mitigate the damage. Our teams are working hand in hand and we look forward to hearing more recommendations for action from the President's visit today."-Tony Hayward, from Houma Louisiana.

- BP would like to clarify that, contrary to some media reports, the actions it has taken to date on the blow out preventer have not resulted in any observed reduction in the rate of flow of oil from the MC252 well.

- BP announced that work has begun to drill a relief well to intercept and isolate the oil well that is spilling oil in the US Gulf of Mexico. The drilling began at 15:00CDT (21:00BST) on Sunday May 2. The new well, in 5,000 feet of water, is planned to intercept the existing well around 13,000 feet below the seabed and permanently seal it. The new drill site is about half a mile on the seabed from the leaking well in Mississippi Canyon block 252, and drilling is estimated to take some three months. BP has also carried out a second approved trial injection of dispersants directly into the oil flow at a point close to the main leak on the seabed. The technique is intended to efficiently mix the oil and dispersant, breaking up and dispersing accumulations of oil and allowing it to degrade naturally and reduce surface impact. The suggestion for this innovative technique came from the companies across the oil industry that BP approached last week for further ideas and expertise to help BP control the well and tackle the spill. Rapid progress is also being made in constructing a coffer dam, or containment canopy. A 14 x 24 x 40 foot steel canopy has already been fabricated and other-sized canopies are under construction and being sourced. Once lowered over the leak site and connected by pipe, the canopy is designed to channel the flow of oil from the subsea to the surface where it could be processed and stored safely on board a specialist vessel. Weather permitting, first installation of a canopy on site is expected to start in a little over a week, allowing the process of testing and commissioning to begin. Only once this is complete will the effectiveness of the system be demonstrated. At the seabed, BP continues to use up to eight remotely operated vehicles (ROVs) to work on the blow-out preventer and subsea equipment. Accurate estimation of the rate of flow is difficult, but current estimates by the US National Oceanic and Atmospheric Administration (NOAA) suggest some 5,000 barrels (210,000 US gallons) of oil per day are escaping from the well. On the surface, weather hampered surface operations over the weekend but is forecast to improve in coming days. BP currently has 230,000 gallons of dispersant available to deploy once the sea state is calm enough and a further 208,000 gallons on order. Offshore booms and specialist oil spill response vessels, skimmers and barges will return to operation in calmer seas, treating and collecting as much oil as possible before it reaches the coast. The onshore activity is focused on six locations in the potentially affected states: Venice and Port Sulphur, Louisiana; Pascagoula and Biloxi, Mississippi; Mobile, Alabama; and Pensacola, Florida. Staging posts are in place stocked with people and material to help protect the shoreline in each area. Work is continuing to install marine protection booms along the coast. Hundreds of thousands of feet of boom have been deployed and, to date, 2,000 volunteers have been trained to assist in the response effort. Whilst difficult to accurately estimate, the cost to the MC252 owners of the efforts to contain the spill and secure the well is currently estimated to be more than $6 million per day. This figure is rising as activity increases. It is too early to quantify other potential costs and liabilities associated with the incident.

- BP announced that it has stopped the flow of oil from one of the three existing leak points on the damaged MC252 oil well and riser in the Gulf of Mexico. While this is not expected to affect the overall rate of flow from the well, it is expected to reduce the complexity of the situation being dealt with on the seabed. Separately, BP announced that it has made $25 million block grants to each of the states of Louisiana, Alabama, Mississippi and Florida to help accelerate the implementation of Area Contingency Plans (ACPs). These approved plans address the removal of a worst case spill and are designed to mitigate or prevent a substantial threat to sensitive areas. The grants BP has made to the four states do not affect BP's MC252 response or existing claims process, but are supplemental to them and are intended to enable local businesses to support clean-up and recovery efforts. Each state will administer its U.S. $25 million grant. At the MC252 well, using remotely operated vehicles (ROVs), a valve has been installed on the end of a broken drill pipe, one of the three points from which oil was leaking. The ROVs first cut the end of the pipe to leave a clean end and the valve, weighing over half a ton, was placed in position on the seabed. Overnight the ROVs completed securely joining the valve to the broken drill pipe and then closed it, shutting off the flow from that pipe. The ROVs will continue to closely monitor the well and remaining flow points to look for any changes. In parallel, BP continues to make plans for the loading and movement of a first containment dome from dock at Port Fourchon, Louisiana out to the well site. It is planned to lower the dome over one of the leak sites on the seabed and then connect it by pipe to a specialist vessel at the surface. This system is designed to help capture the oil at the seabed and collect it securely for processing. The dome is currently expected to be lowered to the wellsite seabed in around three days' time allowing the process of testing and commissioning to begin. Only once this is complete will the effectiveness of the system be demonstrated. BP's initial onshore response efforts focused on Louisiana, and have rapidly expanded with equipment and people staged and ready in Mississippi, Alabama, and Florida. BP has positioned rapid response teams in Mobile, Alabama and Houma, Louisiana, to enable quick response and cleaning of areas where oil may come ashore. These 12-person teams will assess initial impacts, and then call in a larger contingent of trained responders and volunteers to clean the affected area. BP is also setting up a Rapid Response Team for Chandeleur Island. In addition, BP has been hosting town hall meetings in Gulf Coast communities for those who wish to volunteer on a cleanup crew or to volunteer their vessels for marine work. More than 2,000 volunteers have been signed up and trained by BP. BP has a supply of boom and other resources on hand to cover the next seven to ten days of planned response activity, and has put in place a supply chain that should enable it to deliver additional supplies as needs arise. There are now nine staging areas across the Gulf Coast - four in Louisiana and three in Mississippi, and one each in Alabama and Florida.

- Work continues to attempt to bring the MC252 oil well under control, to stop the flow of oil and to contain the oil subsea. A valve that had been attached to the end of a broken drill pipe, one of the three points from which oil was leaking, was closed. This has stopped the flow from this point, but is not expected to affect the overall rate of flow from the well. BP continues to use remotely operated vehicles to monitor the flow of oil from the other two leak points. A containment dome was loaded aboard a transport vessel at Port Fourchon, Louisiana, and began its transport to the MC252 well site. The 40x24x14 feet steel vessel, which weighs almost 100 tons, is expected to be lowered to the seabed. The drilling of the first relief well, which began on Sunday May 2, continues. It is estimated that it will take some three months to complete. Work continues to collect and disperse oil that has reached the surface of the sea and to protect the shoreline. By mid-afternoon, twelve flights over the spill had been completed, delivering a total of 34,000 gallons of dispersant. During the day further in situ burning of oil on the surface of the water was carried out. 80,000 feet of boom was deployed during the day. This brought the total length of boom now deployed to protect the shore to over 100 miles.

- Work continues to attempt to bring the MC252 oil well under control, to stop the flow of oil and to contain the oil subsea. BP continues to use remotely operated vehicles (ROVs) to monitor the subsea situation. The containment dome arrived on location from Port Fourchon, Louisiana, ready to be deployed. Once lowered to the sea bed, the next steps will be to connect the 40x24x14 feet steel dome, which weighs almost 100 tons, to a vessel on the surface. Once this operation is complete it will be possible to assess the effectiveness of the solution. Work on the first relief well, which began on Sunday May 2, continues. It is expected to take some three months to complete. Work continues to collect and disperse oil that has reached the surface of the sea. More than 260 vessels are being used, including skimmers, tugs, barges and recovery vessels. 18 flights over the spill were carried out during the day and operations to skim oil from the surface of the water also continued as seas became calmer. To date the oil spill response team has recovered about 30,000 barrels of oil-water mix. The total length of deployed boom is now over 700,000 feet as part of the efforts to stop oil reaching the coast. Some one million feet is available and more than 300,000 feet is on order. Suitable weather conditions allowed controlled burning of surface oil to be carried out.

- Subsea efforts continue to focus on two fronts: first, reducing the flow of oil spilled by physical containment and second, further work on stopping the flow using a “top kill” option.The containment dome that was deployed last week has been parked away from the spill area on the sea bed. Efforts to place it over the main leak point were suspended at the weekend as a build up of hydrates prevented a successful placement of the dome over the spill area. A second, smaller containment dome is being readied to lower over the main leak point. The small dome will be connected by drill pipe and riser lines to a drill ship on the surface to collect and treat oil. It is designed to mitigate the formation of large hydrate volumes. This operation has never been done before in 5,000 feet of water. In addition, further work on the blow out preventer has positioned us to attempt a “top kill” option aimed at stopping the flow of oil from the well. This option will be pursued in parallel with the smaller containment dome over the next two weeks. All of the techniques being attempted or evaluated to contain the flow of oil on the seabed involve significant uncertainties because they have not been tested in these conditions before. BP continues to do everything it can, in conjunction with governmental authorities and other industry experts, to find a solution to stem the flow of oil on the seabed. Work on the first relief well, which began on Sunday May 2, continues. It is expected to take some three months to complete. Work continues to collect and disperse oil that has reached the surface of the sea. More than 275 vessels are being used, including skimmers, tugs, barges and recovery vessels. The volume of dispersant applied to the spill on the surface amounts to over 315,000 gallons since the spill response began. Intensive operations to skim oil from the surface of the water also continued. Some 90,000 barrels of oily liquid has now been recovered. The total length of deployed boom is now more than 1 million feet as part of the efforts to stop oil reaching the coast. The cost to date of the response amounts to about $350 million, including the cost of spill response, containment, relief well drilling, commitments to the Gulf Coast States, settlements and federal costs.

- Subsea efforts continue to focus on, firstly, progressing options to stop the flow of oil from the well hrough interventions via the blow out preventer (BOP) and, secondly, attempts to contain the flow of oil at source to reduce the amount spreading on the surface. These efforts are being carried out in conjunction with governmental authorities and other industry experts. Further investigation of the failed BOP, using remotely-operated vehicles and a variety of diagnostic techniques, has increased our understanding of the condition of the BOP and allowed planning to continue for a number of potential interventions, including for a so-called “top kill” of the well. This would involve first injecting material of varying densities and sizes (also known as “junk shot”) into the internal spaces of the BOP to provide a seal, before pumping specialised heavy fluids into the well to prevent further flow up the well. Plans for this option are being developed in preparation for potential application next week. Work to deploy a second system designed to contain the oil flow subsea has continued. A small dome or “top hat” has been taken out to the well site and placed on the seabed in preparation for deployment. Such a system has never been used in water depths of 5,000 feet and its successful operation is not certain. The deployment of this system is expected to be attempted within the next few days. All of the techniques being attempted or evaluated to contain the flow of oil on the seabed involve significant uncertainties because they have not been tested in these conditions before. Work on the first relief well, which began on Sunday May 2, continues. It is expected to take some three months to complete. The drilling rig that will drill the second relief well is currently en route to the site, expected to arrive by Friday. Work continues to collect and disperse oil that has reached the surface of the sea. Over 530 vessels are involved in the response effort, including skimmers, tugs, barges and recovery vessels. Over 120 flights have been made to apply dispersant to the spill since the response effort began. Intensive operations to skim oil from the surface of the water also continued. Some 97,000 barrels of oily liquid have now been recovered. The total length of boom deployed as part of efforts to prevent oil reaching the coast is now more than 1.2 million feet, with a further 400,000 feet staged in readiness for deployment. In total over 13,000 personnel from BP, other companies and government agencies are currently involved in the response to this incident. Over 16,000 people have registered to volunteer across four states. So far 6,700 claims have been filed, of which about 1,000 have already been paid. BP has also received 46,500 calls into its help lines, approximately 30 per cent of which have offered ideas to help the response or other assistance. The cost to date of the response amounts to about $450 million, including the cost of spill response, containment, relief well drilling, commitments to the Gulf Coast States, settlements and federal costs.

- Tony Hayward, BP Group Chief Executive, said: "We absolutely understand and share President Obama's sense of urgency over the length of time this complex task is taking. We want to thank the President and his administration for their ongoing engagement in this effort. "BP - working closely with scientists and engineers from across the whole oil industry, from government agencies and departments, and with local officials along the Gulf Coast - is focused on doing everything in our power to stop the flow of oil, remove it from the surface, and protect the shoreline. We are working with state and community leaders to mitigate the impact on the lives and livelihoods of those who have been affected. "And while we continue in these efforts, we are participating fully in investigations that will provide valuable lessons about how to prevent future incidents of this nature."

- BP rebutted allegations that its Atlantis platform in the Gulf of Mexico operated with incomplete and inaccurate engineering documents. Responding to claims that flawed or missing documentation posed a threat to safe operation of the platform, recently made in various news programs and print media, BP said it had thoroughly investigated these claims when they were first made by a former contract worker in 2009 and found them to be without substance. The investigation found that the operators on the platform had full access to the accurate, up-to-date drawings (topsides, hull and subsea) necessary to operate the platform safely. A second investigation of the same allegations by the Ombudsman’s office focused on project document and filing procedures and had no bearing on operating or regulatory issues. After this review BP made some procedural changes in the project execution plan, but these likewise had no connection with the safe operation of the platform. The design, construction, installation and operation of Atlantis have received a high level of oversight by both the US Minerals Management Service (MMS) and the US Coast Guard. BP has and will continue to work with the MMS or any other regulator when concerns are raised about any aspect of our operation. The Atlantis field has been in service since October 2007 and has safely produced many million barrels of oil. The platform was successfully maintained through the course of two major hurricanes in 2008. Its safety, operations and performance record is excellent.

- Subsea efforts continue to focus on progressing options to stop the flow of oil from the well through interventions via the blow out preventer (BOP), and to collect the flow of oil from the leak points. These efforts are being carried out in conjunction with governmental authorities and other industry experts.The riser insertion tube tool (RITT) containment system was put into place in the end of the leaking riser on May 16. Operations began during the day to allow oil and gas to flow through the tool up to the drillship Discoverer Enterprise on the surface 5,000 feet above. Produced oil is being stored on the drillship while produced gas is being flared. It is expected that it will take some time to increase the flow through the system and maximise the proportion of oil and gas flowing through the broken riser that will be captured and transported to the drillship. The RITT is a fabricated from 4-inch diameter pipe, fashioned to allow one end to be inserted into the broken riser pipe that is the source of the main oil flow from the MC252 well, and the other to be connected to a drill pipe and riser from the Discoverer Enterprise. The RITT allows the injection of methanol to mitigate against the formation of gas hydrates. This remains a new technology and both its continued operation and its effectiveness in capturing the oil and gas remains uncertain. Other containment options continue to be progressed. BP also continues to develop options to shut off the flow of oil from the well through interventions via the well’s failed BOP. Plans continue to be developed for a so called “top kill” operation where heavy drilling fluids are injected into the well to stem the flow of oil and gas, followed by cement to seal the well. Options have also been developed to potentially combine this with so-called “junk shot”, the injection under pressure of a variety of materials into the BOP to seal off upward flow. Plans for deployment of these options are being progressed with the possibility of deployment in the next week or so. Work on the first relief well, which began on May 2, continues. The DDII drilling rig began drilling the second relief well on May 16. Each of these wells is estimated to take some three months to complete from the commencement of drilling. Work continues to collect and disperse oil that has reached the surface of the sea. Over 650 vessels are involved in the response effort, including skimmers, tugs, barges and recovery vessels.Intensive operations to skim oil from the surface of the water have now recovered, in total, some 151,000 barrels (6.3 million gallons) of oily liquid. The total length of boom deployed as part of efforts to prevent oil reaching the coast is now almost 1.7 million feet, including over 400,000 feet of sorbent boom. In total over 19,000 personnel from BP, other companies and government agencies are currently involved in the response to this incident. So far 15,000 claims have been filed and 2,600 have already been paid. BP has also received almost 60,000 calls into its help lines.

- Subsea efforts continue to focus on progressing options to stop the flow of oil from the well through interventions via the blow out preventer (BOP), and to collect the flow of oil from the leak points. These efforts are being carried out in conjunction with governmental authorities and other industry experts. The volume of oil and gas being collected by the riser insertion tube tool (RITT) containment system at the end of the leaking riser is estimated to be about 3,000 barrels a day (b/d) of oil and some 14 million standard cubic feet a day of gas. The oil is being stored and gas is being flared on the drillship Discoverer Enterprise, on the surface 5,000 feet above. This remains a new technology and both its continued operation and its effectiveness in capturing the oil and gas remain uncertain. BP also continues to develop options to shut off the flow of oil from the well through interventions via the failed BOP. Plans continue to develop a so called "top kill" operation where heavy drilling fluids are injected into the well to stem the flow of oil and gas, followed by cement to seal the well. Most of the equipment is on site and preparations continue for this operation, with a view to deployment in the next few days. Options have also been developed to potentially combine this with the injection under pressure of a variety of materials into the BOP to seal off upward flow. Work on the first relief well, which began on May 2, continues. The DDII drilling rig began drilling the second relief well on May 16. Each of these wells is estimated to take some three months to complete from the commencement of drilling. Work continues to collect and disperse oil that has reached the surface of the sea. Over 930 vessels are involved in the response effort, including skimmers, tugs, barges and recovery vessels. Intensive operations to skim oil from the surface of the water have now recovered, in total, some 187,000 barrels (7.8 million gallons) of oily liquid. The total length of boom deployed as part of efforts to prevent oil reaching the coast is now more than 1.9 million feet, including over 500,000 feet of sorbent boom. In total over 19,000 personnel from BP, other companies and government agencies are currently involved in the response to this incident. So far about 19,000 claims have been filed, and some 8,000 payments have been made.

- Oil behemoth BP PLC faces billions of dollars in costs connected to its oil spill in the Gulf of Mexico, analysts and legal experts predict. The question now is just how big and fast that bill will grow. With the possibility that it could take three months to stop the Deepwater Horizon spill, payments are likely to start at $2 billion and could reach more than $8 billion, experts said, while cautioning that it is early to make accurate estimates. Cleanup and damages, they said, are just part of the pain connected to this disaster. BP also could take a hit to future earnings if it needs to slow other exploration and drilling in the Gulf of Mexico, where it has substantial acreage rights, analysts said. In the wake of the disaster, the company's stock price already has tumbled about 13 percent since the April 20 spill, shaving off $20 billion in market value. And images of blackened water flowing toward Louisiana have soiled the reputation of the company that previously relabeled itself "beyond petroleum," analysts said. The disaster already appears poised to pass the scope of the 1989 Exxon Valdez disaster in Prince William Sound, Alaska. There were no employee fatalities involved in the Exxon Valdez incident, while 11 people died in the Deepwater Horizon incident. Those deaths follow 15 fatalities in an explosion at BP's Texas City Refinery in 2005. Analysts who put the cost of the Deepwater Horizon spill at anywhere from $2 billion to $8 billion also cautioned that the numbers could change quickly. BP earned $17 billion in net income last year and is projected to earn $23 billion in 2010, according to Raymond James. BP has said that it is spending $6 million to $7 million per day to shut off the flow and limit damage. It has offered repeated assurances that it takes responsibility for the spill. The company set up the toll-free phone number 1-800-440-0858 to take damage claims. President Obama also has said that BP will pay for the costs. That is expected to include reimbursing federal and local governments for work they put into stopping the spill. The company is continuing several approaches to stop the leak, including chemical sprays, covering the leak with a type of dome and drilling another well to relieve the pressure. But drilling that second well will take at least 90 days. If the leak continues to discharge 5,000 barrels of oil a day, within about 50 days it will eclipse Exxon Valdez in terms of oil spilled. In the Exxon case, 250,000 barrels (or 10.8 million gallons) of oil spilled. That is what led many analysts to use the Exxon Valdez as the barometer for what BP is likely to pay. Exxon paid more than $3.8 billion in cleanup and damage costs, plus about $500 million in punitive damages. Because the Gulf of Mexico is far more open than the area where the Exxon Valdez disgorged oil, it is easier to get crews and equipment in to try and stop the spill and erect booms to protect the shore, Molchanov said. BP faces a different environment than did Exxon, however. The aftermath of the Exxon Valdez case shifted the legal landscape around oil spills. In the Valdez case, the law that applied said that only those who had been physically touched by the oil could collect damages, said Dave Oesting, lead counsel for plaintiffs in that case and an attorney at Davis Wright Tremaine in Anchorage. Congress in 1990 passed the Oil Pollution Act, which lifted that restriction. Now those who believe they have related economic damages can file claims. That could mean a wide range of businesses and people will seek compensation in the Deepwater Horizon spill, attorneys said. Already 26 lawsuits have been filed, the Associated Press reported. Louisiana fishermen and shrimpers are seeking (pdf) millions of dollars in damages for the ongoing oil spill, which they say could destroy their livelihoods. One lawsuit names two commercial shrimpers as the plaintiffs, and another comes from the captain of a charter boat that fishes near rigs off the Gulf Coast. The shrimpers case, which seeks class-action status, also lists 10 other groups of lawyers representing plaintiffs, including New York-based environmental advocate Robert F. Kennedy Jr. That firm had already received calls from other businesses that foresee financial harm, including hotels and scuba diving businesses, commercial fisheries and municipalities, said Kevin Madonna, a partner at the firm Kennedy & Madonna LLP. The Oil Pollution Act has not been applied in a spill of this scope and remains untested in some areas, Madonna said, adding that this case "is going to be the mother of all tests." In addition to cleanup costs, payments that BP will have to make likely will include damage to natural resources, including animals that are killed because of the oil, and damage to property and property values on the beaches where oil hits, attorneys and analysts said. There is the potential for even more widespread economic damage if the oil spill disrupts traffic on the Mississippi River for an extended period, Lipnow said. Agricultural goods from the Midwest are exported out of the Port of New Orleans, he said. The Exxon Valdez case took 21 years to resolve and ended up at the U.S. Supreme Court. Cases connected to BP could move faster because of the Oil Pollution Act, which clarifies an oil company's liability, Oesting said. Punitive damages cannot be collected if a suit is filed under that act, attorneys said. But suits seeking punitive damages could be filed outside that act, Madonna said. BP and other oil companies will likely need to re-examine their technology and make sure they have proper precautions to prevent future incidents, Lipow said. The political environment also is likely to shift. Already, President Obama has tabled for a month his plan to expand offshore drilling. That could have an impact on BP and other oil companies, Gheit said. Others said they expected BP and other oil companies would move forward without any significant longer-term problems.

- BP launched a live webcam of the riser flow. The webcam can be viewed at www.bp.com. BP has been providing a live feed to government entities over the last two weeks – including the US Department of the Interior, US Coast Guard, Minerals Management Service (MMS) through the Unified Area Command center in Louisiana – as well as to BP and industry scientists and engineers involved in the effort to stop the spill. BP continues its work to collect oil by the riser insertion tube tool (RITT) containment system. Once on the drillship Discoverer Enterprise, the oil is then being stored and gas is being flared. The RITT remains a new technology and both its continued operation and its effectiveness in capturing the oil and gas remain uncertain. BP has, and will continue, to support the government’s work to determine the rate of flow from the well. Since the Deepwater Horizon accident, the flow rate estimate has been established by the Unified Command. Throughout the process, BP has made it a priority to quickly and consistently provide the National Oceanic and Atmospheric Administration (NOAA) and the Coast Guard with requested information for the joint command structure to make as accurate an assessment as possible of the rate of flow. The rate of flow from the riser is determined in a number of ways and by a number of variables. For instance, while the original riser was 19.5 inches in diameter prior to the Deepwater Horizon accident, damage sustained during the accident distorted the diameter at the end of the pipe by about 30 per cent. In addition, a drill pipe currently trapped inside the riser has reduced the flow area by an additional 10 per cent. Thus, some third party estimates of flow, which assume a 19.5 inch diameter, are inaccurate. As well, there is natural gas in the riser. Data on the hydrocarbons recovered to date suggests that the proportion of gas in the plume exiting the riser is, on average, approximately 50 percent. To provide further specificity on the flow rate, the US government has created a Flow Rate Technical Team (FRTT) to develop a more precise estimate. The FRTT includes the US Coast Guard, NOAA, MMS, Department of Energy (DOE) and the US Geological Survey. The FRTT is mandated to produce a report by close of business on Saturday, May 22. To support this, BP is in the process of providing FRTT with all requested information, including diagrams and schematics showing release points, amounts of oil and gas currently being collected on the Discoverer Enterprise, and subsea video of the oil release point.

- BP announced a commitment of up to $500 million to an open research program studying the impact of the Deepwater Horizon incident, and its associated response, on the marine and shoreline environment of the Gulf of Mexico.

- BP provided an update on developments in the response to the MC252 oil well incident in the Gulf of Mexico. Subsea efforts continue to focus on progressing options to stop the flow of oil from the well through interventions via the MC252 blow out preventer (BOP) and to collect the flow of oil from the leak points. These efforts are being carried out in conjunction with industry experts and governmental authorities. Plans have been developed for a series of interventions via the BOP; it is currently anticipated these may be carried out over a period of about a week, commencing in the next few days. These interventions have not been carried out at these depths and conditions before and the success of individual options cannot be assured. The first planned intervention is the so-called “top kill” operation where heavy drilling fluids would be injected into the well to stem the flow of oil and gas and, ultimately, kill the well. Most of the equipment is on site and preparations for this operation continue, with a view to deployment within a few days. If necessary, equipment is also in place to combine this operation with the injection under pressure of bridging material to seal off upward flow through the BOP. Sophisticated diagnostic work using remotely-operated vehicles (ROVs) will precede the ‘top kill’ to allow the procedure to be planned in detail. The knowledge from this diagnostic work will be instrumental in determining whether to proceed with this option. Being progressed in parallel with plans for the top kill is development of a lower marine riser package (or LMRP) cap containment option. This would first involve removing the damaged riser from the top of the BOP, leaving a cleanly-cut pipe at the top of the BOP’s LMRP. The LMRP cap, an engineered containment device with a sealing grommet, would be connected to a riser from the Discoverer Enterprise drillship and then placed over the LMRP with the intention of capturing most of the oil and gas flowing from the well and transporting it to the drillship on the surface. The LMRP cap is already on site and it is anticipated that this option will be available for deployment by the end of May. Additional options also continue to be progressed, including the option of lowering a second blow-out preventer, or a valve, on top of the MC 252 BOP.

- BP confirmed that following detailed discussion with the National Incident Commander, Admiral Thad Allen, it will continue to provide live video feeds from the seabed throughout the planned ‘top kill’ procedure – the attempt to stop the flow from the damaged MC252 well by pumping heavy drilling fluids into it. Preparations for this procedure are continuing with the expectation that it could be activated on the morning of Wednesday May 26, 2010. Throughout the extended top kill procedure – which may take up to two days to complete - very significant changes in the appearance of the flows at the seabed may be expected. These will not provide a reliable indicator of the overall progress, or success or failure, of the top kill operation as a whole. BP will report on the progress of the operation as appropriate and on its outcome when complete.

- BP started the "top kill" operations to stop the flow of oil from the MC252 well in the Gulf of Mexico. The procedure is intended to stem the flow of oil and gas and ultimately kill the well by injecting heavy drilling fluids through the blow out preventer on the seabed, down into the well. Pumping started at 19.00 (UK) and 13.00 (CDT) and continues.

- Subsea efforts continue to focus on progressing steps to stop the flow of oil from the well through interventions via the failed Deepwater Horizon blow out preventer (BOP), and to collect the flow of oil from the leak points. These efforts are being carried out in conjunction with industry experts and governmental authorities. Operations on the top kill procedure continue. Heavy drilling fluids were pumped under pressure into the BOP starting May 26 at 1300CDT, and top kill operations continue through 2400CDT on May 27. It is estimated that the full top kill procedure could extend for another 24 to 48 hours. If the well were successfully 'killed', it is expected that cementing operations would then follow. The top kill procedure has never before been attempted at these depths and its ultimate success is uncertain. In parallel with the ongoing top kill operation, preparations have been made for the possible deployment of the lower marine riser package (LMRP) cap containment system. Deployment would first involve removing the damaged riser from the top of the failed BOP to leave a cleanly-cut pipe at the top of the BOP's LMRP. The cap, a containment device with a sealing grommet, will be connected to a riser from the Discoverer Enterprise drillship, 5,000 feet above on the surface, and placed over the LMRP with the intention of capturing most of the oil and gas flowing from the well. The LMRP cap is already deployed alongside the BOP in readiness for potential deployment. If it is decided to deploy this option, this would be expected to take some three to four days. In addition to these steps, planning is being advanced for deploying, if necessary, a second BOP on top of the original failed BOP. Drilling of two relief wells began on May 2 and May 16. It is estimated that each of these wells will take three months to complete from the commencement of drilling. Work continues to collect and disperse oil that has reached the surface of the sea, to protect the shoreline of the Gulf of Mexico, and to collect and clean up any oil that has reached shore. Almost 1,300 vessels are now involved in the response effort, including skimmers, tugs, barges and recovery vessels. Operations to skim oil from the surface of the water have now recovered, in total, some 274,000 barrels (11.5 million gallons) of oily liquid. The total length of containment boom deployed as part of efforts to prevent oil reaching the coast is now almost 1.9 million feet, and an additional 1.25 million feet of sorbent boom has also been deployed. So far 26,000 claims have been filed and 11,650 payments have already been made. BP has received over 96,000 calls into its help lines to date. The cost of the response to date amounts to about $930 million, including the cost of the spill response, containment, relief well drilling, grants to the Gulf states, claims paid and federal costs. It is too early to quantify other potential costs and liabilities associated with the incident.

- BP announced that, after extensive consultation with National Incident Commander Admiral Thad Allen and other members of the Federal government, it plans to further enhance the lower marine riser package (“LMRP”) containment system currently scheduled to be deployed this week with further measures that are expected to keep additional oil out of the Gulf of Mexico. The additional steps announced today will follow placement of the LMRP containment cap, which is expected this week. Preparations for these additional planned enhancements are already underway. The first planned addition is intended to use the hoses and manifold that were deployed for the ‘top kill’ operation to take oil and gas from the failed Deepwater Horizon blow-out preventer (BOP) through a separate riser to an intervention vessel on the surface, in addition to the LMRP cap system. This system, which currently is expected to be available for deployment in mid-June, is intended to increase the overall efficiency of the containment operation by possibly increasing the amount of oil and gas flow that can be captured from the well. It is anticipated that the next planned operation will provide a more permanent system by directing oil and gas to a new free-standing riser ending approximately 300 feet below sea level. A flexible hose then will be attached to a containment vessel. This long-term option is designed to permit the system to more effectively disconnect and reconnect the riser to provide the greatest flexibility for operations during a hurricane. Implementation of this enhancement is expected in late June or early July.

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- BP is announcing grants to each of the states of Florida, Alabama, Mississippi and Louisiana to help their Governors promote tourism around the shores of the Gulf of Mexico over the coming months. This is part of our ongoing commitment to help mitigate the economic impact of the oil spill. BP is providing $25 million to Florida and $15 million each to Alabama, Mississippi and Louisiana.

- BP reiterated its pledge to be open and transparent in its response to the oil spill in the Gulf of Mexico. BP confirmed its continuing commitment to co-operate with the Department of Homeland Security (DHS) and the Environmental Protection Agency (EPA) in facilitating access by the US Government and the public to sampling/monitoring data on the Deepwater Horizon spill response. The commitment was made in a letter sent to Janet Napolitano, Secretary of Homeland Security and Lisa Jackson, administrator of the EPA.

- BP announced the availability of four informational Web sites designed to offer state-specific oil spill information to residents of communities affected by the Deepwater Horizon oil spill. BP is committed to engaging in close communication with residents, businesses and elected officials of the affected states. Residents are encouraged to visit these sites frequently and sign up for the mailing list to receive the most current information about the spill response. The four sites can be found at: Alabama: www.alabamagulfresponse.com; Florida: www.floridagulfresponse.com; Louisiana: www.louisianagulfresponse.com; Mississippi: www.mississippigulfresponse.com . These websites are dedicated to providing information about activities and events most important to residents of each state. Residents can sign up to receive email updates, follow an RSS feed, a Twitter feed or a Facebook page with this information.

- BP announced that its internal investigation team began sharing initial perspectives of its review of the causes of the tragic Deepwater Horizon fire and oil spill. The investigation is a fact-finding effort that has not reached final conclusions, but has identified various issues for further inquiry. BP has shared these early perspectives with the Department of the Interior and will do so with all official regulatory inquiries into the accident as requested. This is an internal investigation. There is extensive further work to do - including further interviews, and in addition full forensic examinations of the Blow Out Preventer (BOP), the wellhead, and the rig itself - all of which are still currently on the sea bed. The internal investigation was launched on April 21, 2010 and is being conducted by BP's Head of Group Safety and Operations. He has an independent reporting line to the Group Chief Executive.

- BP announced that it will appoint an Independent Mediator to review and assist in the claims process for the spill associated with the exploratory well that was being drilled by the Transocean Deepwater Horizon in Mississippi Canyon, Block 252. BP has said consistently that it will pay legitimate claims for loss and damage caused by the spill. BP remains fully committed to responding to and paying claims promptly. To date, more than 26,000 claims already have been submitted, resulting in payments exceeding $36 million. BP has established the claims process in accordance with the requirements of the Oil Pollution Act ("OPA"), which allows claimants to make a claim against BP as a designated responsible party. If a claim is not resolved and paid within 90 days, claimants can submit a claim against the Oil Spill Liability Trust Fund, and ultimately bring suit. BP will work to pay all legitimate claims as quickly as possible. Appointing an Independent Mediator is a recognized practice to strengthen claims processes and resolve disputes. BP is working to appoint the best possible person to fill this important role. In those cases in which a claimant and BP cannot agree on resolution of a claim, the claimant can seek review from the Independent Mediator. The Independent Mediator then will make an advisory decision on the claim.

- According to a statement from BP’s press office in London:“Top kill” operations continued over the night and are ongoing. There are no significant events to report at this time. BP will provide updates on progress as appropriate.

- In another serious setback in the effort to stem the flow of oil gushing from a well a mile beneath the Gulf of Mexico, BP engineers said that the “top kill” technique had failed and, after consultation with government officials, they had decided to move on to another strategy. Doug Suttles, BP’s chief operating officer for exploration and production, said at a news conference that the engineers would try once again to solve the problem with a containment cap and that it could take four to seven days for the device to be in place. The abandonment of the top kill technique, the most ambitious effort yet to plug the well, was the latest in a series of failures. First, BP failed in efforts to repair a blowout preventer with submarine robots. Then its initial efforts to cap the well with a containment dome failed when it became clogged with a frothy mix of frigid water and gas. Efforts to use a hose to gather escaping oil have managed to catch only a fraction of the spill. BP has started work on two relief wells, but officials have said that they will not be completed until August — further contributing to what is already the worst oil spill in United States history. The latest failure will undoubtedly put more pressure — both politically and from the public — on the Obama administration to take some sort of action, perhaps taking control of the repair effort completely from BP. President Obama, who is spending the Memorial Day weekend in Chicago, issued a statement on the decision to abandon the top kill. “While we initially received optimistic reports about the procedure, it is now clear that it has not worked,” Mr. Obama said. He said that Rear Adm. Mary E. Landry of the Coast Guard had “directed BP to launch a new procedure whereby the riser pipe will be cut and a containment structure fitted over the leak.” “This approach is not without risk and has never been attempted before at this depth,” Mr. Obama said. “That is why it was not activated until other methods had been exhausted.” The president continued, “We will continue to pursue any and all responsible means of stopping this leak until the completion of the two relief wells currently being drilled.” For BP, the besieged British company, the failure could mean billions of dollars of additional liabilities, as the spill potentially worsens in the weeks and months ahead. A technician who has been working on the project to stem the oil leak said that neither the top kill nor the “junk shot” came close to succeeding because the pressure of oil and gas escaping from the well was simply too powerful to overcome. He added that engineers never had a complete enough understanding of the inner workings of drill pipe casing or blowout preventer mechanisms to make the efforts work. The spill began after the Deepwater Horizon drilling rig exploded on April 20, killing 11 people. Since then, it has dumped an estimated 18 million to 40 million gallons into the gulf. After the announcement, the disappointment was palpable along the Louisiana shoreline, where the oil has increasingly washed up in sticky, rusty globs. Michel Claudet, the president of Terrebonne Parish, 60 miles southwest of New Orleans, said that when he heard the news, he felt “sorrow, despair and like this ordeal will never finish. If you go around the parish, it is all our folks talk about.” Mr. Claudet said that he was trying to remain hopeful, but that it was increasingly difficult. “As every item fails,” he said, “I am less and less optimistic.” In New Orleans, Margaret Shockey, 67, a retired teacher, said, “One thing’s for sure, this is the last city that deserved this.”

- Several days before the explosion on the Deepwater Horizon oil rig, BP officials chose, partly for financial reasons, to use a type of casing for the well that the company knew was the riskier of two options, according to a BP document. The concern with the method BP chose, the document said, was that if the cement around the casing pipe did not seal properly, gases could leak all the way to the wellhead, where only a single seal would serve as a barrier. Using a different type of casing would have provided two barriers, according to the document, which was provided to The New York Times by a Congressional investigator. Workers from the rig and company officials have said that hours before the explosion, gases were leaking through the cement, which had been set in place by the oil services contractor, Halliburton. Investigators have said these leaks were the likely cause of the explosion. The approach taken by the company was described as the “best economic case” in the BP document. However, it also carried risks beyond the potential gas leaks, including the possibility that more work would be needed or that there would be delays, the document said. BP’s decision was “without a doubt a riskier way to go,” said Greg McCormack, director of the Petroleum Extension Service at the University of Texas at Austin. Several other engineers agreed with Mr. McCormack’s assessment of the BP document. Andrew Gowers, a spokesman for BP, said that there was no industry standard for the casing to be used in deepwater wells and that the approach by the Deepwater Horizon had not been unusual. “BP engineers evaluate various factors for each well to determine the most appropriate casing strategy,” he said. The role of financial and time pressures in the rig blast is one focus of a series of hearings by the Coast Guard and the Minerals Management Service that began in Kenner, just outside New Orleans. Douglas H. Brown, the chief mechanic for the Deepwater Horizon, testified that he witnessed a “skirmish” on the rig between a BP well site leader and crew members employed by Transocean, the rig’s owner, the morning of the blast. Mr. Brown said the disagreement followed BP’s decision to replace heavy drilling fluid with lighter saltwater before the well was sealed with a final cement plug. Mr. Gowers declined to answer questions about workers’ accusations or about whether cost may have factored into the company’s decision to use the casing system it chose for the Deepwater Horizon. BP executives will probably face tough questioning about cost-cutting measures when they testify before the House Committee on Natural Resources. As more details come to light about the events that led to the explosion, investigators are trying to determine which decisions and incidents — or combination of them — may have led to the accident, which killed 11 workers. For example, Representative Nick J. Rahall II, Democrat of West Virginia and the chairman of the committee, said BP executives would face questions about why they let workers from Schlumberger, a drilling-services contractor, leave the morning of the accident without conducting a special test on the quality of the cement work. Engineers have described these tests, called cement bond logs, as an important tool for ensuring cement integrity. The decision about the casings will also come up during the hearings. Professor McCormack said that while the type of casing that BP chose to use was more expensive in the short term, it was ultimately the more cost-effective and versatile alternative because it would have allowed the company to more easily drill deeper in the same hole if they decide to do so later. But, the BP records explain, the casing chosen by the company may also cause problems if drilling mud or cement is lost or pushed away from the well into porous rocks as it is pumped. Federal and company records indicate that that is just what happened, on more than one occasion. The rig lost all of its drilling mud in an incident in March, and in the days immediately before the explosion, records show. The well experienced several other instances of minor losses of drilling fluid and gas kicks, according to interviews with workers from the rig. The April 20 disagreement between the BP well site leader and Transocean officials is also a growing focus of the investigation. At a briefing in Washington, investigators laid out a chain of events, beginning with an operational error, that appear to have led to the accident. The findings are preliminary, and come from BP, which owns the lease on the well and has pointed fingers at other companies for the problems on the rig, including Transocean. The BP officials said that rig workers apparently had not pumped in enough water to fully replace the buffer liquid between the water and the mud, which stayed in the blowout preventer, the stack of safety valves at the wellhead. This thick liquid, which is about one-third solid material, may have clogged the pipe that was used for crucial “negative pressure” tests to determine whether the well was properly sealed. The result was a pressure reading of zero (because the pipe was plugged, not because there was no pressure in the well) and the workers apparently misinterpreted that result as indicating a successful test. Rig workers declared they were “satisfied” with the tests and started to replace drilling mud in the pipe to the seabed with water. About two hours later, the blowout and explosion occurred. Evidence began emerging that BP officials may have had an incentive to proceed quickly. A member of the federal panel investigating the cause of the blast said that before the explosion, the company had hoped to use the Deepwater Horizon to drill another well by early March, but was behind schedule. BP applied to use the Deepwater rig to drill in another oil field by March 8, said Jason Mathews, a petroleum engineer for the Minerals Management Service. Based on an estimate of $500,000 per day to drill on the site, the delay of 43 days had cost BP more than $21 million by the day of the explosion on April 20, Mr. Mathews estimated. A Transocean official — Adrian Rose, the company’s health, safety and environmental manager — confirmed that BP leased the rig for $533,000 per day. He could not confirm where the Deepwater Horizon was planning to go next, but he said it was going to undertake another drill, probably for BP.

June

• Upstream news:

- Preparations are ongoing for deployment of the lower marine riser package (LMRP) cap containment system. Remotely operated vehicles (ROVs) are engaged in preliminary operations, including preparing for operations to cut through and separate the damaged riser from the LMRP at the top of the Deepwater Horizon’s failed blow-out preventer (BOP). Deployment of the system will involve connecting the containment cap to a riser from the Discoverer Enterprise drillship and then placing it over the LMRP, with the intention of capturing most of the oil and gas flowing from the well and transporting it to the drillship on the surface. All of these operations, including the cutting of the riser, are complex, involve risks and uncertainties, and have to be carried out by ROVs at 5,000 feet under water. Systems such as the LMRP containment cap have never before been deployed at these depths and conditions, and their efficiency and ability to contain the oil and gas cannot be assured. It is currently anticipated that attachment of the LMRP cap will be attempted later this week; however, operational delays could impact anticipated timeframes. Preparations to use the Discoverer Enterprise to deploy the LMRP cap and the intended severing of the damaged riser mean that the riser insertion tube tool, previously deployed, will not be reinserted into the main leak at the end of the riser. Work on the first relief well, which started on May 2, continues and it has currently reached a depth of 12,090 feet. Work on the second relief well, which started on May 16, had reached a depth of 8,576 feet before drilling was temporarily suspended on May 26. Drilling operations on the second relief well resumed on May 30. Both wells are still estimated to take around three months to complete from commencement of drilling. Work continues to collect and disperse oil that has reached the surface of the sea, to protect the shoreline of the Gulf of Mexico, and to collect and clean up any oil that has reached shore. Over 1,600 vessels are now involved in the response effort, including skimmers, tugs, barges and recovery vessels. Operations to skim oil from the surface of the water have now recovered, in total, some 321,000 barrels (13.5 million gallons) of oily liquid. The total length of containment boom deployed as part of efforts to prevent oil reaching the coast is now over 1.9 million feet, and an additional 1.8 million feet of sorbent boom has also been deployed. So far approximately 30,000 claims have been submitted and more than 15,000 payments already have been made, totalling some $40 million. BP has received more than 110,000 calls into its help lines to date. The cost of the response to date amounts to about $990 million, including the cost of the spill response, containment, relief well drilling, grants to the Gulf states, claims paid and federal costs. It is too early to quantify other potential costs and liabilities associated with the incident.

- BP announced that oil and gas is being received onboard the Discoverer Enterprise following the successful placement of a containment cap on top of the Deepwater Horizon's failed blow-out preventer (BOP). This follows the cutting and removal of the riser pipe from the top of the BOP's lower marine riser package (LMRP). It is expected to take one or more days for flow rates of oil and gas to stabilize and it is not possible at this stage to estimate how much oil and gas will be captured by this containment system. All of these operations are complex, involve risks and uncertainties, and have to be carried out by remotely operated vehicles (ROVs) at 5,000 feet under water. Systems such as the LMRP containment cap never before have been deployed at these depths and conditions. The containment system's efficiency, continued operation, and ability to contain the oil and gas cannot be assured. Preparations continue for the planned enhancements to the containment system as announced on June 1. Work continues on the first relief well, which started on May 2, and the second relief well, which started on May 16. Both wells are still estimated to take around three months to complete from commencement of drilling.

- The lower marine riser package (LMRP) containment cap, installed on June 3, continues to collect oil and gas flowing from the well and transport them to the Discoverer Enterprise drillship on the surface. On June 5, a total of 10,500 barrels of oil was collected and 22 million standard cubic feet of natural gas was flared. From June 3 through June 5, the volume of oil collected was 16,600 barrels and 32.7 million standard cubic feet of natural gas was flared. Optimization continues and improvement in oil collection is expected over the next several days. It will be a few days before an assessment can be made as to the success of this containment effort. This is a complex operation, involving risks and uncertainties, being carried out 5,000 feet under water. The LMRP containment cap never before has been deployed at these depths and conditions, and its efficiency and ability to contain the oil and gas cannot be assured. The volume of oil captured and gas flared is being updated daily on BP’s website, www.bp.com Preparations for additional planned enhancements to the LMRP cap containment system continue to progress. The first planned addition will use the hoses and manifold that were deployed for the “top kill” operation to take oil and gas from the failed Deepwater Horizon blow-out preventer (BOP) through a separate riser to the Q4000 vessel on the surface, in addition to the LMRP cap system. This system is intended to increase the overall efficiency of the containment operation by possibly increasing the amount of oil and gas that can be captured from the well and is currently expected to be available for deployment in mid-June. The second planned addition is intended to provide a more permanent LMRP containment cap system by directing the oil and gas to a new free-floating riser ending approximately 300 feet below sea level. A flexible hose then will be attached to a containment vessel. This long-term containment option is designed to permit more effective disconnection and reconnection of the riser to provide the greatest flexibility for operations during a hurricane and is expected to be implemented in early July. In the meantime, work on the first relief well, which started May 2, continues and has currently reached a depth of 12,956 feet. The second relief well, which started May 16, is at 8,576 feet, and testing of the BOP is continuing. Both wells are still estimated to take approximately three months to complete from commencement of drilling. Work continues to collect and disperse oil that has reached the surface of the sea, to protect the shoreline of the Gulf of Mexico, and to collect and clean up any oil that has reached shore. More than 2,600 vessels are now involved in the response effort, including skimmers, tugs, barges and recovery vessels. Operations to skim oil from the surface of the water now have recovered, in total, approximately 368,000 barrels (15.5 million gallons) of oily liquid. The total length of containment boom deployed as part of efforts to prevent oil from reaching the coast is now over 2.2 million feet, and an additional 2.4 million feet of sorbent boom also has been deployed. To date, approximately 37,000 claims have been submitted and more than 18,000 payments already have been made, totalling approximately $48 million. BP has received more than 152,000 calls into its help lines.

- Three weeks before the Gulf of Mexico spill began on April 20, President Obama announced that his administration would open protected waters off the Atlantic seaboard and Alaska coast to oil exploration. A few days after the spill, Obama reversed course and issued a moratorium on offshore drilling. Leading up to the March 1989 Exxon Valdez oil spill in Alaska, the Bush administration similarly called for easing restrictions on drilling in environmentally protected areas, most notably in the Arctic National Wildlife Refuge. Following the oil spill then, The Times' editorial board questioned the wisdom of opening these areas to oil exploration.

- A massive oil spill blankets the sea, threatening birds, fish and the local economy. The company responsible assures the country that the impact is small, and a top executive promises financial compensation. But soon after, the business garners condemnation for its lackluster response. That was Exxon 21 years ago. Despite initially appearing to react differently, London petroleum giant BP PLC after its April 20 oil spill fell into many of the same public relations mistakes as Exxon did in 1989, according to corporate crisis experts. As a result, they said, BP likely faces a similar black eye, one that will last decades. The company already has taken a massive financial hit. BP's stock yesterday fell to a 14-year low and has lost $95 billion, or half its market value, since the Deepwater Horizon explosion. Until the BP spill, the Exxon Valdez accident ranked the largest U.S. oil spill. The Valdez oil tanker smashed into Alaska's Prince William Sound reef and disgorged nearly 11 million gallons of petroleum. BP's spill has already eclipsed that record, and no one knows just how bad this disaster will become. Since the April 20 explosion of the Deepwater Horizon rig that BP leased, the company has focused on stopping the spill and communicating its actions, said Andrew Gowers, BP's head of group media. There have been obstacles to both goals. Gowers declined to talk about Exxon or whether BP attempted to act differently from that company after its Valdez spill. Exxon has long been considered the archetype of how not to behave following a business crisis, several analysts said. Exxon, now Exxon Mobil Corp., declined to comment on how it approached the Valdez incident. BP's oil disaster is in many ways dramatically different from what Exxon encountered with Valdez. That spill happened in a remote area of Alaska, while the BP spill occurred in the Gulf of Mexico near the populated Louisiana coast. The spill part of Exxon's disaster ended quickly. BP's well, by comparison, has been gushing oil since the rig explosion in the Gulf of Mexico. Only in the past week has the company succeeded in capturing some leaking petroleum. The Valdez spill also transpired in a vastly different technological environment. The Internet was in its infancy. While daily newspapers, television and magazines carried news of the Exxon spill and its aftermath, there were no blogs and social media platforms containing constant updates and personal accounts and photographs. Cell phones were not widely available. BP's spill occurred in the world of 24/7 news, blogs, tweets, status updates and niche-media. After the Deepwater Horizon rig sunk, BP appeared eager to jump in front of the crisis. BP helped set up a Louisiana command center. CEO Tony Hayward claimed the company's responsibility and said it would pay all "legitimate" claims for damages. Although Exxon over the past 20 years fought how much it would pay in economic costs, that company also initially made statements about compensating those with damages. In 1989, Exxon executive Don Cornett, according to numerous media reports, vowed that the company would help those affected by the spill. There already are questions about how much BP will pay in damages. Despite Hayward's media statements about taking care of legitimate claims, Hayward privately rejected committing to paying all economic damage claims, Sen. Bill Nelson (D-Fla.) disclosed after the two met in April (E&E Daily, April 5). There currently is a $75 million cap for economic damages connected to an oil spill, but two Democratic senators are pushing legislation that would eliminate that limit (E&E Daily, June 9). BP also hit controversy as it offered to pay fishermen $5,000 while asking them to sign waivers agreeing not to sue BP. The company has since said that was a "misstep." Both Exxon and BP made a public relations error in emphasizing science over people, Sellnow said. After Exxon's spill, he said, the company blamed Alaska for not allowing the use of dispersants to stop the oil from spreading. Exxon said that was the reason the oil hit the shore, Sellnow said. Reporters largely ignored that scientific argument and instead targeted the stories of people, said Kathleen Fearn-Banks, communications professor at University of Washington and author of the book "Crisis Communication, A Casebook Approach," which examines the Exxon Valdez spill. BP also focused on science and engineering, Sellnow said, talking about how it planned to stop the oil spill. While that was understandably an emphasis, he said, it created a public relations problem. BP focused on "aggressively responding," Gowers said, adding that the "massive scale of the containment effort was the initial focus" but that the company did not lack concern for people hurt by the spill. BP has been quick to pay economic damage claims, he said, even to people who lacked appropriate documentation. To date, he said, BP has paid $53 million in claims and spent $1.25 billion on responding to the spill. Both BP and Exxon tried to shift blame, analysts said. Exxon after the Valdez spill blamed the tanker's captain, Joseph Hazelwood, Seeger said. Hazelwood was accused of being drunk at the time of the crash but was acquitted of that charge at trial. The crash, spill and cleanup morass was a "systemic failure," Seeger said. Exxon before the Valdez crash, he said, had waged a public relations campaign persuading the Prince William Sound community that it was safe to drill and export oil from the area. As a consequence, Seeger said, there was a failure to accept that disaster could happen and prepare for it. Equipment that would later be needed for cleanup had been taken out of the area, he said. Early on, BP's Hayward told CBS's "The Early Show" that "this is not our accident," because the rig was owned by Transocean Ltd. He did, however, say at the time that, "it's our responsibility." Hayward also told Forbes that "the real issue is the failure of the safety equipment," referring to the blowout preventer, which was not handled by BP. In the intervening weeks, Gowers said, BP has "filled in detail" and "presented a more complex and nuanced picture" of what occurred. Exxon and BP also underplayed the impact of the spills, Seeger said. Exxon's CEO at the time said that the environmental impact of the Valdez oil would be small. BP's Hayward after the spill told London's Guardian newspaper on May 14 that "the Gulf of Mexico is a very big ocean. The amount of volume of oil and dispersant we are putting into it is tiny in relation to the total water volume." He also told British TV station SkyNews on May 18 that the "the environmental impact of this disaster is likely to have been very, very modest." There have been accusations that BP underplayed the amount of oil that has been spilled, with initial estimates saying that 1,000 to 5,000 barrels a day were flowing out. There are now some estimates that it could be as high as 100,000 barrels per day. BP's Gowers said that the 1,000 and 5,000 barrel numbers "were not BP estimates" but rather came from the incident's Unified Command, which included BP but also the U.S. Coast Guard and government agencies. The current estimates are not BP numbers, he said. Journalists also have charged that BP blocked access to the site. Gowers said that is not accurate. BP yesterday sent a letter to Unified Command incident commanders clarifying that people are free to talk to reporters if they wish. The CEO of Exxon in 1989 and BP now became public relations liabilities, communications experts said. Exxon CEO Rawl in 1989 decided not to go to the Valdez spill site, which likely compounded the company's image problems, said Fearn-Banks. Hayward has made a number of gaffes, including the remark about the size of the Gulf and lamenting to the "Today" show on May 31 that, "there's no one who wants this over more than I do. I would like my life back." He later apologized for that comment. Hayward might not have too many positive options, Fearn-Banks said. BP has run ads in which Hayward apologizes for the spill and promises, "we will get it done. We will make this right." But even that falls flat, Seeger said. "It creates the impression that the company is disingenuous," Seeger said. "It creates the perception that the company is more concerned about its image than the cleanup." BP struggled as it was unable to stop the spill and days stretched into weeks and now nearly two months. Interior Secretary Ken Salazar and President Obama demanded answers, with Obama saying that he wanted to "know whose ass to kick" over the disaster. The drumbeat of failures as the company tried repeatedly to cap the spill drowned out its public relations message, he said. Meanwhile BP failed to answer obvious questions "in a compelling manner," Sellnow said, such as, "If you can't plug the hole, then really what are you going to do that I can have confidence in?" The inability to stop the leak for so long "has really conditioned the atmosphere in which this is unfolding," Gowers said. "It's just been a very unfortunate saga and frustrating for everyone involved, including us." While BP has struggled with stopping the leak, Exxon's initial woes came over cleanup. That petroleum company belonged to a consortium responsible for removing the oil. But Exxon and that consortium argued for days about how the petroleum would be removed. Meanwhile it spread, killing wildlife, Fearn-Banks said. BP was part of that consortium in 1989. In this spill, BP "whether intentionally or not, they over-reassured the public that they could plug the well," Sellnow said. "They failed to acknowledge the uncertainty of the situation." That created the question in people's minds, Sellnow said, of "'If you didn't have an adequate plan in place should there be a failure of the system, why were you drilling [so far down]?' In the court of public opinion they haven't answered that question adequately." Public relations experts say it appears both Exxon and BP failed to follow the first rule of crisis communications: having a plan in place to deal with a potential disaster. "BP never had a plan in place for the worst-case scenario or they would have put it in place," Fearn-Banks said. "I don't think it's a question of money. ... They absolutely don't know what to do at all." The company already had developed a reputation for taking inappropriate risks. A 2005 explosion at BP's Texas City Refinery killed 15 people. Between 2006 and 2008, three workers died at the Texas City refinery in three separate incidents. Preparing for this disaster was not possible, Gowers said. As Hayward has stated, Gowers said, the disaster was "a completely unanticipated event. It required multiple systems to fail to happen. "The industry has been drilling safely in deep waters for over 20 years and now is having to rethink everything," Gowers said. In the months after the spill, Exxon helped turn around its image when it "focused on the cleanup and stopped trying to minimize their failures or the severity of the spill," Sellnow said. Exxon involved the community in the cleanup, he said. It is not clear yet whether BP could do something similar he said, because of concerns about vapors. BP's current inability to dig itself out image-wise in some ways helps Exxon, a few analysts said. Seeger said that "it helps Exxon that it will no longer be at the top of the list," in terms of the country's worst environmental disaster. But at the same time, Exxon and oil companies are hurt by BP's spill and public relations stumbles. Disasters leading to death and environmental mayhem trigger shifts in the public policy agenda, Seeger said.

- Two decades after the Exxon Valdez oil spill, cleanup technology has progressed so little that the biggest advancement in the Gulf of Mexico disaster — at least in the public’s mind — is an oil-water separator based on a 17-year-old patent and promoted by the movie star Kevin Costner. Experts say there have been some improvements in skimmers and other existing technologies since the 1989 Exxon accident in Alaska. Dispersants to break up oil have been far more widely used in the Deepwater Horizon leak in the gulf than in any previous spill, and they have been used for the first time underwater. Controlled burns of oil — only tested in 1989 — have been conducted regularly in the gulf. But more significant advances have been hampered by a lack of money for research and laws and regulations that make it difficult to test new ideas and introduce improved equipment. In the gulf spill, the laying of boom and the skimming of oil remain a last, and not completely effective, line of defense for coastal areas. Skimming, for instance, cannot be done in rough seas and is often limited to daylight hours because of the difficulties in detecting oil at night. Even officials with BP, the company responsible for the gulf spill and cleanup, acknowledge that most of the equipment in use represents improvements in old technology, and cite the lack of major spills in the past two decades as one reason. BP said last week that it would buy 32 of Mr. Costner’s machines to help clean the oil spill. But the machines work much better on fresh oil than weathered oil, so it is unclear how much of a contribution they will make. Experts in cleanup technologies say that there are no magic-bullet approaches on the horizon and that in some ways, cleanup is limited by a basic fact of nature: oil and water do not mix. In testimony this month before Congress, Mr. Costner told of years of woe trying to market his separator, a centrifuge originally developed and patented in 1993 by the Idaho National Laboratory, for use in oil spills. One obstacle, he said, was that although his machines are effective, the water they discharge is still more contaminated than environmental regulations allow. He could not get spill-response companies interested in his machines, he said, without a federal stamp of approval. Beyond regulatory obstacles, a major reason for the dearth of new technologies has been a lack of money for research. Programs that were flush with cash in the 1990s after the Exxon Valdez spill and the subsequent creation of the Oil Pollution Act have had their appropriations dry up over the past decade. And research money from oil companies has declined in the same period. Kurt Hansen, project manager for spill research with the Coast Guard’s Research and Development Center in New London, Conn., said that in the 1990s, his group’s budget was $5 million to $6 million a year. Research is hampered in other ways. For example, there is only one place in the United States — a center in New Jersey operated by the Minerals Management Service — where cleanup technologies can be tested, at full scale, on spilled oil. Other countries, notably Norway and Canada, allow occasional testing involving intentional spills into the environment, although only after an exhaustive permitting process. In the United States, just obtaining oil for use in small-scale laboratory research can be extremely difficult, said Scott Pegau, research program director of the Oil Spill Recovery Institute, a research center established in Cordova, Alaska, after the Exxon Valdez spill. Mr. Pegau said it recently took him months to obtain less than a gallon of crude. Oil spill experts also say that much of the research that has been conducted may have, in retrospect, focused on the wrong target. For years scientists and environmentalists have been concerned about the possibility of a spill in Arctic and near-Arctic areas, with their fragile ecosystems and extreme drilling conditions. But with a runaway gusher 5,000 feet under the surface of the gulf, “now we know it’s quite extreme there,” Ms. Kinner said. Ken Lee, executive director of a Canadian government center for offshore gas and oil research, said scientists had made progress in developing better ways to cope with spills in cold environments. One approach, Mr. Lee said, is to introduce fine mineral particles that help the oil naturally disperse, after which it can be degraded by bacteria. But the research is not particularly useful for the current spill, he said, because the Gulf of Mexico is naturally full of fine mineral particles, so presumably much natural dispersion is happening anyway. For years after the Exxon Valdez disaster, scientists studied the possibility of improving bacterial degradation by adding different, perhaps even genetically engineered, bacteria to the water in the vicinity of a spill. A more voracious microbe, the thinking went, would eat more oil. Since no one bacterium degrades all the components of oil, he said, “there’s no net advantage in adding one bug.” And studies showed that natural bacteria often quickly beat out any new designer microbes added to the mix. Ms. Kinner and others said that with all the attention being paid to the gulf spill, the prospects for more research money had brightened considerably. This month, for instance, the Coast Guard issued a call for research proposals related to the gulf disaster, including ideas for “innovative applications not commonly used for oil response.”

- The lower marine riser package (LMRP) containment cap, installed on June 3, continues to collect oil and gas flowing from the MC252 well and transport them to the Discoverer Enterprise drillship on the surface. In the first 12 hours of June 9 (midnight to noon), approximately 7,920 barrels of oil were collected and 15.7 million cubic feet of natural gas were flared. On June 8, a total of approximately 15,000 barrels of oil were collected and 29.4 million cubic feet of natural gas were flared. Lightering - the transfer of crude oil from one vessel to another - from storage on the Discoverer Enterprise to the barge Massachussetts began on the morning of June 9 and continues. When the process is complete, the barge will transport the oil for discharge at an onshore terminal. The volume of oil captured and gas flared is being updated twice daily on BP’s website, www.bp.com. The LMRP containment cap never before has been deployed at these depths and conditions, and its efficiency and ability to contain the oil and gas cannot be assured. Preparations for additional planned enhancements to the LMRP containment system continue to progress. The first planned addition will use the hoses and manifold that were deployed for the “top kill” operation to take oil and gas from the failed Deepwater Horizon blow-out preventer (BOP) through a separate riser to the Q4000 vessel on the surface, in addition to the LMRP cap system. This system is intended to increase the overall efficiency of the containment operation by potentially increasing the amount of oil and gas that can be captured from the well and is currently expected to be available for operation in mid-June. The second planned addition is intended to provide a more permanent LMRP containment cap system by directing the oil and gas to a new free-floating riser ending approximately 300 feet below sea level. It is then proposed that a flexible hose be attached to a containment vessel. This long-term containment option is designed to permit more effective disconnection and reconnection of the riser to provide the greatest flexibility for operations during a hurricane. It is expected to be implemented in early July. In the meantime, work on the first relief well, which started May 2, continues and has currently reached a depth of 13,978 feet. The second relief well, which started May 16, is at 8,576 feet, and preparing to drill ahead. Both wells are still estimated to take approximately three months to complete from commencement of drilling. Work continues to collect and disperse oil that has reached the surface of the sea, to protect the shoreline of the Gulf of Mexico, and to collect and clean up any oil that has reached shore. Almost 3,600 vessels are now involved in the response effort, including skimmers, tugs, barges and recovery vessels. Operations to skim oil from the surface of the water now have recovered, in total, approximately 383,000 barrels (16.1 million gallons) of oily liquid. The total length of containment boom deployed as part of efforts to prevent oil from reaching the coast is now over 2.3 million feet, and almost 2.7 million feet of sorbent boom also has been deployed. To date, almost 42,000 claims have been submitted and more than 20,000 payments already have been made, totalling over $53 million. BP has received more than 173,000 calls into its help lines. The cost of the response to date is approximately $1.43 billion, including the cost of the spill response, containment, relief well drilling, grants to the Gulf states, claims paid, and federal costs. This also includes the first $60 million in funds for the Louisiana barrier islands construction project. It is too early to quantify other potential costs and liabilities associated with the incident.

- The future of BP’s offshore oil operations in the Gulf of Mexico has been thrown into doubt by the recent drilling disaster and court wrangling over a moratorium. But about three miles off the coast of Alaska, BP is moving ahead with a controversial and potentially record-setting project to drill two miles under the sea and then six to eight miles horizontally to reach what is believed to be a 100-million-barrel reservoir of oil under federal waters. All other new projects in the Arctic have been halted by the Obama administration’s moratorium on offshore drilling, including more traditional projects like Shell Oil’s plans to drill three wells in the Chukchi Sea and two in the Beaufort. But BP’s project, called Liberty, has been exempted as regulators have granted it status as an “onshore” project even though it is about three miles off the coast in the Beaufort Sea. The reason: it sits on an artificial island — a 31-acre pile of gravel in about 22 feet of water — built by BP. The project has already received its state and federal environmental permits, but BP has yet to file its final application to federal regulators to begin drilling, which it expects to start in the fall. Some scientists and environmentalists say that other factors have helped keep the project moving forward. Rather than conducting their own independent analysis, federal regulators, in a break from usual practice, allowed BP in 2007 to write its own environmental review for the project as well as its own consultation documents relating to the Endangered Species Act, according to two scientists from the Alaska office of the federal Mineral Management Service that oversees drilling. The environmental assessment was taken away from the agency’s unit that typically handles such reviews, and put in the hands of a different division that was more pro-drilling, said the scientists, who discussed the process because they remained opposed to how it was handled. The scientists and other critics say they are worried about a replay of the disaster in the Gulf of Mexico because the Liberty project involves a method of drilling called extended reach that experts say is more prone to the types of gas kicks that triggered the explosion on the Deepwater Horizon. BP has defended the project in its proposal, saying it is safe and environmentally friendly. It declined to respond to requests for further comment. Extended-reach drilling has advantages. Drilling at an angle might be less threatening to sensitive habitats. But engineers say that this type of drilling is riskier and more complicated than traditional drilling because it is relatively new and gas kicks are more frequent and tougher to detect. And because of the distance and angles involved, drilling requires far more powerful machinery, putting extra pressure on pipes and well casings. Several companies have built artificial islands to drill offshore in the Arctic and elsewhere, in part because surging ice floes can destroy conventional floating or metal-legged offshore drilling platforms. Critics say that such islands are so tiny that a large oil spill will quickly flow into the surrounding waters. BP officials say that by accessing the Liberty oil field from far away, the project reduces its environmental impact in the delicate North Shore area. The Liberty field lies about five miles from land under the shallow waters of the Beaufort Sea in an area populated during the winter by seals and polar bears and covered by thick floating ice. During the summer, bowhead whales migrate through the region. The project will also involve nearly 400 workers in a region where jobs are scarce, according to BP. But concerns exist about the project’s oversight and critics say the project offers another example of dangerous coziness between industry and regulators. For example, the federal scientists say that BP should never have been allowed to do environmental reviews that are the responsibility of the regulators. And yet, the language of the “environmental consequences” sections of the final 2007 federal assessment and BP’s own assessment submitted earlier the same year are virtually identical. No such overlap existed in the documents for other major projects approved by the same office around the same time, a review of the documents shows. Both assessments concluded that the effects from a large spill potentially could have a major impact on wildlife, but discounted the threat because they judged the likelihood of spill to be very remote. They also asserted that BP’s spill response plan would be able to handle a worst case — which BP estimated as a spill of 20,000 barrels per day. Officials from the minerals agency declined to answer questions about the handling of the BP’s environmental assessment, but they added, “In light of the BP oil spill in the gulf and new safety requirements, we will be reviewing the adequacy of the current version of the Liberty project’s spill plan.” In promotional materials, BP acknowledges that the Liberty project will push boundaries of drilling technology. To reduce weight on the rig, BP has developed a new steel alloy for the drill pipe. So much force is needed to power a drill over such long distances that BP had to invest more than $200 million to have a company build what it describes as the largest land rig in the world. The drill’s top drive is rated at 105,000 foot-pounds of torque, while North Slope rigs are typically rated at 40,000 foot-pounds. John Choe, an expert in extended-reach drilling and director of the department of energy resources at Seoul National University, said that it was less safe than conventional types of drilling because gas kicks that can turn into blowouts are tougher to detect as they climb more slowly toward the rig. A 2004 study commissioned by the Minerals Management Service came to a similar conclusion. BP discovered the Liberty oil field in 1997, began construction of a rig there in 2008, and was nearing final preparations this April when the Deepwater Horizon rig exploded in the Gulf of Mexico.

- Two weeks after the Obama administration declared a moratorium on offshore drilling on May 27, BP announced that the Liberty project would continue, with drilling scheduled to start in the fall, generating its first oil production by 2011. By 2013, BP estimates, Liberty will yield 40,000 barrels of oil per day. If approved, the Liberty will be the longest horizontal well of its kind in the world. BP’s production plan for the Liberty notes that drilling studies only support horizontal wells up to 8.33 miles. Any horizontal wells longer than that, the plan says, “have not been studied.” State regulators have faulted BP for not being prepared to handle a spill at a similar, though less ambitious project, known as the Northstar field. That project involves vertical drilling and sits on an artificial island six miles northwest of Prudhoe Bay in the Beaufort Sea. The Liberty project will tie into the Endicott pipeline when complete. On April 20, the federal Pipeline and Hazardous Materials Safety Administration warned BP that it was in “probable violation” of federal standards because of corrosion found on its Endicott oil pipeline and a lack of records indicating corrosion protection and monitoring efforts. BP has faced a number of challenges at its Alaska facilities. The company sustained two corrosion-caused leaks in its rigs in Prudhoe Bay in 2006, including a leak of over 200,000 gallons that cost the company around $20 million in fines and restitution. This was the largest spill to have occurred on Alaska’s North Slope.

- The lower marine riser package (LMRP) containment cap, installed on June 3, continues to collect oil and gas flowing from the MC252 well and transport them to the Discoverer Enterprise drillship on the surface. In the first 12 hours of June 13 (midnight to noon), approximately 7,720 barrels of oil were collected and 16.9 million cubic feet of natural gas were flared. On June 12, a total of approximately 15,000 barrels of oil were collected and 32.9 million cubic feet of natural gas were flared. The total volume of oil collected by the LMRP cap system since it began operation is approximately 127,000 barrels. A further approximately 22,000 barrels of oil previously had been collected through use of the Riser Insertion Tube Tool and stored in the Discoverer Enterprise. Between June 9 and 11 approximately 115,000 barrels of collected oil were transferred from storage on the Discoverer Enterprise to the barge Massachusetts between June 9 and 11. The Massachusetts left the MC252 site on June 11 to discharge the oil at a terminal in Mobile, Alabama. Once discharge is complete, the barge will return to the MC252 site. The volume of oil captured and gas flared is being updated twice daily on BP’s website, www.bp.com. The LMRP containment cap has never before been deployed at these depths and conditions, and its efficiency and ability to contain the oil and gas cannot be assured. Preparations for additional planned enhancements to the LMRP cap containment system continue to progress. The first planned addition, to operate in addition to the LMRP cap system, will take oil and gas from the choke line of the failed Deepwater Horizon blow-out preventer (BOP) through a separate riser to the Q4000 vessel on the surface. Both the oil and gas captured by this additional system are expected to be flared through a specialised clean-burning system. This system is intended to increase the amount of oil and gas that can be captured from the well and is currently anticipated to begin operations in the next few days. Preparations are also underway for more permanent and flexible containment system employing floating risers. A manifold has been deployed on the seabed and a suction pile to anchor a riser has been installed. It is currently anticipated that this system will be available to begin first operations around the end of June/early July. Plans are being developed to further develop these systems and also for further options to provide additional containment capacity and flexibility, in line with requests made by the US Coast Guard. Work on the first relief well, which started May 2, continues and has currently reached a depth of 13,978 feet. The second relief well, which started May 16, is at 9,022 feet. Both wells are still estimated to take approximately three months to complete from commencement of drilling. Work continues to collect and disperse oil that has reached the surface of the sea, to protect the shoreline of the Gulf of Mexico, and to collect and clean up any oil that has reached shore. Operations to skim oil from the surface of the water now have recovered, in total, almost 475,000 barrels (19.9 million gallons) of oily liquid. The total length of containment boom deployed as part of efforts to prevent oil from reaching the coast is now around 2.5 million feet (over 470 miles), and almost 3.2 million feet (almost 600 miles) of sorbent boom also has been deployed. To date, over 51,000 claims have been submitted and more than 26,500 payments have been made, totalling over $62 million. The cost of the response to date amounts to approximately $1.6 billion, including the cost of the spill response, containment, relief well drilling, grants to the Gulf states, claims paid, and federal costs. This includes new grants of $25 million each to the states of Florida, Alabama and Mississippi and the first $60 million in funds for the Louisiana barrier islands construction project. It is too early to quantify other potential costs and liabilities associated with the incident.

- The Discoverer Enterprise resumed containment operations following a short outage caused by a lightning strike. The U.S. Coast Guard gave authorization for the operation to resume after the ship’s crew completed safety and operational assurance inspections. The shut-down of the containment system was a precautionary move designed to protect the health and safety of the crew during the incident. There were no injuries and all safety systems operated as designed.

- BP announced that oil and gas is flowing through a second containment system attached to the Deepwater Horizon rig’s failed blow out preventer (BOP). This second system supplements the lower marine riser package (LMRP) cap containment system, which remains in operation. The new system is connected directly to the BOP and carries oil and gas through a manifold and hoses to the Q4000 vessel on the surface. The Q4000 uses a specialised clean-burning system to flare oil and gas captured by this second system.

- Two systems continue to collect oil and gas flowing from the MC252 well and transport them to vessels on the surface. The first is the lower marine riser package (LMRP) containment cap located on top of the Deepwater Horizon’s failed blow-out preventer (BOP). This system, which was installed on June 3, takes oil and gas to the Discoverer Enterprise. A second system, which started on June 16, is connected directly to the BOP and carries oil and gas through a manifold and hoses to the Q4000 vessel on the surface. The Q4000 uses a specialised clean-burning system to flare both oil and gas captured by this second system. On June 19, a total of approximately 11,050 barrels of oil was collected and 25.6 million cubic feet of natural gas was flared on the Discoverer Enterprise. This is less than recent averages because process facilities were shutdown for part of the day. In the same 24-hour period, 9,990 barrels of oil and 17.8 million cubic feet of natural gas were flared on the Q4000. The total volume of oil recovered from both the LMRP containment cap system and the Q4000 since they became operational is approximately 249,500 barrels. Approximately 103,000 barrels of collected oil were transferred from storage on the Discoverer Enterprise to the Overseas Cascade tanker on June 17 and June 18. The Overseas Cascade left the MC252 site on June 18. The volumes of oil and gas that are captured or flared is being updated twice daily on BP’s website, www.bp.com. The LMRP containment cap and Q4000 systems never before have been deployed at these depths and conditions, and their efficiency and ability to contain or flare the oil and gas cannot be assured. Preparations continue for the next step in containment operations. Construction of the first floating riser remains on schedule for the end of June. The Helix Producer vessel then will be connected to this riser and it is currently anticipated that this system will be available to begin first operations around the end of June or early July. Plans also are being developed for further options to provide additional containment capacity and flexibility. These projects are currently anticipated to begin operations around mid-July. Work on the first relief well, which started May 2, continues and has currently reached a measured depth of 15,936 feet. The second relief well, which started May 16, is at a measured depth of 10,000 feet. Both wells are still estimated to take approximately three months to complete from commencement of drilling. Work continues to collect and disperse oil that has reached the surface of the sea, to protect the shoreline of the Gulf of Mexico, and to collect and clean up any oil that has reached shore. Operations to skim oil from the surface of the water now have recovered, in total, approximately 558,000 barrels (23.4 million gallons) of oily liquid. The total length of containment boom deployed as part of efforts to prevent oil from reaching the coast is now about 2.7 million feet (500 miles), and about 3.9 million feet (740 miles) of sorbent boom also has been deployed. To date, over 65,000 claims have been submitted and more than 32,000 payments have been made, totalling over $105 million. The cost of the response to date amounts to approximately $2.0 billion, including the cost of the spill response, containment, relief well drilling, grants to the Gulf states, claims paid, and federal costs. On June 16, BP announced an agreed package of measures, including the creation of a $20 billion fund to satisfy certain obligations arising from the oil and gas spill. It is too early to quantify other potential costs and liabilities associated with the incident.

- This morning at approximately 0845 CDT a discharge of liquids was observed from a diverter valve on the drillship Discoverer Enterprise, which is on station at the MC252 wellsite. As a precautionary measure, the lower marine riser package (LMRP) containment cap system, attached to the Discoverer Enterprise, has been moved off the Deepwater Horizon’s failed blow-out preventer (BOP) to ensure the safety of operations and allow the unexpected release of liquids to be analysed. Capture of oil and gas through the LMRP cap is therefore temporarily suspended until such time that the cap can be re-installed. Capture of oil and gas through the BOP’s choke line via a manifold to the Q4000 vessel on the surface continues.

- Two systems continue to collect oil and gas flowing from the Deepwater Horizon’s failed blow-out preventer (BOP) and transport them to vessels on the surface. The lower marine riser package (LMRP) containment cap, installed on June 3, takes oil and gas to the Discoverer Enterprise where oil is collected and gas is flared. The second system, which began operations on June 16, takes oil and gas to the Q4000 vessel on the surface where both oil and gas are flared. On June 26, a total of approximately 22,750 barrels of oil were collected or flared by the two systems and 52.9 million cubic feet of gas were flared. Specifically, the LMRP containment system connected to the Discoverer Enterprise collected 14,730 barrels of oil, and the Q4000 flared an additional 8,020 barrels of oil. To date, the total volume of oil recovered or flared by containment systems is approximately 435,600 barrels. Information on the volumes of oil and gas that are collected or flared is updated twice daily on BP’s website, www.bp.com. Preparations continue for the next step in containment operations. Work on the first floating riser containment system, which will be connected to the Helix Producer vessel, remains on schedule. It is currently anticipated that this system will be available to begin first operations at the end of June or in early July. The system is intended to provide additional oil containment capacity of approximately 20,000-25,000 barrels a day. Together with the LMRP cap and Q4000 systems, the addition of this new system should increase total oil containment capacity to 40,000-50,000 barrels a day. The floating riser system is designed to allow more rapid disconnection and reconnection of the system, reducing the time that collection may be impacted in the case of, for example, inclement weather. Plans also are being developed for potential additional containment capacity and flexibility, including a second floating riser system and additional capacity through a new cap on the BOP. These projects are currently anticipated to be available to begin operations around mid-July. The LMRP containment cap system, the Q4000 system, and the planned additional containment systems never before have been deployed at these depths or under these conditions, and their efficiency and ability to contain or flare the oil and gas cannot be assured. The first relief well, which started drilling May 2, has reached a measured depth of 16,546 feet and has successfully completed a second ”ranging” run using specialist equipment inserted into the well to help more precisely locate the MC252 well. Drilling and ranging operations will continue over the next few weeks as the well progresses towards the target intercept depth of approximately 18,000 feet. Once intercept has occurred, operations are expected to begin to kill the flow of oil and gas from the reservoir by pumping specialised heavy fluids down the relief well.The second relief well, which started May 16, is at a measured depth of 12,038 feet. Both wells are still estimated to take approximately three months to complete from commencement of drilling. Work continues to collect and disperse oil that has reached the surface of the sea, to protect the shoreline of the Gulf of Mexico, and to collect and clean up any oil that has reached shore. Over 39,000 personnel, almost 5,000 vessels and some 110 aircraft are now engaged in the response effort. Operations to skim oil from the surface of the water now have recovered, in total, approximately 652,000 barrels (27 million gallons) of oily liquid. In addition, a total of 275 controlled burns have been carried out to date, removing an estimated 238,000 barrels of oil from the sea’s surface. The total length of containment boom deployed as part of efforts to prevent oil from reaching the coast is now over 2.9 million feet (over 550 miles), and over 4.7 million feet (almost 900 miles) of sorbent boom also has been deployed. To date, more than 80,000 claims have been submitted and almost 41,000 payments have been made, totalling more than $128 million. The cost of the response to date amounts to approximately $2.65 billion, including the cost of the spill response, containment, relief well drilling, grants to the Gulf states, claims paid, and federal costs. On June 16, BP announced an agreed package of measures, including the creation of a $20 billion fund to satisfy certain obligations arising from the oil and gas spill. It is too early to quantify other potential costs and liabilities associated with the incident.

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- Officials in the Obama administration began for the first time to publicly chastise BP America for its handling of the spreading oil gusher in the Gulf of Mexico, calling the oil company’s current resources inadequate to stop what is unfolding into an environmental catastrophe. As oil edged toward the Louisiana coast, fears continued to grow that the leak from the seabed oil well could spiral out of control. One official at the National Oceanic and Atmospheric Administration, in a widely distributed warning, said the oil flow could grow from the current estimate of 5,000 barrels a day to “an order of magnitude higher than that.” The increased level of concern was reflected in the sharp new criticism by federal officials of BP for not stopping the leak and cleaning up the spill before it reached land, something the company’s officials had said was possible earlier in the week. “It is clear that after several unsuccessful attempts to secure the source of the leak, it is time for BP to supplement their current mobilization as the slick of oil moves toward shore,” Homeland Security Secretary Janet Napolitano said pointedly, as the government announced steps to supplement its response with people and equipment from the Defense Department. Geoffrey S. Morrell, deputy assistant secretary of defense, said in a statement that the government would hold BP accountable for the cost of the department’s deployment, which included the Louisiana National Guard to help clean up coastal areas once the oil comes ashore. BP officials said they did everything possible, and a review of the response suggests it may be too simplistic to place all the blame on the oil company. The federal government also had opportunities to move more quickly, but did not do so while it waited for a resolution to the spreading spill from BP, which was leasing the drilling rig that exploded in flames on April 20 and sank two days later. Eleven workers are missing and presumed dead. The Department of Homeland Security waited to declare that the incident was “a spill of national significance,” and then set up a second command center in Mobile. The actions came only after the estimate of the size of the spill was increased fivefold to 5,000 barrels a day. The delay meant that the Homeland Security Department waited until late this week to formally request a more robust response from the Department of Defense, with Ms. Napolitano acknowledging even as late as Thursday afternoon that she did not know if the Defense Department even had equipment that might be helpful. By Friday afternoon, she said, the Defense Department had agreed to send two large military transport planes to spray chemicals that can disperse the oil while it is still in the Gulf. Officials initially seemed to underestimate the threat of a leak, just as BP did last year when it told the government such an event was highly unlikely. Rear Adm. Mary E. Landry, the chief Coast Guard official in charge of the response, said on April 22, after the rig sank, that the oil that was on the surface appeared to be merely residual oil from the fire, though she said it was unclear what was going on underwater. The day after, officials said that it appeared the well’s blowout preventer had kicked in and that there did not seem to be any oil leaking from the well, though they cautioned it was not a guarantee. BP officials, even after the oil leak was confirmed by using remote-controlled robots, expressed confidence that the leak was slow enough, and steps taken out in the Gulf of Mexico aggressive enough, that the oil would never reach the coast. (The NOAA document on a potentially far larger leak, first obtained by The Press-Register in Mobile, Ala., was described by an agency spokesman as simply a possibility raised by a staff member, not an official prediction.) Some oil industry critics questioned whether the federal government is too reliant on oil companies to manage the response to major spills, leaving the government unable to evaluate if the response is robust enough. But it is still the government, in this case the Coast Guard, that has the final say. A law passed a year after the 1989 Exxon Valdez disaster makes "each responsible party for a vessel or a facility from which oil is discharged" liable for cleaning up a spill. But oversight of the cleanup is designated to the Coast Guard, with advice from other federal agencies. Rear Adm. Robert C. North, retired, who was commander of the Coast Guard’s Eighth District from 1994 to 1996, said that decisions in these situations are made collectively, but that the buck essentially stops with the federal coordinator — in this case, Admiral Landry. If the government determines that the responsible party is not up to the job, it can federalize the spill, running the cleanup operations without the private company but billing it for the cost. This is a last resort, however. In this case, Admiral North said, the oil companies have more technology and expertise than the government. “It doesn’t appear that federalizing it would bring in any more resources,” he said. Officials from BP and the federal government have repeatedly said they had prepared for the worst, even though a plan filed last year with the government said it was highly unlikely that a spill or leak would ever result from the Deep Horizon rig. “There are not much additional available resources in the world to fight this thing offshore,” said Doug Suttles, BP’s chief operating officer for exploration and production, in an interview. “We’ve basically thrown everything we have at it.” Mr. Suttles said BP’s efforts did not change after it was disclosed that the leak was estimated at 5,000 barrels a day, five times larger than initial estimates had suggested. He said BP, which is spending roughly $6 million a day and will likely spend far more when oil reaches land, had already been mobilizing for a far larger spill. However, he did not deny that BP initially thought the slick could be stopped before it reached the coastline. But even after the weather cleared — and just a few days before officials began acknowledging the likelihood of landfall — Tony Hayward, BP’s chief executive, expressed confidence the spill could be contained. Adm. Thad W. Allen, the commandant of the Coast Guard, said Friday that he agreed the situation was catastrophic and could continue to unfold for up to three months, but he said he remained satisfied with his team’s response, saying that even if it had initially known that the leak was 5,000 barrels a day, the response would have been the same. “While it may not have been visible to the public, from the very start, we have been working this very hard,” he said. Within a matter of hours of the report of the explosion, the Coast Guard had dispatched three cutters, four helicopters and a plane to the scene, helping to save 90 workers, including three critically injured ones who were sent by helicopter for emergency care.

- BP announced that it supports the U.S. government’s decision to proceed with the construction of six sections of the Louisiana barrier islands proposal. The company will fund the estimated $360 million it will cost to construct the six sections. BP will not manage or contract directly for the construction of the island sections, nor will the company assume any liability for unintended consequences of the project. The company plans to make payments in stages based on the project’s milestones.

- BP announced that it has established a $360 million escrow account to fund immediately the construction of six sections of Louisiana barrier islands approved by the U.S. government. BP has been directed to pay for the construction by the federal government. Since the environmental implications of the projects are not fully understood, BP assumes no liability for unexpected or unintended consequences of these projects. BP has already provided $170 million to Louisiana, Alabama, Mississippi and Florida to help with their response costs and help promote their tourism industries. The company has also paid approximately $43 million in compensation to people and companies affected by the spill.

- BP's Chairman Carl-Henric Svanberg and Group Chief Executive Tony Hayward told shareholders that the company's response to the Gulf of Mexico oil spill is their top priority, along with rebuilding trust and confidence in BP and ensuring that such an accident never happens again. Both Svanberg and Hayward expressed their deep regret and sorrow for the tragedy. Svanberg underscored the company's commitment to mitigating damage from the oil spill. "The Board of BP has been clear from the outset that all resources available to the company should be applied to meeting BP's responsibilities in addressing these events," he said. "The task is by no means complete and we have a long way to go. This is a tough job and Tony and the team continue to work relentlessly. They have all our support.

- BP, already bedeviled by an out-of-control well spewing millions of gallons of oil into the Gulf of Mexico, now finds itself with one more problem: Tony Hayward, its gaffe-prone chief executive. Among his memorable lines: The spill is not going to cause big problems because the gulf “is a very big ocean” and “the environmental impact of this disaster is likely to have been very, very modest.” And this week, he apologized to the families of 11 men who died on the rig for having said, “You know, I’d like my life back.” But rather than receiving a limited public role, Mr. Hayward, a geologist who has led the company for three years, has become even more the public face of the company. BP began showing a new television ad in which Mr. Hayward, speaking directly into a camera, pledges to spare no effort to clean up the spill. It ends with a heartfelt promise: “We will get it done. We will make this right.” (The same day, in an interview published in The Financial Times, he said, “What is undoubtedly true is that we did not have the tools you would want in your tool kit.”) Instead of reassuring the public, critics say, Mr. Hayward has turned into a day-after-day reminder of BP’s public relations missteps in responding to the crisis, which began six weeks ago and looks likely to continue well into the summer. Mr. Hayward and the company have repeatedly played down the size of the spill, the company’s own role in the April 20 explosion of the Deepwater Horizon, and the environmental damage that has occurred. At the same time, they have projected a tone of unrelenting optimism despite repeated failures to plug the well. The chief executive’s tendency to utter provocative statements has prompted a surge of criticism from politicians, bloggers and television pundits, who took particular offense at the “I’d like my life back” comment. But Mr. Hayward, an earnest-looking man with cherubic red cheeks and a soft British accent, remains ever present in BP’s response efforts. One Louisiana congressman, Charlie Melancon, has started a petition campaign calling on BP’s board of directors to fire Mr. Hayward, and financial analysts are increasingly predicting that he will get the boot before the crisis is over. Robert Wine, a BP spokesman, said that Mr. Hayward “has the full support of the board, and he is very much at the heart of the response managing everything we are doing.” Mr. Hayward, 53, ascended to the top job when his predecessor, John Browne, resigned after a personal scandal and a series of major accidents. Mr. Hayward promised to refocus the company culture on safety. Much is at stake for BP, the top oil and gas producer in the United States and the largest deepwater operator in the Gulf of Mexico. The company has already spent about $1 billion to deal with the accident, and it faces billions of dollars in additional damage claims and government penalties, with the liability growing every day that the leak continues. In addition, the Justice Department, an independent panel and numerous Congressional committees are investigating the company. Shareholders are worried about the cost to the company, based in London, whose stock has fallen about 35 percent since the explosion. To be sure, BP is facing an unprecedented technological and engineering challenge, battling formidable odds in trying to plug a damaged oil well in the darkness and pressure found 5,000 feet below the ocean surface. After several efforts to stop the oil flow failed, the company is now seeking to install a temporary dome to capture most of the spilled oil until it can drill two relief wells. Those relief wells, which would be used to inject cement into the damaged well to permanently kill it, are not expected to be completed before August, and the environmental damage would linger well after that — which means that the company and Mr. Hayward face a public relations crisis that will last for many months. The company has enlisted the help of the Brunswick Group, a public relations and crisis management firm, to deal with the accident. It has dedicated the home page of its Web site, BP.com, to the crisis and taken out full-page advertisements in major newspapers. BP has also hired a new head of media relations in the United States, Anne Womack Kolton, who worked at Brunswick and is a former aide to Vice President Dick Cheney and Energy Department spokeswoman. In Washington, BP has become a toxic political symbol that is a target on all fronts, even as it is seeking to work with the government get out of its current predicament. Before the spill, BP had maintained a low profile in Washington relative to other companies, with its lobbying work and political contributions usually trailing other oil-and-gas giants like Exxon Mobil, Chevron and Conoco Phillips. Unlike many other companies with federal interests, BP kept most of its lobbying work in-house, although it had retained several prominent Washington lobbyists, including Ken Duberstein and Tony Podesta, to make its case on issues including tax incentives for gas production and climate control regulations. From the start, BP promised to be transparent about the spill. But the company has wavered between providing information to the public and strictly limiting it. For example, it resisted for weeks putting up a live video feed of the underwater spill, agreeing to it only after intense pressure from Congress. The company has consistently refused to use widely used scientific techniques to measure the spill, saying it was focused on shutting down the well. Administration officials and Congressional leaders have accused BP of hiding the true dimensions of the leak for financial reasons. Carol M. Browner, the White House energy and environment adviser, has noted that BP has a “vested financial interest” in minimizing the size of the leak because the fines the company will eventually pay will in part be based on the amount of oil that has escaped. BP and the government initially estimated the well was leaking 1,000 barrels a day. But since then, government scientists have come up with a new and much larger rate of 12,000 to 19,000 barrels a day. Perhaps trying to tamp down the outcry over his own comments, Mr. Hayward’s remarks to reporters in Houston were more tame. He promised that the company would clean up every drop of oil and “restore the shoreline to its original state.” The chief executive added: “We will be here for a very long time. We realize this is just the beginning.”

- It seems unthinkable, even now, that the disastrous oil spill in the Gulf of Mexico could bring down the mighty BP. But investment bankers get paid to think the unthinkable — and that is just what they are doing. The idea that BP might one day file for bankruptcy, particularly as part of a merger that would enable it to cordon off its liabilities from the spill, is starting to percolate on Wall Street. Bankers and lawyers are already sizing up potential deals (and counting their potential fees). Given the plunge in BP’s share price — the company has lost more than a third of its value since Deepwater Horizon blew — some bankers and analysts say BP is starting to look like takeover bait. The question is, who would buy BP, given its enormous potential liabilities? Shell and Exxon Mobil are both said to be licking their chops. And already, flinty legal minds are dreaming up scenarios in which BP would file a prepackaged bankruptcy and separate the costs of the cleanup — and potentially billions of dollars in legal claims — into a separate corporate entity. Tony Hayward, BP’s chief executive, has insisted that his giant will weather this storm. BP is indeed a money machine: it turned a profit of nearly $17 billion last year. But that hasn’t stopped the deal crowd from blue-skying potential outcomes. Here is some of the math: BP’s costs for the cleanup could run as high as $23 billion, according to Credit Suisse. On top of that, BP could face an additional $14 billion in claims from gulf fisherman and the tourism industry. So while conservative estimates put the bill at $15 billion, something approaching $40 billion is not out of the question. After all, little about this spill has turned out as expected. The company has about $12 billion in cash and short-term investments, but there is already a debate about whether it should cut its dividend out of fear that it could run out of money. Of course, it could sell assets or seek loans, which in this environment is still not that easy. But all those numbers don’t account for the greatest possible threat: a jury verdict against BP. Such a verdict might push the cost of the spill into the hundreds of billions. If that happened, even BP might buckle. This outcome might seem far-fetched right now. But on Wall Street bankers have already coined a term for it: “the Texaco scenario.” In 1987, Texaco was forced to file for Chapter 11 because it could not afford to pay a jury award worth $1 billion to Pennzoil. That award had been knocked down by a judge from a whopping $10.53 billion. (Pennzoil successfully sued Texaco for “jumping” its planned merger with Getty Oil, in part, by moving the case to local court near its headquarters. The jury awarded triple damages.) Imagine the BP case playing out in a Louisiana courtroom, against the backdrop of an oil-choked local economy, high unemployment and an angry public. How high can you count? Under the Oil Pollution Act of 1990, BP’s liability for economic devastation — above the cost of the cleanup — is capped at $75 million, a number Mr. Hayward has already said he plans to blow through. But if BP is found to have violated safety regulations, which seems likely, that cap becomes irrelevant. That’s not to say that BP won’t fight a huge judgment against it. After the Exxon Valdez spill, Exxon fought a $5 billion fine for punitive damages for two decades. It won. The fine was cut down to $4 billion, then to $2.5 billion. The case eventually made it to the Supreme Court, which found that Exxon’s actions were “worse than negligent but less than malicious,” and vacated the fine. The judgment limited punitive damages to the compensatory damages, which were calculated as $507.5 million. Given that Shell and Exxon have billions in cash on hand and market values that easily exceed BP — Exxon is twice the size — bankers say now is the time to make a deal, as long as an acquirer can find a way to separate the legal exposure. That, of course, is a big ‘if.’ There are many people — besides BP — who think even discussing the possibility of a bankruptcy or takeover is silly. But looking out a few years, that may be BP’s best, last hope.

- BP said it will be sending a second advance payment during June to individuals and businesses along the Gulf Coast to compensate for the loss of income or net profit due to the cleanup of the Deepwater Horizon Incident in the Gulf of Mexico. With the second advance payments, BP estimates it will have spent about $84 million for loss of income or net profit through June, based on the claims it has received to date. This number will grow as additional claims are filed.

- As part of the previously announced commitment to fund the entire $360 million cost of six berms in the Louisiana barrier islands project, BP announced that it will make an immediate payment of $60 million to the State of Louisiana. In a letter to Louisiana Governor Bobby Jindal and as previously announced, BP detailed its plans to make payments in stages based on the project’s completion milestones. The initial $60 million payment is intended to permit the State to begin work on the project immediately. BP will then make five additional $60 million payments when the Coastal Protection and Restoration Authority of Louisiana, which is chaired by Garret Graves, certifies that the project has satisfied 20%, 40%, 60%, 80% and then 100% completion milestones. The entire $360 million will be funded by the completion of the project. Under the arrangement announced today, BP plans to make payments directly to the State of Louisiana rather than establishing an escrow fund for this project.

- As part of its commitment to restore the environment and habitats in the Gulf Coast region, BP announced that it will donate the net revenue from oil recovered from the MC252 spill to create a new wildlife fund to create, restore, improve and protect wildlife habitat along the coastline of Louisiana, Mississippi, Alabama, and Florida. The creation of this fund is over and above BP’s obligations under the Oil Pollution Act of 1990. BP’s net revenue from the sale of oil recovered from skimming operations and the well containment systems will be deposited into this newly-created fund. At this point, BP cannot predict the total of amount of net revenue that will be deposited into the wildlife fund. The amount of funding will be contingent upon the amount of oil collected during operations and the price at which the oil is sold. BP will provide regular updates on the amount of proceeds being deposited into the fund.

- BP’s embattled chief executive, Tony Hayward, prepared to tell Congress on that he was “deeply sorry” for the oil disaster in the Gulf of Mexico, seeking to demonstrate that he and the oil giant understood the enormity of the spill’s environmental, economic and human toll. Mr. Hayward has faced withering criticism for his response to the spill, and was expected to receive another onslaught of anger as he testified before the House panel. Also, Mary L. Kendall, acting inspector general of the Interior Department, told lawmakers that the Minerals Management Service was taking a “completely backwards” approach in investigating the spill, “gathering evidence via public hearing rather than developing evidence to culminate in a public forum.” Ms. Kendall underlined the serious shortage of minerals service inspectors covering drill sites in the Gulf of Mexico. There were only 60 inspectors there to oversee nearly 4,000 drilling facilities, while on the Pacific Coast 10 inspectors cover only 23 facilities, she said in testimony prepared for a House Committee on Natural Resources subcommittee hearing. The minerals service has a difficult time recruiting inspectors, Ms. Kendall said, because the oil industry tends to offer considerably higher wages, and inspectors in the Gulf operate “with little direction as to what must be inspected, or how.” Mr. Hayward’s appearance before the Congressional panel comes one day after President Obama announced that BP would create a $20 billion fund to pay damage claims to thousands of fishermen and others along the Gulf Coast. BP also said it would suspend dividend payments to shareholders. In prepared remarks, Mr. Hayward offered deep contrition, but few answers to the pressing questions stemming from the explosion aboard the Deepwater Horizon offshore rig, and the two-month oil spill. The $20 billion fund announced on Wednesday will be administered by Kenneth R. Feinberg, the lawyer and mediator who ran the fund for victims of the Sept. 11 attacks and has emerged as a troubleshooter on issues like executive compensation and resolving claims for asbestos and Agent Orange victims. While acknowledging that oil is likely to continue spewing from the well for perhaps months to come, Mr. Obama was able to throw something of a lifeline to desperate coastal residents worried about meeting payrolls, mortgages and shrimp boat payments. Under the famous portrait of a charging Theodore Roosevelt on horseback, administration and company officials haggled over last details in an extraordinary White House meeting that went more than four hours, double the time scheduled, and was punctuated by breaks as each side huddled separately. Finally, participants said, Mr. Obama sealed the deal in a private, 25-minute session with BP’s chairman, Carl-Henric Svanberg. Mr. Svanberg, looking somber as he left the White House, confirmed to waiting reporters that the president seemed “frustrated because he cares about the small people.” But he added: “People say that large oil companies don’t care about the small people. But we care. We care about the small people.” The “small people” comment set off an immediate uproar in the blogosphere and elsewhere from people who said it showed BP’s indifference to those harmed by the spill. A BP spokesman called the remark a “slip in translation” by Mr. Svanberg, who is Swedish. Later Wednesday Mr. Svanberg apologized, saying he was “very sorry” he had spoken “clumsily.” “What I was trying to say — that BP understands how deeply this affects the lives of people who live along the gulf and depend on it for their livelihood — will best be conveyed not by any words but by the work we do to put things right for the families and businesses who’ve been hurt,” he said in a statement. Mr. Svanberg said the BP board, which met in emergency session in advance of the White House meeting, had agreed not to pay further dividends to shareholders this year. Faced with mounting criticism of his company, including from within the oil industry, he denied reports that BP had taken safety shortcuts on the Deepwater Horizon rig, where an April 20 explosion killed 11 workers and set in motion the leak that Mr. Obama has called the worst environmental disaster in American history.

- BP launched its 2010 BP Statistical Review of World Energy, in which it announced that the global recession drove energy consumption lower in 2009 than the previous year, the first such decline since 1982, as the world economy contracted for the first time since the Second World War. Globally, consumption of oil, natural gas and nuclear power declined, while coal consumption was essentially flat; only hydroelectric output and other renewable forms of energy increased in 2009. The data on energy consumption suggests that global carbon dioxide (CO2) emissions from energy use fell for the first time since 1998. For the year as a whole, prices for all forms of traded energy fell, with the sharpest declines seen for traded natural gas and coal in North America and Western Europe - though Asian coal prices fell less sharply in face of strong Chinese import growth. Oil prices declined for the first time since 2001. During 2009, prices for oil and coal in competitive markets hit their low points early in the year, with oil prices recovering first, while spot natural gas prices in North America and Western Europe continued to decline well into 2009. In addition to varying demand stories by fuel and region, the different price paths were also driven by supply-side stories. In the oil market, sustained OPEC cuts led production to fall even more rapidly than consumption did. For natural gas, sharp production declines in Russia, Turkmenistan, and Canada were partly offset by growth in LNG and the US. In turn, robust US gas production growth (the strongest in the world for three consecutive years) was driven by unconventional supply, especially shale gas. The Review reports proved oil reserves of 1,333.1 billion barrels at the end of 2009, including Canadian oil sands under active development and an upward revision in official Venezuelan reserves. Global reserves are sufficient to meet 2009 production for 45.7 years. On the same basis, reserves of gas are sufficient for 62.8 years and coal for 119 years.

- BP notes the fall in its share price in US trading. The company is not aware of any reason which justifies this share price movement. BP continues to keep the market updated on the Gulf of Mexico oil spill through regular announcements. The response to this incident is our top priority. BP faces this situation as a strong company. In March, we indicated that the company’s cash inflows and outflows were balanced at an oil price of around $60/barrel. This was before the costs of the incident. Under the current trading environment, we are generating significant additional cash flow. In addition, our gearing is currently below the bottom of our targeted range. Our asset base is strong and valuable, with more than 18bn barrels of proved reserves and 63bn barrels of resources as at the end of 2009. All of the above gives us significant capacity and flexibility in dealing with the cost of responding to the incident, the environmental remediation and the payment of legitimate claims. BP will continue to keep the market fully informed of further developments in the response to the Gulf of Mexico oil spill, in compliance with its listing obligations.

- BP announced it is providing the State of Florida with an additional $25 million grant to continue implementation of the State’s Area Contingency Plan. This $25 million grant is in addition to a previous $25 million block grant that BP announced on May 5 to help accelerate the implementation of the State’s Area Contingency Plan, and a $25 million tourism grant announced on May 17.

- With each day that oil fouls the Gulf of Mexico, more drivers are weighing a choice at intersections across the United States: if BP is on the left and some other station is on the right, is filling up at BP an endorsement of the company’s conduct? Advocacy organizations like Public Citizen urge consumers to stay away from BP stations. About 550,000 Facebook users have clicked the “Like” button on the Boycott BP page. And angry people have picketed at BP stations. This doesn’t send a particularly powerful message to BP, though. After all, BP owns only a handful of the 11,000 stations that bear its brand and is trying to sell the few still on its books. So those who wish to inflict the maximum amount of pain on the company are instead putting much of the hurt on the family businesses that actually own the stations. Just how little does BP gain from its gas stations, besides whatever ancillary marketing benefit it gains from the signs? The gas in its pumps may not be extracted, refined or stored by the company and may just get a spritz of BP additives right before it ends up at the service station. All of this puts a mere handful of coins in the company’s pocket per fill-up. And the gas that people buy when they fill up elsewhere? Fuel from independent gas stations, grocery chains and big-box wholesale clubs sometimes comes directly from refineries or wholesalers that BP owns outright. Greenpeace has chosen not to call for a boycott. Instead, its representatives pose a different challenge: people who really want to punish BP ought to try getting Beyond Petroleum themselves. BP doesn’t have much use for the service station business anymore. In 2007, it announced plans to sell the last 700 stations that it hadn’t already sold to franchisees. The company chose to focus on finding and collecting oil. Once companies make a discovery, it comes out of the ground and ends up at a refinery. There, it can be mixed with oil that a variety of companies have poured into the tanks. Then, the gasoline makes at least one stop at what is essentially a wholesale warehouse. BP owns some of these tank farms, but so do other companies. Eventually, a truck pulls up to collect and deliver the gasoline to stations. It is often only then that the ingredients that make it BP fuel get added. Meanwhile, revenue for some BP station owners has declined as much as 20 percent since the oil spill, according John Kleine, executive director of the BP Amoco Marketers Association, which represents many of the owners and suppliers of the BP and Arco stations. And does Public Citizen truly believe that the spill’s environmental damage and the resulting economic pain justify its attempts to starve service station owners of revenue? For people who can’t stomach the idea of even a penny of their money going to BP, driving by the station in search of a more palatable option creates its own problems. Kert Davies, the research director for Greenpeace in the United States, said he was pondering this recently as he was driving home (yes, he does drive). “There was a Chevron, a Shell station, Exxon and BP,” he said. “I can think of really good reasons to boycott every one of those.” Plenty of people head to a no-name station, a grocer or warehouse club. But it’s entirely possible that those drivers end up with a tank full of the very fuel that they were trying to avoid. “Pick any one of those retailers, and you stand a good chance of filling your car up with fuel extracted by BP,” Mr. Lenard said. Alternatively, BP may have stored the gasoline and supplied it to whomever delivered it to a grocer or warehouse store. David Nicholas, a BP spokesman, said that he could not identify BP’s biggest wholesale fuel customers, but that he probably wouldn’t disclose them even if he could. Meghan Glynn, a spokeswoman for the grocery chain Kroger, which sells a lot of gasoline, said the identity of its partners was proprietary. “We source fuel as a commodity from a variety of suppliers,” she said in a statement. And if one of them happened to be BP, how would the company feel about protestors picketing its fuel pumps? “We respect the right of individuals to advocate for their point of view, but we leave purchasing decisions up to the individual consumer,” she wrote. Jeff Cole, who runs Costco’s enormous gasoline sales operation, did not return several calls for comment about whether it purchases fuel from BP. Sam’s Club, meanwhile, offers gas at 464 locations, some of which comes from BP terminals. BJ’s Wholesale Club does not buy gasoline directly from BP, but a spokeswoman, Kelly McFalls, said that didn’t mean it wasn’t peddling BP’s fuel. These uncomfortable truths are a big part of why Greenpeace has not called for a boycott. Still, it hopes to use the spill as a rallying cry. So perhaps the best way for people to express outrage and inflict pain on oil companies is to use less fuel, thereby lowering overall demand. This is much harder than flinging brown paint at a BP sign, as many people have done. It may mean walking more or wearing sweaters indoors in the winter with the thermostat set at 64 degrees. People who still need a short-term hit of righteousness may continue to avoid filling up at BP stations. But it would be nice if they picked up a week’s worth of milk from a BP mini-mart on the way home at night. That way, the station owners don’t suffer as much. Then, the next morning, all of those drivers ought to go shopping for a hybrid.

- As much as 60,000 barrels of oil a day could be gushing into the Gulf of Mexico from the damaged BP well, a flow rate equal to an Exxon Valdez being spilled every four days. BP, which says it has spent $1.5 billion in response to the spill, has tentatively agreed to place $20 billion into an escrow account to pay victims. The economic and environmental damage can linger for decades, as was the case with the Exxon Valdez, and even much smaller spills, like the one off Cape Cod in 1969. How do we calculate the full costs of the BP blowout, which may not be understood for 20 or 30 years? How might we ensure that the public doesn’t end up paying for future damages and recovery, as it has with Superfund sites?

- Two days after Mr. Hayward angered lawmakers on Capitol Hill with his refusal to provide details during testimony about the worst offshore oil spill in United States history, and one day after BP’s chairman said the chief executive would not be as involved in daily operations in the Gulf of Mexico, Mr. Hayward sparked new controversy from afar. “He is having some rare private time with his son,” a BP spokeswoman, Sheila Williams, said in a telephone interview. But Rahm Emanuel, the White House chief of staff, who taped an interview for ABC’s “This Week,” called Mr. Hayward’s attendance at the race “part of a long line of P.R. gaffes and mistakes” that he has made. “To quote Tony Hayward, he’s got his life back,” Mr. Emanuel said. On May 31, six weeks after the spill began, Mr. Hayward uttered “I’d like my life back,” a comment that struck many in the gulf region as insensitive, and for which he eventually apologized. Senator Richard Shelby, Republican of Alabama, called Mr. Hayward’s yacht outing the “height of arrogance,” in an interview with Fox News. But Mr. Hayward’s role in the gulf became the topic of further speculation even as Ms. Williams, the BP spokeswoman, insisted that Mr. Hayward was still in charge of the company and the enormous cleanup operations. The chairman of the board of BP, Carl-Henric Svanberg, told the British TV network Sky News that Mr. Hayward would be “now handing over” the daily operations in the gulf to Robert Dudley, an American who joined BP as part of its acquisition of Amoco a decade ago. BP tried to clarify what Mr. Svanberg had said about the transition of leadership in the gulf. “What he meant by ‘now,’ ” Ms. Williams said, was that “there would be a transition over to Bob over a period of time.” “Obviously, Tony’s main priority remains overseeing all BP operations,” she said. “Over all, there will be some responsibilities handed over, but Tony will remain in full control until we have stopped the leak.” When that might happen is not clear. Crude oil is flowing at a rate estimated between 35,000 and 60,000 barrels of oil a day from the damaged well, and BP has been able to capture only a percentage of that with its current containment methods. BP said it was aiming to stop the leak in August, when two relief wells it is drilling will intersect with the damaged one. The company said that it was ahead of schedule on one of the wells and within 200 feet of the side of the damaged well, but that the drilling would proceed more slowly the closer it got. Workers had captured 24,500 barrels of oil on Friday before shutting down the operation because of a malfunction on the vessel that is siphoning the oil from the leaking well — 1,000 fewer barrels than on Thursday. Operations restarted early Saturday. By then, Mr. Hayward was already in Cowes on the southern coast of England for the J. P. Morgan Asset Management Round the Island Race, a yacht race around the Isle of Wight. A spokeswoman for the race said in an e-mail message “that a gentleman by the name of Tony Hayward is a co-owner of an entered boat called ‘Bob’ that was racing today, however his name did not appear on any crew list.” The boat finished fourth in a class of 45 others.

- BP announced it is providing the State of Alabama with an additional $25 million grant to continue implementation of the State's Area Contingency Plan. This $25 million grant is in addition to a previous $25 million block grant that BP announced on May 5 to help accelerate the implementation of the State's Area Contingency Plan, and a $15 million tourism grant announced on May 17.

- The United States Justice Department said that it was considering legal action to block British Petroleum from paying dividends to make sure the company covers all costs related to the oil spill in the Gulf of Mexico. Interior Secretary Ken Salazar has said BP would be asked to pay energy companies for losses if they had to lay off workers because of the moratorium on deepwater drilling. BP, whose shares dropped 7 percent in London, said it would decide next month whether keep a quarterly dividend of 14 cents a share for the second quarter, a payout of about $2.6 billion. Needless to say, investors in Britain were furious because BP dividends accounted for some 12 percent of all dividends handed out by British companies last year. Should the U.S. stop BP from paying dividends to its shareholders? What would be the consequences of this action?

- BP announced it is providing the State of Mississippi with an additional $25 million grant to continue implementation of the State's Area Contingency Plan. This $25 million grant is in addition to a previous $25 million block grant that BP announced on May 5 to help accelerate the implementation of the State's Area Contingency Plan, and a $15 million tourism grant announced on May 17.

- BP announced that it has approved initial payments toward 90% of commercial large loss claims that have been filed as a result of financial losses of the Deepwater Horizon incident and spill. Using an accelerated process BP approved payments of 337 checks for a total amount of $16 million to businesses that have filed claims in excess of $5,000. Initial payments began over the weekend and will be completed this week. The remaining outstanding commercial large loss claims are awaiting documentation and are continuing through the process. The acceleration of commercial large claims payments will help ease the burden on impacted businesses by providing access to money in a short period of time. Improvements to the commercial large claims process have been made as a result of applying learning from the existing individual claims process, as well as consultations with local, state, Department of Homeland Security and United States Coast Guard officials.

- BP announced significant progress in its half-billion dollar pledge to the Gulf of Mexico Research Initiative (GRI). Three research institutions in the Gulf region will receive a total of $25 million in fast-track funding for high-priority studies of the distribution, composition and ecological interactions of oil and dispersant. On May 24 BP announced a commitment of up to $500 million to the GRI open research program to study the impact of the Deepwater Horizon incident, and its associated response, on the environment and public health in the Gulf of Mexico.

- Following a meeting with the President of the United States, the BP Board announces an agreed package of measures to meet its obligations as a responsible party arising from the Deepwater Horizon spill. Agreement was reached to create a $20bn claims fund over the next three and a half years.

- BP notes the comments made by President Obama. It confirms that the Company will be meeting with the President to discuss his proposal for arrangements to ensure that all legitimate claims in respect in the Gulf of Mexico oil spill are paid out in a fair and timely manner. BP will continue to keep the market fully informed of further developments in compliance with its listing obligations.

- BP reiterated its pledge to clean up the oil and gas spill in the Gulf of Mexico and to pay all legitimate claims arising from the spill, even though another party already is disputing its responsibility for costs associated with the Deepwater Horizon incident and the resulting spill. Anadarko Petroleum Corporation has announced it is refusing to accept responsibility for oil spill removal costs and damages, claiming that, under an exception to a joint operating agreement’s cost and liability sharing provisions, BP Exploration & Production Inc. (BPXP) was “grossly negligent” or engaged in “willful misconduct” as operator for Mississippi Canyon, Block 252 (MC252). BP strongly disagrees with these allegations and will not allow the allegations to diminish its commitment to the Gulf Coast region. BPXP and two other parties, including Anadarko Petroleum Corporation, co-own the leasehold interest in MC252 -- the origin of the oil and gas spill. All the co-owners of the leasehold interest previously entered into a written operating agreement under which BPXP would act as “operator” and be responsible for conducting operations in MC252, but that the parties would share the costs of operations, including the cost to clean up any spill resulting from drilling the MC252 exploratory well, according to their respective ownership interests in MC252. Further, all the co-owners of the leasehold interest filed documents with the U. S. federal government clearly certifying that each would be jointly and severally liable, together with any other responsible parties, for oil spill removal costs and damages in accordance with the Oil Pollution Act of 1990. BP said that it has paid $104 million to residents along the Gulf Coast for claims filed as a result of the oil spill in the Gulf of Mexico. BP has issued more than 31,000 checks in the past seven weeks. BP has received about 64,000 claims to date. A 1,000-member claim team is working around the clock to receive and process claims. There are 33 field offices set up in the States of Louisiana, Mississippi, Alabama and Florida, and BP is accepting calls through an 800 number as well as accepting applications online. BP has received about 84,000 calls on the claims alone. The average time from filing a claim to checks being issued is 4 days for individuals and seven days for more complex business claims that have provided supporting documentation. Willis said BP's commitment is to move expeditiously and fairly to meet the needs of the residents of the Gulf Coast. Claims can be filed by phone at 1-800-440-0858 (TTY device 1-800-573-8249), on the web at www.bp.com/claims, or by visiting one of our claims offices across the Gulf Coast.

- BP announced that it will donate the net revenue it receives from the sale of oil recovered from the MC252 spill to the National Fish and Wildlife Foundation (NFWF). NFWF, whose mission is to preserve and restore America's native wildlife species and habitats, will direct this money to projects that bring the greatest benefit to the wildlife of the affected Gulf Coast States. BP will provide $5 million to NFWF immediately, to ensure that their work can begin even as initial oil collections from the Discoverer Enterprise enter the refining process.

- BP provided further details about the previously-announced new organization that will manage the company’s long-term response to the Deepwater Horizon incident and the MC252 oil and gas spill. Effective immediately, Bob Dudley has been appointed President and Chief Executive Officer of BP’s Gulf Coast Restoration Organization. Mr. Dudley will report to Tony Hayward, BP’s Group Chief Executive. The new organization will manage all aspects of the response to the Deepwater Horizon incident and the oil and gas spill in the Gulf of Mexico, ensuring that BP fulfils its promises to the people of the Gulf Coast and continues its work to restore the region’s environment. BP’s decision to establish this new organization in no way limits the resources that are available to meet the company’s commitments to clean up the spill and restore the Gulf Coast. BP’s Exploration and Production Segment will remain accountable for all activities relating to killing the MC252 exploratory well and containing the flow of oil and gas into the Gulf of Mexico.

- Technical Briefing on Relief Wells and Status Update on Subsea Containment Efforts with BP Senior Vice President Kent Wells. When: Monday, June 28th. 9.30am CDT, 3.30pm BST

July

• Upstream news:

- Tony Hayward, BP Group Chief Executive, paid a one-day working visit to Azerbaijan on July 6. During his visit Mr Hayward met with the President of the Republic of Azerbaijan HE Ilham Aliyev briefing him on the current status and plans for BP-operated projects in this country. Mr Hayward re-iterated BP’s commitment to Azerbaijan and to continuing successful cooperation with the government and SOCAR. Mr Hayward once again highlighted the importance of the Azeri-Chirag-Gunashli and Shah Deniz oil and gas development, as well as the Baku-Tbilisi-Ceyhan and South Caucasus Pipeline projects to Azerbaijan, the region and global energy markets. Mr Hayward also emphasized the significance of continued exploration activities in the Caspian to the energy future of the region.

- Following a technical review, the National Incident Commander has approved the plan for BP to move ahead with replacing the existing lower marine riser package (LMRP) containment cap over the Deepwater Horizon’s failed blow-out preventer (BOP) with a new sealing cap assembly. The new sealing cap contains three closing rams and multiple ports for connection to additional containment options. The new cap creates the potential to increase oil and gas containment capacity to greater than 50,000 barrels per day and should improve containment efficiency during hurricane season by allowing shorter disconnect and reconnect times. The new cap assembly also might simplify future well kill and cementing procedures through the relief wells, which in turn could increase the probability of success for those operations. In addition, the new cap should enable a shut-in test to be performed to determine integrity of the MC252 well. The plan for installing the sealing cap will involve a multiple stage process and several vessels and remotely operated vehicles. First, the existing LMRP cap and the remaining riser flange will be removed from the top of the Deepwater Horizon LMRP. Next, a flange transition spool will be installed using the Boa Deep C. Then, using the Discoverer Inspiration, the three-ram capping stack will be connected to the top of the spool. The sealing cap operation is expected to begin this weekend to take advantage of anticipated favourable weather conditions and is expected to take between four and seven days to complete. The sealing cap installation procedure is intended to run in parallel with the installation and start-up of the Helix Producer containment system, which could begin ramping up containment operations. Because the LMRP cap must be removed to conduct this sealing cap operation, there will be a period of decreased oil and gas capture from the wellhead. During the installation of the sealing cap assembly, the Q4000 should continue to capture and flare oil and gas. Additionally, oil and gas also may be captured by the Helix Producer containment system once it becomes operational. Unlike the LMRP containment cap system, the Q4000 and Helix Producer systems are connected to the kill and choke lines on the BOP via the existing top kill manifold. This new sealing cap has not been deployed at these depths or under these conditions, and there can be no assurance that the sealing cap will be successfully installed or installed within the anticipated timeframe. Contingency LMRP caps are positioned on the seabed and it should be possible to return to the current containment configuration if needed. Work on the first relief well, which started May 2, continues. The well reached a measured depth of 17,810 feet on July 9. The previous ranging run indicated that the relief well is now approximately 5 to 7.5 feet horizontally away from the MC252 well. The next planned step is to do another ranging run and then drill down 30 feet to a measured depth of 17,840 feet. The series of drilling and ranging runs will continue for approximately another 60 feet. The 97/8 inch liner will then be set before beginning the final series of drilling and ranging runs before intercepting the MC252 well. Although uncertainty still exists, the first half of August remains the current estimate of the most likely date by which the first relief well will intercept the MC252 well and kill operations performed. The second relief well, which started May 16, is drilling at 15,963 feet. The next planned step is to set the 117/8 inch casing. Following casing and cementing, the second relief well will pause to avoid any interference with the first relief well activities, but be positioned should any issues arise with the first relief well.

- Following approval from the National Incident Commander, BP began replacing the existing lower marine riser package (LMRP) containment cap over the Deepwater Horizon's failed blow-out preventer with a new sealing cap assembly. Installation of the sealing cap is proceeding as planned. The Discoverer Enterprise removed the LMRP cap at approximately 12:40 PM CDT on Saturday, July 10. The Discoverer Enterprise then moved off station. Following the removal of the cap, a subsea dispersant wand was inserted into the riser. Two plugs and all six flange bolts were then removed. The Discoverer Inspiration is now moving on station. The Q4000 containment system continues to capture oil and gas from the MC252 well and flare the hydrocarbons safely at the surface. Once it becomes operational, the Helix Producer containment system will begin capturing additional oil and gas.

- The three ram capping stack was installed on the Deep Water Horizon LMRP at 7 p.m. CDT. The stack completes the installation of the new sealing cap. Following installation of the capping stack and in line with the procedure approved by the National Incident Commander and Unified Area Command, the well integrity test will begin July 13 on the MC252 well. For the duration of the test, which will be a minimum of 6 hours and could extend up to 48 hours, the three ram capping stack will be closed and all sub-sea containment systems (namely, the Q4000 and Helix Producer) will be temporarily suspended, effectively shutting in the well. It is expected, although cannot be assured, that no oil will be released to the ocean for the duration of the test. This will not however be an indication that flow from the wellbore has been permanently stopped. Information gathered during the test will be reviewed with the relevant government agencies including the federal science team to determine the way forward. Options include reinstatement of containment as well as extending the test duration beyond 48 hours. The sealing cap system never before has been deployed at these depths or under these conditions, and its efficiency and ability to contain the oil and gas cannot be assured. The Helix Producer containment system started operations on July 12. The Q4000 containment system continues to capture oil and gas from the MC252 well and flare the hydrocarbons safely at the surface Relief well operations continue throughout this period and remain the sole means to permanently seal and isolate the well.

- Following approval from the National Incident Commander, BP this past weekend began replacing the existing lower marine riser package (LMRP) containment cap over the Deepwater Horizon's failed blow-out preventer with a new sealing cap assembly. Installation of the sealing cap is proceeding as planned. The Discoverer Enterprise removed the LMRP cap at approximately 12:40 PM CDT on Saturday, July 10. Initial steps included the removal of six bolts along with the LMRP's flange. A transition spool was subsequently installed on the existing flange. The next step is to install a capping stack that has three closing rams. The Q4000 containment system continues to capture oil and gas from the MC252 well and flare the hydrocarbons safely at the surface. The Helix Producer containment system is being commissioned to begin the collection of additional oil and gas, prior to ramping up containment operations. On July 10, a total of approximately 15,200 barrels of oil were collected or flared and 35.2 million cubic feet of gas were flared. Specifically, the LMRP containment system connected to the Discoverer Enterprise collected 7,096 barrels of oil, and the Q4000 flared an additional 8,100 barrels of oil. With the removal of the LMRP cap, oil recovered from the Discoverer Enterprise was lower on July 10 and recovery from the Discoverer Enterprise has since been discontinued. As of July 10, the total volume of oil collected or flared by the containment systems is approximately 749,100 barrels. Information on the volumes of oil and gas that are collected or flared is updated twice daily on BP's website, www.bp.com.Plans also are being developed for additional containment capacity and flexibility that will ultimately increase capacity to 60,000-80,000 barrels per day. These projects are currently anticipated to begin operations towards the end of July. The sealing cap system, the Q4000 system, the flexible riser system, and the planned additional containment systems never before have been deployed at these depths or under these conditions, and their efficiency and ability to contain or flare the oil and gas cannot be assured. Work on the first relief well, which started May 2, continues. The well reached a measured depth of 17,810 feet on July 11 and a tenth 'ranging' run was completed. Following the running and cementing of the 9 7/8-inch casing and further ranging runs, the relief well is intended to intercept the original well at approximately 18,000 feet. Operations will then begin to kill the flow of oil and gas from the reservoir by pumping specialised heavy fluids down the relief well. The second relief well, which started May 16, is just below 16,000 feet and preparing to cement casing. Although uncertainty still exists, the first half of August remains the current estimate of the most likely date by which the first relief well will be completed and kill operations performed. Surface Spill Response and Containment Through July 10 Work continues to collect and disperse oil that has reached the surface of the sea, to protect the shoreline of the Gulf of Mexico, and to collect and clean up any oil that has reached shore. Approximately 46,000 personnel, more than 6,400 vessels and dozens of aircraft are engaged in the response effort. Operations to skim oil from the surface of the water collected more than 25,000 barrels of oily water on July 10. To date, these operations have recovered, in total, approximately 720,238 barrels (30.25 million gallons) of oily liquid. In addition, a total of 286 controlled burns have been carried out to date, removing an estimated 238,095 barrels of oil from the sea's surface. The total length of containment boom deployed as part of efforts to prevent oil from reaching the coast is now more than 3.1 million feet (587.12 miles). As of July 10, almost 105,000 claims have been submitted and more than 52,000 payments have been made, totalling almost $165 million. The cost of the response to date amounts to approximately $3.5 billion, including the cost of the spill response, containment, relief well drilling, grants to the Gulf states, claims paid, and federal costs. On June 16, BP announced an agreed package of measures, including the creation of a $20 billion fund to satisfy certain obligations arising from the oil and gas spill. It is too early to quantify other potential costs and liabilities associated with the incident.

- Following a meeting with Secretary Chu and his team of scientific and industry experts, the National Incident Commander announced that additional analysis of the well testing procedure should be performed before starting the well integrity test. During this period, BP will continue to ramp up containment operations on the Helix Producer as well as continue to optimise the Q4000 operations. The Helix Producer has the capacity to capture approximately 20,000 – 25,000 barrels of oil per day. Historically, the Q4000 has flared an average of approximately 8,000 barrels of oil per day.

- Following installation of the capping stack and in line with the procedure approved by the National Incident Commander and Unified Area Command, the well integrity test on the MC252 well commenced. The well integrity test will last at least 6 hours and could last up to 48 hours. During the test, the three ram capping stack is closed, effectively shutting in the well and all sub-sea containment systems (namely, the Q4000 and Helix Producer systems) have been temporarily stopped. Although it cannot be assured, it is expected that no oil will be released to the ocean during the test. Even if no oil is released during the test, this will not be an indication that oil and gas flow from the wellbore has been permanently stopped.

- BP continues to work cooperatively with the guidance and approval of the National Incident Commander and the leadership and direction of federal government including the Department of Energy, Department of the Interior, Federal Science Team, Bureau of Ocean Energy, Management, Regulation and Enforcement, U.S. Coast Guard and secretaries Ken Salazar and Steven Chu. At this time, the well integrity test on the MC252 exploratory well continues. During the test, the three ram capping stack has been closed, shutting in the well. All sub-sea containment systems (namely, the Q4000 and Helix Producer systems) have been temporarily suspended. The pressure inside the well recently has been measured at approximately 6,792 pounds per square inch and continues to rise slowly. As directed by the National Incident Commander, extensive monitoring activities are being carried out around the well site. Information gathered during the test is being reviewed with the government agencies, including the Federal Science Team, to determine next steps. Depending upon the results of the test and monitoring activities, these steps may include extending the well integrity test or returning to containment options. Should the test conclude, the Q4000 is expected to resume capturing and flaring oil and gas through the existing system. It has been capturing and flaring an average of 8,000 barrels a day (b/d) of oil in recent weeks. The Helix Producer also is expected to be available to resume capturing oil and flaring gas through the recently installed floating riser system. It has the capacity to capture approximately 20,000 – 25,000 b/d of oil.

- A plan to build and deploy a rapid response system that will be available to capture and contain oil in the event of a potential future underwater well blowout in the deepwater Gulf of Mexico was announced by Chevron, ConocoPhillips, ExxonMobil and Shell. The new system will be flexible, adaptable and able to begin mobilization within 24 hours and can be used on a wide range of well designs and equipment, oil and natural gas flow rates and weather conditions. The new system will be engineered to be used in deepwater depths up to 10,000 feet and have initial capacity to contain 100,000 barrels per day with potential for expansion. The companies have committed $1 billion to fund the initial costs of the system. Additional operational and maintenance costs for the subsea and modular processing equipment, contracts with existing operating vessels in the Gulf of Mexico and any potential new vessels that may be constructed will increase this cost commitment. This system offers key advantages to the current response equipment in that it will be pre-engineered, constructed, tested and ready for rapid deployment in the deepwater Gulf of Mexico. It is being developed by a team of marine, subsea and construction engineers from the four companies. The system will include specially designed subsea containment equipment connected by manifolds, jumpers and risers to capture vessels that will store and offload the oil. Dedicated crews will ensure regular maintenance, inspection and readiness of the facilities and subsea equipment. The four companies will form a non-profit organization, the Marine Well Containment Company, to operate and maintain this system. Other companies will be invited and encouraged to participate in this organization. Work on this new containment system is being accelerated to enhance deepwater safety and environmental protection in the Gulf of Mexico, which accounts for 30 percent of U.S. oil and gas production and supports more than 170,000 American jobs. The sponsor companies will proceed immediately with the engineering, procurement and construction of equipment and vessels for the system. ExxonMobil will lead this effort on behalf of the four sponsor companies. The companies are also actively involved in significant industry efforts to improve prevention, well intervention and spill response. This includes rig inspections and implementation of new requirements on blowout preventer certification and well design. The industry has proactively formed several multi-disciplinary task forces to further develop improved prevention, containment and recovery plans. The companies have reviewed the system with key officials in the federal Administration and Congress and will conduct briefings with other key stakeholders.

- BP has announced that it has signed a new agreement with the Egyptian Ministry of Petroleum and the Egyptian General Petroleum Corporation to develop the significant hydrocarbon resources in the North Alexandria and West Mediterranean Deepwater concessions. Production from the West Nile Delta development is projected to reach up to 1 billion cubic feet per day, providing a major new source of gas for the domestic market in Egypt. The first phase will develop an estimated 5 trillion cubic feet of gas and associated condensate through subsea development of five offshore fields into a new purpose-built onshore gas plant on Egypt’s Mediterranean coast. First gas is expected in late 2014. The new agreement amends the commercial terms and the governance structure for the two concessions located in the West Nile Delta, enabling BP and its partner RWE Dea to proceed with development.

- BP announced that it has entered into several agreements to sell upstream assets in the United States, Canada and Egypt to Apache Corporation. The deals, together worth a total of $7 billion, comprise BP’s Permian Basin assets in Texas and south-east New Mexico, US; its Western Canadian upstream gas assets; and the Western Desert business concessions and East Badr El-din exploration concession in Egypt. The decision to make these divestments follows the announcement made by BP last month that it was increasing its target for divestments to $10 billion. The proceeds of the sales will be used by BP to increase the cash available to the group.

- With the guidance and approval of the National Incident Commander (NIC) and the leadership and direction of federal government, relief well activities at the MC252 well site will be temporarily suspended because of potentially adverse weather associated with Tropical Storm Bonnie, which is projected to track into the Gulf of Mexico.

- On July 23, with the guidance and approval of the National Incident Commander (NIC) and the leadership and direction of the federal government, relief well activities at the MC252 well site were temporarily suspended because of potentially adverse weather associated with Tropical Storm Bonnie. Following the passing of the weather system, the DDIII drilling rig returned to the relief well site on July 24 and is taking steps necessary to reconnect with the well and resume drilling operations. These steps are expected to take a number of days. The DDII drilling rig is moving back into position, and will take steps necessary to reconnect to the second relief well. However, work on the second relief well has been suspended so as not to interfere with the first. The MC252 well has been successfully shut-in for integrity testing since July 15. BP continues to closely monitor the MC252 well and well-capping structure, under the guidance of the Unified Command.

• Downstream news:

- BP and Verenium Corporation (NASDAQ: VRNM) announced an agreement for BP Biofuels North America to acquire Verenium's cellulosic biofuels business, including the Company's facilities in Jennings, LA and San Diego, CA for $98.3 million. Verenium will retain its commercial enzyme business, including its biofuels enzymes products and have the right to develop its own lignocellulosic enzyme program. Verenium will also retain select R&D capabilities, as well as rights to access select biofuels technology developed by BP using the technology it is acquiring from Verenium through this agreement.

• Business/Finance news:

- Everyone involved in the response effort should "feel free to talk" to media about their experiences. BP offered additional guidance and clarification to all personnel to ensure that members of the response team – including, but not limited to, all government, BP, and contract personnel – know they are free to talk to the media.

- Doug Suttles, Chief Operating Officer of BP Exploration and Production, met with Vessels of Opportunity (VoO) participants to view operations and discuss a number of enhancements made to the VoO program. Through these modifications, the program will more effectively deploy boats to oil recovery activity and better utilize local commercial and charter fishing vessels to advance the effectiveness of the Gulf of Mexico response.

- Payments to residents and businesses of the Gulf Coast reached $201 million as BP continued to increase its outreach to thousands of people who have filed claims related to the Gulf of Mexico oil and gas spill. More than 32,000 claimants have received one or more payments in the past 10 weeks. The largest groups include fishermen, who have received $32 million, and shrimpers, who have received $18 million. In addition, about $77 million has been paid for loss of income to a variety of occupations including deckhands and employees of seafood processing plants and other businesses. In all, 114,000 claims have been submitted, but more than 61,000 claims lack enough information for BP to make a payment, or claimants have been unreachable after filing.

- BP notes the press speculation over the weekend regarding potential changes to management and the charge for the costs of the Gulf of Mexico oil spill. BP confirms that no final decision has been made on these matters. A Board meeting is being held ahead of the announcement of the second quarter results on 27th July. Any decisions will be announced as appropriate.

- Following the explosion and subsequent sinking of the Transocean Holdings LLC operated Deepwater Horizon drilling rig in the Gulf of Mexico in April 2010, BP and US Government authorities have been conducting unprecedented oil spill response activities. These ongoing efforts have sought to halt the flow of hydrocarbons from the well, capture and contain oil that has been leaking, protect the shores and clean up oil that has reached the shores. BP's own investigation, as well as several independent investigations, into the cause of the accident are ongoing. BP's second quarter replacement cost loss was $16,973 million, compared with a profit of $3,140 million a year ago. For the half year, replacement cost loss was $11,375 million compared with a profit of $5,527 million a year ago. The group income statement for the second quarter reflects a pre-tax charge of $32.2 billion related to the Gulf of Mexico oil spill. This includes $2.9 billion which has been charged for costs incurred to 30 June 2010. All charges relating to the incident have been treated as non-operating items.

- BP announced that it has taken a pre-tax charge of $32.2 billion for the Gulf of Mexico oil spill, including the $20 billion escrow compensation fund previously announced. The company will also tell analysts that it plans to sell assets for up to $30 billion over the next 18 months, primarily in the upstream business, and selected on the basis that they are worth more to other companies than to BP. This portfolio high grading will leave the company with a smaller but higher quality Exploration & Production business. Meanwhile BP continues to access new business opportunities, with new agreements in Azerbaijan, Egypt, China and Indonesia announced since the end of the first quarter. The company said it was taking a prudent approach to managing the balance sheet and its financial liquidity, in order to ensure that BP has the flexibility to meet all of its future financial obligations. As a result it plans to reduce its net debt level down to a range of $10-$15 billion within the next 18 months, compared to net debt of $23 billion at the end of June. Group capital spending for 2010 and 2011 will be about $18 billion a year, in line with previous forecasts.

- BP said that it had capped its hemorrhaging well, at least temporarily, marking the first time in 86 days that oil was not gushing into the Gulf of Mexico. Oil stopped flowing around 2:25 p.m. when the last of several valves was closed on a cap at the top of the well, said Kent Wells, a senior vice president for BP. The announcement came after a series of failed attempts to cap or contain the runaway well that tested the nation’s patience. Mr. Wells emphasized that pressure tests were being conducted to determine the status of the well, which is now sealed like a soda bottle. BP and the government could decide to allow the oil to flow again and try to collect all of it; they could allow the oil to flow and, if tests show the well can withstand the pressure from the cap, close the well during hurricanes; or they could leave the well closed permanently. The last option seems unlikely, but whatever the decision, the cap is an interim measure until a relief well can plug the leak for good. “I am very pleased that there’s no oil going into the Gulf of Mexico,” Mr. Wells said, “but we just started the test and I don’t want to create a false sense of excitement.” That was not much of a risk along the Gulf Coast, where countless livelihoods have been put in jeopardy and fishermen frequently and gloomily remark that Prince William Sound has never been the same since the Exxon Valdez disaster. Whether it was just the eye of the hurricane or the morning after the storm, the moment was a time to take stock of just how much damage had already been done since the deadly explosion on the Deepwater Horizon oil rig on the night of April 20. For weeks, the BP spill camera — which along with terms like “top kill,” “containment dome” and “junk shot” made up a growing list of phrases that many people wish they had never learned — had shown a horrible chocolate plume of oil pouring upward from the broken blowout preventer, a symbol of government and corporate impotence. The plume has been a constant presence in the corner of TV screens, mocking reassurances from officials on the news programs who describe the latest attempt to stop the gushing. But the view on was eerily tranquil, just the slate blue of the deep interspersed with small white particles floating across the screen. Though the exact amount of the oil that has poured out of the well may never be known, it was suddenly and for the first time a fixed amount. The disaster was, for a little while at least, finite. At the White House, President Obama called the development a “positive sign,” though he cautioned that the operation was still in the testing phase. In statements, Louisiana officials, including Gov. Bobby Jindal, said they were “cautiously optimistic.” Officials at all levels played down expectations. Thad W. Allen, the retired Coast Guard admiral who is coordinating the spill response, told reporters that the cap was primarily meant to be used to shut the well during extreme weather. He said that after the test, the cap would be used to capture oil through surface ships — two that are on the site now and two more that will be in operation in a week or two. With all four collection ships in place, BP could capture all of the oil, estimated at 35,000 to 60,000 barrels per day. Mr. Wells cautioned that the test could take 48 hours or more, as scientists study pressure readings from the cap. If pressure rises and holds, that would be a sign that the casing — the 13,000-foot string of pipe that lines the well bore — is undamaged. But if the pressure stays low or falls, that would suggest the well is damaged. In that case, Mr. Wells said, the test probably would be stopped well ahead of schedule, valves would be reopened and collection systems that had been shut down for the test would start again. The test had been delayed by about two days, first when the government ordered a last-minute review of the procedure out of concern that, by allowing the buildup of pressure, the test itself might harm the well. A particular fear, experts said, was that it might cause a shallow blowout — damaging the well lining close to the seabed, which could allow oil and gas to escape into the gulf outside the well, making the spill worse. By Wednesday afternoon, those concerns had been allayed and preparations were made to begin the test. But late that night, a hydraulic leak was discovered in part of the choke valve equipment, and the test was scrubbed. Thursday afternoon the test began again, first with the shutting down of pipes that funneled oil and gas to two surface ships. In even the most optimistic case, the BP oil spill is far, far from over. There are still millions of barrels of oil out in the gulf and months of work missing for fishermen and shrimpers; inestimable harm is still being inflicted on wildlife throughout the food chain; and anger still seethes along the Gulf coast. “What’s to celebrate?” asked Kindra Arnesen, the wife of a shrimper from Plaquemines Parish, La., who has become a recognizable voice of outrage over the past two and a half months. “My way of life’s over, they’ve destroyed everything I know and love,” she said, before going on to explain, in detail, why she believes the pressure tests are likely to fail.

- Despite the April 20 Deepwater Horizon disaster, BP has no plans to leave the Gulf of Mexico or stop drilling for oil in other deep ocean waters. Just the opposite: with its runaway well apparently under control, the troubled oil giant is now staking its future more than ever on deepwater wells. Although such wells are far riskier than land-based or shallow-water ones, oil fields that are located under a mile or more of water can be extremely lucrative, and BP continues to see them as worth the risks. Reflecting that strategy, BP announced that it had agreed to sell $7 billion of oil and gas fields to the Apache Corporation. The assets being sold — in Texas, New Mexico, western Canada and Egypt — are all on land. The move goes a long way toward raising the $20 billion that BP pledged to put in escrow by the end of 2013 to pay claims for the gulf oil spill. The company has already suspended its shareholder dividend to come up with some of the money, and it is expected to announce at least $3 billion in additional asset sales in the coming months. Reflecting BP’s urgent need for cash, Apache said it would advance BP $5 billion of the purchase price on July 30, even though the transaction is unlikely to close for several months as regulators in various countries review it. But the deal is not just about the money. Although BP, based in London, could have raised the funds by selling valuable deepwater assets, it decided to dispose of onshore assets instead. Analysts say the choice shows that BP is committed to deepwater drilling, despite the prospect of increased global regulation of such wells and an effort in Congress to bar the company from receiving new drilling permits in the gulf. “The Gulf of Mexico, West Africa, Brazil, Egypt — these offshore areas are where you have significant deposits, and this is what BP will continue to go after,” said Bruce Lanni, an energy portfolio strategist at Nollenberger Capital Partners. “BP has an opportunity to become a little leaner and meaner by selling some of its noncore assets on the periphery and emphasize the deepwater production.” As optimism grew that the temporary cap put on the Macondo well was holding up against the pressure of the oil below, BP announced an expansion of its offshore portfolio. The company signed a deal with Egypt’s government to develop new hydrocarbon deposits in the Mediterranean Sea. BP’s chief executive, Tony Hayward, declared, “This agreement unlocks a new phase in realizing the huge potential of the Nile Delta basin.” News of the Apache deal came shortly after Thad W. Allen, the retired Coast Guard admiral in charge of the response to the gulf spill, said that the government would give BP another 24 hours to test the cap on the Macondo well. The cap will remain shut while BP and government officials weighed whether to kill the well permanently by pumping heavy mud into it. In their quest for new supplies, oil companies have gone after oil and gas reserves in ever-deeper waters since the 1990s. But no company has invested as much in deepwater exploration over the last decade as BP, which has often led the way in the industry’s push into the deepest reaches of the oceans. Deepwater production, traditionally defined as wells in more than 1,000 feet of water, now accounts for about a third of BP’s 2.5 million barrels of daily oil output — surpassing Royal Dutch Shell or Exxon Mobil. BP is the top producer in the Gulf of Mexico, with a daily output of 400,000 barrels in 2009. The company operates the world’s biggest offshore platform, Thunder Horse, in the gulf. BP is also one of the top investors in Angola, which has turned into the fastest-growing source of oil in Africa thanks to its offshore deposits. Last year, the company made three discoveries in Angola’s ultradeepwater Block 31. In addition, BP is also looking for oil off the coasts of Libya and Egypt, and it is the largest foreign investor in Azerbaijan, where it operates two major fields in the Caspian Sea, Azeri-Chirag-Gunashli and Shah Deniz. With most of the big onshore fields long since discovered or controlled by national governments, major oil companies view the world’s oceans as their best opportunity to find vast pools of untapped oil and gas. But for BP, the increasing dependence on deepwater drilling poses its own risks. Deepwater projects are challenging under the best of circumstances — much of the work must be done using remote-controlled robotic vehicles, and the intense pressures and temperatures of the ocean depths make everything more difficult. The Deepwater Horizon accident has gravely damaged BP’s reputation. Even if the company can contain the political damage, its growth will be stunted by its need to save cash to pay for the spill. BP has already announced it would not pay a dividend this year and would reduce its capital spending program.

- BP announced that, by mutual agreement with the BP board, Tony Hayward is to step down as group chief executive with effect from October 1, 2010. He will be succeeded as of that date by fellow executive director Robert Dudley. BP chairman Carl-Henric Svanberg said: "The BP board is deeply saddened to lose a CEO whose success over some three years in driving the performance of the company was so widely and deservedly admired. "The tragedy of the Macondo well explosion and subsequent environmental damage has been a watershed incident. BP remains a strong business with fine assets, excellent people and a vital role to play in meeting the world's energy needs. But it will be a different company going forward, requiring fresh leadership supported by robust governance and a very engaged board. "We are highly fortunate to have a successor of the calibre of Bob Dudley who has spent his working life in the oil industry both in the US and overseas and has proved himself a robust operator in the toughest circumstances," Svanberg said.

- Bob Dudley (54) is a main board director of BP and currently runs the recently-established unit responsible for clean-up operations and compensation programmes in the Gulf of Mexico. He joined BP from Amoco after the merger of the two companies in 1998. He was president and CEO of BP's Russian joint venture, TNK-BP, until 2008. On his appointment, Dudley will be based in London and will hand over his present duties in the US to Lamar McKay, chairman and president of BP America. Hayward will remain on the BP board until November 30, 2010. BP also plans to nominate him as a non-executive director of TNK-BP. Commenting on the decision to step down, Hayward said: "The Gulf of Mexico explosion was a terrible tragedy for which - as the man in charge of BP when it happened - I will always feel a deep responsibility, regardless of where blame is ultimately found to lie. "From day one I decided that I would personally lead BP's efforts to stem the leak and contain the damage, a logistical operation unprecedented in scale and cost. We have now capped the oil flow and we are doing everything within our power to clean up the spill and to make restitution to everyone with legitimate claims. "I would like to thank all of the BP people involved in the response and the many thousands of others along the Gulf Coast who have joined us in our efforts. "I believe the decision I have reached with the board to step down is consistent with the responsibility BP has shown throughout these terrible events. BP will be a changed company as a result of Macondo and it is right that it should embark on its next phase under new leadership," Hayward said. "I will be working closely with Bob Dudley over the coming months to ensure a smooth transition. It has been a privilege to serve BP for nearly 30 years and to lead it for the last three. I am sad to leave so many fine colleagues and friends who have helped this great company to achieve so much over the years. I am sorry that achievement has been overshadowed by the tragedy in the Gulf of Mexico." BP said that under the terms of his contract Hayward would receive a year's salary in lieu of notice, amounting to £1.045 million.

- BP said it estimates it will pay at least $60 million in advance payments in August to claimants across the Gulf Coast who have lost income or net profit due to the oil spill in the Gulf of Mexico. BP, which has paid $256 million to date for claims including $30 million in the last seven days, will start making the advance payments by the end of this week. Claimants will receive their check about 30 days after they received their July payment.

- BP announced that it will establish a $100 million charitable fund to support unemployed rig workers experiencing economic hardship as a result of the moratorium on deepwater drilling imposed by the United States federal government. The Rig Worker Assistance Fund will be administered through the Gulf Coast Restoration and Protection Foundation, a supporting organization of The Baton Rouge Area Foundation (BRAF).This voluntary donation fulfills the commitment BP announced on June 16 to provide $100 million in assistance as a gesture of good will for the people of the Gulf Coast region.

- BP announced it has hired Witt Associates, and its CEO James Lee Witt, to support BP’s work to restore Gulf Coast communities in the wake of the oil and gas spill in the Gulf of Mexico. Witt Associates, a public safety and crisis management consulting firm, founded by former FEMA Director James Lee Witt, has unrivaled experience in emergency response, recovery, and mitigation. The firm has successfully worked in the Gulf region and across the nation to engage with key stakeholders and manage transparent and accountable long-term recovery efforts. BP will draw on Witt’s expertise and strategic counsel on all aspects of BP’s long-term recovery work. As BP builds out its Gulf Coast Restoration Organization, it will draw on Witt Associates to identify experienced and effective personnel in the region to liaise with state and local government officials and community organizations on behalf of BP. BP’s Gulf Coast Restoration Organization will continue to work in cooperation with the Unified Command and will build the infrastructure necessary to see through BP’s long-term commitments.

August

• Upstream news:

- During final preparations to commence with the injectivity test, a small hydraulic leak was discovered in the capping stack hydraulic control system. The injectivity test, previously announced to take place, will be rescheduled until the leak is repaired.

- BP announced that it has agreed to sell its oil and gas exploration, production and transportation business in Colombia to a consortium of Ecopetrol, Colombia's national oil company (51 per cent), and Talisman of Canada (49 per cent). The two companies will pay BP a total of $1.9 billion in cash, subject to customary post-completion price adjustments, for 100 per cent of the shares in BP Exploration Company (Colombia) Limited (BPXC), the wholly-owned BP subsidiary company that holds BP's oil and gas exploration, production and transportation interests in Colombia. Subject to regulatory and other approvals, the sale is expected to be completed by the end of the year. The sale of the Colombian business is part of BP's plan, announced on July 27, to divest up to $30 billion of assets over the next 18 months. On July 20 BP announced that it had agreed to sell assets in the USA, Canada, and Egypt to Apache Corporation for a total of $7 billion, and the company has also recently informed governments in Pakistan and Vietnam that it intends to divest its upstream interests in those countries.

- BP started injectivity testing in advance of static kill operations. Based on the results of the injectivity test, pumping of drilling mud for the static kill could commence later, following which a decision on the best way to cement the well will be determined. All operations are being carried out with the guidance and approval of the National Incident Commander. The aim of these procedures is to assist with the strategy to kill and isolate the well, and will complement the upcoming relief well operation. The relief well remains the ultimate solution to kill and permanently cement the well. The first relief well, which started May 2, has set its final 9 7/8-inch casing. Operations on the relief wells are suspended during static kill operations. Depending upon weather conditions, mid-August is the current estimate of the most likely date by which the first relief well will intercept the Macondo well annulus, and kill and cement operations commenced.

- Based on the results of the injectivity test, BP started pumping drilling mud as part of the static kill operations. All operations are being carried out with the guidance and approval of the National Incident Commander. The aim of these procedures is to assist with the strategy to kill and isolate the well, and will complement the upcoming relief well operation.

- BP announced that the MC252 well appears to have reached a static condition -- a significant milestone. The well pressure is now being controlled by the hydrostatic pressure of the drilling mud, which is the desired outcome of the static kill procedure. Pumping of heavy drilling mud into the well from vessels on the surface began at 1500 CDT (2100 BST) on August 3, 2010 and was stopped after about eight hours of pumping. The well is now being monitored, per the agreed procedure, to ensure it remains static. Further pumping of mud may or may not be required depending on results observed during monitoring. The start of the static kill was based on the results of an injectivity test, which immediately preceded the static kill and lasted about two hours. BP will continue to work with the National Incident Commander and other government officials to determine the next course of action, which involves assessing whether to inject cement in the well via the same route. The aim of these procedures is to assist with the strategy to kill and isolate the well, and will complement the upcoming relief well operation, which will continue as per plan. A relief well remains the ultimate solution to kill and permanently cement the well. The first relief well, which started May 2, has set its final 9 7/8-inch casing. Operations on the relief wells are suspended during static kill operations. Depending upon weather conditions, mid-August is the current estimate of the most likely date by which the first relief well will intercept the Macondo well annulus, and kill and cement operations commence.

- BP has received authorization from the National Incident Commander (NIC) to conduct cementing operations on the MC252 well as part of the static kill procedure. Pumping operations are expected to begin Thursday, August 5th. All operations are being carried out with the guidance and approval of the NIC and other government officials. The aim of the procedure is to assist with the strategy to kill and isolate the well, and will complement the upcoming relief well operation.

- BP started pumping cement into the MC252 well at 09:15 CDT (15:15 BST) as part of the static kill procedure. All operations are being carried out with the guidance and approval of the National Incident Commander and other government officials.

- BP completed cementing operations at the MC252 well at 14:15 CDT, as part of the static kill procedure. Monitoring of the well is underway in order to confirm the effectiveness of the procedure. Operating with the guidance and approval of the National Incident Commander and government officials, BP continues the ongoing relief well operations. Depending upon weather conditions, mid-August is the current estimate of the most likely date by which the first relief well will intercept the Macondo well annulus.

- At a press conference in New Orleans, Doug Suttles, BP's chief operating officer for Exploration & Production, responded to two questions about possible future development opportunities within the MC252 reservoir, saying: “And you can imagine what we've been focused on is the response right now. So we haven't even thought about what we're going to do with this reservoir and this field some day." Later he acknowledged that there are substantial oil and gas reserves in the reservoir, adding that BP would have to “think about what to do with that at some point.” As Mr. Suttles made clear this morning, BP's present focus is entirely on the response effort in the Gulf of Mexico and the future use of the reservoir is not currently under consideration. Mr. Suttles also emphasized that neither the original wellbore, which was successfully cemented, nor either of the two relief wells would be used as part of any future development.

- The MC252 well has been shut-in since July 15; there is currently no oil flowing into the Gulf. BP continues to work with the guidance and approval of the National Incident Commander and the leadership and direction of the federal government. Following the completion of cementing operations on the MC252 well on August 5, pressure testing was performed which indicated there is an effective cement plug in the casing. BP believes the static kill and cementing procedures have been successful. BP continues to progress the relief well operations that commenced on May 2. The well is currently at a measured depth of 17,909 feet. Progressing towards the intersect with the MC252 well will involve drilling alternating with ranging runs to confirm proximity to the well. Depending upon weather conditions, August 15th is the current estimate of the most likely date by which the first relief well will intercept the MC252 well annulus.Operations on the second relief well, which started May 16, have been suspended at a measured depth of 15,874 feet, so as not to interfere with the completion of the first relief well.

- BP, operating with the guidance and approval of the National Incident Commander (NIC), completed the four-hour near ambient pressure test on the MC252 well in the Gulf of Mexico.

- BP announced the completion of its purchase from Devon Energy of an additional interest in the BP-operated Azeri-Chirag-Gunashli (ACG) oilfield development in the Azerbaijan sector of the Caspian Sea.

- Under the guidance and approval of the Unified Area Command, BP has been authorized to begin flushing drilling mud and hydrocarbons from the MC252 well sealing cap and the original Deepwater Horizon Lower Marine Riser Package (LMRP) and Blow Out Preventer (BOP). The flushing is in advance of a pressure test procedure that will study the well’s BOP stack and sealing cap under ambient conditions.

- The forty-eight hour ambient pressure test was deemed successful. Under the guidance and approval of the National Incident Commander (NIC) and Unified Area Command, BP has been authorized to begin open water fishing operations from the MC252 Blow Out Preventer (BOP). The fishing operations will aim at removing drill pipe within the MC252 BOP. Operations commenced this morning. Following successful fishing operations and authorization from the NIC, BP will proceed with replacement of the original BOP with the BOP from the Transocean Development Driller II (DDII). In anticipation of a successful operation, the DDII set a storm packer and has unlatched its BOP from the second relief well site. In the case fishing operations are unsuccessful, BP and the federal science team are developing contingency procedures which would be carried out under the approval from the NIC.

- As part of its long term monitoring and research program in the Gulf of Mexico, BP is deploying a new technology that will enable nearly constant monitoring by two satellite-controlled, unmanned vehicles. The vehicles, known as Wave Gliders and developed by Liquid Robotics in Silicon Valley, California, get their propulsion power from wave action and use solar power for their electronics. They will be deployed and begin a months-long, ongoing research program in the Gulf of Mexico.

• Downstream news:

- The Grand Opening of the Castrol China Technology Centre took place in Shanghai’s Pudong Jinqiao Science Park, marking an important step in the development of Castrol’s global technology strategy. The new facility will be dedicated to developing lubricant technology solutions for the automotive, aviation, industrial, offshore and marine market sectors in China. The Opening Ceremony was attended by Mr. Zhu Jiajun, Deputy Governor of Shanghai Pudong New District, Mr. Mike Johnson, Chief Executive Lubricants, Mr. Chen Liming, President of BP China, Dr. Angela Strank, Lubricants Technology Vice President, and Mr. Paul Turner, Regional Director China & North Asia, as well as more than 100 distinguished guests, including automotive companies and equipment manufacturers.

- BP Products North America Inc. (BP) and the US Occupational Safety and Health Administration (OSHA) have reached a settlement to resolve 270 of the 709 citations that OSHA issued to BP at its Texas City Refinery in October 2009. In these citations, OSHA alleges that BP failed to meet obligations set forth in a 2005 agreement with OSHA. These allegations relate to the continuing implementation of abatement activities following the 2005 accident at the Texas City Refinery. BP contested the citations and maintains that the refinery has undertaken extensive actions to enhance worker safety since 2005 in full conformance with the 2005 agreement. BP and OSHA elected to focus on resolving 270 "Failure to Abate" citations which are the subject of this settlement. Both parties have agreed to settle these matters and focus on moving forward collaboratively in order to continue to improve plant safety. This new agreement addresses the concerns that OSHA raised in these citations. BP is hopeful that this agreement will provide a platform to resolve the remaining citations. As part of this agreement, BP will further accelerate its ongoing multi-year program of investment in activities that are designed to implement industry leading process safety practices and address potential hazards which are identified through comprehensive engineering reviews. BP and OSHA have established an aggressive schedule for these activities, which are already underway. The work will be verified by independent experts and OSHA to ensure consistent implementation and conformance with OSHA standards. BP is obligated to fund the program, currently estimated to cost up to $500 million over the period 2010 to 2016. This amount is in addition to the more than $1 billion that BP spent on safety and infrastructure improvements at the Texas City Refinery during 2005-2009. Besides its commitment to future investment, BP also has agreed to pay a penalty of $50.6 million to OSHA as part of this settlement.

• Business/Finance news:

- BP said it has instituted a series of actions to expedite claim payments to businesses impacted by the oil spill in the Gulf of Mexico, including establishing an Immediate Action Claims Team. About 2,600 business claims were processed over the past three days, using new guidelines developed to specifically address challenges faced by businesses. As a result, business claims totalling $9 million were approved. These payments will be mailed to businesses. Of the 2,600 business claims processed the past three days, many were from small businesses while several represented a second or third payment that was expedited due to cash flow issues. Others were new claims now eligible for payment due to BP’s expanded covered claims criteria. Under the new procedures, BP is encouraging businesses with urgent cash flow needs to contact their adjuster immediately, or they can call 800-573-8249 and tell the operator that they have an urgent cash flow need. The claim will be referred to the Immediate Action Claims Team, which is dedicated to evaluating these types of claims and expediting payments.The new procedures include paying claims from tourist businesses not directly linked to the natural resource but located in close proximity to the affected tourist resource, such as an oiled beach; simplifying documentation requirements; easing requirements for start-up businesses to prove a loss; and increasing the delegation of authority for adjusters. To ease documentation requirements, BP will accept tax returns from 2009, and in recognition of cash flow issues, pay the equivalent of roughly three months of losses. If no 2009 tax return exists because of an extension, BP will use the 2008 return for emergency payments. Businesses can get specific criteria from their claims adjuster. For start-ups, BP will accept proof of business activity which can include such things as bank statements, asset purchase verification and Articles of Association. Increasing the delegation of authority for its adjusters will speed up payments as larger claims will be approved without having to go through the centralized Claims Authorization Team. The expedited business claims process applies to any size company but will be especially helpful for small and medium size companies who may not have the financial resources needed to meet their short-term cash needs for payroll and other operating expenses. BP also announced that it will defer decisions on some business and individual claims to Ken Feinberg who will take over the claims process with the establishment of the Gulf Coast Claims Facility (GCCF) later this month. With regard to claims that are being referred to GCCF, Willis said that there are some tough decisions to be made on a variety of claims.

- Two weeks after crews wrestled temporary control of the geyser of oil spewing into the Gulf of Mexico, BP could begin the first step in a weeks-long process to permanently jam the blown-out well. But here in this fisherman's paradise, the first town to fall victim to the largest offshore oil spill in U.S. history, the toxic oil is still washing ashore. Grand Isle, population 1,500, is a village still in mourning, still a place where hope is in short supply. The only inhabited barrier island in all of Louisiana, Grand Isle should be bustling this time of year. But over the weekend, there was no commotion of pickups hauling fishing boats on Highway 1. Vacation homes stood quiet, with blinds down and shutters shut. On the beach, gone was the sound of laughing children playing in the 90-degree waters. Making things worse, locals say, is the uncertainty of it all. Hurricanes can be awful too, but at least they move on. About 50 miles south of New Orleans, Grand Isle sits on the southern edge of Barataria Bay — a dense and extensive wetlands and home to so many fish, shrimp and crab that it is a haven for migratory birds looking for a feast before they journey across the Gulf of Mexico. It's clear why pirates loved Barataria Bay, with its vast system of bayous and uninhabited islands. Look at the warm waters, and it's easy to see fish jumping out or crab swimming away. But an oily, iridescent metallic sheen coats the waves coming ashore. What at first seem like pebbles scattered over the sand are black tar balls, which form when oil mixes with sand and rocks. The tar balls' glittery hardened shell can break apart in the heat, revealing a center that is soft, gooey and pitch-black. It leaves a residue that resembles WD-40 lubricant. There are so many tar balls that huge tractors are forced to skim the beach 24 hours a day, sucking up tainted sand. Recently, machines were able to squeeze six barrels of oil out of 71 tons of sand, said Jesse Alling, a Coast Guard marine science technician. In some areas on the beach, the tar balls have congealed into pieces of hardened asphalt, as though someone had repaired potholes on the beach. The frothy tips of waves are sometimes tinted red, instead of white, an effect of a dispersant, a chemical used to break oil into tiny, invisible particles, Alling said. Hermit crabs are caked in thick, dark reddish muck, unable to cleanse themselves. About a dozen crabs seemed to be stuck together by the oily, gritty paste on their shells. Every day, dead birds covered in oil are found by crews. On Saturday, after a flock of royal terns flew off, a Coast Guard crew saw one that had been left behind, its belly tarnished, its feathers waterlogged. Even with all the cleanup work on the beach, crews know they are nowhere near done. Locals say they're still worried about the effects of the oil and dispersant on fish, and what it means for the long-term survival of a town whose identity is fixed on fishing.

- The parish presidents have gotten their wish. Last week they had a meeting with Coast Guard Retired Admiral Thad Allen to tell him they felt ignored by BP and the Coast Guard. Now, the group has come to an agreement on how they will all work together to clean up the oil spill. The document signed by all of the parish presidents, outlines a transition plan for all parishes and how they'll work with the Unified Command Center to clean up oil. It also says the parish must give consent for any response equipment to be removed. In the event of a hurricane, BP must provide a representative to be in each parish and have access to a recurring budget to pay for any un-expected costs. Garret Graves, the chairman of the Coastal Protection and Restoration Authority, says parish presidents know best how to protect their coastlines, and they need to be a part of each and every decision.

- Federal investigators are expected to confront executives and managers of BP and rig owner Transocean Ltd. about catastrophic failures in oil well design and disabled safety systems that may have played a role in the deaths of 11 crewmen on the ill-fated Deepwater Horizon. The joint U.S. Coast Guard- Interior Department investigation into the April 20 blowout has amassed a trove of testimony during three previous hearings in Louisiana and this week moves to Houston, the hub of the nation's oil and gas industry, where BP and other firms linked to the disaster have offices. The earlier proceedings elicited gripping narratives from rig workers who described their escape from the fiery explosions and evidence of cost-saving managerial decisions that may have compromised safety. The outcome of this federal investigation is potentially significant. If the inquiry uncovers criminal misconduct by companies involved with the well, the investigative panel can offer its findings to the U.S. Department of Justice, which is conducting a criminal investigation. The panel boosted its legal heft last week by adding retired U.S. District Judge Wayne R. Andersen and Coast Guard Capt. Mark R. Higgins, an attorney, to the team. Their courtroom experience may help the panel cut through the increasingly time-consuming process of questioning witnesses, which is frequently interrupted by scores of lawyers representing a dozen companies and individuals. A fifth proceeding may be held after key equipment, including the well's blowout preventer, is recovered from the bottom of the Gulf of Mexico. The Coast Guard, which is charged with investigating deaths at sea, conducts the hearings much like a trial, with witnesses under oath, cross-examination and exhibits. The panel will report its findings by January. A key witness scheduled to testify is Halliburton's technical advisor, Jesse Gagliano. Halliburton was hired by BP to cement the well. An e-mail from Gagliano warned BP two days before the explosion that the company's well design plan posed a "SEVERE" risk of gas flow, according to previous testimony. Such a gas surge is suspected to have pushed a bubble of combustible methane through a drill pipe, exploding in the belly of the massive rig. Warnings about the integrity of the well and the rig's safety systems were ignored or disregarded, according to witnesses. Federal investigators have suggested that crucial decisions were made to save time and money. In earlier hearings, testimony illustrated the financial and time pressures BP was under to finish the exploratory phase of the drilling, which included sealing the well and moving the floating oil rig to a different site. Drilling was six weeks behind schedule, costing BP at least $21 million in leasing fees alone. Panelists said that may have put pressure on the company to reject more time-consuming procedures to close the well. This week, BP employee Brian Morel will probably be asked to explain an e-mail message he wrote in which he rejected Halliburton's suggestion to place 21 devices called "centralizers" in the well bore, opting to use just six. Centralizers are doughnut-shaped sheaths that surround pipe and keep it from knocking into the side of the well bore. A properly centered pipe makes it easier to seal the well with cement, which should reduce the risk of a gas blowout. Engineers widely agree that using more centralizers is safer than using fewer. But installing the devices takes time and money, and BP employees testified that such approaches are not always necessary. In an e-mail, Morel defended the decision to use fewer centralizers, writing, "Hopefully, the pipe stays centralized due to gravity," adding that "it's too late to get any more product to the rig." Another key witness scheduled to testify is Mark Hay, a supervisor for Transocean, which owned the rig and leased it to BP. One of Hay's subordinates told the panel last month that Hay scolded him for taking the time to repair a gas safety valve that had been put in bypass mode. When operational, the device automatically cuts off unexpected flows of gas from the well into the rig. Williams also testified that the Deepwater Horizon's critical fire and gas leak alarms had been disabled for at least a year because the rig's chiefs didn't want to be woken up by false alarms. He described the rig as being in "very bad condition," with overdue maintenance and unreliable computers. In the gulf, meanwhile, engineers have finished pressure testing on the troubled well and said they would begin trying to fish out a piece of drill pipe remaining in the wellhead — an important precursor to replacing the faulty blowout preventer and permanently shutting down the well. The pieces of the well removed during the so-called fishing procedure and the removal of the blowout preventer could be crucial to determining what caused the accident. The federal spill response chief, retired Coast Guard Adm. Thad Allen, in his order released Saturday directed BP to remove the equipment by methods that will "recognize and preserve the forensic and evidentiary value" in cooperation with Coast Guard authorities and criminal investigators for the Justice Department.

- BP said that it has paid $303 million in claim payments to more than 40,000 individuals and businesses impacted by the oil spill in the Gulf of Mexico. In just the past three weeks, BP has paid out $112 million and will continue to pay claims until the Gulf Coast Claims Facility (GCCF) takes over claims processing for businesses and individuals later this month.

- BP announced the appointment of Mike Utsler as BP's lead representative in the Unified Area Command (UAC) here and as chief operating officer for the BP Gulf Coast Restoration Organization. Utsler, who has served as BP's commander in the Houma incident command post since April, replaces Doug Suttles, who has led BP's overall response to the spill and served as BP's representative in the UAC. Utsler assumes his new role. Suttles will be returning to his role as chief operating officer for BP Exploration and Production in Houston. Prior to joining the spill response effort, Utsler served as vice president at BP, and brings more than 33 years experience to this new role. The Gulf Coast Restoration Organization will manage BP's ongoing response and restoration activities from the Deepwater Horizon oil spill. The organization will maintain offices in each of the affected states, including Florida, Mississippi, Alabama, Louisiana, and Texas.

- BP announced that it has established a trust and made a $3 billion initial deposit of the previously-announced $20 billion escrow account to pay legitimate claims arising from the Deepwater Horizon incident and the resulting oil and gas spill.

- BP cautioned individuals and businesses to be alert for potential scams - including door-to-door attempts by unauthorized individuals who seek personal information or charge fees for safety training or other purposes in connection with the Deepwater Horizon Gulf of Mexico oil spill response.

- In our article on Friday about the four-month effort to plug the runaway well in the Gulf of Mexico, Clifford Krauss, John Broder and I describe the many ups and downs for the engineers inside BP’s command center. Their task began with the biggest “down” of all — the April 20 explosion and fire aboard the Deepwater Horizon drill rig that killed 11 rig workers. Just as people remember what they were doing when they heard that President Kennedy was shot or that terrorists had attacked on Sept. 11, 2001, BP engineers precisely recall the moment when they first heard about the disaster in the Gulf. Richard Lynch, a BP vice president who ended up overseeing much of the containment effort, was in London on business and could not get back to Houston until April 23 because flights were grounded by the ash cloud from the Icelandic volcano. He went straight from the airport to BP’s offices for a briefing, went home to see his family and came back at 4:30 a.m. “I’ve been here ever since,” he said in a recent interview. Kent Wells, a senior vice president, was in Washington working on the company’s onshore gas business. He learned about the explosion when he walked into the office on the morning of April 21, and a short time later he was on a plane to Houston. Paul Tooms, BP’s vice president of engineering, had just returned to his home in England from a four-day break in Spain — he had also been delayed because of the ash cloud, the trip back including an enormously expensive taxi ride from the Spanish border to Paris — only to learn that he would have to hop on a plane again, as soon as he could. He recalled thinking that while he had been involved in other incidents involving BP, “this was going to eclipse anything.” As BP’s resident well-control expert, Mark Mazzella was one of the first to be contacted. The call came shortly after midnight, or a little more than two hours after the explosion. He immediately came into the office. Mr. Mazzella and others described an “all-hands-on-deck” approach in those early days, when teams of engineers worked around the clock to try to shut off the flow of oil by using remotely operated submersibles to try to close valves on the blowout preventer on the seafloor. (That effort was detailed in an article by investigative reporters at the Times in June.) “You think it’s chaotic if you are on the outside looking in, but it’s very organized,” Mr. Mazzella said. “As bad as it was to see people lose their lives, it was good to see how quickly the team pulled together.” Mr. Wells initially was charged with serving as a liaison between dayside and nightside teams, so for the first few weeks he worked overnight. Then BP executives realized they needed to do a better job of explaining what the company was doing to the public and to the government. From that point on, Mr. Wells spent much of his time briefing government officials and the public about the efforts to stop the gusher. For most of the engineers, the initial reaction to the news of the disaster was shock and disbelief. “It was unthinkable,” Mr. Lynch said. “That’s not to say it couldn’t happen. But the probability and possibility of it happening is something I blatantly discounted.” Now that rig was burning like a Roman candle. “Everybody was going, what happens now if the rig sinks,” Mr. Lynch said. “And then of course the rig sinks. What was a terrible scenario got worse.”

- BP announced that it is providing $52 million to federal and state health organizations to fund behavioral health support and outreach programs across the US Gulf Coast region. The funding will help residents link up with support that is available through providers in their communities, through a variety of local outreach programs and a special toll free phone line where people can turn for information on available services.

- BP’s claims team, which has paid $368 million to individuals and businesses, is in the final stages of preparing to transfer responsibility for individual and business claims related to the oil spill in the Gulf of Mexico to the Gulf Coast Claims Facility (GCCF) on August 23.

- BP, which has transitioned its individual and business claims program to the Gulf Coast Claims Facility (GCCF), said it made claim payments of nearly $400 million during the 16 weeks it managed claims related to the oil spill in the Gulf of Mexico.

September

• Upstream news:

- The MC252 well has been shut-in since July 15. Following the completion of cementing operations on the well on August 5, pressure testing was performed which indicated there is an effective cement plug in the casing. Operations are now underway to replace the Deepwater Horizon (DWH) drilling rig’s failed blow-out preventer (BOP) with the DDII drilling rig’s BOP in order to allow operations to complete the relief well to resume. The capping stack on top of the DWH BOP was removed by the drillship Discoverer Enterprise on September 2. Following the removal of the capping stack, the Q4000 support vessel will connect a riser to the DWH BOP as part of ongoing operations to remove the BOP from the well. The DDII drilling rig will then be expected to move its BOP into place. The DDIII drilling rig is on standby in readiness to resume drilling the relief well. The well is at a measured depth of 17,909 feet and progressing to intersect with the MC252 well will involve drilling, alternating with ranging runs to confirm proximity to the well. Depending upon weather conditions, mid-September is the current estimate of the most likely date by which the relief well will intercept the MC252 well annulus. Information on the subsea operational status is updated daily on BP’s website, www.bp.com . Since July 15, no new oil has flowed into the Gulf of Mexico from the MC252 well. No volumes of oily liquid have been recovered since July 21 and the last controlled burn operation occurred on July 20. BP, as part of Unified Command, continues to conduct overflights and other reconnaissance to search for oil on the surface. Throughout the response, skimming operations recovered a total of over 826,000 barrels of oily liquid and a total of 411 controlled burns have been carried out, removing an estimated 265,000 barrels of oil from the open water. At peak, approximately 3.5 million feet of containment boom was deployed in response to the oil spill. Currently 1.72 million feet of containment boom remains deployed. Approximately 28,400 personnel, more than 4,050 vessels, and dozens of aircraft remain engaged in the response effort. On August 23, the processing of all claims by individuals and businesses related to the Deepwater Horizon incident transferred to the Gulf Coast Claims Facility (GCCF) under the leadership of Ken Feinberg. Since the transfer, over 42,000 claims have been submitted to the GCCF, with over 4,900 claims totalling some $38.5 million being paid. Prior to the transfer to the GCCF, BP had made 127,000 claims payments, totalling approximately $399 million. The cost of the response to date amounts to approximately $8 billion, including the cost of the spill response, containment, relief well drilling, static kill and cementing, grants to the Gulf states, claims paid and federal costs. On June 16, BP announced an agreed package of measures, including the creation of a $20 billion escrow account to satisfy certain obligations arising from the oil and gas spill.

- The MC252 well has been shut-in since July 15. Following the completion of cementing operations on the well on August 5, pressure testing was performed which indicated there is an effective cement plug in the casing. A number of operations have been successfully completed to allow the DDIII drilling rig to be in a position to begin drilling the relief well to intercept the MC 252 well annulus. The capping stack on top of the Deepwater Horizon (DWH) Blow Out Preventer (BOP) was removed by the drillship Discoverer Enterprise on September 2 at 4:25 pm CDT. The DWH BOP was successfully removed from the MC252 well by the Q4000 on September 3 at 1:20 pm CDT. The DDII moved into place with its BOP, which was then successfully installed on top of the MC252 well on September 3 at 8:33 pm CDT. The DWH BOP was lifted to the surface on September 4 at 8:53 p.m. CDT. The DWH BOP was taken into custody by the US Department of Justice as evidence in its ongoing investigation into the incident. Information on the subsea operational status is updated daily on BP's website, www.bp.com

- No single factor caused the Macondo well tragedy. Rather, a sequence of failures involving a number of different parties led to the explosion and fire which killed 11 people and caused widespread pollution in the Gulf of Mexico earlier this year. A report released by BP concludes that decisions made by “multiple companies and work teams” contributed to the accident which it says arose from “a complex and interlinked series of mechanical failures, human judgments, engineering design, operational implementation and team interfaces.” The report – based on a four-month investigation led by Mark Bly, BP’s Head of Safety and Operations and conducted independently by a team of over 50 technical and other specialists drawn from inside BP and externally – found that: The cement and shoe track barriers – and in particular the cement slurry that was used – at the bottom of the Macondo well failed to contain hydrocarbons within the reservoir, as they were designed to do, and allowed gas and liquids to flow up the production casing; The results of the negative pressure test were incorrectly accepted by BP and Transocean, although well integrity had not been established; Over a 40-minute period, the Transocean rig crew failed to recognise and act on the influx of hydrocarbons into the well until the hydrocarbons were in the riser and rapidly flowing to the surface; After the well-flow reached the rig it was routed to a mud-gas separator, causing gas to be vented directly on to the rig rather than being diverted overboard; The flow of gas into the engine rooms through the ventilation system created a potential for ignition which the rig’s fire and gas system did not prevent; Even after explosion and fire had disabled its crew-operated controls, the rig’s blow-out preventer on the sea-bed should have activated automatically to seal the well. But it failed to operate, probably because critical components were not working. Commenting on the report, which he commissioned immediately after the Macondo explosion, BP’s outgoing chief executive Tony Hayward said: “The investigation report provides critical new information on the causes of this terrible accident. It is evident that a series of complex events, rather than a single mistake or failure, led to the tragedy. Multiple parties, including BP, Halliburton and Transocean, were involved. BP’s incoming chief executive Bob Dudley said: “We have said from the beginning that the explosion on the Deepwater Horizon was a shared responsibility among many entities. This report makes that conclusion even clearer, presenting a detailed analysis of the facts and recommendations for improvement both for BP and the other parties involved. We have accepted all the recommendations and are examining how best to implement them across our drilling operations worldwide. Based on its key findings, the investigation team has proposed a total of 25 recommendations designed to prevent a recurrence of such an accident. The recommendations are directed at strengthening assurance on blow-out preventers, well control, pressure-testing for well integrity, emergency systems, cement testing, rig audit and verification, and personnel competence. The company said it expected a number of the investigation report’s findings to be considered relevant to the oil industry more generally and for some of the recommendations to be widely adopted. BP said the report was based on information available to the investigating team. It noted that additional relevant information may be forthcoming, for example, when Halliburton’s samples of the cement used in the well are released for testing and when the rig’s blow-out preventer is fully examined now that it has been recovered from the sea-bed. There will also be additional information from the multiple ongoing US government investigations. The investigation report is available online at www.bp.com, together with an accompanying video.

- The MC252 well has been shut-in since July 15. Following the completion of cementing operations on the well on August 5, pressure testing was performed which indicated there is an effective cement plug in the casing. A number of diagnostic operations to further understand the well’s condition have been successfully completed on the MC252 well. The diagnostics were performed over the last few days by the Development Driller II, which is currently latched to the MC252 well. A lead block impression test was completed in order to determine the condition of the casing hangar, located near the well head. The test, which uses soft lead metal to form an impression of the casing hangar, shows that the hangar was in the proper location and had not lifted. The next operation to be performed is the installation of a lock down sleeve, which is a mechanical device that completely secures the casing hangar and the annulus. This operation is a key final step before restarting of the relief well drilling. Once the lock down sleeve is installed and tested, we will re-start the relief well operations on the weekend in order to intercept the well annulus. The relief well is the last step in completely killing the MC252 well.

- BP re-started relief well drilling operations from the Development Driller III (DD3) following the successful installation of a lock down sleeve, a mechanical device that secures the MC252 well’s casing hangar. The DD3 is drilling toward the MC252 well intercept point, currently about 50 feet below. Relief well operations will consist of drilling and ranging runs that will guide the rig’s drill bit to intercept the well’s annulus. Following the intercept, heavy drilling mud and cement will be pumped into the annular space to complete the isolation of the MC252 well.

- BP announced that its acquisition of an interest in block 42/05 in the South China Sea’s Pearl River Mouth Basin has been approved by the Chinese Government. BP has acquired a 40.82 per cent interest in the block from Devon Energy China, Ltd. The block covers an area of 6939 square kilometers. Chevron acquired the remaining 59.18 per cent and will be the operator during the exploration phase under the amendment agreements to a production sharing contract with China National Offshore Oil Corporation (CNOOC). CNOOC Limited, a listed arm of CNOOC, has the right to back-in to a level of 51% during the development phase of the production sharing contract.

- Relief well drilling from the Development Driller III (DD3) re-started and operations completed drilling the final 45 feet of hole. This drilling activity culminated with the intercept of the MC252 annulus and subsequent confirmation at 4:30 p.m. CDT Thursday. Total measured depth on the DD3 for the annulus intercept point was 17,977 feet. Operations conducted bottoms up circulation, which returned the contents of the well’s annulus to the rig for evaluation. Testing of the drilling mud recovered from the well indicated that no hydrocarbons or cement were present at the intersect point. Therefore, no annulus kill is necessary, and the annulus cementing will proceed as planned. It is expected that the MC252 well will be completely sealed. Once cementing operations are complete, the DD3 will begin standard plugging and abandonment procedures for the relief well. The Development Driller II continues its work to gather additional data from the MC252 well and try to determine the location of the drill pipe that was originally in the well at the time of the accident. Subsequently plug and abandonment activities will commence in accordance with the approved procedure.

- BP confirmed that well kill operations on the MC252 well in the Gulf of Mexico are now complete, with both the casing and annulus of the well sealed by cement. The MC252 well has been shut-in since July 15 and cementing operations in August, following the static kill, provided an effective cement plug in the well’s casing. The relief well drilled by the DDIII drilling rig intercepted the annulus of the MC252 well on September 15, followed by pumping of cement into the annulus on September 17. BP, the federal government scientific team and the National Incident Commander have now concluded that these operations have also successfully sealed the annulus of the MC252 well. BP will now proceed to complete the abandonment of the MC252 well, which includes removing portions of the casing and setting cement plugs. A similar plugging and abandonment of both relief wells will occur as well. BP will also now begin the process of dismantling and recovering containment equipment and decontaminating vessels that were in position at the wellsite.

• Downstream news:

- BP announced that it has agreed to sell its interests in ethylene and polyethylene production in Malaysia to PETRONAS. The agreement concerns BP’s 15 per cent interest in Ethylene Malaysia Sdn Bhd (EMSB) and 60 per cent interest in Polyethylene Malaysia Sdn Bhd (PEMSB), both of which are operated by PETRONAS, and are located at Kertih, on the east coast of Malaysia. This announcement does not affect BP’s other businesses in Malaysia.Under the terms of the agreement, PETRONAS will, at closing, pay $363m in cash to BP, inclusive of a balance sheet adjustment of $13m and the repayment of a shareholder loan of $53m. Subject to certain conditions, both parties anticipate completing the transaction by the end of 2010. Additionally, BP will also receive an EMSB pre-closing dividend payment amounting to $48m, subject to EMSB Board approval.

• Business/Finance news:

- The Deepwater Horizon accident investigation report prepared by BP's internal investigation team on the causes of the Gulf of Mexico tragedy, is expected to be published. When published, the full report will be available at www.bp.com and BP will issue a further announcement as appropriate. BP announced it is providing $10 million to the National Institutes of Health (NIH) under its Gulf of Mexico Research Initiative (GRI) to support a study of potential public health issues relating to the Gulf oil spill and other spill-related health research. The GRI is a 10-year, $500 million independent research program established by BP to better understand and mitigate the environmental and potential health effects of the Gulf spill. BP provided NIH the funds to expedite work in support of the research priorities identified at the Institute of Medicine (IOM) workshop commissioned by Secretary of Health and Human Services Kathleen Sebelius and summarized in the IOM report “Assessing the Effects of the Gulf of Mexico Oil Spill on Human Health,” released on August 10, 2010. The BP funding will allow NIH to build on efforts by the Centers for Disease Control and Prevention and the Unified Command and is intended to support the immediate needs of researchers, including Gulf Coast academic institutions and local and state agencies, in understanding potential acute and long-term health impacts of exposures to oil, dispersed oil and dispersants. Decisions regarding the distribution of the $10 million will be made by NIH with input from Gulf state academic institutions and state and local officials to ensure effective coordination with work currently being conducted. All project proposals will be peer reviewed by appropriate experts, and data, measurement information and findings from NIH-funded studies will be made fully and openly available in accordance with standard practice applicable to this type of research.

- BP announced that its third quarter 2010 results will be released at 0700 GMT on Tuesday 2nd November, one week later than previously indicated.

- The following statement was released by BP America Chairman and President Lamar McKay on completion of the MC252 Relief Well in the Gulf of Mexico. Today’s completion of relief well operations on the Macondo well is a significant technological accomplishment and another important milestone in our continued efforts to restore the Gulf Coast. Our work is not finished, however. BP remains committed to remedying the harm that the spill caused to the Gulf of Mexico, the Gulf Coast environment, and to the livelihoods of the people across the region. BP will continue sharing what we have learned in an effort to prevent a tragedy like this from ever being repeated. We also believe that the industry will gain important insights on how to be better prepared to respond to any future incidents.

- BP announced its intent to join the proposed Marine Well Containment Company (MWCC) and to make its underwater well containment equipment available to all oil and gas companies operating in the Gulf of Mexico. This and other equipment will preserve existing capability for use by the oil and gas industry in the U.S. Gulf of Mexico while Chevron, ConocoPhillips, ExxonMobil and Shell build a system that exceeds current response capabilities. Under the terms of an agreement with the Marine Well Containment System operator ExxonMobil, the sponsor companies' project team will utilize full time BP technical personnel with experience from the Deepwater Horizon response.

- ExxonMobil, on behalf of the Marine Well Containment Company (MWCC), announced an agreement with BP to provide its underwater well containment equipment to MWCC as part of BP's intent to join the new organization. Chevron, ConocoPhillips, ExxonMobil and Shell are establishing the MWCC to provide emergency response services in the U.S. Gulf of Mexico. As part of the agreement, BP equipment will be made available to all oil and gas companies operating in the U.S. Gulf of Mexico. The equipment could be deployed to capture and contain oil from a potential underwater well blowout while the new rapid-response system announced in July is being developed. ExxonMobil is leading the engineering, procurement and construction of the system on behalf of the sponsor companies. Existing BP equipment is being assessed for use in near-term response capability. The sponsor companies' project team will utilize full time BP technical personnel with experience from the Gulf of Mexico response. The equipment will be operated by MWCC. The formation of the company and details about membership will be announced soon.

- The Board of BP announced that Douglas Flint, who currently chairs the Board’s Audit Committee, will be standing down at the Company’s next Annual General Meeting in April 2011. This follows Mr. Flint’s appointment as Chairman of HSBC p.l.c. which takes effect in December 2010.

- BP and the Gulf of Mexico Alliance announced plans for the implementation of BP’s $500 million Gulf of Mexico Research Initiative (GRI) to study the effects of the Deepwater Horizon incident and the potential associated impact on the environment and public health. On May 24, BP announced the overall research program with the commitment to fund $500 million over a 10-year period for scientific studies. While the details of the full program were being developed, a series of fast-track grants were made to accelerate data acquisition and analysis: Louisiana State University ($5 million), the Northern Gulf Institute ($10 million), the Florida Institute of Oceanography ($10 million), the Alabama Marine Environmental Sciences Consortium ($5 million) and the National Institutes of Health ($10m).

- BP is to create a new safety division with sweeping powers to oversee and audit the company’s operations around the world. The Safety & Operational Risk function will have authority to intervene in all aspects of BP’s technical activities. It will have its own expert staff embedded in BP’s operating units, including exploration projects and refineries. It will be responsible for ensuring that all operations are carried out to common standards, and for auditing compliance with those standards. The powerful new organisation is designed to strengthen safety and risk management across the BP group. It will be headed by Mark Bly and report directly to incoming chief executive Bob Dudley. The company said the decision to establish the new function follows the Deepwater Horizon accident in the Gulf of Mexico and BP’s investigation into the disaster. It is one of a number of major changes announced by Dudley as he prepares to take over his new role on October 1. Dudley also disclosed that BP is to re-structure its Upstream segment from a single business into three functional divisions – Exploration, Development and Production – and to carry out a detailed and wide-ranging review of how it manages third-party contractors.

October

• Upstream news:

- BP and SOCAR (the State Oil Company of the Republic of Azerbaijan) announced they had signed a new production sharing agreement (PSA) on joint exploration and development of the Shafag-Asiman structure in the Azerbaijan sector of the Caspian Sea. The PSA was signed today in Baku by Rovnag Abdullayev, President of SOCAR, and Rashid Javanshir, BP Azerbaijan President, in the presence of BP’s visiting Group Chief Executive Officer (CEO) Robert Dudley.

- BP announced that it has reached agreement to sell its upstream businesses and associated interests in Venezuela and Vietnam to TNK-BP for a total of $1.8 billion. TNK-BP, Russia's third largest oil company, is owned equally by BP and the AAR Consortium (comprising Alfa Group, Access Industries and Renova). The agreement includes BP's interests in the Petroperijá, Boquerón and PetroMonagas joint ventures in Venezuela and, in Vietnam, BP's 35 per cent operating interest in the Lan Tay and Lan Do gas fields and associated pipeline and power generation interests. The sales are part of BP's plan, announced in July 2010, to make divestments of up to $30 billion by the end of 2011 to help the company meet its financial obligations arising from the recent Gulf of Mexico oil spill. As part of this programme, BP has previously announced agreements to sell assets in Egypt, Canada and the USA to Apache Corporation for $7 billion and to sell its Colombian exploration, production and transportation business to Talisman and Ecopetrol for $1.9 billion.

- BP announced that it has reached agreement to sell its recently-acquired interests in four mature producing deepwater oil and gas fields in the US Gulf of Mexico to Marubeni Oil and Gas for $650 million. BP acquired the interests in the fields - Magnolia, Merganser, Nansen and Zia - from Devon Energy earlier in 2010 as part of a wider acquisition of assets in the Gulf of Mexico, Brazil and Azerbaijan. Marubeni will pay BP $650 million in cash for the interests, subject to customary post-closing adjustments. Dependent upon regulatory approval, the parties anticipate completing the deal in early 2011.

• Downstream news:

• Business/Finance news:

- BP announced that it has pledged certain Gulf of Mexico assets as collateral for the $20 billion Deepwater Horizon Oil Spill Trust which was set up to pay legitimate claims arising from the April 20 incident. The pledged collateral consists of an overriding royalty interest in oil and gas production of BP's Thunder Horse, Atlantis, Mad Dog, Great White and Mars, Ursa and Na Kika oil and gas assets in the Gulf of Mexico.

November

• Upstream news:

- BP confirmed that it has been awarded licence interests in seven offshore exploration blocks in the UK’s 26th Seaward Licencing Round. The awards – five blocks operated by BP and two blocks operated by a partner – together represent the largest licence award BP has received in the UK for more than a decade. The awards, made by the UK Department of Energy and Climate Change, support BP’s focused programme of exploration and appraisal in the North Sea. The strategy is based on developing new fields which can be tied in to BP’s existing infrastructure hubs.

- Basra, November 4th 2010. October saw the highest levels of activity on the Rumaila oilfield in southern Iraq since the Technical Service Agreement was signed in 2009 and BP was appointed Lead Contractor. Activity has focused on improving oil production from existing wells, bringing new wells on stream and ensuring flowlines and other field infrastructure is tied-in to support increased production. In October, a total of 20 drilling rigs were working on the field, including those operated under new contracts by Daqing, Weatherford and a consortium of Schlumberger and IDC. Seven of these were drilling into the main pay of the reservoir and 13 were workover rigs, installing electrical submersible pumps (ESPs). Some 1400 Iraqis and 300 expatriate staff were working on this drilling programme alone, in addition to a total of 4000 staff in the Rumaila Operating Organisation. Training courses have been run by Baker Hughes, Al Khorayef and Jinan in Iraq on ESP installation, and some 20 Iraqis are currently undertaking an industry-accredited advanced well control course in Turkey as part of the Weatherford contract. Current production from the field is around one million barrels of oil a day. Activity is focused on meeting the improved production target as specified in the TSC. - BP confirmed that, pending clarification from the UK Government on certain aspects of the new EU Regulations concerning restrictive measures against Iran, production from the Rhum gas field in the central North Sea has been suspended. This action has been taken in order to comply with the notification requirements in the Regulations.

- BP Egypt announced that it has made a significant gas discovery in the Deepwater West Nile Delta area. The Hodoa discovery is located in the West Mediterranean Deepwater, Nile Delta concession, some 80 km northwest of Alexandria. The WMDW-7 well was drilled to a depth of 6350 metres and is the first Oligocene Deep Water discovery in the West Nile Delta area. Further appraisal is underway. BP operates and holds 80% of the West Mediterranean Deepwater concession with RWE Dea holding the remaining 20%. Hodoa was drilled by the Pride North America Semi-Sub rig, in a water depth of 1077 metres.

- Following an announcement last week by the Government of Indonesia last week, BP confirmed that it has been awarded a 100 per cent interest in the North Arafura oil and gas production sharing contract (PSC) in onshore Papua Province. The PSC was signed today in Jakarta by representatives of the Government and BP. The North Arafura PSC is located on the coast of the Arafura Sea, 480 kilometres southeast of the BP-operated Tangguh plant, covering an area of just over 5,000 square kilometers. BP expects to commence seismic operations on the block in the near future.

- BP announced that it has entered into an agreement to sell its interests in Pan American Energy (PAE) to Bridas Corporation. PAE is an Argentina-based oil and gas company owned by BP (60 per cent) and Bridas Corporation (40 per cent). Bridas Corporation will pay BP a total of $7.06 billion in cash for BP’s 60 per cent interest in PAE. The transaction is expected to be completed in 2011. The sale of its interests in PAE is part of BP’s plan, announced in July 2010, to divest up to $30 billion of assets by the end of 2011. Before the agreement to sell its interests in PAE, BP already had sales agreements in place totalling some $14 billion. The proceeds of the sale announced today will be used by BP to increase the cash available to the group.

- BP announced that it has entered into an agreement to sell almost all of its exploration and production assets in Pakistan to United Energy Group Limited (UEG). UEG will pay BP a total of $775 million in cash for these assets which consist of nine producing and exploration blocks in Sindh province and four offshore exploration blocks in the Arabian Sea. The assets are held by BP Pakistan Exploration and Production Inc., BP Pakistan (Badin) Inc. and BP Exploration Alpha Ltd. The transaction is expected to be completed in the 1st half of 2011. The sale of these interests in Pakistan is part of BP’s plan, announced in July 2010, to divest up to $30 billion of assets by the end of 2011. Before the agreement to sell these assets in in Pakistan, BP already had sales agreements in place totalling approximately $21 billion. The proceeds of this latest sale will be used by BP to increase the cash available to the group.

• Downstream news:

- BP announced that it has agreed to sell its fuels marketing businesses in Namibia, Botswana and Zambia to Puma Energy. BP also announced that it has agreed to sell its 50% interest in each of BP Malawi and BP Tanzania to Puma Energy, subject to the pre-emption rights of its co-shareholders (Press Corporation Limited in Malawi and the Government of Tanzania in Tanzania). The decision to divest these businesses, which was first announced by BP in March 2010, followed a strategic review of BP's southern African refining and marketing businesses. The sales do not include BP's refining and marketing businesses in Mozambique or South Africa. Puma Energy, which is already involved in a number of strategic partnerships in the sub-Saharan downstream sector, has confirmed that Angola's state-owned petroleum company, Sonangol (Sociedade de Combustíveis de Angola), intends to take a 10% stake in the acquired businesses.

- Exxon Mobil has agreed to pay $25 million and commit to a more thorough cleanup of its huge oil spills along Newtown Creek and a faster timetable for the process, according to a settlement announced by Attorney General Andrew M. Cuomo. Of the $25 million, $19.5 million will go to projects, like parks, that benefit the environment — the largest single payment for such a purpose in New York State history, state environmental officials said. The agreement settled a suit filed by the state in 2007 over the extent and pace of oil companies’ efforts over more than two decades to clean up spills from refineries and storage tanks at the site, underneath the Greenpoint section of Brooklyn. The amount of oil in the combined spills is estimated at 17 million to 30 million gallons, contaminating about 55 acres of land. The federal government recently named Newtown Creek a Superfund site slated for a comprehensive cleanup of oil that has leached into the water, along with pesticides, PCBs and other pollutants found in both water and sediment. Along with the settlement, environmentalists say, the designation will assure that the contamination will be identified and remediated. Under the terms of the settlement, which was filed in Federal District Court in Brooklyn, Exxon Mobil, which was responsible for most of the continuing cleanup in the area, agreed to expand its efforts to remove not just the oil but also oil-contaminated groundwater and soil, as well as soil vapor. The agreement also sets a timetable for faster cleanup operations, including a plan for identifying the scope of the contamination and quarterly reports on the status and progress of the cleanup effort. The company will also pay more than $5 million in penalties and costs. In a statement, Exxon Mobil officials said they were “pleased” to have reached a resolution to the suit. Exxon Mobil noted that, along with BP and Chevron, two companies that have taken responsibility for part of the cleanup, it has removed over 11 million gallons of spilled oil. But the environmental group Riverkeeper and the residents who had filed separate lawsuits over the cleanup deemed the efforts, which began in earnest in 1990, to be too little and too slow.

• Business/Finance news:

- BP's third-quarter replacement cost profit was $1,847 million, compared with $4,981 million a year ago. For the nine months, replacement cost loss was $9,528 million compared with a profit of $10,508 million a year ago. The group income statement for the third quarter and nine months reflects a pre-tax charge of $7.7 billion and $39.9 billion respectively related to the Gulf of Mexico oil spill. All charges relating to the incident have been treated as non-operating items. Costs incurred relating to the incident were $8.7 billion in the third quarter and $11.6 billion in total since the incident.

- BP announced that a strong operating performance across the group helped it return to profit in the third quarter of 2010 despite an additional pre-tax charge of $7.7 billion in respect of the Gulf of Mexico spill. Headline replacement cost profit for the third quarter was $1.8 billion, compared with a loss of $17.0 billion in the previous quarter and a profit of $5.0 billion in the third quarter of 2009. On an underlying basis, after adjusting for non-operating items, third-quarter replacement cost profit was $5.5 billion, an increase of 18 per cent on the year-ago quarter.

- The board of BP announced that it has appointed Brendan Nelson and Frank L. “Skip” Bowman as non-executive directors of BP p.l.c. with immediate effect. Mr Nelson will succeed Douglas Flint as Chairman of BP’s Audit Committee when Mr Flint retires from the Board at the conclusion of the 2011 BP Annual General Meeting.

December

• Upstream news:

• Downstream news:

• Business/Finance news:

- Citing the lessons of the BP oil spill, the Obama administration reversed course and pulled plans to open the eastern Gulf of Mexico and portions of the Atlantic Coast to oil and gas exploration. The five-year offshore plan unveiled was a relatively sharp turn from the administration's proposal in March, when it moved toward drilling off the mid- and southern Atlantic Coast and in the eastern gulf, areas that had long been off-limits. That plan was seen as an attempt to garner GOP support for then-upcoming energy and climate change legislation. But a few weeks later, the Deepwater Horizon rig exploded in flames off the Louisiana coast, setting in motion the largest offshore oil spill in American history. Gulf fishing grounds were closed, summer vacationers boycotted the beaches, and the shortcomings of the federal government's oversight of drilling were cast in high relief. The administration imposed a moratorium on deep-water drilling — recently lifted — and reevaluated its long-term plans for leasing on the outer continental shelf. "As a result of the Deepwater Horizon oil spill we learned a number of lessons, most importantly that we need to proceed with caution and focus on creating a more stringent regulatory regime," Salazar said. He emphasized that a large part of the gulf remained open to drilling and pointed out that energy companies weren't active on the majority of leases they held there. In Alaska, the administration is suspending new lease sales through 2012 but left open the possibility of future oil and gas development in the Arctic and in Cook Inlet after the completion of studies of possible environmental impacts and oil spill response capabilities. Long-standing prohibitions on new drilling along the Pacific Coast remain in effect. Environmentalists, who criticized the March move to more offshore drilling, cheered the administration's change of mind. "This decision is a wise and sensible step to protect Florida, the Atlantic Coast and the Pacific Coast from an inevitable disaster from expanded drilling," said Oceana Chief Executive Officer Andrew Sharpless. Political reaction mirrored the partisan divide on the nation's energy policy. Virginia Gov. Bob McDonnell, a Republican who has sought to open his coast to energy exploration, called the decision "irresponsible and short-sighted" and said he would turn to the state's congressional delegation for a "legislative fix." The probable incoming chairman of the House Natural Resources Committee was also critical. "We shouldn't allow this single event to disrupt our long-term need for an all-of-the-above energy plan that includes the responsible development of our nation's oil and gas resources," Rep. Doc Hastings (R-Wash.) said. Democratic Sen. Bill Nelson of Florida called the decision "an enormous victory" for his state, cautioning that "just one accident could ruin Florida's tourism economy and our unique environment." Rep. Edward J. Markey (D-Mass.), who chairs key energy panels in the House, also praised the revision, saying that the nation should focus on developing alternative energy sources rather than "looking deeper and deeper for the last remaining drops of oil." The oil industry viewed the decision as another blow to domestic energy production, following last summer's suspension of deep-water drilling — lifted in October — and a pronounced slowdown in the approval of shallow-water drilling permits. American Petroleum Institute President Jack Gerard also took issue with Salazar's statement that the industry was not fully exploiting its existing leases. Officials also said they were proceeding with a final environmental assessment of Shell Oil Co.'s proposal to drill at least one exploratory well in the Beaufort Sea off Alaska as early as next summer, which would be the first substantial new drilling in U.S. Arctic waters in many years. Conservation groups complained that the Arctic should have been left out of the 2012-17 leasing program.

- If journalism is the first draft of history, instant books are the second. The presidential commission investigating this year's oil spill in the Gulf of Mexico is still a couple of months away from delivering its initial report, but already the first books on the world's largest offshore spill are hitting the shelves. As the business columnist for the Houston Chronicle, and a BP watcher since the Texas City refinery explosion of 2005, Loren Steffy was in the right place to follow the oil spill close up, and knows enough of the background to set it in the context of BP's troubled history in the U.S. His strengths and weaknesses, however, are exactly the ones you would expect from a writer with his perspective. In his new book, "Drowning in Oil: BP and the Reckless Pursuit of Profit," Steffy is very good on the drama of the accidents, and on the technical details of the hazardous business of offshore oil extraction. What he fails to do in the book published by McGraw-Hill is get beneath the skin of BP, to anatomize the flaws in the company that lay behind the oil industry's worst disasters of the 21st Century. The basic facts, as Steffy sets them out, will be familiar to anyone who has followed the media this year. BP was built from a "staid and stodgy," formerly state-owned company into a world leader under John Browne, who, Steffy observes, was "something of a rarity — a rock star of British business." After taking over as chief executive in 1995, Browne led BP into a series of daring takeovers, including Amoco and Arco in the U.S., and tripled the company's share price. In a move that won him few friends elsewhere in the oil business, he embraced renewable energy and adopted the slogan "beyond petroleum." The company's name was changed from British Petroleum to BP and the logo evolved from a shield to the "helios," a sort of green and yellow sunflower. Named a British lord in 2001, Browne was featured in Vanity Fair magazine and his home was in Architectural Digest. Notoriously, he was dubbed the "Sun King" in a Financial Times profile, a tag that implied that even then there was some skepticism about his management style. All the while, however, "warning signs were piling up," Steffy says. "Beneath the veneer of fawning media coverage, BP's oil operations, which generated most of the company's revenue but far fewer headlines, were beginning to fray." The veneer was shattered in March 2005 by the Texas City explosion, which killed 15 people. It was that accident that drew Americans' attention to BP, a company that had until then been "little more than a logo on a Matchbox truck." As the full details of the disaster emerged, it became clear that BP's executives, up to and including Browne, had failed to take a strong enough lead in insisting on safety at the refinery. Other, less catastrophic, problems followed, including the partial flooding of the flagship Thunder Horse production platform in the Gulf of Mexico, allegations of market manipulation by oil and gas traders, and spills from corroded pipes in Alaska that forced the temporary shutdown of the pipeline system. It is that litany of failures, and many smaller ones besides, that meant that, when the Deepwater Horizon rig exploded on April 20, killing 11 men, it seemed inevitable that it had been working under contract to BP. This came in spite of the promise of a fresh start from Tony Hayward, who took over from Browne as chief executive in 2007. Hayward warned that it would take five years to implement the lessons learned from Texas City. As it turned out, he had only three. Steffy's account of the events leading up to and following the Deepwater Horizon explosion are the most dramatic but also the least satisfying part of the book. The narrative is gripping but key questions about what was going on behind the scenes, in the White House as well as at BP, are left unanswered. The book also suffers from going to press while the U.S. inquiry into the spill is throwing out revelations about what happened before and after the accident. Some factors that now seem to be relatively unimportant are stressed in the book, while others that now have moved to center stage, such as the roles of other companies in drilling the Macondo well, including Transocean and Halliburton, are left out. Above all, there is no convincing account of how BP has serially failed to live up to its ambition of delivering, in Hayward's words, "safe and reliable operations." Several underlying causes are suggested, in line with explanations offered by other commentators: the failure to integrate the U.S. acquisitions properly; a decentralized "entrepreneurial culture"; pressure from the top for cost cuts that ran counter to declared safety objectives; a slack and corrupt regulatory regime. Steffy suggests that "Hayward, like Browne before him, was blind to the consequences of his actions because … neither chief executive ever stood amid the charred rubble and burned flesh of their own decisions." It is a cheap shot, and factually incorrect; one of a handful of lapses into purple prose that mar what is generally a carefully and powerfully written story. The question "What is wrong with BP?" is of vital importance to everyone who works for or invests in the company. It deserves a better answer.

- The Obama administration filed a civil complaint against BP and eight other companies over the gulf oil spill this year, setting up a lengthy and complex legal battle over cleanup costs and penalties that could amount to billions of dollars. The complaint, filed in U.S. District Court in New Orleans, alleges a series of violations of federal safety and operational regulations that resulted in the April 20 explosion and fire on the Deepwater Horizon drilling rig in the Gulf of Mexico. It charged that the companies "failed to take necessary precautions" to properly control the well and "failed to use the best available and safest drill technology" in the gulf waters. It also accuses several companies of violations of the Clean Water Act, which could result in penalties based on the amount of oil spilled — estimated by the government to be 206 million, but disputed by BP. Lisa Jackson, administrator of the Environmental Protection Agency, said the government hopes to win up to $21 billion in damages for the oil that spewed for months into the gulf. The defendants include BP, the primary partner and operator of the oil well that ruptured; units of Anadarko Petroleum Corp.; MOEX; and units of Transocean Ltd. and its insurer, QBE Underwriting. Anadarko and MOEX were minority partners in the well. Transocean leased the Deepwater Horizon rig to BP. The Department of Justice and the FBI are separately conducting a criminal investigation of the Deepwater Horizon explosion, which killed 11 workers and started the worst offshore oil spill in U.S. history. Law enforcement agents and federal prosecutors continue to comb through records and conduct interviews in the gulf region. A finding of gross negligence or willful misconduct could put some of the top executives and onsite managers of the drilling operation in jeopardy. In the civil action, the government hopes to roll a significant amount of any money it recovers into a Gulf Coast restoration fund. The lawsuit contends that all nine companies share responsibility for the spill and that together they failed to maintain surveillance on the rig and well and did not use safety measures to protect "personnel, equipment, natural resources and the environment." David M. Uhlmann, a former head of the environmental crimes unit at the Justice Department and now director of the Environmental Law and Policy Program at the University of Michigan Law School, predicted that "this suit would probably lead to a negotiated settlement with BP and most, if not all, [of] the companies named." The government's next step could be to subpoena key personnel on the rig who have refused to testify in other hearings. The government, he said, "made clear that there's still a lot to be learned and still a lot they don't know that they might address in this civil suit."

- Responding to the lawsuit's allegations, the other companies shifted responsibility solely onto BP, the well's operator.

- Officials with Anadarko said in an e-mailed statement: "We recognize that we may have obligations under federal law, and we will continue to look to the operator to pay all legitimate claims as it has committed to do. We stand by our statement of June 18, that the operator's decisions and actions on the rig likely amount to gross negligence and/or willful misconduct."

- A spokesman for Transocean asserted that "no drilling contractor has ever been held liable for discharges from a well under the Oil Pollution Act of 1990. The responsibility for hydrocarbons discharged from a well lies solely with its owner and operator."

- Officials at BP declined to address the issue of sole culpability and disputed the estimated size of the spill. In a written statement Wednesday, the company said: "At this time, the unavailability of key data and information, such as the blowout preventer, capping stack and other evidence recently recovered, which are essential to determining how much oil flowed into the Gulf of Mexico from the … well, renders existing flow rate estimates highly unreliable."

- The company said it has stepped up to pay for the oil cleanup and has been the only one to address the economic damage to Gulf Coast businesses and residents, setting aside $20 billion to pay all legitimate claims.

- "We took these steps before any legal determination of responsibility and will continue to fulfill our commitments in the gulf as the legal process unfolds," the company said.

- Ask anybody in New Orleans or along the Gulf Coast whether things are normal, and they'll probably tell you about the "new normal." This time the query is about how the Gulf Coast is recovering from the BP Deepwater Horizon oil rig explosion April 20 that killed 11 and leaked oil onto 550 milesof Gulf of Mexico beaches from Texas to the Florida Panhandle. "We continue to tell visitors we are open, the water is safe and the beaches are beautiful," said Laura Lee, media director of the Pensacola (Fla.) Bay Area Convention & Visitors Bureau, which lost $10 million in accommodations revenue from June through August. But it rebounded in September through promotions and vouchers, ending up with 17% more lodging revenue than in the same month in 2009. Tar balls aside — and California has tar balls — "for the most part you would never know there ever was an oil spill if you walked on the beach today," Lee said. BP workers filled many rooms left vacant by tourists who ventured elsewhere, but Jones said some restaurants and water activities are struggling. Through the end of January, tourists who book two nights on the tourism site will receive a Wish Card worth $100 for restaurant dining. Grand Isle, La., the only occupied barrier island off the Louisiana coast and the closest town to the oil spill, has always been a laid-back destination. Except during its huge Tarpon Rodeo the last weekend in July, which was canceled this year. Sports fishermen already are back in the waters off Grand Isle, although oil continues to wash up on the beaches. Jean Landry, director of the Nature Conservatory in Grand Isle, hopes visitors will return for the Grand Isle Migratory Bird Celebration on April 15 and 16. It's heaven for bird watchers, who take their cameras and binoculars to record some of the 35 species of warblers as well as Indigo Buntings, Scissor-tailed Flycatchers and other birds that rest here on their flights from Mexico and South America to northern climates. Although New Orleans escaped being drizzled with oil, it does suffer from a shortage of Louisiana seafood, especially oysters. Oyster prices are steep, said Wendy Wallace of the Louisiana Restaurant Assn. "They're not in abundance, but the restaurants that want them get them, mainly from Texas," Wallace said. But is the seafood safe to eat? The Texas oysters that New Orleans restaurateur Tommy Cvitanovich he and others are using are "as close as you can get" to the renowned, salty Louisiana oysters, he said. One reason for the shortage: BP paid clean-up workers so well that some fishermen switched jobs rather than harvesting oysters.