BP News 2012

News summaries from company 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:

- BP said in a court filing that all of its costs and damages from the 2010 Gulf of Mexico oil spill should be paid by Halliburton, its cement contractor for the Macondo well project. BP paid more than $21 billion in cleanup costs and economic damages as of Dec. 1, the company said on its Web site.

- The $20 billion fund created by BP to pay damages from the 2010 spill in the Gulf of Mexico has stopped making payments until the judge overseeing the sprawling federal court litigation clarifies a recent order. Judge Carl J. Barbier in New Orleans ruled on Dec. 29 that settlements reached since Nov. 7 must provide 6 percent of the “gross settlement amount” to an escrow account for certain litigation expenses of plaintiffs’ lawyers. In a letter to Judge Barbier, David Pitofsky, the lead counsel for the fund, asked the judge whether, among other questions, his ruling means that people who have already received money should be forced to give some of it back. “We feel compelled by the court’s order to freeze payments to eligible claimants until we get clarification from the court,” said Kenneth R. Feinberg, administrator of the fund.

- Global energy demand will continue to grow over the next twenty years, albeit at a slowing annual rate, fuelled by economic and population growth in non-OECD countries. Increased energy efficiency and strong growth for renewable energy are also forecast in BP’s latest Energy Outlook 2030. Global energy demand is likely to grow by 39 per cent by 2030, or 1.6 per cent annually, almost entirely in non-OECD countries; consumption in OECD countries is expected to rise by just 4 per cent in total over the period. Global energy will remain dominated by fossil fuels, which are forecast to account for 81 per cent of global energy demand by 2030, BP forecasts, down about 6 per cent from current levels. The period should also see increased fuel-switching, with more gas and renewables use at the expense of coal and oil. That gradual switching should see renewables, including biofuels, continue to be the fastest growing sources of energy globally, rising at an annual clip of more than 8 per cent, much quicker even than natural gas, the fastest growing fossil fuel at about 2 per cent a year over the period to 2030.

- This statement was made on 26 January 2012 in response to the court ruling issued the same day. The full judge’s Opinion can be read here: www.laed.uscourts.gov/OilSpill/OilSpill.htm . The ruling makes clear that contractors will be held accountable for their actions under the law. While all official investigations have concluded that Transocean played a causal role in the accident, the contractor has long contended it is fully indemnified by BP for the liabilities resulting from the oil spill. The Court rejected this view. Under the decision Transocean is, at a minimum, financially responsible for any punitive damages, fines and penalties flowing from its own conduct. As we have said from the beginning, Transocean cannot avoid its responsibility for this accident. By contrast, since the spill we have stepped up, acknowledged our role and paid more than $7.8 billion in claims, advances and other payments to individuals, businesses and governments.

- This ruling, together with the decision on Transocean's financial obligations stemming from its conduct at the Macondo well, is a strong signal that contractors involved in critical well operations will be held accountable for their actions under the law. All official investigations have concluded that Halliburton played a causal role in the accident, and following this ruling, Halliburton is, at a minimum, responsible for any punitive damages as well as civil penalties to the extent that they may apply under the Clean Water Act. Moreover, the court determined that if Halliburton is found to have committed fraud, then the indemnity could be void. BP has acknowledged its role in the accident and has paid more than $7.8 billion in claims, advances and other payments to individuals, businesses and governments, regardless of whether third parties ultimately would be responsible for any of that sum or additional liabilities. Our charges and provisions never assumed any recovery from Transocean or Halliburton for pollution-related damages. These two decisions should put an end to the attempts by Transocean and Halliburton to avoid their obligations.

- A judge ruled that BP must cover some of the direct damage claims awarded against Halliburton for the $40 billion in cleanup costs and economic losses caused by the 2010 oil well explosion and Gulf of Mexico spill. BP, which is based in London, must indemnify Halliburton for compensatory damage claims under its drilling contract, Judge Carl J. Barbier of the United States District Court in New Orleans ruled. BP sued Halliburton, which provided cementing services for the project, in April to recover a share of any damages and costs from the spill. Any punitive damages awarded against Halliburton do not have to be paid by BP, the judge said.

• Downstream news:

- BP Wind Energy and Sempra U.S. Gas & Power announced plans to further expand their strategic relationship by jointly developing the Mehoopany Wind Farm in Pennsylvania and the Flat Ridge 2 Wind Farm in Kansas that represent a combined investment of more than $1 billion. Both wind farms are fully-contracted under long-term agreements, and are expected to be in commercial operation by year-end 2012. The wind farms will have a combined total output of 560 megawatts (MW) and will each be the largest ever built in their respective states. The Mehoopany Wind Farm will be located in Wyoming County, Pennsylvania and is expected to generate up to 141 MW of energy. The power output from the wind farm has been sold under contract to Old Dominion Electric Cooperative and Southern Maryland Electric Cooperative Inc. The contracts were negotiated by the National Renewables Cooperative Organization.

• Business/Finance news:

February

• Upstream news:

- BP and the Plaintiffs’ Steering Committee (PSC) confirmed that the U.S. District Court has adjourned the start of the Deepwater Horizon Multi-District Litigation 2179 civil trial by one week, until Monday, March 5th. This adjournment is intended to allow BP and the PSC more time to continue settlement discussions and attempt to reach an agreement. BP and the PSC are working to reach agreement to fairly compensate people and businesses affected by the Deepwater Horizon accident and oil spill.

- BP (NYSE: BP) announced that it has agreed to sell its interests in the Hugoton, Kansas, Jayhawk gas processing plant and associated producing gas fields in Kansas to an affiliate of LINN Energy, LLC (NASDAQ: LINE). Under the agreement, LINN Energy has agreed to pay BP $1.2bn in cash. Completion of the agreement is subject to closing conditions including the receipt of all necessary governmental and regulatory approvals. The sale is currently expected to complete on 30 March, 2012. The agreement includes the sale of all of BP’s working interest in about 2,400 wells in the Hugoton natural gas field, as well as the Hugoton Jayhawk gas processing plant, which has a processing capacity of about 450 million standard cubic feet of gas per day (mmscf/d). The majority of BP’s current net natural gas production of about 110 million cubic feet of gas equivalent in the area is processed through the plant.

- A minority partner in BP’s blown-out Macondo well in the Gulf of Mexico agreed to pay $90 million in a settlement with the federal government and gulf states over the disastrous 2010 oil spill. The Justice Department said the agreement was the largest civil penalty ever recovered under the federal Clean Water Act, which was enacted in 1972.

• Downstream news:

- BP announced that it intends to sell its LPG bottles and tank filling operations in Portugal, UK, Austria, Poland, Netherlands, Belgium, Turkey, China and South Africa, as well as its non refinery-integrated wholesale business. Also included in the sale are LPG storage terminals, bottle filling plants, customer lists, operating licences and logistics assets.

- The Skolkovo Foundation has given official approval for the establishment of a Center of Applied Research on Energy efficient Heat Exchange and Catalysis (Project “UNIHEAT”), involving Imperial College London, the Boreskov Institute of Catalysis and BP. Researchers at the Center will run the UNIHEAT project, which will focus on increasing energy efficiency and reducing heat loss in oil refining by up to 15% by improving refining operations, enhancing oil production processes, and reducing CO₂emissions. The Center will be funded by the Skolkovo Foundation and BP Russia.

- BP Wind Energy executives welcomed special guests including Congressman Francisco "Quico" Canseco, landowners, local elected officials and community leaders to a dedication ceremony to mark the full commercial operation of the Sherbino 2 Wind Farm in Pecos County, West Texas. The 150 megawatt (MW) wind farm is owned and operated 100 percent by BP, and will generate enough electricity to power 45,000 average American homes. Located on a 20,000-acre site some 30 miles east of Fort Stockton, the Sherbino 2 Wind Farm utilizes 60 Clipper Windpower C-96 wind turbines each with a rated capacity of 2.5 MW. Approximately 250 workers were employed during peak construction of the facility and some 12 permanent workers are employed to monitor and maintain the wind farm now that it is operational.

• Business/Finance news:

- BP, one the UK’s leading graduate recruiters, announced that it is increasing its annual UK graduate recruitment by 50 per cent, to nearly 250 graduates, in 2012. BP has also confirmed that it will offer all of these graduate recruits an opportunity to work with the London 2012 Organising Committee (LOCOG) before they start their careers in September. BP is the only UK employer to offer such an experience to graduates, who will start working with LOCOG in June. LOCOG and BP have agreed to offer up to 100 of the graduates the opportunity to pursue short-term secondments in areas such as the main operations centre, transport or city operations. BP secondment places are being offered on a first-come, first-served basis. Throughout their secondments, BP will provide the graduates with a BP internship salary, accommodation and transport costs.

- The Board of BP p.l.c. announced that Professor Dame Ann Dowling will join the Board as a non-executive director with immediate effect. Dame Ann is the Head of the Department of Engineering at the University of Cambridge where she is Professor of Mechanical Engineering. Dame Ann has held visiting posts at MIT and Caltech and has had strong links with industry throughout her career. It was further announced that Sir William Castell has decided not to stand for re-election at the Company’s Annual General Meeting on April 12, 2012. Sir William will have served on the Board for nearly six years. Sir William handed the Chair of the Safety, Ethics & Environment Assurance Committee to Paul Anderson in December 2011.

- Download the full version of our fourth quarter and full-year 2011 results using the link below. Download the results (SEA) (pdf, 562KB)

- BP group chief executive Bob Dudley said that returning operational momentum and strong cash flow generation in 2011 gave the company increasing confidence in its plans to grow value for shareholders. As BP reported its results for the fourth quarter and full year 2011, Dudley said: “BP is on the right path, working to grow value through the 10-point plan we laid out in October. Above all, we have a relentless focus on safety and risk management. And we are playing to our strengths – investing in exploration, deep water, gas value chains, giant fields and a world-class downstream, while actively managing our portfolio to grow value.”

- Less than two years ago, the British oil company BP was worried about its very survival as a seemingly unstoppable oil spill in the Gulf of Mexico threatened to destroy its finances and reputation. But BP expressed renewed confidence in its future, reporting strong quarterly profits and raising its dividend to shareholders. The company also said it was eager to resolve billions of dollars in remaining private and government claims from the accident, whether through a settlement or in a trial scheduled to begin Feb. 27 in New Orleans.

March

• Upstream news:- - Nearly two years after an explosion on an oil platform killed 11 workers and sent millions of gallons of oil gushing into the Gulf of Mexico, deepwater drilling has regained momentum in the gulf and is spreading around the world. The announcement of an agreement by BP and lawyers representing individuals and businesses hurt by the disaster represented something of a turning of the page, though BP and its drilling partners continue to face legal challenges. After a yearlong drilling moratorium, BP and other oil companies are intensifying their exploration and production in the gulf, which will soon surpass the levels attained before the accident. Drilling in the area is about to be expanded in Mexican and Cuban waters, beyond most American controls, even though any accident would almost inevitably affect the United States shoreline. Oil companies are also moving into new areas off the coast of East Africa and the eastern Mediterranean. The reason for the resumption of such drilling, analysts say, is continuing high demand for energy worldwide. Domestic oil exploration and gasoline prices are emerging as important issues in the presidential campaign. While candidates have sparred over the reasons for rising prices, there is little disagreement over the call for more drilling, onshore and offshore. President Obama, while in New Hampshire last Thursday, countered Republican charges that he was to blame for the rising pain at the pump.Gas prices are averaging $3.76 a gallon, while crude oil futures settled at $106.70 a barrel. Exploration in deepwater fields remains dangerous because of high temperatures and high pressure when drilling 6,000 feet or more under the sea floor, and accidents continue to occur, most notably last year off the coasts of China and Brazil. But despite the risks, the deepwater drilling trend is spreading in the Mediterranean and off the coast of East Africa after a string of huge discoveries of natural gas. The new oil platforms will help supply growing demand in China, India and across the developing world. At the same time, turmoil in North Africa and the Middle East threatens operations in established fields that the world has relied on in recent decades. For a time after the BP spill, the drilling moratorium ordered by the Obama administration caused a decline in gulf production, but a reversal has occurred. Forty rigs are drilling in the gulf compared with 25 a year ago. BP has five rigs drilling in the gulf, making it one of the most active drillers there. That is the same number BP operated before the accident, and it plans to have three more rigs drilling in the gulf by the end of the year. The Energy Department recently projected that gulf oil production would expand from its 2011 level of 1.3 million barrels a day, still nearly a quarter of total domestic production, to two million barrels a day by 2020. Last December, the Obama administration held its first offshore auction since the BP spill, granting leases for more than 20 million acres of federal waters — bigger than West Virginia. The leases are worth $330 million to the federal government and have the potential to produce 400 million barrels of oil. BP successfully bid for 11 of the 191 available drilling blocks. Environmentalists challenged the auction of exploration rights, so far unsuccessfully, which precedes applications and approvals for actual drilling permits. By the Obama administration’s accounting, 61 drilling permits for wells in more than 500 feet of water were granted in the 12 months ending Feb. 27, only six fewer than were permitted in the same period in 2009 and 2010 before the BP explosion.

- Now it gets complicated. The late-night announcement of a proposed $7.8 billion deal in the BP civil trial is not the end of the case, but the beginning of a new phase with many unanswered questions.

- BP has reached a settlement with the Plaintiffs' Steering Committee (PSC), subject to final written agreement, to resolve the substantial majority of legitimate economic loss and medical claims stemming from the Deepwater Horizon accident and oil spill. The PSC acts on behalf of individual and business plaintiffs in the Multi-District Litigation proceedings pending in New Orleans (MDL 2179). BP estimates that the cost of the proposed settlement, expected to be paid from the $20 billion Trust, would be approximately $7.8 billion. This includes a BP commitment of $2.3 billion to help resolve economic loss claims related to the Gulf seafood industry.

- BP announced that the Brazilian National Petroleum Agency (ANP) has approved its farm-in to four deepwater exploration and production concessions operated by Petróleo Brasileiro S.A. (Petrobras) in the Brazilian equatorial margin. BP Energy do Brasil Ltda. is taking a 40 per cent interest in each of the blocks, located in the Barreirinhas and Ceará basins, from Petrobras. The move will give BP access to four new concession blocks in Brazil: BM-BAR-3 and BM-BAR-5 in the Barreirinhas basin, and BM-CE-1 and BM-CE-2 in the Ceará basin. Together the blocks cover a total area of 2,113 square kilometres.

- BP announced that it has agreed to sell its interests in its southern gas assets (SGA) in the UK North Sea to Perenco UK Ltd for $400 million in cash. As it continues the active management of its business portfolios around the world, focusing on core activities and future growth, BP expects to divest assets with a total value of $38 billion between 2010 and the end of 2013. Including the agreement to sell SGA, the company has now announced divestments with an expected value totalling approximately $23 billion. Perenco has made an initial payment to BP of $100 million in cash and the remaining $300 million will be paid on completion, which is expected before the end of 2012. A further $10 million may be paid in the future contingent on the prevailing gas prices. Completion of the sale is subject to a number of third party and regulatory approvals. It is expected that impacted BP employees working for SGA will transfer with the asset to Perenco.

- BP (NYSE: BP) announced an agreement to lease thousands of acres in northeast Ohio for future oil and gas production in the Utica/Point Pleasant shale formation. Utica/Point Pleasant is a relatively new and very promising shale basin that consists of a potentially significant liquids-rich gas source, and this deal adds an important American energy source to BP’s onshore gas portfolio. BP signed an agreement to lease about 84,000 acres in Trumbull County, Ohio with the Associated Landowners of the Ohio Valley (ALOV), a group representing area mineral owners. Members of ALOV voted March 26 to approve the lease arrangement. Terms of the agreement, to be executed with each landowner, are confidential.

• Downstream news:

• Business/Finance news:

- In accordance with Section 203.01 of the New York Stock Exchange Listed Company Manual, BP plc announces that on March 6, 2012 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, 2011. 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 and the Plaintiffs' Steering Committee (PSC) confirmed that the U.S. District Court has extended the deadline for Settlement Agreement submission through 8:30 AM CDT on Wednesday, April 18. This extension is intended to allow BP and the PSC more time to complete the extensive documentation required to finalize the two Agreements-in-Principle that were announced on March 2. BP and the PSC are finalizing two separate Settlement Agreements -- one resolving economic and property damage claims; the other resolving medical claims -- that will fairly compensate people and businesses affected by the Deepwater Horizon accident and oil spill.

- BP announced that it has reached definitive and fully documented agreements with the Plaintiffs’ Steering Committee (PSC) to resolve the substantial majority of eligible private economic loss and medical claims stemming from the Deepwater Horizon accident and oil spill. The parties have filed for preliminary court approval of the two settlement agreements, one resolving economic loss and property damage claims and the other resolving medical claims. BP and the PSC believe that the settlement agreements are a fair, reasonable and adequate resolution of the claims. As part of the motions seeking preliminary approval, the parties have asked the Court to approve proposed plans to notify class members of their rights under the settlement agreements and schedule fairness hearings. Once these hearings have taken place, the Court will decide whether to give final approval to each settlement agreement. BP has also asked the Court to adjourn the MDL 2179 liability trial until after it determines whether to grant final approval of the settlement agreements. The PSC will not oppose this request for adjournment.

- BP is cooperating with the Department of Justice and other official investigations into the Deepwater Horizon accident and oil spill. BP had clear policies requiring preservation of evidence in this case and has undertaken substantial and ongoing efforts to preserve evidence. We will not comment on the Government’s case against former BP employee Kurt Mix and we will continue cooperating in the Department of Justice’s investigation.

- Shrimp processors ask a federal judge to delay preliminary approval of BP’s proposed settlement of economic claims from the 2010 oil spill in the Gulf of Mexico. They contend that it favors shrimp harvesters and boat captains at the expense of shrimp docks, processors and others.

- A former BP engineer appeared in federal court chained at the wrist and ankles to face criminal charges that he intentionally deleted hundreds of text messages about the amount of oil flowing into the Gulf of Mexico from the company's blown-out well in 2010. Kurt Mix, 50, of Katy, Texas, was charged with two counts of obstruction of justice and released on a $100,000 bond. U.S. Magistrate Stephen Smith asked Mix whether he understood the charges against him and the possible penalties if convicted — a 20-year sentence and $250,000 fine on each count. Mix nodded and said, "I understand." When the judge asked whether Mix had read the complaint filed against him, he said, "Yes, sir, I have." They are the first criminal charges to emerge from the federal investigation into the gulf oil spill and involve actions that Mix allegedly took after the deadly April 20, 2010, explosion. Houston lawyer David Gerger represented Mix at the hearing, but he said he was standing in for Boston-based lawyer Joan McPhee, who will be representing Mix for the long term. Assistant U.S. Atty. Scott M. Cullen said a supervised release of Mix was agreed to by both sides. Under the agreement, Mix turned over his passport and agreed not to travel outside Texas and Louisiana. He declined to comment outside court. After the 15-minute hearing, marshals led Mix from court. Mix was a drilling and completions engineer for BP. According to court documents, he worked on BP's efforts to estimate the flow of oil from the well and on attempts to stop the leak. BP sent Mix "numerous messages" to preserve all information and communications regarding the well, including text messages, the documents said. On or about Oct, 4, 2010, after Mix learned that his electronic files would be collected for BP's lawyers, he deleted from his iPhone a string of more than 200 text messages with his BP supervisor, according to the court documents. The texts, some of which were recovered, included internal BP information while it was trying to halt the flow of oil from the well by pumping heavy mud into it. In one text, Mix allegedly said, "Too much flowrate -- over 15,000" barrels of oil a day. That was triple the official public estimate BP was providing at the time. Another allegation centers on events on or about Aug. 19, 2011, when Mix purportedly deleted more than 100 text messages with a BP contractor with whom he was working on the rate of oil flowing from the well. In an email statement to the Associated Press, BP said it would not comment on the case but was cooperating with the Justice Department and other investigations.

• Downstream news:

- BP announced a deal with FedEx to offset the carbon emissions of over 200 million FedEx Envelopes shipped worldwide yearly. Through the carbon-neutral FedEx Envelope shipping program, FedEx will calculate the carbon dioxide released through FedEx Envelope shipments on an annual basis and purchase the equivalent amount of carbon offsets from BP’s not-for-profit, BP Target Neutral scheme. This will neutralize the equivalent amount of CO2 emissions by supporting investments in low carbon development projects that reduce or remove carbon from being released into the atmosphere. These projects also create additional environmental, social and economic benefits locally. They include a biogas farm facility in the Netherlands, a reforestation project in the Tanzanian Southern Highlands that is converting degraded grassland to commercial forest and a landfill gas collection system at Thailand’s first sanitary landfill.

- The Shah Deniz consortium has reached an important milestone and approved the decision to commence Front End Engineering and Design (FEED) on the estimated $25 billion Shah Deniz Stage 2 project. This was officially announced in Baku during the meeting between the President of the Republic of Azerbaijan H.E. Ilham Aliyev and Bob Dudley, Group Chief Executive of BP, the Operator of Shah Deniz, who is on a working visit to Azerbaijan. The Shah Deniz Stage 2 project will bring gas from the Caspian Sea to markets in Turkey and Europe, opening up the ‘Southern Gas Corridor’. Achieving this important milestone allows the consortium to maintain its target for first gas exports around the end of 2017. The Shah Deniz 2 project is set to produce 16 billion cubic metres of gas per year. The entry into FEED represents the start of a key phase in the project during which engineering studies will be refined, further wells will be drilled, commercial agreements will be finalised and key construction contracts will commence. During the FEED phase of the project, the Shah Deniz consortium will finalise its selection of export routes across Turkey and into Europe.

• Business/Finance news:

- Two year personal development scheme supported by BP will see Young Leaders play a high profile role at Games time. Young people from Aberdeen, Hull, and London will celebrate their 2 year participation in the London 2012 Young Leaders Programme, with LOCOG Chair, Seb Coe and double Olympic champion, Jonathan Edwards, before they take up high profile roles at the London 2012 Games. The event at the British Museum, marks their achievements on the programme and looks ahead as they prepare for their roles as Games Makers at the London 2012 Games.

- BP's financial sponsorship of a cultural institution is once again provoking heated words in the arts community. This time, the World Shakespeare Festival has become the center of attention after a group of British actors launched a protest against the partnership between the oil company and the Royal Shakespeare Co. The World Shakespeare Festival is a global celebration of the Bard's plays coinciding with the Cultural Olympiad in London. The festival is being billed as the largest celebration of Shakespeare ever staged, with arts groups from around the world converging on venues around Britain. The Royal Shakespeare Co. is producing the festival in partnership with Shakespeare's Globe. The latter group is producing Globe to Globe, an event involving the staging of all of the Bard's plays, each in a different language. As reported in the Stage UK, a group of actors staged a protest of BP's sponsorship just before a performance of "The Tempest" at Stratford-upon-Avon. The group has launched a website titled "BP or not BP?". The protest organization, named the Reclaim Shakespeare Co., states on its website: "We say to the RSC: to thine own self be true. Be nothing if not critical and forgo your damaging relationship with BP." The group also has launched a Twitter account, @ReclaimOurBard. In 2010, BP was at the center of the Deepwater Horizon oil spill in the Gulf of Mexico. It was the largest oil spill in history. The oil company's sponsorship deals with other cultural institutions has drawn criticism in recent years. The Tate Britain in London was targeted by protesters in 2010 for its partnership with BP.