US playing hardball over BP’s ‘corporate recklessness’ in Gulf

HOPES that BP could soon put the Deepwater Horizon catastrophe behind it have been crushed by a ferociously-worded memo accusing the oil major of gross negligence for its part in the worst environmental disaster in US history.

Papers filed in New Orleans by lawyers for the US department of justice (DoJ) accuse the British group of operating a “culture of corporate recklessness” that led to the massive oil spill in the Gulf of Mexico in 2010. If the DoJ can prove gross negligence, fines under the US clean water act could come to $21 billion (£13.2bn).

That would come on top of other compensation payments, some of which have been made while others have yet to be determined.

BP has vehemently denied the gross negligence, which the DoJ says it can prove through evidence such as e-mail exchanges between BP staff prior to the explosion on the Macondo rig.

“The behaviour, words and actions of these BP executives would not be tolerated in a middling size company manufacturing dry goods for sale in a suburban mall,” government lawyers said, and yet they were 
condoned in an environment that former BP chief executive Tony Hayward described “as comparable to exploring outer space”.

Analysts said the tone of the government filing blew away hopes of a relatively easy settlement. The two sides have been negotiating on a deal to cover outstanding liabilities, with BP reportedly willing to stump up $15bn while the DoJ was said to be holding out for $25bn.

Elsewhere in the sector, there was more upbeat news yesterday from Europe’s largest oil company as Shell confirmed plans to go ahead with construction of the world’s first carbon capture and storage (CCS) facility to lock away emissions from mining oil sands.

The Quest venture in Edmonton, Canada, is one of four key CCS projects Shell is involved in around the world, the others being in Scotland, Australia and Norway. The project closest to home – a joint venture with Scottish Hydro-owner SSE – proposes piping CO2 from the gas-fired Peterhead Power Station to a depleted Shell field in the North Sea.

Bill Spence, global head of CCS for Shell, said combined support from the provincial and federal governments in Canada proved authorities there were aligned in their strategy for dealing with greenhouse gases.

The International Energy Agency estimates that CCS could account for 19 per cent of CO2 reductions by 2050, while saving up to 70 per cent of the cost to meet overall targets.

“It is a very, very valuable card to have in your hand,” Spence said.

Having missed out on EU funding, the Peterhead project is waiting to see whether it will receive backing from the UK’s government’s £1bn fund to build CCS demonstration plants.

The government has already twice delayed naming successful applicants to the fund, while Shell has a looming deadline to decommission the pipeline if it’s not used to take carbon dioxide out to sea.