BP’s Oil Spill Costs Exceed $3B

BP has spent in excess of $3 billion on the Gulf oil spill as of Monday, the company said.

The costs include efforts to contain and cleanup the oil, the drilling of relief wells that many believe will ultimately stop the leak, and $147 million in compensation to some of those affected by the spill.

“The cost of the response to date amounts to approximately $3.12 billion, including the cost of the spill response, containment, relief well drilling, grants to the Gulf states, claims paid, and federal costs,” BP said.

The new figure exceeds the $2.65 billion estimate the firm issued just a week ago. 

BP said there are now 44,500 people working on the response to the spill, about 5,000 more than a week ago, BBC News reported.

The company’s share price has plummeted more than 50 percent following the explosion on the Deepwater Horizon oilrig on April 20, which killed 11 workers and created the worst environmental disaster in U.S. history.

Last month, BP decided to suspend its shareholder dividend, and create a $20 billion fund for costs arising from the catastrophe.  It is also shedding some non-core assets to raise an additional $10 billion dollars.

Investors remain uncertain about the ultimate financial impact of the disaster, but estimates from some analysts place the final costs in the tens of billions.

The collapse in the company’s share price has led to speculation that BP may become a takeover target.

However, BP spokesman Robert Wine dismissed a Sunday Times report that said the company was turning to competitive oil groups and sovereign wealth funds from Asia and the Middle East to thwart a possible hostile takeover bid.

“We have no current plans to issue new equity,” he said during an interview with the AFP news agency.

Bad weather continues to slowdown BP’s cleanup efforts in the Gulf, keeping smaller skimming vessels in harbors in Mississippi, Alabama and Florida, although skimming and other efforts have resumed in the calmer seas off the Louisiana coast.

Meanwhile, a massive Taiwanese ship known as “A Whale” may provide a much-needed boost in the days ahead.   Owned by TMT Shipping Offshore, the giant vessel has been converted into the largest oil skimming ship in the world, able to suck up to 21 million gallons (500,000 barrels) of oily water each day through its “jaws” — vents on the side of the ship.

By comparison, some 500 smaller vessels have only been able to collect a total of 28.2 million gallons (671,428 barrels) of oil-water in ten weeks.

The “A Whale,” which traveled from Taiwan to the Gulf, is currently undergoing tests.  If all goes well, approval for the vessel to begin skimming operations could come as early as Tuesday.

The Navy’s MZ-3A Airship is also expected to reach the Gulf on Tuesday to help detect oil, direct skimming vessels and search for wildlife that may be threatened from the disaster.

The AFP quoted officials as saying that disposal units, known as Heavy Oil Recovery Devices (HORDs), are “greatly improving” clean-up efforts.

As many as 1,000 HORDs are expected to be in operation in the weeks ahead, and will concentrate on sucking up the thick, heavy oil that has thwarted conventional skimming vessels.

The oil leaking on the seafloor of the Gulf has now spewed as much as four million barrels of oil, the AFP reported.

Although BP’s current containment systems can only capture or flare 25,000 barrels of oil daily, that number is set to double upon the arrival of a third vessel on Thursday.

BP said the two relief wells being drilled to permanently stop the leak are still on course for completion by mid-August.

Image Caption: The vessel “A Whale” conducts a shakedown voyage to evaluate its oil skimming capabilities on open water as part of the BP Deepwater Horizon Oil Spill response July 4, 2010. The converted tank ship is being evaluated by its owner, TMT, to gauge the effectiveness of its oil recovery systems. The ship was recently converted in Lisbon, Portugal, in June with the hope that it could dramatically increase the amount of oil recovered from the BP oil spill. U.S. Coast Guard photo.

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