BP pledges certain gulf assets as spill collateral

Paula Dittrick
OGJ Senior Staff Writer

HOUSTON, Oct. 1 -- BP PLC pledged certain Gulf of Mexico assets as collateral for the $20 billion Deepwater Horizon Oil Spill Trust, which was established to pay claims arising from the Apr. 20 Macondo well blowout, explosion on Transocean Ltd.’s Deepwater Horizon semisubmersible, and an oil spill.

The cost of the oil spill as of Sept. 29 amounted to $11.2 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. BP operated the Macondo well.

The pledged collateral consists of an overriding royalty interest in oil and gas production of BP's Thunder Horse, Atlantis, Mad Dog, Great White, Mars, Ursa, and Na Kika oil and gas assets in the Gulf of Mexico.

“The pledging of these assets underscores our commitments to the trust,” said Lamar McKay, BP America Inc. chairman and president. An estimated 4.9 million bbl of oil leaked from the Macondo well, of which BP estimates it captured 800,000 bbl. Eleven workers on the Deepwater Horizon semi were killed.

Since government officials confirmed the Macondo well was sealed on Sept. 19, BP has been plugging and abandoning the well. This includes removing portions of the casing and setting cement plugs. It also has started dismantling and recovering containment equipment and decontaminating the vessels involved in the oil spill response.

BP created a wholly owned company, Verano Collateral Holdings LLC, to hold the overriding royalty interest in gulf production. This royalty interest is capped at $1.25 billion/quarter and $17 billion total. Verano will pledge the overriding royalty interest to the trust as collateral for BP's remaining contribution obligations to the trust.

There will be no change in operatorship or the marketing of the production from the assets, and there will be no effect on the other partners’ interest in the assets. For financial reporting purposes, Verano will be a consolidated entity of BP.

BP agreed on June 16 to establish the trust and set aside assets. The company already contributed $3 billion to the trust and will make additional contributions of $2 billion in the fourth quarter of 2010 and $1.25 billion quarterly thereafter through yearend 2013.

Contact Paula Dittrick at paulad@ogjonline.com.

Related Articles

EPA approves Magellan’s Corpus Christi splitter project

12/12/2014 The US Environmental Protection Agency has issued a final greenhouse gas prevention of significant deterioration construction permit to Magellan Pr...

US needs more data before ending crude export ban, House panel told

12/11/2014 Much more environmental impact information is needed before the US can reasonably remove crude oil export limits, a witness told a House Energy and...

BOEM raises offshore oil spill liability limit to $134 million

12/11/2014 The US Bureau of Ocean Energy Management increased the liability limit for oil-spill related damages from offshore operations to $134 million from ...

Small subset of wells accounts for most methane emissions, researchers say

12/09/2014 A small subset of natural gas wells are responsible for most methane emissions from US natural gas production, said a study from the University of ...

Methane controls just part of complete climate strategy, speakers say

12/08/2014 Reducing oil and gas operations’ methane emissions is an essential, but far from the only, part of a comprehensive climate strategy, speakers at a ...

Cost-benefit believability

12/08/2014 In anticipation of what might become the costliest federal regulation in US history, Congress should join the Supreme Court in reviewing the Enviro...

EPA air proposals should recognize progress, API official says

12/08/2014 The US Environmental Protection Agency should recognize progress that is continuing before it considers imposing costly new air quality requirement...

EPA poses tighter ground-level ozone pollution controls

12/08/2014 The US Environmental Protection Agency proposed reducing ground-level emissions limits to 65-70 ppb from its current level of 75 ppb. It also will ...

API: Producers reducing methane emissions already

12/05/2014 US oil and gas producers are reducing wellhead methane emissions already and don’t need ill-conceived, overly prescriptive federal regulations, Ame...

White Papers

AVEVA NET Accesses and Manages the Digital Asset

Global demand for new process plants, power plants and infrastructure is increasing steadily with the ...
Sponsored by

AVEVA’s Approach for the Digital Asset

To meet the requirements for leaner project execution and more efficient operations while transferring...
Sponsored by

Diversification - the technology aspects

In tough times, businesses seek to diversify into adjacent markets or to apply their skills and resour...
Sponsored by

Engineering & Design for Lean Construction

Modern marketing rhetoric claims that, in order to cut out expensive costs and reduce risks during the...
Sponsored by

Object Lessons - Why control of engineering design at the object level is essential for efficient project execution

Whatever the task, there is usually only one way to do it right and many more to do it wrong. In the c...
Sponsored by

Plant Design for Lean Construction - at your fingertips

One area which can provide improvements to the adoption of Lean principles is the application of mobil...
Sponsored by

How to Keep Your Mud System Vibrator Hose from Getting Hammered to Death

To prevent the vibrating hoses on your oilfield mud circulation systems from failing, you must examine...
Sponsored by

Duty of Care

Good corporate social responsibility means implementing effective workplace health and safety measures...
Sponsored by

Available Webcasts


On Demand

Optimizing your asset management practices to mitigate the effects of a down market

Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.

register:WEBCAST


Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.

register:WEBCAST


Utilizing Predictive Analytics to Optimize Productivity in Oil & Gas Operations

Tue, Nov 18, 2014

Join IBM on Tuesday, November 18 @ 1pm CST to explore how Predictive Analytics can help your organization maximize productivity, operational performance & associated processes to drive enterprise wide productivity and profitability.

register:WEBCAST


US HYDROCARBON EXPORTS Part 3 — LNG

Fri, Nov 14, 2014

US LNG Exports, the third in a trilogy of webcasts focusing on the broad topic of US Hydrocarbon Exports.

A discussion of the problems and potential for the export of US-produced liquefied natural gas.

These and other topics will be discussed, with the latest thoughts on U.S. LNG export policy.

register:WEBCAST


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected