GENERAL INTEREST — Quick Takes
GAO warns of financial risks from Macondo claims
Damage claims from the 2010 Macondo well incident and crude oil spill and the federal government's overall government spill response framework pose evolving, uncertain risks to the government and its Oil Spill Response Fund, the US Government Accountability Office said in an Oct. 24 report.
It warned that outlays from the fund could reach the $1 billion per incident limit despite BP PLC, the well's operator, paying more than $700 million of state and federal cleanup costs as of May 31. Federal and state cleanups are under way, and agencies continue to submit costs for reimbursement, GAO said.
"However, the full extent of these costs, particularly those related to environmental cleanup, may not be fully realized for some time," the report noted. More than $626 million had been paid from the fund as of May 31, it noted.
The report said GAO recommended in November 2010 that Congress consider setting a fund per incident cap based on net outlays (expenditures less reimbursement) instead of total expenditures. The congressional government watchdog service also recommended that Congress extend the per barrel tax collected for the fund. The tax is scheduled to expire in 2017, it said.
GAO also found that the US Coast Guard's processes for paying claims and reimbursements following the accident and spill were appropriate and properly documented. It said that it made four recommendations to establish and maintain appropriate cost reimbursement procedures for the fund. The USCG changed its operating practices to reflect lessons learned responding to Macondo-related claims and updated its reimbursement procedures, but has not yet updated procedures for processing significant claims, the report said.
Transocean seeks summary judgment against BP
Transocean Ltd. on Nov. 1 filed a motion for summary judgment requesting the US District Court in New Orleans compel BP PLC to hold Transocean harmless for damages associated with the 2010 Macondo well blowout and resulting massive oil spill off Louisiana in the Gulf of Mexico.
An explosion and fire on the Deepwater Horizon semisubmersible, owned by Transocean, killed 11 people, and the semi later sank. In the Deepwater Horizon drilling contract, BP agreed to release Transocean from fines, penalties, and damages associated with pollution from the well, Transocean said.
"BP cannot avoid its contractual promise by alleging that Transocean breached the drilling contract or that the Deepwater Horizon was unseaworthy," Transocean said. "BP cannot avoid its contractual promise by alleging that Transocean or its employees were grossly negligent."
Many lawsuits remain pending regarding the well blowout and the spill (OGJ Online, June 22, 2011).
Santos to sell Evans Shoal stake
Santos Ltd., Adelaide, has followed through with a decision to sell its 40% stake in the Evans Shoal natural gas field in permit NTP/48 in the Timor Sea.
Santos did not disclose the prospective buyer, saying only that it is a major international exploration and production company already operating in Australia.
Santos expects to receive as much as $350 million. It will take a cash consideration of $250 million plus a contingent future cash payment of up to $100 million pivoting on a final investment decision being reached to develop the field and the level of 2P reserves booked for the field at that point.
Santos is aiming to close the deal by yearend.
Santos' previous attempt to sell the stake to Magellan Petroleum for cash over several stages fell through earlier this year when Magellan struggled to come up with funds to complete the purchase.
Evans Shoal has a high carbon dioxide content and Magellan was hoping to capitalise on this by establishing a methanol development.
Other joint venture partners in Evans Shoal are Petronas 25%, Shell 25%, and Osaka Gas 10%.
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