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BP Might Stop Paying Claims If Drilling Ban Is Extended

BP Might Stop Paying Claims If Drilling Ban Is Extended

Without permission to continue its offshore drilling operations, BP has warned Congress that it might run out of money to pay for the damages caused by its three-month oil spill.

The debate over whether a six-month moratorium on deepwater oil drilling should be extended and expanded has been rekindled in Washington after the explosion of a second offshore oil rig in the Gulf of Mexico on Thursday.

The production rig, owned by Mariner Energy has already created an oil sheen a mile-long and 100 feet wide in waters that are just west of the site of BP’s massive spill.

The Department of Interior first established a temporary ban on deepwater oil drilling on July 12. The current moratorium is set to expire on November 30.

Opponents to the ban have been reluctant to recant, and most claim that an expanded ban on deepwater rigs like the Deepwater Horizon wouldn’t have affected the Mariner Energy rig, which was located in much shallower water.

What BP Has Already Agreed To Pay:

  • $20 billion in an escrow fund over the next four years to pay damage claims and government penalties stemming from the April 20 explosion
  • $100 million to a foundation to support rig workers who have lost their jobs because of the administration’s deepwater drilling moratorium
  • $500 million for a 10-year research program to study the impact of the spill

Because the BP oil spill fallout will continue to be so extensive in the Gulf Coast, government officials, businesses, and individuals have continued to seek funds beyond the minimum fines and compensation that BP must pay under the law.

Feeling the squeeze, the company has signaled that it may soon stop cooperating with these demands unless it’s sure it will be able to continue operations in the Gulf of Mexico, which accounts for 11 percent of its global production.

A drilling overhaul bill passed by the House on July 30th includes a clever amendment that has BP particularly concerned.

The bill would bar any company from receiving permits to drill on the Outer Continental Shelf if more than 10 fatalities had occurred at its offshore or onshore facilities. It would also withhold permits if the company had been penalized with fines of $10 million or more under the Clean Air or Clean Water Acts within a seven-year period (NY Times).

So far, BP is the only company that fits this description.

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115 comments

+ add your own
3:37PM PDT on Sep 12, 2010

I can't believe BP is holding the Gulf hostage! I hope the government wises up and stops allowing foriegn companies into this nation for drilling and mining

5:37PM PDT on Sep 10, 2010

We knew this was coming it was justa matter of time.

3:13AM PDT on Sep 10, 2010

NO DRILLING, how hard can it be !!

7:05PM PDT on Sep 8, 2010

No drilling, thank you. Yes, simple.

7:41PM PDT on Sep 7, 2010

Even if it puts the company under, you can be sure that the top execs won't deny themselves their excessive pay and benefits. That's really all they care about.

2:32PM PDT on Sep 7, 2010

It's only 11%. Screw them! I hope it puts them out of business. And if they don't pay, they should be shut down. Why is that so hard? They are a disgrace to humans.

11:06AM PDT on Sep 7, 2010

Shame to all those at the top of British Petroleum who are showing themselves to be liars to a global audience. Are they running scared and using scare tactics now?

8:48AM PDT on Sep 7, 2010

Frankly, given all their other lies, I don't believe a word of it. BP's reach is global. They have many other drilling sites still in operation. Disingenuous and typically arrogant. If BP defaults, the solution is simple. We should appropriate all BP drilling platforms and other hard assets within U.S. territorial waters, as well as their offices, their bank accounts and anything else within reach, standing on U.S. soil.

12:28AM PDT on Sep 7, 2010

Remember that BP is only a symptom of the real problem... our incessant dependency on fossil fuels.

8:52PM PDT on Sep 6, 2010

blackmail is the american way. Tell bp no more drilling anywhere in the usa until they totally fix this mess they created.

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Beth Buczynski Beth is a freelance writer and editor living in the Rocky Mountain West. So far, Beth has lived in... more
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