Anadarko: Oil Pollution Act Environmental Liability Could Be $1.5 Billion-$2.5 Billion
August 03 2010 - 7:33PM
Dow Jones News
Anadarko Petroleum Corp. (APC) said Tuesday it could potentially
be liable for $1.5 billion to $2.5 billion in environmental damages
under the nation's flagship oil-spill law as a designated
responsible party in the Deepwater Horizon spill.
Houston-based Anadarko, which owns 25% stake in the BP PLC
(BP)-operated Macondo project, has been fighting against taking any
financial responsibility for the spill, sprung in late April when
the Transocean Ltd.'s (RIG) Deepwater Horizon rig burned and sank.
While BP has taken responsibility for the clean-up, it has also
said its partners should share in the costs. Anadarko reaffirmed
Tuesday that it believes the spill was the direct result of BP's
actions and that its contract with BP contains a clause limiting
its liability if gross negligence is demonstrated.
In a quarterly filing with the Securities and Exchange
Commission, Anadarko estimated the gross liability among all
parties designated responsible for environmental damages under the
Oil Pollution Act at $6 billion to $10 billion, with Anadarko
potentially responsible for up to a quarter of that amount, or $1.5
billion to $2.5 billion. The Oil Pollution Act was enacted after
1989's Exxon Valdez spill and is the nation's primary law divvying
up responsibility after an oil spill. Dozens of lawsuits have been
filed against BP, Transocean and other involved companies under the
law, known as OPA, as well as several other federal and state
environmental laws.
Anadarko's estimate could be larger as the company said it
doesn't include potential costs associated with penalties and
fines, natural-resource damages or civil litigation damages.
As a lessee in the Macondo project, Anadarko has been designated
as a "responsible party" under OPA. The company said it has so far
received bills from BP for a total of $1.2 billion. Anadarko has
withheld payments pending the completion of various ongoing
investigations into the cause of the spill.
Anadarko said that if BP ceases paying 100% of the oil-spill
costs, the U.S. government could seek payment from all companies
involved in the joint venture, which also included a unit of
Japan's Mitsui & Co. (8031.TO), and several liability
provisions of the Oil Pollution act could apply.
"Under this scenario, the company estimates its maximum
allocation of gross OPA-related environmental liabilities could be
25%, which is equivalent to Anadarko's working interest in the
Macondo well," the company said in the filing.
The government has identified two other responsible parties,
which don't own interest in the Macondo well, Anadarko said. If the
oil-spill costs are shared with these parties, Anadarko could end
up paying less than 25%, the company said.
Through July 13, the Coast Guard has billed a total of $222
million to all companies designated responsible for spill-related
response costs incurred by it and other federal and state
agencies.
The companies have each been sent identical invoices for the
total costs, without any allocation of costs between or among them,
Anadarko said. To date, BP has paid all Coast Guard invoices,
thereby relieving the other companies, Anadarko said.
Anadarko also Tuesday posted a narrowed second-quarter loss of
$40 million, or 8 cents a share, amid higher sales volumes, better
cost management and wider margins, though the net result was hit by
derivative impacts. Excluding these and other items, earnings came
in at 49 cents a share, above the average forecast from analysts
polled by Thomson Reuters for 35 cents a share. The company has so
far taken no hit to its bottom line from the spill, and it repeated
its position that the accident "was preventable and likely the
result of the operator's gross negligence and/or willful
misconduct."
-By Isabel Ordonez, Dow Jones Newswires; 713-547-9207;
isabel.ordonez@dowjones.com
(Mark Long in New York contributed to this article).
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