Monday, June 14, 2010

BP May Lose US Oil Leases, Contracts

As Simmons & Co upgrades BP to 'buy' while its CEO Matt Simmons says BP will seek Chapter 11 in a month, the CEO may get his wish sooner.

BP May Lose U.S. Oil Leases, Contracts as Gulf Spill Punishment
(6/14/2010 Bloomberg)

"June 14 (Bloomberg) -- BP Plc may lose control of its U.S. oil and natural gas wells and be barred from doing business with the federal government as punishment for the worst oil spill in U.S. history, industry and regulatory analysts said.

"President Barack Obama and lawmakers are debating penalties that would cripple the company’s ability to do business in the U.S. as public outrage intensifies. In addition to BP’s culpability in the Gulf of Mexico spill, a 2005 explosion at BP’s Texas City refinery that killed 15 workers and a 2006 pipeline leak that dumped 200,000 gallons of crude at Prudhoe Bay, Alaska, will figure in the debate, said Michael Wara, associate professor of environmental law at Stanford University in Palo Alto, California.

"“The government weighs whether there is a pattern and practice,” Wara said. “They’ll consider whether BP runs these incredibly complicated systems, where accidents can and sometimes do happen, or whether the company has a culture that disfavors safety and environmental compliance.” " [The article continues.]

One expert quoted in the article says of the potential government move: “It’s exceedingly possible and exceedingly unwise,” McKenna said. “You engage in the economic deterioration of a company that’s already under stress.”

Therefore it is likely to happen. That's the government way.

Just so that Obama can appear in the eyes of adoring environmentalists who thank Obama for being "the best environmental president" the country has had since Teddy Roosevelt (cognitive dissonance, anyone?) that he is kicking ass.

An increasingly imperial federal government's all-out war on a private business.

And his government was going to give a pollution prevention and safety award to BP. (BP was one the three finalists.)

Obama hasn't returned campaign donations from BP. (He refused to return $1 million campaign donations from Goldman Sachs.)

He hasn't even met the CEO Tony Hayward. (He's meeting the BP chairman after almost two months since the spill. But he had plenty of time for golf, again.)

Senate Dems wants BP to set up $20 billion escrow account from which to pay for damages.

(There goes some analysts' optimistic assessment that BP's liability is likely to be limited to less than $10 billion total.)

BP's market cap as of last Friday is $106 billion. Only a few weeks ago it was bigger than Chevron ($148 billion). BP has $236 billion in assets on its balance sheet.

Growing public anger toward BP? Or toward Obama's government? Or environmental groups like Sierra Club?


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