New Oil Slick Shakes Up BP Liability Talks

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October 12, 2012

HOUSTON–As U.S. officials and BP PLC negotiate to resolve the company’s liability for the Deepwater Horizon spill, some local and state officials are citing a newly discovered oil slick as evidence that the full impact of the 2010 accident remains unclear.

Federal officials said late Wednesday that the oil slick, about 50 miles off the Louisiana coast near where the Deepwater Horizon drilling rig exploded, matches crude that gushed from the well, which was being drilled by BP. The source of the thin slick, known as a sheen, isn’t clear, and officials said it could be oil that had been trapped in the wreckage of the rig, which was owned by Transocean Ltd.

BP and the U.S. Justice Department are currently in advanced talks to settle the company’s civil and criminal liabilities arising from the disaster, according to people familiar with the negotiations. The rig exploded on April 20, 2010, killing 11 workers and leaking 4.9 million barrels of oil into the Gulf of Mexico.

Talk of a new slick was making residents nervous in Orange Beach, Ala., one of the Gulf Coast beach towns sullied by the 2010 spill, Mayor Tony Kennon said Thursday. Mr. Kennon called on the U.S. Coast Guard to investigate the source of the sheen, so people in town would know what to expect.

“Is it a leak or is it a gusher?” he asked, adding, “We’re hoping it’s nothing, but in the back of your mind, you wonder, ‘What if?'”

The Alabama governor’s office also expressed concern over the sheen. “We expect BP to clean up any of their oil that is found in Alabama waters or on the beaches,” a spokeswoman for Republican Gov. Robert Bentley said.

Sen. Mary Landrieu, a Louisiana Democrat, wrote to the Coast Guard in August to express concerns that federal officials had stopped actively monitoring parts of the coast for lingering effects from the spill. The new sheen heightens those concerns, a Landrieu spokeswoman said Thursday.

“One can only hope that the nightmare well has not come back to haunt the people of the Gulf,” said Rep. Ed Markey (D., Mass.,), the top Democrat on the House Natural Resources Committee, in a statement. He called for reinstalling an underwater camera at the well, which was plugged in July 2010, and said additional effects from the spill should be considered in assessing monetary damages.

BP, in an internal presentation reviewed by The Wall Street Journal, indicated that the slick likely came from a mixture of oil and a mud used in drilling that was trapped inside a long pipe connecting the Deepwater Horizon rig to the sea floor.

In a statement, BP defended the integrity of its sealed well and suggested that the slick comes from residual oil contained in debris from the rig. The company pointed to a federal inspection a year ago, after similar sheens surfaced in the Gulf, which found that the well wasn’t leaking. “We have seen no evidence from this latest sheen that leads us to believe otherwise,” the company said.

A spokesman for Transocean pointed to a federal-court ruling earlier this year that the drilling rig contractor wasn’t responsible for an oil spill that originated beneath the water’s surface.

“We will rely on the lab analysis as to the origin of the oil, and defer to the recent ruling of the federal court on the question of responsibility,” said Brian Kennedy, the Transocean spokesman.

The oil sheen was reported by BP on Sept. 16, and assessed by the Coast Guard and the National Oceanic and Atmospheric Administration. Officials took samples that correlate to oil collected from the BP well. The sheen has stretched for as long as four miles, but has varied in size with sea conditions.

-By Daniel Gilbert and Ana Campoy. (c) 2012 Dow Jones & Company, Inc.

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