Feds: BP agrees to expedite oil spill payments

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SpillBP said Thursday it plans to increase the amount of oil captured from a ruptured well in the Gulf of Mexico by early next week as the Obama administration announced that the oil giant agreed to speed up payments to people whose livelihoods have been washed away by the spill.

Fishermen, property owners and businesspeople who have filed damage claims with BP are angrily complaining of delays, excessive paperwork and skimpy payments that have put them on the verge of going under as the financial and environmental toll of the seven-week-old disaster grows.

Under federal law, BP PLC is required to pay for a range of losses, including property damage and lost earnings, and the company has disputed any notion that the claims process is slow or that it has been dragging its feet.

But on Thursday, Tracy Wareing, of the National Incident Command office, said administration officials raised a “pressing concern” during a meeting Wednesday with BP executives about the time the company has been taking to provide relief payments.

She said the company would change the way it processes such claims including dropping the current practice of waiting to make such payments until businesses have closed their books for each month.

The dispute over the claims process played out as shareholders feared that the company might be forced to suspend dividends and find itself financially overwhelmed by the cleanup costs, penalties, lawsuits and damage claims generated by the biggest oil spill in U.S. history.

After Wednesday’s steep losses, shares of BP rose more than 10 percent Thursday in New York as markets began heeded warnings from analysts who said the selloff was an overreaction. But at $32.20, the shares are still trading at levels last seen 14 years ago.

The latest fall came after Interior Secretary Ken Salazar promised a Senate energy panel to ask BP to compensate energy companies for losses if they have to lay off workers or suffer economically because of the Obama administration’s six-month moratorium on deep-water drilling.

Congressional leaders stepped up that pressure on BP on Thursday, with House Speaker Nancy Pelosi telling reporters at the White House “every taxpayer in America must know that BP will be held accountable for what is owed.”

Despite anger with BP, some lawmakers and Louisiana residents reiterated their call to end the 6-month deep-water drilling moratorium, saying it will cause economic hardship in the region.

“Our people don’t want unemployment, they want to go back to work,” Gov. Bobby Jindal said Thursday as he met with oil workers in Port Fourchon, La. “An arbitrary, six-month moratorium is going to put thousands of Louisianians out of work. We want them to reconsider.”

At the bottom of the sea, the containment cap on the leaking well is capturing 630,000 gallons a day and pumping it to a ship at the surface, and the amount could nearly double by next week to roughly 1.17 million gallons, the Coast Guard has said.

The government has estimated 600,000 to 1.2 million gallons are leaking per day, but a scientist on a task force studying the flow said the actual rate may be between 798,000 gallons and 1.8 million. A task force member said an estimate come Thursday or Friday.

Using the government’s worst case scenario, the amount of oil that has spilled since the April 20 rig explosion that killed 11 workers would fill up enough gallon milk jugs to stretch 4,525 miles, nearly the distance between the spill site and London, the world headquarters of BP.

In the best case scenario, the spill would fill enough gallon milk jugs to stretch 2,210 miles, slightly more than the distance between the spill site and Seattle.

A second vessel expected to arrive within days should greatly increased capacity. BP also plans to bring in a tanker from the North Sea to help transport oil and an incinerator to burn off some of the crude.

Kent Wells, BP’s senior vice president of exploration and production, said Thursday that a semi-submersible drilling rig was expected to be up and running early next week and would capture and burn about 420,000 gallons of oil daily.

BP opted to burn the oil because storing it would require bringing in even more vessels to the already crowded seas above the leaking well.

“It was going to become too congested, it was not the safest way to do it,” Wells said. A drill ship already at the scene can process a maximum of 756,000 gallons of oil daily that’s sucked up through a containment cap sitting on the well head.

Testing on the oil-burning system should begin over the weekend, and full production should start early next week, Wells said. Work is also expected to begin this weekend to build a more robust containment system meant to better withstand the force of Gulf hurricanes.

Cleanup of the gooey oil continued along the Gulf Coast. In Orange Beach, Ala., reddish-brown globs of oil the size of credit cards littered the beach at the tide line as a blue farm tractor loaded with shovels and other cleanup equipment chugged down the beach.

BP said it will give $75 million in grants to Alabama, Florida and Mississippi at the request of the governors in each of the three Gulf states. Mississippi Gov. Haley Barbour said the grant will fund protection for the most environmentally sensitive stretches of his state’s coastline.

County commissioners in the Florida Panhandle’s Escambia County approved $700,00 in emergency funding to promote the Pensacola area’s beaches as tar and oil sheen began breaking through a boom designed to protect inland waterways.

Outside the meeting, about two dozen men, some in fishing waders, carried signs criticizing BP. One of the men, Dennis Miller, who has been fishing for more than four decades, said they are frustrated because there is nothing to do.

“We’re just worried,” Miller said. “We’re trying to figure out what we’re going to do when they shut the whole Gulf down. And we know that’s coming.”

Associated Press writers Harry R. Weber in Houston, Jay Reeves in Orange Beach, Ala., Melissa Nelson in Pensacola, Fla., and Eileen Sullivan, Darlene Superville, Seth Borenstein in Washington contributed to this report. Ray Henry reported from New Orleans.

Source: The Associated Press.