Estimate of spilled oil goes up, and BP stock price goes down

U.S. Coast Guard Adm. Thad Allen says the oil spill containment operation in the Gulf of Mexico is now catching up to 630,000 gallons (15,000 barrels) daily. Allen told reporters that "we continue to make progress."
By Marc Kaufman
Washington Post Staff Writer
Thursday, June 10, 2010

The stock price of BP plunged more than 15 percent Wednesday to a 14-year low as it became increasingly clear that the amount of oil spewing out of the Deepwater Horizon well is substantially greater than the company or the federal government initially estimated.

Coast Guard Adm. Thad W. Allen, head of the government's spill response, said that BP collected 15,000 barrels of oil (630,000 gallons) from the blown well on Tuesday but that significantly more was escaping the containment cap into the ocean. Allen said the company is moving a "mobile drilling unit" to the site that will increase the receiving capacity to 28,000 barrels (almost 1.2 million gallons) a day.

The quantity of oil spilling into the Gulf of Mexico has been the subject of speculation and controversy for weeks. Early in the crisis, the National Oceanic and Atmospheric Administration issued an estimate of 210,000 gallons a day, but more recently a government-appointed team of scientists known as the Flow Rate Technical Group produced estimates of 504,000 to 1.05 million gallons.

Because the damages and penalties that could be levied against BP would be based on the amount of oil released into the gulf, investors interpreted Wednesday's news as substantially increasing the company's potential liability.

Allen also said Wednesday that the 1,000-foot shuttle tanker Loch Rannoch was headed to the gulf from the North Sea. The tanker is capable of withstanding rougher seas than the ships currently in place at the crowded blowout site.

Along the Gulf Coast, the damage to wildlife is becoming more apparent. A rescue center in Louisiana said it has gotten more than five times as many oily birds in the past few days than in the previous six weeks.

The U.S. Fish and Wildlife Service's rescue center in coastal Louisiana has reported a little more than 400 birds since the BP well blew out April 20. Of those, 350 were brought in since Thursday.

Since the Deepwater Horizon explosion, BP's stock price has dropped by more than 50 percent. Wednesday's decline was attributed to both the amount of oil flowing from the well and comments from Interior Secretary Ken Salazar that the Obama administration will ask BP to repay the salaries of workers laid off because of the six-month moratorium on deepwater exploratory drilling.

Phil Weiss, an oil analyst with Argus Research in New York, said momentum is working against BP as the news gets progressively worse despite the increased capture of oil. He said he thinks the company can survive, "but there's more doubt in my mind than there was a week ago. Momentum is a powerful thing."

Concerns have also grown that BP will have to suspend its dividend payment under pressure from U.S. lawmakers who say the money should go toward paying legal claims and for environmental repair in the gulf. In the past two days, seven analysts have cut their expectations on the likely payout, giving more reason to sell the stock.

Although officials of the administration and BP communicate every day, President Obama told NBC's Matt Lauer Tuesday that he has not spoken directly with company chief executive Tony Hayward.

He told Lauer he expected that Hayward would just tell him what he wanted to hear -- an explanation that was revised Wednesday by White House press secretary Robert Gibbs. The spokesman said that Hayward had no independent authority and that decisions are made by the board of directors and its chairman.

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