Oil spill makes unlikely partners of BP and the federal government

By Joel Achenbach
Washington Post Staff Writer
Tuesday, June 15, 2010; 4:02 PM

It was a marriage of necessity, awkward from the start. The federal government and BP have been forced to work cheek by jowl from the deep sea to the shoreline even as they have increasingly grown to dislike and distrust each other. The question now is whether this marriage can be saved.

There's always the option of turning everything over to the lawyers.

On Wednesday, President Obama will sit down with BP's leadership team in a White House meeting that everyone hopes will be constructive but could conceivably end with a see-you-in-court farewell.

At this precise moment, a complete rupture looks unlikely. The administration is demanding that BP fork over billions for an escrow account to handle claims against the company. BP so far has signaled that it's willing to do so, provided that it has certain assurances. Most importantly, it wants some sense that there's going to be a limit to its liability, and that it won't have to make up the lost wages of every rig worker sidelined by the administration's six-month moratorium on deep-water drilling.

The company's message: We're trying to do everything we can to fix this mess but at some point we have to draw the line. But the administration has congressional Democrats breathing hard over its shoulder: Senate Democrats have demanded $20 billion from BP, an eye-popping sum even by Big Oil standards, and in the House, Rep. Ed Markey, chairman of the energy and environment subcommittee, declared Tuesday morning, "Congress must ensure that there is unlimited liability for oil spills by oil companies."

BP also wants the escrow account administered by someone the company can trust. All this is under negotiation and the fine details are likely to be hammered out before Obama shakes hands with BP chief executive Tony Hayward.

White House spokesman Bill Burton, in a gaggle with reporters Monday on Air Force One, said that the White House was confident that it had the legal authority to compel BP to fund the new account, but that BP had shown no sign of getting legalistic.

"The signs from BP aren't that there is going to be a protracted legal battle over this or anything like that," he said. "I'm not going to get into a line-by-line in the code. But considering BP is going to do this, I don't think we have to go down the road of what lawyers are going to have to compel them to do in a court of law," Burton said.

The company knows that the White House needs to score political points. For example, according to the Wall Street Journal, officials in Alabama wanted BP to pay for sand barriers to protect beaches. BP was willing go to do so but also saw the advantage in letting the White House appear to be ordering BP to do it against the company's will. Hayward was quoted as saying, "Let the White House have the victory of announcing it, but it's the right thing for us to do."

Tuesday morning, White House Press Secretary Robert Gibbs once again claimed that the White House has been bending BP to its will.

"They're drilling not only a relief well to put a permanent end to this crisis in the gulf but they're drilling a second relief well at the cost of $100 million, not because they wanted to but because the government directed them to. They're increasing their containment strategy on the surface so that we can pump more oil up, not because they wanted to but because we directed them to," Gibbs said on CNN.

A BP spokesman said the company had no response.

The gulf oil spill has made just about everyone look bad, but the list of winners and losers in the narrative is skewed to the losers. President Obama has been hammered by pundits for failing to project a sense of command in the crisis. His rational explanations of government limitations when it comes to plugging deep-water wells have run headlong into the visceral anguish of a public witnessing black effluent gushing into the Gulf of Mexico. His cool demeanor has not satisfied such critics as his political ally James Carville, who has parked himself on the Gulf Coast and at one point beseeched the president to tell BP executives "I'm your daddy."

Presidential adviser David Axelrod recently struggled to describe the relationship between the administration and BP. Asked pointedly on NBC's "Meet the Press" whether the president trusts Hayward, Axelrod answered, "I, I'm not -- I don't consider them a partner, I don't consider them -- they're not social friends, they're not -- I'm not looking to make judgments about their soul. I just want to make sure that they do what they're required to do."

The strained relationship between the federal government and BP has also become increasingly evident on the technological front.

On Friday, Coast Guard Rear Adm. James Watson, the on-scene coordinator of the federal response to the spill, sent a letter to BP demanding that within 48 hours the company produce an explanation of how it will contain more of the leaking oil and add backup systems in case something else goes wrong. The current method uses a cap on the leaking pipe, and is capturing about 15,000 barrels (630,000 gallons) a day, but oil continues to leak around the cap and new estimates suggest that the flow could be 30,000 barrels (1,260,000 gallons) or even 40,000 barrels (1,680,000 gallons) a day.

The company made clear in its response to Watson's letter that there are limits to what it can do safely at a site in the gulf already jammed with more than 25 ships and rigs.

"The risk of operating multiple facilities in close proximity must be carefully managed. Several hundred people are working in a confined space with live hydrocarbons on up to 4 vessels," BP chief operating officer Doug Suttles wrote. "This is significantly beyond both BP and industry practice."

The collection of oil had to be suspended Tuesday when a fire, apparently caused by a lightning strike, broke out at the top of the derrick on the drillship Discoverer Enterprise. BP said the fire was quickly extinguished and the company planned to start collecting oil again shortly.

Bottom line: The situation is, both politically and technologically, extremely combustible.

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