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BP Chief Skirts Oil Liability Issue at CERA Conference BP Chief Skirts Oil Liability Issue at CERA Conference

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BP Chief Skirts Oil Liability Issue at CERA Conference


Dudley: Hard to pick figure.(Dan Kitwood/Getty Images)

HOUSTON — You can add BP’s top executive as another person who is either unwilling or unable to take a position on the thorny issue of oil spill liability.

“I don’t know the answer,” BP CEO Bob Dudley said at the IHS Cambridge Energy Research Associates conference here. “But I do know that if the liability cap is so high, no one in the industry would want to drill—even though it’s an incredibly low probability of it [an oil spill] happening.”


The Oil Pollution Act, passed in 1990 in response to the 1989 Exxon Valdez oil spill, requires companies to pay up to $75 million in the wake of a spill. BP had agreed to put $20 billion into an escrow account to pay for economic damages in response to its oil spill, which eclipsed the Exxon disaster as the biggest oil spill in U.S. history.

Dudley couldn’t pick out a specific number or range for the liability cap. But he sought to remind Washington that if the cap is too high or removed, fewer companies would be able to produce in the Gulf of Mexico because they wouldn’t be able to afford insurance. But BP would not be one of those companies.

“An analogy I would make is: If airlines didn’t have a certain liability cap, we wouldn’t have airlines,” said Dudley, who spoke to the largest audience of his industry peers since the spill during a luncheon speech at the CERA conference. “The tough question is: How many companies do you want operating in the Gulf’s deep water? The higher the liability cap gets, the fewer companies that will operate in the Gulf.”


Dudley is not alone in his inability or unwillingness to offer more thought on the liability cap. President Obama’s oil spill commission said in its final report that it didn’t believe the cap should be removed for the same reasons Dudley gave Tuesday. But the seven-member panel, which dissolves Friday, also didn’t have any specific number to offer. When releasing their report in January, they said they didn’t have enough time to delve into the details of what the number should be. But regardless, the lack of consensus on a presidential panel reflects the complicated nature of the topic.

Prospects don’t look much better in Congress. Oil-state Democratic Sens. Mark Begich of Alaska and Mary Landrieu of Louisiana have been saying for about a month they’re on the cusp of releasing joint liability legislation. The offices confirmed that the senators aren’t expected to release it this week.

In the meantime, the liability cap remains at $75 million and the Interior Department has awarded the first deep-water drilling permit since the BP spill to Noble Energy. BP owns nearly half of that well. 

This article appears in the March 9, 2011 edition of NJ Daily.

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