The plunge in Anadarko Petroleum Corp.’s share price since late April perhaps best expresses the ongoing concerns about the company’s potential liabilities in the escalating cost of the Gulf of Mexico oil spill disaster. As a 25 percent interest owner in the ill-fated Macondo well, still spewing oil into the waters of the Gulf, Anadarko could end up being hit by 25 percent of the tab for the spill response. With BP already having spent in excess of $3 billion on the response, and with another $20 billion committed to an escrow account, that 25 percent liability would add up to a sizable sum.
And, with Anadarko being a partner with ConocoPhillips in the North Slope Alpine oil field and in the development of satellites to that field, and given Anadarko’s natural gas exploration efforts in the Brooks Range foothills, the company’s financial health is of significant interest in Alaska. According to Anadarko’s most recent financial report, the company earned somewhat more than $3 billion in revenues worldwide in the first quarter of 2010.
Distanced from BPOn June 18 Anadarko Chairman and CEO Jim Hackett distanced his company from BP in the events leading to the Macondo well blowout, saying that under the terms of the joint operating agreement under which the well was drilled BP is responsible to the well’s co-owners for damages caused by BP’s gross negligence or willful misconduct.
“The mounting evidence clearly demonstrates that this tragedy was preventable and the direct result of BP’s reckless decisions and actions,” Hackett said. “Frankly, we are shocked by the publicly available information that has been disclosed in recent investigations and during this week’s testimony that, among other things, indicates BP operated unsafely and failed to monitor and react to several critical warning signs during the drilling of the Macondo well. BP’s behaviors and actions likely represent gross negligence or willful misconduct and thus affect the obligations of the parties under the operating agreement.”
But according to a June 29 report in the Financial Times, Anadarko had been aware of the details of the Macondo well design and BP had informed Anadarko of design changes and any well control events that occurred during the drilling. Well design components would have included the method of lining the well and the use of centralizers to stabilize the well, aspects of the well design that have triggered debate about the safety standards in the Macondo drilling.
BP told the Financial Times that BP personnel had engaged in periodic communications with the well co-owners during the drilling operation.
Badly executedHowever, Anadarko says that the well design met industry standards and that the blowout problems resulted from BP’s execution of the design, according to the Financial Times report.
And on July 7 Anadarko spokesman John Christiansen confirmed his company’s position to Petroleum News.
“The real issue was the operator’s execution, not the well design,” Christiansen said. “We did not have any personnel on the rig, nor were we consulted with regarding the decisions made on the rig.”
Meantime, BP has billed Anadarko for $272.2 million in spill-related costs, while also sending a corresponding bill for $111 million to Mitsui, a 10 percent partner in the Macondo well, according to a report by The Associated Press.
“They are partners in the field and as responsible partners we would expect them to bear some of the costs,” BP spokeswoman Sheila Williams said July 5, AP reported.
Anadarko has said that it is reviewing the bill from BP and is assessing its “contractual remedies,” AP said.