Monday, June 21, 2010

Ed Markey: BP Is Either Lying Or Grossly Incompetent!

Posted last Wednesday: Will BP Go Bust Or WILL BP Recover Back To $52?

Here's another set of reasoning from the bulls, and this one comes from so-called value investor, Whitney Tilson. On Barrons:
Buying Into a Pariah. If you do not have access you could read it from this blog: Why We’re Long BP

Now what was very intersting for me in the posting
Will BP Go Bust Or WILL BP Recover Back To $52? Matt Simmons had contradicted the firm he founded, Simmons & Co.

Matt Simmons is calling for BP to go zero (and yes, he publicly acknowledged that he's short on the stock based on his own reasonings), while Simmons & Co gave it an outperform rating with a target price of $52. Now
Simmons & Co has cuts ties to outspoken founder. Conflict of interest was the reasoning.

( Here is a great article on Matt Simmons on CNN:
The Gulf Coast oil spill's Dr. Doom )

Anyway, one of the main reasoning from Matt Simmons is that BP was under stating the size of the oil leak and by logical reasoning, if the oil spill is much larger, the damages to BP would be more severe.

The following newsclip is fresh from AP newswire:
US lawmaker accuses BP of underestimating oil spill

  • (AFP) – 1 hour ago

    WASHINGTON — A key US congressman released an internal BP document Sunday showing up to 100,000 barrels of oil could be leaking into the Gulf of Mexico each day, up to 20 times more than it estimated in public.

    The oil giant's own worst-case scenario was based on the consequences of removing both the ruptured wellhead now lying on the bottom of the seafloor and a key set of valves known as a blowout preventer (BOP), as well as incorrectly calculating the restrictions.

    According to US government estimates, some 30,000 to 65,000 barrels are escaping on a daily basis, soiling once-pristine Gulf Coast shorelines, killing wildlife and putting a major dent in the region's multi-billion-dollar fishing industry.

    At the time the document was provided to lawmakers in May, BP was telling the public that 5,000 barrels a day were spewing into the Gulf waters and told lawmakers that up to 60,000 barrels could leak, according to Democratic Representative Ed Markey, who released two pages of the file.

    Markey, who chairs the House Select Committee on Energy Independence and Global Warming, accused the firm of lying to Congress in order to reduce its liabilities.

    In the document, which is itself undated, BP said its minimum estimate under such a scenario was 55,000 barrels gushing out of the well each day.

    "If BOP and wellhead are removed and if we have incorrectly modeled the restrictions -- the rate could be as high as (approximately) 100,000 barrels per day up the casing or 55,000 barrels per day up the annulus (low probability worst cases)," it said.

    Markey, a vocal critic of BP and its handling of the disaster, lit out against the firm he said was "either lying or grossly incompetent."

    "First they said it was only 1,000 barrels, then they said it was 5,000 barrels, now we're up to 100,000 barrels," he told NBC's "Meet the Press."

Ah... Matt Simmons estimates is 120,000 barrels!

  • "It was their technology, it was their spill camp, they're the ones that should have known right from the beginning; and either to limit their liability or because they were grossly incompetent, they delayed a full response to the magnitude of this disaster."

    BP rejected the charge, noting that the conditions it had stated for the worst-case scenario to develop were not in place then, and are not in place now.

    "It's completely misrepresenting what were saying," BP spokesman Robert Wine said about Markey's reaction.

    "We were saying that if two conditions were met simultaneously -- one that we got the modeling restrictions wrong and if the blowout preventer were removed -- then we could have 100,000 barrels of oil."

    He told AFP the estimate "has nothing with the amount of oil that's actually escaping at the moment."

    According to Wine, "there is no way the BOP is being moved" because the valve system plays a critical role in the collection effort, estimated to be retrieving or burning up to some 25,000 barrels of fresh crude each day.

    "The blowout preventer is being kept in place and is not being moved until we can guarantee to the authorities and the public at large that the well is being killed and poses no threat," he added.

    US lawmakers have assailed BP for its response to the worst oil spill in US history, which began with an April 20 explosion of its deepwater rig in the Gulf of Mexico that killed 11 workers

On ZH: Internal BP Document Confirms Matt Simmons' Worst Case Prediction Of Spill Rate Of 100,000+ Barrels Per Day

Also on CNBC: With $20 Billion Fund, BP Limiting Liability: Feinberg

  • The man in charge of the $20 billion BP oil-spill compensation fund said Sunday that by creating the fund, the giant oil company is taking the first steps to limit its legal liability.

    “Investors in BP should know that there’s now an alternative to the litigation system in place,” Kenneth Feinberg said in a telephone interview with CNBC Sunday afternoon. “I think that’s a really helpful sign if you’re an investor.”

    Feinberg, who was appointed last week as the independent administrator fund, said that recipients of emergency relief funds, which are being paid out in real time do not sign away their right to sue BP [BP 31.76 0.05 (+0.16%)] for damages.

    But, he said, those people who accept final settlements from the fund, will likely be required to give up their right to sue BP. “You’ll waive your right to sue,” Feinberg said. “That’s only fair.” ...

Oh my gosh.... this Kenneth Feinberg is supposedly to be the independent administrator of the oil spill compensation fund.... so go figure... how on earth could he be speaking like this?

For whom does he serve the best interest?