NEW ORLEANS — BP’s board met Monday to decide the fate of the firm’s chief executive as work resumed to permanently plug the source of the largest oil spill in U.S. history after a storm threat eliminated an opportunity to seal the Gulf of Mexico gusher more securely by the end of July.
Tony Hayward, who became the face of BP PLC’s efforts to contain the Gulf oil spill, will step down as chief executive officer in October and be offered a job with the company’s joint venture in Russia, a person familiar with the matter said Monday.
The person spoke on condition of anonymity because an official announcement had not been made by the British company’s board, which met Monday in London to decide Hayward’s fate.
Hayward left the board meeting Monday without speaking to reporters. It’s not yet clear what his role would be with TNK-BP, Russia’s third-largest oil firm, of which BP owns half.
TNK-BP was once run by American Bob Dudley, who took over as BP’s point man in dealing with the Gulf of Mexico oil spill after a series of missteps by Hayward.
Dudley will now replace Hayward as BP CEO, two people familiar with the situation said. He will take the helm Oct. 1, one of the people said, declining to be named before an official announcement.
BP said Monday that no announcement would be made on management changes before this morning, when the company reports its second-quarter earnings.
In New York, BP shares rose almost 5 percent Monday as the stock market anticipated a formal announcement about Hayward. Shares of BP PLC rose $1.82, or 4.9 percent, to $38.68 in midday trading in New York.
BP shares closed up 4.6 percent Monday at $6.45 in London.
BP’s second-quarter earnings report is expected to include preliminary provisions for the cost of the Gulf disaster, with analysts saying that could be as high as $30 billion.
BP said the cost of dealing with the spill had reached nearly $4 billion by July 19.
Meanwhile, crews were restarting work Monday to plug the leaky Gulf well after the remnants of Tropical Storm Bonnie blew through, forcing a short evacuation. The U.S. government’s oil spill chief, retired Coast Guard Adm. Thad Allen, said Monday that the so-called static kill - in which mud and cement are blasted in from the top of the well - should start next Monday.
If all goes well, the final stage - in which mud and cement are blasted in from deep underground - should begin Aug. 7. BP said the “bottom kill” could take days or weeks, depending on how well the static kill works.
After that, cleanup is still expected to take some time.
“When this spill first started, it took about four to six weeks for the oil to start impacting shore,” Allen said. “After we put the cap in place, we can expect for four to six weeks after that or even longer, depending on the weather conditions, for oil to continue to come ashore.”
BP will clean up oil from the spill whenever it’s found, Allen said. Chemical analysis can determine whether crude found underneath a beach months from now came from the well, he said.
PLEDGE OF SAFETY
Hayward, 53, who has a doctorate in geology, had been a well-regarded chief executive. But his promise when he took the job in 2007 to focus on safety “like a laser” came back to haunt him after the April 20 explosion on the Deepwater Horizon rig killed 11 workers and unleashed the deep-sea gusher of oil.
Hayward’s early attempts to shift blame to the rig operator, Transocean, failed to take the heat off BP. Later remarks that the amount of oil pouring into the Gulf was “tiny” compared to its volume of water and Hayward’s remark that he would “like my life back” made him an object of scorn. That emotion turned to fury when Gulf residents heard that Hayward spent a day at a fancy English sailing race in which his yacht was competing during the height of the disaster.
David Cumming, head of U.K. equities at Standard Life Investments,said the board’s reported intention to remove Hayward is an act of “political appeasement.”
“I think they have taken the view that his departure will relieve some of the political and media pressure in the U.S. and help BP rebuild its U.S. reputation,” Cumming told BBC radio.
Hayward makes $1.6 million a year as the company’s head, according to its annual report. In 2009, he received a performance bonus of more than $3.9 million plus other remuneration, bringing his total pay package to more than $7.8 million.
Hayward may be entitled to receive his pension fund, worth $16.8 million at the end of last year, as well as a year’s salary of about 1 million pounds.
Dudley, currently BP’s managing director, grew up partly in Hattiesburg, Miss. He spent 20 years at Amoco Corp., which merged with BP in 1998, and lost out to Hayward on the CEO’s slot three years ago.
New Orleans Mayor Mitch Landrieu said BP’s attitude about making things right was more important than who was running the company.
“BP, from I think everybody’s perspective, made a very bad mistake,” he said. “I think what the world expects from BP is an acknowledgment that something was done wrong. I think BP has a long way to go to gain the trust of the people.”
BP’s obligation to clean up the oil spill and pay for damage also won’t be altered by a change in management, White House spokesman Robert Gibbs said.
The company’s responsibilities in the Gulf remain the same “regardless of who leads the company,” Gibbs said.
DRILLING BAN
Meanwhile, opponents of a U.S. ban on deep-water drilling asked a federal appeals court to block a bid by regulators to throw out a judge’s ruling that scrapped the moratorium.
Interior Secretary Kenneth Salazar previously asked the U.S. appellate court and a lower-court judge, both located in New Orleans, to dismiss the lawsuit by Hornbeck Offshore Services Inc. and other oil-service companies. The U.S. said the lawsuit was rendered irrelevant by newer drilling suspension rules announced July 12.
The industry suit remains necessary because drilling hasn’t resumed in the Gulf of Mexico in the wake of the second moratorium, lawyers for Hornbeck said Monday. Drill ban opponents including Louisiana Gov. Bobby Jindal claim the moratorium is turning an environmental disaster into an economic catastrophe.
“The July 12 order reimposes the same basic blanket, one-size-fits-all prohibition as the original moratorium,” Carl Rosenblum, Hornbeck’s attorney, said in a filing Monday. “It prevents all deep-water drilling, treating the industry leader and the industry laggard exactly the same.”
U.S. District Judge Martin Feldman in New Orleans on June 22 threw out the six month ban imposed by federal regulators on oil and gas drilling in waters deeper than 500 feet, finding it was too broad. A three-judge panel of the 5th U.S. Circuit Courtof Appeals in New Orleans on July 8 refused regulators’ request to put Feldman’s order on hold while the government appeals.
Information for this article was contributed by Harry R. Weber and Robert Barr of The Associated Press, by Stanley Reed, Eduard Gismatullin, Brian Swint, Roger Runningen, Nicholas Johnston, Margaret Cronin Fisk, Mark Chediak, Laurel Brubaker Calkins, Katarzyna Klimasinska and Jim Polson of Bloomberg News.
Front Section, Pages 1 on 07/27/2010