NEW ORLEANS — BP picked an American to replace its outgoing chief Tuesday, and he pledged that his company will remain committed to the Gulf region even after the gushing oil well there is sealed.
Robert Dudley will become BP PLC’s first non-British chief executive officer, the company said as it reported a record quarterly $17 billion loss and set aside $32.2 billion to cover costs from the spill.
BP said it plans to seek a $10 billion tax credit from theU.S. government because it has lost so much money from the spill.
Dudley, who will replace Tony Hayward on Oct. 1, promised changes in light of the environmental disaster. “There’s no question we are going to learn things from this investigation of the incident,” he told reporters by phone from London after the announcement was made.
One certain change is thatBP will become smaller. It announced it will sell $30 billion in assets.
Dudley, BP’s managing director and current point man on oil spill recovery, defended his company’s record and that of the chief executive he will replace.
Hayward, whose verbal miscues intensified the anger of Gulf Coast residents, will leave BP with benefits valued at more than $18 million. He told reporters he had been “demonized and vilified” but had no major regrets about his leadership.
“Life isn’t fair,” he said, but added that wasn’t the point. “BP cannot move on in the U.S. with me as its leader.”
The White House was not impressed with Hayward’s comments.
“What’s not fair is what’s happened on the Gulf,” press secretary Robert Gibbs said. “What’s not fair is the actions of some have caused the greatest environmental disaster that our country has ever seen.”
BP announced the move Tuesday, nearly 100 days into a catastrophic mile-deep blowout that killed 11 workers, spewed 2.24 million to 4.38 million barrels of oil and sapped 35 percent, or $60 billion, of BP’s market value.
“We are taking a hard look at ourselves, what we do and how we do it,” BP Chairman Carl-Henric Svanberg said during a webcast presentation on the company’s earnings.
Svanberg said the company’s priority was to stop the Gulf leak permanently, clean up the spill and compensate people whose livelihoods have been lost. But he added that the company was determined to restore value to shareholders, whose dividends were axed by BP under U.S. political pressure.
Svanberg said that BP isn’t the sole responsible party for the accident in an interview with Bloomberg Television on Tuesday. The company will “vigorously” pursue its partners on the well for costs, Hayward said in a conference call with journalists. The partners include Anadarko Petroleum Corp. and Mitsui Oil Exploration Co.
Company shares dropped 65 cents, or about 1.7 percent, to close at $38 in Tuesday trading in New York.
If not for the spill’s effect, BP’s quarterly profit would have been $5.6 billion, or $1.79 a share - more than 80 percent higher than the $3.1 billion recorded a year earlier. BP revenue also would have appeared impressive and would have been up more than 34 percent to $73.7 billion compared with $54.8 billion in the year-ago period.
Under U.S. corporate tax law, companies can take credits on up to 35 percent of their losses.
That means taxpayers could be covering roughly half of the $20 billion pledged by BP for a fund to compensate people and businesses harmed by the disaster.
On the basis of the upper estimate of oil spilled so far, BP could be fined up to $4.8 billion under the Clean Water Act, or up to $18.8 billion if it is found to have committed gross negligence or willful misconduct.
Any fines would be on top of the compensation BP has agreed to pay to thousands of people harmed by the spill. Under U.S. government pressure, it set up a $20 billion escrow fund to pay all claims, including environmental damages and state and local response costs.
PLANS FOR HAYWARD
Dudley pledged that his company will remain committed to the Gulf region even after the busted well is sealed for good - something that may happen soon. A temporary cap has held back the oil for nearly two weeks, a “static kill” effort to plug the well from above is to begin Monday, and the permanent fix - a relief well - could begin sealing the well from the bottom for good with mud and cement days after that.
BP said it planned to recommend Hayward for a nonexecutive board position at its Russian joint venture, TNK-BP.
Hayward, who will stay on BP’s board until Nov. 30, will receive a year’s salary of $1.6 million as part of his severance package. His pension benefits are valued at about $16.8 million, and he retains his rights to shares under a long-term performance program that could eventually be worth several million dollars if BP’s share price recovers.
MISSISSIPPI ROOTS
Dudley, who will be based in London, will hand over spill response coordination to Lamar McKay, the chairman and president of BP America.
Dudley spent some of his childhood in Mississippi and worked for 20 years at Amoco Corp., which merged with BP in 1998. He lost out to Hayward on the CEO slot three years ago.
“I think you will find I listen hard and carefully to people and have worked with restructuring organizations to achieve change,” he said. “I did not seek out this job. I was asked to step into these shoes, and I firmly and deeply believe that BP is a company made up of great people and great businesses.”
Plugging the oil well for good will be a major milestone in the oil-spill fight. BP and the federal government differ slightly on when the relief well needed to accomplish that will be completed.
The government’s oil spill chief, retired Coast Guard Adm. Thad Allen, said Monday that the well could be completed as early as Aug. 7, but Kent Wells, a BP senior vice president, said Tuesday that he expected it would take until Aug. 10. Both agree that it would take several days to several weeks to permanently seal the well after that.
OIL SLICK DISSIPATING
The oil slick in the Gulf of Mexico appears to be dissolving far more rapidly than anyone expected.
The immense patches of surface oil that covered thousands of square miles of the gulf after the April 20 oil rig explosion are largely gone although there continues to be sightings of tar balls and emulsified oil here and there.
Reporters flying over the area Sunday spotted only a few patches of sheen and an occasional streak of thicker oil, and radar images taken since then suggest that these few remaining patches are quickly breaking down in the warm surface waters of the Gulf.
John Amos, president of SkyTruth, an advocacy group that criticized the early, low estimates of the size of the BP leak, noted that no oil had gushed from the well for nearly two weeks.
“Oil has a finite life span at the surface,” Amos said Tuesday, after examining fresh radar images of the slick. “At this point, that oil slick is really starting to dissipate pretty rapidly.”
The effect on sea life of the large amounts of oil that dissolved below the surface is still a mystery. Two preliminary government reports on that matter have found concentrations of toxic compounds in the deep sea to be low, but the reports left many questions, especially about anapparent decline in oxygen levels in the water.
“Less oil on the surface does not mean that there isn’t oil beneath the surface, however, or that our beaches and marshes are not still at risk,” Jane Lubchenco, administrator of the National Oceanic and Atmospheric Administration, said in a briefing Tuesday. “We are extremely concerned about the short-term and long-term impacts to the Gulf ecosystem.”
HIGHER PENALTIES PITCHED
Companies that cause oil spills would face unlimited liability under energy legislation being unveiled in the U.S. Senate, removing a $75 million limit in place since 1990, Sen. Harry Reid’s staff said.
The bill also would boost the fee for the federal oil spill trust to about 49 cents per barrel, up from 8 cents, according to a summary of the legislation released Tuesday by aides to Reid, the Senate majority leader. A final decision on the amount of the fee hasn’t been made, said a senior aide who asked not to be identified until the bill is introduced.
The total cost of the bill, which provides rebates for cars and trucks that run on natural gas and for renovations that make houses more energy-efficient, is estimated at $15 billion, according to another aide.
The proposal will “eliminate the limitation on liability for damages caused by an oil spill at an offshore facility” and make sure “the parties that cause an oil spill are responsible for the damages, rather than taxpayers or innocent victims,” according to the summary.
“We are making it crystal clear that polluters, not taxpayers, will be held responsible for cleaning up and paying for the damages caused by their negligence,” Reid, a Nevada Democrat, said in an e-mail Tuesday.
Information for this article was contributed by Harry R. Weber, Jane Wardell, Chris Kahn, Brian Skoloff and Bernard McGhee of The Associated Press; by Brian Swint, Eduard Gismatullin, Mark Chediak and Simon Lomax of Bloomberg News; by Ronald D. White of the Los Angeles Times; by Justin Gillis, Campbell Robertson and John Collins Rudolf of The New York Times; and by Jia Lynn Yang of The Washington Post.
Front Section, Pages 1 on 07/28/2010