Page 1 of2

From:
Sent: 23April2010 14:35 t
To: Dl Washi Private Office
Cc: .{Restricted)

.'
Subject: Update on Transocean/BP explosion in the Gulf of Mexico .
.,

Nigel,

Latestctetails of the incident in fhe Gulf of

SUMMARY .

Mexico:
1. BP continue to mobilise in the gulf, following the explosion of a Transocean oil rig
late Tuesday evening. So far a "pollution ~vent" has not occurred, but BP are doing
-
contingency planning we await furth.er. info from BP later today. PD,sible'liability
and
reputation issues (see below). Could be the big!;Jestblowout.of an o:ffshore well in 30
~affi. . _
#. .

2. Latest intel suggests the inci~nt will not delay publication of KGL. .
energy/climate bill (including offshore provisions), which is still expected on tv1onday.

~I
DETAIL
. . . .
4. Transocean are the Swiss owneffi of the affected rig in the Gulf. of Mexico. They
operate the rig, which is leased to BP under cO'ntract. BP are the owners of the product (oil
and gas). .
5. Circa 10pm CET on Tuesday 20 April an explosion occurred at a Tr.ansocean oil . rig_
was in contact with BP within 30 mins of the story breaking. He was able to confirm that
no British citizens were involved in the explosion. 126 of the workers escaped
'safely. 7 were critically injured. 11 still remain unaccounted for, and-are presumed
dead. Houston reported the facts to Consular Section.
..
6. BP, who would be responsible for the environmental clean up, tell me that overall they
are in "decent shape". BP consid~r themselves well prepared for potential spills,
and their surveiU~nce indicates thaUhere has not been any leakage from the well port. They
continue to mobilise in the gulf (more than 30 vessels) and doing plaiming to anticipate the fallout
from a pollution event (which has so far not occurred). BP suggest that it is too early to rule Ol!t
whether the well integrity can be maintained. They do aim to bring a new rig in to replace the one
thatsunk on Thursday (timing TBC).
..
7. Local mainstream media coverage remains mostly factual, as opposed to .
analytical. KUHF (Houston NPR affiliate) reported Friday morning that Coastguard had spotted a
slick, and there was a danger of a larger oil slick forming, from oil being forced up from the reservoir.
Later reports stated that theCoastg~ard confirmed that there was no

12/07/2010
 Page 2 of2

slick, however.

8. As the dust settles, we will follow up: (i) with BP on any reputattonal damage (around 10 years
after the last big BP spill incident in US waters), (ii) the impact on President
:..:: I Obama and Congress' offshore drilling plans, and (iii) the liability implications for BP and
Transocean. A summary of legal liability as it currently stands in US law, and what it could mean
for Transocean and BP, is provided below, with thanks to

Energy attach6. British Embassy, Washington

3100 MlilSS8chusetts Ave, NW 20008 . .

Environmental liability: Under the federal Oil Pollution Act of 1990, both the rig
operator and HP are liable for damages arising from any a discharge of oil occurring
in navigable
waters (including US territorial waters). Liability is joint and several, meaning that anyone
of the parties could be .held responsible fClr 1 00% of the damages. We have not
investigated whether any state laws that would impose environmental liability.
..
Health & Safety: The federal Occupational Health & Safety Admirti~ation and the statelevel
equivalent entities are likely investigating worker safety conditions on the drilling rig. Assuming that
BP did not e~rcise control over the manner in which the drill rig was operated, the drill rig operator
will likely bear liaoiJity .for any workplace safety violations. We understand that most federal and
state worker safety laws provide for criminal sanctions as well as civil penalties.

Civil liability: Families of the dead/missing workers and any surviving injured workers likely will seek
damages through tort claims (personal injury, wrongful death, negligence, gross
negligence, etc.). As a matter of course, plaintiffs will bring such actions against any entity involved
(Le., the rig operator, BP, any other contracters who were' at the site). Based on news reports, at
least one family of a missing worker has already filed a wrongful death lawsuit against both the rig
operator-and BP.

Criminal liability: The Oil Pollution Act does not provide for criminal sanctions. However, it does not
preclude the federal and state governments from pursuing criminal sanctions under other federal
and state law.

12/07/2010
SUMMARY

On 20 April an oil rig in the deep waters of Gulf of Mexico caught fire and then
exploded. BP, who lease the rig, and the Coast Guard mobilised to contain the leak
and environmental effects. Despite considerable efforts, failure to stop the leak
means oil spill looks set to become one of the largest in history. Already implications
for Obama's plans on offshore drilling. The spill will have considerable financial and
reputational costs for BP.

DETAIL

1. At 10pm CET on 20 April, a Transocean oil rig in the Gulf of Mexico caught,
fi're and exploded. Eleven workers are missing and presumed dead. Despite
the sinking of the rig last on 22 April, BP and the Coast Guard were at that time
optimistic about the extent of the leak and environmental damage.

2. However, optimism has now given way, following revised estimates that
around 5,000 barrels of day are leaking from the ruptured well (five times
more than previous estimates). Early signs suggest this G~uld become the
worst offshore spill in history. At the current rate, it would take less than two
months for as much oil to be spilt as in the Exxon Valdez (ship) disaster in
1989. . ..t .
3. The US military today joined BP, the Coast Guard and US Department of Interior, in
what is being described as the biggest ever containment mechanism, involving
dozens of vessels and over 2,000 personnel. Louisiana has declared a state of
emergency as the slick nears its coast, threatening important wetlands and fishing
grounds despite extending about 4,000 feet of boom alongside its river delta.
Mississippi, Florida and Alabama could also be badly hit.

EFFORTS TO'STOP LEAK

4. BP's three-pronged efforts to stop the oil leak continue. The well appears to
lack an automatic blow-out preventer, and attempts to close the wellhead
have so far been unsuccessful. Vast funnels are also being constructed to
coll~ct oil and route it to the surface. This temporary solution could take
several weeks to execute. Finally, relief drilling rigs have begun to seal the
well, however this will could also take up to 90 days. .

EFFORTS TO CONTAIN ENVIRONMENTAL DAMAGE

5. The effort to contain the oil spill and minimise environmental damage also
continues. While the Swiss company Transocean were the owners of the rig,
it was leased to BP under contract. So in terms of liability, SP as owners of
the product is responsible for the cost of the environmentaf damage and
cleanup.

6. Coast Guard,-Dept Interior and BP appear confident that they can use
temporary floating barriers to keep the slick (approximately 149 by 43 miles)

-~~
:~ .
-.('<
.._ ,..
,
 from causing significant damage to the co<!~. Varied weather conditions and
the depth of the waters have not helped recovery efforts, which have also
included in situ burning. The US Navy, as well as Shell, have joined tbe
relief
operation over the past two days. . J
BP COSTS AND REPUTATION

7. BP (the largest producer in the Gulf) have treated this incident with utmost
seriousness, with CEO Tony Hayward taking charge of the vast, $4m a day
clean up operation. Despite winning praise for their behaviour from the Coast
Guard, the Administration has repeatedly put the onus on BP to do 'more "we
will not rest until BP permanently seals the wellhead and cleans up every
drop of oil," Interior Secretary Salazar said today. Although it will be many
weeks before the full costs to BP's reputation and finances are known, they
-
are expected to be considerable BP's share price has already fallen 11 %
since 20 April.

8. The legal dimensions has also spread, with lawyers filing-suits on behalf of
commercial fishermen and injured workers against BP, Transocean and other
companies Involv~d in the manufacture of the rig and the drilling process.
..
ADMINISTRATION REACTIONS

9. President Obama has asked Secretary Salazar to conduct a review of the

incident and report within 30 days. It will focus on the causes of the explosion
and on what, if any, additional precautions and technologies should be
required to prevent accidents of this nature from happening again. In a sign of
things to come, Secretary Salazar has also ordered an immediate review of all
offshore production in the Gulf, and is sending teams to conduct on-site
inspections. Tighter regulation and restrictions in offshore production wou"ld
be a particular blow to BP, who has been a driving force behind deep water
production in the Gulf.

FURTHER POLITICAL IMPLICATIONS

10. Earlier today President Obama told reporters: "I <?Ontinu~ to believe that domestic
oil production is an important part Qf our overall strategy for energy security, but I've
always said it must be done responsibly." Senior White House adviser David Axelrod
added that no new drilling in domestic areas will go forward until "there is an
adequate review of what happened here and what is being proposed elsewhere."

NEXT STEPS

11. Despite BP's considerable efforts to prevent and (with the US Govemment)
contain the oil spill, the depth of the waters, failure of repeated attempts to seal
the well head, and the sheer volume of oil that is being spilt, mean the
-~
-'~~
_r~~
~
'...'~?~
~,~~
 The
largest US oil (offshore technology) conference, in Houston next week, will
provide a further opportunity to take early s~uDdings on how the incident has.
affected the thinking of the US exploration and production industry.

."

.,

t ...
 From:
Sent:
To:
27 April 2010 16:54
D,L Washi Private pffice (Re~tricted)
.
Page 1 of3

Cc:

Subject: FW: Gulf mexico oil rig update

Nigel,

Very few new developments since the last update on Sunday:

i. The thr~e pronged effort to stop the oil leak continues (seal the valve on ocean floor by
triggering shut off value; a bespoke funnel is being made to collect oil and pipe it to the surface; relief
drilling rigs are being towed in to seal the well). This could take up to 2-3 months
to succeed. ' , ._'"
ii. The effort to contain the oil spill and minimise environmental damage also continues. Coast
,Guard, Dept Interior and BP 'are epnfident that they can use temporary floating barriers
to keep the slick (approxima~ly 48 by 39 miles) frem causing damage to the coast Owing to
improved weather conditions and recovery efforts to date. the spill has been contained about 30
miles offshore. Additionally BP tell me that joint command are also considering iFi situ
burning as a spill response. .

iii. Tony Hayward changed his schedule at the last minute and was in Washington today meeting
various Hill and Administration contacts. BP's local office and I are aiming to schedul . a
meeting between yourself and Hayward tomorrow afternoon. but it is not yet confirmed.

Either way, I (and Houston) will keep you updated as the situation in the Gulf develops.

~e, ,British Embassy, Washingtl;ln

100 Ma

Nigel,.
There have been"a few developments since friday, the principal one being that an oil leak has now
occUrred. Still some time before the spill would reach the coast of la (longer than three days),
however.

The Coast Guard, BP and Interior department officials have agreed a plan that would carry out.
various measures to stop the leaks and to contain the environmental effects of the existing
,-",\.":","~
~5. f
~,
<;~~.
12/07/2010
 Page 2 of3

spill. Further detail below,.from news reports. I will follow up with BP tomorrow and keep you

_.
updated.

DETAIL . .
The leaks were discovered on Saturday in the riser, the 5,000-foot-long pipe that extended from the
wellhead to the drilling platform. The riser detached from the platfonn after it exploded and sank,
and is now leaking in two places, both at the sea floor.

About 42,000 gallons of oil a day are estimated to be emanating from the well throug~ the

leaks in the riser.The response team - including Coast Guard officers, officials from tile federal
Mineral Management Service and officials from BP - has approved a plan that would use remote-
controlled vehicles to activate the blowout preventer, a large val.ve at the wellhead 5,000 feet below
the ocean's surface. The blowout preventer can seal off the well, and is designed to do just that to
prevent sudden pressure releases that possibly led to the first explosion on the oil rig on Tuesday
night.lf successful, the engaging of the blowout preventer
could have the well sealed within days. .

-
The other effort described by officials Sunday drilling relief wells nearby - would take
months.BP, which was leasing the drilling platfonn and is responsible for the cleanup under federal
law, was also mobilizing two rigs that could drill the reliefwe'M, which could send heavy mud and
concrete into the cavity of oil and gas that drilling apparently punctured by
accident. -'f ...
Officials are also working on putting a dome over the end of the riser that would catch the oil and
route it up to the surface where it could be collected. If the blowout preventer is successfully
activated, though, this may be unnecessary.The drilling of relief wells; however, would go forward
even if the more. immediate options work, a BP spokesman said.

At the current rate of 42,000 gallons of oil per day, the leak would have to continue for 262 days to
match the 11 million gallon spill from the Exxon Valdez in 1989, the worst oil spill in United States
history. Rough weather has continued to hinder efforts to clean the sheen of crude oil and water
mixture, which has spread to 400 square mires. As of Sunday morning, 48,000 gallons of oil-water
mix had,b~en collected, the Coast Guard said.

Doug Helton, a fisheries biologist who coordinates oil spill responses for the National Oceanic and
Atmospheric Administration, said the 011 emanating from the riser was taking the shape of a giant
ice cream cone as it drifted toward the surface.

He said there were no repDrts of dead animals yet, although that was expected to change soon if
the leaks were not sealed.Mr. Helton added that wind data allowed officials to predict that the spill
would not hit shore within three days, but that it was moving in a northern trajectory."Louisiana is
the closest area," he said. ''There is a potential'for other Gulf states if the release continues
unabated, but we have no indication in our trajectories that shorefall will happen in the next three
days." Officials had expressed cautious optimism Friday when it appeared that no oil was leaking
from the well.

But two leaks were discovered Saturday morning by a remotely operated device that scanned
the riser, said Rear Adm. Mal)' E. Landry, commander of the Coast Guard's Eighth District.On
Saturday, the shQen of oil on the surface had spread to a 2Q-.by-20-mile area, Coast Guard
officials said
............................... * ...........* ...........*** ............ * ..................... *..** .................... ** ..... **
Visit http://www.fco iOV.uk for British foreign policy news and travel advice and http'llblo2s.fco.~ov_uk to read our
bIogs. Please note that all messages seIIt and received by members of the Foreign & Commonwealth Office and its
missions . overseas may be automatically logged. monitored and/or recorded in accordance with the Telecommunications (Lawfirl
Business Practice) (Interception of Communications) Regulations 2000. We keep and use information in line with the Data

12/07/2010
Re: Tony Hayward

From: ~ ...
-..
Page lof 1

Sent: 27 April 2010 22:00

To:
Cc:
Subject: Re: Tony
Hayward

..Follow Up Flag: Follow up

Flag Status: Red
touch.
.f
thanks for the tip. Will be in

Best'

-- Original Message From:

To:
Sent Tue Apr 2723:10:072010 Subject
Tony Hayward
.'
.."

..
Tony is heading back to the Gulf Co~ tonl'gbt and won't be avaijable to meet with the Ambassador. I will continue to
keep you posted and let you know if another opportunity materializes. Thank you.

********************************************************************************
* Visit htq>://www.fco.gov.uk for British foreign policy news and travel advice and
ht1p:/lblogs.fco.gov.uk to read our blogs.

Please note that all messages sent and received by members of the Foreign & Commonwealth Office and its
missions overseas may be automatically logged, monitored and/or recorded in accordance with the
Telecommunications (Lawful Business Practice) (Interception of Communications) .
Regulations 2000. We keep and use information in line with the Data Protection Act 1998. We may release
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12/07/2010
 . .pagelOf4.

;. " From:
Sent: 30 April 2010 20:52
To: Nigel Sheinwald Wash
Cc: DL Washi Private Office
(Restricted);

..- ",. ,- . .~ . ~

- Subject: - Potential NigeVTony Hayward CaD Saturday or next

'week
Follow Up Flag: Follow up
ti.'
Flag Status: Red
;

Nigel,

1. I got your message about try.ing to arra~ayward ca11 for tomorrow morning,
and have spoken to the DC Chief of Staff_and Head of~P's
- DC office_

. .0 i. .'

2. J emphasised to _that we understand they must be l:Inder considerable

pressure, and explained -the main intention of the call: to offer our continued support in what
must be an extremely difficult time.
irit in 'which it was made. He aareed to pass the
e said a direct call may be possible,however, and I agreed to pass on contact details
(perhaps_might be able to do-this, if you agree?). I have asked BP to keep me
updated, and will pass on any relevant details.
4. He also updated me on ''what it feels like" for them just now:

a. On the ground'in Louisiana - it's working quite well in terms of coordination and
collaboration, and they have no complaints.

. .!~J;' :~.'. .~'. !:.

c. As \the spill begin~ to hit the beaches (imminent) they expect the rhetoric to ramp up e.g
- "has BP done elibugh?"._recognised that the politicians will have to deal with the
politicalifallout, while they mostly have to deal with "the bottom line". .

.. 5. The Hayward can -If not feasible tomorrovlmoming,_suggested that early next
week might be.

12/07/2010

I..
. From: -.8Nigel Sheinwald ~10
Sent: 09:43
To: Cc:
~eStricted);

Subject:

Thanks. Not clear where you left the call. I'd prefer to spk today. Realise pressures on him, but not
unreasonable. Do you have contact no or shd I try via No 10 switch?
Also, more criticism (eg Napolitano) now of BP. Obama ~o visit. Are HMG offering any help eg DEFRA or
agencies or contingencies? We need to be active and empathetic.
~ pl ensure are in the loop.
~
Nigel Sheinwald ."Ii

Subject: .RE: Potential N1gelfTonyHaywara call,Saturday or

Nigel (cc. ..... via email and my personal email)

Unhelpfully, fconet blackberrys are down so best to communicate via telephone over
weekend.

---------------
From:
Sent: 30 April 2010 20:52 To:
Nigel Sheinwald
Cc: -

Potential Nigel/Tony Hayward call- Saturday or next week

Nigel,
'
1. I got your message about trying tQ arr~Hayward.call for tomorrow morning,
,and have spoken to,the DC Chief of Stafflllllllllllland Head of BP's DC office.......
Nagel) . ',. "
2. I emphasised to""" that we understand they must be under considerable pressure,
and explained the main intention of the call: to offer our continued support in what
must be an extremely difficult time.
'.
1. ,~
~.,
-..<:.:~

~
'::}
 contact
to keep

4. He also updated me on "what it feels like" for them just now:

a. On the ground in Louisiana - it's working quite well in terms of coordination and collaboration,
and they have no complaints.
"ol~.~'

c.lAs the spill begins to hit the beaches (imminent) they.expect the rhetoric to ramp up
e'.q "has BP done enough?" .......... recognised that the politicians will have to deal with
the' political fallout, while they mostly have to deal with "the bottom line".

suggested that early ne:»t

5. The Haywar-~ call
week might be.
If.not feasible tomorrow morning, 11IIII .',

6.11IIII didn't specifically all~de to their reputational costs, but this of course will

become even more impo~tant qnce,the day to day. crisis planning eases off, in the medium term.
7. As and when the Hayward call can be fixed, in addition to making the general point about offering
our support, you might also wish to ask him about how BP expect to deal with future communications,
especially once the spill has begun to cause visible and pictorial damage, and personal injury
lawsuits have begun in earnest. I have also copied today's factual egram below which includes the
latest details.

8. I will remain in touch with BP and the GIG team on this. And while I will be in Texas for an oil
conference at the weekend and first half of next week, I and others
will continue to keep you updated. '

Yours,
------------------------------------------------------------
Subject
OIL SPILL IN GULF OF MEXICO POTENTIALLY LARGEST IN HISTORY

Summary
Transocean/BP Gulf of Mexico oil rig caught fire and exploded on 20 April. BP and Coast Guard mobilised
to contain the leak and environmental effects. Despite considerable efforts, failure to stop leak means
spill looks s~t to become one of the largest in history. Already implications for Obama's plans on
offshore drilling. The spill will have considerable financial and reputational costs for BP.

Despatched

30 April 2010 23:51:52 GMT

Text
1. On 20 April, a Transocean oil rig in the Gul~ of Mexico caught fire and exploded. ~leven workers
missing, presumed dead. Despite the sinking of the rig on 22 April, BP and

2
the Coast Guard were at ~hat time optimistic about the extent of the leak and probable
environmental damage.

2. However, that initial optimism has now fallen away, following revised eitimates that around 5,000
barrels of day are leaking from the ruptured well (five times more than previous estimates). Early
signs suggest it, could become the worst offshore spill in history. At the current rate, it would
take less than'two months for as much oil to be spilt as in the Exxon Valdez (ship) disaster in 1989.

3. The US military today joined BP, the Coast Guard and US Department of Interior, in what is being
described as the biggest ever containment operation, involving dozens of vessels and over 2,000
person~el. Louisiana has declared, a state of emergency as the slick nears its coast, threatening
important wetlands and fishing grounds despite extending about 4,000 feet of boom alongside its river
delta. Mississippi, Fldrida and Alabama could 'also be badly hit.

EFFORTS TO STOP LEAK

4. BP's three-pronged 'effort to stop the oil leak continue. The well appears to lack an automatic
blow-out preventer, and attempts to close the well head have so far been unsuccessful. Vast funnels
are also being constructed to collect oil and route it to the surface. This temporary solution could
take several weeks to execute. Finally, relief
drilling rigs have begun to seal the well, however this could also take up to 90 days.

EFFORTS TO CONTAIN ENVIRONMENTAL DAMAGE

5. The effort to contain the oil spill and minimise environment~l damage also continues. While the Swiss
company Transocean were the owners of the rig, it was leased to.BP under
contract. So in terms of liabili~y, BP a~ owners of the product is responsible for the
cost of the environmental d~age and cleanup. Goast Guard, Dept.Interior and BP 'appear confident that
they can use temporary floating barriers to keep the slick (approximately 149 by 43 miles) from causing
significant damage to the coast. Varied ~ather conditions and the depth of the waters have not helped
recovery efforts, which ha~e also included in situ burning. The US Navy, as well as Shell, have joined
the relief oPeration over the past two days.

BP COSTS AND REPUTATION .

6. BP (the largest producer in the Gulf) have treated this incident with utmost seriousness,
with CEO Tony Hayward taking charge of the vast $4m a day cleanup operation. Despite winning praise
from the Coast Guard, the Administration has repeatedly put .the onus on BP to do more - "we will not
rest until BP permanently seals the wellhead and cleans up every drop of oil," Interior Secretary
Salazar said today. Although it will be many weeks before the full costs to BP's reputation and
finances are known, they are expected to be considerable - BP's share price has already fallen 11%
since 20 April. The legal dimension has also spread, with lawyers filing suits on behalf of commercial
fishermen and injured workers against BP, Transocean and other companies involved in the manufacture of
the rig and the drilling process.

ADMINISTRATION REACTION & POLITICAL IMPLICATIONS

7. President Obama has asked Secretary Salazar to conduct a reyiew of the incident and
report within 30 days. It wiil focus on the causes of the explosion and on what, if any,
additional precautions and technologies should be required to prevent accidents of this nature from
happening again. In a sign of things to come, Secretary Salazar has also
ordered an immediate review of all offshore production in the Gulf, and is sending teams
to conduct on-site inspections. Tighter regulation and restric~ions in offshore
.
production would be a particular blow to BP, who has been a driving force behind deep
water production in the Gulf.

8. Earlier today President Obama told reporters: "I continue to believe'that domestic oil production is
an important part of our overall strategy for energy security, but I've always said it must be done
responsibly." Senior White House adviser David Axelrod added that no new drilling in domestic areas
will go forward until "there is an adequate review of what happened here and what is being proposed
elsewhere."
NEXT STEPS
11. Despite BP's considerable efforts to prevent and (with the US Government) contain the
3
 oil spill, the depth and failure of repeated attempts to seal the well head, being
the she_~ dVOl.ume .for spilt, mean the i-ncident will. probably continue
weeks.

Sign Off .
.
.
~
Sheinwald

Sent By

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I

I
 Page 1 of 1

From: Dominick Chilcott * (Restricted)

Sent: O~ May 2010 15:42
To:
.Cc:

Subject: BP Follow Up
Flag: Follow up Flag
Status: Red .

As agreed at i>ur meeting this morning, I phoned_of BP. As you might

expect, he was a man in a hurry. I reminded him that we hoped to organise a contact.
..~
.between Tony Haywood and the Ambassador. He said he would take that forward.
(Since then, I understand that..BP have been in touch and Tony Haywood may be
I.
coming to the Embassy tomorrow afternoon to' see Nigel.)
I also asked him whether there was anything in the media that BP felt failed to capture
their true position. H~ said BP's main effort now was now just to get their points out. They
had racheted up their engo,gement with the media. We would have seen Tony Haywood's
various interviews with radio and television. I said I had indeed heard Tony Haywood on
NPR that morning.

At that point,~pologised and said he had to go.

Dominick

Dominick Chilcott I Deputy Head of Mission I British Embassy 13100 Massachusetts Ave NW I Washington DC 200081 USA

12/07/2010
 From:
Sent: 03 May 2010,16:00'
.
Page 1 of 6'

To:
Cc:

............................~.~ ~

Subject: RE: BP: DRAFT UK Action Plan

,.

:'::\'~.. ~~::)~~r.:~'~"-: -~-~.~\ ~;': _.

This is how it played olttat,tlie White House Press Briefing today .(highlights in
bold).

..,

, I'"
a And just generally, what is yoQr satisfaction level with gp's performance?

MR. GIBBS: Well, again, they're responsible. We're - we have oversight I did this a couple of times, I think;
yesterday. Look, there are many different things that we're focused on. First and foremost is capping this well.
There were tests over the weekend on the application of subsea dispersant, which have thus far performed well.
And they're continuing to test that which is, instead of spraying the dispersant on the surface of the water, it is
to release the dispersant near the source of the leak. And that had some positive impact during the first
round of testing. The second -. the relief well began - the diilling began on that last evening, which is a more
long-term solution.

Obviously BP is working on a structure to possibly put on top of the well and vacuum up the oil to the surface,
with the water, to deal with that So that's one aspect of what we're dealing with. Secondly we're dealing with as
the pollutants rise to the surface containing the sPllaad of that oil, on the surface of the water, and how that
-
affects both the environment that we're dealing with as well as the local economy in I would say all of those . things are
what we are overseeing. They're responsible-'for that Obviously they have the unique equipment for dealing with
this at a depth of 5,000 feet under the surface of the ocean. But we are going to continue to ensure that they're
doing aU that they need to do from the perspective of state, local and federal authorities.

Secretary Napolitano, Secretary Salazar and Usa Jackson are meeting this afternoon with BP to get an
update from them on their ongoing process and to ensure that they're taking the steps that we feel are
necessary to respond to an incident of this magnitude. '

a Robert, two questions. The first one is, ~e hear so many different time frames as to when this oil well will
actually be under control. What is the best-case and wha~ is the worst-case scenario? I mean, I'm hearing
anywhere from a matter of days to 90 days in the worst case. What is your sense of how long

MR. GIBBS: Well, I would direct you to BP in terms of what they might say. Look, I think there are a series of
-
processes that, as you said, could take could take a matter of days. I think the - I forget the exact term of the
-
structure putting on top of th~ valve would take probably another week. The original well took 90 days to drill,
and it could take - it could take that long to drill a relief well. .
a So if it takes up to 90 days, is that something that the president is comfortable with?

MR. GIBBS: Well, I'm not sure the president can alter the pace of drilling in the Atlantic.

a But that's wh!!t we're looking at

24/0712010

-
---
 Page 1 of 1

From:
Sent: 04 May 2010 08:17
To:
, Subject: RE: TIME SENSITIVE MEETING REQUEST with
BP
,

Dear._'

Just spoken to the Ambassador, he would prefer a meeting with Mr Hayward if possible today. We can be
quite'flexible on

..
timings.
Regards

,From: ,
. Sent: 04 May 2010 08:08
To: ...................................... .
: Sub~NSmvE MEEITNG REQUEST with BP
t ...

~ Morning_

I understand we are now aiming for a phone call around 2pm. Is that correct?

Regards '

'~dor
British Embassy, Washington
DC USA

From:
Sent: 03 May 2010 16:59
_
To:
Subject: TIME sENsmve MEETING REQUEST with BP
Importance: High

Hi"
..
I'm writing to schedule a meeting with Ambassador Sheinwald and Tony Hayward, Group Chief Execl!tive
on
Tuesday, May 4th. Mr. Hayward is available after 1 pm tomorrow. Please contaCt me directly to arrange this'
,Thanks,
meeting. >,

-.>~:-i~'
'1)

,_.,~'j;, 'f,
08/07/2010
.:'""-'..-,,-,..., ... '.,-. ,"
 Page 1 of7

From:
Sent: 10 May 2O~O 16:52
To: DL Washi. Private Office' (Restricted)
Cc:

Subject: latest on Gulf oil incident

Nigel,

You should be aware that since Friday's update (cOpied below) BP's efforts to cap the main
leak has failed initially. They will spend the next two days trying again, using various, revised efforts.
Three Congressional hearings begin tomorrow involving BP, Halliburton and Transoc.ean.

Containing the leak and cleaning up the effects _.~

1. Attempts to place the dome o'{er the largest leak foundered when ice-like methane hydrate
crystals accumulateti inside, blocking the funnel before any oil could be piped to the surface. The
dome has been moved away from the leak, and -BP is working to see whether the problem can
be fixed and another attempt mad~.

2. BP is also considering a way to tap into and block the pipe to the well. Debris would be
injected into the blowout preventer to stop the flow of oil. This is risky however as it could
damage the preventer and increase the leak.

3. The drilling of a relief well (to stop the leak permanently) continues, but could take 2
. months before it is complete.

4. Along with in situ buming and extensive use of booms on the coasts, BP have stepped up their
use of chemical dispersant following approval from EPA. However, as of Sunday evening authorities
reported black oily deposits washing up on beaches in Alabama, and at
the mouth of the Mississippi .

5. In sum, similar to their comments tast Friday on the cofferdam effort, BP continue to
emphasise that all methods involve "significant uncertainty" due to the unprecedented'
depths of the waters. .

6. Govemor Jindal (LA) has also asked US Coast Guard to approve a $200m plan to
dredge the surrounding are, and use th.e material to construct a natural defence a~inst the
spin. BP would be expected to pick up the bill. .

Press and other reactions

7. Overall, BP continue to be the main focus of criticism by the press, and State
and Federal officials. Yest~rday's Miami Herald editorial.(copied below) encouraged Congress to
ensure BP were hel~ ful1y responsible for paying for the clean up and all damages. While specific
liability will be unsettled for some time, BP have said the $75m limit of liability in current law "is
not relevanf' in this case. A protracted legal batt~e seems

12/07/2010
 Page 20f7

likely.

8. Sunday'~ NY Times (copied below) was critical of BP's safety record, citing previous BP
America incidents in Texas City, Alaska etc, but also acknowledged that BP's safety record in the
Gulf was proportionate to the size of its operations. Today's WSJ highlights the insufficiency of
BP's general spill plan. Congressional hearings tomorrow and Wednesday (Senate ENR and EPW
and House Oversight and Government Reform) will focus on causes as well as liability.

9. A article on the safety record of Transocean (the Swiss drilling rig operator) was also featured
in WSJ. Again, despite alarmist and critical headlines, in the body of the piece it becomes clear
that their record is actually rather good.

I will provide a further update for you and London' tomorrow, including the
headlines from the first Congressional and State hearings.

.,
1. Miami Herald. Editorial.
,
Make BP pay its fair share ...

OUR OPINION: Congress should raise damages cap to $10 billion

It took the 1989 massive Exxon Valdez oil spill in Alaska to nudge Congress into passing
, the Oil Pollution Actin 1990, which made oil-companies responsible for paying' all spill- -
cleanup costs. The law set a liabi1ity cap for oil companies at $75 million for economic damage
claims caused by a spilL
Clearly, that was being too kind to oil producers, as the ongoing massive spill in' the Gulf of Mexico
makes painfully clear. As of Friday, a 78-ton dome was being lowered in an attempt to slow the
leak. Fishing fleets remain grounded. Shrimpers' boats have been converted into makeshift
cleanup crafts to reckon with the 5,000 barrels of crude that's widening the oil slick daily. Beach
resorts are seeing bookings drop as tourists shy away from visions of oil-soaked beaches.

Now lawmakers from coastal states - including Sen. Bill Nelson and Rep. Kendrick Meekare
pushing to raise that cap to make sure BP and other oil companies in future spills are liable for
damages incurred by such disasters.

Bills in the House and Senate would raise the liability cap to $10 billion and make it retroactive to
cover this ongoing spill. Congress shoul<;l approve the bills, and do it quickly.

BP profits soared

If this seems steep, think again. In the firs~ quarter of 2010, BP saw its profits rise to $6.1
billion from $2.6 bmion a year earlier. BP can afford to pay the claims .of the fishermen, the
shrimpers, the hoteliers seeing their livelihoods sink under the sludge.
BP also should pay the mitigation costs for environmental damages, which could take years to fully
assess. :~;
......'\~J~i
~~
;~

12/07/2010 .:.:,;;;,

---
------
 Page 3 of7 '

. ,

La~1'Smu$t1a~t" .

If this seems unfair, it's not. While most attempts to make new laws retroactive would
skirt constitutiof1~nty.b~causetheydealwith something already done, the spill is stm a
catastropneinprogress. That's. why Congress should act now.

In 1990, Congress alsocteated the Oil Spilt Liability Trust Fund to pay damage claims above
the $75 million cap; The fund comes from an 8 cent tax on every barrel of oil produced
or imported into the United States. Ther.e's a catch, however. Congress also put a $1
billion per incident cap on payouts'from the fund.

The new bills would eliminate the cap. They would also allow local responders to tap the
fund for preparation.and mitigation up front. rather than waiting for reimbursement. Another
change would allow claimants to collect from future revenues of the fund, with interest, if

damage exceeds'the amount-tn the trust, currently $1.6 billion. .

. , .

Equally important, the proposed lawwould also eliminate an existing $500 million cap on
natural resource damages. The health of the bayous, bays and sugar-white beaches of the Gulf
are priceless in their value to millions of people. '

, .

Unlike Exxon. which tried every manoeuvre possible to slither out.'Of its obligations for the Alaskan spill, BP has been
front and centre on taking responsibility. It set up a $25 million fund for states to use to cOl1)bat'the slick. But it
has also repeatedly said it will pay only for "legitimate" damages, whatever that means. .

....
...

Sounds too much like wiggle words. Congress should make sure BP is as responsible for all
damages as it keeps promising to be.

2. Sunday NYTimes

GULFPORT, Miss. - People who live along the Gulf Coast know that a promise of money is not nearly as nice
as it sounds. It means waiting and waiting. and raising a fuss, and then waiting some more, and
consulting lawyers and talking to bureaucrats, and still waiting, and in some cases just giving up.

Michael Calamari. left, and Rudy Ladner, fishermen who are out of work because of the
spill, pass the time in Lakeshore. Miss.

And now, after almost five years of fighting insurance companies and government agencies to rebuild after
Hurricane Katrina, they are contemplating the prospect of going through all of that again.

It is too early to tell how the maddeningly unpredictable oil slick in the Gulf of Mexico will affect the
.economies that depend on the ocean and its edible inhabitants. And it is too early to judge how .6E
wiH act in providing compensation for economic losses. But recent experience does not
provide comfort.

"The insurance industry and big corporations have a history of stall, deny and kind of wait

. ,

you out," said KeVin Buckle, who works for Ship Island Excursions, a charter
here. Mr. Buckle had such a bad experience afl;er'Hurricane Katrina that he has been pushing for a
boat company

stateinsurance'bilf of rights. Like most ,everyone else, he is in a wait-and-see mode. .

12/07/2010
 Page 4 of7 '

BP says it has a "robust process to manage claims" and "is committed to pay legitimate claims" for
loss or damage caused by the spill, all in addition to footing the cleanup costs.

There is a toll-free telephone number to caU, and if the claim is small enough - generally,
immediate loss of pay fits this category - an operator can walk a person through the process and
have the claim paid within 48 hours, said Bill Salvin, a company spokesman. Any person accepting
such a payment does not waive any rights against future litigation or claims. Larger claims, Mr.
Salvin said, would require an investigation by adjusters.

So far, around 4,700 claims have been filed, a BP spokesman said, with a little over 800 paid,
almost all. of them for loss of income.

Along the bayous of southern Louisiana and along the docks of Mississippi harbors, it is difficult to
find someone who has even heard that the toll-free number exists. And those who have called
often report difficulty getting through to an operator. So BP is enlisting
churches and community groups to get the word out, as well as setting up offices in vacant
storefronts along the coast to deal with claimants in person.

This sounds good to coa,stal residen~. But they want it in writing.

"I mean, Exxon came out and said the same stuff after Valdez." sara Jim Hood, the attorney
general of Mississippi, whq describes' himself as a "veteran of the insurance wars" after
'Hurricane Katrina. , '...
Mr. Hood said he was cautiously optimistic after his conversations with BP's lawyers, who are
expected to formalize some of their assurances in writing early this week.

The question of liability is likely to be unsettled for some time. BP officials said that the $75 million
limit on the company's liability, as set forth in the laW that governs oil spills, is "not relevanf in this
case, and some United States senators seem to agree, having proposed legislation that would
retroactively raise the cap to $10 billion.

But with several companies involved in the drilling rig that caused the spill, including the rig's
owner, TransOcean, there will most likely be protracted legal battleS thafwlIT aetermine who
actually owes whom for what. For now it is BP, the self-acknowledged "responsible party," that is
spending the money.

BP is, obviously, interested in where that money goes, hence the need for adjusters on the large
claims and the comment by Tony Hayward, the company's chief executive, to The Times of London:
"This is America - come on. We're going to have lots of illegitimate claims. "

It is true that fraud cases related to Hurricane Katrina continue to trickle into federal courts. But the
burden of the term "legitimate claims" has given some people pause. The unease is especially
keen here, given the often arbitrary,"seeming, reasons for denials of coverage after the storm and
the fact that many of those likely to be' affected by the slick lack the legal education ~ or in the
case of the large community of Vietnamese, the language ability
- to know what kind of agreements they have made. . .

The worries were heightened by early incidents that BP officials have tried to put behind them. In
0l1e case, BP officials were .making boat owners, many of whom have been temporarily put out
of work by the spill, sign agreements to work in the cleanup effort that included waivers of certain
kinds of liability. BP dropped the clauses, which Mr. Hayward referred ~ as a "misstep," but not
without facing widespread public outrage and a ruling in

12/07/2010
 Page 5 of7

Federal District Court.

.. ,.~ :.!. ..,

Then. the"Alabama atto~y general condemned reports that a BP employee had offered
quick' $5,000 settlements for:economic damages in exchange for waivers oHuture liability.
Several BP spokesmen',said they w~re not. aware .that such an offer was ever made, though
Mr. Hayward appeared to confirm it last week when he told reporters it was a "screw-up" by
a few employees.

A response this big is, going to have glitches, Mr. Salvin said. While this is true, these
particular glitches worried coastal residents because they conformed to the worst fears.

"Thafs the kind of deal they would do," said Brent Coon, a lawyer who sued on behalf of
victims of the BP Texas City refinery explosion jn 2005 that left 15 dead, and who has
filed a suit in this disaster as well. "Let's go ahead and just buy them off quick and cheap
now before they realize how bad this is going to be."

Meanwhile, a fleet of lawyers is already massing, with new class-action suits being filed
seemingly by the hour. Even some plaintiff attorneys here worry that fishermen could see
badly-needed claims payments eaten up by the fees of less-scrupulous lawyers.

But the last five years have taught vigilance. ,

"I don't trust much," said, Loi, Ngtlyen, 46, smoking Marlboro Reds on the stem of his .
shrimp boat in the harbor of Pass Christian, Miss. "If you want money, you have to go see
lawyer first." :~~ '

,.-:>}'

3. Reporting for London Friday

SUMMARY

Despite better weather and more effective clean up, first shoreline impact of oil from the
spill confirmed late Wednesday in Louisiana. Senior Administration personnel continue to
visit the ,Gulf to oversee relief efforts and to offer support to local residents and officia1s.
BP installed a vast dome on sea,bed to contain one of the two remaining leaks, but cautious
about their ability to make it work perfectly. They hope to move from an emergency to an
"operational" response, but the political, environmental and legal ramifications just
beginning. USG considering UK offer of additional dispersants, but BP suggest they have
good stocks in immediate term. BP continue extensive round of public and media
engagement, as well as preparing for 3 Congressional committee hearings next week.

DETAIL

Stopping leak and containing the spill

1 A ~ntainment dome now in place above one of the two remaining. leaks should allow
~

BP to siphon oil to the surface for collection. Expected to be operational by early next week,
but BP is cautious about it working perfectly from the first. Various additional efforts being
made to stop'leak from wellhead, but none very likely to succeed in short term.

2. Prevention and clean up is a collaborative effort led by the US Coast Guard. Surface
efforts include: '

. 80 vessels have been sent out tq deploy more than 750,000 feet of boom in Gulf
waters nearer to shore.

12/07/2010 '..~
~'
 Page 6 of7'

. 170 specialty response cleanup vessels, including 15 are 21 O-foot Oil Spill
Re$pc;m~e \(~s~~I$, have rec:oyereq .and treqted a~out 1.8m gall.ons of oib-water mix
. 27 planes supporting distribution of 250,000 gallons of dispersant, which includes
nearly 100,000 gallons deployed yesterday. A further 300,000 gallons are available.
. Favourable weather conditions enabled a successful controlled bum operation, for
the second consecutive day, to remove oil in an effort to protect shoreline and
wildlife.

3. The first shoreline impact of oU from the spill was confirmed late Wednesday aftemoon at
Breton, Louisiana. Overnight information indicated sheen and emulsified oil were observed
around the islands. Large-scale onshore shoreline protection and community outreach
operation continues, to protect potentially affected coastal areas of Florida, Mississippi and,
Louisiana. .

US. Government (Administration and Congress)

4. Late this week Secretaries Locke (Commerce), Napolitano (Homeland Security) and
Salazar (Interior) visited Gulf Coast. They met federal, state and local officials, and local business
leaders. Part of oversight of BP's efforts to plug the leak and contain the spill, and ongoing
emphasis on interagency coordinatio~.

5. White House public line unchanged on liability. On WednesdaVit said it was in favor of "significantly"
raising the cap on damages faced by energy firms that pollute the environment, as it dem~ds'<8P
pays' for the .Gulf oil spill. The 1990 Oil Pollution Act
caps the damages for which the firm is liable at 75 million dollars unless the company is guilty of
"gross negligence." Congress has discussed extending upper limit through neW legislation.

6. Cabinet Officials host daily coordination calls. with the gulf coast State Governors.
These calls are intended to further the already unprecedented response efforts by BP,
federal and local officials.

7. Department of the Interior's Mineral Management Service confirmed BP exempted from an

environmental impact study, citing that a large spill was unlikely. Decision widely criticised in
press, alongside references to historical censure of MMS, suggesting'they hav.e been too
close to industry to regulate it effectively.

8. Many Senators and Congressmen have .called for the incident to spell the end' of any
future expansion of offshore drilling. As well as key Congressional leadership .
suggesting the incident could spur on stalled passage of climate and energy .Iegislation, on
Thursday Interior Secretary Salazar put on hold plans to expand offshore production, at least
until their review of the incident is completed on May 28th.

9. BP to appear before three high-profile Congressional committee hearings next week (House
Oversight and Government reform, Senate Energy and Natural Resources and Senate
Envkonment and Public Works).

BP and the oil and gas industry

10. Existing efforts .to cap or fill the wellhead continue, including through relief well drilling
(still expecteEi to take months), and occurring alongside more successfuJimmediate clean up
effort$ (in situ buming and use of dispersants). BP tells us they are working with EPA to ensure
extensive us~ of dispersants in deep waters is. environmentally safe.

11. BP has continued their extensive public and media engagement, with Tony Hayward
telling the BBC on Thursday "we will ultimately win because...one of the

12/07/2010
 Page 7 of7 .

interventions...will stop the leak."

12. Consensus emerging among oil and gas industry participants at the Annual Offshore
Technology Conference in Houston that both BP and the industry will survive, albeit
learned lessons from what went wrong. BP not prepared to speculate on the medium term
liability until extensive root-cause analysis taken place. Secretary Salazar has said "some
very major mista~es" were made by the companies involved, however, and tightening of
safety regulations seems likely.

13. Tony Hayward, met Senator Nelson (D-Florida), an opponent of offshore drilling,
reportedly saying that responsibility for economic damages will have to be worked out il,
the future but that "all legitimate claims will be paid" and the $75 million Federal cap
would "inevitably be exceeded," (BP already distributed 4"x $25m block grants to
States). However, this does not mean -BP has accepted fullliabiHty.

Oil Production and Price

14. The leak has not so far affected production at other wells in the Gulf. However there has
been some press speculation that oil could contaminate the water supply on offshore
platforms, forcing the closure of some operations.

15. Oil prices have fallen this week (US$75.43 per barrel at end 7 May, down a further 2%
that day), indicating that traders are placing more importance on news about the
European economy and une~pectedly large US oil stocks data than any disruption
arising from the spill. .# . . __ .

British Embassy, Washington

. <~: .~..
~v
'''.
12/07/2010 .....