BP says it's sorry, allots $20 billion for spill fund

Money to help compensate for devastated livelihoods
By Jennifer Loven • ASSOCIATED PRESS • June 17, 2010

WASHINGTON — President Barack Obama wrested a $20 billion compensation guarantee and an apology to the nation from British oil giant BP on Wednesday, announcing the company would set up a major claims fund for shrimpers, restaurateurs and others whose lives and livelihoods are being wrecked by the oil flooding into the Gulf of Mexico.

Applause broke out during a community meeting in Orange Beach, Ala., on the news.

"We asked for that two weeks ago and they laughed at us," Mayor Tony Kennon said. "Thank you, President Obama, for taking a bunch of rednecks' suggestion and making it happen."

Obama had said he would "make BP pay," and the company's chairman said after four hours of intense White House negotiations that BP was ready.

The unending oil spill saga had yielded almost no good news before this. Creation of the fund — to be run by an administrator with a proven track record — is the first big success Obama has been able to give to Gulf residents and the nation in the eight weeks since a drilling rig explosion gave birth to the massive spill.


Obama and London-based BP PLC said the $20 billion figure was by no means a cap.

The deal also adhered to what Obama had said was his non-negotiable demand: that the fund and the claims process be administered independently from BP. It won't be a government fund, either, but will be led by the administration's "pay czar," Kenneth Feinberg, better known as the man who oversaw the $7 billion government fund for families of victims of the Sept. 11, 2001, terrorist attacks.

Burning of oil begins
The April 20 explosion of an offshore oil rig killed 11 workers and sent millions of gallons of crude spewing into the water from the broken well a mile below the surface — as much as 18 million gallons and still flowing. More wildlife, beaches and marshlands are fouled every day, jeopardizing not just the region's fragile ecology but a Gulf way of life built on fishing and tourism.

On Wednesday, BP began burning oil siphoned from the ruptured well as part of its plans to more than triple the amount of crude it can stop from reaching the sea by the end of the month, according to the company.
Though BP hopes to install equipment soon to capture up to 90 percent of the escaping oil, the leak is expected to continue at least until relief wells are finished in August.


BP: 'We will not rest'
"What this is about is accountability," Obama said after a four-hour, on-again, off-again White House negotiation session with BP executives. "For the small-business owners, for the fishermen, for the shrimpers, this is not just a matter of dollars and cents. ... A lot of these folks don't have a cushion."

BP Chairman Carl-Henric Svanberg apologized for "this tragic accident that should never have happened."

"We care about the small people," he said. This wording upset people, and he apologized later Wednesday, saying he spoke clumsily.

Company CEO Tony Hayward will face sharp questions from lawmakers on Capitol Hill today.


On Wednesday, Hayward expressed contrition and pledged, "We will not rest until the well is under control, and we will meet all our obligations to clean up the spill and address its environmental and economic impacts."

BP also agreed to establish a separate $100 million fund to support oil rig workers idled by Obama's six-month moratorium on new deep-sea oil drilling. The administration also was to ask Congress for special unemployment insurance for the workers.