BP ‘reneges’ on boom contracts

Washington – The drawdown of the BP oil spill may bring relief to Gulf residents, but one sector is feeling the pinch – companies that went into overdrive to produce containment boom and are now wallowing in loss.

The manufacturers charge that BP placed bulk orders but since last month has quietly reneged on commitments, leaving the companies saddled with millions of dollars in inventory and forcing them to lay off workers.

Researchers say one quarter of the 4.9 million barrels dumped in the world’s largest ever oil spill remains, while much of it dispersed naturally irrespective of containment efforts.

After the Deepwater Horizon rig blew up in April, some firms said they worked around the clock to produce containment boom, a floating barrier which is placed in water to halt the flow of oil.

Larry Buck, chief executive of Victory Awning in Fort Worth, Texas, said BP owed his company $400 000 for boom orders and that he wasted another $500 000 on raw materials that he could have invested elsewhere.

Buck said he initially hired additional workers but is now laying off about 20 people, or one fifth of his workforce.

“We’ve got to cut somewhere,” he said by telephone. “We’re not like the government. We’ve got to pony up every week.”

$20bn compensation fund

The British-based energy giant declined to discuss individual cases but said it was looking at how to resolve disputes.

“We are reaching out to our suppliers to understand these individual situations that have been reported,” BP spokesperson Elizabeth Adams said.

“Through that process we hope to explore a range of possible solutions,” she said.

BP is setting up a $20bn fund to compensate those hurt by the disaster. It fully capped the ruptured underground well last week after months of efforts.

US government researchers said last week that 41% of the spilled oil naturally evaporated or dispersed, in part because the Gulf of Mexico’s ecosystem is accustomed to periodic seepage.

The response by the government and BP retrieved or destroyed another one-third, while 26% of the oil remains either in the water or on shore.

Federal authorities say it is up to local officials to decide what to do with boom, which is being removed in parts of Alabama, Florida and Mississippi and sometimes decontaminated for use elsewhere.

Need for boom stock

In worst-hit Louisiana, boom has already crept into the marshland, raising fears for the sensitive environment.

“It’s a tradeoff between the potential damage the boom can actually do if you leave it in the water during a storm and then the need to move it back and hold it in reserve should you need it,” said Admiral Thad Allen, the pointman on the crisis.

Some 756 000m of containment boom are set up to halt the spill, down slightly from several weeks ago, according to government figures. Another 354 000m are ready for deployment.

Buck, the firm executive, said that the Deepwater Horizon rig explosion showed the need for oil companies to keep a plentiful stock of boom.

“Were they to have another oil spill today, it would be a disaster because BP has suspended orders,” Buck said.

Manufacturing disaster

Industrial Fabrics Association International, which represents makers of containment boom and other specialty fabrics, said that BP had to honour its commitments.

“Just because the well is capped, BP can’t turn around and say we’ve decided not to accept the order. That’s simply not how business is done,” said JoAnne Ferris, the association’s director of marketing.

“I’m pretty sure the contract law in England is similar to the contract law in the United States,” Ferris said. “In the United States, we call it skipping out on the tab.”

Ferris feared that the spill was “going from an oil disaster to a manufacturing disaster”.

“I hope BP will step up and make this go away,” she said. “The last thing they need is more bad publicity.”

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