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BP Official on ‘A Good Meeting of the Minds’ at the White House

June 16, 2010 at 12:00 AM EST
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BP officials have said they will set aside a fund to pay damages to victims of the Gulf oil spill, following a meeting with President Obama. Judy Woodruff talks to BP Managing Director Bob Dudley about those payouts and the company's decision to suspend dividend payments to stockholders.
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JUDY WOODRUFF: Bob Dudley is managing director of BP and one of the company’s executives who met with the president earlier today.

Mr. Dudley, thank you for being with us again.

ROBERT DUDLEY, managing director, BP: Good evening, Judy.

JUDY WOODRUFF: The meeting at the White House today, the president last night used the term reckless in speaking of BP. He earlier talked about wanting to fire your CEO, Tony Hayward.

What was the tone of today’s discussion?

ROBERT DUDLEY: Judy, the tone today, the president was very direct, expressed his great concern for the people along the Gulf Coast and businesses operating in the Gulf Coast, wanted to make it clear his expectations were that BP would meet their obligations.

We assured him that we would not only meet those obligations; we would set aside $20 billion, put assets aside to make sure that we can meet those obligations and transition the claims process we have set up to an independent claims producer.

I think it was a — it was a good meeting of the mind. It’s what people on the Gulf Coast need and want to hear. It helps us put — provide some certainty around what we’re putting aside to move forward. And it was a — it was very workmanlike meeting that lasted for about four-and-a-half-hours.

JUDY WOODRUFF: And just to be clear about this claims fund, this money is not going to be money that is capped; is that right?

ROBERT DUDLEY: Well, that’s right. I mean, we have a well that continues to flow in the Gulf, and we’re doing everything we can to shut off the flow of that well, but it wouldn’t be realistic to say anything can be capped yet.

We have a plan to shut that off by August and contain the flow. But what this does is, it provides real assurance for people along the Gulf Coast that the money will be there to meet these — these claims.

JUDY WOODRUFF: And give us an example of that, because we understand it doesn’t include cleanup costs.

ROBERT DUDLEY: Well, the fund does not, but BP will continue to fund what’s called removal costs or cleanup costs on — on — out of our own cash flow, in addition to the fund.

But the majority of what we see as the — the claims and the expense going forward would come out of that fund. So, we will have both. Examples out of the fund would, of course, be small businesses. And we started writing checks this week for estimated projections of small business losses, as well as the individual claims that we have had in place for some time now.

It will include — the fund would include states’ claims that may also come forward. It’s a comprehensive fund. It doesn’t — setting up this escrow account doesn’t preclude anybody else’s legal rights to also come forward as well.

But it does begin to provide the certainty, both for BP, in being able to set aside these. And we made a very, very difficult decision to stop dividend payments for the rest of the year, including a payment that was to be made on Monday, to shareholders that we had already promised. So, that’s difficult, because people were expecting those payments.

But we think we need to do this to ensure we have the funding, the liquidity, and the certainty for the United States and the people of the Gulf Coast that we will meet our obligations.

JUDY WOODRUFF: The leak itself — we learned yesterday that the amount of oil escaping is much more than originally thought. It’s now said to be up to 2.5 million gallons a day. That number has changed so often, Mr. Dudley, how can the American people trust what they’re hearing from BP on this?

ROBERT DUDLEY: Well, as the summer has gone on, the last month-and-a-half, it’s really a government estimate. It’s a team of scientists led by Marcia McNutt of the U.S. Geological Survey.

And as we have continued to move forward on these containment devices, new — new estimates come forward, new data comes forward. We’re revising our containment plans on that. It’s a range. It’s an estimate. And so we’re going to respond to that, increasing the size of the containment by the end of the month, before we eventually kill this thing in August.

JUDY WOODRUFF: And — and, just briefly, what can you tell us is the latest on how much is being siphoned off or burned off vs. how much is still flowing into the Gulf?

ROBERT DUDLEY: Well, because — we don’t know. There’s a range on the flow rates. But we have around 16,000 barrels a day coming out of the first containment flow path. And we have started up the second one yesterday that is up to about 5,000 barrels a day.

Total, we believe we can capture with this system that’s in place now around 28,000 barrels a day. It’s hard to say. The ranges now are higher than that, so there will be some additional flow. By the end of the month, we’re going to build a system that has redundancy up to 80,000 barrels a day, should that be needed.

JUDY WOODRUFF: Congressional hearings yesterday, I know you’re aware that there was information that came out of those hearings that indicates that BP took a number of risky shortcuts in building this Deepwater Horizon well.

After seeing that information, how can the public believe anything other than that BP took risks it shouldn’t have?

ROBERT DUDLEY: You know, Judy, these — they’re — this is an investigation of a very complicated accident. It’s been that way from the beginning. That’s lots of conflicting statements and information that comes out. There’s a tone around that implies that we have many shortcuts, that it’s somehow company policy.

We have put in place over the last three years programs that focus on safety, number-one priority for the company. All of us would be deeply disturbed if that were the findings of the investigation.

But it’s early. It’s too early to draw those conclusions. And I think it’s best for the investigators to work through their process.

JUDY WOODRUFF: Are you saying that, based on what we have seen come out of that hearing and e-mails and so forth, that you can’t already draw a conclusion that risky shortcuts were taken?

ROBERT DUDLEY: Judy, I don’t know. I’m not going to draw any conclusions from it. Circumstantial evidence, you can draw a single conclusion.

I think this is a very complicated accident that happened with a series of decisions that were made and equipment failures that have led to this catastrophic combination of things that led not only to a rig burning, but then, second, an oil spill, that it’s a combination of accidents here.

I think we can’t draw any conclusion. It’s about as complicated an industrial investigation I think I have seen.

JUDY WOODRUFF: Several other things I want to ask you about. One is, we heard President Obama say today that BP is a strong and viable company. And, yet, we also learned today that the Bank of America has now told its traders not to engage in any long-term trades with BP.

Does that not suggest there is concern about the long-term viability of BP?

ROBERT DUDLEY: Well, Judy, I think that’s one of the things that came out of this today. The markets don’t like uncertainty. Shareholders don’t like uncertainty.

There’s been wide swings in both the share price of BP and the cost of its debt. And one of the things that should come out of it today which is good for the country and good for BP is certainty about a stream of cash flows that we will put into this escrow account. And I think that’s going to settle things down. That’s what we want. That’s what the president wants.

BP is a strong company and should be able to fund and weather what will be a very large set of claims and liabilities in the U.S., but that was the outcome today.

JUDY WOODRUFF: The last thing I want to ask you about are the people on the Gulf Coast.

We had two officials on this program last night, one from Louisiana, one from Florida. They both were critical of BP. One said, we can’t count on BP for what we need. The other said, BP is not protecting our coasts, our shorelines.

What do you say to these officials?

ROBERT DUDLEY: Well, I have been down there. And I have spent a lot of time on the coast. I have seen the oil on parts of the Louisiana shore. I have been in the claims centers.

I think people are uncertain. They would like this well stopped. They would like it cleaned up. I think the economic concern is clearly there. We have set up 33 of these claims offices across the Gulf. This is not our core competency, and yet I think — I have spent some time talking with Ken Feinberg — it will form the infrastructure for the independent claims process.

I absolutely understand. I grew up on the Gulf Coast. I know those beaches down there. And this is a very difficult time for people. And it’s very difficult. A lot of BP people live and their families are down there in the Gulf Coast as well. It’s very personal for all of us.

JUDY WOODRUFF: Finally, your chairman, Mr. Svanberg today, at the White House, in speaking to reporters, referred to the people who live in the Gulf region as small people.

There’s already been reaction to that, people taking offense. How can you — what do you have to say about that?

ROBERT DUDLEY: Well, Judy, I know — I know how he feels. I know exactly what his intent was.

English is his second language. His native language is Swedish. And what he was talking about is small businesses. And he’s — he’s absolutely understanding of the way people feel. He’s on his way to the Gulf here shortly. I think he just misspoke a little bit. But his intent was very clear.

JUDY WOODRUFF: Bob Dudley, managing director of BP, we thank you very much.

ROBERT DUDLEY: Thank you, Judy.

GWEN IFILL: We will get an assessment on how the White House is handling the crisis later in the program.