BP Would Be Barred From New Offshore Oil Leases Under Bill in U.S. House

BP Plc would be barred from new U.S. offshore oil and gas leases for as long as seven years under legislation being drafted by Representative George Miller, who cited the company’s safety and environmental violations.

BP “has a flagrant history of taking risks to boost profits that has resulted in deaths of workers, destruction of the environment and economic chaos in local communities,” Miller said today in an e-mailed statement. Miller plans to offer his bill as an amendment to legislation that would overhaul drilling rules.

President Barack Obama’s administration and lawmakers are considering penalties that would limit BP’s U.S. operations. In addition to BP’s Gulf spill, Miller cited a 2005 explosion at BP’s Texas City refinery that killed 15 workers and a 2006 pipeline leak that dumped 200,000 gallons of crude at Prudhoe Bay, Alaska, as reasons for his legislation.

“Serial violators ought to face consequences, and one of those consequences should be denying” BP and oil-producing companies “with this kind of record the right to drill in America’s offshore waters,” Miller said in the statement.

The U.S. also may revoke BP’s status as operator of producing wells in the Gulf, such as Thunder Horse, or of leases at Prudhoe Bay, David Pursell, a managing director at Tudor Pickering Holt & Co. LLC, a Houston investment bank, said this month. Congress also is weighing measures to bar BP from contracts with the Department of Defense and Environmental Protection Agency.

Administration Powers

The administration has the power to force BP out as operator of existing leases on federal lands and offshore tracts. The operator, typically the partner with a majority interest, is designated before drilling begins. The Interior Department tracks each operator’s performance and may “disapprove or revoke your designation as operator” based on accidents, pollution events or other cases of noncompliance, a

Obama has said it is in the best interest of the U.S. to have BP remain financially sound and pay all claims.

“BP is a strong and viable company, and it is in all of our interests that it remain so,” he said on June 16 after meeting at the White House with BP’s chairman and chief executive officer.

Miller said his legislation would block the Interior secretary from issuing offshore leases to a company that is determined to be a danger to workers and natural resources based on a review of records for all subsidiaries and partnerships.

Spills in the Gulf, Alaska and the Texas City refinery explosion are “part of a pattern of BP’s history of reckless behavior,” Miller said.

BP’s American depositary receipts, each representing six ordinary shares, have dropped 53 percent since the day before the April 20 explosion and the shares in London have declined 51 percent. The ADRs rose $1.10, or 4 percent, to $28.77 at 3:08 p.m. in New York trading.

To contact the reporters on this story: Steve Geimann in Washington at sgeimann@bloomberg.net; Jeff Plungis in Washington at jplungis@bloomberg.net.

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.