BP signs deal to get back in the game
BP has inked a big deal with the Environmental Protection Agency. Beginning next week, the global energy company will be allowed to bid on leases to drill for oil on territory controlled by the U.S. government, including the Gulf of Mexico.
In 2012, on the heels of the Deepwater Horizon spill, BP was barred from doing business with the federal agencies. Since then, it has continued to operate ten rigs in the gulf.
“The region is extremely important,” says Matthew Jurecky, the head of oil and gas research for a consulting firm called GlobalData, noting he wasn’t surprised the BP ban was lifted, because he always assumed it was “temporary and conditional.”
“They’ve been one of the top producers, responsible for many of the largest projects in the gulf,” he says.
In 2010, four billion barrels of oil poured from one of BP’s deepwater wells into the gulf. Since then, the company has paid more than $3 billion in fines and penalties.
“After the oil disaster, BP’s bottom line was hit quite hard,” says Christopher Knittel, the William Barton Rogers Professor of Energy Economics at MIT’s Sloan School of Management.
According to Knittel, the timing of this announcement isn’t coincidental. In New Orleans next week, at an event in the Mercedes-Benz Superdome, the U.S. Department of the Interior’s Bureau of Ocean Energy Management is scheduled to auction off lease rights to millions of acres off the gulf coast.
“I imagine BP will use this as an opportunity to expand operations,” Knittel says. The company has committed to spending $40 billion in the region over the next decade.
In the administration agreement BP signed with the EPA, it has agreed to more monitoring. Among other things, it will have to hire independent auditors to oversee its operations.
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