The Senate Environment and Public Works Committee yesterday voted to remove the liability cap on damage claims stemming from oil spills. The proposal could be one of several provisions cobbled into an energy and climate bill that could be considered by Congress in the wake of the Deepwater Horizon accident.

In a news release, API warned that the elimination of liability limits could make insurance unavailable for domestic energy development in the Gulf. More than 100 U.S. companies would be forced out of the exploration and production business, which could destroy jobs, harm economic growth and put U.S. energy security at risk.

API President and CEO Jack Gerard said:

"...legislative proposals that would make domestic resources unavailable or uneconomic, instead of focusing on improving s... more »

The Gulf oil spill became an international political issue yesterday with British lawmakers bristling at the suggestion that BP should pay the salaries of Gulf Coast energy workers who lose their jobs under the administration's six-month drilling moratorium.

As we reported, legal experts say there are no laws or court precedents that require such compensation, a fact that apparently led President Obama to direct Congressional leadership to "update the laws to make sure that the people in the Gulf, the fishermen, the hotel owners, families who are dependent for their livelihoods in the Gulf, that they are all made whole..." (The Wall Street Journal)

The British government issued a statement asking the United States to "re... more »

API President and CEO Jack Gerard told Congress today that raising the Oil Spill Liability Trust Fund cap from $75 million to $10 billion "would place about 145,000 jobs at risk."

In prepared remarks, Jack explained congressional legislation to raise the cap could force all but the very largest oil companies out of the Gulf of Mexico, adding that costs for offshore operations could increase by 25 percent.

"The impacts would be devastating...just a 10 percent increase in development costs could render seven current discoveries sub-economic, reducing production, jobs, and putting $7.6 billion in future government revenue at risk."

Jack also said API is developing recommendations for Congress and the administration on how to effectively address liability limits and financial responsibility re... more »

A congressional proposal to raise the liability limit from $75 million to $10 billion on the Oil Spill Liability Trust Fund could threaten the viability of deepwater operations, significantly reduce U. S. domestic oil production, and harm U.S. energy security.

In an assessment of the proposal's potential impact, API found it would be impossible to obtain a $10 billion per well insurance policy, and small and mid-size offshore operators would be forced out of the market.

If such insurance policies were available, the total unit costs of exploration and production could potentially increase by 25 percent, making uneconomic seven offshore discoveries holding an estimated 1.8 billion barrels of oil equivalent.

In a news release, API President and CEO Jack Gerard said:

Precipitous changes to t... more »

We've received several telephone calls from reporters who are wondering who pays for oil spill cleanup activities. With regard to the Deepwater Horizon spill, BP has assumed responsibility for the cleanup.

As BP America President and Chairman Lamar McKay told a Senate panel yesterday, "No resource available to this company will be spared." He added, "Our obligation is to deal with the spill, clean it up and make sure the impacts of that spill are compensated, and we're going to do that."

There also is a federal Oil Spill Liability Trust Fund, which amounts to an insurance policy supported and funded by the oil industry to make sure there are adequate resources to pay for oil spill damages.

But before any money from the trust fund can be used, the responsible company must pay ALL of the r... more »