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Waste and Emissions»US may bar BP from federal contracts as oil closes beaches

»Monday, May 24,2010

The Obama administration is studying options to bar BP from receiving federal contracts - a move that could cost the British oil giant billions of dollars and severely curtail its drilling operations, according to the investigative website ProPublica

The revelation came as local authorities closed public beaches in Grande Isle, Louisiana, where thick clots of oil washed ashore for the first time.

Officials at the Environmental Protection Agency have suspended talks with the company over whether to prevent it being eligible government contracts because of previous environmental misconduct, ProPublica said.



The EPA has reportedly put the negotiations on hold until it learns more about BP's role in the huge oil spill unleashed by a rig explosion in the Gulf of Mexico that killed 11 workers.

The review is the latest example of the administration of President Barack Obama seeking to "get tough" with the company after Washington was criticised for an allegedly tardy response to the disaster.

Mr Obama is also today announcing details of a bipartisan commission to investigate the spill and offshore drilling - just two months after he made that extraction technique central to US energy policy, to the dismay of environmental groups.

In his executive order, he names former Florida Sen Bob Graham and former Environmental Protection Agency William K. Reilly as co-chairs. He said the commission must ensure that it does not disrupt "any ongoing or anticipated civil or criminal investigation" arising from the disaster.

It was his first reference to the possibility of a criminal probe into the accident in the Gulf of Mexico, although he did not say such an investigation was under way. Attorney General Eric Holder said on May 3 that the Justice Department was part of the probe into the spill, though a US official said then it was not a criminal inquiry.

The EPA said in a statement that, according to its regulations, it can consider banning BP from future contracts after weighing "the frequency and pattern of the incidents, corporate attitude both before and after the incidents, changes in policies, procedures, and practices".

ProPublica said the agency will assess whether the latest incident in the Gulf is evidence of an institutional problem inside BP, a precursor to the action called debarment. A BP spokesman said the company would not comment on pending legal matters.

With more than £25bn wiped off the company's share price down and a soaring bill for the clean-up and compensation, losing access to federal penalties would be another major blow to its finances.

The EPA has also ordered the energy giant to choose an alternative less-toxic dispersant to break up the spill and start using it by Sunday amid growing concerns about the impact of the 650,000 gallons of the chemical mixture Corexit 9500 already used.

Meanwhile, BP chief operating officer Doug Suttles said engineers expected to try to use the "top kill" technique to stop the gush of oil in the next few days.

In the procedure, thick, viscous fluid twice the density of water will be pumped at a high rate into the site of the leak to stop the flow so that it can then be sealed with cement, he said. "Our best estimate is probably Tuesday," he said, while noting that the operation has never been tried in such deep water.

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7753611/US-may-bar-BP-from-federal-contracts-as-oil-closes-beaches.html
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