BP says it will pay for oil cleanup

Updated at 5:50 p.m. ET Monday

BP (BP) CEO Tony Hayward said today the oil giant will pay to clean up sections of the Gulf of Mexico that are fouled from the effects of the big oil spill off the coast of Louisiana.

That was the good news.

The bad news was that the leaking continued as BP and others frantically tried to figure out how to cap the leaks and disperse the thousands of barrels of crude oil making their way to the surface of the Gulf. 

Moreover, there were some fears that the spill  may threaten production, shipping and refining of oil and natural gas in Mississippi, Alabama and Louisiana.

Those three states account for 19% of U.S. refining capacity as of 2009, BusinessWeek said. 

The Gulf of Mexico represents about 25% of U.S. oil production and 15% of natural-gas production.

"Traders are nervous about how fast the slick could grow" and whether it could have a significant effect on oil and natural-gas production, said Andy Lipow, president of Lipow Oil Associates in Houston.

Shares of the companies involved in the spill or the well tumbled at the open today but rebounded off their lows by the close.

Crude oil briefly topped $87 a barrel but fell back to $86.19, a gain of just four cents on the day. 

AAA's Daily Fuel Gauge report put the national average price of gasoline at $2.895.

But producers of chemicals used to disperse the oil were soaring. Nalco (NLC), which had spiked as much as 18% to $29.25, dropped back to $26.19, up 5.9%. BP plans to use its products to cope with the spill. Clean Harbors (CLH), which also makes cleanup materials, closed up 5.6% to $66.98. It had been up as much as 11.1%. 

BP was trying to cap the smallest of three leaks with underwater robotic vehicles in the hope it will make it easier to place a single oil-siphoning container over the wreck.

One of the robots cut the damaged end off a pipe at the smallest leak Sunday and officials were hoping to cap it with a sleeve and valve, Coast Guard spokesman Brandon Blackwell said Monday. He did not know how much oil was coming from that leak.

Officials said work had begun to drill a relief well in hopes of reducing pressure on the BP well. That may takes weeks or months to complete, however.

Fishermen from the mouth of the Mississippi River to the Florida Panhandle got the news Sunday that more than 6,800 square miles of federal fishing areas were closed, fracturing their livelihood for at least 10 days and likely more just as the prime spring season was kicking in.

BP shares sank for the eighth day in the last nine sessions.

So, too, were the shares of companies involved in the construction of the well: Transocean (RIG), the well-driller; Cameron International (CAM), which built the blowout prevention equipment that didn't work; and Halliburton (HAL), whose cementing process may have contributed to the explosion of Transocean's Deepwater Horizon rig.

Also falling was Anadarko Petroleum (APC), a 25% owner of the project.

BP had been down as much as 9.2% but recovered to a 3.8% loss to $50.19. Transocean recovered to a gain of 0.8% to $72.91. Halliburton climbed back to a gain of 2.4% to $31.39. Cameron International rallied to close up 3.3% to $40.77.

BP is down 16.5% since the April 20 explosion that has also left 11 missing and presumed dead. Transocean is off 21%. Halliburton is down 5.7%, and Cameron International is down 15.8%. Anadarko is down 11.8%.

BP said it "will pay all necessary and appropriate cleanup cost" as well as "legitimate and objectively verifiable" claims for property damage, personal injury and commercial losses. It pledged that claims will be "promptly investigated" and that resolved claims would be paid promptly. 

The spill is likely to spark years of litigation over which company is responsible for which part of the spill. BP was the operating partner of the well, but Transocean was drilling it.

Halliburton was responsible for cementing the well -- pouring in the material between the drilling pipe and the hole drilled for the well and had just finished the job just before the explosion.

Another potential hazard was a political one that depends on how the public judges the Obama administration's response. 

In 2005, President George W. Bush stumbled in dealing with Hurricane Katrina in the Gulf and left the impression of a president distant from immense suffering. His presidency never recovered.

Administration officials said they were on top of the accident from the first day.

A declaration of national significance -- opening the way for greater government involvement -- came nine days later, when a new leak was discovered and it was determined that far more oil was leaking from the site than initially estimated.

The government is pressing BP on cleanup costs under the terms of the Oil Pollution Act. The law, passed after the legendary Exxon Valdez oil spill, makes oil companies financially responsible for all cleanup costs and specified damages relating to spills.

The tricky part of cleaning up the mess is understanding who is responsible. BP leased Transocean to drill the well. Transocean has said it is insured for up to $950 million of losses.

And Transocean may try to shift some of the blame to Halliburton and Cameron International.