After several weeks of negotiations with the federal government, BP PLC made its first deposit — $3 billion — into a $20 billion claims fund for spill-related damages, the company and the government announced Monday.
But the claims must now be paid quickly or some businesses won’t make it, according to one coastal mayor.
“We have survived the oil, it looks like. But can we survive the economic distress that it’s caused?” asked Gulf Shores Mayor Robert Craft, whose beach city has long been on the front lines of the oil spill. “The survival of the small business down here won’t take care of itself.”
The deposit will be held in an escrow account overseen by Ken Feinberg, who was named claims czar in June by President Barack Obama. Feinberg has yet to take over the claims process, saying he couldn’t until BP put money in the bank. A spokeswoman said Monday that he will take the lead on Aug. 23.
Meanwhile, the top federal official overseeing activity at the site of the broken gusher said the relief well, long-heralded as the leak’s final and permanent fix, has drilled down 17,152 feet.
The relief well is now as little as 10 yards — a first down in football — away from intersecting the shaft of the well far under the ocean floor. That is expected to happen by week’s end, according to retired U.S. Coast Guard Adm. Thad Allen.
“They’re closing in on the last, I’d say 30 or 40 feet at this point, but it’s very, very slow, because they have to be exact,” Allen said.
Engineers said they choked off the well with mud at the top and sealed it with cement last week, but they plan to send more mud and cement through the relief well as a precautionary measure.
Allen also said Monday that government officials and the National Oceanic and Atmospheric Administration are keeping track of a tropical disturbance to the east of Florida, which could potentially affect the spill response.
“I believe, as of this morning, they thought there was a 10 percent chance that this could develop into a system that would be of consequence to us,” he said. “So at this point, we’re not taking any directed action, but we’re watching it very closely.”
NOAA projections showed no surface oil in the Gulf, and there were only sporadic reports of crude around Alabama on Monday.
Some “weathered mousse balls” were found in the Bon Secour National Wildlife Refuge, according to a spokeswoman with the Mobile Joint Information Command center. Also, Orange Beach city officials, on a coastal flyover, found light sheen in waters near that city, as well as some heavier sheen around Bon Secour and Gulf Shores.
The Alabama Department of Public Health announced that, effective 6 a.m. today, private reefs in Portersville Bay, Grand Bay and Heron Bay would be reopened to oyster harvesting. Public oyster reefs in the area remain closed as a result of the spill, according to department spokesman Jeff McCool.
Also today, the recently created Bureau of Ocean Energy Management, a federal regulatory agency, will take input in Mobile on drilling regulations and whether any changes should be made to a federal moratorium announced in July.
The forum, which is open to the public, is scheduled at the Battle House Renaissance Hotel downtown starting at 9 this morning, and doors open at 8.
In a written statement, Tom Perrelli, associate attorney general for the U.S. Department of Justice, said that BP still has more work to do to right coastal finances after the $3 billion deposit.
“We are pleased that BP made an initial contribution and has taken an important step toward honoring its commitment to the president and the residents and business owners in the Gulf region,” Perrelli’s statement said.
The company said it plans to make another deposit of $2 billion after October, and then make $1.25 billion deposits four times a year for the next three years. New York City-based Citigroup will handle the fund, and coastal residents can cash the checks without charge at Whitney National Bank branches, BP said in a news release.
In addition to financing the $20 billion fund, BP has also been paying claims, granting $35.2 million in Baldwin County and $28.4 million in Mobile County, the company said.
BP CEO Bob Dudley said in a news release that the $20-billion escrow fund shows that the company will honor its promise to help those affected by the spill.
“Establishing this trust and making the initial deposit ahead of schedule further demonstrates our commitment to making it right in the Gulf Coast,” Dudley’s statement said.
But the company’s first deposit, which comes nearly two months after BP agreed to create the fund under pressure from the White House, didn’t arrive quickly enough for the tastes of some along the coast.
“It was supposed to have been done a month or six weeks ago,” said Orange Beach Mayor Tony Kennon. “All of our community has had this tremendous delay.”
Still, Kennon expressed great excitement over the first deposit, saying he “did a backflip” when he heard the news.
“I have more faith in Mr. Feinberg doing the right thing than I ever did in BP,” he said.