Spill’s Cleanup Cost Estimated at $750,000 a Day

Cleanup of the Orange County oil spill is costing roughly $750,000 a day, and the tally already has reached at least $4 million, James H. Ross, president and chief executive of BP America Inc., said Tuesday.

The estimate reflects “cash (paid) out, with BP acting as agents for the ship owner (American Trading Transportation Co.),” Ross said in a telephone interview from BP America’s Cleveland headquarters. He said the shipping firm may have paid out money directly that is not reflected in the estimate.

Ross said it would be premature to put a more precise figure on cleanup costs or to predict how much longer crews will be cleaning up the goo spilled last week from the tanker American Trader, which BP chartered to transport Alaskan crude oil.

If winds were to kick up, the remaining oil could hit the beaches in the next 12 to 24 hours, while an army of workers waits to mop it up, he said. If not, “with light winds, the oil could just slop around before coming onto shore, and that could take a long time,” he said.

No matter how long the cleanup takes, Ross’ estimates suggest the total cleanup will cost far less than the $2 billion that Exxon estimated was spent in 1989 to deal with the much larger oil spill in Alaska last March.

American Trading, which owns the tanker chartered by BP, has assumed responsibility for the Orange County spill and cleanup, Ross said. BP, which owned the spilled oil, is helping American Trading coordinate the cleanup but will not assume costs, he added. In any case, it is likely that much, if not all, of the cleanup cost will be covered by insurance, including $400 million in pollution insurance coverage held by American Trading, Ross said.

He said it is unlikely the spill and subsequent cleanup will adversely affect BP’s first-quarter earnings. BP America’s parent, British Petroleum Co., is scheduled to announce its fourth-quarter and full-year 1989 earnings on Thursday.

Cleanup costs must pay for about 688 contract employees, plus a fleet of 66 vessels, including 22 skimmers and a helicopter. Another 500 contract workers are available should more oil hit the beaches because of rough weather, a BP spokesman said at the cleanup site.

In addition, BP America has sent 121 of its staff to the cleanup site in Orange County. Other oil companies--including Atlantic Richfield Co., Chevron Corp. and Exxon Corp.--have lent 25 to 30 of their employees to give technical advice.

Ross, who surveyed the spill scene Friday, played down the effect of the spill on BP’s fortunes. Some observers have said it will increase opposition to BP and other oil companies’ plans to prospect for oil in offshore areas, including those off Alaska, and it will strengthen efforts to stiffen tanker regulation.

“Clearly some legislators are enjoying the timing of this incident relative to pending oil spill legislation in Washington . . . and that legislation may make things much more expensive for the whole industry,” he said.

Ironically, the spill comes a couple of months after BP America’s in-house magazine published a feature article titled “Upping the War on Oil Spills.” The article quotes John Morgan, BP’s senior vice president for transportation, as saying, “We’re putting the emphasis on (oil spill) prevention.

“The best defense is to do everything you can to ensure spills don’t happen,” said Morgan, who is also chairman of the company’s task force on oil spill prevention and response.