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The Wall Street Journal: BP’s Woes Mount in U.S.

By PHIL IZZO
December 12, 2006

BP’s woes continued to mount in the U.S. as the Supreme Court ruled against the company in a royalty dispute and documents reviewed by the Wall Street Journal showed executives worried about cost cuts affecting safety prior to a refinery blast.

BP officials so far have said that they believe budgetary decisions didn’t play a critical role in the accident, caused when workers restarted a small gasoline-processing unit. In a series of internal interviews, however, BP executives painted a more-complicated picture. Their thinking is laid out in notes and interview summaries that were collected earlier this year as part of an internal BP review of the refinery accident. The interviews were conducted as part of a wide-ranging “accountability” review, designed to determine what led to the accident, according to a BP spokesman. The documents haven’t previously been made public.

Meanwhile, the U.S. high court ruled that Interior Department royalty orders aren’t subject to a statute of limitations. At issue were whether Interior royalty calculations — through administrative actions — ordered the companies to pay a higher rate based on refinement of the methane before it is marketed and sold. The BP subsidiaries had argued the government was entitled to royalties on the value of methane gas at the time it was extracted and before carbon dioxide is removed from the methane. Federal law generally requires lease payments to be made on gas in a “marketable condition.”

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