NEW ORLEANS (CN) - After an oil industry insider told CNN on Wednesday that there "isn't enough money in the world to clean up the Gulf of Mexico" and that BP may be forced into bankruptcy in about a month, BP stock tumbled by 15.8 percent on the New York Stock Exchange. Meanwhile, BP and federal officials met to address BP's delay in processing large claims, and the Coast Guard admiral in charge of the federal response demanded that BP provide more information.
Coast Guard Adm. Thad Allen wrote to BP CEO Tony Hayward on Tuesday that despite several federal requests for claims-related information from BP, such information continues to be scarce.
"The Federal Government and the public expect BP's claims process to fully address the needs of impacted individuals and businesses," Allen wrote to BP. "We need more detail and openness from BP to fulfill our oversight responsibilities to the American people and ensure that you are meeting your commitment to restore the Gulf Coast.
"The NIC [National Incident Command] and our state counterparts have made several requests for additional information which we have not received," Adm. Allen wrote. "Access to this level of detail is critical to informing the public as to how BP is meeting its obligations as a responsible corporation. I expect a response from BP on this critical issue as soon as possible."
Matt Simmons, who CNN called an "energy insider," predicted Wednesday that BP will run out of money in about a month from paying oil spill-related claims.
Simmons told CNN's money.com magazine, Fortune, that because there had not been a Gulf of Mexico oil spill in 41 years, BP optimistically canceled its insurance 3 years ago and since then has been self-insured.
Simmons runs a Texas-based boutique investment bank, Simmons & Co., which specializes in the energy industry.
"They have about a month before they declare Chapter 11," Simmons told Fortune. "They're going to run out of cash from lawsuits, cleanup and other expenses. One really smart thing Obama did was about three weeks ago he forced BP CEO Tony Hayward to put in writing that BP would pay for every dollar of the cleanup. But there isn't enough money in the world to clean up the Gulf of Mexico. Once BP realizes the extent of this my guess is that they'll panic and go to Chapter 11."
In the seven weeks since the explosion of the Deepwater Horizon, BP has lurched from one improvisation to the next in search of a way to mitigate the oil spewing from its broken well. This disaster is of unprecedented environmental magnitude in U.S. history and is certain to also have longstanding economic repercussions.
BP bluffed the Minerals Management Service to get its deep-water exploration lease in 2009, by claiming in its application that it could control an oil leak 25 times larger than the one set off by the Deepwater Horizon. (See Courthouse News' June 4 story.)
When asked why BP did not have containment systems on standby, BP spokesman Robert Wine said there was no reason to think an accident of this magnitude was likely.
"It's unprecedented," he told The Associated Press. "That's why these caps weren't there before."
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