BP 2011 Annual Report Download - page 78

76 BP Annual Report and Form 20-F 2011
Business review
Alternative Energy
In Alternative Energy, we are aligning technology capability with future
growth platforms, particularly biofuels.
• In addition to our expanding biofuel production business in Brazil, we are
developing advanced technologies that will unlock the commercial
potential of next generation biofuels. At our technology centre in San
Diego, bioscientists are advancing the technology to commercialize
cellulosic biofuels and utilizing our large scale demonstration facility in
Louisiana to prove the scale-up of proprietary cellulosic technology. In
the UK, BP and its partners have constructed a demonstration plant to
accelerate commercial-scale production of biobutanol, a highly-efficient
fuel molecule.
• Our portfolio of strategic venturing investments aims at putting BP at the
forefront in terms of innovation, particularly in developing sustainable
energy solutions. Our emerging business and ventures unit brings
together BP’s venturing and carbon markets expertise with extensive
carbon capture and storage capability and through this unit, we have
more than 29 separate investments spanning three broad areas:
bioenergy, electrification and carbon solutions.
The investments create insights and develop options to
grow value for BP, for both its oil and gas assets as well as its low-
carbon businesses. They cover a range of specialized innovations and
technologies, such as waste-heat recovery, energy storage, carbon
funds and land-carbon projects, new solar and bio-energy technologies.
For example, we have an investment stake in GMZ Energy, based
in the US, which is commercializing materials that allow the efficient
conversion of heat to electricity with a thermoelectric device – a building
block for a new generation of energy-efficient products. The investment
gives us insights into the ability of thermoelectric technology to recover
low-grade waste heat sources cost-effectively across the group.
Gulf of Mexico oil spill
From response to restoration – summary
Building on the efforts of 2010, BP has continued to demonstrate
its commitment to the US federal, state and local governments and
communities of the Gulf Coast following the Deepwater Horizon oil spill.
BP’s efforts in 2011 included:
• Continuing the clean-up of the waters and shorelines impacted across
the Gulf of Mexico and the ongoing protection of fish and wildlife.
• Supporting the economic restoration of impacted sectors of the Gulf
Coast economy through targeted support to the tourism and seafood
industries.
• Continuing the funding of the $20-billion Deepwater Horizon Oil Spill
Trust for the purposes of paying all legitimate individual, business, state
and local government claims and funding of settlements and Natural
Resource Damages (NRD) assessment and restoration activities.
• Progressing the NRD activities in collaboration with the federal and state
trustee agencies and progressing both emergency and early restoration
activities, including our voluntary commitment of up to $1 billion in early
restoration projects.
• Continuing the support of independent long-term research through the
Gulf of Mexico Research Initiative (GoMRI) to improve knowledge of the
Gulf ecosystem and to better understand and mitigate the potential
impacts of oil spills in the region and elsewhere.
Proposed settlement with the Plaintiffs’ Steering Committee
On 3 March 2012, BP announced that it had reached a settlement with the
Plaintiffs’ Steering Committee (PSC), subject to final written agreement
and court approvals, to resolve the substantial majority of legitimate
economic loss and medical claims stemming from the Deepwater Horizon
accident and oil spill. The PSC acts on behalf of individual and business
plaintiffs in the Multi-District Litigation proceedings pending in New
Orleans (MDL 2179).
The proposed settlement is comprised of two separate
agreements, one to resolve economic loss claims and another to resolve
medical claims. Each proposed agreement provides that class members
would be compensated for their claims on a claims-made basis, according
to agreed compensation protocols in separate court-supervised claims
processes. The proposed agreement to resolve economic loss claims
includes a BP commitment of $2.3 billion to help resolve economic loss
claims related to the Gulf seafood industry and a fund to support continued
advertising that promotes Gulf Coast tourism.
BP estimates that the cost of the proposed settlement, expected to
be paid from the $20 billion Trust, would be approximately $7.8 billion. This
includes the financial commitment for the Gulf seafood industry.
The proposed economic loss settlement provides for a transition
from the Gulf Coast Claims Facility (GCCF). A court-supervised transitional
claims process for economic loss claims will be in operation while the
infrastructure for the new settlement claims process is put in place. During
this transitional period, the processing of claims that have been submitted
to the GCCF will continue, and new claimants may submit their claims. BP
has agreed not to wait for final approval of the economic loss settlement
before claims are paid. The economic loss claims process will continue
under court supervision before final approval of the settlement, first under
the transitional claims process, and then through the settlement claims
process established by the proposed economic loss agreement.
This proposed settlement does not include claims against BP made
by the United States Department of Justice or other federal agencies
(including under the Clean Water Act and for Natural Resource Damages
under the Oil Pollution Act) or by the states and local governments. The
proposed settlement also excludes certain other claims against BP, such as
securities and shareholder claims pending in MDL 2185, and claims based
solely on the deepwater drilling moratorium and/or the related permitting
process.
For further details, see the Legal proceedings section on pages
160-164.