BP agrees to $20B fund, apologizes to U.S. for spill (Houston)

BP Plc and the government have reached a preliminary agreement under which the British oil giant will put $20 billion in an escrow account to pay claims resulting from the oil spill in the Gulf of Mexico, according to news reports.

President Barack Obama made the announcement Wednesday after meeting with senior BP officials.

The agreement calls for BP to make two payments into the escrow account this year, then a payment each quarter over the next several years until the $20 billion amount is reached.

Obama also announced that BP had agreed to create a $100 million fund for oil industry workers who have been unable to perform their jobs as result of the six-month drilling moratorium imposed on deepwater drilling.

Meanwhile, BP Chairman Carl-Henric Svanber apologized to Americans for the environmental catastrophe resulting from the April 20 explosion and subsequent sinking of the Deepwater Horizon rig. He said the company will suspend its dividends to shareholders to help pay for the costs.

BP also announced Wednesday that oil and gas is flowing through a second containment system to supplement the containment dome already in place over the Deepwater Horizon’s failed blowout preventer.

Oil and gas is transported from the BOP to the surface through hoses, and then to a Q4000 surface vessel that is burning off the oil and gas because BP doesn’t have the capacity to process it.

Last week BP (NYSE: BP) pledged to donate all proceeds from oil collected from the spill to the Gulf Coast.

Read the full story in the Houston Business Journal. HBJ's complete spill coverage is available here.