HOUSTON -- The liability for the damage being done by the blown out well in the Gulf could cost companies based in Houston huge sums. But can they afford it?
Disturbing images of oil in the water and tar balls on beaches have come every day from the Gulf Coast. The images stand in stark contrast to the gleaming office towers in Houston occupied by oil and gas companies. In a city that for decades has dominated the world’s energy industry, it may be taken for granted that the companies are among the most profitable in the world and their people are some of the highest-paid.
Their offices alone might be envied: real estate brokers say the energy companies often scoop up Houston’s nicest high-rises and pamper their people with larger-than-average work spaces.
"They tend to be on the upper end of the scale, versus other industries," said Coy Davidson, a broker with Colliers International. "I think it’s a question of retaining talent.”
There may be no better example of that than James Hackett. As CEO of Anadarko based in The Woodlands, he earned $20.9 million last year, making him the 33rd highest-paid executive in the nation, even ahead of the top executive at McDonald's, according to Forbes magazine.
Like BP, Anadarko funds big offshore drilling projects. In fact, it has a 25 percent stake in the ill-fated BP well, so it could be liable for a significant portion of the damages.
"So it could be billions and billions and billions" of dollars, said Jacqueline Lang Weaver, who once worked for Exxon and now is a professor at the University of Houston’s Law Center.
But it’s not just Anadarko and BP on the hook. The Justice Department recently told BP, Anadarko and also Halliburton to alert the government before doing anything that might deplete company assets -- assets that otherwise could be used to pay judgments against the companies.
If forced to pay, Anadarko told 11 News it has $3 billion in cash on hand, a $1.3 billion line of credit, and many millions in assets it could "easily sell" to raise even more money.
But there is a big question as to whether it will ever have to.
"Their agreement says, yes they share costs and profits from the well. But, if BP is grossly negligent, then, Anadarko has come out and said we’re not going to pay," said Weaver.
She said Anadarko likely won't have to pay if it can make a case that BP recklessly drilled a bad well. Does Anadarko have a case?
“Well, that's the literally $20 billion, $60 billion question, isn't it," she said.
Anadarko spokesperson John Christiansen said, judging from what has been revealed in federal investigations so far, "it's become more and more clear this tragic event was preventable and was due to (BP's negligence)."
But how much did Anadarko know about how BP was drilling the well?
In the Financial Times of London, Anadarko acknowledged it was aware of BP’s use of a cheaper drilling method now faulted for possibly causing the blowout. Anadarko contended that BP’s design "met industry standards if executed correctly."
But as stated to 11 News, Anadarko believes the well was not “executed correctly.”
Legal experts said BP is expected to go to court to force Anadarko to help pay for the clean-up and other costs. A judge or jury may have to decide who is at fault and which of the highly-profitable companies has to pay a bill that is running into the billions.