Interior Dept. allows BP to bid on Gulf leases, with conditions

The Interior Department will allow BP to bid in next week’s Gulf of Mexico lease sale, despite its suspension from obtaining new federal contracts.

However, the agency said in a notice Thursday that if the British oil giant is the highest bidder and remains under suspension at the time of the lease award, which is given following a 90-day post-sale evaluation period, it will be disqualified.

“Concurrently, the previous second highest bidder will assume the position of the highest responsible qualified bidder,” the notice says.

For now, the Bureau of Ocean Energy Management will accept and process BP bids following standard procedures.

BP declined to comment on the notice.

While it hasn’t said it plans to bid, BP is the largest leaseholder in the Gulf and is a major player.

After BP agreed in November to plead guilty to criminal charges in connection with the 2010 Deepwater Horizon disaster in the Gulf, the Environmental Protection Agency suspended BP from new federal contracts, which effectively meant it has been unable to secure new leases in the Gulf. BP has been working since then to get the suspension lifted.

Beyond lease sales, the suspension has meant other fallout for BP.

The company was ineligible for new contracts worth up to $1.9 billion to provide fuel to the federal government this year because of the suspension. BP has been a major supplier of fuel to the U.S. military.

The contracts were with the Defense Logistics Agency, a combat support unit that provides the Army, Navy, Air Force, Marine Corps and other federal agencies with logistics, acquisition and technical services.

BP pleaded guilty Jan. 29 to manslaughter and other criminal charges stemming from the well blow-out and rig explosion in the Gulf off Louisiana nearly three years ago.

It was ordered to pay a $4 billion criminal penalty that it negotiated with the Justice Department.

It also was sentenced to five years probation and will be subject to independent monitoring. The guilty plea keeps the suspension in place until BP can work out an administrative agreement with the EPA.

BP owned the undersea well that blew out, leading to the worst offshore oil spill in U.S. history. It also was leasing the Deepwater Horizon drilling rig that exploded, killing 11 workers.

Besides the criminal penalty, the company already has spent more than $24 billion on clean-up, compensation to victims and other spill-related costs.

A civil trial over the disaster is currently ongoing in federal court in New Orleans. Billions of dollars in fines and damages are at stake.


Read ongoing FuelFix coverage of the legal trials surrounding the Gulf of Mexico oil spill: