BP Says Barring it From Drilling in the Gulf Endangers Payouts

BP (BP) warned that any legislation that stops it from drilling for oil in the Gulf of Mexico could prevent the oil giant from paying out compensation related to this year's oil spill.

Congress is currently considering legislation that would bar any company from receiving offshore drilling permits if more than 10 fatalities had occurred at its offshore or onshore facilities, The New York Times reported. The bill also forbids permits to companies that have paid fines of $10 million or more under the Clean Air or Clean Water acts over a seven-year period.

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If BP is prevented from drilling in the Gulf, which accounts for about 11% of its production, then it may struggle to make voluntary payments on top of the $20 billion escrow fund it has set aside to pay victims of the oil spill, the company said.

BP has agreed to contribute hundreds of millions of dollars to projects including a foundation to support rig workers who have lost their job, a research program to study the impact of the spill and marketing campaigns to promote Gulf tourism.

"If we are unable to keep those fields going, that is going to have a substantial impact on our cash flow," said David Nagle, BP's executive vice president for BP America, told The New York Times. That "makes it harder for us to fund things, fund these programs."

The total cost of the oil spill so far is now $8 billion, BP said Friday. The British company also indicated that the well could be permanently sealed within about two weeks, MarketWatch reported.