Gulf Oil Spill: What's Behind BP CEO Hayward's New Plans and Promises

In between the "We're sorrys" and "It'll be alrights," BP CEO Tony Hayward finally got around to what we've all been waiting for: outlining its long-term plans for the Gulf. In short, BP is laying the groundwork for a sustained damage-control operation -- one aimed at the Gulf, its business and its public image.

At which point, you'd be perfectly justified in asking: What took him so long?

Here are a few of the more revealing items that came up in the conference call.

Isolating BP's disaster operations BP will reorganize its the Gulf of Mexico disaster operations into a new division. No word yet on what the unit will be called, although there will be plenty of sarcastic suggestions from the locals and media. Bob Dudley, a BP exec -- well-respected one, according to the Guardian -- who used to manage the company's Russian TNK-BP unit, will head this new Gulf of Mexico division. On a sidenote: TNK-BP's subsidiary RUSIA Petroleum filed for bankruptcy Thursday, following a long and unprofitable plan to sell Russian natural gas to China.

Hayward didn't give specifics on what this "separate, stand alone organization" will look like, making it ambiguous enough to mean many things. Hayward cast the move as a way to keep the focus on the oil spill disaster without distracting BP from its other operations.

Most likely, this is an accounting move that will allow BP to put its toxic oil spill assets in one place and then make a massive impairment write down. Whether Hayward thought of this weeks ago, isn't clear. But the timing of it -- the day after Moody's Investors Service and Fitch Ratings cut BP's long-term debt rating -- indicates the company is scrambling to protect itself from any more outsider uncertainty.

The reorganization indicates that BP sees this as a long-term event, and one that requires undivided attention. It may also provide stability in dealing with the disaster if BP ends up sacking Hayward. Even if Hayward stays on board, someone must have finally told him how his lack of a filter is hurting BP. Dudley, an American, is known for his ability to handle politically sticky situations.

Does BP have enough money? Major shareholders pressed Hayward on whether BP would continue its 8.6% dividend, if it would be cut and whether the company had enough money to pay for the Gulf oil spill.

Hayward was rather coy in his response. After telling investors the dividend was safe, he left open the possibility that it could be temporarily cut. The issue has already hacked off a few senators who have called on BP to end the dividend until the total damage from the spill is paid for. But it's not so simple. BP spent $10 billion on dividends last year, a payout on which U.K. pension funds are heavily reliant. BP hasn't cut its dividend since 1992, and a move to do so would signal the company may be in more trouble -- politically or otherwise -- than it admits.

Of course, BP has to tread carefully. Its major shareholders would leave in droves if the dividend didn't materialize. Hayward later warned that the cleanup costs and total damages would be sizable. He didn't even try to muster up a figure, which indicates just how big this can get. We can all look forward to BP's next quarterly earnings report, however. The company plans to break out all of the costs associated with the Deepwater Horizon rig explosion and subsequent oil spill.

BP seems to have hope that the relief wells will work. The company said in a press release, which also came out today, that it expects the costs of containment, removal and clean up to be largely complete in 2010.

A new promise? Hayward outlined BP's four-point plan:

• Transparency with the U.S. government and public;
• Investing to make the Gulf oil industry safe;
• Take financial responsibility for any and all environmental damage;
• Be responsible to those who have suffered economic harm.

Collecting oil As most of us already know, BP is trying to contain the oil, not plug the well at the moment. (A separate effort to plug the well is ongoing and won't be complete until August.) If the containment dome is successful, BP will capture the oil and send it to the surface and onto a oil tanker. The collected oil will be refined sometime in mid-June.

Hayward described Friday how BP has found a better way to collect the oil, a new system that it hopes to have up and running in July. The system would be more hurricane resistant.

The whole idea of collecting and then refining the oil won't sit well with folks living in the region. They already view BP as a company more interested in capturing the oil then stopping the well. Even if this containment system is absolutely necessary, it won't help BP's already tarnished image.

Photo of oil spill cleanup from the Coast Guard, CC 2.0