Recipients of money from BP's 20-billion-dollar oil spill compensation fund will likely be required to waive their right to sue any firm involved in the disaster along the US Gulf Coast, The New York Times reported Friday.

Citing internal documents from lawyers handling the fund, the daily said businesses and individuals who accepted compensation from the fund would waive their rights to sue not only the British energy giant, but any company implicated in the largest accidental spill in history.

The waiver would come into effect only if a final settlement is accepted.

The fund, set up by BP at the White House's urging, is being administered by Kenneth Feinberg, who oversaw a similar fund to compensate victims of the September 11, 2001 attacks.

Recipients of money from that fund faced a similar choice: sue, risking a lengthy battle and uncertain outcomes, or waive their right to litigation and accept settlements before the full impact of the disaster is known.

In the case of the spill fund, even though BP is the only firm paying into the compensation account, it is expected to seek a litigation exemption for at least three other firms linked to the disaster, the Times said.

They include Transocean, which leased its Deepwater Horizon rig above the ruptured well to BP; Halliburton, which cemented the well; and Cameron International, which supplied the blowout preventer, the device atop the wellhead that failed to shut the well down after the April 20 explosion that ripped through the rig, sparking the spill.

The Times also reported that compensation eligibility is expected to be based partly on geographic proximity to the spill, potentially cutting out individuals and businesses who suffered serious knock-on financial hardships.

Other potentially controversial provisions prohibit payments based exclusively on declining home values linked to the spill, and compensation based on mental health claims.

Feinberg is expected to release regulations for emergency payments Friday and the final settlement protocols in the fall, with the two terms expected to be similar except for a higher burden of proof in the case of final payments, the newspaper said.

earlier related report

BP starts removing drill pipe from damaged wellhead
Washington (AFP) Aug 21, 2010 –

BP said Saturday it began removing drill pipe and other equipment from a damaged wellhead under the Gulf of Mexico, as it prepares to replace its giant blowout preventer valve with a new one.

Called a "fishing" procedure, the pipe removal was authorized late Friday by US spill response chief Thad Allen after a successful 48-hour "ambient pressure test" to ensure no oil will leak during the procedure, BP said.

Allen also gave BP until Sunday to submit a proposal for removing the blow out preventer that will not interfere with a federal investigation into the April 20 explosion that unleashed the worst oil spill in US history.

A so-called "bottom kill" operation to permanently seal the ruptured well has been delayed until the blow out preventer is replaced.

The bottom kill involves intercepting the crippled well with a relief well, which then pumps heavy drilling oil and cement into the oil well to permanently plug it.

Originally scheduled for mid-August, the bottom kill was postponed earlier this week to at least the second week of September because of concerns about pressure at the drill site.

The ruptured Macondo well was capped on July 15 and earlier this month BP engineers performed a "static kill" which plugged it with heavy drilling fluid and then sealed it with cement.

However, there is an area between the well and the outer well bore called the annulus which must still be sealed off from the reservoir miles below the surface of the Gulf of Mexico.

Engineers are worried that on removing the blow out preventer, the pressure behind the annulus could increase too quickly and compromise the cement plug above it.

In reference to the delicate blow out preventer removal, Allen told BP "the procedure may not be commenced without my prior approval."

He also ordered BP to provide "continuous live," remote video coverage of the operation, as well as "unfettered access" to federal investigators to observe and record the entire process.

Allen said the Joint Investigation Team he heads "will take custody of all equipment removed from or associated with the BOP (blow out preventer) stack… from the time it is removed from the well head and will maintain that custody throughout the lifting process."

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