Investors to oil companies: Be prepared for spills

By Annalyn Censky, staff reporter


NEW YORK (CNNMoney.com) -- In the aftermath of the BP oil spill, large investment funds are demanding that other large oil companies make investors aware of their spill prevention and disaster response plans.

On Thursday, 58 investors with assets totaling more than $2.5 trillion said they sent letters to the world's largest oil and gas companies asking for more transparency regarding their emergency response plans.

The investors included the New York State Comptroller, California State Treasurer and the Florida State Board of Administration.

BP (BP)'s stock has declined about 33% since the Deepwater Horizon rig exploded April 20, sending oil gushing into Gulf Coast waters. In July, BP said it would cancel its quarterly dividend and set aside $20 billion over four years to pay claims to victims of the spill.

"The shareholder harm that has flowed from the BP spill has focused investor attention on governance, compliance and management systems needed to minimize risks associated with deepwater offshore oil and gas development worldwide," the letters said. "The BP Gulf of Mexico disaster has also raised concerns about response plans by companies and the industry for dealing with offshore accidents."

At a Congressional hearing In June, lawmakers slammed executives from five of the world's largest oil companies for having cookie-cutter contingency plans for dealing with disasters like oil spills.

Those plans included embarrassing errors such as a reference to protecting walruses, which haven't lived in the Gulf Coast for at least 3 million years, and the phone number of a marine biologist who died five years ago.

Exxon Mobil (XOM, Fortune 500), Chevron (CVX, Fortune 500), ConocoPhillips (COP, Fortune 500) and Royal Dutch Shell - which participated in the hearing -- were among the companies on the receiving end of investors' letters Thursday.

The investors also appealed to 26 insurance companies that insure offshore drilling operations, asking if they were considering changes to their underwriting criteria.

"Investors are rightly raising questions about whether and how the rest of the oil industry is prepared to manage the risks associated with the industry's move toward increasingly extreme water depths and operating conditions to find oil," said Andrew Logan, oil program director at Ceres, a network of investors and environmental groups that helped organize the investor letters, in a statement.

BP posted a second-quarter loss of $17.2 billion due to oil spill costs when it announced its latest earnings last week. The company said it took a pretax charge of $32.2 billion in the quarter related to the oil spill. To top of page

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