Gulf spill sets back BP's attempt at green image

That image, worth billions of dollars, is being sullied by the company's inability to contain a massive oil spill in the Gulf of Mexico.

As the expanding oil slick threatens marshlands and wildlife along the coasts of Louisiana and Mississippi, BP faces perhaps the biggest public relations challenge an oil company has experienced in the United States since the Exxon Valdez tanker disaster in Alaska in 1989.

BP's environmentally friendly image -- its logo is a green and yellow sunburst -- has outlasted past accidents, including a deadly Texas refinery blast and massive Alaska pipeline spill. But last week's deadly explosion on an oil rig that BP hired and the looming environmental damage are shaping up to be a major problem, experts said.

Since the accident, BP's stock market value has declined by roughly $25 billion.

An estimated 5,000 barrels of oil per day are spewing into the Gulf, and the company is spearheading the cleanup. But on Thursday, the government sent in equipment to support BP's efforts as the spill was reaching the coast. The Obama administration said BP is responsible to pay for the cleanup, which the company says is costing millions of dollars per day.

Marketing experts and environmentalists say BP's response so far has been superior to Exxon's treatment of the Exxon Valdez tanker crash. BP devoted most of its home page on its website to the disaster, and it's held regular news conferences.

But it's had some slips. Most notably, BP appeared to initially downplay the extent of the oil spill. It estimated that 1,000 barrels of oil were seeping from the sea bed each day. The government later corrected that figure to five times as much.

In addition, local officials in communities in the path of the spill have expressed frustration with the lack of communication from BP officials, as well as the government.

"They have to repair the problem. I'm not sure if anything else is going to matter until they do," said Kelly O'Keefe, managing director of the Virginia Commonwealth University Brandcenter. "And they should apologize."

CHECKERED PAST

BP says it's not focusing on its public relations effort. "It's about tackling an oil spill as aggressively as we can," said Robert Wine, a spokesman at BP's headquarters in London.

BP has had its share of recent high-profile accidents:

• An explosion at a BP refinery in Texas City in 2005 killed 15 people and injured 170. BP pleaded guilty to a felony and paid $50 million in criminal fines. On the civil side, regulators in October hit BP with a record $87 million fine for failing to correct safety hazards at the plant. BP has formally contested the fine.

• In late 2007, BP paid $303 million to settle criminal charges in connection with price manipulation of the Lower 48 propane market.

• More than 200,000 gallons of oil spilled from a BP pipeline in Alaska in March 2006, the largest North Slope spill ever. BP pleaded guilty to a misdemeanor and paid about $20 million in criminal penalties, including $4 million to the National Fish and Wildlife Foundation for Arctic environmental research. A smaller spill later that year prompted BP to temporarily shut down half of the huge Prudhoe Bay oil field while the company figured out how bad a pipeline corrosion problem had become. BP then spent tens of millions replacing bad pipes.

STAINING A GREEN IMAGE

The costs could be much higher this time. Besides cleanup expenses now running at $6 million a day, BP faces potential fines and costs to ensure better safety on the rigs it operates in the Gulf. And there will be legal costs. Two lawsuits have already been filed related to the blast and potential damage to the commercial shrimping industry.

The immediate concern was the oil slick threatening hundreds of species of fish, birds and other wildlife along the Gulf Coast.

Eileen Campbell, chief executive of market research company Millward Brown, said BP risks becoming associated with photos of oil-soaked wildlife.

That would stand in stark contrast to the green image that BP took years to build. The company has invested in solar and wind energy projects. It devoted $500 million on biofuels research, and CEO Tony Hayward supports capping carbon emissions. It spent nearly $76 million in the United States on radio and TV last year, according to Kantar Media.

BP is considered the most environmentally friendly of major oil companies, the firm said. In contrast, Exxon's brand is based more on its reputation for innovation, corporate citizenship and communication with shareholders.

David Oesting, an Alaska lawyer who represented the plaintiffs in a class-action suit that followed the Valdez crash, doesn't believe BP will suffer as much as Exxon did.

Exxon eventually spent more than $4.3 billion on the cleanup and on lawsuits to compensate residents. Two decades later, it continues to pay for the damages. Oesting said he won $1 billion in the suit, and years later he's still cutting checks to the victims.