BP’s Bill for the World’s Largest Oil spill: $61.6 billion

On April 20, 2010, a well blowout a mile under the Deepwater Horizon exploration ship sent a surge of oil and gas up to the rig, setting it on fire and killing 11 crew members. The well leaked for 87 days, and 3.19 million barrels of crude oil poured into the Gulf of Mexico. BP just totaled up the amount of legal bills, damage settlements, restoration costs, and fines it has paid to hundreds of lawyers, 400 local governments, thousands of claimants and the federal government, and the tab comes to $61.6 billion.

More:

“BP’s big bill for the world’s largest oil spill reaches $61.6 billion,” Steven Mufson, Washington Post

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BP ‘Grossly Negligent’ in the Gulf Oil Spill

On Thursday September 4, 2014 U.S. District Court Judge Carl J. Barbier, Louisiana born and bred, found BP to be “grossly negligent” in the 2010 Deepwater Horizon oil spill, attributing 67% of the blame to the company, 30% to contractor Transocean, and 3% to submarine cement subcontractor Halliburton. BP may be liable for as much as $18 billion in fines under the Clean Water Act. BP had tried to claim its two partners in the drilling venture were equally responsible, so the ruling essentially doubles that. BP says it will appeal.

With this fine on top of other Deepwater fines, costs, and damage expenses, BP’s total bill for the disaster could reach $50 billion.

BP Oil Spill +2

While the media fleet sailed with the Titanic centennial story, this week marked the anniversary of another maritime disaster. The Deepwater oil spill happened two years ago, but you wouldn’t know it unless you live on the Gulf Coast. Most media coverage  boosted the recovery of tourism and the fishing industry. Only the editors of the Tampa Bay Times have a weather eye on the future:

“Two years later, spill’s dangers linger,” Tampa Bay Times editorial

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Gulf of Mexico Oil Spill Blame Game. It’s Back!

BP Global has charged that its subcontractor, Halliburton Energy Services, destroyed evidence of shoddy cement work on the Deepwater Horizon oil rig. BP claims the “Mocondo Blowout” that caused last year’s catastrophic Gulf oil spill was caused by Halliburton’s substandard work.

More:

“BP says Halliburton ‘intentionally destroyed evidence’ after Gulf oil spill,” Vivian Kuo, CNN

 “BP says Halliburton destroyed Gulf spill evidence,” Reuters via Chicago Tribune

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Commission Establishes Oil Spill Blame

Contractor Halliburton knew the cement it used to seal the BP Deepwater oil rig was faulty but used it anyway, according to a report released by a federal commision. “Halliburton and BP both had results in March showing that a very similar foam slurry design to the one actually pumped at the Macondo well would be unstable, but neither acted upon that data,” according to investigators.

Thomas Roth, Halliburton’s vice-president of cementing, recently stated that his company’s tests showed the materials had “good stability,” a claim contradicted by BP officials.

Just who is to blame for the disaster?

Annoying Oil Rig Alarms Silenced

The recent CEO-juggling at PB may have distracted you from an alarming news item. Mike Williams, an electronics technician for Transocean, reported that the alarm for the Blowout Preventer valve (BOP) on the Deepwater Horizon drill rig was intentionally disabled to avoid waking the crew with false alarms.

The result: no alarm for the real emergency, which cost 11 lives. A similar alarm bypass at the Upper Big Branch Mine killed 29 miners in an explosion, notes Johnny Kilroy.

 It gets worse. A supervisor told Mr. Williams that the entire Transocean fleet of drill rigs runs the alarms in bypass.

BP Changes Caps

Update: The cap is ON.

BP is replacing the old cap on its gushing Gulf oil well. Removing the old cap has allowed crude oil to gush unrestrained into the Gulf of Mexico, some 60,000 barrels per day.

The new cap will have an improved, snug fit, and should capture more crude. It has been manufactured by Cameron, the company that also made the blowout prevention valves (BOPs) on the Deepwater Horizon.  The cause of the failure of the Deepwater’s BOPs has yet to be determined.

  

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BP Partner Balks at Blame — and the Bill

BP sent Anadarko Petroleum a bill for $272 million, a quarter of Gulf oil spill cleanup costs to date. Anadarko is a 25 percent partner in the Deepwater Horizon drilling project. Another 10 percent of the disaster is owned by Japan’s Mitsui, so that company got a $111 million invoice.

Anadarko CEO Jim Hackett issued a statement last month blaming the oil spill on “BP’s reckless decisions and actions,” so expect some resistence from the junior partner. Mitsui merely says it has until July 12th to reply. Corporate and maritime lawyers everywhere are on alert.

Other sources claim oil spill cleanup costs to date exceed $3 billion and may rise to $6 billion. Damages are something else again. BP has established a $20 billion fund to meet preliminary claims.

More:

“BP Wants Partners to Help Shoulder Spill Cost,” John Schwartz, New York Times.

“BP Passes the Buck to Oil Well Partners,” Dana Chivvis, AOL News.

 

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Judge Sold Exxon Stock 5 Hours Before Lifting Drilling Ban

Federal Judge Martin Leach-Cross Feldman engaged in an oil spill cleanup of his own last week. Five hours before he rendered his decision blocking the six-month moratorium on deep-water Gulf oil drilling, Judge Feldman sold his personal holdings of Exxon Mobil stock. Exxon was not a party to the case under consideration but will directly benefit from the Judge’s action.

Judge Feldman may have lost a few dollars on the sale; he definitely lost much more in credibility. “The judicial canons require that judges be aware of their investments,” wrote Steven Mufson and Joe Stephens in the Washington Post:

“Judicial ethicists said that, had he been aware of his holdings, Feldman should have disclosed the ownership or recused himself at the case’s outset if he thought it posed a conflict or raised questions about his impartiality. The court docket indicates that Feldman signed several orders before the sale.

“‘I’ve never heard of a situation like this,’ said Jeffrey M. Shaman, a judicial ethics specialist and law professor at DePaul University.

“The judge may have thought the stock did not create a substantial conflict, legal analysts said, but the fact that he apparently felt compelled to sell the stock and disclose it could be seen as indicating otherwise.

GOP-BP

Many small-government Republicans are now screaming for massive federal involvement in Gulf oil spill mitigation. These GOP free-market fundamentalists and devout deregulators are currently calling for the scalps of BP’s CEO and board members.

Not so Congressman Joe Barton (R, TX-6). He apologized to BP’s CEO for the U.S. Government’s “shakedown” of the multinational oil corporation, the Administration’s insistence on a $20 billion escrow account to address claims by Gulf fishermen and others whose incomes are affected by BP’s blundering oil spill. Mr. Bolton has received an annual average of $80,000 in campaign donations from oil companies over two decades. This is an election year, and Mr. Bolton has racked up $100,000 in oil company contributions so far.

Republican leaders conducted a shakedown of their own, telling Joe Barton to retract his statement if he wanted to keep his post as ranking member of the House Energy and Commerce Committee. Grudgingly, he did.