DeepWater Horizon

BP faces new trial and US$18b in fines over 2010 Deepwater Horizon disaster

PUBLISHED : Tuesday, 01 October, 2013, 12:00am
UPDATED : Monday, 30 September, 2013, 9:48pm

Oil giant BP is to fight attempts to fine it up to US$18 billion over the 2010 Deepwater Horizon disaster, at a new trial in New Orleans.

The latest legal battle revolves around its efforts to cap a runaway well, and the amount of oil that entered the Gulf of Mexico during the 87-day spill.

The trial, scheduled to open yesterday and expected to last a month, could add up to US$18 billion to BP's bill - five times the US$3.5 billion set aside for fines. That is on top of the US$42.4 billion it has spent to date on clean-up, claims and fines.

BP is also fighting a second battle to limit payouts to those who lost livelihoods. The company has outspent the US$7.8 billion it set aside for the uncapped settlement, and recently took out newspaper ads saying the system was being abused.

The outcome in New Orleans will hinge on what the court decides about whether BP did everything it could to cap the well. The court will then turn to the dispute over how much oil escaped into the Gulf.

The trial is the second of three phases being heard by US district judge Carl Barbier. The first phase, which wound up in April, was to apportion blame for the events leading up to the blowout among BP and its partners, Transocean and Halliburton.

The blowout killed 11 men, polluted vast swathes of ocean and devastated wildlife and industry in five Gulf states.

The government, joined now by BP's former partners on the well, was to argue yesterday that the company deliberately underestimated the size of the spill, and wasted time trying to plug the well with debris, when the flow was too strong. That argument will be critical to the final tally of BP's legal bills.

Under the Clean Water Act, BP could be fined US$1,100 for each barrel of oil that escaped into the Gulf, rising to US$4,300 a barrel if the company is found to be guilty of gross negligence.

"I think BP has an uphill battle establishing that their efforts to cap the well were successful because of the sheer length of time involved," said Blaine Lecesne, a law professor at Loyola University in New Orleans.

However, BP lawyers can claim the company did its best given the complexity of the event, Lecesne said.

BP in pre-trial motions argued that the federal government reviewed and approved of its various plans to cap the well at every juncture, and that other oil companies agreed with its strategy.