BP settles with maker of failed blowout preventer

NEW ORLEANS — Cameron International, the maker of the Deepwater Horizon blowout preventer that failed to stop last year’s massive oil spill in the Gulf of Mexico, has agreed to pay $250 million to BP under a legal settlement, BP said Friday.

BP said it was “in their mutual best interests, and the agreement is not an admission of liability by either party.” The companies are dropping all claims against one another, they said.

The settlement comes in advance of a federal trial over the catastrophic Gulf oil spill. The non-jury trial is slated to begin in February and determine fault in the April 20, 2010, explosion and subsequent oil spill off the Louisiana coast of more than 200 million gallons of oil.

The settlement with Cameron does not end the legal fighting over the blowout of the Macondo well, which was owned by London-based BP and two partners, MOEX and Anadarko. BP has already settled claims with those two companies and a third company, Weatherford, the maker of a part used in the well.

“Today’s settlement allows BP and Cameron to put our legal issues behind us and move forward to improve safety in the drilling industry,” said Bob Dudley, BP group chief executive.

“Unfortunately, other companies persist in refusing to accept responsibility for their roles in the accident and for contributing to restoration efforts,” Dudley said in a swipe at Halliburton Corp. and Transocean Ltd. Halliburton supplied critical cement to seal the well and Transocean was the company drilling the well.

Probes of the Deepwater Horizon explosion by the federal government and independent scientists and engineers have found all three companies were at fault for a series of decisions and actions that led to the Macondo well blowout, the nation’s largest offshore oil spill.

BP is engaged in an intense legal fight with Halliburton Corp. and Transocean. Earlier this month, BP went so far as to accuse Halliburton employees of covering up damaging evidence about a cement mixture Halliburton used in drilling the well.

BP said it would use the $250 million from Cameron to pay for the cost of cleaning up from the spill and paying individual damages claims by people, businesses and government entities hurt by the spill. BP said it has spent about $7.5 billion so far of those claims. But the British company faces billions of dollars in additional damages and fines.

Under the agreement, BP said Houston-based Cameron is no longer responsible for any additional cleanup costs related to the spill. But BP said the agreement does not cover civil, criminal and administrative fines and other penalties that might arise out of the court proceedings.

Jack Moore, the chairman and CEO Cameron, said the agreement with BP “removes uncertainty facing Cameron” as litigation intensifies over the Deepwater Horizon explosion.

“This eliminates all significant exposure to historical and future claims related to this incident,” Moore said.

Moore said Cameron does not expect to have to pay much for possible court fines and penalties. “We do not consider these items to represent a significant risk to Cameron,” he said.

Cameron said its insurers were expected to fund at least $170 million of the $250 million payment the company agreed to make to BP.

BP and Cameron also pledged to “improve safety in the drilling industry” and do more to improve blowout preventers.

Associated Press

15 Responses

  1. ntangle says:

    Pls pardon my truncated thought in my last comment. Was running out the door to get some more Christmas cards into today’s mail. Agree w/ Peter about their “expensive insurance”. Although not very likely, the exposure could’ve been much higher than $¼B. That uncertainty was probably reflected in their stock value. And of course an adverse judgment wouldn’t have required either defendant’s “approval”.

  2. ntangle says:

    Adler claims: And, any settlements of torts against Transocean with Cameron attached would have to be approved by Transocean 1st.
    “Peter” is correct. Absent settlement, they might be jointly liable for a court judgment of tort(s) against both parties. Which of course wouldn’t require CAM’s “approval”.

  3. Peter says:

    Cameron settled due to risk and not fault. By settling, Cameron avoids millions in legal fees, but more importantly, their stock is less volatile and the odds of a potentially huge payout are dropped (which scares the stock holders).
    Basically, this $250 million is a very expensive insurance policy. Most likely, Cameron would have been cleared (rightly so), but a bad judgement could have been crippling.
    It’s like many other legal issues facing corporations, sometimes it’s better just to pay up even when you’ve done nothing wrong.
    In the end, Cameron will make up the $250 million with slightly higher prices that will be passed from company to company until it hits the consumers (you and I) in higher petroleum prices and higher plastics prices.

  4. Adler says:

    Ntangle, you make my point. If Cameron were to be legally and financially liable to anyone it would have been Transocean. And, any settlements of torts against Transocean with Cameron attached would have to be approved by Transocean 1st.

  5. theallknowingone says:

    Classic case for more tort reform. Good companies like these cannot be burdened by frivolous lawsuits.

  6. Wayne Togo says:

    These BP advocates “can put lipstick on it, but it is still a pig.”

    Guess who is quoted …

  7. ntangle says:

    …Cameron had no legal relationship with BP regarding the BOP…..
    Perhaps they didn’t have a direct contractual relationship re the BOP, but that doesn’t shield CAM from torts against RIG, with CAM attached. It’s wise for them to kiss & make up. Rather than making each other look worse, to their mutual detriment.

  8. CYFAIRDOG says:

    Wasn’t the blowout preventer way overdue for maintenance? That would fall on TransOcean. I would guess that this settlement just opens the door for Cameron and BP to get back to business as usual. There are still plenty of lawyers fees to be spent by all of these parties.

  9. HaHA says:

    “Today is for sale, and it is all you can afford… the lord uses the good ones, and the bad ones use the lord”

  10. Jim says:

    When Cameron was on Silber Road, I was in engineering with them. I also designed and built their Ville Platte, LA Plant. Like any big corporate entity, politics are crazy at Cameron, especially back when the were controlled by the Abercrombies.

    The issue with the BOP will not be simple at all. While Cameron has already started working on a fix, this is a daunting engineering challenge. I’m guessing from design to testing to full production will probably be years. This of course does not consider every other BOP on land and offshore rigs.

    The next OTC will have people from Europe, Louisiana, and Texas with some kind of fix. Some will be marketing gimmicks and others may be OK. This will take a lot of cash by someone and despite a lot people in Texas and Louisiana work on BOP’s, not many are capable of engineering the need changes. 3D CAD is not a fix, testing and proof in the field is. The biz needs to be wary of quick fixes for the problem. Also where are the new API Standards for design and testing. If they don’t the Fed’s and the EU will.

    In summary to engineers working on a fix, calmly tell the marketing people to get of the engineering and production offices. Do the work to fix not to keep some idiotic VP happy. In the Oil Patch some bogus delivery date by marketing prevents good products form working well until it is modified many times in the field. This is all about safety and technology, not a sales commission. A good design will sell well, they always do. Anything else will endanger lives and cost more money than good engineering and testing.

  11. Adler says:

    The extortion continues. Cameron had no legal relationship with BP regarding the BOPs. If they were have paid anyone, it would have been Transocean, since it was for them that Cameron built the stack.

  12. Wayne Togo says:

    The Cameron defense was solid, at: law, equity, precedent, evidence, truth and justice.

    BP did it. BP did it all. Nobody but BP did it. BP bribed the federal Minerals Management Section, Obama, congress and the federal courts. Then BP directly ordered every ‘Cheapy John’ unsafe practice. Finally, BP openly scuttled the MODU.

    Cameron ‘risks’ consisted of ‘undue judicial influence’ from legislative, executive and presss, fraudulent testimony and the vagaries of ‘Cajun Juries’.

    ‘His Usurpness’ has invested heavy in: “We are all at fault”. ‘WE’ are manifestly NOT ALL ‘at fault’. The runaway, rogue and utterly unconstitional national government is trampling every vestige of ‘the Rule of Law’. This gunpoint settlement is merely more of the same.

  13. Don Y says:

    They were probably made in China.

  14. CW says:

    “Today’s settlement allows BP and Cameron to put our legal issues behind us and move forward to improve drilling in the safety industry,” said Bob Dudley, BP group chief executive.

    It might be a better idea to improve safety in drilling industry. Perhaps this was BP’s problem all along, a sort of operational dyslexia.

  15. Trail_Tramp says:

    Cameron got off cheap. Now lets see what kind of settlement BP gets out of Halliburton.