BP’s potential oil spill liability cut by $3.4 billion

British oil giant BP got a big win late Tuesday when the U.S. government agreed not to seek civil penalties against the company for more than 800,000 barrels of oil that were collected before entering the Gulf of Mexico during the 2010 oil spill disaster.

U.S. District Judge Carl Barbier’s acceptance of a stipulation between BP and the government means the maximum penalty BP faces is about $17.6 billion, compared to a $21 billion maximum had the 800,000 barrels been included and should a court find that the spill resulted from gross negligence.

“The United States and BP have agreed to stipulate to the amount of collected oil to avoid the need for further proceedings with respect thereto, and to simplify the proceedings before the court,” Barbier’s order reads.

The development came as BP launched an all-out public relations offensive in advance of a civil trial next week before Barbier, which eventually could result in the company having to pay billions of dollars more in connection with the oil spill.

The company issued a statement Tuesday saying it has been open to a settlement during protracted negotiations with the U.S. government, but the company has been unable to reach a deal on terms BP believes are reasonable. It seems to suggest that there won’t be a deal before the trial begins Monday.

“Faced with demands that are excessive and not based on reality or the merits of the case, we are going to trial,” said BP general counsel Rupert Bondy. “We have confidence in our case and in the legal team representing the company and defending our interests.”

The trial before Barbier involves a web of oil spill lawsuits and other claims that were filed in various courts around the country and later consolidated in New Orleans.

During the first phase of the trial, Barbier will hear evidence on the causes of the Macondo well blowout and will assign percentages of fault to the companies determined to be responsible. The second phase will address the amount of oil that spilled.

The U.S. government has accused BP of gross negligence and previously calculated that 4.9 million barrels of oil, or 206 million gallons, were discharged by the company’s undersea well off Louisiana. BP insists it was not grossly negligent and has repeatedly said the government oil flow total is overstated by at least 20 percent, though it has not publicly stated its own calculation.

Tuesday’s stipulation and court order means that the government will not argue that any more than 4.1 million barrels should figure into potential penalty calculations during the second phase of the trial.

BP captured the 800,000 barrels with various containment devices before capping the well three months after it blew out on April 20, 2010.

The Macondo well blew out a mile beneath the sea, causing an explosion on the Deepwater Horizon drilling rig that killed 11 workers. The resulting spill was the worst offshore oil spill in U.S. history.


Read ongoing FuelFix coverage of the legal trials surrounding the Gulf of Mexico oil spill:

Guilty: Transocean convicted in Gulf of Mexico oil spill (Feb. 14)
BP feud with US government over Gulf oil spill heats up (Feb. 13)
BP well-site leaders faced earlier indictment in spill case (Feb. 8)
BP loses some federal contracts due to spill (Feb. 5)
Guilty: BP admits to causing deaths in spill disaster (Jan. 29)
Rig victim’s widow says Gulf disaster caused ‘inferno of grief’ (Jan. 11)
Transocean to pay government $1.4B to settle fed’s spill claims (Jan. 3)
Government accuses BP of being evasive on Gulf spill flow rate (Dec. 28)


About The Author

Veteran newsman currently covering energy for The Houston Chronicle. Spent 12 years at The Associated Press covering energy, airlines, general business news, legal affairs, politics and state and federal government issues. Won or shared numerous awards and award nominations for coverage of the Gulf oil spill, Delta Air Lines, the Atlanta courthouse shootings and the murders of two Dartmouth College professors. Prior to AP, worked at two daily newspapers in the Boston area.