BP looks to shave more money off Gulf oil spill fines tab

BP is asserting that roughly 10 percent of the crude that entered the water during the 2010 Gulf of Mexico oil spill should not be counted in the civil fines it faces because the oil dissolved before reaching the surface, the U.S. government said in court papers Monday objecting to the  argument.

If BP were to win the argument, that could shave up to another $1.7 billion off the Clean Water Act fines it faces.

Engineers used dispersants following the disaster that broke up the oil and caused some of it to dissolve. Plenty still reached the Gulf shores.

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Justice Department lawyers said in the filing in federal court in New Orleans that they want a judge to rule that any dissolved oil should count toward the fine calculation. They say the law is clear that oil discharged into the water is subject to fines under the Clean Water Act.

The government has long held that 4.9 million barrels of oil were discharged by BP’s Macondo well a mile below the surface of the Gulf off the coast of Louisiana and that 4.1 million barrels of oil entered the water.

A BP expert wrote in a report released last month that he believes only 3.26 million barrels of oil was discharged, which would put the amount that BP said entered the water at 2.46 million barrels. Both sides agree that 800,000 barrels of oil was collected at the wellhead before entering the water.

Based on the government’s calculation of how much oil entered the water, BP would face maximum Clean Water Act fines of $17.6 billion, if U.S. District Judge Carl Barbier finds that the company was grossly negligent. He has not yet ruled on that key issue. Based on BP’s calculation, the maximum penalty would be $10.6 billion.

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If another 10 percent of the oil that spilled wasn’t counted, and the government’s calculation was accepted, that would mean a maximum penalty of $15.9 billion. Based on BP’s calculation, the maximum would be $9.5 billion.

BP owned the undersea well that blew out 50 miles off the Louisiana coast on April 20, 2010, causing an explosion on the Transocean-owned Deepwater Horizon rig that killed 11 men. It took nearly three months to cap the runaway well.

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