by Giles Cadman
In a move sanctioned by a federal judge in New Orleans, BP and the Justice Department have agreed BP will pay $4B in penalties to settle criminal charges for the oil well blow out in the Gulf of Mexico in 2010. This is part of a much larger set of penalties.
The company’s stock price, which fell roughly by half after the accident, has recovered more than 40 percent of its loss over the last three years. The company has sold off billions of dollars of assets to pay for damages from the accident and is now a smaller company, but still one focused on drilling in the Gulf of Mexico. The company’s shares rose on the news of the judge’s decision, with its American shares ending the day at $45.21, up almost 2 percent.
The company said it had already paid out more than $24 billion on various settlements and cleanup efforts.
Cases against individuals are still pending.
The two top BP officers aboard the Deepwater Horizon drilling rig, Robert Kaluza and Donald Vidrine, were charged with manslaughter in connection with each of the men who died, and David Rainey, a former vice president, was charged with obstruction of Congress and making false statements for understating the rate at which oil was spilling from the well.
A low-level engineer, Kurt Mix, was previously charged with obstruction of justice for deleting text messages about company estimates of the spill flow rate.
Despite paying out more than $24B BP still faces more potential fines.
Although BP has resolved the criminal charges against the company, it still faces sizable pollution fines before it can put the accident behind it. A settlement with the Justice Department has so far been elusive, and a trial to resolve the remaining civil litigation is scheduled for Feb. 25 in New Orleans.
Under the Clean Water Act, the company faces potential civil fines of $5 billion to $21 billion, based on a government estimate that 4.9 million barrels of oil were released from the Macondo well. The higher fines could be applied if the company were found to be grossly negligent in the spill.
This spill, while a tragedy, has probably done more to enhance the safety and environmental impact of oil wells across the globe than any set of untested regulations. Oil companies will be looking at the implications of the Deepwater Horizon accident, and ensuring that they do not face the same kind of massive financial penalties as BP has had to pay.