Billions in penalties at stake for BP in estimates of oil discharged into Gulf

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wwltv.com

Posted on September 27, 2013 at 6:07 PM

Updated Monday, Sep 30 at 10:45 AM

David Hammer / Eyewitness News
Email: dhammer@wwltv.com | Twitter: @davidhammerWWL

Follow David Hammer's Twitter account as he covers the trial this morning from federal court.

NEW ORLEANS - It’s sure to be dry and highly technical, but the second phase of the BP oil spill trial that starts Monday could make a $7 billion difference for the British oil giant.

Already reeling from higher-than-expected costs of a settlement with private plaintiffs, BP is desperately fighting against claims by the U.S. government and private lawyers that they were grossly negligent in the April 2010 oil spill, the largest offshore discharge in American history.

After a first phase that looked at liability for the Macondo well blowout and the resulting deadly explosions on the Deepwater Horizon oil rig, U.S. District Judge Carl Barbier will use the second phase of the trial to hear about BP’s efforts to stop the flow of oil.

The plaintiffs say they will show how the company was unprepared for a spill in spite of documents indicating that it knew just how large and devastating a blowout could be. BP failed again and again in the months after the spill to shut off the flow, and it raged on for 87 days until a capping device finally closed in discharge in mid-July 2010.

The most important fight of the second phase, however, will be over how much oil actually made it into the Gulf from that broken hole a mile under the surface.

The government says it was 4.1 million barrels, based on hydraulic analysis of subsea video and other scientific reviews that determined that 4.9 million barrels spewed out of the hole and 810,000 barrels were successfully collected by BP using tubes and other devices.

But BP claims only 2.45 million barrels really made it into the waters, based on different assessments of the subterranean reservoir of oil and the oil that was successfully collected.

That’s a huge dispute, because if the company is found grossly negligent by Barbier, it would face a maximum pollution fine of $18 billion using the government’s official total, but less than $11 billion based on BP’s total.

The Clean Water Act penalties are capped at $1,100 per barrel spilled for simple negligence. But if Barbier finds gross negligence and willful misconduct by BP, the fines would increase to $4,300 per barrel.

BP has only budgeted for Clean Water Act fines of $3.5 billion, based on its assumption that it won’t be found grossly negligent and on its own high-end calculation of 3.2 million barrels spilled.

Lowball figures are nothing new for BP. It already pleaded guilty to Obstruction of Congress for withholding data that showed more oil flowing than they initially admitted, although the former BP vice president charged with the same crime, David Rainey, is fighting the charges.

Separately, an internal BP email from two days after the explosions showed company officials telling colleagues to keep quiet about a scientist’s findings that oil was likely coming out of the well at a rate 15 times higher than what BP was telling the Coast Guard.

The irony is that BP may actually find new life for their claims of a lower discharge by arguing that the oil flow actually got worse over the three-month spill. Videos of the deep sea shut-off device called a blowout preventer clearly showed how the oil, gas and sediment tore through metal and rubber valves as it spewed out of the earth.

BP says that’s why the government measurements, which took actual flow from the last days of the spill and assumed it was constant, are incorrect. Instead, BP said measurements of 57,000 barrels of oil a day in mid-July should have indicated that the spill was significantly smaller when it began.

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