BP takes watery approach towards reducing fine
Such a ruling could reduce BP's fine by as much as $US3.4 billion ($A3.2 billion) if the company is found to have acted with gross negligence when its Macondo well blew out off the Louisiana coast, leading to the worst offshore oil spill in US history. Eleven rig workers were killed when the Deepwater Horizon drilling rig, which BP had been leasing from Transocean, exploded.
The US government has asserted that the well discharged 4.9 million barrels of oil. BP stated again in its filing on Friday that it believes the spill was significantly smaller, though it hasn't publicly provided its own estimate.
With a finding of gross negligence, the 4.9-million-barrel figure would carry a maximum Clean Water Act fine of more than $US21 billion.
The law allows for a fine based simply on the amount of oil discharged. BP points out in its motion that some courts have interpreted the law to mean that oil has to be discharged into water or the environment to count.
Before it capped the well in July 2010, BP captured some of the gushing oil before it spilt into the water a mile below the Gulf surface. The government concluded in August 2010 that some 800,000 barrels of oil was collected at the wellhead, the assemblage of equipment that is attached to the opening of an oil or gas well.
US Interior Department officials have refused to say whether the government believes any of that oil touched the water before being collected. A US Justice Department spokesman declined to comment on BP's filing.
A civil trial on the tangle of spill-related litigation is set to begin on February 25.
The first phase of the trial will deal with apportioning blame among BP and the other companies. The second phase will deal with the amount of oil that spilt.
Frequently Asked Questions about this Article…
BP is asking a federal judge to rule that an estimated 800,000 barrels of oil captured at the Macondo wellhead before it was capped in July 2010 should not be counted when calculating the company's Clean Water Act civil fine for the Deepwater Horizon spill.
According to BP's filing, excluding the 800,000 barrels captured at the wellhead could reduce the company's potential fine by as much as US$3.4 billion (about A$3.2 billion) if the court determines BP acted with gross negligence. The government estimate of 4.9 million barrels carries a maximum fine of more than US$21 billion under that finding.
The U.S. government has asserted the Macondo well discharged 4.9 million barrels of oil. BP has said it believes the spill was significantly smaller but has not publicly provided its own numerical estimate in the filings described in the article.
BP's argument rests on legal interpretation: the company says some courts have read the Clean Water Act to require that oil must have been discharged into water or the environment to count toward fines. BP notes it captured some oil at the wellhead a mile below the surface before it spilled into the Gulf, and it asks that captured oil not be included in the discharge total.
The civil trial is scheduled to begin on February 25. The first phase will address apportioning blame among BP and the other companies involved, and the second phase will focus on determining the amount of oil that spilled.
The article names Transocean as the owner of the Deepwater Horizon drilling rig that BP had been leasing. The rig exploded during the Macondo well blowout, and eleven rig workers were killed.
No. U.S. Interior Department officials have declined to say whether any of the oil collected at the wellhead touched the water, and a U.S. Justice Department spokesman declined to comment on BP's filing, according to the article.
Investors should watch (1) the court's ruling on whether oil captured at the wellhead counts as discharged under the Clean Water Act, which could reduce BP's fine by an estimated US$3.4 billion if excluded, (2) whether the court finds BP grossly negligent—because a 4.9 million-barrel figure under gross negligence could carry maximum fines exceeding US$21 billion—and (3) the trial's phases beginning February 25 that will first apportion blame and then determine the spill volume.
Call 1300 880 160
Start a chat
Schedule a call
