Cameron International Corp., which manufactured the blowout preventer used on Transocean Ltd.’s Deepwater Horizon semisubmerisble, agreed to pay a $250 million settlement to BP PLC, and BP agreed to indemnify Cameron for current and future compensatory claims associated with an oil spill.
On Apr. 20, 2010, a blowout of the Macondo well resulted in a fire and explosion that killed 11 workers on the Deepwater Horizon. The semi later sank, and a massive oil spill resulted in the Gulf of Mexico off Louisiana.
As part of the settlement, Cameron and BP agreed to mutually release claims against each other.
“This agreement with BP is the right action, as it removes uncertainty facing Cameron in the litigation associated with the Deepwater Horizon event,” said Jack Moore, Cameron chairman and chief executive officer.
This eliminates all significant exposure to historical and future claims related to this incident,” Moore said. “Though this agreement does not provide indemnification against fines and penalties, punitive damages or certain other potential noncompensatory claims, we do not consider these items to represent a significant risk to Cameron.”
Cameron expects its insurers will pay at least $170 million of this agreement. Cameron expects to take a charge in the fourth quarter for any amounts not covered by insurance.
The National Academy of Engineering and National Research Council said in their final report on the 2010 Macondo deepwater well accident that both the industry and its regulators had misplaced confidence in the ability of BOPs to act as fail-safe mechanisms in the event of a blowout despite numerous past warnings of BOP systems potentially failing (OGJ Online, Dec. 15, 2011).