BP reaches deal with DOJ over Macondo well blowout in gulf

BP PLC on Nov. 15 announced resolution of criminal and securities claims by the US government against the supermajor related to the April 2010 deepwater Macondo well blowout, which resulted in a massive spill off Louisiana in the Gulf of Mexico.

Subject to approval by a US federal court, the resolution involves a series of payments that total $4.5 billion over 6 years. BP and the US Department of Justice negotiated the agreement, which includes $1.256 billion in criminal fines. BP also agreed to 5 years’ probation.

The blowout caused an explosion and fire, killing 11 crew members on the Deepwater Horizon semisubmersible drilling rig, owned by drilling contractor Transocean Ltd.

The semi later sank. The deepwater Macondo well, now sealed, was drilled on Mississippi Canyon Block 252. Recently, BP capped and plugged an abandoned piece of subsea equipment known as a cofferdam that was believed to be the source of an oil sheen (OGJ online, Nov. 5, 2012).

BP’s agreement with DOJ stipulates the appointment of two monitors, both with terms of 4 years. A process safety monitor will review, evaluate, and provide recommendations to improve BP’s process safety and risk management procedures concerning deepwater drilling in the gulf.

An ethics monitor will review and provide recommendations for the improvement of BP’s code of conduct and its implementation and enforcement.

BP responds

BP noted it is prepared to “vigorously defend” itself against remaining civil claims. The resolution announced Nov. 15 is expected to add $3.85 billion to the $38.1 billion charge taken against BP’s income as of Sept. 30.

BP’s financial statements as of Dec. 31 will reflect the additional charge, as well as any other adjustments arising during the fourth quarter. BP said it anticipates the cash outflows can be met within its current financial framework.

“All of us at BP deeply regret the tragic loss of life caused by the Deepwater Horizon accident as well as the impact of the spill on the Gulf coast region,” said Bob Dudley, BP’s Group chief executive. “From the outset, we stepped up by responding to the spill, paying legitimate claims, and funding restoration efforts in the gulf.”

Remaining claims involve federal civil claims, including those arising under the Clean Water Act, federal and state Natural Resource Damages claims, some private civil claims and private securities claims, some state economic loss claims, and miscellaneous private civil claims pending in other federal and state courts.

“BP believes that today’s agreement is consistent with its legal position that it was not grossly negligent. All the pleas related to the accident itself are based on no more than negligent conduct.”

As of Nov. 15, BP had spent more than $14 billion in operational response and clean-up costs.

BP to pay SEC

Regarding Macondo-related claims from the US Securities and Exchange Commission, BP agreed to a civil penalty of $525 million, payable in three installments over 3 years, and consented to an injunction prohibiting it from violating certain securities laws and regulations.

SEC’s claims are premised on oil flow rate estimates contained in three reports provided by BP to SEC on Apr. 29-30, 2010, and May 4, 2010.

BP agreed to plead guilty to 11 felony counts of misconduct or neglect of ships officers relating to the loss of 11 lives, one misdemeanor count under the Clean Water Act, one misdemeanor count under the Migratory Bird Treaty Act, and one felony count of obstruction of Congress.

Thirteen of the 14 criminal charges pertain to the accident itself and are based on the negligent misinterpretation of the negative pressure test conducted on board the Deepwater Horizon. BP acknowledged this misinterpretation more than 2 years ago when it released its internal investigation report.

“Today’s agreement is consistent with BP’s position in the ongoing civil litigation that this was an accident resulting from multiple causes, involving multiple parties, as found by other official investigations,” BP said.

The remaining criminal count pertains to two BP communications made to a member of Congress during the spill response about flow rate estimates.

BP agreed to pay $2.4 billion to the National Fish & Wildlife Foundation over 5 years. In addition, BP will pay $350 million will be paid to the National Academy of Sciences over 5 years.

Terms of the plea agreement call for BP to take additional actions, enforceable by the court, to further enhance drilling safety in the gulf. These requirements relate to BP’s risk management processes, such as third-party auditing and verification, training, and well-control equipment and processes.

BP also agreed to several initiatives with academia and regulators to develop new technologies related to deepwater drilling safety.

Companies convicted of certain criminal acts can be debarred from contracting with US government agencies. BP said it has not been advised of the intention of any federal agency to suspend or debar the company in connection with this plea agreement.

BP will continue to work cooperatively with the debarment authority, the company said.

Contact Paula Dittrick at paulad@ogjonline.com.

Related Articles

PHMSA proposes pipeline accident notification regulations

07/02/2015 The US Pipeline and Hazardous Materials Safety Administration has proposed new federal oil and gas pipeline accident and notification regulations. ...

BHI: US oil rig count rises for first time in 30 weeks

07/02/2015 A sudden 12-unit jump in oil-directed rigs during the abbreviated week ended July 2 represented their first rise since Dec. 5, 2014, and helped lif...

FourPoint Energy to acquire Anadarko basin assets from Chesapeake

07/02/2015 FourPoint Energy LLC, a privately owned Denver company, plans to acquire oil and gas assets from Chesapeake Energy Corp. subsidiaries Chesapeake Ex...

Puma Energy completes purchase of Murco’s UK refinery, terminals

07/02/2015 Singapore-based Puma Energy Group Pte. has completed its purchase of UK midstream and downstream assets from Murco Petroleum Ltd., a subsidiary of ...

BP to settle federal, state Deepwater Horizon claims for $18.7 billion

07/02/2015 BP Exploration & Production Inc. has agreed in principle to settle all federal and state claims arising from the 2010 Deepwater Horizon inciden...

MARKET WATCH: NYMEX oil prices plummet on crude inventory build, Iran deadline extension

07/02/2015 Oil prices plummeted more than $2/bbl July 1 to settle at a 2-month low on the New York market after a weekly government report showed the first ri...

API to issue recommended practice to address pipeline safety

07/01/2015 The American Petroleum Institute expects to issue a new recommended practice in another few weeks that addresses pipeline safety issues, but the tr...

Shell Midstream Partners takes interest in Poseidon oil pipeline

07/01/2015 Shell Midstream Partners LP has completed its acquisition of 36% equity interest in Poseidon Oil Pipeline Co. LLC from Equilon Enterprises LLC, a s...

Shell makes FID on Appomattox deepwater development in Gulf of Mexico

07/01/2015 Royal Dutch Shell PLC has taken a final investment decision (FID) on the Appomattox deepwater development, authorizing construction and installatio...
White Papers

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by
Available Webcasts


OGJ's Midyear Forecast 2015

When Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

When Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST



On Demand

Cognitive Solutions for Upstream Oil and Gas

Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected