Wednesday, December 15, 2010

BP, Transocean Face Fines Up To $21.1 Billion In Federal Suit

New Orleans – The Justice Department filed suit against British Petroleum and rig owner Transocean Deepwater Drilling to recover massive damages from the largest oil spill in history.

Under the provisions of the Clean Water Act, the oil company, the rig owner and minority owners such as Anadarko Petroleum, MOEX Offshore 2007, Triton Asset Leasing GMBH and Transocean's insurer QBE Underwriting Ltd./Lloyd's Syndicate 1036 could face penalties of up to $1,100 per barrel - $4,300 per barrel if the government is able to prove gross negligence or willful misconduct.

The defendants could wind up paying anywhere from $5.4 billion to $21.1 billion in fines for spilling an estimated 206 million gallons after “Deepwater Horizon” blew out and exploded on April 20 of this year, killing 11 workers.

BP has disputed the government's estimate of the amount of petroleum spilled into the environment.

In its defense, BP said the filing of the lawsuit is in no way proof of its culpability and that of the multiple defendants named in the federal complaint, British Petroleum is the only one that has offered to pay for cleanup and damages.

Transocean disputed the allegations and insisted it should not be held liable. In a prepared statement, company officials said “No drilling contractor has ever been held liable for discharges from a well under the Oil Pollutioin Act of 1990. The responsibility for hydrocarbons discharged from a well lies solely with its owner and operator.”

The U.S. District Judge to whom the case has been assigned has already consolidated hundreds of plaintiffs claiming damages to property in a single lawsuit against the defendants.

Costs to petroleum producers and consumers are predicted to skyrocket in the future as a result of a moratorium on deepwater drilling following the disaster and delays in processing shallow water permits which are not subject to the moratorium.

The Paris-based International Energy Agency forecast that development of new oil fields in the Gulf of Mexico will be delayed by 12 to 18 months – much longer than originally estimated. The agency had earlier estimated projects will be delayed by 6 to 12 months.

Petroleum production in the year 2015 will be thereby diminished by as much as 300,000 barrels a day, according to the forecast.

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