November 16, 2012

For BP, largest fine in U.S. history

In addition to the $4 billion fine, two BP supervisors face manslaughter charges in the 2010 oil disaster.

By BETTINA BOXALL and RONALD D. WHITE Los Angeles Times

(Continued from page 1)

Deepwater Horizon
click image to enlarge

Fire boats battle the blazing remnants of the Deepwater Horizon on April 21, 2010, a day after the blowout that resulted in an historic oil spill that gushed for 87 days.

The Associated Press

FINANCIAL FALLOUT OF OIL SPILL IS FAR FROM OVER FOR BP

BP's $4.5 billion settlement of federal criminal charges announced Thursday is a record amount, and a significant sum.

Or, looked at another way, it's less than the $5.5 billion in profit the British oil giant made between June and September of this year.

BP is not fully past the Deepwater Horizon disaster, the 2010 explosion that killed 11 workers and led to the largest oil spill in U.S. history. The company has so far set aside $42 billion to pay fines and damages resulting from the spill, and that amount may grow.

But the company is steadily resolving the spill's legal issues and has nearly met its target for asset sales to help pay for the spill's costs. In the process, BP PLC has reshaped itself into a somewhat smaller company - but one that's still a large and profitable force in the oil industry.

"The danger is not over," Christine Tiscareno an analyst at S&P Capital IQ in London. "But they are now a step closer" to moving beyond the disaster.

The biggest obstacle is a trial set for February in New Orleans to determine BP's civil liability. If a court finds that BP was grossly negligent in causing the spill, fines could be billions more than the company has estimated.

For instance, BP has reserved $3.51 billion for possible civil fines under the Clean Water Act. But a bill signed into law in July by President Barack Obama would allow up to $17.6 billion in civil fines - maybe $21 billion depending on definitions of how much oil actually spilled into the Gulf - said environmental attorneys Jordan Diamond and Jay Austin.

Tiscareno thinks the criminal settlement helps BP argue that it was not grossly negligent. "It adds to their chest of ammunition," she said.

-- The Associated Press

Chris Jones, older brother of Gordon Jones, who died in the fiery explosion, was not satisfied with BP's mea culpa.

"The fact that BP is finally admitting that it is responsible is not shocking; the amount of money it is paying in fines is not shocking," said Jones, a litigation attorney in Baton Rouge, La. "What is shocking is that it has been three years since this happened and not once has a representative of BP said to us 'I'm sorry for your loss.' It's par for the course."

"BP is simply going to sign a check for billions of dollars, then continue to do business in U.S. waters and make money for its shareholders," he said. "But Gordon wasn't able to live a day after April, 2010."

British BP can easily absorb the $4.5 billion settlement, analysts said. In the third quarter alone, BP raked in sales of more than $93 billion and had a net profit of more than $5.2 billion. That shows that "BP has made the most remarkable comeback from the most costly industrial accident in history," Fadel Gheit, senior energy analyst at Oppenheimer and Co., said in a note to investors.

In addition, BP has raised $35 billion from asset sales, including a $2.5 billion proposal to sell its Carson, Calif., refinery and other assets.

Some critics said the fine isn't punishment enough.

"This settlement is pathetic," said Tyson Slocum, director of the energy program at Public Citizen, a consumer advocacy group. "The point of the criminal justice system is twofold: to punish and to deter. This does neither.

"It is a weak-tea punishment that provides zero deterrence to BP or other companies."

 

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