Yesterday the U.S. Justice Department filed suit against BP and several other companies involved in the Deepwater Horizon oil spill in the Gulf, accusing them of disregarding safety regulations leading to the explosion, which led to the spill and caused the death of 11 workers.
The other companies are: Anadarko Exploration & Production LP; Anadarko Petroleum Corp.; MOEX Offshore 2007 LLC; Triton Asset Leasing GMBH; Transocean Holdings LLC; Transocean Offshore Deepwater Drilling Inc.; Transocean Deepwater Inc.; and Transocean’s insurer, QBE Underwriting Ltd./Lloyd’s Syndicate 1036. Haliburton was not named but could be added later. Haliburton was the cement contractor for the project and the maker of the valve that failed.
The lawsuit makes it possible for the federal government to seek billions of dollars in penalties for polluting the Gulf of Mexico, beaches and wetlands, and reimbursement for its cleanup costs.
More than 300 lawsuits filed previously by individuals and businesses, and now consolidated in the New Orleans federal court, include claims for financial losses and compensation for the families of 11 workers
The suit asks that the companies be held liable without limitation under the Oil Pollution Act for all removal costs and damages caused by the spill, including damages to natural resources. The lawsuit also seeks civil penalties under the Clean Water Act.
Under the Clean Water Act alone, BP faces fines of up to $1,100 for each barrel of oil spilled. If BP were found to have committed gross negligence or willful misconduct, the fine could be up to $4,300 per barrel.
Based on the government’s estimate of 206 million gallons released by the well, BP could face civil fines of between $5.4 billion and $21.1 billion. BP disputes the estimate.
Just as the lawsuit is being filed comes the news that more of the newly released WikiLeaks cables show, among other things, that BP had a similar blowout following a gas leak in Azerbaijan just 18 months before the blowout in the Gulf Of Mexico.
The Guardian, one of five media outlets with early access to the trove of diplomatic communications being gradually released by WikiLeaks, released its report on the latest group of cables, one of which reveals that in 2008 BP suffered a blowout similar to the one that would later cause the Deepwater Horizon disaster:
On the Azerbaijan gas leak, a cable reports for the first time that BP suffered a blowout in September 2008, as it did in the Gulf with devastating consequences in April, as well as the gas leak that the firm acknowledged at the time.
Written a few weeks after the incident, the cable said Bill Schrader, BP’s then head of Azerbaijan, admitted it was possible the company “would never know” the cause although it “is continuing to methodically investigate possible theories”.
According to another cable, in January 2009 BP thought that a “bad cement job” was to blame for the gas leak in Azerbaijan. More recently, BP’s former chief executive Tony Hayward also partly blamed a “bad cement job” by contractor Halliburton for the Deepwater Horizon disaster in the Gulf of Mexico.
The Guardian also reported that other leaked cables revealed:
- Azerbaijan’s president accused BP of stealing $10 billion worth of oil from his country and using “mild blackmail” to secure rights to develop gas reserves in the Caspian Sea region.
- American energy firm Chevron was talking to Iran about developing an Iraq-Iran cross-border oilfield, despite U.S. sanctions.
Coming on the heels of the release of the cables and the lawsuit is yet more bad news for BP:
BP Plc fell the most in almost four months in London trading after the Obama administration filed a suit saying the company and four others violated environmental laws in the largest U.S. oil spill.
The shares dropped as much as 3.2 percent, the most since Aug. 24, and were down 7.2 pence, or 1.5 percent to 469.35 pence as of 3:33 p.m. local time. BP has fallen 28 percent since the April 20 blowout on the Deepwater Horizon rig that killed 11 workers and caused the Macondo well to leak crude into the Gulf of Mexico until July.
I suppose that BP hopes there is some truth to the old expression “bad news comes in threes,” but something tells me three is only the beginning.