BP to pay US$4.5b fine over Gulf spill

20:43, Nov 15 2012
Help written on beach
OIL SPILL: The word Help is written in the sand on the beach at Gulf Shores, Alabama as workers battle to stop thousands of gallons of oil from a spill from hitting beaches.
Gulf oil spill
OIL SPILL: Workers gather stormwater runoff and decayed organic matter on the beach in Gulfport, Mississippi.
Gulf oil spill
GULF OIL SLICK: The crew of a Basler BT-67 fixed wing aircraft release oil dispersant over an oil discharge from the mobile offshore drilling unit, Deepwater Horizon, off the shore of Louisiana.
Gulf oil spill
OIL SLICK: A band of oil from the BP oil spill off the coast of Louisiana floats in the water near Freemason Island.
Deepwater Horizon Gulf oil spill
An oil soaked bird struggles against the side of the HOS an Iron Horse supply vessel at the site of the Deepwater Horizon oil spill.
Oil spill
OIL SPILL: Oil is seen on the surface of the Gulf of Mexico in an aerial view of the Deepwater Horizon oil spill off the coast of Mobile, Alabama.
Oil from the Gulf
OIL SLICK: A man holds a plastic bag with oil from the Gulf of Mexico oil spill south of Freemason Island, Louisiana.
Protesters
OIL SPILL: Demonstrators hold placards during a rally in New Orleans to demand the cleaning of coasts as oil leaking from the Deepwater Horizon wellhead continues to spread in the Gulf of Mexico.
Protective wall
OIL SPILL: A wall constructed to protect the northern shore of Dauphin Island, from the Gulf of Mexico oil spill is shown in this aerial photograph.
Oil in waves
OIL SLICK: Thick black waves of oil and brown whitecaps are seen off the side of the supply vessel Joe Griffin at the site of the Deepwater Horizon oil spill containment efforts.
Oil-stained bird
OIL STAINED: A cattle egret stained by oil rests on the deck of the supply vessel Joe Griffin, at the site of the Deepwater Horizon oil spill in the Gulf of Mexico off the coast of Louisiana.
Oil
Greenpeace senior campaigner Lindsey Allen walks through a patch of oil from the Deepwater Horizon on the breakwater in the mouth of the Mississippi River.
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Dispersed oil caught in the wake of a transport boat floats on the Gulf of Mexico, approximately 15 miles northwest of site of the BP oil spill.
Oil3
Dispersed oil floats on the surface of the Gulf of Mexico waters close to the site of the BP oil spill.
Oil4
Oil drips from the rubber gloves of Greenpeace Marine Biologist Paul Horsman.
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Gas from the damaged Deepwater Horizon wellhead is burned by the drillship Discoverer Enterprise.
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Greenpeace marine biologist Paul Horsman surveys oil pooled between reeds and brush.
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Veterinarians working for US Fish and Wildlife Services bathe a brown pelican at Fort Jackson Wildlife Rehabilitation Center.
Oil spill
OIL SPILL: A worker shovels oil from the Deepwater Horizon oil spill off Fourchon Beach in Port Fourchon.
Oil spill
GULF OIL SPILL: Oil fouls the water near nesting pelicans on an island in Barataria Bay just off the the coast of Louisiana.
Pelican covered in oil
PELICAN COVERED IN OIL: An oiled bird on an island in Barataria Bay just off the the coast of Louisiana.
Oil spill
CONTAMINATION: CNN reporter Anderson Cooper lays down on the bow of an air boat to take a picture as Governor Bobby Jindal, right, removes a fishing net from the oil contaminated water in Pass A Loutre near Venice, Louisiana.
Oil spill
OIL SLICK: Workers clean up oil from the Deepwater Horizon oil spill in Pass a Loutre, Louisiana.
Oil spill in perspective
From a www.beowulfe.com program using Google maps to provide local perspective on the impact of the Gulf oil spill.
BP oil spill
A Nasa satellite image of the Gulf of Mexico shows the extent of the oil released from the Deepwater Horizon spill.
BP oil spill
BP CEO Hayward takes a first hand look at the recovery operations aboard the Discover Enterprise drill ship in the Gulf of Mexico.
BP oil spill
US President Obama walks along the Louisiana coastline while touring damage caused by oil spill.
Oiled pelican
SPILL VICTIM: A brown pelican covered in oil sits on the beach at East Grand Terre Island along the Louisiana coast.
Oiled bird
OILED: A bird is mired in oil on the beach at East Grand Terre Island along the Louisiana coast.
Pelican
GULF PELICAN: A brown pelican is seen on the beach at East Grand Terre Island along the Louisiana coast. Oil from the Deepwater Horizon has affected wildlife throughout the Gulf of Mexico.
Oil bird
A Pelican sits on the beach covered in oil at East Grand Terre Island along the Louisiana coast.
Pelicans
SPILL VICTIMS: Brown Pelicans, covered in oil from BP's Gulf of Mexico oil spill, huddle together in a cage at the International Bird Rescue Research Centre in Buras, Louisiana.
Pelican sits in oil
OIL VICTIM: An exhausted oil-covered brown pelican sits in a pool of oil along Queen Bess Island Pelican Rookery, 4.8km northeast of Grand Isle, Louisiana.
Gulf oil spill
UNDERWATER VANTAGE: patches of oil from the Deepwater Horizon spill are seen from underwater.
Gulf spill
UNDERWATER OIL: Patches of oil from the Deepwater Horizon spill are seen from an underwater vantage.
Gulf spill
OIL SPILL: Patches of oil from the Deepwater Horizon spill are seen from an underwater vantage.
Journalist Rich Matthews
UNDER THE SEA: AP journalist Rich Matthews takes a closer look at oil from the Deepwater Horizon spill, in the Gulf of Mexico.
Oil
OIL EVERYWHERE: Rich Matthews takes a closer look at oil from the Deepwater Horizon spill.
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EFFECTS: Marine reef ecologist Scott Porter holds barnacle samples he removed from an oil rig in waters in the Gulf of Mexico. Porter plans to determine the effect of oil from the Deepwater Horizon spill.
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Marine reef ecologist Scott Porter works to remove oil from the Deepwater Horizon spill off his hands.
Oil in bottles
GULF SPILL: Oil-tainted water from the Gulf of Mexico sits in jars placed before a group of business people and officials called Gulf Voices as they speak of their plight during a visit to Capitol Hill in Washington.
Oil spill
GULF SPILL: Crude oil from the Deepwater Horizon oil spill washes ashore in Orange Beach, Alabama.
Oil spill
GULF SPILL: Gas and oil continue to leak at the Deepwater Horizon oil spill site in the Gulf of Mexico, in this image captured from a BP live video feed.
Gulf oil spill
OIL SPILL: The Taiwanese skimmer dubbed "A Whale", left, conducts a test of its oil skimming capabilities in the Gulf of Mexico as part of the Deepwater Horizon oil spill response.
Young heron
YOUNG HERON: Young herons impacted by oil from the Deepwater Horizon oil spill are seen at the Fort Jackson Wildlife Rehabilitation Centre.
BP STICKS AT IT: Work continues at the site of the BP oil well leak in the Gulf of Mexico.
BP STICKS AT IT: Work continues at the site of the BP oil well leak in the Gulf of Mexico.
oiled heron
OIL VICTIM: A seriously oiled tri-coloured heron is spotted on Queen Bess Island near Grand Isle, Louisiana.

BP will pay US$4.5 billion (NZ$5.5b) in penalties and plead guilty to felony misconduct in the Deepwater Horizon disaster that caused the worst offshore oil spill in the country's history, the company says.

The settlement includes a US$1.256b criminal fine, the largest such levy in US history, the company said.

A settlement with the US Securities and Exchange Commission is also part of the deal, as are payments to the National Fish & Wildlife Foundation and the National Academy of Sciences.

The April, 2010 explosion on the Deepwater Horizon rig in the Gulf of Mexico killed 11 workers.

The mile-deep Macondo oil well then spewed 4.9 million barrels of oil into the Gulf over 87 days, fouling shorelines from Texas to Florida and eclipsing in severity the 1989 Exxon Valdez spill in Alaska.

The oil company said it would plead guilty to 11 felony counts related to the workers' deaths, a felony related to obstruction of Congress and two misdemeanours.

BP, which replaced its chief executive after the spill as its market value plummeted, still faces economic and environmental damage claims sought by four Gulf Coast states and other private plaintiffs.

BP has been negotiating for months with the US government and Gulf Coast states to settle billions of dollars of potential civil and criminal liability claims.

BP's US shares were up about 1.3 per cent overnight while its London-traded shares were 0.3 per cent higher.

Wall Street analysts were encouraged that the plea deal could resolve a significant share of the liability BP faces. But it is not a "global" deal to resolve all outstanding civil and criminal liability with the US government and Gulf Coast states.

"It certainly is an encouraging step," said Pavel Molchanov, oil company analyst with Raymond James.

"By eliminating the overhang of the criminal litigation, it is another step in clearing up BP's legal framework as it relates to Macondo."

POTENTIAL LIABILITY

BP has sold over US$30b worth of assets to fund the costs of the spill. Matching that, it has already spent about US$14b on clean-up costs and paid out, or agreed to pay out, a further US$16b on compensation and claims.

The disaster has dragged it from second to a distant fourth in the ranking of top western world oil companies by value.

In an August filing, the Justice Department said "reckless management" of the Macondo well "constituted gross negligence and wilful misconduct" which it intended to prove at a civil trial set to begin in New Orleans in February 2013.

Negligence is a central issue to BP's potential liability. A gross negligence finding could nearly quadruple the civil damages owed by BP under the Clean Water Act to US$21b in a straight-line calculation.

Still unresolved is potential liability faced by Swiss-based Transocean Ltd, owner of the Deepwater Horizon vessel, and Halliburton, which provided cementing work on the well that US investigators say was flawed. Both companies were not immediately available for comment.

According to the US Justice Department, errors made by BP and Transocean in deciphering a pressure test of the Macondo well are a clear indication of gross negligence.

"That such a simple, yet fundamental and safety-critical test could have been so stunningly, blindingly botched in so many ways, by so many people, demonstrates gross negligence," the government said in its August filing.

Transocean disclosed in September that it is in discussions with the Justice Department to pay US$1.5b to resolve civil and criminal claims.

BP has already announced an uncapped class-action settlement with private plaintiffs that the company estimates will cost US$7.8b to resolve litigation brought by over 100,000 individuals and businesses claiming economic and medical damages from the spill.

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Reuters