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BP knew 2010 U.S. Gulf spill was risk, lawyers tell trial

Preparations to drill a relief well continue at the Macondo oil spill site in the Gulf of Mexico, in this aerial photograph taken from a coa
Preparations to drill a relief well continue at the Macondo oil spill site in the Gulf of Mexico, in this aerial photograph taken from a coa

By Kathy Finn

NEW ORLEANS (Reuters) - Long before the oil spill in the Gulf of Mexico in 2010, BP knew its Macondo well could explode and then lied about how much oil leaked, plaintiffs' lawyers said at the opening of the second phase of the company's trial on Monday.

The British oil major is fighting to hold down fines that could hit $18 billion at the trial in New Orleans, which will determine responsibilities for the worst marine pollution disaster in the United States.

"BP refused to spend any time or money preparing to stop a deepwater blowout at its source," said Brian Barr, a lawyer for the plaintiffs, which include people affected by the spill, the U.S. government and Gulf states.

"BP then made the situation worse," Barr said. "By lying about the amount of flow from the well."

In response, a lawyer for BP told the U.S. District Court that the company followed U.S. spill preparation standards.

The second phase of the trial, expected to last a month, is focused on how much oil spewed from the well and whether a series of efforts BP made to cap it over 87 days were adequate.

"BP had a response plan that was fully consistent with U.S. standards for spill preparedness," said a BP lawyer, Mike Brock. "BP did not misrepresent the flow rate in a way that caused a delay in the shut in of the well. It made reasonable decisions based on what was known at each step along the way."

In the costliest scenario the fines under the Clean Water Act could reach $17.6 billion - an amount well beyond the $42 billion BP has so far set aside for clean-up, compensation and damages.

The first phase of the trial, which wrapped up in April, looked at dividing blame among BP and its contractors, Transocean Ltd and Halliburton Co , for the disaster that left 11 men dead and huge stretches of sea and coast fouled with oil.

The U.S. government says 4.9 million barrels were spilled in the worst offshore disaster in U.S. history in April 2010. BP says 3.26 million barrels leaked from the well during the nearly three months it took to cap the blowout at the Deepwater Horizon rig. Both those totals include 810,000 barrels that were collected during clean-up that the judge has agreed to exclude.

Judge Carl Barbier is not expected to assign penalties for BP until early next year in the third phase of the trial.

Under the Clean Water Act, negligence can be punished with a maximum fine of $1,100 for each barrel of oil spilled; a gross negligence verdict carries a potential $4,300 per barrel fine.

If the court judged the spill to have been 4.09 million barrels - the government estimate less oil recovered - the price of negligence could reach $4.5 billion. Gross negligence could run to $17.6 billion.

BP shares have lost a third of their value since the disaster, as the company hived off $39 billion of assets that generated $5 billion a year in cashflow - or about a fifth of its earning power - before 2010.

The case is In re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on April 20, 2010, U.S. District Court, Eastern District of Louisiana, No. 10-md-02179.

(Reporting By Kathy Finn; Writing by Terry Wade; Editing by Grant McCool)

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