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    Home / News / World News / Court approves BP's $20 billion oil spill settlement
    Court approves BP's $20 billion oil spill settlement
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    World 3 min read

    Court approves BP's $20 billion oil spill settlement

    By Gaurav Jeyaraman
    Apr 05, 2016
    04:56 pm
    Court approves BP's $20 billion oil spill settlement

    A federal judge in New Orleans granted final approval to an estimated $20 billion settlement over the 2010 BP oil spill in the Gulf of Mexico. U.S. District Judge Carl Barbier, who approved the settlement had earlier stated that BP had been "grossly negligent" in the offshore rig explosion. In a statement, BP said it was pleased that the court approved "the historic settlement."

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    What had happened?

    The Deepwater Horizon oil spill began on 20 April 2010 on the Deepwater Horizon oil rig in the Gulf of Mexico on the BP-operated Macondo Prospect block. An explosion led to the sinking of the rig, rupturing the oil pipelines that bring the oil to the surface. Approximately, 4.9 million barrels of oil and chemicals leaked into the Gulf of Mexico over 87 days.

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    The Deepwater Horizon rig

    The Deepwater Horizon was a 9-year-old semi-submersible, mobile, floating drilling rig that could operate in waters up to 3,000m deep. Built by South Korean company Hyundai Heavy Industries and owned by Transocean, the rig was chartered to BP by Haliburton from 2008-2013. It was drilling an exploratory well, 5,600m below sea level when a methane leak caused an explosion, sinking the rig.

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    11 workers missing

    At the time of the explosion, 126 crew members were on board: seven BP employees, 79 of Transocean, and employees of various other companies. Eleven missing workers were never found despite a three-day search by the US coast guard.

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    Investigations into the incident

    The Deepwater Horizon investigation included several individual investigations and independent commissions set up by state governments, the US Coast Guard and individuals who suffered losses due to the incident. The National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling and the Government Accountability Office also conducted investigations. BP also initiated its own internal investigation into the incident.

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    Worst environmental disaster in US history

    The spill area hosted 8,332 species, including more than 1,270 fish, 604 polychaetes, 218 birds, 1,456 mollusks, 1,503 crustaceans, 4 sea turtles and 29 marine mammals. Thousands of animals died as a result, and livelihoods of fishermen in Louisiana and Alabama were severely affected.

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    What were the outcomes of these investigations

    All the investigations led to the conclusion that negligence on BP's part led to the incident, and held BP responsible for all consequences. Individuals who claimed damages were awarded $3 billion in total by BP. BP's internal investigation acknowledged its shortcomings but also blamed Haliburton and Transocean for mismanagement. Both companies denied the accusations and placed the blame solely on BP.

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    BP agrees to pay $20 billion in damages

    In July 2015, the US Department of Justice and BP announced an agreement for $18.7bn. In October, BP agreed to a DoJ quote of a $20 billion dollar settlement. The new figure included other private settlements that BP has pledged. The money would be used by the affected states to handle environmental and economic damages. Court approval was required to formalize the proposed settlement.

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    Details of the settlement

    The settlement includes $5.5 billion in civil Clean Water Act penalties and billions more to cover environmental damage and other claims by the five coastal states and local governments. The money is to be paid out over 16 years. The U.S. Justice Department has estimated that the settlement will cost BP as much as $20.8 billion, the largest in US history.

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