BP spars with U.S. government over size of Gulf of Mexico spill

Reuters

By Kathy Finn

NEW ORLEANS, Oct 7 (Reuters) - Lawyers for BP Plc andthe federal government sparred on Monday over the methodscompeting teams of scientists used to estimate the size of thecompany's 2010 oil spill in the U.S. Gulf of Mexico.

U.S. District Judge Carl Barbier will use evidence presentedduring the next 12 days of trial to determine the total amountof oil that gushed into the Gulf for 87 days after the Macondowell blew out. Potential fines under the Clean Water Act couldtop $17 billion, an amount close to BP's annualized profits asof last quarter.

The disaster left 11 men dead and huge stretches of sea andcoast fouled with oil.

The government told the court that some 4.9 million barrelsspilled. BP has estimated just 3.26 million barrels escaped intothe sea. Both sides acknowledged that 810,000 barrels of oilcollected in cleanup will be excluded from the final amount.

Arriving at a consensus estimate is difficult as Macondo wasan exploration well, unlike a production well that wouldnormally have highly accurate gauges measuring flow rates foroil.

The government believes oil flowed from the well at a rateof about 62,000 barrels a day shortly after the explosion and"waned down to 53,000 toward the end," a Justice Departmentlawyer said in court.

In his opening statement for the government, attorney SteveO'Rourke likened the spill to an Exxon Valdez-type spilloccurring about every 4.5 days for the duration of the spill.

The Valdez tanker is widely regarded as having carried260,000 barrels during a mishap in 1989 in Alaska.

O'Rourke contended that BP's estimates for the Gulf ofMexico spill varied widely and the company was emphasizing thelower end of those ranges.

They "told their shareholders that the flow was about 4million barrels," O'Rourke said. "Today they're going to say itwas 2.4 to 3.6 million."

BP lawyer Mike Brock took issue with government scientists'methods for calculating the spill, saying they had a wide rangeof error and that they rushed to come up with an estimate in thedays after the spill to appease the public.

Brock also said government scientists relied too heavily onhydraulics calculations that require detailed information aboutdaily changes in the well.

"The government cannot account for all those changes," Brocksaid.

He said a flaw in the government's calculations was that itsexperts assumed the Macondo well could tap the entire underlyingreservoir of oil. BP's petroleum engineering experts, on theother hand, estimated that the well actually had access to aslittle as 10 percent of the reservoir, Brock said.

Brock also showed excerpts from a June 2013 video depositiongiven by one of the government's expert witnesses, Dr. RonaldDykhuizen, in which he discussed his own earlier estimate thatthe oil spilled ranged from 3.5 million barrels to 6.5 millionbarrels and that the best estimate was 5 million barrels.

FINES NEXT YEAR

This second phase of the trial, expected to last three moreweeks, covers how much oil spewed from the well.

In the costliest scenario, the fines under the Clean WaterAct push provisions BP has made well beyond the $42 billion setaside thus far for clean-up, compensation and damages.

The company has shed about $39 billion in assets to covermost of its provisions.

The first phase of the trial, which wrapped up in April,looked at dividing blame among BP and its contractors;Transocean Ltd, which owned the drilling rig, andHalliburton Co, which did cement work on the well.

Penalties are not expected to be assigned until early nextyear after the trial's third phase.

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

If the court judged the spill to have been 4.09 millionbarrels - the government's estimate less oil recovered - thepenalty for negligence could reach $4.5 billion. The penalty forgross negligence could run to $17.6 billion.

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

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