* Trial concerns a potential near $18 bln in fines for BP
* Plaintiff lawyers argue BP leak estimates unsubstantiated
* BP lawyer says company carefully assessed hazards, options
By Kathy Finn
NEW ORLEANS, Oct 1 (Reuters) - BP Plc unnecessarilydelayed the capping of its Macondo well and worsened the extentof the 2010 Gulf of Mexico oil spill through dithering andindecision, according to allegations by plaintiffs' lawyers onTuesday that the British company denied.
In the second phase of a trial in New Orleans over billionsof dollars in potential fines, lawyers for the plaintiffs - theU.S. government, Gulf states and former contractors Transoceanand Halliburton Co - also sought to show BP's estimatesof the size of the leak were unsubstantiated and caused delaysby complicating efforts to cap the well.
In the costliest scenario, fines under the Clean Water Actcould reach nearly $18 billion - an amount beyond the $42billion BP has set aside for clean-up, compensation and damages.
Witnesses on day two of the trial said they were surprisedwhen BP abandoned one proposed way to plug the well, which wouldhave put a new blowout preventer on top of a similar device.
"It was BP's decision," said Robert Turlak, an engineer fromTransocean Ltd who worked on the well-capping team. "Wewere so close, we'd come a long way ... We had the equipmentready."
It eventually took 87 days to control the well as a seriesof different capping methods were tried. By then, millions ofbarrels of oil had escaped into the sea and fouled coastlines inthe worst offshore spill in U.S. history.
BP lawyer Paul Collier fended off allegations ofindecisiveness, saying the company carefully assessed hazardsand discussed how to mitigate risks associated with numerousplugging options.
Collier said BP's well-capping team had a mantra of "don'tmake things worse" and experts who testified for BP said themethod favored by Turlak was not ready.
At one point after the April 2010 spill, BP touted thechances of stopping the leak with a so-called top kill thatpumped heavyweight drilling mud into the well. But that did notwork - frustrating U.S. officials at the time.
"I believed the words (BP Senior Vice President) Kent Wellsused, that this is a slam dunk," former U.S. Energy SecretarySteven Chu said in a videotaped deposition played in court onMonday about the top kill. After that, "we began to be much morecritical about what BP planned to do," Chu said.
Eventually, a "capping stack" that took weeks to build wasused to shut the well. Capping stacks have since become crucialpieces of equipment standing by for emergencies in the Gulf.
BP has insisted its response after the blowout that killed11 men was fully consistent with U.S. standards and that itnever misrepresented the amount of oil spewing from the well.
James Dupre, who was in charge of BP's well control effortsat the time, said the company consulted with experts across theoil industry on how to best cap the well. He said options were evaluated simultaneously, not one after another, so as not todelay decision-making.
SIZE OF SPILL IN FOCUS
The first phase of the trial, which wrapped up in April,looked at dividing blame among BP and its contractors;Transocean owned the drilling rig and Halliburton did cementwork on the well.
The second phase of the trial in U.S. District Court in NewOrleans, expected to last a month, covers how much oil spewedfrom the well and whether efforts to stop it were adequate.
Internal company emails presented at the trial on Mondayshowed BP saying publicly after the spill that 5,000 barrels ofoil a day were leaking into the ocean when it knew up to 100,000barrels a day could have been leaking.
The U.S. government says 4.9 million barrels were spilled,while BP says 3.26 million barrels leaked. Both those totalsinclude 810,000 barrels that were collected during clean-up thatthe judge has agreed to exclude.
BP shares have lost a third of their value since thedisaster, partly because of uncertainty over future fines.
The company has shed about $39 billion in assets to covermost of its provisions, but damages could rise.
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 estimate less oil recovered - the priceof negligence could reach $4.5 billion. Gross negligence couldrun to $17.6 billion.
Moody's Investors Service said on Tuesday that BP's creditratings could tolerate a moderate penalty under the Clean WaterAct but warned that "a severe penalty resulting from a findingof gross negligence could change the equation."
Moody's also said there is uncertainty over what BP's finalbill will be from a settlement agreement reached last year withthe Plaintiffs' Steering Committee (PSC) - an uncapped systemfunded by BP that pays out money to tens of thousands of peopleand business affected by the spill.
The cost of that deal was estimated at $7.8 billion but BPhas revised it upwards to $9.6 billion and has complained thatthe settlement administrator is paying out far more generouslythan he was meant to in compensating the likes of fishermen,hoteliers and others making a living along the Gulf coast.
BP has filed numerous challenges to the settlement toBarbier and a higher court - so far without success.
It has also sued the U.S. Environmental Protection Agencyfor being banned from bidding for new federal fuel contracts ornew Gulf of Mexico drilling licences. Despite the Macondo spill,BP is still the biggest single holder of licences in the Gulf.
Environmentalists have criticized the flurry of filings bythe company and newspaper adverts it has run complaining aboutthe high costs of the settlement agreement, along withtelevision commercials BP has run urging tourists to return tothe Gulf coast for fishing and birdwatching.
Judge Carl Barbier has said he will not assign penalties forBP until the third phase of the trial, expected early next year.
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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