BP Finally Swims Away From Deepwater Horizon With Environment Still Damaged
On April 20, 2010, the oil drilling platform Deepwater Horizon exploded, killing 11 people and dumping nearly 5 million barrels of oil into the Gulf of Mexico. BP PLC (BP), which operated the platform, said the number was overstated. As part of legal settlements over the explosion, BP agreed to pay fines and compensation that reached about $8 billion. Some estimates say that BP's reserves for the claims reached over $40 billion.
BP's long financial nightmare may be close to an end. It said payouts for claims against it are almost over, and that it has set a final amount to close out the matter. Whether this ends the environmental effect of the incident is less clear.
BP management announced:
The Court Supervised Settlement Program (CSSP) established as part of the Deepwater Horizon (DWH) class action settlement is winding down. BP now expects to take a post-tax non-operating charge of around $1.7 billion in its fourth quarter 2017 results for the remaining Business Economic Loss (BEL) and other claims associated with the CSSP. The cash impact is expected to be spread over a multi-year period.
The charge results primarily from significantly higher claims determinations issued by the CSSP in the fourth quarter and the continuing effect of the Fifth Circuit’s adverse May 2017 ruling on the matching of revenues with expenses when evaluating BEL claims.
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Brian Gilvary, BP’s chief financial officer, said: “With the claims facility’s work very nearly done, we now have better visibility into the remaining liability. The charge we are taking as a result is fully manageable within our existing financial framework, especially now that we have the company back into balance at $50 per barrel.”
Eight years after the incident, this portion of the catastrophe is over.
The National Ocean Service of the National Oceanic and Atmospheric Administration (NOAA) says it will take decades to completely clean up the environment that was damaged due to the incident. Its researchers wrote less than a year ago:
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A recent Endangered Species Research special issue summarizes some of the devastating longterm effects of the Deepwater Horizon oil spill on protected marine mammals and sea turtles. The issue compiles 20 scientific studies authored by NOAA scientists and partners covering more than five years' worth of data collection, analysis, and interpretation. The research indicates that populations of several marine mammal and sea turtle species will take decades to rebound. Significant habitat restoration in the region will also be needed.
While it took almost a decade to clean up the financial claims, the problem of the Deepwater Horizon incident is not over.
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