BP Sentenced to Pay $4 Billion for Deepwater Horizon Oil Spill Crimes

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BP also admitted that the senior executive withheld documents, provided false and misleading information to the U.S. House of Representatives.

BP Exploration and Production was sentenced today to pay $4 billion in criminal fines and penalties for its  conduct the led to the 2010 Deepwater Horizon oil spill. It was the largest criminal case in U.S. history.

Nevertheless, the penalty remains a small fraction of the actual damage caused by pumping at least 5 billion gallons of crude oil into the Gulf of Mexico. This means that BP is paying less than $1 a gallon for the criminal spill and destruction of the environment.

BP’s guilty plea was accepted, and the sentence was imposed, by U.S. District Judge Sarah S. Vance of the Eastern District of Louisiana.  During the sentencing, Judge Vance claimed, among other things, that the consequential fines imposed under the plea agreement far exceed any imposed in U.S. history, and are structured so that BP will feel the full brunt of the penalties.  She also noted that the agreement provides just punishment and significant deterrence, requiring detailed drilling safeguards, monitors and other stringent, special conditions of probation so that BP’s future conduct will be closely watched.

BP pleaded guilty to 11 counts of felony manslaughter, one count of felony obstruction of Congress and violations of the Clean Water and Migratory Bird Treaty Acts.  In its guilty plea today, BP admitted that, on 20 April 2010, the two highest-ranking BP supervisors onboard the Deepwater Horizon negligently caused the deaths of 11 men and the resulting oil spill.  The company also admitted that on that evening, the two well site leaders observed clear indications that the Macondo well was not secure and that oil and gas were flowing into the well, but chose not to take steps to prevent the blowout.

The Justice Department said it will oversee BP’s compliance with the plea agreement’s terms, including the requirements of full cooperation with the department’s ongoing criminal investigation, implementation of enhanced safety protocols and adherence to the recommendations of two newly installed monitors.  Should BP fail to comply, we will act swiftly and firmly.”

BP admitted during its guilty plea that the company, through a senior executive, obstructed an inquiry by the U.S. Congress into the amount of oil being discharged into the Gulf while the spill was ongoing.  BP also admitted that the senior executive withheld documents, provided false and misleading information in response to the U.S. House of Representatives’ request for flow-rate information, manipulated internal estimates to understate the amount of oil flowing from the well and withheld data that contradicted BP’s public estimate of 5,000 barrels of oil per day.

At the same time that the senior executive was preparing his manipulated estimates, BP admitted, the company’s internal engineering response teams were using sophisticated methods that generated significantly higher estimates. The Flow Rate Technical Group, consisting of government and independent scientists, later concluded that more than 60,000 barrels per day were leaking into the Gulf, contrary to BP’s representations to Congress.

According to the sentence imposed by Judge Vance pursuant to the plea agreement, more than $2 billion dollars will go to the Gulf region.  By order of the court, approximately $2.4 billion of the $4 billion criminal recovery is dedicated to acquiring, restoring, preserving and conserving – in consultation with appropriate state and other resource managers – the marine and coastal environments, ecosystems and bird and wildlife habitat in the Gulf of Mexico and bordering states harmed by the Deepwater Horizon oil spill. An additional $350 million will be used to fund improved oil spill prevention and response efforts in the Gulf through research, development, education and training.

BP was also sentenced to five years of probation – the maximum term of probation permitted under law. The company is also require to retain a process safety and risk management monitor and an independent auditor, who will oversee BP’s process safety, risk management and drilling equipment maintenance with respect to deepwater drilling in the Gulf of Mexico. BP is also required to retain an ethics monitor to improve its code of conduct to ensure BP’s future candor with the U.S. government.

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2 Responses to BP Sentenced to Pay $4 Billion for Deepwater Horizon Oil Spill Crimes

  1. Ken Zino says:

    BP financial results was $4 billion for the fourth quarter, compared to $5.0 billion for the same period in 2011. For the full year, underlying replacement cost profit was $17.6 billion compared to $21.7 billion in 2011.

    Bob Dudley, BP Group Chief Executive, said: “We have moved past many milestones in 2012, repositioning BP through divestments and bringing on new projects. This lays a solid foundation for growth into the long term. Moving through 2013 we will deliver further operational milestones and remain on track for delivery of our ten-point strategic plan, including our target for operating cash flow growth, by 2014.”

    Operating cash flow in the fourth quarter of 2012 was $6.3 billion, and $20.4 billion for the full year compared to $22.2 billion in 2011. At the end of 2012, BP’s net debt was $27.5 billion — down from $31.5 billion at the end of the third quarter — representing a gearing level of 18.7%, within BP’s 10-20% target gearing range.

    BP announced a quarterly dividend of 9c a share, to be paid in March.

  2. AutoCrat says:

    BP civil and criminal legal matters in the U.S. during 2012 have cost it substantial amounts of money. Including the completing payments into a Trust Fund, and settlements with the Plaintiffs’ Steering Committee, as well as a criminal settlement with the US Department of Justice (DOJ) and a settlement of civil claims against BP with the Securities and Exchange Commission (SEC), BP took an additional $4.1 billion charge in the fourth quarter. The total cumulative net charge for the Gulf of Mexico oil spill and Macondo well blowout for BP shareholders at the end of 2012 was $42.2 billion.

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