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BP Puts Profits Over Safety, Says US Attorney

By Countercurrents.org

26 February, 2013
Countercurrents.org

A long-awaited trial over the biggest US offshore oil spill began on February 25, 2013, with governments, businesses and individuals blaming BP mostly for the 2010 disaster that killed 11 rig workers and spilled 4 million barrels of oil into the Gulf of Mexico.

"Not only was it within BP's power to prevent the tragedy, it was its responsibility," Mike Underhill, a US Justice Department trial attorney, said at the trial over legal culpability for the blowout and spill.

The trial is being held at federal court in New Orleans.

Lawyers for other plaintiffs also slammed BP executives, as did attorneys for two of the well owner's co-defendants, rig owner Transocean Ltd and cement services provider Halliburton Co. BP lawyer Mike Brock said the blame was shared by all three companies.

Underhill said that less than an hour before BP's long-troublesome Macondo well ruptured and caused an explosion, BP's top well site leader on the rig called an engineer in Houston to discuss a critical pressure test that indicated problems.

Company officials did not stop the operation and "11 souls had 47 minutes to live the rest of their lives," Underhill said.

Underhill said the accident could have been avoided if onshore engineer Mark Hafle and well site leader Don Vidrine on the rig had done their jobs. Vidrine faces separate criminal charges in the disaster, as does Robert Kaluza, the other highest-ranking supervisor aboard the rig before the disaster.

Jim Roy, an attorney for other plaintiffs suing BP, Transocean, Halliburton and others, said BP executives at the highest level felt pressure to push output to the limit.

"Production over protection. Profits over safety," said Roy, who represents plaintiffs who did not take part in an $8.5 billion settlement BP struck last year.

Roy also said Transocean opened the door to disaster with poor staff training and poor maintenance of seabed equipment, while Halliburton made substandard cement to plug the well.

Transocean's lawyer, Brad Brian, came out swinging against BP, saying rig workers trusted the company and died betrayed.

Brian noted BP employees had referred to Macondo as a "well from Hell" in emails, and the inaction following Vidrine and Hafle's 8-minute phone call showed they did what BP had done for two months in the face of a risky well: "They did nothing."

Halliburton's lawyer, Don Godwin, made similar arguments about BP but also said Transocean's rig crew should have shut in the well at the first sign of trouble. "Now is when they want to pass the buck and blame my client for their misdeeds," he said.

And David Beck, the lawyer for Cameron International, maker of the blowout preventer atop the well, said the structure works in tandem with other efforts to prevent disaster.
"It's a blowout preventer. It is not a blowout stopper," Beck said.

Louisiana continues to suffer from the oil spill, state Attorney General Buddy Caldwell said, with hundreds of miles of coastline still being polluted "less than 30 miles from the door of this courthouse."

Any punitive damages would come on top of billions in potential fines under the Clean Water Act. The payout by BP so far included a record $4.5 billion in penalties, and a guilty plea to 14 criminal counts to resolve charges from the Justice Department and civil claims from U.S. securities regulators.

BP has sold assets to help cover its spill-related costs, including its older, smaller Gulf of Mexico operations.

A BBC report [2] said:

BP has been accused of putting profits before safety on the first day of a trial.
The accusation came from the lawyer acting for the plaintiffs' steering committee, which represents thousands of businesses and individuals.

He told US District Judge, Carl Barbier, that BP executives were most focused on cost-cutting.
The trial could result in the biggest civil fine in history of up to $17.6bn.

Jim Roy attacked the rig's operator, Transocean, saying the company's safety official on the rig had had little training: "His training consisted of a three-day course. Amazingly, he had never been aboard the Deepwater Horizon."

He did not spare contractor Halliburton, either, saying it deserved some of the blame for providing BP with cementing of the Macondo well that was "poorly designed, not properly tested and was unstable".

The non-jury trial will unfold in two phases.
The first, which opened on Monday, will focus on the cause of the 20 April 2010 explosion that killed 11 men and released an estimated 4 million barrels of oil into the Gulf over 84 days.

The trial could last for months, but the risks are so great for BP that it may try to reach a settlement, analysts suggest.

"If they are found grossly negligent it will set the tone on the level of fines BP will have to pay, and the financial consequences will be huge," said Nick McGregor, an oil analyst at Redmayne Bentley stockbrokers.

"So while BP's posturing in public is robust, I wouldn't be surprised if they are aggressively trying to reach for a settlement behind the scenes," he added.

Robert Percival, an environmental law professor at the University of Maryland, said: "The risk for both sides is so great - for BP it's their name, reputation and future contracts with the US government. For the US government it's all the resources they're spending on the trial - particularly if BP is not found grossly negligent."

Under the Clean Water Act, the fines are calculated as $1,100 for every barrel of oil spilt through ordinary negligence to as much as $4,300 a barrel through gross negligence.

The Department of Justice intends to demonstrate BP was grossly negligent, which puts the maximum penalty at about $17.6bn.

Last Wednesday, BP won a ruling that 810,000 barrels of oil captured would not be counted in Feb 25th’s civil case, which reduced the potential fine under the Clean Water Act by $3.4bn.
The minimum fine is now about $4.5bn - if BP is charged of simple negligence.

However, on top of that, the Gulf states of Louisiana, Alabama, Mississippi and Florida are demanding an additional $34bn in damages under the Oil Pollution Act, citing uncertainty over the long-term effects of the spill on their coastline as well as economic losses and property damage.

Once the world's second-biggest oil company, BP has fallen to fourth place among the "oil majors" after selling off billions of dollars worth of assets to set aside money to cover liabilities related to the disaster.

In spite of the looming costs, BP still eked out a profit in the fourth quarter from a year earlier.

And so far BP has done an effective job of restoring its credibility through PR campaigns and providing compensation, analysts said.

BP has only been suspended from getting contracts from the Environmental Protection Agency but not the US government, which surprised many lawyers, said Mr Percival.

"Many feel this [suspension] is temporary, and as oil is so fungible there will always be a market for BP," he said.

Another report [3] said:

"BP can hire all the smiling faces they can find for their commercials, but in court it's a game-changer," Garret Graves, the chairman of the Coastal Protection and Restoration Authority of the state of Louisiana. "First of all, they will have to start telling the truth," he said. "Second, let's just say that's not going to go over so well for BP. Even BP's money can't buy revisionist history."

Source:

[1] Feb 25, 2013, “UPDATE 5-BP, contractors start trial for worst US offshore spill”,
http://uk.reuters.com/article/2013/02/26/bp-trial-idUKL1N0BPD2A20130226?feedType=RSS&feedName=rbssEnergyNews

[2] BBC, Feb 25, 2013, “BP spill trial told it 'put profits over safety'”,
http://www.bbc.co.uk/news/business-21548117

[3] The Standard, Feb 25, 2013, “BP and Gulf states set for trial over oil spill”,
http://www.standardmedia.co.ke/?articleID=2000078099&story_title=Kenya-BP-and-Gulf-states-set-for-trial-over-oil-spill

 




 

 


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