By Kathryn Maureen Ryan Impunity Watch Managing Editor
Washington D.C., United States ofAmerica – Halliburton, North America’s largest oilfield services provider has reportedly reached a $1.1 billion settlement for the majority of claims related to its role in contributing to the BP (formally British Petroleum) Deepwater Horizon Oil Spill in the Gulf of Mexico in 2010. The settlement, which includes legal fees, was announced on Tuesday and would be paid in three instalments into a trust until appeals are resolved over the next two years. The settlement is subject to approval by the U.S. District Court for the Eastern District of Louisiana, Halliburton said. The company announced the settlement on their website in broad terms without providing any statements form company executives.
The Deepwater Horizon oil spill, also known as the Macondo blowout, caused the largest oil spill in United States history effecting 2,500 to 68,000 square miles of the Gulf of Mexico. The spill called into question the safety of the controversial practice of deep sea oil exploration.
The settlement would protect Halliburton from certain punitive damages if the court were to rule later that the company had been negligent or ‘grossly negligent’ for its role in contributing to the blowout, the company’s Chief Financial Officer Mark McCollum said. Following the announcement Halliburton’s shares were down 0.18 percent at $67.49 in afternoon trading on the New York Stock Exchange. “We think this is a smart move by Halliburton,” said Stewart Glickman, an equity analyst at S&P Capital IQ. “While state claims by Louisiana and Alabama remain, we think this trims legal overhang.” Rig contractor Transocean, which employed nine of the 11 workers killed on the rig, agreed to pay $1.4 billion in settlement last year, while BP has paid about $28 billion so far.
The deal comes as Halliburton, BP and Transocean await a ruling form United States District Judge Carl Barbier in New Orleans on the degree to which each actor was negligent in the explosion and resulting oil spill. By settling, Halliburton would avoid the risk of higher damages if it is found to be grossly negligent. “This lifted the uncertainty and eliminated the impact of a potential negative ruling from Judge Barbier,” said Tom Claps, a litigation analyst at Susquehanna Financial Group.
Halliburton was BP’s cement contractor on the Deepwater Horizon drilling rig that exploded on Earth Day 2010. The explosion killed 11 workers and triggered the largest oil spill in United States history, spilling 4.9 million barrels of oil into the Gulf of Mexico over 87 days. The company was responsible for the placement of centralizers that are intended to help stabilize the well bore during the cementing process. Halliburton had earlier blamed BP’s decision to use only six centralizers – to save “time and money” – for the blowout that caused the explosion and massive spill.
David Uhlmann, a law professor at the University of Michigan and a former chief of the Justice Department’s environmental crimes section, said that Halliburton does not admit any liability in the settlement. However, he argues that the company never have agreed to pay more than a billion dollars unless there was substantial evidence that it was negligent.” The oil spill cost billions of dollars in economic damages for Gulf residents and the regional economy and threatened critical ecosystems in the region. The long-term economic and environmental impacts of the spill remain unclear.