BP Oil Spill Could Cost Company $90B in Lawsuits and Cleanup
Some analysts say that the petroleum giant BP could be on the hook for more than $90 billion in damages as a result of oil spill lawsuits and environmental clean up costs stemming from the ongoing catastrophe in the Gulf of Mexico.
BP, formerly British Petroleum, already faces more than 250 Gulf oil spill lawsuits from residents, businesses and states affected by the oil spill, many of which are seeking class-action status. But analysts interviewed for a Reuters story on the storm of litigation headed BP’s way say they could be just the tip of the iceberg.
In late June, New Orleans Chef Susan Spicer became the latest to sue BP. Her lawsuit was filed on behalf of restaurant owners in New Orleans whose businesses have been negatively affected by the damage BP’s oil spill has done to both the seafood supply and tourism. The lawsuit indicates how BP is likely to face a considerable amount of litigation from people who were indirectly affected by the environmental disaster.
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The gulf coast oil spill started shortly after the April 20 explosion and fire on the Deepwater Horizon sent the oil drilling rig to the bottom of the Gulf and unleashed an oil spill in the Gulf that is shaping up to be the worst environmental disaster in history. The blast killed 11 workers and sent tens of thousands of gallons of oil gushing from a mile-deep well in the ocean floor.
It took weeks just for BP to begin successfully siphoning some of that flow into tankers on the surface, and there is no chance the spill will be halted until August, when BP expects to finish drilling two relief wells to take pressure off the main wellhead, with no guarantee of success. The oil slick is obliterating sea life, ecosystems and waterfowl in the Gulf and Gulf Coast states, and oil is washing ashore in Louisiana, Mississippi and Florida, and is expected to soon come ashore in Alabama as well.
BP has reported already spending nearly $3 billion on clean up operations. But the bulk of the economic costs have not begun to truly show themselves.
The low ball estimates were from analysts at Credit Suisse estimate legal and cleanup costs for BP could reach $37 billion, while Zygmunt Plater, former chairman of the Alaska Oil Spill Commission’s legal task force that took on the Exxon Valdez spill in 1989, estimates the cost could shatter the $90 billion mark.
BP officials refuse to comment on the oil spill litigation, but have said that declaring bankruptcy is not being considered an option. Last month, BP agreed to create a $20 billion fund to help gulf coast shrimpers, fishermen and oyster farmers, and other area businesses, recover from the damage of the disaster.
Although BP has taken the brunt of the negative publicity, most of the lawsuits also name Transocean Ltd., which owned the rig, Cameron International Corp. and Halliburton Energy Services Inc. as defendants as well.
The U.S. Judicial Panel on Multidistrict Litigation is scheduled to hear arguments about consolidation of lawsuits over the oil spill at a hearing in July. The Panel will decide whether the cases should be transferred to one court to prevent duplicative discovery and inconsistent rulings. The Panel will also determine where the oil spill lawsuits should be centralized if a multidistrict litigation is formed.
Photo Courtesy of IBRRC via Flickr CC
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