Gulf Oil Spill Settlement Could Exceed $7.8B in Payments By BP

To settle claims for damages suffered by businesses, consumers and others as a result of the catastrophic oil spill in the Gulf of Mexico, BP has agreed to pay an estimated $7.8 billion.

The BP oil spill settlement was reached late Friday, and could provide financial compensation for more than 100,000 people and businesses.

The settlement has no cap on damages, and the $7.8 billion in projected payments are just an estimate from BP (formerly British Petroleum). Some plaintiff attorneys have indicated that the number could go much higher as damages are assessed.

There are two parts to the settlement; one for the resolution of economic loss claims and another for personal injury and wrongful death lawsuits resulting from the spill.

The economic loss claim includes pledges to financially bolster the Gulf Coast seafood industry, which was hard hit by the spill. It also includes the creation of a fund that will advertise the Gulf Coast as a tourism destination.

The medical claims agreement includes a 21-year consultation program for those who are likely to need continuing medical testing due to chemical exposure and other health concerns. It also makes allowances for the possibility that some victims which have currently not filed a lawsuit may manifest health problems years later and seek compensation.

The Gulf Coast oil spill started shortly after an explosion and fire on the Deepwater Horizon oil platform that killed 11 workers in April 2010. The damage sent the oil rig, which controlled the Macondo well, to the bottom of the Gulf and unleashed an oil spill in the Gulf that many now consider the worst environmental disaster in history.

The massive oil spill released nearly five million barrels of toxic oil into the waters of the Gulf of Mexico, impacting several states, including Louisiana, Alabama, Mississippi and Florida.

The money for the settlement will come from a fund set up shortly after the oil spill that contains about $20 billion. A finalized agreement is expected in about 45 days and would result in plaintiffs dropping their claims. BP would also not admit liability.

BP still faces unresolved lawsuits from the U.S. government, the states or municipalities, which could cost billions more.

While the majority of the media attention and government focus has been on BP, there are also lawsuits against Transocean Ltd., Cameron International Corp. and Halliburton Energy Services Inc.