US fines Transocean US$1.4b over Gulf oil disaster

Thursday, January 03, 2013

The United States hit drilling rig operator Transocean with US$1.4 billion in criminal and civil fines Thursday for its role in the 2010 Deepwater Horizon disaster in the Gulf of Mexico.

Transocean agreed to plead guilty to violating the Clean Water Act in the disaster, in which a blowout on its drilling rig killed 11 and sent some 4.9 million barrels of oil into the Gulf, the Justice Department announced.

The blowout, one of the country’s most devastating environmental disasters, took place on April 20, 2010, as Transocean’s Deepwater Horizon vessel was drilling a well for British oil giant BP.

In pleading guilty, the department said, Transocean had admitted its rig crew was "negligent in failing fully to investigate clear indications that the Macondo well was not secure and that oil and gas were flowing into the well."

The firm was ordered to pay US$400 million to resolve criminal charges and another US$1 billion in civil penalties, partly to fund spill prevention and environmental restoration in the five states hit by the three-month-long spill.

"Transocean’s rig crew accepted the direction of BP well site leaders to proceed in the face of clear danger signs -- at a tragic cost to many of them," said Assistant Attorney General Lanny Breuer.

"Transocean’s agreement to plead guilty to a federal crime, and to pay a total of US$1.4 billion in criminal and civil penalties, appropriately reflects its role in the Deepwater Horizon disaster."

Transocean said in a statement that the agreements to plead guilty and pay the fines had removed much of the uncertainty about its operations from the case.

"This is a positive step forward, but it is also a time to reflect on the 11 men who lost their lives aboard the Deepwater Horizon. Their families continue to be in the thoughts and prayers of all of us at Transocean."

The company said it remained potentially subject to claims related to the assessment of damages to natural resources in the region from the spill but that those claims could be limited depending on ongoing court reviews.

Transocean said it had already set aside a loss contingency of US$1.5 billion, and would pay the fines out over five years, with some US$1 billion to be paid in 2013 and 2014.

In early afternoon New York trade Transocean’s shares were up 7.2 percent at $49.56.

The fines were still small compared with those aimed at BP, the main operator of the well.

BP announced a deal with US prosecutors on November 15 to settle a criminal investigation into the disaster by paying US$4.5 billion and pleading guilty to 11 counts of manslaughter, one count of felony obstruction of Congress and two environmental violations.

The British energy giant must still resolve a civil case on environmental fines which could amount to as much as US$18 billion if gross negligence is found. It also remains on the hook for economic damages, including the cost of environmental rehabilitation.

Also in November three former BP employees pleaded not guilty to criminal charges related to the disaster. Two supervisors on the rig at the time rejected manslaughter charges, saying they were being treated as scapegoats, and a senior BP executive at the time denied he obstructed justice by lying about the volume of oil leaking from the runaway well.

Copyright © 2013 AFP