2010 oil spill still haunting BP and Transocean – BP, RIG & HAL

Boston, MA 02/26/2013 (wallstreetpr) – The Gulf of Mexico oil spill of 2010 was caused due to negligence on the part of BP plc (NYSE:BP) and Transocean LTD (NYSE:RIG) officials. Several oil-rig safety measures were flouted and danger signs ignored. Millions of gallons of crude oil spewed out of the Mocando well into the Gulf of Mexico and 11 rig workers paid with their lives. A U.S. Justice Department lawyer, Michael Underhill said that BP had prioritized its profits against the safety of people and the environment. The U.S District court Judge Carl Barbier is preceding the spill-related litigation against BP and Transocean.  He will decide who is to be held responsible for this major oil spill and who will eventually pay damages.

Large-scale disaster

The Deepwater Horizon rig oilspill which was the largest offshore one that has taken place in U.S history was caused by a blowout and the resultant explosion caused 4 million gallons of oil to be spilled into the Gulf. Barbier’s ruling will demarcate the exact amount that every concerned company will have to pay. BP plc (NYSE:BP), the London-based company and Switzerland-based Transocean LTD (NYSE:RIG) as well as Halliburton Company (NYSE:HAL), who was responsible for all the well cement work, all faced hundreds of lawsuits. If BP is eventually found to be guilty of gross negligence, it will be liable to pay upto $17.6 billion to the U.S towards the Clean Water Act fines in addition to the any new claims of punitive damages by claimants.

All safety norms thrown down the well

BP plc (NYSE:BP) has already paid $8.5 billion in settlements last year. The company has been charged of gross negligence and its willful failure in providing its Deepwater Horizon crew an adequate amount of training. Spill victims have also contended that the defective cement work by Halliburton Company (NYSE:HAL) as well as the ill-maintained equipment and flouting of safety measures lead to the explosion. BP was running behind schedule and had run over-budget on the project. It ignored tests, concealed flaws, cut corners and disabled safety systems aboard the rig. The under-trained crew was an additional factor in the subsequent disaster.

Ill-maintained equipment

Safety tests had proved that the Deepwater Horizon well was unstable, the cement construction faulty and that drilling should have been discontinued immediately. Claimants have accused that the blowout preventer, a 400-ton piece of equipment also failed and ill maintenance was the cause of its failure. Faulty wiring and dead batteries were found by investigators. It would have taken over 3,000 hours to rectify the 390 maintenance issues that were detected and BP plc (NYSE:BP) as well as Transocean LTD (NYSE:RIG) opted for profits over safety and went ahead with the operation despite all these warning signals.

Passing the buck around

Accusations have been flying back and forth between BP plc (NYSE:BP), Transocean LTD (NYSE:RIG) and Halliburton Company (NYSE:HAL) as each one tries to pin the blame on the other. No out-of-court settlements will be permitted and Barbier will ensure that maritime law which governs this phase is applied in the litigation. The drilling moratorium in the deep seas had harmed casinos, banks and other businesses and BP will have to pay compensatory damages now in addition to the punitive damages that it was asked to pay last year. The company is fighting the former claims. Passing the buck will be of no avail and it is left to be seen how the accused will eventually pay for their lackadaisical attitude.

Shares of BP plc (NYSE:BP) went down by 3.42% to close at $40.40

Shares of Transocean LTD (NYSE:RIG) went down by 3.83% to close at $51.24

Shares of Halliburton Company (NYSE:HAL) went down by 3.06% to close at $39.85

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Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email (alanmasterson@wallstreetpr.com) or his Google+ page (https://plus.google.com/103338576216002376250).