oil spill

NEW ORLEANS — A day of reckoning arrived for BP on Thursday as the oil giant agreed to plead guilty to a raft of criminal charges and pay a record $4.5 billion in a settlement with the government over the deadly 2010 disaster in the Gulf of Mexico. Three BP employees were also charged, two of them with manslaughter.

The settlement and the indictments came two and a half years after the fiery drilling-rig explosion that killed 11 workers and set off the biggest offshore oil spill in U.S. history.

The settlement includes nearly $1.3 billion in fines, the largest criminal penalty in the nation’s history. As part of the deal, BP will plead guilty to charges involving the 11 deaths and lying to Congress about how much oil was spewing from the blown-out well.

“We believe this resolution is in the best interest of BP and its shareholders,” BP chairman Carl-Henric Svanberg said. “It removes two significant legal risks and allows us to vigorously defend the company against the remaining civil claims.”

Assistant Attorney General Lanny Breuer said the deaths and the oil spill “resulted from BP’s culture of privileging profit over prudence.”

Separately, BP rig workers Robert Kaluza and Donald Vidrine were indicted on federal charges of manslaughter and involuntary manslaughter, accused of repeatedly disregarding abnormal high-pressure readings that should have been glaring indications of trouble just before the blowout.

In addition, David Rainey, BP’s former vice president of exploration for the Gulf of Mexico, was charged with obstruction of Congress and making false statements. Prosecutors said he withheld information that more oil was gushing from the well than he let on.

Rainey’s lawyers said he did “absolutely nothing wrong.” And attorneys for the two rig workers accused the Justice Department of making scapegoats out of them. Both men are still with BP.

“Bob was not an executive or high-level BP official. He was a dedicated rig worker who mourns his fallen co-workers every day,” Kaluza attorneys Shaun Clarke and David Gerger said in a statement. “No one should take any satisfaction in this indictment of an innocent man. This is not justice.”

NEW ORLEANS — Federal prosecutors brought the first criminal charges Tuesday in the Gulf oil spill, accusing a former BP engineer of deleting more than 300 text messages that indicated the blown-out well was spewing far more crude than the company was telling the public at the time.

Kurt Mix of Katy, Texas, was arrested and charged with two counts of obstruction of justice for allegedly destroying evidence.

The U.S. Justice Department made it clear that the investigation is still going on and suggested that more people could be arrested. In a statement, Attorney General Eric Holder said prosecutors “will hold accountable those who violated the law in connection with the largest environmental disaster in U.S. history.”

Federal investigators have been looking into the causes of the blowout and the actions of managers, engineers and rig workers at BP and its subcontractors Halliburton and Transocean in the days and hours before the April 20, 2010, explosion.

But the case against Mix focuses only on the aftermath of the blast, when BP scrambled for weeks to plug the leak. Even then, the charges are not really about the disaster itself, but about an alleged attempt to thwart the investigation into it.

In court papers, the FBI said one of the areas under investigation is whether the oil company intentionally lowballed the amount of crude spewing from the well.

In outlining the charges, the government suggested Mix knew the rate of flow from the busted well was much greater than the company publicly acknowledged.

Prosecutors also said BP gave the public an optimistic account of its May 2010 efforts to plug the well via a technique called a “top kill,” even though the company’s internal data and some of the text messages showed the operation was likely to fail.

An accurate flow-rate estimate is necessary to determine how much in penalties BP and its subcontractors could face under the Clean Water Act. In court papers, prosecutors appeared to suggest the company was also worried about the effect of the disaster on its stock price.

The charges came a day before a federal judge was to consider granting preliminary approval of a $7.8 billion civil settlement between BP and a committee of plaintiffs.

In a statement, BP said it is cooperating with the Justice Department and added: “BP had clear policies requiring preservation of evidence in this case and has undertaken substantial and ongoing efforts to preserve evidence.”

The FBI said in court papers that Mix had been repeatedly notified by BP that instant messages and text messages needed to be preserved.

Mix, who resigned from BP in January, appeared on Tuesday afternoon before a judge in Houston, shackled at his hands and feet, and was released on $100,000 bail. His attorney had no comment afterward. If convicted, Mix could get up to 20 years in prison and a $250,000 fine on each count.

The engineer deleted more than 200 messages sent to a BP supervisor from his iPhone containing information about how much oil was spilling out, then erased 100 more messages to a contractor the following year, prosecutors said. Some of the messages were later recovered via forensic computer techniques.

Many of the messages had to do with an effort to plug up the well with heavy mud injected under high pressure.

In public statements, the company professed optimism that the top kill would work, giving it a 60 to 70 percent chance of success.

On the day the top kill began, Mix estimated in a text to his supervisor that more than 15,000 barrels of oil per day were spilling — three times BP’s public estimate of 5,000 barrels and an amount much greater than what BP said the top kill could probably handle.

At the end of the first day, Mix texted his supervisor: “Too much flow rate — over 15,000 and too large an orifice.” Despite Mix’s findings, BP continued to make public statements that the top kill was proceeding according to plan, prosecutors said. On May 29, the top kill was halted and BP announced its failure.

The company’s stock dropped 15 percent on the next trading day, the government said.

David Uhlmann, a University of Michigan law professor who was chief of the Justice Department’s environmental crimes section, said the charges are probably “just the first of what will be multiple criminal charges.”

“It could be the sign that the government believes there was a more far-reaching cover-up about the size of the spill,” he said.

BP stock closed at $41.91 Tuesday, a drop of just 4 cents. Analysts said investors evidently recognized the charges involved just one, low-ranking employee and saw no hint yet of any kind of larger cover-up on BP’s part.

The explosion aboard the Deepwater Horizon drilling rig killed 11 workers. More than 200 million gallons of crude oil leaked from the well off the Louisiana coast before it was capped.

Under the Clean Water Act, polluters can be fined $1,100 to $4,300 per barrel of spilled oil, with the higher amount imposed if the government can show the disaster was caused by gross negligence.

Al Sunseri, whose family-owned oyster business was damaged by the spill, said there was little real news in the arrest of Mix. “I personally believe it’s so involved that we could never really understand the magnitude of the bad players involved,” he said.

Billy Nungesser, president of hard-hit Plaquemines Parish who has long accused BP of misleading the public about the spill, said: “We’re just glad that the truth, and all the truth, will come out. Where crimes were committed, BP needs to pay the price.”

Printed on Wednesday, April 25, 2012 as: Engineer charged on BP oil spill for allegedly deleting evidence

Texas is the first state affected by the BP oil spill to use settlement money from a BP investor for habitat conservation efforts, leading to more coastal restoration attempts in the future.

The 2010 spill was a result of an explosion of the offshore drill Deepwater Horizon, which was drilling on a well operated by BP. BP investor MOEX Offshore 2007 LLC agreed to settle their liabilities in the spill, giving the state of Texas $6.5 million, according to the Texas attorney general’s website. Part of Texas’ settlement money will go towards acquiring 80 acres of land from the Goose Island State Park in Aransas, Texas to create a safe habitat for the whooping crane population, according to the Texas Parks & Wildlife website.

Katelyn Jordan, biology senior and Marine Science Club historian, said she supports the move towards conserving the whooping crane’s habitat and hopes to see more work in vulnerable coastline areas in the future.

“Some of the most fragile areas on the coastline are estuaries and coastal watershed areas because they really dictate things like salinity levels,” Jordan said. “Those are areas most impacted by oil spills. A lot smaller organisms like coastal birds live in that kind of environment and I definitely think it’s important to work to conserve their habitat.”

Conservation of habitats such as the whooping crane’s is just of one several initiatives environmentalists hope to act on, said Don Pitts, state coordinator for the Kills and Spills Team for Texas Parks & Wildlife.

“Habitat preservation is one of several different opportunities we utilize,” Pitts said. “We either like to preserve or protect, or create additional habitats in order to offset some of these damages.”

Pitts said the use of the settlement money to acquire state land for these efforts is an appropriate use of the funds.

“It’s a great opportunity to use restoration dollars to improve habitat using Texas resources,” Pitts said. “It’s a wonderful tract of land and a great opportunity for us to acquire and use it for this kind of preservation.”

Bob Stokes, president of the Galveston Bay Foundation, said Texas was less affected by the spill than other states, which allows officials to allocate this money for other conservation efforts, such as helping the whooping crane.

“This settlement is just a fraction of the overall case,” Stokes said. “[MOEX] is just one of the dependents. The settlement is going to be split among the five states, but a little more will go to states that were more affected. Even though we didn’t have more oil on our shores, our resources were still affected in the Gulf. This will go to more general coastal protection and conservation.”

Stokes said further settlement money from the spill could potentially be allocated to continued coastal restoration if Congress passes the RESTORE Act of 2011. Stokes said the RESTORE Act of 2011, which has not yet been passed by Congress, would require 80 percent of any settlement funds from the spill to go towards these coastal restoration projects. He said the current conservation efforts being made by Texas are additional attempts at restoration without the prompting of the RESTORE Act.

Printed on Thursday, April 12, 2012 as: Texas environmental initiatives gain funds from BP settlement

In a Saturday, June 12, 2010 file photo, crude oil from the Deepwater Horizon oil spill washes ashore in Orange Beach, Ala.

Photo Credit: The Associated Press

NEW YORK — BP's multibillion-dollar settlement with people and businesses harmed by its 2010 oil spill removes some uncertainty about the potential financial damages it faces. It also may help the company restore its all-important relationship with the federal government.

Although the oil company still has a few major legal and financial hurdles to overcome nearly two years after the spill in the Gulf of Mexico, the tentative settlement with plaintiff’s lawyers sends important signals to investors, Gulf Coast states and federal regulators.

Where once it seemed conceivable that BP’s spill-related costs could reach $200 billion, lawyers and industry analysts now say that figure will likely be less than a quarter that amount. If the class-action lawsuit by victims had gone to trial, BP could have faced much higher costs along with the embarrassment of having to publicly rehash earlier mistakes.

The settlement, which BP estimates will cost $7.8 billion, also shows its willingness to pay a huge sum to resolve issues related to the spill. That may improve its standing with the federal government, which controls access to oil reserves that are critically important to BP’s future.

“The only trial I thought we would see in this case is the one that just went away,” said David Uhlmann, a University of Michigan law professor.

A blowout of the Macondo well in April 2010 destroyed a drilling rig called the Deepwater Horizon. That killed 11 workers, spilled an estimated 200 million gallons of oil and disrupted thousands of Gulf Coast lives and businesses. The spill soiled sensitive tidal estuaries and beaches, killed wildlife and closed vast areas of the Gulf to commercial fishing.

The settlement announced Friday would apply to tens of thousands of victims along the Gulf Coast, including fishermen who lost work and cleanup workers who got sick. It still needs approval in federal court.

BP expects to pay the victims using the remainder of a trust fund that the company had established to pay these types of claims. The trust has $9.5 billion in assets left out of an initial $20 billion.

Whatever remains would return to BP.

Friday’s deal does not resolve lawsuits with federal, state and local governments or address environmental damage. Those other claims could total up to $25 billion.

BP, which is based in London, says it doesn’t expect to have to add to the $37.2 billion it has set aside to fund the trust and pay for other spill costs. Although some analysts expect BP to have to pay more eventually, the total would be much less than initially feared.

Some residents dissatisfied with the claims process under the trust fund are hoping the settlement makes it easier to receive compensation.

Kenneth Feinberg is the man in charge of the massive task of administering the BP Fund, sorting through over a million claims as part of his job of distributing the $20 billion in compensation for damages from the oil spill.

Photo Credit: Victoria Montalvo | Daily Texan Staff

Reimbursement claims for lost rope sales in Sweden, a shrimp scampi shortage in the North End of Boston and lost dental appointments in Alabama were all claims filed by victims of the 2010 Deepwater Horizon oil spill.

It is Kenneth Feinberg’s job as administrator of the Gulf Coast Claims Facility to sort through legitimate and irrelevant claims.

Feinberg recounted letters written to him by claimants in the wake of the 2010 British Petroleum Deepwater Horizon oil spill to a group of students, faculty and community members on Monday, demonstrating the challenges he faced distributing the $20 billion BP allocated for private claims and cleanup relief in the Gulf.

One of the most memorable letters came from a rope maker in Sweden.

“This rope is sold to fisherman in the Gulf for fishing nets. There is no fishing. I can’t sell my rope. Pay me in krona, dollars. I don’t care, but pay me!”

Feinberg, referred to as “the master of disaster,” has overseen claims related to Agent Orange, the 9-11 Victim Compensation Fund, Virginia Tech’s Memorial Fund and the Troubled Asset Relief Program, which determined reasonable compensations for senior corporate officials receiving government bailouts.

He has been celebrated for his administration but more often than not has been criticized as the “man the Gulf Coast loves to hate.”

“Ninety-nine percent of the criticism about these programs is really directed at policy makers, not me,” Feinberg said. “I’m just implementing the program. Looking back from 30,000 feet [the programs] are a political response to an impatient, demanding electorate and that’s the way they ought to be looked at.”

In administering the BP fund, Feinberg said he received more than 1 million claims from 50 states and 37 foreign countries.

“When you announce that there is $20 billion that results in, shall we say, some very creative claims from people all over the world,” Feinberg said. “I ensure that BP to this day is very, very unhappy that they ever announced $20 billion. Build it and they will come.”

In one year Feinberg has processed more than 97 percent of all the Deepwater Horizon claims and paid out $5.5 billon to more than 225,000 claimants.

Feinberg said a major problem with disaster relief funds is that they’re only available to some people.

“Bad things happen to good people everyday in this country,” Feinberg said. “They’re not all available to have a fund. I didn’t see a fund for Katrina. A thousand people died. I didn’t see a fund for Oklahoma City. You should’ve seen some of the emails I got when I was administering the 9-11 Fund.”

He described the email of one mother who lost her son in the Oklahoma City bombing.

“That’s what kept you up at 3 a.m., stories like that,” Feinberg said.

Law school Dean Lawrence Sager described Feinberg’s job as administering “justice in situations where justice is impossible.”

Melinda Taylor, executive director for UT’s Center for Global Energy, said Feinberg is an example of someone who has been very successful using law in a creative fashion to resolve big disputes.

“In many ways practicing law can be a little bit boring, but this is a way for students to see that the options out there are unlimited and you can use your creativity and in a different way,” Taylor said. 

Printed on October 4, 2011, as: Victims' claims sorted after BP oil spill

The British Petroleum oil spill in April 2010 inspired a new partnership between UT and the Massachusetts Institute of Technology to create a set of guidelines that will allow scientists to avoid future crises.

The Energy Institute at UT, MIT’s Energy Initiative and Woods Hole Oceanographic Institute formed the Research Center for Environmental Protection at Hydrocarbon Energy Production Frontiers, REEF. Several UT colleges and schools will be involved, including the Cockrell School of Engineering, School of Law, Lyndon B. Johnson School of Public Affairs, McCombs School of Business and Jackson School of Geosciences. The team hopes to outline a set of realistic rules and steps to avoid major human-caused disasters, representatives said.

Director of the Energy Institute, Raymond Orbach is taking on a personal role with MIT faculty making sure programs from both schools are complimentary. Legal and regulatory aspects, environmental concerns and the risk of human error will be the main factors in REEF’s assessments, Orbach said.

Tadeusz Patzek, Chairman of UT’s Department of Petroleum & Geosystems Engineering, is part of the advisory board of the Bureau of Ocean Energy Management, Regulation and Enforcement which deals with issues relating to the REEF proposal.

“If we decide to drill, and most governments including U.S. government are of the opinion that we should, we should do it in a way as to minimize or eliminate damage to the environment,” Patzek said.

An option for extracting natural gas and oil is the process of fracking, a fairly recent method used since the ‘90s. It was first used extensively in the Barnett Shale in the Dallas-Fort Worth area, said energy and earth resources graduate student, Jenifer Wehner.

“People in the oil and gas industry commonly say ‘fracking’ to describe just one part of the whole gas exploration and production process,” according to a May 13 article from The New York Times. “Purists would say it is not really even part of ‘drilling’ but actually the ‘completion’ phase.”

Shale is a porous rock and because of its properties it holds on to gas molecules, and although there is gas in the rock, there is no way to extract it easily.

“Part of the concern regarding hydraulic fracking is putting water with chemicals down into the ground,” Wehner said. A concern is that water will seep out of the well where the oil was drilled and get into ground water.

The UT-MIT partnership is looking at areas where it’s tough to extract resources. The Arctic has a huge amount of oil and gas which is why it’s the next frontier, Orbach said, even though it’s a very sensitive environmental area. Further areas to explore include Alaska, Canada, Russia and Norway.

“We need to work with energy companies to ensure their practices are consistent with what we find best. We will bring to the government, awareness of what we’re doing but the government will decide whether to use our results or not,” Orbach said. “What we hope is that they will find them so attractive that they will help them formulate policy.”

According to an article from the Houston Chronicle on July 17, 2011, the center could require commitments of up to $100 million over five years, coming from multiple sponsors. 

Director plays clips from latest movie, critiques BP’s response to rig explosion

The 5-foot-6-inch outspoken director Spike Lee made his presence felt on the stage at the Lady Bird Johnson Auditorium on Sunday and focused on the ongoing corruption resulting from Hurricane Katrina in 2005 to the more recent British Petroleum oil spill.

“We still forget [the catastrophe] wasn’t really a hurricane,” said Lee after screening a segment of his latest documentary “If God Is Willing and Da Creek Don’t Rise.” “It was the faulty levees and the work of the United States of America. The whole infrastructure of this country needs help. When you cut corners, people die. It’s the same with BP. People are going to die and get hurt? Fuck it. Make the money. There has to be some morals and ethics that go into capitalism in this country.”

About 600 members of the UT community attended the screening, which previously aired on HBO on Aug. 23, and a heated roundtable discussion featuring history and film professors as well as New Orleans native Camille Pluck, a psychology junior.

“Politics, class and racism will always permeate [New Orleans’] society,” Pluck said. “People always ask, ‘How can you love New Orleans if it’s so corrupt?’ And I respond, ‘How can you love America?’”

Lee filmed his latest documentary as a follow-up to the Peabody Award-winning 2006 documentary “When the Levees Broke.” Initially, Lee says, he finished the four-hour documentary before the BP oil spill but then went back to the Big Easy eight more times to follow the story. Both documentaries feature a plethora of first-person accounts that humanize the events.

“These aren’t documentaries — these are now part of American history,” said Douglas Brinkley, a noted history professor from Rice University who introduced Lee. “His Katrina and BP spill archives are important parts of documented oral history. I see him less as a filmmaker and more as one of our great truth-tellers, and we have so few of them.”

Included in his latest documentary are reports of BP initially blocking fly-overs and questions about the toxicity of the oil dispersants used.

The hour-long segment concluded with a montage of underwater oil leak footage from nearly every day of the three-month spill, followed by images of the blue and grey corpses strewn across the city after Katrina.

“I had no idea about the entirety of the problems in New Orleans,” said studio art sophomore Tara Alavi. “The rhetoric is so censored and his documentary is incredibly moving. I teared up during it. It made me want to take action and do what I can. I don’t know where to begin, but it opened my eyes to the magnitude of the problem.”