BP, plaintiffs reach $7.8B Gulf spill settlement

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AP Photo/Anonymous

NEW ORLEANS (AP) — BP agreed late Friday to settle lawsuits brought by more than 100,000 fishermen who lost work, cleanup workers who got sick and others who claimed harm from the oil giant’s 2010 Gulf of Mexico disaster, the worst offshore oil spill in the nation’s history.

The momentous settlement will have no cap to compensate the plaintiffs, though BP PLC estimated it would have to pay out about $7.8 billion, making it one of the largest class-action settlements ever. After the Exxon Valdez disaster in 1989, the company ultimately settled with the U.S. government for $1 billion, which would be about $1.8 billion today.

BP still has to resolve claims by the U.S. government, Gulf states and its partners in the doomed Deepwater Horizon project, in which pressure from a well a mile below the ocean’s surface blew up a massive drilling rig, killing 11 men and spewing oil into the sea for nearly three months. That could add billions of more to its tab.

BP said it expects the money to come from the $20 billion compensation fund that it previously set out. According to the Deepwater Horizon Oil Spill Trust, current total trust assets are approximately $9.5 billion.

The spill exposed oil industry failings, forced BP chief executive Tony Hayward to step down after his repeated gaffes and led to new lexicon in American vocabulary as crews used innovative attempts to plug the spewing well, such as the top kill and the junk shot.

The spill soiled sensitive tidal estuaries and beaches, killing wildlife and shutting vast areas of the Gulf to commercial fishing. After several attempts to cap the well failed, engineers finally were successful on July 15, halting the flow of oil into the Gulf of Mexico after more than 85 days.

The main targets of litigation resulting from the explosion and spill were BP, Transocean, Halliburton and Cameron International, maker of the well’s failed blowout preventer. BP, the majority owner of the well that blew out, was leasing the rig from Transocean.

The Justice Department sued some of the companies involved in the ill-fated drilling project, seeking to recover billions of dollars for economic and environmental damage. The department opened a separate criminal investigation, but that probe hasn’t resulted in any charges.