Four years after an oil rig explosion in the Gulf of Mexico, Halliburton agreed to pay $1.1 billion to residents, local governments, and businesses affected by the incident. The decision announced Tuesday by the company and plaintiffs’ lawyers involved the 2010 Deepwater Horizon oil spill.
The settlement covers claims for punitive damages brought by the commercial fishing industry and others affected by the massive oil spill. The Wall Street Journal reports that the amount is less than the $1.3 billion Halliburton set aside for costs stemming from the oil rig explosion and largest offshore oil spill in U.S. history.
The deal comes as Halliburton, BP PLC, and Transocean Ltd. wait for U.S. District Judge Carl Barbier in New Orleans to rule on the degree to which each company is responsible for the explosion and oil spill. In settling before the ruling, Halliburton avoids higher damages if it is found grossly negligent.
Halliburton performed the oil-well cementing on the Deepwater Horizon oil rig, which was owned by Transocean and operated by BP. Regulators and government investigative panels blame deficient cementing for the oil rig explosion, which left 11 workers dead and spilled millions of gallons of crude oil into the Gulf of Mexico.
Halliburton defended its cementing on the oil rig, saying the mix was prepared to BP’s specifications and that the other two companies failed to test the cement’s integrity. All three companies deny claims they were grossly negligent in the disaster.
While Tuesday’s agreement solves one case for Halliburton, it doesn’t resolve some state lawsuits that have been filed against Halliburton, according to Bloomberg.
The settlement reached Tuesday will be paid into a trust in three installments during the next two years. A certain level of claimants have to participate in the settlement, otherwise Halliburton can terminate it.
Stephen Herman and James Roy, lawyers for the plaintiffs, stated of the settlement, “Halliburton stepped up to the plate and agreed to provide a fair measure of compensation to people and businesses harmed in the wake of the Deepwater Horizon tragedy.”
BP has the most at stake in Judge Barbier’s upcoming ruling. Should the company be found grossly negligent, it faces up to $18 billion in penalties under the Clean Water Act. It believes the liability is closer to $3.5 billion. The company stated Tuesday that Halliburton’s settlement proves all three companies contributed to the oil rig explosion.
BP spokesman Geoff Morrell told the Wall Street Journal, “This settlement marks the very first time — despite three years of official investigations and litigating implicating the company — that Halliburton has acknowledged that it played a role in the accident.”
Emily Mir, a spokeswoman for Halliburton, said the company’s settlement doesn’t admit liability in the oil rig explosion. It denies all allegations of wrongdoing in the Deepwater Horizon oil spill.
[Image: Will Nuckols]