Transocean set to pay $1.4 billion for role in 2010 Deepwater Horizon disaster

January 3, 2013

The owner of the drilling rig that exploded and led to the massive 2010 oil spill in the Gulf of Mexico will pay $1.4 billion in criminal and civil penalties, the Justice Department said Thursday.

Transocean Ltd. agreed to accept some responsibility for its role in the Gulf disaster, which took place after its Deepwater Horizon rig caught fire and killed 11 people. The company will pay $1 billion to resolve civil claims and $400 million in criminal penalties, and will plead guilty to one misdemeanor violation of the Clean Water Act.

Yet Transocean’s punishment was considerably smaller than that of BP, which was leasing the rig at the time of the blowout. BP has already agreed to pay $4.5 billion in penalties and has pleaded guilty to 11 felony counts of manslaughter and other criminal charges. The London-based oil giant also faces potentially billions of dollars in civil claims from the U.S. government.

Thursday’s settlement marked the conclusion of the Department of Justice’s criminal investigation of Transocean. “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,” the Switzerland-based company said in a statement.

In the aftermath of the explosion on Apr. 20, 2010, as millions of gallons of crude were seeping out from the well, BP and Transocean fought bitterly over which company deserved the bulk of the blame.

BP executives pointed out that Transocean owned the blowout preventer that failed to cap the Macondo well and stop oil from leaking out. “This wasn’t our accident,” BP’s then-chief executive Tony Hayward said a couple weeks after the explosion. Transocean officials shot back that the owner of the well should ultimately bear responsibility.

After the Transocean settlement Thursday, BP was quick to claim partial vindication. “Today’s settlement between Transocean and the United States underscores what every official investigation has found: that the Deepwater Horizon accident resulted from multiple causes, involving multiple parties,” said Geoff Morrell, a BP spokesperson.

Yet the two companies have met with strikingly different fates. After 2 1 / 2 years, Transocean has yet to face any felony charges at the personal or corporate level.

As part of its settlement on Thursday, Transocean admitted that the members of its crew aboard the Deepwater Horizon, under the direction of BP’s site leaders, were negligent in failing to fully follow up on signs that the Macondo well was not secure.

“Transocean’s agreement to plead guilty to a federal crime, and to pay a total of $1.4 billion in criminal and civil penalties, appropriately reflects its role in the Deepwater Horizon disaster,” said Lanny A. Breuer, assistant attorney general for the Justice Department’s Criminal Division.

BP, by contrast, has pleaded guilty at the corporate level to 11 felony counts of “seaman’s manslaughter,” one felony count of obstruction of Congress, one misdemeanor count under the Clean Water Act and one misdemeanor count under the Migratory Bird Treaty Act.

Two BP site leaders aboard the rig at the time, Robert Kaluza and Donald Vidrine, were separately indicted by a New Orleans grand jury in November on multiple felony counts of manslaughter. Another BP executive, David Rainey, has been charged with misleading a congressional subcommittee about the well’s flow rate. All three have pleaded not guilty.

BP also faces Clean Water Act civil fines that could total $5 billion or nearly $20 billion, depending on whether the company is found to be guilty of gross negligence or willful misconduct. And the company recently won approval from a federal judge for a $7.8 billion settlement with people and businesses affected by the spill.

It took 87 days to cap the Macondo well, which sits 50 miles southeast of Louisiana. All told, 206 million gallons of oil had spilled out, washing up on local beaches, marshes and fishing grounds.

The Department of Justice did not offer comment on the third company involved at the drilling site, Halliburton, which was in charge of cementing and monitoring the Macondo well. In a September regulatory filing, Halliburton said its actions were still under examination.

Transocean stocks jumped more than 7 percent after the news. The company had said in September it had discussed a $1.5 billion settlement with the Department of Justice and that it had reserved $2 billion related to claims related to the spill.

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