BP Gulf of Mexico Drilling Rig Explosion, Spill and Litigation: Timeline
BP Plc (BP), which was set to got to trial March 5 in federal court in New Orleans to determine the extent of liability for the April 2010 Gulf of Mexico oil spill, reached a settlement yesterday with lawyers for individuals and businesses hurt by the spill.
BP estimated the cost of the settlement at $7.8 billion.
The following is a timeline of the events leading to the destruction of the Deepwater Horizon offshore rig, the subsequent spill of millions of barrels of oil and resulting litigation. All dates and events are from court, agency and securities filings, or company and government statements.
Jan. 30, 2010: The Deepwater Horizon moves onsite about 45 miles south of the Louisiana coastline to resume drilling the Macondo well after another rig withdrew due to storm damage.
April 1: ModuSpec USA Inc. begins a two-week condition assessment of the rig at the request of Transocean Ltd., which operates the Deepwater Horizon.
April 15: One of two BP well-site leaders assigned to the rig leaves to attend a conference on well-control techniques. His replacement lacks any experience as a well-site leader on the Deepwater Horizon, according to a U.S. Coast Guard investigation.
An employee of Halliburton Co. (HAL), designer of a cement job meant to seal the well against leaks, advises his contact at BP by e-mail that 21 stabilizers are needed to center the drill pipe in the well, according to court filings. The Halliburton engineer warns the well has a “severe risk” of natural gas leaks with only six of the devices, which could lead to an explosive blowout, the court filings state. A BP well engineer orders 15 additional centralizers flown out to the rig, which has only six on hand.
April 16: A BP manager overrules the well engineer’s decision and orders the job to proceed with six centralizers, according to court papers. BP operations engineer Brett Cocales sends an e-mail to the Macondo drilling engineer, Brian Morel, saying six centralizers should be adequate to obtain a proper cement seal in the well.
“Who cares, it’s done, end of story, will probably be fine and we’ll get a good cement job,” he wrote, according to a copy of the e-mail cited in court papers.
April 18: Halliburton tests an innovative cement formula for the well and doesn’t provide all of the results to BP. Halliburton engineer Jesse Gagliano again advises BP the well is at risk for leaks if fewer than 21 centralizers are used, according to court filings.
April 19: Drilling is completed to target depths. Casing is installed and cement pumped.
April 20: Drilling and completion operations are finished. The well subsequently fails, resulting in blowout and explosion.
At 7:30 a.m. BP decides not to run a “cement bond log,” a test that determines if the cement had properly sealed the sides of the well against leaks. In the afternoon, crews continue well-completion tasks in preparation to move the rig to another location. About 5:30 p.m., engineers debate the results of critical pressure test conducted to ensure the well isn’t leaking. The test is ultimately declared successful.
In the evening, visiting company officials and rig supervisors hold a “leadership meeting” which culminates with some guests on the bridge of the rig, taking turns practicing controlling the Deepwater Horizon’s positioning system in a training simulator.
At 9:41 p.m. drilling mud shoots out of the pipe connecting the rig to the well on the seafloor. The first of two explosions comes roughly nine minutes later, and the rig is quickly engulfed in flames. Workers, unable to contain the blowout or fight the fire, abandon the Deepwater Horizon. Eleven die.
April 22: BP and Transocean (RIG) are sued by the family of Shane Roshto, one of the 11 dead workers.
April 29: A Louisiana fishing charter boat operator sues on behalf of the state’s $2.6 billion industry, one of the first of thousands of litigants against companies involved in the rig project, including states and the federal government.
May 6: The U.S. Justice Department asks the companies to preserve evidence, a signal that the government had begun an investigation into possible criminal acts.
May 10: A BP investor sues the company’s directors claiming its alleged pursuit of profit at the expense of safety led to the explosion and resulting spill, the first of many such suits.
May 13: Transocean asks a court to cap its liability at $26.7 million under a 150-year-old law designed to protect the shipping industry from catastrophic legal awards.
June 1: U.S. Attorney General Eric Holder formally opens a criminal and civil investigation into the spill.
June 16: BP agrees to put about $20 billion into a fund to pay damages resulting from the Gulf spill, with claims administered by Kenneth Feinberg, the lawyer who oversaw executive compensation for the government’s financial bailout. Less than two months after the spill began, more than 225 lawsuits in 11 states had been filed by businesses, individuals and investors over the disaster.
July 15: BP and the Coast Guard successfully cap the blown- out well, stopping a geyser of oil that gushed more than 4.1 million barrels of crude into the Gulf of Mexico over 85 days. Lawsuits tied to the disaster exceed 300.
Aug. 3: Bloomberg News reports the U.S. is examining whether BP made misleading statements after the spill, and whether company executives traded stock based on inside information about the accident. The Justice Department is investigating possible criminal wrongdoing and the Securities and Exchange Commission is probing potential civil violations, said a person familiar with the matter.
Aug. 10: A panel of judges orders that all claims tied to the disaster be consolidated before one judge in New Orleans federal court, U.S. District Judge Carl Barbier.
Sept. 19: The Macondo well is permanently sealed with cement pumped in through an emergency relief well drilled nearby.
Oct. 20: Environmental groups sue BP, saying it should pay damages and create a fund to restore wildlife and habitats harmed by the Gulf of Mexico oil spill. At least 27 federally protected species inhabiting the Gulf region were harmed by spill, the groups say.
Oct. 27: Halliburton is ordered by the judge overseeing the spill suits to turn over cement used on the Deepwater Horizon project to investigators from the Coast Guard and the Department of the Interior in connection with a probe of the spill.
Oct. 28: The National Oil Commission reports that Halliburton cement used on the BP well in April was unstable.
Dec. 15: The Obama administration sues BP and four other companies for violating environmental laws, seeking damages under the Clean Water Act. The suit seeks a declaration that four of the defendants are liable under the Oil Pollution Act for all removal costs and damages caused by the oil spill, including damages to the environment. In addition to London- based BP, the owner of the well, defendants include units of Transocean, which owned the rig, as well as Anadarko Petroleum Corp. (APC) and MOEX Offshore 2007 LLC, part owners of the well.
BP shares fall the most in almost four months.
Jan. 13, 2011: The family of Karl Kleppinger Jr. becomes the first to settle a lawsuit against rig owner Transocean and other companies involved in the disaster over the deaths of 11 crew members of the Deepwater Horizon.
March 3: Louisiana sues BP and its partners in the well, seeking $1 million a day for damages caused by the spill.
April 15: Cameron International Corp. (CAM) says in a court filing that it isn’t to blame for the rig explosion because oil and gas were surging toward it when workers tried to activate blowout-prevention equipment. Plaintiffs suing the companies claim Houston-based Cameron’s blowout preventer wasn’t designed to handle the extreme environment and thicker drill pipes found in ultra-deep wells such as the Macondo.
April 19: Mitsui & Co.’s Moex Offshore LLC unit, a 10 percent partner with BP in the blown-out well, sues the U.K.- based energy company for economic losses as a result of the project’s failure and the spill that followed. Moex, claiming BP broke its partnership agreement, asks the judge in the case to declare it isn’t responsible for damages and cleanup costs.
April 20: BP sues Transocean, blaming the owner and operator of the Deepwater Horizon for the accident and seeking to recover costs for billions of dollars in damages. BP says that without Transocean’s “misconduct” there wouldn’t have been any explosion, fire, deaths or oil spill.
Aug. 23: The Gulf Coast Claims Facility, which draws on the $20 billion set aside by BP after the spill, has received more than 947,000 claims from 50 states and 36 nations, according to a summary by claims administrator Feinberg. BP has paid more than $5 billion to 204,434 claimants in the past year from the fund, created to compensate victims of the spill. In total, about $6.7 billion has been drawn from the fund, which also pays for clean-up costs and restoration projects through payments provided to local governments.
Aug. 26: Businesses and individuals suing BP and other companies involved in the spill win the judge’s approval to seek punitive damages in pursuing claims of economic and environmental losses. BP and the other companies claimed the U.S. Oil Pollution Act prevented plaintiffs from collecting punitive damages. Barbier rules the statute is “silent as to the availability of punitive damages” and plaintiffs can pursue such claims under maritime law. Barbier dismisses economic loss claims by individuals and businesses filed under state law.
Sept. 15: BP won’t have to face some lawsuits filed by institutional investors on behalf of the company, a federal judge in Houston rules. U.S. District Judge Keith P. Ellison agrees with BP’s argument that the claims should be filed in U.K. courts because the company is based there.
Sept. 30: Barbier rules Anadarko won’t have to face personal injury claims arising from exposure to oil and other chemicals in the cleanup of the spill. Anadarko and Moex can’t be held responsible for these claims under maritime law, he says.
Nov. 1: A Transocean unit asks the judge to order BP to honor a blanket indemnity against oil spill damages that the rig owner claims was part of its drilling contract.
Nov. 14: The judge rules BP must face claims over the spill by Louisiana and Alabama. The states can sue for negligence and product liability under general maritime law and are eligible for punitive damages, Barbier says. He dismisses claims brought under state environmental laws, including demands for civil penalties, finding they were preempted by federal law governing the Outer Continental Shelf.
Dec. 9: Mexican states and Alabama cities that are deemed too far removed from the spill to have been physically harmed by it are barred by the court from bringing some claims against BP. Barbier throws out state law claims by six Louisiana parishes seeking penalties over wildlife killed or injured by the spill. He says the parishes, as counties in the state are called, can still sue BP and other spill companies under U.S. law to recover wildlife losses, spill damages and removal costs.
Jan. 2, 2012: BP seeks to have Halliburton, the cement contractor for the Macondo well, pay all of the oil company’s related costs and damages tied to the spill. BP has paid more than $21 billion in cleanup costs and economic damages to individuals, businesses and governments harmed by the spill as of Dec. 1, the company says. BP reserved more than $40 billion to cover costs related to the sinking of the Deepwater Horizon drilling rig.
Jan. 26: BP can’t collect from Transocean part of the $40 billion in cleanup costs and economic losses caused by the 2010 oil well blowout and spill, the judge rules. He also holds that BP must indemnify Transocean for pollution-related economic damage claims under its drilling contract. Any awards for punitive damages against Transocean or civil penalties under the U.S. Clean Water Act won’t have to be covered by BP, the judge also writes.
Jan. 31: BP is ordered to cover some of any direct damage claims awarded against Halliburton for the $40 billion in cleanup costs and economic losses caused by the spill. BP must indemnify Halliburton for compensatory damage claims under its drilling contract, Barbier rules. BP had sued Halliburton to recover a share of any damages and costs from the spill. Any punitive damages awarded against Halliburton don’t have to be paid by BP, the judge says.
Feb. 9: Bloomberg News reveals BP is negotiating with U.S. officials to settle the pollution claims tied to the oil spill. The U.S. seeks fines of as much as $4,300 for each of the 4.1 million barrels spilled after the rig explosion.
BP wins a ruling barring the introduction of evidence at trial of previous accidents involving the oil company. Barbier grants a BP motion blocking the introduction of exhibits pertaining to prior industrial accidents, including the 2005 explosion at its Texas City, Texas, refinery and a 2006 oil spill at its Prudhoe Bay field in Alaska.
Feb. 13: BP was told it must face fraud claims by investors who said the company lied before and after the 2010 spill about its accident response capability. Judge Ellison in Houston allows holders of BP American depositary receipts to pursue claims alleging violations of U.S. securities law. He dismisses claims by investors who bought ordinary shares of London-based BP, saying his court has no jurisdiction over them.
Feb. 17: MOEX (MOEX) agrees to pay $90 million to the U.S. and five states to settle pollution violations related to the spill while BP and its drilling fluid provider for the Macondo well agree to dismiss claims against each other. The U.S. files a consent order outlining the MOEX settlement of Clean Water Act violations. The agreement requires MOEX to pay $45 million in civil penalties to the U.S. and about $25 million total to Alabama, Florida, Louisiana, Mississippi and Texas. MOEX will also pay $20 million for land acquisition projects.
Feb. 24: Transocean claims BP officials overseeing the Macondo well ignored questions about whether safety tests done hours before a fatal blast on the drilling rig were flawed. Donald Vidrine, the senior BP manager on the Deepwater Horizon on April 20, 2010, talked with an engineer about unsatisfactory well tests less than an hour before an explosion killed 11 workers on the rig and sent oil pouring into the waters off Louisiana, Transocean’s attorneys say in a filing. While Mark Hafle, a Houston-based BP drilling engineer, warned Vidrine in a phone call that stability tests on the well might be flawed, “neither man stopped work” at the facility, Transocean says.
Feb. 26: The scheduled Feb. 27 trial is delayed by Barbier until March 5 to allow settlement negotiations to continue.
Bloomberg News later reports that BP and lawyers for businesses and individuals affected by the spill were near a $14 billion accord to be funded with money set aside for out-of- court settlements. Three people familiar with the talks say that, under the plan, BP would close its $20 billion Gulf Coast Claims Facility and shift the remaining $14 billion to plaintiffs hurt by the disaster. Such a deal wouldn’t include fines by the federal government that could reach $17.6 billion, lawsuits by state governments or claims between BP and partner companies involved in the disaster.
The case is In Re Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).
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