A Bourbon Street balcony during Mardi Gras. Photo (c) Alex Demyan

(Bloomberg) — The trial over liability for BP Plc’s 2010 Gulf of Mexico oil spill was postponed to Feb. 25 so the lawyers won’t lose their accommodations to Super Bowl and Mardi Gras crowds, a New Orleans judge said.

The Super Bowl, the National Football League’s title game, is set for Feb. 3, and the last day of Mardi Gras, the pre- Lenten festival, is Feb. 12. The trial, originally set for Jan. 14, will be delayed six weeks because lawyers involved have been told they’ll be “kicked out” of their hotel rooms, U.S. District Judge Carl Barbier said at a hearing today.

“It makes no sense to try and start the trial Jan. 14 then suspend it,” Barbier said. “We don’t want to ruin everybody’s holidays.”

Scott Dean, a BP spokesman, declined to comment on the change in trial date.

“The day of judgment is coming,” Steve Herman, an attorney for the plaintiffs, said today. “A few weeks of delay isn’t going to matter.”

The April 2010 sinking of the Deepwater Horizon rig set off the largest offshore oil spill in U.S. history and led to hundreds of lawsuits brought against London-based BP, owner of the well, and its partners in the project.

Economic Loss

BP agreed in March to pay an estimated $7.8 billion to resolve most private plaintiffs’ claims for economic loss, property damage and injuries. The settlement, reached days before a scheduled trial on liability for the 2010 spill, didn’t cover federal government claims and those of the Gulf Coast states.

It also didn’t cover lawsuits against Transocean Ltd., the Vernier, Switzerland-based owner and operator of the rig; and Houston-based Halliburton Co., which provided cementing services. BP’s settlement excluded claims by financial institutions, casinos, private plaintiffs in parts of Florida and Texas, and residents and businesses claiming harm from a drilling moratorium.

Barbier will conduct a fairness hearing on the $7.8 billion settlement Nov. 8. Objections to the settlement have to be filed by Nov. 1.

Barbier will consider fault for the explosion and subsequent spill at the nonjury trial now set in February. He will also determine whether BP or other defendants were grossly negligent in their actions setting off the spill.

Potential Fines

A finding of gross negligence could raise the potential fines for violations of the Clean Water Act from $1,100 a barrel to $4,300 a barrel. The U.S. has claimed that more than 4 million barrels of oil were spilled before the well was capped.

The U.S. sued BP, Transocean and BP’s partners in the well, Mitsui & Co.’s MOEX Offshore 2007 and The Woodlands, Texas-based Anadarko Petroleum Corp., alleging violations of federal pollution laws. MOEX has settled the federal claims.

BP has been in negotiations with the U.S. Justice Department to settle the pollution suit, according to a person familiar with the matter. Dean declined to comment.

These negotiations may not avert a trial, Louisiana Attorney General Buddy Caldwell said today.

“The way everybody’s talking, they’re revving up for a trial,” he said in an interview outside the courtroom. “Louisiana is not negotiating with BP at this time.”

Criminal Trial

The trial on liability for the 2010 spill is now set to begin the same day as a criminal trial against a former BP engineer charged with destroying evidence sought for a U.S. probe.

The jury trial of Kurt Mix, who was charged with two counts of obstruction of justice for allegedly deleting text-message strings from his mobile phone, is scheduled to start Feb. 25 in New Orleans federal court before a different judge.

Mix, who has pleaded not guilty, worked on internal BP efforts to estimate the amount of oil leaking from the Macondo well.

The lawsuits are in 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). The criminal case is U.S. v. Mix , 12-cr-00171, U.S. District Court, Eastern District of Louisiana (New Orleans).

On May 5, 2010, the containment dome, or cofferdam, left Port Fourchon on Chouest’s Joe Griffin for the Deepwater Horizon site. Image (c) BP PLC

BP said Thursday that it has capped the abandoned containment dome, or cofferdam, that was identified last week as the source of a recent oil sheen spotted in the Gulf of Mexico near the site of the 2010 Deepwater Horizon disaster.

The 86-ton cofferdam is a steel container that in 2010 was lowered over the blown out Macondo well in an attempt to capture the oil and funnel it to the surface. The system failed, miserably, with methane ice crystals forming almost immediately after being deployed which caused the steel structure to float. The cofferdam was later abandoned at the site some 1,500 feet away.

BP now says that on Tuesday, with the approval of US Coast Guard, the company deployed Remotely Operated Vehicles (ROVs) and successfully installed a 750-lb cap over an opening on the cofferdam known as the stovepipe and secured it in place with clamps. ROVs also successfully inserted plugs into four small connection ports on the top and sides of the cofferdam, BP says.

BP on Thursday confirmed that initial visual inspections of the cap and plugs have observed no oil droplets emanating from any of the openings and they will continue to monitor the sheen by satellite for several days to confirm that the cap and plugs are secure.

Oil spews from the Macondo well in 2010. (Photo courtesy of U.S. Geological Survey via WHOI)

(Bloomberg) — An oil sheen discovered last month in the Gulf of Mexico near the site of the Deepwater Horizon rig explosion matches samples from the BP Plc oil spill.

BP, the owner of the well that caused the worst offshore spill in U.S. history, reported the sheen on Sept. 16, and the U.S. Coast Guard took samples 10 days later, the Coast Guard said yesterday in a statement on its website.

“The exact source of the sheen is uncertain at this time, but could be residual oil associated with wreckage and/or debris left on the seabed from the Deepwater Horizon incident in 2010,” according to the statement. “The sheen is not feasible to recover and does not pose a risk to the shoreline.”

BP and Transocean Ltd., the owner of the drilling rig that sank, may be held “accountable” for any cost associated with further assessments or operations related to the sheen, according to the release.

Mark Salt, a spokesman for London-based BP, couldn’t immediately comment on the sheen.

Image (c) CreativeNature/Shutterstock

(Bloomberg) — Gulf of Mexico fisheries are rebounding from the BP Plc oil spill, landing more fish last year than in 2009, the year before the worst U.S. offshore marine disaster, the government said.

The total Gulf catch was 25 percent bigger last year than in 2009, 55 percent more than in 2010 and the largest since 1999, the National Marine Fisheries Service said today in a report. In April 2010, the Deepwater Horizon oil rig exploded, killing 11 workers and triggering a spill the government estimated at more than 4 million barrels.

“Our fisheries are on the way up,” Harlon Pearce, chairman of the Louisiana Seafood Promotion and Marketing Board, said in an interview. Some species are doing better than others, and the industry will “need another year or two of stabilization” before it’s back completely, he said.

The disaster hurt fisheries that last year provided about a fifth of the seafood landed by U.S. fishermen, a catch valued at a record $5.3 billion, according to the report. The country’s haul was the biggest in volume since 1994. The U.S. is the world’s fifth-biggest fishing nation, after China, India, Indonesia and Vietnam.

The 2011 catch from Gulf states totaled 1.984 billion pounds, up from 1.283 billion in 2010 and 1.583 billion in 2009, the National Marine Fisheries Service, a unit of the National Oceanic and Atmospheric Administration, said in the report. Landings of menhaden, a fish used mainly for oil and meal, were up 66 percent over 2010. That species accounted for much of the Gulf’s growth, while oysters, crabs and shrimp still haven’t bounced back from pre-spill levels, Pearce said.

Report Challenged

Dean Blanchard, chief executive officer of Dean Blanchard Seafood Inc., a shrimper based in Grand Isle, Louisiana, said the government statistics are misleading and fail to tell the tale of individual operations. Fishing operations are constrained by geography, because going greater distances to find fish raises transportation costs and eats profits, he said.

The company is suing BP, claiming its settlement offer comes nowhere near meeting the needs of those most affected by the spill.
London-based BP agreed in March to pay an estimated $7.8 billion to resolve most private plaintiffs’ claims for economic loss, property damage and injuries. The company declined to comment on today’s report.

“We’re not recovering. Where the oil went, there’s nothing left living,” Blanchard said in a telephone interview. “I’m losing customers. I’m just stuck.” Blanchard called the proposed settlement “a joke” and said his catch is about 10 percent to 15 percent of normal.

Large amounts of weathered oil and tar that washed up last month after Hurricane Isaac came ashore along the Gulf Coast show that the spill is still affecting the region, Stuart Smith, a lawyer for hundreds of property owners and fishing and tourism businesses, said last week in a letter to the U.S. magistrate judge overseeing spill litigation.

-By Alan Bjerga. Copyright 2012 Bloomberg.

Image (c) Shutterstock

(Bloomberg) — BP Plc’s proposed $7.8 billion partial settlement of 2010 Gulf of Mexico oil-spill claims shouldn’t be approved because last month’s hurricane shows how the extent of the spill’s damage still isn’t known, a victim’s lawyer said.

Large amounts of weathered oil and tar were washed up after Hurricane Isaac struck land in the Gulf of Mexico, showing that the spill hasn’t been contained and is still affecting the region, Stuart Smith, a lawyer for hundreds of Gulf Coast property owners and fishing and tourism businesses, said in a letter to the U.S. magistrate judge overseeing litigation over the 2010 spill.

BP’s contention that significant future contamination from the oil spill is unlikely is a “ridiculous proposition,” Smith said in the Sept. 10 letter filed in federal court in New Orleans today. “The landfall of Hurricane Isaac has changed the settlement landscape.”

BP, based in London, agreed in March to pay an estimated $7.8 billion to resolve most private plaintiffs’ claims for economic loss, property damage and injuries. The settlement, reached days before a scheduled trial on liability for the 2010 spill, doesn’t cover federal government claims and those of the Gulf Coast states.

Excluded Claims

Also excluded are claims of financial institutions, casinos, private plaintiffs in parts of Florida and Texas, and residents and businesses claiming harm from the Obama administration’s moratorium on deep-water drilling prompted by the spill. The settlement includes two separate agreements –one over medical claims, the other on economic and property damage.

U.S. District Judge Carl Barbier in New Orleans granted preliminary approval to the settlement in May and set a fairness hearing for Nov. 8. Smith and other lawyers have been filing objections to the settlement.

BP and the plaintiffs steering committee believe the settlement agreements “are fair, reasonable and adequate under the law and therefore should be granted final approval by the court,” Scott Dean, a company spokesman, said in an e-mailed statement.
The objections were expected, “as is common in any class- action settlement approval process,” Dean said.

Hurricane Isaac uncovered limited amounts of residual oil from the Macondo well, BP said in a statement today. This material was “buried in isolated stretches of shoreline we were cleaning before the storm hit,” Mike Utsler, president of BP’s Gulf Coast Restoration Organizations, said in the statement.

Cleanup Operations

BP has spent $14 billion on cleanup operations since the incident, the company said.

Smith asked U.S. Magistrate Sally Shushan to open limited discovery, or evidence-finding, on the effects of Isaac, as well as the extent of the environmental recovery in the Gulf.

Smith hadn’t provided the settling parties with enough opportunity to review and respond to his request for more discovery, Shushan said in an order today. Shushan gave BP and the plaintiffs steering committee, which reached the settlement with the company, until
Sept. 14 to respond to Smith’s request. She didn’t order more discovery.

Even before Hurricane Isaac, “oil continues to wash up on our beaches,” Allen Kanner, lawyer for Louisiana Attorney General Buddy Caldwell, said in a court filing last week objecting to the settlement. “At least four of our fisheries remain closed due to the continued concentration of oil in the Gulf.”

The proposed settlement “unfairly transfers the risks of future losses from BP to the victims even though BP legally remains forever responsible,” Kanner said.

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).

(Photo courtesy of U.S. Geological Survey via WHOI)

(Bloomberg) — BP Plc, the owner of the Macondo well that caused the worst U.S. oil spill two years ago, declined in London after the Department of Justice reiterated it will pursue charges of gross negligence in the case.

BP slipped as much as 4.5 percent, the most in more than a month, and traded down 3.9 percent at 419.70 pence as of 10:40 a.m. BP faces a trial with the DOJ after reaching a $7.8 billion settlement in March with victims of the spill.

“The tone of the DOJ is clearly disappointing as it would appear to suggest that hope for an out-of-court settlement is fading,” said Richard Griffith, an analyst at Oriel Securities Ltd. in London, in an e-mailed note. “The risk is that the trial process could now drag on over several years and effectively act as a drag on the shares.”

The U.S. “intends to prove gross negligence or wilful misconduct” in a trial, it said in a court filing from Aug. 31. The government was responding to comments in a BP filing asking for final approval for its settlement with victims.

If BP is found guilty of gross negligence, which would require the government to prove the accident resulted from a conscious BP act or omission, the maxiumum level of penalty would rise to $17.6 billion from $4.5 billion using the government’s estimate of the size of the spill.

The blowout and explosion on the Deepwater Horizon rig in April 2010 killed 11 workers and set off an oil spill that the government has estimated at more than 4 million barrels. The accident prompted hundreds of lawsuits against BP, and shares remain more than 30 percent lower than before the accident.

The government’s filing shows it doesn’t disagree with the company’s March settlement with victims, BP spokesman Mark Salt said.
“Other issues raised by the government simply illustrate that disputes about the underlying facts remain,” Salt said. “BP believes it was not grossly negligent and looks forward to presenting evidence on this issue at trial in January.”

-By Brian Swint. Copyright 2012 Bloomberg

The Marine Well Containment Company’s capping stack. Photo: MWCC

HOUSTON–U.S. regulators are testing how a spill-fighting consortium of international oil companies would respond to the worst-case scenario: a well blowout thousands of feet under water.

The exercise, which began Tuesday morning and will go on for several weeks, will have the Marine Well Containment Co. lower a capping stack–a device similar to the one that stopped the flow of oil from the Deepwater Horizon well in 2010–through 7,000 feet of water and latching it to a test well head.

The capping stack will be lowered by wire, a technique that could potentially be faster than the one used in 2010, when the capping stack was lowered by pipe.

“This exercise will help further enhance [the] industry’s preparedness by deploying one important component of their well-control capabilities to the sea floor,” said Jim Watson, director of the Bureau of Safety and Environmental Enforcement, in a news release.

The Marine Well Containment Co. is an independent nonprofit organization headquartered in Houston. It was founded by Exxon Mobil Corp. (XOM), Chevron Corp. (CVX), ConocoPhillips (COP) and Royal Dutch Shell PLC (RDSA, RDSA.LN) in the wake of BP PLC’s (BP, BP.LN) Deepwater Horizon disaster, to address concerns that the oil industry didn’t have the ability to stop deep-water spills. Now it has equipment ready to be deployed in the case of an emergency.

Under laws enacted after the Deepwater Horizon blowout, which in 2010 killed 11 aboard a drilling rig and unleashed the worst offshore oil spill in U.S. history, companies are required to show they have access to and could deploy surface- and subsea-containment equipment to respond quickly to a blowout.

Tuesday’s exercise is part of a series of planned and unannounced exercises and inspections designed to make sure the oil and natural-gas operators can actually carry out their required spill-response plans.

In May, the bureau said it will at some point administer a similar exercise to the Helix Well Containment Group, the other consortium that provides well-containment equipment to oil and natural-gas operators in the Gulf.

Copyright © 2012 Dow Jones & Company, Inc.

A view of the Gulf oil spill from space.

The Financial Times on Friday reported that BP PLC (BP) hopes to pay less than $15 billion to settle all penalties with the Department of Justice over the massive oil spill in the Gulf of Mexico two years ago, citing a person familiar with the discussions.

The DOJ, however, wants the company to pay $25 billion and the discussions are accelerating, the person told the newspaper.

Meanwhile, a U.S. federal judge on Monday ruled against BP Plc’s (BP) bid to gain access to 21 emails and other documents sent by the White House and other officials related to the 2010 Gulf of Mexico oil spill, according to Reuters.

The report states that the federal government’s need to keep the documents confidential and the public interest in ensuring an effective response to the next disaster outweighed BP’s need for the documents to defend itself in litigation, Judge Sally Shushan said in New Orleans.

Company spokesman Scott Dean declined comment, according to the report.

Marlin semi-sub platform in the Gulf of Mexico, USA © BP p.l.c.

HOUSTON (Dow Jones)–After deep self-examination following the April 2010 Deepwater Horizon oil spill, BP PLC (BP, BP.LN) decided not to leave the Gulf of Mexico and opted instead to increase investment as part of its renewed commitment to the region, a company executive said Monday.

“After much soul-searching in the fall of 2010, we concluded it would be wrong to walk away,” BP Executive Vice President Bernard Looney said in a presentation at the Offshore Technology Conference here. “We would have been walking away not only from our past, but from a key component of our future.”

BP is planning to add three drilling rigs in the Gulf by the end of the year, bringing the total number to eight, more than the company had before the oil spill, Looney said. BP also plan to spend this year $4 billion in the Gulf and expects to spend at the same level for years to come, he said.

“We hope to invest at least that much every year over the next decade,” Looney said.

One of BP’s major capital projects in the region, Mad Dog Phase 2, is expected to start production towards the end of the decade, he said.

Mad Dog, which was discovered in 1998 and first produced oil in 2005, is confirmed to have some four billion barrels of oil in place, Looney said, adding that puts into the “super-giant field” category.

BP is working hard to learn from the oil spill lessons and help prevent “such an accident from ever happening again,” Looney said. “The Deepwater Horizon accident challenged us to the core.”

Securing a “reasonable resolution to the remaining claims against us,” related to the oil spill remains a challenge for the company, he said.

BP was the operator of the Macondo well where a rig it leased from Transocean Ltd. (RIG) exploded and sank in April 2010, killing 11 workers and causing the worst offshore oil spill in U.S. history

-By Isabel Ordonez, Dow Jones Newswires

Copyright © 2012 Dow Jones & Company, Inc.

According to statements released late Friday by BP and a committee of lawyers representing Gulf coast plaintiffs, the settlement will create two classes of claims: economic loss claims and medical claims.

(This story and related background material will be available on The Wall Street Journal website, WSJ.com.)

The economic loss claims will compensate businesses, property owners and individuals who sustained economic damage from the 87-day oil spill, the biggest offshore spill in U.S. history.

The medical claims will compensate a wide range of individuals along the Gulf Coast, including thousands of spill clean-up workers, and will provide medical consultation services for the next 21 years.

BP said the payments will come from the balance of a $20 billion fund it set up previously to compensate Gulf Coast residents and businesses impacted by the spill.

While the settlement doesn’t put a cap on the total payments BP will make, the company estimates it will cost about $7.8 billion to cover the claims, including about $2.3 billion to help resolve economic loss claims related to the Gulf seafood industry.

The settlement, which must be approved by U.S. District Judge Carl Barbier, is not expected to increase the $37.2 billion charge BP previously recorded in its financial statements.

The settlement does not include claims against BP by the U.S. Justice Department or other federal agencies for violations of the Clean Water Act or by the states and local governments.

BP has paid some $6.1 billion to more than 200,000 individuals and businesses through the Gulf Coast Claims Facility, a process overseen by Washington, D.C. attorney Kenneth Feinberg, who was appointed to the post by the government. An additional $400 million in payments have been offered by the fund but haven’t yet been completed.

The GCCF will be dismantled but a new system for reviewing and approving claims will be established that will be run by the plaintiff’s attorneys and overseen by the courts.

Late Friday night Judge Barbier of the Eastern District of Louisiana said that since the settlement “would likely result in a realignment of the parties” the civil trial that was set to start Monday was adjourned so the sides could reassess their positions. No new date was set.

The settlement does not resolve claims the plaintiffs may make against Transocean (RIG, RIGN.VX), the owner of the Deepwater Horizon rig, cement contractor Halliburton (HAL), or blowout preventer-manufacturer Cameron International (CAM).

A spokesman for Transocean said the settlement does “not change the facts of this case and we are fully prepared to argue the merits of our case based on those facts.”

(c) 2011 Dow Jones & Company, Inc.