The Settlement Phase: Maker of Blowout Preventer Agrees to Pay BP $250 Million


There’s nothing like an impending trial to prompt defendants to cut their losses and settle out of court. We’re seeing the front-end of that legal phenomenon today with Cameron International – the maker of the (poorly named) “blowout preventer” that failed to stop last year’s 200-million-gallon Gulf oil spill – agreeing to settle with BP for $250 million. With the massive federal multi-district litigation (MDL) trial slated to begin in February to determine fault in the spill, my guess is we’ll be seeing other settlements coming down the pike.

From a Dec. 16 Associated Press report:

BP PLC says it will be paid $250 million by the maker of the blowout preventer that failed to halt oil spewing from BP’s busted well in the Gulf of Mexico.

The settlement comes in advance of a federal trial over the catastrophic Gulf oil spill. The non-jury trial is slated to begin in February and determine fault in the April 20, 2010, explosion and subsequent oil spill off the Louisiana coast of more than 200 million gallons of oil.

And this from BP’s head honcho:

“Today’s settlement allows BP and Cameron to put our legal issues behind us and move forward to improve safety in the drilling industry,” said Bob Dudley, BP group chief executive.

“Unfortunately, other companies persist in refusing to accept responsibility for their roles in the accident and for contributing to restoration efforts,” Dudley said in a swipe at Halliburton Corp. and Transocean Ltd. Halliburton supplied critical cement to seal the well and Transocean was the company drilling the well.

The settlement is not an admission of liability, but it brought about an agreement between BP and Cameron to drop all claims against each other. BP will use the $250 million to pay for oil spill cleanup and damage claims from individuals and businesses hurt by the spill. The settlement frees Cameron from paying for any additional cleanup costs tied to the spill. Although it does not represent the end of the company’s legal challenges, it goes a long way toward reducing the uncertainty surrounding the company’s liability. More from the AP report:

…BP said the agreement does not cover civil, criminal and administrative fines and other penalties that might arise out of the court proceedings.

Jack Moore, the chairman and CEO Cameron, said the agreement with BP “removes uncertainty facing Cameron” as litigation intensifies over the Deepwater Horizon explosion.

With less than three months to go before the start of the trial in New Orleans, I expect other settlements are on the way. So stay tuned.

Read the full AP report here:

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Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
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