By Ashley Jefferson,
Money and Investing Writer
Halliburton (NYSE: HAL), a company contracted by BP (NYSE: BP) to cement an oil well in the Gulf of Mexico has reached a $1.1 billion settlement according to the company in an announcement made on Tuesday Septemeber 2. This settlement includes thousands of businesses, individuals and governments.
In 2010, BP contracted two companies: Halliburton and Transocean (NYSE: RIG). A misstep in these two, possibly all three companies led to a blowout of the Deepwater Horizon oil rig, killed 11 workers, and sent oil gushing throught the Gulf. Though BP vows that they are not the party to blame in this, they still have had to sepnd more than $28 billion on damage claims and cleanup costs.
Halliburton was responsible for mixing and applying the cement that was responsible for keeping the oil rig in place. Many studies that have been conducted of the accident say that if the cement had been mixed and applied properly, that the worst offshore oil spill in American History may not have occurred.
Four years after the widely publicized tragedy, BP and Halliburton continue to go back and forth about who is to blame.
The settlement comes as no surprise especially after they plead guilty to a criminal charge of destroying evidence last year. Compared to all parties involved, Halliburton is only paying out a small fraction of the damages. In the coming months, a Federal District Court judge in New Orleans will be deciding how to assign the blame to Transocean, Halliburton, and BP.
“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,” said Stephen Herman and James Roy, the leaders of the steering committee for the plaintiffs.
Legal scholars who followed the case felt that Halliburton’s judgement about the settlement was thought through and calculated and will definitely be a benefit to the company in the long run.
According to the New York Times, Carl Tobias, a law professor at the University of Richmond said “It also allows Halliburton to put the oil spill – especially its litigation costs, uncertainty and adverse publicity- behind the company, so that it can concentrate efforts on creating innovative technology and increasing market share.”
While it seems like things are finally being settled, this is just the beginning. BP could potentially face up to $18 billion in penalities under the Clean Water Act. The exact amount is all dependant upon how much oil the Judge decides was spilled and if the company was grossly negligent or not.
While BP acknowledges responsibility, they are determined to make sure that the other companies involved also own their part in it as well. Anadarko Petroleum (NYSE: APC), a company that owned 25 percent of the well, has a possibility of being fined under the same law.
What have our big corporations learned from this? Is the worst oil spill in history and a costly aftermath enough for corporations to examine their practices and change where neccesary?
A trial is set for January to decide the exact financial penalities.
A version of this article appeared in the Tuesday, Sept. 9 print edition.
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