Spill Mill

Written by The Financial Express | Updated: Nov 17 2012, 06:38am hrs
The US president called the Deepwater Horizon disaster of 2010 the worst environmental disaster his country had ever faced. Over the three months it took to cap the shattered well reaching 5,000 feet under the sea floor, during which an estimated 4.9 million barrels of oil spilled out into the Gulf of Mexico, senior BP personnel under-presented the flow rate to the public and even the Congress. This was on top of negligence in sealing the well in the first place. So, in an unusual move, BP supervisors who made the last critical decisions on board the Deepwater Horizon rig before it exploded (and subsequently misrepresented the scale of the disaster) have been charged with manslaughter by the Justice Department. And their corporation has been persuaded to pay up $4.5 billion to settle criminal liabilities. Though this is the largest ever criminal settlement in the US, and BP has already paid $23 billion in clean-up costs and reparations, bigger bills may yet be coming its way via the violations to the Clean Water Act, civil claims, etc. The scale of punishment will obviously encourage BP and its peers to embrace safety standards much more closely. This is obviously desirable.

But it must also be underlined that neither BP nor its shareholders appear to be really taken aback. Even though it has had to sell some assets to pay related liabilities, BP remains the largest oil producer in the US Gulf of Mexico, and it is now exploring shale formations across Texas, Oklahoma, Arkansas, Louisiana and Ohio. The crux of the matter is that, from Canadian oil sands to the offshore Arctic territories of Alaska, new-age crude will not only be much more energy-intensive but also come with greatly enhanced risks of spills, explosions, etc. Safety standards, R&D budgets and liability caps need to be enhanced but they wont guarantee us a safe haven.