A sheen of oil floats in a marsh on April 19, 2011 in southern Louisiana, one year after the BP oil spill. John Moore/Getty Images
In the days after the 2010 Gulf of Mexico oil spill, BP lied about how much oil was leaking from its Macondo well and took too long to cap it, plaintiffs' lawyers said Monday at the opening of the second phase of the company's trial.
The current phase, expected to last a month, is focused on how much oil spewed from the well and whether efforts to plug it were adequate.
"BP refused to spend any time or money preparing to stop a deepwater blowout at its source," said Brian Barr, a lawyer for the plaintiffs – who include people affected by the spill, the U.S. government and Gulf states, and BP's former contractors.
"BP then made the situation worse," Barr said. "By lying about the amount of flow from the well."
The British oil company is fighting to hold down fines that could hit $18 billion at the trial, which will determine damages. BP's annualized earnings, based on last quarter, are running at about $17 billion.
The amount of oil spilled will determine the penalty the company faces.
The U.S. government says 4.9 million barrels were discharged in the Gulf of Mexico spill, the worst offshore disaster in U.S. history. BP says 3.26 million barrels leaked from the well during the nearly three months it took to cap the blowout at the Deepwater Horizon rig. Both those totals include 810,000 barrels that were collected during clean-up that the judge has agreed to exclude.
A lawyer for BP told the U.S. District Court in New Orleans that the company did not misrepresent the oil flow and followed U.S. standards before and after the spill.
"BP had a response plan that was fully consistent with U.S. standards for spill preparedness," said a BP lawyer, Mike Brock.
"BP did not misrepresent the flow rate in a way that caused a delay in the shut in of the well. It made reasonable decisions based on what was known at each step along the way."
Internal company emails presented at the trial on Monday showed BP saying publicly after the spill in April 2010 that 5,000 barrels of oil a day were leaking into the ocean, when it knew up to 100,000 barrels a day could have been leaking.
John Wilson, a professor at New Mexico Institute of Mining and Technology who was called to testify against the company, said BP's reliance on unsubstantiated estimates of the size of the leak contributed to poor decisions on how to plug the well. BP took 87 days and several attempts to cap it.
The first phase of the trial, which wrapped up in April, looked at dividing blame among BP and its contractors – Transocean and Halliburton Co – for the disaster that left 11 men dead and huge stretches of sea and coast fouled with oil. Transocean owned the drilling rig and Halliburton did cement work on the well.
Judge Carl Barbier said he would not assign penalties for BP until the third phase of the trial, expected early next year.
Under the Clean Water Act, negligence can be punished with a maximum fine of $1,100 for each barrel of oil spilled; a gross negligence verdict carries a potential $4,300 per barrel fine.
If the court judged the spill to have been 4.09 million barrels – the government estimate less oil recovered – the price of negligence could reach $4.5 billion. Gross negligence could run to $17.6 billion.
A Mississippi environmental group called for hefty fines.
"When you drill a well in 5,000 feet of water and you literally have no idea what you do if there's an accident – to me that's gross negligence on the face of it," said David Muth, director of the Mississippi River Delta Restoration program.
BP shares have lost a third of their value since the disaster, as the company hived off $39 billion of assets that generated $5 billion a year in cash flow – or about a fifth of its earning power – before 2010.