Mar 3, 2012 1:20 PM by Chris Welty
NEW YORK (AP) - BP's settlement deal with thousands of victims of the 2010 Gulf oil spill is a major step toward putting the worst oil spill in U.S. history behind it.
BP says it will not have to increase the $37.2 billion it has set aside to pay for the spill, and analysts say the settlement could allow BP to quickly resolve outstanding claims by states and the federal government.
If approved by the court, the deal would settle lawsuits filed by 100,000 individuals and businesses affected by the spill. BP expects the settlement to cost $7.8 billion, paid out of a $20 billion trust the company had established to pay these types of claims. The trust has $9.5 billion in assets. Whatever remains in the trust after victims are paid out would come back to BP.
The accident in April 2010 destroyed a drilling rig called the Deepwater Horizon, killed 11 workers, spilled an estimated 200 million gallons of oil and disrupted thousands of Gulf Coast lives. The spill soiled sensitive tidal estuaries and beaches, killed wildlife and closed vast areas of the Gulf to commercial fishing.
The settlement does not resolve state claims against the company or federal fines and penalties that could total $20 billion to $25 billion. BP is also mired in lawsuits with some of its partners in the Macondo project in the Gulf of Mexico.
Also, individual victims are not required to agree to terms of the settlement and they could choose to bring separate cases.
But analysts say individual claims aren't expected to amount to much, and they now expect BP to be able to move quickly to settle the rest of the claims against it.
"They are clearing the decks for a potential deal with the government that would end this litigation and enable them to move beyond the Gulf oil spill," said David Uhlmann, a University of Michigan Law School professor who served as chief of the Justice Department's environmental crimes section.
Uhlmann called the deal fair for both sides and said it cleared what appeared to be the biggest hurdle to a global settlement in the case. "The only trial I thought we would see in this case is the one that just went away," he said.
Fadel Gheit, an analyst at Oppenheimer & Co., said the settlement shows BP is willing to pay in order to try to put the oil spill behind it. That willingness, he said, will help the company reach deals with governments and other plaintiffs.
BP is the largest oil producer in the Gulf, and it needs to be able to continue to drill for oil there to ensure its future, he said.
"They have been telling the government: 'We'll do whatever it takes. We're just going to pay and get this over with. We want to be back in business,'" Gheit said.