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Transocean to Settle Claims with Justice Department over Gulf Oil Spill

Source: WSJ

Posted on 03 Jan 2013 by Neilson

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Transocean to settle claimsOffshore driller Transocean Ltd. and the Justice Department are expected to announce a settlement Thursday afternoon that would wrap up all of the company's civil and criminal issues relating to the 2010 Deepwater Horizon accident in the Gulf of Mexico, according to people familiar with the talks.

Transocean was the owner of the drilling rig that exploded in April 2010, killing 11 workers and leading to the largest offshore oil spill in U.S. history. The company is expected to pay fines and penalties of about $1.4 billion, according to a person familiar with the matter.

Spokesmen for Transocean and the Department of Justice didn't return calls seeking comment.

Transocean said previously in Securities and Exchange Commission filings that it has discussed a $1.5 billion payment with the Justice Department to resolve the civil and criminal claims. The company has set aside a $2 billion noncash reserve for all Deepwater Horizon-related claims.

Oil giant BP PLC, which had been leasing the Deepwater Horizon to drill an exploratory well in the Gulf of Mexico and was primarily in charge at the time of the accident, agreed to pay $4.5 billion in November to settle all criminal and some civil charges related to the accident.

The case against BP included 11 felony counts of "seaman's manslaughter" and a misdemeanor violation of the Clean Water Act.

BP must still contend with civil Clean Water Act violations, which could total more than $20 billion. If BP agrees to settle the civil violations the payments would likely be much less. But if it chooses to fight the claims in court it could face fines of $4,300 for each of the estimated 4.9 million barrels of oil spilled if the company is found to have been grossly negligent.