BP's Costs Stemming from 2010 Gulf of Mexico Accident Exceed $61 Billion

On Thursday, BP issued its final estimate on its total financial losses stemming from the 2010 Deepwater Horizon rig explosion and oil spill at the Macondo well in the Gulf of Mexico. With $61.6 billion (USD) paid out to thousands of claimants, lawyers, states along the Gulf Coast, and the federal government, the financial toll of the accident is larger than the market capitalization of either of the next two biggest integrated U.S. oil companies — ConocoPhillips or Occidental Petroleum — and more than twice the size of Anadarko Petroleum, the biggest U.S. independent oil company.  

In April, the U.S. Chemical Safety Board (CSB) released a report finding that a complex interplay of physical, operational, and organizational barriers failed on April 20, 2010, sending oil and gas from deep below the ocean floor onto the drilling rig, triggering explosions and ensuing fire that left 11 of the 126 workers dead and critically injured at least 17 others. It also claimed that offshore regulatory changes made thus far do not do enough to place the onus on industry to reduce risk, nor do they sufficiently empower regulators to proactively oversee industry’s efforts to prevent another disaster like Macondo, the biggest oil spill in the history of offshore drilling. The CSB had previously released two volumes of findings identifying failures of the primary well control equipment, the blowout preventer, and safety management deficiencies by Transocean and BP. 

“Before the accident, BP had a market capitalization of $180 billion. The accident actually shaved off one-third of the market capitalization of the company. It’s a miracle that the company is still in business,” says Fadel Gheit, oil analyst at Oppenheimer & Co. He went on to add, “We’re lucky that BP was not a small company, because at the end of the day, the government would have shouldered the entire weight of the accident.”