By MARK DRAJEM, JIM SNYDER and JEF FEELEY
BP won the right to again compete for US contracts and new
leases in the Gulf of Mexico, where its massive 2010 oil
spill prompted regulators to bar it from new government
The agreement with the Environment
al Protection Agency
will allow BP, which had been the Pentagons biggest
fuel supplier, to seek lucrative federal contracts again and
bid for oil exploration leases. Next week, a US auction is
set for the right to drill in the Gulf, where the
London-based company is the second-largest producer.
The end of the suspension is a milestone in BPs
recovery from the worst US oil spill, which forced it to sell
about $38 billion in assets to meet the costs of cleaning up
pollution and compensating victims. A trial to establish
BPs degree of responsibility and impose fines under the
Clean Water Act is still underway in New Orleans.
It marks another step, in our view, toward the
rehabilitation of BPs reputation, standing and position
in the key North American market, analysts at Deutsche
Bank said in a note to clients Friday. The timing is
helpful given the upcoming licensing round, they
Tyson Slocum, director of the Public Citizens Energy
Program in Washington, said the decision was premature.
This lets a corporate felon and repeat offender off the
hook for its crimes against people and the environment
, Slocum said in
a statement. BP was on criminal probation at the time
of the 2010 Deepwater Horizon disaster, and it has failed to
prove that it is a responsible contractor.
The US Bureau of Ocean Energy Management, part of the
Interior Department, on March 19 plans to auction leases
covering more than 40 million acres on the Gulf for oil and
Bob Dudley, BPs chief executive officer, said this
month the Gulf is one of four key regions for
growth. It drilled 63.6 million bbl in the Gulf in 2013,
second only to Royal Dutch Shell, according to Interior
The company declined to comment yesterday on whether it will
participate in the auction next week.
After a lengthy negotiation, BP is pleased to have
reached this resolution, which we believe to be fair and
reasonable, John Mingé, chairman and president
of BP America, said in an e-mailed statement.
The companys 45-page administrative agreement with the
EPA announced yesterday will last five years. It obliges BP
to comply with a set of safety, ethics and corporate
governance requirements. The company will also retain an
independent auditor, who will conduct an annual compliance
review and report to the agency.
This is a fair agreement that requires BP to improve
its practices in order to meet the terms weve outlined
together, Craig Hooks, an EPA assistant administrator,
said in a statement.
The settlement with the government over the contracting ban
wont have any effect on other lawsuits over the 2010
spill, Carl Tobias, who teaches mass-tort law at the
University of Richmond in Virginia, said in an e-mail
A judge in New Orleans is weighing how to assess blame for
the disaster among the three main companies involved -- BP,
Transocean, the owner of the drilling rig that burned and
sank, and oilfield services provider Halliburton.
US District Judge Carl Barbier also must determine how much
oil spilled, a key measure for determining how much BP will
eventually have to pay in Clean Water Act penalties. The oil
company could be facing more than $17 billion in fines.
The EPA imposed the contract suspension in 2012 after
determining that BP hadnt fully corrected deficiencies
that led to a fatal explosion aboard the Deepwater Horizon
In August, BP sued the EPA in federal court in Houston
seeking to lift the suspension. The companys request
was backed by the British government and US Chamber of
Commerce, the biggest business lobbying group in Washington.
As part of the deal, BP said it would drop that lawsuit.
The EPAs lawyers asked a judge yesterday for a
stay pending dismissal of BPs lawsuit over
the ban, according to court records.
The government suspended BPs rights to seek federal
contracts after the company pleaded guilty to 11 counts of
felony seamans manslaughter, two pollution violations
and one count of lying to Congress in connection with the
BP agreed to pay $4.5 billion in related criminal and civil
penalties and faces additional fines, as well as to thousands
of claims by individuals and companies. Its also agreed
to resolve most private-party lawsuits as part of an uncapped
settlement BP now values at about $9.2 billion
In addition to the spill, the EPA cited the 2005 explosion at
a BP-owned Texas City, Texas, refinery
and two oil spills in
Prudhoe Bay, Alaska, as grounds for the 2012 debarment.
At the time of the April 2010 spill, BP was on probation
after pleading guilty in 2007 to a felony air-pollution
charge and paying a $50 million fine for the explosion in
Texas City that killed 15 workers.
BP has four major producing hubs in the Gulf -- Mad Dog,
Thunder Horse, Atlantis and Na Kika. The company has boosted
the number of drilling rigs in the region to 10 from six
before the Deepwater Horizon accident. Underlying production
grew for the first time since 2009 in the Gulf last year.
The push into the Gulf comes as BP has struggled to make its
onshore US business profitable. It announced plans last week
to separate the unit that handles output in the lower-48
states to try and make it more competitive with smaller