Fines for oil and gas accidents, in the US and Scotland

There is a commonly held belief that US Courts award larger monetary fines and penalties than European Courts. This perhaps can be tested by some recent comparisons. BP paid $18.7Bn in fines to the US Government after the Macondo blowout in 2010, after already having paid $42Bn in the settlement of criminal and civil suits, and trust fund payments. The blast killed 11 people and discharged 686,000 tonnes of oil into the sea.

The Total Elgin blow-out

In the UK, Total E+P experienced a blow-out on the Elgin offshore platform in 2012, which caused considerable inconvenience to neighbouring offshore operators, where production and other drilling work had to be suspended. The high pressure natural gas leak continued for 51 days. The accident led to a total discharge of 6000 tonnes of gas and condensate into the atmosphere. Closing the well down cost Total around $127m, but also they lost production output from the Elgin-Franklin project for around a year.

Last year the Scottish Courts fined Total E+P $1.67million for the mistakes that led to the discharge and pollution. This makes the Scottish fine per tonne of gas discharge on Total around 1% of the US fine imposed on BP, per tonne of oil discharge. Is this factor a measure of the difference between oil and gas, or the difference between the Courts?

What does this mean for SoCalGas?

Southern California Gas has currently a problem with a major gas leak from the Aliso Canyon gas storage well, which is an abandoned oil well used to store natural gas. This blew in October last year, and is on schedule to be stopped by the end of March. The Californian Air Resources Board has monitored the leak rates, which have now reduced significantly, as the reservoir empties. They suggest the discharge to date has been 83,000 tonnes of methane, also suggesting this is 2.1m metric tonnes of CO2 equivalent.

On the basis of a Scottish Court fine, pro-rata for the discharge of 83,000 tonnes, SoCalGas would face a fine of $23m, if it were based in Scotland. If the US Courts treat a gas discharge in the same way as an oil discharge, then following the BP example, the fine will be 100x greater, or around $2Bn. I think it is more likely that US Courts, even with their normal high value fines, will view air pollution and global warming as far less significant than oil pollution and damage to their local sea environment and beaches. We will wait for some years to see what the fine will be.

Feb 10: UK Courts fine ConocoPhillips

February 10th: Another UK Court ruling relates to ConocoPhillips, who have been fined GBP3m ($4.5m approx) over three dangerous gas releases on the Lincolnshire Offshore Gas Gathering System (LOGGS) between 30 November and 1 December 2012. In the first incident 603Kg of hydrocarbon gas was released.

The fine was related more to the lack of proper procedures and danger posed by the release, to the offshore workers, than the environmental damage.

References

For the SoCalGas leak information website, see www.AlisoUpdates.com.

For the Californian ARB website: http://www.arb.ca.gov/research/aliso_canyon_natural_gas_leak.htm

For the original INSIDER comment on this topic, see https://nickdenbow.wordpress.com/2015/12/23/us-climate-change-contribution/

(c) Nick Denbow – Processingtalk.info

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