Finance

Louisiana Company to Pay $43 Million for Longest-Running Oil Spill in U.S. History

WASHINGTON — The Department of Justice announced on Wednesday that Louisiana-based Taylor Energy will pay $43 million in civil penalties and damages for a leak in the Gulf of Mexico that has been releasing oil since 2004, the longest-running spill in U.S. history.

As part of the settlement, Taylor Energy will also transfer to the Department of the Interior control of $432 million remaining in a trust fund dedicated to cleaning up the spill.

The leak, located roughly 10 miles off the Louisiana coast, began 17 years ago when an offshore oil platform owned by Taylor Energy sank in a mudslide triggered by Hurricane Ivan, breaking open a number of undersea wells. Oil and gas have been seeping from the site ever since.

Taylor Energy, which sold its oil assets and ceased production in 2008, has long disputed both the size of the leak and the extent of its responsibility for cleanup efforts. The settlement on Wednesday marked the end of a yearslong legal battle over the spill. The $43 million that the company will pay represented all of its remaining available assets, the Justice Department said.

“Offshore operators cannot allow oil to spill into our nation’s waters,” said Todd Kim, the Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division, in a statement. “If an oil spill occurs, the responsible party must cooperate with the government to timely address the problem and pay for the cleanup. Holding offshore operators to account is vital to protecting our environment and ensuring a level industry playing field.”

Taylor Energy had set up a $666 million fund in 2008 to clean up the spill and spent roughly one-third of the money to cap nine of the 25 wells that were damaged during the hurricane. But after doing so, the company said that the remaining 16 wells were too risky to address because they were buried under so much mud and debris, and unsuccessfully sued the Department of Interior to release the balance of its funds.

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In 2018, after new federal estimates suggested that as much as 29,000 gallons of oil per day were still gushing from the site, the Coast Guard ordered Taylor Energy to halt the leak or face steep fines. When the company refused, the Coast Guard commissioned an outside contractor to build a containment system that is now believed to be capturing the majority of the leaking oil and sent Taylor Energy a bill last year for $43 million to cover a year’s worth of removal costs.

Taylor Energy pushed back. The company claimed that only a small amount of oil had still been leaking from the wells, that oil sheens observed in the area were from oil-soaked sediment around the platform rather than from the wells themselves, and that further disturbing the area risked the release of even more oil into the Gulf of Mexico. Taylor Energy had also challenged the Coast Guard’s containment efforts in federal court, asserting that the company should not be held liable for the costs.

The settlement requires Taylor Energy to dismiss its three pending lawsuits against the federal government. After court approval of the settlement, the company will be liquidated and will turn over any remaining assets to the federal government. The company has also been ordered not to interfere with the Coast Guard’s efforts to contain or remove oil from the spill site.

Taylor Energy did not immediately respond to a request for comment.

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