BP will pay $255M arbitration award

By Bryan Cohen | Nov 12, 2012

JUNEAU, Alaska (Legal Newsline) - Alaska Attorney General Michael Geraghty announced a multi-million dollar arbitration award on Thursday against BP Exploration (Alaska) Inc.

The state requested monetary compensation for oil production shortfalls caused by pipeline replacements and pipeline leaks in 2006 at the Prudhoe Bay Unit.

"The state contends that it suffered a loss or deferral of production of oil and natural gas liquids under the PBU leases due to certain oil spills that occurred in March and August 2006, and consequent facility shut-ins and pipeline replacement projects triggered by those spills," the arbitration decision said.

BP Exploration (Alaska) Inc. admitted liability for the purposes of arbitration, but argued that the state suffered no losses, requesting that the arbitration panel award no damages to the state.

The three arbitrator panel held a four week hearing in May and June before issuing a unanimous decision in the state's favor on Oct. 31. The final, binding and non-appealable award, after adjustment for previously agreed upon credit with prejudgment interest, is $245 million.

Additionally, BP Exploration (Alaska) Inc. will pay $10 million to settle civil assessments related to the spills.

In total, BP will pay the state of Alaska $255 million for the 2006 pipeline shutdowns and spills.

More News

The Record Network