Taylor Energy To Pay $475M Over Longest-Running Offshore Oil Spill

Taylor Energy To Pay $475M Over Longest-Running Offshore Oil Spill
Taylor Energy agreed to turn over all remaining assets to the U.S. to resolve liability for the oil spill at its former GOM offshore facility.

Oil and gas company Taylor Energy has agreed to turn over all its remaining assets to the United States upon liquidation to resolve its liability for the oil spill at its former Gulf of Mexico offshore oil production facility.

Under the proposed consent decree, Taylor Energy will transfer to the Department of the Interior (DOI) a $432 million trust fund dedicated to plugging the subsea oil wells, permanently decommissioning the facility, and remediating contaminated soil.

The consent decree further requires Taylor Energy to pay over $43 million for civil penalties, removal costs, and natural resource damages.

The oil spill is the longest-running oil spill in U.S. history, ongoing since 2004. The spill was a consequence of Hurricane Ivan causing one of Taylor's offshore drilling platforms located about 10 miles off the coast of Louisiana to collapse in the Gulf of Mexico.

Since April 2019, the vast majority of the leaking oil has been successfully captured by a containment system installed and operated by the U.S. Coast Guard through a contractor.

The United States filed a civil complaint against Taylor Energy in the U.S. District Court in New Orleans in October 2020 seeking removal costs, civil penalties, and NRD under the Oil Pollution and Clean Water Acts arising from the discharge of oil from the company’s former oil production facility.

Between 2016 and 2020, Taylor Energy filed several lawsuits against the United States, including challenging the Coast Guard’s decision to install the spill containment system and appealing the Coast Guard’s denial of Taylor Energy’s $353 million spill-cost reimbursement claim submitted to the U.S. Oil Spill Liability Trust Fund.

The settlement resolves the United States’ environmental enforcement claims against Taylor Energy and requires the company to drop its remaining lawsuits against the United States.

“Despite being a catalyst for beneficial environmental technological innovation, the damage to our ecosystem caused by this 17-year-old oil spill is unacceptable,” said U.S. Attorney Duane A. Evans for the Eastern District of Louisiana. “The federal government will hold accountable businesses that violate our Nation’s environmental laws and ensure that any oil and gas company operating within our District meets their professional and legal responsibilities.”

“For the last three years, the Coast Guard, along with our federal partners, has committed to the challenging mission of containing and removing more than 800,000 gallons of oil discharging into the Gulf of Mexico,” said Captain Will Watson, Sector Commander of the Coast Guard New Orleans.

“Containment and removal operations continue to this day. This settlement will provide significant financial resources for the BSEE, BOEM, NOAA, and the Coast Guard to permanently secure the wells, protect the marine environment, preserve marine resources, and ensure compliance with the Oil Pollution Act of 1990,” he added.

Under the settlement, Taylor Energy will pay over $43 million — all of the company’s available remaining assets — in fines, as well as transfer $432 million currently held in a trust for decommissioning of the incident site to the Bureau of Ocean and Energy Management (BOEM). The company will also be barred from interfering in any way with the decommissioning work.

“This settlement represents an important down payment to address impacts from the longest-running oil spill in U.S. history,” said Nicole LeBoeuf, Director of NOAA’s National Ocean Service. “Millions of Americans along the Gulf Coast depend on healthy coastal ecosystems. NOAA and our co-trustees look forward to working in partnership with the National Pollution Funds Center to ensure the region and the ecosystem can recover from this ongoing tragedy.”

To contact the author, email bojan.lepic@rigzone.com

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