16 Oil Wells Leaking Off Louisiana Coast Since 2004 Lead to $475 Million Settlement

Off the coast of Louisiana, 16 wells have been leaking since 2004 after a subsea mudslide during Hurricane Ivan knocked over an oil company's production farm. More than 15 years later, federal prosecutors announced that the New Orleans-based oil company has agreed to pay a sweeping $475 million settlement for the long-running oil leaks.

As part of the settlement announced Wednesday, Taylor Oil Co. must turn over a $432 million cleanup trust fund to the Department of the Interior and pay another $43 million to cover penalties and other damages. The company has also agreed to drop three of its own lawsuits that challenged some of the government's cleanup orders and measures.

"This settlement represents an important down payment to address impacts from the longest-running oil spill in U.S. history," Nicole LeBoeuf, director of the National Oceanic and Atmospheric Agency's National Ocean Service, said in a Justice Department news release.

The Hurricane Ivan-generated mudslide knocked over one of Taylor's production platforms and broke a cluster of pipes. The company was able to plug nine of the leaking wells but said that it can't do the same for the rest.

Oil Spill Settlement
Federal prosecutors say a New Orleans-based company has agreed to turn over a $432 million trust fund and pay $43 million to settle a lawsuit over cleaning up the nation's longest-running oil spill. Shown above is the wake of a supply vessel crossing over an oil sheen drifting from the site of the former Taylor Energy oil rig in the Gulf of Mexico on March 31, 2015. Gerald Herbert/AP Photo

Attorneys for Taylor Oil Co. did not immediately respond to an email requesting comment. As is common in such agreements, the proposed settlement said Taylor does not admit any liability.

U.S. District Judge Greg Gerard Guidry will decide whether to approve the proposed consent decree after a 40-day public comment period.

The settlement requires Taylor to drop its other lawsuits. In June, a federal appeals court agreed that a district judge was right to throw out a trespass suit against a federal contractor that created a system to capture most of the oil.

That system has captured and removed more than 800,000 gallons (3 million liters) of oil since April 2019, Coast Guard Captain Will Watson, sector commander in New Orleans, said in the news release.

"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 Duane A. Evans, U.S. attorney for the Eastern District of Louisiana.

Taylor's website states that it sold all its oil and gas assets in 2008 and exists now only to respond to the toppled platform. The company has agreed to turn over all remaining assets after liquidation, the government said.

The trust fund was created to plug the wells, permanently decommission the facility and clean contaminated soil. One of Taylor's suits, filed in 2016, sought to get back the remaining money, claiming regulators had broken the agreement requiring it to put $666 million into the fund.

The company also had appealed the Coast Guard's rejection of its claim for $353 million in cleanup costs.

The trust fund will be transferred to the Department of the Interior under the settlement. The additional $43 million—all of the company's remaining assets—is for civil penalties, removal costs and natural resource damages, the news release said.

It includes a civil penalty of $15 million, $16.5 million for natural resources damage and more than $12 million for Coast Guard removal costs.

The company cannot interfere with the Bureau of Safety and Environmental Enforcement's decommissioning work or the Coast Guard's oil containment and removal, and will turn over all studies, reports and other documents about the site.

The Associated Press contributed to this report.

Oil Sheen
Off the coast of Louisiana, 16 wells have been leaking since 2004 after a subsea mudslide during Hurricane Ivan knocked over an oil company’s production farm. Above, an oil sheen drifts from the site of the former Taylor Energy oil rig in the Gulf of Mexico, off the coast of Louisiana on March 31, 2015. Gerald Herbert/AP Photo