Exxon Adds $300 Million to Cost of Oil Spill
Exxon Corp. Thursday added $300 million to its 1989 costs of cleaning up the Valdez oil spill, already the costliest industrial accident in history, further reducing its annual earnings to $3.51 billion and bringing Exxon’s total charges to $1.68 billion for the year.
For the first time, the new costs reflected potential liability from litigation, as well as expenses from future cleanups. Including insurance, the additional charges bring Exxon’s total 1989 costs for the Valdez cleanup to well over $2 billion.
The announcement coincides with Alaska Atty. Gen. Douglas Baily’s disclosure that Justice Department and Exxon attorneys might file a plea bargain settlement over pending criminal charges for environmental damages from the spill.
Exxon spokesman Bill Smith declined to comment on any settlement. In addition, there are 170 spill-related lawsuits pending against Exxon.
Late Tuesday, Exxon agreed to return to Alaska no later than May 1 to resume cleaning up shorelines still fouled with oil.
Smith said the company did not know whether it plans to add additional charges in 1990 for legal or other costs.
The nation’s biggest oil company said its 1989 earnings would fall to $3.51 billion, or $2.74 a share, from its previous estimate of $3.81 billion, or $2.98 per share. Exxon had originally reported its 1989 earnings Jan. 24. But as with all such earnings reports the figures are tentative until audited.
The Valdez tanker ran aground in Prince William Sound last March, tipping 11 million gallons of oil into the rich Alaskan waters, killing wildlife and spoiling the coastline.
The company was faced with a massive cleanup bill, $30 million in lost oil and compensation payments to fishermen.
Exxon said the revision of its earnings report released in January reflects the price of extra cleanup and environmental restoration, as well as litigation and related costs.
It said the revision increased the fourth-quarter charge for the accident to $800 million, or 64 cents a share, and brought the charge for all of 1989 to $1.68 billion, or $1.33 a share.
