Refiner in Katrina spill tries to head off lawsuit

updated 12:50 p.m. ET Oct. 27, 2005

HOUSTON - Hoping to forestall a class-action lawsuit over a large oil spill from its Louisiana refinery during Hurricane Katrina, Murphy Oil Corp. is trying to persuade residents to settle with the company.

The El Dorado, Ark.-based oil company this week opened five adjustment offices to meet with those who say oil from the refinery near Chalmette, a suburb southeast of New Orleans, contaminated their homes.

Murphy, which announced the policy on its Web site and in newspaper ads, also released a map of the territory affected by the spill.

The Murphy settlement effort — which has been sharply criticized by plaintiffs’ attorneys — follows a 1.1 million-gallon crude spill discovered after Katrina tore through the area and sent floodwaters into the refinery and hundreds of neighboring homes.

The Coast Guard has said Murphy is responsible for the spill, among the worst environmental problems to surface in Katrina’s wake.

Two views
Murphy Chief Executive Claiborne Deming, addressing investors on a quarterly conference call Wednesday, said his goal is to “quickly and fairly deal with this issue.”

Murphy’s attorney, George Frilot, said the company should have the right to approach residents. “Until the class is certified, the plaintiffs’ lawyers don’t have a relationship with them, and we have a First Amendment right to speak with them,” Frilot said.

Plaintiffs’ attorney Scott Bickford said Murphy is “preying on people that are in such dire circumstances” by offering a lumpsum now as long as they don’t sue later.

The case against the company alleges that Murphy didn’t adequately prepare the refinery for the storm.

A New Orleans federal court next week will hear a motion seeking to limit Murphy’s ability to contact residents. Judge Eldon Fallon rejected a previous effort by plaintiffs to restrict Murphy, but said the court would “police” Murphy’s communications.

$1 billion spill?
Financial analysts and attorneys expect the costs of the spill could be more than $1 billion.

On Wednesday, Murphy CEO Deming repeated that insurance would spare the company a material blow, but he declined during the call to directly address a number of issues, including the question of whether Murphy insurers are fighting the claim.

The refinery is scheduled to resume operations next spring.

Murphy’s Web site for the spill is www.murphyoilcorp.com/ir/katrina.

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