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Southern Natural Gas Co. Agrees to Pay $300 Million for ARCO Explosion

June 26, 1990 GMT

ANDERSON, Texas (AP) _ Southern Natural Gas Co. has agreed to pay ARCO Oil and Gas Co. more than $300 million for damages that resulted from an explosion on an ARCO drilling platform in the Gulf of Mexico last year.

The March 19, 1989, blast and resulting fire killed seven people, injured 23 and destroyed the platform. The blast occurred while workers for Southern Natural Gas were attempting to make repairs on the platform.

Representatives agreed on the settlement Monday during a recess in a civil trial that began June 11 in State District Court in Madison County.

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They presented the agreement to Judge Bill McAdams while he was holding court in neighboring Grimes County.

″We feel we’ve been adequately compensated for our losses,″ said Don Riddle, lead counsel for ARCO.

″Aside from Pennzoil, it’s the largest settlement around as far as anybody knows,″ Riddle told the Bryan-College Station Eagle.

Pennzoil Co. in 1984 won a $10.3 billion judgment against Texaco Inc. after claiming that Texaco had broken up its deal to buy Getty Oil Co. Texaco agreed to settle the case for $3 billion in 1988.

Houston attorney Randy Wilson, one of about 20 attorneys representing Southern Natural Gas, declined to comment on the settlement.

According to the settlement, Southern Natural Gas made no admission of guilt but agreed to pay ARCO $300.5 million by Aug. 6, and to pay a total of $500,000 to three ARCO employees injured in the explosion.

ARCO was a party to several lawsuits pending against Southern Natural Gas in federal court in Louisiana. The settlement will end those suits, Riddle said.

The settlement will be paid by the gas company’s insurance carriers, primarily Lloyd’s of London, Riddle said.

ARCO had asked for between $250 million and $325 million in actual damages and $5 billion in exemplary damages resulting from the explosion on a drilling platform about five miles south of the mouth of the Mississippi River.

In addition to damage to the platform itself, ARCO claimed it lost about $200 million in profits from oil and natural gas sales because the destroyed platform was crucial to a seven-platform oil field.

Southern Natural Gas bought natural gas from ARCO and transported it to shore by means of pipeline running from the platform. The explosion occurred when subcontractors hired by the gas company cut into the pipeline while trying to make repairs.