The City of Gulf Shores, Ala., announced a settlement with British oil company BP (NYSE: BP) for future losses incurred by the 2010 Gulf of Mexico Deepwater Horizon oil spill.
The oil company agreed to pay the city of 6,100 residents $6.5 million as a sort of insurance against any future beach closures. Gulf storms are likely to bring in tar balls or other remnants of the 5 million gallons of oil spilled during the 2010 Deepwater Horizon accident, said the city's mayor, Robert Craft, to Mobile's Press-Register.
This settlement does not cover independent claims the city's businesses may have pending with BP, and it does not cover potential damages incurred in the event of a new oil spill, reported the Press-Register.
Gulf Shores was the recipient of $4.8 million from BP in 2010 in tax revenues to cover loses to tourism. The city is located along Alabama's southern tip and relies on its summer tourism industry.
BP earlier this month announced it negotiated a $7.8 billion settlement with thousands of business and property owners along the Gulf of Mexico. The money will come from a $20 billion escrow account the company created to pay for damages in the wake of the oil spill. BP has already paid out more than $6 billion in third party claims from the fund.
The company also paid an additional $1.3 billion to local governments for damages.
The company now could face billions more in damages. U.S. District Judge Carl Barbier in New Orleans must still determine if BP was grossly negligent in its role in the oil spill. If so, BP could face an additional $21 billion fine stemming from environmental damages.
Shares of BP rose 14 cents to $86.80 in early Tuesday trading.