2010 Sep 09

BP report shares blame for oil rig disaster

 BP blames "a sequence of failures" for the disastrous Gulf of Mexico oil rig explosion, in which 11 men died, and subsequent major oil spill. Science correspondent Tom Clarke says the report is BP's "case for the defence".

The BP internal report published on Wednesday said that a "sequence of failures" involving a "number of parties" led to the explosion on the Deepwater Horizon rig which led to four million barrels of oil gushing into the Gulf of Mexico, becoming the worst oil spill in US history.

The Deepwater Horizon drilling rig exploded on 20 April, killing 11 workers. It sank two days later, unleashing a surge of crude that lasted until the well was capped on 15 July.

The blast has cost UK-headquartered BP billions of pounds as well as generating vast amounts of criticism for it and its outgoing chief executive Tony Hayward.

Commenting on the report's findings, Tony Hayward blamed the leak on "a bad cement job" referring to work done at the bottom of the oil well by sub-contractor Halliburton.

Mr Hayward continued: "It would appear unlikely that the well design contributed to the incident, as the investigation found that the hydrocarbons flowed up the production casing through the bottom of the well."

One of BP's partners in the Deepwater Horizon venture, Transocean, has criticised BP's findings. A spokesman told Channel 4 News: "This is a self-serving report that attempts to conceal the critical factor that set the stage for the Macondo incident: BP's fatally flawed well design.

"In both its design and construction, BP made a series of cost-saving decisions that increased risk – in some cases, severely.

"Transocean's investigation is ongoing, and will be concluded when all of the evidence is in, including the critical information the company has requested of BP but has yet to receive."

Summary - the BP report found that:

•The cement and shoe track barriers – and in particular the cement slurry that was used – at the bottom of the Macondo well failed to contain hydrocarbons within the reservoir, as they were designed to do, and allowed gas and liquids to flow up the production casing

•The results of the negative pressure test were incorrectly accepted by BP and Transocean, although well integrity had not been established

•Over a 40-minute period, the Transocean rig crew failed to recognise and act on the influx of hydrocarbons into the well until the hydrocarbons were in the riser and rapidly flowing to the surface

•After the well-flow reached the rig it was routed to a mud-gas separator, causing gas to be vented directly on to the rig rather than being diverted overboard

•The flow of gas into the engine rooms through the ventilation system created a potential for ignition which the rig's fire and gas system did not prevent

•Even after explosion and fire had disabled its crew-operated controls, the rig's blow-out preventer on the sea-bed should have activated automatically to seal the well. But it failed to operate, probably because critical components were not working.

Extract from BP report into Gulf of Mexico oil spill "The team did not identify any single action or inaction that caused this accident. Rather, a complex and interlinked series of mechanical failures, human judgments, engineering design, operational implementation and team interfaces came together to allow the initiation and escalation of the accident. Multiple companies, work teams and circumstances were involved over time."

Dr Simon Boxall from the National Oceanography Centre in Southampton told Channel 4 News that the report shows a catalogue of errors which "should not have happened".

Dr Boxall said: "My interpretation of this report is that there was too much confidence in paperwork and not enough attention to detail.

"On paper the rig was fine but in reality it was an accident waiting to happen."

He continued: "I am sure that there are other rigs where this could happen for the same reasons."

However, prior to the report's publication, BP's share price had risen by two per cent to 414p per share and continued to rise following its release.

Oil and gas analyst David Hart of Westhouse Securities told Channel 4 News that other reports, including one by federal investigators that have still to be published will potentially have a greater impact on BP's share price: "There will be a good deal of scepticism until the forthcoming investigations either confirm or possibly in some cases draw other conclusions to those of BP.

"They will be more important as regards their affect on share price movement as they will help determine whether liability for the disaster will be borne solely by BP or shared among the other parties with an interest in the well."

Today's report is BP's 'case for the defence' While it details failings by BP engineers and crew that led to the disaster, it also leaves no room for doubt that the company finds its contractors, principally Halliburton and Transocean, contributed to the disaster, writes Channel 4 News science correspondent Tom Clarke. Of the eight key "safety barriers" BP identifies in the report Haliburton's cement is implicated in two of them. It also highlights errors made by the crew which consisted of both Transocean and BP employees. This shouldn't be read as an effort by BP to pass the buck. The burden of responsibility for the disaster lies squarely with BP. However, the degree to which the tragic explosion, fire and subsequent oil spill was BP's fault will be informed by this and subsequent investigations. And there are a lot of them. BP faces several inquiries from different congressional committees in the US. President Obama has convened a presidential commission to investigate the spill and the offshore industry. The US Securities and Exchange Committee is investigating financial transactions made around the time of the spill. The Deepwater Horizon joint investigation led by the US coastguard and others is taking nine months to investigate the causes of the disaster. BP is also embroiled in 300 separate private lawsuits. The degree of negligence that these and other inquiries find will dictate the level of fine BP faces. The US attorney general has promised to make BP pay the full amount it is responsible for and if the company is found "grossly negligent" that number could be in excess of $13 bn.

BP has come under heavy fire in the US but the political pressure has eased since the oil firm set up a $20 bn dollar (£13bn) fund to meet compensation payouts and costs.

The crisis cost former chief executive Tony Hayward his job after a series of PR blunders and he will make way in October for fellow board member Bob Dudley, who becomes BP's first overseas boss.

BP hopes to sell around 10 per cent of its production assets over the next 18 months, with the aim of raising 30 bn dollars (£20bn) to beef up its balance sheet to meet the crisis.

The oil giant has already spent $8bn (£5.2bn) trying to contain the disaster and has forecast that it will eventually cost the group more than $32bn (£20.9bn), after clean-up costs and compensation are taken into account.

In the next week or so, BP is due to seal the well permanently.

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