Transocean Says `Blowout' May Have Caused Rig Fire

U.S. Coast Guard rescuers searched waters of the Gulf of Mexico through the night for 11 offshore oil workers still missing after an explosion and fire injured 17 people on a Transocean Ltd. drilling rig yesterday.

The Deepwater Horizon, a floating rig leased to BP Plc., continued to burn, preventing anyone from boarding the platform or beginning an investigation, the companies said. Survivors were whisked away in buses under police escort about 3 a.m. local time after arriving at Louisiana’s Port Fourchon.

Flames engulfed the rig located 41 miles off the coast of Louisiana as it was completing the concrete casing of a well drilled to a depth of 18,000 feet (5,486 meters). There apparently was little or no warning, Adrian Rose, Transocean’s vice president for quality, health, safety and the environment, said at a press conference yesterday.

A violent pressure surge at the well hole may have triggered the explosion and fire, known in the oil and natural- gas industry as a blowout, Rose said. That assessment was based on the fact that the fire was burning from the top of the well, fed by escaping oil or gas, Rose said.

“There was undoubtedly some abnormal pressure buildup,” Rose said. He had no other information about the cause of the blast or why the pressure couldn’t be controlled.

Extinguishing Fire

The companies said their priority is extinguishing the fire and concluding search operations.

“Our primary focus at this point has been supporting the Coast Guard and Transocean,” David Rainey, BP’s vice president for Gulf of Mexico production, said at a press conference in New Orleans yesterday afternoon.

Crews will attempt to staunch the fuel to the fire using a remote-operated vehicle under seas, Rose said. Ships are pouring water on the blaze, hoping to cool the rig enough for a robot to move in and shut off valves on fuel sources that may be feeding the fire.

Transocean said it’s too soon to know if the rig is salvageable. Deepwater Horizon is reported to be listing, or leaning into the water, from 3 degrees to 10 degrees, though it is in no danger of capsizing, Transocean’s Rose said.

Once those efforts conclude, Transocean, based in Geneva, and BP, based in London, will turn their attention to investigating the cause of the explosion, Rose said.

Too Early

    “It’s too early to have started an investigation,” said BP spokesman Robert Wine. “We’ll be working to offer whatever assistance we can. There is a very clear regulatory system for investigating any parties. We clearly have to learn from this incident.”

The Minerals Management Service, which regulates drilling in U.S. waters, and its parent agency, the U.S. Department of the Interior, will cooperate with the Coast Guard in the government’s inquiry into the incident, said David Hayes, Deputy Secretary of the Interior.

The fire broke out after 10 p.m. local time Tuesday, forcing workers to evacuate the offshore platform. Most of the 126 people were transported to shore by boat. The injured were taken by helicopter to hospitals.

The Coast Guard used as many as four helicopters, an airplane, and four ships to search for the 11 crew members who are unaccounted for, said U.S. Coast Guard Rear Admiral Mary E. Landry.

The military branch charged with guarding the U.S. coast used infrared sensors to look for the missing workers, Landry said. They are not thought to be in a lifeboat, she said.

BP mobilized seven large oil-spill cleanup vessels to the site, although water pollution has been “minimal” because flames are consuming the petroleum, BP’s Rainey said. An oil sheen is visible on the water, Landry said.

2001 Rig

The Deepwater Horizon is a semi-submersible drilling unit that can drill in water up to 8,000 feet deep, according to Transocean’s Web site. The floating rig was built in 2001 and was designed to withstand rough waters.

The MMS had inspected the rig regularly, Hayes said.

Transocean said last year the ultra-deepwater rig drilled the deepest oil and gas well ever, more than 6 miles, while working for BP in the Gulf of Mexico.

All BP workers are safe and accounted for, David Nicholas, a spokesman for the company, said yesterday in a statement.

BP agreed in September to extend its lease on the Deepwater Horizon rig for three years and pay an additional $3.4 million a year in rent.

The company agreed to pay $544 million, or $496,800 a day, during the three-year period, Transocean said at the time. That was above the prior rent, which averaged about $487,500 a day.

The Deepwater Horizon accounts for about 34 cents of annual per-share earnings for Transocean, or about 4 percent of profit, Arun Jayaram, an analyst for Credit Suisse Holdings USA Inc. in New York, said yesterday in an interview.

Transocean was unchanged at 96.55 Swiss francs on the SIX Swiss Exchange as of 11:50 a.m. in Zurich. BP dropped 1.8 percent to 636.60 pence in London.

To contact the reporters on this story: Jim Polson in New York at jpolson@bloomberg.net; Jessica Resnick-Ault in New York at jresnickault@bloomberg.net

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