Transocean Is BP Spill Focus as Five Workers Named `Parties of Interest'

Transocean Ltd. employees onboard the Deepwater Horizon drilling rig when it exploded in the Gulf of Mexico have become the focus of a U.S. government probe into the cause of the fatal disaster.

Stephen Bertone, chief engineer on the rig, and Mike Williams, chief engineer technician, were designated as parties of interest yesterday by a joint U.S. Coast Guard-Interior Department investigative panel. That boosted to five the number of Transocean workers who could face criminal charges stemming from the accident that killed 11 people.

No one from BP Plc, which leased the Deepwater Horizon to drill the Macondo well, or from other companies involved in the work has been named a party of interest, according to the panel’s website. Transocean, the largest offshore oil driller, may be held liable because under maritime law the vessel owner has ultimate responsibility for the safety of those onboard, said Paul Sterbcow, an attorney representing Williams.

Transocean “cannot delegate that duty to anybody else,” Sterbcow said in a telephone interview before his client was named. “The law prevents it and the facts prevent it.”

If Transocean employees are found to have taken steps that led to the explosion, deaths and spill, they may face criminal charges, regardless of whether they were following orders from their client, BP, said Jane Barrett, who spent 20 years prosecuting environmental crimes at both the federal and state levels.

Parties of Interest

Sterbcow said that even if the joint panel finds that BP advocated unsafe drilling practices or a questionable well design, Transocean employees may be faulted for acquiescing. He later declined to comment on Williams.

Other parties of interest named by the panel include James Harrell, who as offshore installation manager was the highest- ranking Transocean drilling official on the rig; Captain Curt Kuchta, who escaped from the burning vessel by jumping from the deck 100 feet (30 meters) above the sea; and Douglas Brown, the chief mechanic, according to the panel’s website.

The panel began a third round of hearings this week in Kenner, Louisiana, near the New Orleans airport. Today’s hearing was canceled after four Transocean employees declined to testify, said Coast Guard Captain Hung Nguyen, co-chairman of the proceedings.

Guy Cantwell, a spokesman for Switzerland-based Transocean, declined to comment on the details of the investigation.

Imprisonment, Fines

Under federal rules, anyone designated a party of interest could face criminal charges if the investigative panel concludes crimes were committed, Kyle Schonekas, an attorney representing Kuchta, said in a July 19 interview.

The rig workers may face imprisonment and fines under an array of federal statutes that includes the Clean Water Act, the Migratory Bird Treaty Act and the Seaman’s Manslaughter Law, said Barrett, who now runs the Environmental Law Clinic at the University of Maryland.

Transocean fell $1.25, or 2.6 percent, to $47.75 at 4 p.m. in New York Stock Exchange composite trading. The shares have dropped 48 percent since the disaster.

Pat Fanning, a lawyer representing Harrell, said it’s too soon to determine which individuals or companies may shoulder most or all of the blame.

The six-member panel, composed of equal numbers of Coast Guard officers and Interior Department regulators, appears to be divided about which element of rig operations to concentrate on, Fanning said in an interview in the lobby of the hotel hosting the proceedings.

‘Marine Safety’ Focus

“The Coast Guard guys are very focused on marine safety because they see it as a case of you’re the master of the vessel, so you’re responsible,” Fanning said. The Interior Department representatives are more interested in questions about the design of the well and drilling practices, he said.

Fanning said investigators’ focus eventually will turn to BP’s well design and the manner in which the company directed Transocean and other contractors to execute the drilling program. The Macondo well, about 40 miles off the Louisiana shore in 5,000 feet of water, was months behind schedule and millions of dollars over budget when the rig exploded.

Corporate Entities

“It’s becoming pretty clear as the testimony goes on that the rig was under BP’s control and BP was giving the orders,” Fanning said.

So far, the highest-ranking onboard BP managers who were overseeing the well when it exploded haven’t answered questions from the panel.

Robert Kaluza, a BP well-site leader who was on temporary assignment to the project, has refused to appear, citing his Constitutional right against self incrimination. Donald Vidrine, a well manager of equal rank, declined to testify yesterday, citing undisclosed health reasons.

Nine corporate entities have been designated as parties of interest by the panel. They are BP and its partners in the well, Anadarko Petroleum Corp. and Mitsui Oil Exploration Co., which is 70 percent owned by Japan’s Mitsui & Co.; Transocean; Halliburton Co.; Cameron International Corp.; Weatherford International Ltd.; M-I Swaco; and Dril-Quip Inc.

Cameron International and Mitsui Oil are among those that received letters on May 5 from the Justice Department telling them to preserve documents related to the oil spill.

The letters told the companies they need to take steps to preserve “potentially relevant information” related to the Deepwater Horizon accident. The Justice Department provided the letters in response to a Freedom of Information Act request.

Cameron, Moex

Cameron, based in Houston, made the blowout preventer, a stack of valves that’s meant to shut off the flow of oil and gas during a pressure surge, or blowout. Rhonda Barnat, an outside spokeswoman for Cameron, declined to comment.

The letter to Mitsui was sent in care of Moex USA, a subsidiary of Mitsui Oil Exploration. Mitsui & Co. owns a majority stake in Moex, which holds a 10 percent stake in the well.

Naoki Ishii, the assistant secretary of Moex USA, said in a May 10 letter to the Justice Department that “we had already made arrangements to preserve possibly relevant materials, including paper and electronic documents.”

Ronald Sepulvado, the BP well-site leader for whom Kaluza was standing in when the disaster unfolded, told the panel yesterday that Transocean’s offshore installation manager, or OIM, had the authority to veto any drilling operations he deemed unsafe.

Asked yesterday by Hariklia Karis, a Kirkland & Ellis LLP attorney representing BP, “where the buck stops” on the rig with regard to safety, Sepulvado responded, “It stops with the OIM.”

A fourth round of hearings is scheduled for Aug. 23-27 in Houston.

To contact the reporters on this story: Joe Carroll in New Orleans at jcarroll8@bloomberg.net; Laurel Brubaker Calkins in Houston at laurel@calkins.us.com.

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