BP Says Transocean, Halliburton Have to Share Blame for Gulf Rig Explosion

BP Plc, facing billions of dollars in damages and penalties for causing the largest U.S. oil spill, says its investigation shows other companies made mistakes that led to the Gulf of Mexico oil rig explosion.

BP managers had direct involvement in just one of the eight judgment errors and equipment failures that led to the April 20 explosion aboard the Deepwater Horizon drilling rig, according to the company’s internal investigation. The explosion killed 11 workers and spewed crude oil into the Gulf of Mexico for almost three months.

The blame for the other mistakes rests primarily with rig owner Transocean Ltd., contractor Halliburton Co. and Weatherford International Ltd., which provided valves for the well, according to the 234-page report released yesterday after a probe by more than 50 BP engineers, geologists and hired investigators.

“They need to spread the allocation of damages around to others, otherwise BP’s going to be left holding the bag for the whole disaster,” said Robert J. Gordon, an attorney with Weitz & Luxenberg LP, a New York-based firm representing more than 1,000 Gulf Coast fishermen and hoteliers in lawsuits against BP, Transocean and Halliburton. “There are billions of dollars at stake.”

BP, which agreed in June to an Obama administration demand to set aside $20 billion for claims, presented its findings yesterday to federal officials in Washington.

The London-based company also plans to submit the report to a joint U.S. Coast Guard-Interior Department investigative panel that is scheduled to hold public hearings on the catastrophe Oct. 4 to 8 in Louisiana.

‘Fatally Flawed’ Well

“BP is happy to slice up blame, as long as they get the smallest piece,” U.S. Representative Edward Markey, head of the U.S. House Energy and Environment Subcommittee, said in an e-mailed statement.

Transocean said BP’s report concealed Macondo’s “fatally flawed” design, which “set the stage” for the explosion. The Switzerland-based driller cited a series of cost-savings decisions by BP that added risk, including a design that cut the number of barriers to gas flow.

Transocean said its own probe is awaiting critical information that BP hasn’t yet provided.

“There are other, more independent investigations under way and we need to see what conclusions they reach,” said Brian Youngberg, an analyst at Edward Jones & Co. in St. Louis, who has a hold rating on BP stock.

Design Vindicated

The BP investigation team, led by Mark Bly, who oversees the company’s worldwide safety programs, analyzed pressure data from the rig on the night of the disaster that was transmitted to computers at BP’s Houston operations center.

The data showed that explosive gas leaked into the Macondo well through cracks in cement near the bottom of the hole before surging up the pipe to the rig, Kent Corser, a BP drilling manager who participated in the probe, said yesterday in Washington.

Corser said the data also vindicated BP’s decision to use a well design known as a “long string” that chief executive officers from Exxon Mobil Corp. and Chevron Corp. criticized as ill-suited for that sort of oil field during Congressional testimony in June.

“Everything we looked to on the long string looked fine, so we don’t think it had any bearing on the event,” Corser said during the briefing.

Faulty Cement

After the disaster, which sank the $365 million rig and halted deep-water Gulf oil exploration, BP studied every well in the 10 square miles surrounding Macondo. Of those, 57 percent used long-string construction, an indication that the design is accepted industry practice, Corser said.

Halliburton was responsible for ensuring the cement it poured around the side of the hole was solid enough to hold back gas and oil from the surrounding rock, the report showed. The Houston-based company failed to properly test the recipe it used in mixing cement for the bottom section of the well, or to detect faults that allowed gas to seep into the hole, Corser said.

BP’s report has “substantial omissions and inaccuracies,” Cathy Mann, a spokeswoman for Houston-based Halliburton, said in an e-mailed statement. She didn’t specify those concerns.

Transocean, the world’s largest offshore oil driller, was faulted in the report for failing to notice signs a blowout was imminent in the minutes before disaster struck. BP’s well-site leaders aboard the rig shared in the blame because they misinterpreted pressure data from the well. The report identified them by job title only.

Transocean Crew

Transocean representatives erred by failing to realize gas and oil were rushing up the pipe until it was too late to halt the blowout. They also erred by diverting the flow to a piece of equipment that funneled gas onto the deck rather than over the side of the vessel, the report says. Various fire-safety and pressure-control devices under the control of Transocean crew members also failed to operate properly, BP said.

BP’s reconstruction of the events says that gas began flowing into the well from the surrounding rock at 8:52 p.m. local time. By 9:46 p.m., the gas was pouring across the rig’s deck, up the derrick and into the engine room. Three minutes later, the first explosion rocked the vessel, followed by a second blast a short time later, according to the report.

The first explosion probably damaged electrical lines linked to the blowout preventer on the sea floor, rendering the 50-foot stack of valves incapable of cutting the pipe connecting the rig to the well to shut off the flow of gas and crude, Fereidoun Abbassian, BP’s vice president of drilling technology, said during yesterday’s briefing.

Anadarko, Mitsui

Anadarko Petroleum Corp., a Texas-based oil company that has a 25 percent stake in the Macondo well, is withholding reimbursements to BP for spill-related costs. On June 18, the company said BP’s actions “likely represent gross negligence or willful misconduct.” Anadarko said after BP’s report was released that it stands by that position, and independent studies should determine what went wrong.

A unit of Mitsui Oil Exploration Co., which has a 10 percent interest in the BP well, also has said it is withholding payments. Mitsui Oil is 70 percent owned by Japan’s Mitsui & Co.

In addition to hundreds of civil lawsuits, BP and other companies involved in the well may face criminal charges if federal investigators find evidence of negligence, said Kevin Book, managing director of Clearview Energy Partners LLC, a Washington-based policy analysis firm.

To contact the reporters on this story: Joe Carroll in Washington at jcarroll8@bloomberg.net; Jim Polson in New York at jpolson@bloomberg.net.

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