BP Gulf-Leak Estimates Slowed Efforts to Kill Well

BP Plc “impeded” efforts to kill an out-of-control well in the Gulf of Mexico by underestimating the amount of oil gushing into the water, the staff of a presidential panel investigating the disaster said in a report.

Estimates of a 1,000-barrel-a-day leak after a drilling rig exploded April 20 delayed planning for techniques to seal the well, staff of the National Commission on the BP Deepwater Horizon Oil Spill said today. A U.S. government-appointed team of scientists in August said the well was gushing about 62,000 barrels a day after the blowout and 53,000 barrels when it was capped on July 15.

The report found that at the time of the explosion, BP had no proven ways to kill a well in 5,000 feet of water and that government regulators were ill-equipped to supervise BP decisions. The staff in an earlier report said the low estimates may have hindered the containment efforts.

“Underestimates of the flow rate appear to have impeded planning for source-control efforts,” the report found. The 87- day effort to stop the oil was needed “because of a lack of advance preparation by industry and government.”

The explosion killed 11 workers and triggered the worst U.S. oil spill. The Justice Department and several committees in Congress are investigating the disaster, which sank the $365 million rig leased by BP from Transocean Ltd., closed thousands of square miles to fishing for months, and halted deep-water oil exploration. In an agreement brokered with the Obama administration, BP set aside $20 billion to pay damage claims.

‘Aggressive Indifference’

“Had BP not shown such aggressive indifference to the size of the disaster, and the oil industry to preparing for such an event, then perhaps early actions could have made a difference in stopping this spill,” Representative Edward Markey, a Massachusetts Democrat, said today in a statement.

Scott Dean, a BP spokesman, said the London-based company declined to comment on the report.

The commission, appointed by President Barack Obama, plans to release findings in January. Last month, a staff report found that Houston-based Halliburton Co., a contractor on the doomed rig, knew cement it mixed to plug the well was unstable as much as two months before the blowout.

The commission’s staff recommended that deep-water drillers develop detailed plans to control a blowout and that regulators have more “in-house” experience with deep-water exploration. Regulators should require drillers to upgrade blowout preventers, the device meant to seal a well in the event of a blowout, with diagnostic systems that can send data.

Expertise Required

“At the time of the blowout, the government was unprepared to oversee a deep-water source-control effort,” the report found. “This experience suggests that, to provide meaningful supervision, the government needs access to sufficient expertise in deep-water drilling and containment -- through the Department of the Interior, the national labs, outside scientists, or otherwise.”

Drillers may need to consider at the time a well is being designed the possibility that a well may go out of control. Smaller drillers without the resources available to BP to fight a spill may need to show they have the ability to respond, whether through binding membership in an industry insurance group, according to the staff report.

“On April 20, the oil-and-gas industry was unprepared to respond to a deep-water blowout, and the federal government was similarly unprepared to provide meaningful supervision,” the report found. “In a compressed timeframe, BP was able to design, build, and use new containment technologies, while the federal government was able to develop effective oversight capacity. Those impressive efforts, however, were made necessary by the failure to anticipate a subsea blowout in the first place.”

U.S., BP Underestimated

The Obama administration and BP both underestimated the spill rate, according to today’s report. In early May, as BP prepared to place a containment dome over the well, Doug Suttles, BP chief operating officer for exploration and production, told panel staff that the flow was 13,000 to 14,000 barrels a day. The government’s estimate at the time was 5,000 barrels.

Government officials said a reason for the rapid formation of hydrates in the cofferdam was the heavier-then-anticipated flow. Hydrates blocked oil and gas and the dome project failed.

The Obama administration blocked release of worst-case government estimates of the spill rate, the commission staff said in an Oct. 6 report. The move undermined public confidence in the U.S. response and may have hindered efforts to staunch the flow.

NOAA Denies Release

The National Oceanic and Atmospheric Administration “wanted to make public some of its long-term, worst-case discharge models for the Deepwater Horizon spill, and requested approval to do so from the White House’s Office of Management and Budget,” according to the staff paper. “The Office of Management and Budget denied NOAA’s request.”

Halliburton, the second-largest oilfield-services company after Schlumberger Ltd., disputed the panel’s findings on its role, saying the cement cited for flaws in February was different from the mixture used to plug the well two months later.

The commission tested off-the-shelf cement and additives, while Halliburton tested the “unique blend” of cement and additives that existed on the rig at the time Halliburton’s tests were conducted, it said.

In a separate report, the staff found industry and government have underfunded research into ways for cleaning up an oil spill and that technology used in the BP spill was “dated and inadequate.” The report downplays a theory that resources are better spent preventing a spill because clean-up technology is limited once oil enters the water.

“The impacts of the Deepwater Horizon spill would have been mitigated by better clean-up technology,” the report found. “Industry has committed little to no funding to in-house response,” research and development.

To contact the reporter on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net.

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net.

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