BP, Contractors ‘Breathtakingly Inept,’ Reilly Says

BP Plc, Transocean Ltd. and Halliburton Co. were “breathtakingly inept” and made mistakes that were “largely preventable” at the doomed Macondo well, a leader of a panel investigating the disaster said.

The U.S. shares blame for the April blowout and spill because it lacks the ability to maintain adequate oversight of the oil industry, William K. Reilly said today in remarks prepared for an industry conference in New Orleans. Oil companies should set up a self-regulating body to work with the U.S. on increasing deep-water drilling safety, he said.

“The understanding and expertise of government regulators has lagged far behind the technological advances that have made deep-water drilling possible, and it will take time for them to catch up,” said Reilly, co-chairman of the National Commission on the BP Deepwater Horizon Oil Spill.

The April 20 explosion at BP’s Macondo well killed 11 workers, spewed crude for 87 days and shut a third of the Gulf to commercial fishing. The spill-investigating commission has said decisions made by BP and its contractors suggest risks were ignored before the explosion.

Reilly said the oil industry should create and manage a Safety Institute, which would encourage early adoption of revised drilling standards and insist that service providers embrace the rules when hired for drilling in deep water. He said the comments are his own because the commission hasn’t completed its report, which is due on Jan. 12.

Photographer: Jay Mallin/Bloomberg

William K. Reilly, leader of a panel investigating the oil disaster. Close

William K. Reilly, leader of a panel investigating the oil disaster.

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Photographer: Jay Mallin/Bloomberg

William K. Reilly, leader of a panel investigating the oil disaster.

‘Missteps, Miscalculations’

“There is virtual consensus among all the sophisticated observers of this debacle that three of the leading players in the industry made a series of missteps, miscalculations and miscommunications that were breathtakingly inept and largely preventable,” Reilly said in his remarks.

Oil companies must reconsider the industry’s response on drilling and spills or face a “disproportionately severe” reaction from government regulators, Reilly said. “If the industry leaves this exclusively up to government and the regulators, the industry will ultimately regret it,” he said.

BP faulted its engineers for the fatal drilling-rig blast in an internal investigation, and said contractors Transocean and Halliburton share the blame. The two other companies have said BP was responsible for decision-making on the rig.

London-based BP owned the Macondo well in the Gulf. Transocean Ltd. owned the rig that exploded. Halliburton supplied cement to plug the well. The spill led to ban of deep- water drilling in the Gulf that halted work on 33 rigs. The moratorium was lifted on Oct. 12.

Halliburton “remains confident that all the work it performed with respect to the Macondo well was completed in accordance with BP’s specifications,” said Zelma Branch, a spokeswoman for the company.

Transocean, BP Engineers

Transocean followed the “calculations, blueprints and step-by-step construction procedures” created by BP’s engineers at the well, said Brian Kennedy, a company spokesman. “Employees executed various steps in those plans at the instruction of BP engineers on the rig and on shore,” he said.

A spokesman for BP didn’t return a call seeking comment.

The U.S. this week will provide guidance for companies seeking permits to drill in the Gulf’s deep waters, Michael Bromwich, director of the Bureau of Ocean Energy Management, Regulation and Enforcement, said at the conference.

“We will not cut corners in the permit review process and permits will be approved only when we are satisfied that all applicable regulatory requirements are met,” Bromwich said.

To contact the reporters on this story: Katarzyna Klimasinska in New Orleans at kklimasinska@bloomberg.net;

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

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