BP, Transocean Officials Botched Tests, Witness Testifies

BP Plc (BP/) and Transocean Ltd. (RIG) officials on the Deepwater Horizon drilling rig botched safety tests the night it blew up and sent oil spilling into the Gulf of Mexico, an expert on drilling told a judge.

The rig’s crew misinterpreted results of negative pressure tests done April 20, 2010, that showed the Macondo well was unstable, Richard Heenan, the oil-drilling expert, testified in a trial over spill claims. The U.S. government contends the botched test led to the blast, which killed 11 workers and sent more than 4 million barrels of oil into the Gulf.

“I couldn’t believe, based on what I saw, that the people on the rig came to the conclusion that this was a successful test,” Heenan told a federal judge yesterday in New Orleans. The handling of the check “was a gross and extreme departure” from accepted standards in the oil industry, he said.

After hearing evidence in the three-month trial, U.S. District Judge Carl Barbier will decide who is liable for damages over the largest offshore oil spill in U.S. history.

He will also rule on whether BP, Transocean or other companies were grossly negligent in their handling of the rig and well. His ruling in the nonjury trial will affect how much each company may have to pay.

Robert Dudley, BP’s chief executive officer, said yesterday at an oil conference in Houston that his company is “safer” and “stronger” almost three years after the spill, and he praised BP’s response to the disaster.

BP’s Actions

“We alone stepped up from the outset, acknowledging our role, waiving the liability cap and committing ourselves to help restore the environment and economy of the Gulf Coast region,” Dudley said.

BP rose 10 pence to 449.6 pence in London trading today.

The spill from the Macondo well fouled the Gulf and the shoreline of surrounding states. The accident sparked hundreds of lawsuits against London-based BP, Vernier, Switzerland-based Transocean, which owned the rig, and Houston-based Halliburton Co. (HAL), which handled cement work on the well.

If BP is found grossly negligent, it may be liable to the U.S. for as much as $17.6 billion in Clean Water Act fines, as well as unspecified punitive damages to claimants who weren’t part of an $8.5 billion settlement of lawsuits. For Transocean and Halliburton, a similar finding would mean they could face punitive-damages awards.

Behind Schedule

The government and spill victims say BP was over budget and behind schedule on the Macondo well, located off the Louisiana coast, prompting the company to cut corners and ignore safety tests showing the well was unstable.

They also allege that Halliburton’s cement job was defective and that Transocean employees made missteps on the rig, including disabling safety systems, failing to maintain the installation properly and not adequately training its crew to handle a crisis.

BP sued its contractors, claiming Transocean employees’ miscues were the main cause of the explosion and Halliburton concealed flaws with the drilling project’s cement work. Transocean and Halliburton countersued, pointing fingers at BP.

BP pleaded guilty to 14 federal charges in November, including 12 felonies, and admitted it misinterpreted the critical pressure test just before the explosion. The U.K. company agreed to pay $4 billion in fines and penalties, plus $525 million to settle a U.S. Securities and Exchange Commission case.

Transocean also pleaded guilty to criminal violation of pollution laws and paid $400 million in fines as part of a $1 billion settlement of government claims.

Test Results

The U.S. and spill victims contend BP’s and Transocean’s misinterpretations of the negative-pressure tests were a key cause of the rig’s explosion and the subsequent spill. The tests check for an increase in the pressure or flow of oil or gas up the well, which can lead to a so-called blowout.

After two unsuccessful tests, BP began monitoring negative testing on an additional pipe, called a kill line. The test showed pressure on the drill pipe and zero pressure on the kill line, an anomaly that indicated the well wasn’t secure, the U.S. said in court papers.

Heenan, a partner in Calgary-based Canadian Petroleum Engineering Inc. called as an expert witness by government lawyers, said results showing pressure in the well had climbed to 1,400 pounds per square inch “was not a good thing” and should have indicated the well was unstable.

The drilling expert also discounted explanations by BP and Transocean officials that they believed the safety tests were successful based on a so-called bladder effect. That condition occurs when pressure on valves may produce false readings.

Bladder Effect

BP and Transocean contend the rig’s crew accepted the anomalous test results at the urging of the rig’s drilling supervisor, Jason Anderson, who according to trial evidence cited the bladder effect as support for his position. Anderson died in the blast.

After reviewing records related to the well and the safety tests, Heenan testified there was “no technical basis” for misinterpreting the checks because of worries about the bladder effect.

Under cross-examination, Heenan conceded that BP officials, such as Macondo well supervisor Donald Vidrine, may have been convinced the safety tests were valid and there was no need to immediately halt operations on the installation.

In court filings, the government’s lawyers have pointed to a conversation between Vidrine and Mark Hafle, a Houston-based official, on the night of the rig explosion in which Hafle questioned whether the safety tests had been properly performed. Vidrine invoked his constitutional rights against self- incrimination to avoid testifying in the case.

Manslaughter Charges

Vidrine faces manslaughter charges over his alleged misinterpretation of the pressure tests, which prosecutors contend led to the fatal blast on the rig.

Given the discussions about whether the pressure tests results were affected by the bladder effect, Vidrine may have believed the well was stable and not a serious threat to explode, Heenan testified yesterday.

“I don’t believe he would have intentionally put his life or anyone else’s in danger,” the drilling expert said. He added that he believed the Transocean crew on the rig may have been operating under the same belief that the tests shouldn’t set off alarm bells.

Glen Benge, who previously worked for Exxon Mobil Corp. and has been an expert on oil-field cement for 36 years, testified yesterday that BP officials didn’t properly test the cement used at the Macondo well.

Save Time

Benge said BP officials sought to save time by not doing foam-stability testing on the cement used on the well. BP executives blamed cement contractor Halliburton for providing the shoddy materials used on the project.

The expert said that cement left over from another oil drilling project was used on the Macondo project and that BP, as the well’s operator, was ultimately responsible for the quality of the cement work.

The judge also heard more testimony yesterday from Ronnie Sepulvado, a BP manager assigned to the Macondo project, who said that although the company had become more cost-conscious over the years, he didn’t sacrifice safety procedures to speed up production.

Sepulvado, who wasn’t on the rig the night of the explosion, acknowledged that drilling operations on the Macondo well were behind schedule because of weather conditions and other factors. He said the company didn’t push the crew to disregard safety to speed up operations.

The well supervisor testified March 5 that some of the rig’s equipment, including a device used in drilling operations, was broken for about three years. The crew would “work around it,” he added. Sepulvado said he constantly raised the maintenance issue “with just about everybody on the rig,” he said.

The case is In re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, 10-md-02179, U.S. District Court, Eastern District of Louisiana (New Orleans).

To contact the reporters on this story: Allen Johnson Jr. in federal court in New Orleans at allenmct@gmail.com; Jef Feeley in Wilmington, Delaware, at jfeeley@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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