BP Reassessing Transocean, Contractors it Blames for Oil Spill

BP Plc, facing billions of dollars in damages and penalties for causing the worst U.S. offshore oil spill, is reviewing its relationships with Transocean Ltd. and other contractors involved in the catastrophe.

BP has five Transocean rigs under contract at a total cost of almost $2 million a day, a Jan. 13 filing by the rig owner with the U.S. Securities and Exchange Commission showed.

Three of the vessels are operating in the Gulf of Mexico, site of the April 20 catastrophe that killed 11 workers, injured 17 and sank the $365 million Deepwater Horizon rig. Contracts for the Transocean vessels are for terms that extend as far as November 2016.

BP’s internal investigation concluded in September that Transocean, which owned the rig, and other contractors held most of the blame for the Macondo blowout.

“This process is part of our effort to implement the recommendations contained in the company’s internal investigation report,” Daren Beaudo, a spokesman for the London-based energy company, said in an e-mailed statement today. Beaudo did not elaborate on what the review will entail.

“Transocean and its crews have earned the confidence and loyalty of its customers,” the rig owner said in an e-mailed statement. “We take great pride in those relationships.”

Biggest Increase

BP probably will spend $9.5 billion this year on drilling wells and constructing production facilities, a 36 percent increase from 2010, James D. Crandell, an analyst at Barclays Plc, wrote in a Dec. 15 report. That would be the biggest increase among a group of the largest international oil companies that includes Exxon Mobil Corp. and Royal Dutch Shell Plc, according to Crandell’s estimates.

BP is paying $580,000 a day to lease Transocean’s GSF Development Driller II rig in the Gulf, the rig owner said in a Jan. 13 SEC filing. The other Transocean vessels under contract to BP in the Gulf are the Development Driller III at a daily rate of $403,000 and the Discoverer Enterprise for $435,000 a day.

BP also is leasing Transocean’s Discoverer Luanda off the Angolan coast for an undisclosed rate and the Paul B. Loyd Jr. in the U.K. sector of the North Sea for $498,000 a day, the filing showed.

‘Fatally Flawed’

Lawyers representing BP have castigated Transocean’s safety record in the Gulf and other deep-water oil provinces during several months of hearings before a U.S. Coast Guard-Interior Department investigative panel.

BP said in the internal investigation that its probe found seven of the eight judgment errors and equipment failures that led to the tragedy were the fault of Transocean, Halliburton Co. or Weatherford International Ltd. Halliburton, based in Houston, poured the cement used to bind the steel pipe in the well to the surrounding rock formation. Weatherford, based in Geneva, provided valves for the $154.6 million project.

Transocean, the world’s largest offshore oil driller, dismissed the report as self-serving when it was released and said the blowout resulted from BP’s “fatally flawed” well design.

William Reilly , co-chairman of the panel appointed by President Barack Obama to look into the disaster, said on Jan. 6 that BP was “centrally responsible.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE