BP, Transocean Officials Botched Tests, Witness Testifies

BP Plc and Transocean Ltd. 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 oil-drilling expert said.

The rig’s crew misinterpreted results of negative pressure tests done April 20, 2010, that showed the Macondo well was unstable, Richard Heenan, a Canadian engineer who has supervised off-shore drilling projects, told a judge yesterday in a trial over spill claims. The U.S. government contends the botched tests led to the blast, which killed 11 workers and sent more than 4 million barrels of oil spewing 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 oil-industry standards, 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.

The spill from the Macondo well fouled the Gulf and surrounding states’ shorelines. The accident sparked hundreds of lawsuits against London-based BP, Vernier, Switzerland-based Transocean, which owned the rig, and Houston-based Halliburton Co., 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 Halliburton’s cement job was defective and Transocean employees made a series of missteps on the rig, including disabling safety systems, failing to maintain the installation properly and not adequately training its crew to handle crisis situations.

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

The U.S. and spill victims contend BP’s and Transocean’s misinterpretation of one of the well-pressure tests was a key cause of the explosion and spill. The tests check for increases in pressure caused by the flow of oil or gas up the well, which can lead to a so-called blowout.

‘No Basis’

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.

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

Blowout Preventer

Barbier heard testimony today that the Deepwater Horizon’s maintenance issues may have played a role in the fatal blast and spill. Rory Davis, an engineering expert who studied the failure of the installation’s so-called “blowout preventer,” said the safety system wasn’t properly maintained.

A study of the remains of the 400-ton system, recovered from the Gulf’s seabed, found it suffered from a dead battery and faulty wiring, Davis, called to testify by lawyers for the government and spill victims, told the judge.

“If that 27-volt battery had been sufficiently charged, it should have cut the pipe and sealed the well,” Davis said. BP has argued in court filings that Transocean was responsible for the maintenance of the rig’s systems.

Officials of Houston-based Cameron International Corp., which made the rig’s blowout preventer, recommended that the battery only be used for one year, Davis said. “Transocean used it for 2 1/2 years,” 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).

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