BP Spill Report Hints at Legal Defense


WASHINGTON — The oil giant BP spent months this summer trying to contain the gusher of oil on the floor of the Gulf of Mexico. Now BP is trying to contain the legal and financial fallout from the explosion of the Deepwater Horizon.

On Wednesday, BP released the results of an internal investigation that heaped some of the blame on itself, but mostly pointed at other companies. Conducted by the company’s safety chief, Mark Bly, and a team of about 50, most of them BP employees, the inquiry was initiated shortly after the April 20 explosion that killed 11 and spilled almost five million barrels of oil into the Gulf of Mexico.

Less a mea culpa than a public relations exercise, the 193-page report could also be seen as a preview of BP’s probable legal strategy as the company prepares to defend itself against possible criminal charges or civil complaints, federal penalties and hundreds of lawsuits.

The report deflects attention away from BP and back onto its contractors, especially Transocean, which owned the rig, and Halliburton, which performed cement jobs on the well. It also focuses less on decisions that BP made in designing and drilling the well than on what rig workers, mostly from Transocean, did in the hours leading up to the blowout.

Of the report’s eight crucial findings, BP accepts partial responsibility for one cause of the explosion, saying it shared blame with Transocean for having misread certain pressure tests that foreshadowed the explosion.

Central to BP’s legal strategy will be the need to rebut claims that the company acted with gross negligence. Toward that end, the report plays down BP’s well design as a factor in the explosion.

“To put it simply, there was a bad cement job and a failure of the shoe track barrier at the bottom of the well, which let hydrocarbons from the reservoir into the production casing,” BP’s departing chief executive, Tony Hayward, said in a statement Wednesday.

“Based on the report, it would appear unlikely that the well design contributed to the incident, as the investigation found that the hydrocarbons flowed up the production casing through the bottom of the well,” the statement said.

Transocean, which is also conducting an investigation, disagreed, arguing that the well design played a significant role while accusing BP of having made “cost-saving decisions that increased risk — in some cases, severely.”

BP also used the report to point the finger at Halliburton for its work in cementing the well. Halliburton designed and pumped a cement seal that investigators have said may have allowed explosive natural gas to enter the well and rush up to the rig.

During a news conference Wednesday, Mr. Bly said that BP relied on Halliburton for the design and application of the cement but that BP had neglected to monitor the work properly.

“Halliburton should have done more extensive testing and signaling to BP that there were issues to think about and BP should have done a better job of ensuring that that happened,” he said.

In a statement, Halliburton rejected this view. “The well owner is responsible for designing the well program and any testing related to the well,” company executives wrote. “Contractors do not specify well design or make decisions regarding testing procedures as that responsibility lies with the well owner.”

One important legal question going forward will concern the failed blowout preventer, to which BP investigators did not have access because it was only recently removed from the Gulf floor. Since the device was made by Cameron then bought and maintained by Transocean, BP may not be the only company held accountable for its failure.

The report blames the failure of the blowout preventer entirely on maintenance issues that would have been the fault of companies other than BP. It did not address questions that might focus attention back on BP, like the blowout preventer’s design or the decision to use a blowout preventer with a single blind shear ram, essentially the last finger in the dike during a blowout. Numerous studies and a New York Times investigation have shown that two blind shear rams is the safer option.

Among the report’s most significant conclusions, investigators say that the blowout came up the center of the pipe and not up the outside of the well casing, the area known as the annulus.

If true, the finding is significant because it plays down the importance of certain BP decisions that have been criticized as negligent. One such decision was BP’s choice of a type of well casing that internal documents indicated the company knew was cheaper but riskier. Another such decision was BP’s use of fewer-than-advised centralizers, devices that are meant to keep the casing properly positioned.

The report offers scant insight into why certain decisions were made and by whom — questions that are likely to become important in coming legal battles.

For example, the report does not say why the crew failed to notice that the well was flowing until it was too late. It does not clearly explain why the blowout preventer shear rams failed to seal the well when they were eventually closed after the explosion.

It also does not say why BP failed to follow its own guidelines, which called for further evaluation if the top of cement was not 1,000 feet, or 305 meters, above the reservoir, as was the case with this well.

The report does, however, fault Transocean workers for failing to recognize and act on the influx of hydrocarbons into the well for more than 40 minutes until the hydrocarbons were in the riser and rapidly flowing to the surface.

The well flow was routed to a mud-gas separator after it reached the rig, causing gas to be vented directly onto the rig rather than diverted overboard, BP investigators found.

A series of other reports, including one from the Coast Guard and the federal minerals management agency, are expected in the coming months.

As a legal document, BP’s report is unlikely to carry much weight in pending litigation or in influencing the Department of Justice, which is considering criminal and civil charges related to the spill.

“The investigation team did not evaluate evidence against legal standards, including but not limited to standards regarding causation, liability, intent and the admissibility of evidence in court or other proceedings,” BP said in the report’s executive summary.

People interviewed for the report were not under sworn-testimony conditions, company’s investigators did not record or produce verbatim transcripts of the interviews and interviewees were not asked “to review or endorse the notes taken.”

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Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
Cooper Law Firm

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