US report blames BP, contractors for Gulf oil spill
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Last Updated: Thursday, September 15, 2011, 00:28
  
Washington: The US government heaped the lion's share of blame for the country's biggest ever oil spill on BP on Wednesday as investigators issued their final report on the massive Gulf disaster last year.

In a report that may be pivotal in the multibillion-dollar legal battles to come and could set the stage for criminal charges, the Coast Guard and the offshore oil regulator wrote that BP was solely to blame for 21 of 35 contributing causes to the Macondo well blow-out that led to the leak, and shared blame for 8 more.

After the most definitive look yet at the disaster, investigators said BP made a series of decisions that complicated cementing operations and may have contributed to the ultimate failure of the cementing of the well.

BP shares retained most of the day's near 4 percent gain after the report as investors viewed the report as spreading responsibility more broadly. Shares of Halliburton -- which was responsible for cementing -- fell nearly 1 percent.

But analysts also noted the report highlighted BP's risk approach had been a core cause.

"BP's cost or time saving decisions without considering contingencies and mitigation were contributing causes of the Macondo blowout," the report said.

The final report by the Coast Guard and Bureau of Ocean Energy Management had been eagerly awaited by investors seeking clues on possible legal ramifications BP and its partners may face from the drilling disaster.

The report highlighted a litany of errors that preceded last year's explosion on the BP-leased Deepwater Horizon rig killed 11 workers and spewed more than 4 million barrels of oil from the Macondo well into the sea.

BP failed to communicate decisions regarding the cementing that increased operational risks to Transocean, the contractor that owned and operated the Deepwater Horizon rig, according to the report.

Transocean workers missed an opportunity to address the cement problems when they misinterpreted a critical test of the well's cement barriers.

A Nightmare Well

The Macondo project was plagued by problems even prior to the spill, according to the report.

The well was running over budget and had also exhibited signs that all was not right. In an email, a BP engineer labeled Macondo as a "a nightmare well which has everyone all over the place," according to the report.

BP had sent its minority partners MOEX and Anadarko Petroleum Corp three requests for more money to drill the well beyond the its original estimated cost of $96 million. The companies in total allocated $155 million to drill Macondo.

Halliburton was responsible for cementing on the well. The cement's failure to maintain the integrity of the well was the central cause of the blowout, the federal team said.

BP worked with Halliburton to design the cement job. Because the well was over budget, "BP sought to minimize these losses by reducing the volume of cement it pumped into the well" and a key analysis recommended by a Halliburton engineer was skipped, according to the report.

Halliburton, Transocean and Cameron International, the designer of the well's blowout preventer, were not immediately available for comment.

Legal Implications

The Gulf drilling disaster spurred a slew of investigations, lawsuits and regulatory reforms.

The Justice Department has already sued the well's owners, BP, Anadarko Petroleum Corp and Mitsui Co Ltd, as well as Transocean.

More charges could be brought, however, and the findings from federal investigators could provide fodder for lawsuits that BP and its contractors have filed blaming each other for the spill.

BP welcomed the report's findings spreading the responsibility for the accident around.

"BP agrees with the report's core conclusion -- consistent with every other official investigation -- that the Deepwater Horizon accident was the result of multiple causes, involving multiple parties, including Transocean and Halliburton," the company said in a statement.

The latest federal report echoes other official investigations of the spill, which have blamed the catastrophe on a series of mistakes made by BP and its partners.

Regulatory Changes

In addition to the legal impacts of the federal report, the team's investigation may lead to further changes in the regulatory landscape for offshore drilling.

Following the Gulf spill, the government imposed a raft a new rules aimed at preventing another disaster.

While regulations in place at the time of the spill did not cause the disaster, "stronger and more comprehensive federal regulations might have reduced the likelihood of the Macondo blowout," the federal investigators said.

The report said regulations could be strengthened in areas involving cementing procedures and inspection of offshore drilling operations, but said many recommended changes have already been implemented by the BOEM.

Bureau Report


First Published: Wednesday, September 14, 2011, 22:08


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