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BP says Transocean, Halliburton share blame in spill


LONDON (Bloomberg)—BP P.L.C. faulted its own engineers for the fatal drilling-rig blast that triggered a record U.S. oil spill, but it said contractors Transocean Ltd. and Halliburton Co. share the blame.

BP's internal investigation of the April 20 Deepwater Horizon explosion, released Wednesday on the company's website, cited at least eight errors of judgment and equipment failures that allowed natural gas to erupt from the Macondo well 40 miles off the Louisiana coast. The blast killed 11 workers and triggered a leak that spewed more than 4 million barrels of crude into the Gulf of Mexico over 87 days.

BP and Halliburton didn't fully test a cement mixture that probably failed, allowing the blowout, the report said. Transocean, which owned the rig and was hired by BP to drill the well, failed to maintain “critical components” designed to automatically prevent a blowout, BP said. Rig workers responded too slowly and made at least one mistake that may have caused the explosion, the London-based company said.

“BP is pointing fingers at those guys who were on the rig, and they're not here to defend themselves,” said Billy Anderson, whose son Jason was the highest-ranking Transocean crew member to perish in the disaster. “They're trying to spread around the blame.”

The spill cost BP CEO Tony Hayward his job, and BP faces hundreds of lawsuits from hotel owners, shrimpers and others who claim financial losses.

The report was compiled by a team of investigators who reported to Mark Bly, BP's chief of safety. The spill shut a wide swath of fishing grounds for months and brought U.S. deepwater oil exploration to a standstill.

BP said “a complex and interlinked series of mechanical failures, human judgments, engineering design, operational implementation and team interfaces came together to allow the initiation and escalation of the accident.”

Mistakes began with flawed cementing of the wellbore, and after gas began flowing into the well from the surrounding rock, Transocean rig workers and BP managers aboard the vessel misinterpreted a pressure test that indicated danger was imminent, the report said.

“The Transocean rig crew and BP well site leaders reached the incorrect view that the test was successful and that well integrity had been established,” the report said.

Transocean employees drilled the $140 million well under BP's supervision. Halliburton was paid to line the hole with cement. BP's well design had “no bearing” on the disaster, Kent Corser, a drilling manager for the company, told reporters today at a briefing in Washington.

“It's all about execution,” said David Pursell, a managing director at Tudor Pickering Holt & Co. L.L.C., a Houston investment bank. “If it points to execution, it points to the guys on the rig, which include BP, Transocean and the other service providers. I'm still not convinced that this wasn't a bad well design.”

BP's report concealed Macondo's “fatally flawed” design, which “set the stage” for the explosion, Vernier, Switzerland-based Transocean said in an e-mailed statement. The driller cited a series of cost-savings decisions by BP that increased risk, including a design that reduced the number of barriers to gas flow.

Transocean said its own investigation is awaiting critical information that BP hasn't yet provided. A spokeswoman for Houston-based Halliburton said she wasn't immediately able to comment on the report.

The report, which runs more than 190 pages, isn't meant to serve as “the final word” on what caused the incident, Mr. Bly said in a video accompanying the release of BP's findings. He said the investigation was limited by lack of direct access to some witnesses and to certain physical evidence.

BP well-site leaders Donald Vidrine and Robert Kaluza have declined to testify before a joint U.S. Coast Guard-Interior Department investigative panel studying the disaster.

BP, the largest oil and gas producer in the Gulf of Mexico, was hours from finishing the Macondo well about one mile under the sea surface when it erupted.

Crew members aboard the rig realized belatedly that the blowout had begun and probably were too late to close the valves on the blowout preventer, the report said. Instead of diverting the flow of gas, mud and oil safely over the side, crew routed it to a system that spewed gas onto the rig, where it ignited, the report said.

The federal investigative panel has focused on how BP employees aboard the rig and in Houston failed to detect signals that the well was about to erupt. The panel is scheduled to conduct another week of hearings beginning Oct. 4 in a suburb of New Orleans.

One finding of BP's so-called Bly report was that managers aboard the rig misinterpreted a test of the well's stability on April 20 and began replacing drilling fluid, which is heavier than oil and gas, with seawater. The seawater was too light to prevent gas that had begun leaking into the well from shooting up the pipe to the rig, where it exploded.

The U.S. Justice Department and several Congressional committees also are conducting probes. Under an agreement brokered with the Obama administration, BP agreed to set aside $20 billion to cover claims and damages.

BP’s report recommends new guidelines on cementing wells and tougher standards for equipment designed to prevent blowouts.

U.S. House Democrats in July pushed through an overhaul of drilling rules that spells out procedures for preventing gas from entering a well and new requirements for blowout preventers. The Senate has yet to take up the bill.

An investigation by the House Energy and Commerce Committee found that BP made a series of “risky well-design and cementing decisions.”

The U.S. Bureau of Ocean Energy Management, which oversees offshore drilling, is weighing rules that would mandate procedures in the event of irregular well tests, David Dykes, chief of the bureau’s Office of Safety Management, told a committee of scientists and engineers investigating the disaster on Aug. 12.

BP said the subsea control system on the Deepwater Horizon’s blowout preventer had electrical faults and weak batteries, both “critical components” for shutting off the flow from the well automatically. It’s not clear why remotely operated vehicles weren’t able to activate a valve intended to shear the drill pipe and shut off the gusher in days following the explosion, the report said.