BP's Report on Deepwater Horizon Explosion and Failed Well Leaves Questions

Questions are unanswered in BP's report on the explosion aboard Deepwater Horizon

By Nicholas Moroni

BP's release of a preliminary report on the events surrounding the April 20 explosion aboard the Deepwater Horizon that led to three months of spewing oil in the Gulf of Mexico, hints at a defensive role that the company will probably be playing as it faces investigations and litigation in the future.

"No single factor caused the Macondo well tragedy. Rather, a sequence of failures involving a number of different parties" caused the oil rig to explode and the oil spill in the gulf, BP stated in a press release today. In the aforementioned report, the oil giant names Transocean (which owned the Deepwater Horizon), Cameron International (the manufacturer of the failed blowout preventer) and Halliburton (accused of performing a shoddy job in pouring cement down the well: one that might have failed to stop firy oil and gas from rising to the surface and to cause the explosion), as responsible entities.

Similar to the blame game that was played recently in Houston at federal investigative hearings; mea culpas from entities linked to BP and the Deepwater Horizon were not forthcoming.

The Washington Post published the following statements in an article today:

• "It is evident that a series of events rather than a single mistake or failure led to the tragedy," said BP CEO Tony Hayward, who has been silent for months, and will step down from his post on October 1 - he will be taking a position in Russia, and will yield less power within the company. Bob Dudley will take over as CEO.
• "In both its design and construction, BP made a series of cost-saving decisions that increased risk - in some cases severly," read a statement from Transocean.
• "The well owner [BP] is responsible for designing the well program and any testing related to the well," Halliburton rebutted in a statement.

The report, which was presented at a press conference in Washington, D.C. today, failed to hold anyone in particular within BP responsible for the explosion.

The report did claim that the blowout did not rise from the sides of the well (an area known as the annulus); but, rather up the center - an indication that the company may dodge blame for operating with a cheaper casing that had been assessed as riskier, and going with a reduced number of centralizers (they keep the casing in place, and the company used).

BP will remain on the defensive as it stands to face billions of dollars in fines that could be imposd under the Clean Water Act and the Oil Pollution Act.

The Justice Dept. is already investigating BP, and the company is facing litigation from states and individual plaintiffs.

Gulf Oil Spill Hearings: Disorder Aboard the Deepwater Horizon

Gulf of Mexico oil spill hearings reveal little about the explosion on the Deepwater Horizon oil rig; A Wall Street Journal report discloses a haphazard operation aboard the rig prior to its explosion

By Nicholas Moroni

Whether additional measures could have been taken to prevent the explosion of the Deepwater Horizon oil rig was the central topic throughout federal investigative hearings in Houston this week.

All week, a joint panel hosted by the US Coast Guard and the Interior Department's Bureau of Ocean Energy Management, Regulation and Enforcement scrutinzed - and discovered little - the actions of a number of players with connections to the doomed rig.

Throughout this past week, representatives from BP, Transocean (the Swiss countractor that leased the Deepwater to BP), and other companies largely dodged questions and played a blame game, while five witnesses invoked their Fifth Amendment rights, and refused to testify.

The Washington Post reported last week on the testmony of Transocean's Paul Johnson, who accused BP of swapping a more experienced well-site leader for one the oil giant favored - albeit one with less experience. However, The Wall Street Journal cited a counterattack by BP, stating: "BP has said that Transocean bears at least partial responsibility...because of the equipment's failure."

That "equipment" would be the blowout preventer - the device that seals off a well in the event of an explosion. In the case of the Macondo well, the blowout preventer failed to do so.

Another recent article in The Journal also paints a portrait of disorder and disconcern with regard to a crucial test to the failed Macondo well in the days leading up to the Deepwater's demise, and the 86 days of crude that gushed into the Gulf of Mexico. According to the article, which sites investigative records, and the testimonies of witnesses from this week's hearings, several officials aboard the Deepwater allegedly failed to seriously assess unusually high pressure readings. The readings needed to be taken prior to a test that would enable the rig to make sure that cement and steel inside the well were locked together. The cement and steel had to bind together to prevent any natural gas from leaking, so the rig could depart the site and move on to another job.

Robert Kaluza, a BP well site leader, who declined to testify this week, told BP internal investigators that decisions made by some of the company's officials may have been done in an effort to expedite the process. "Maybe [they] were trying to save time." BP has also been accused of having economic incentives - moving forward in an attempt to pursue other drilling projects.

The article also states that an unusual amount of mud was removed (ten times the usual amunt) below the blowout preventer - possibly to drill deeper. Mud holds down any gas that may leak, so wells are usually tested before they are utilized.

In this case, the excessive amount of mud removed may have caused the potent mixture of natural gas and oil to surge up a the well and set the rig ablaze. What's more, the faulty blowout preventer failed to seal the well and prevent the dangerous concotion from rising to the top.

The well was also referred to by BP employees as the "nightmare well," prior to the explosion.

As for the federal joint hearings - they will resume on October 4 in either New Orleans or Houston.

Transocean Operatives Tesitfy at Federal Hearing

Deepwater Horizon oil rig following the April 20 explosion that led to

the oil spill in the Gulf of Mexico. Transocean leased the rig to BP and

Halliburton was responsible for the cement job in the well

that some have called the cause of the blowout.

(Photo by US Coast Guard/Courtesy of SkyTruth)

US Coast Guard and Bureau of Energy Management hearings in Houston illuminate a kerfuffled Deepwater Horizon rig

By Nicholas Moroni

The joint US Coast Guard/Bureau of Energy Management federal hearings into the ongoing oil saga in the gulf continue today in Houston; however, yesterday's session was marred with a self-inflicted portrayal of disorganization among the leaders aboard the ill-fated Deepwater Horizon oil rig - which sank on April 20, killing 11 crew members.

Transocean - the company that leased the rig to BP - operatives were on the hot seat yesteday as federal officials pushed to reveal a lack of communication and organization that in no way facilitated the crew's response to the blown-out well. When US Coast Guard Capt. Hung Nguyen asked rig manager Paul Johnson matter-of-factly, "Are you clear who was in charge?"; Johnson replied, "I'm not sure."

The Los Angeles Times also reported that after the blowout, crew members were awaiting orders from senior personnel - orders they never received.

Daun Winslow, a Transocean division manager, claimed that Curt Kuchta, the rig's captain, turned to him to inquire as to whether or not he should perfrom an emergency disconnect of the drill from the well. Winslow also said he had to urge Kuchta to deploy the lifeboats.

The LA Times also published a series of troubling findings from a September 2009 audit of the rig that were summoned at yesterday's hearings - among them:

• Not all relevant personnel on the rig were knowledgeable about drilling and well operation practices.
• A review showed significant overdue maintenance jobs that required more than 3,545 man hours.
• No single person on board could account for which alarms had been disabled and for what reason.
• A warning on understaffing was issued saying that any further reduction of experienced personnel may be "detrimental to the performance of the rig."

The hearings proceed today, with BP and Haliburton representatives being called to testify, although the Houston Chronicle reported yesterday that Brian Morel, a BP drilling engineer, plans to exercise his Fifth Amendment rights by refusing to say anything that might incriminate him in any wrong-doing.

One of the Halliburton employees expected to testify today was supposedly in direct contact with Morel and other BP representatives about the cement job in the weeks leading up to the well explosion. A faulty cement job by Halliburton may have caused the explosion: if the cement is not properly set in a well, oil and gas can mix and surge up the well at extremely high rates of speed, causing an explosive force.

As the federal hearings continue, and perhaps the finger-pointing, the question of whether or not these companies and other BP associates will be shielded under claimants' agreements to waive litigation following a settlement with attorney Ken Feinberg's Gulf Coast Claims Facility - something Feinberg is still pondering.

Gulf Coast Claims Facility Viewed Suspiciously

Ken Feinberg at a town hall meeting in Bayou La Batre, Ala.

(Photo by Bill Starling/Courtesy of Press-Register)

The Gulf Coast Claims Facility is being viewed suspiciously

By Nicholas Moroni

As attorney Ken Feinberg's Gulf Coast Claims Facility officially takes over the BP claims process on Monday, August 23, some have adopted a precarious view of the operation.

Fisherman, restaurant owners, distributors, hotel owners, and other entities are cautiosuly approaching the claims process. Many are uncertain that the initial emergency payments and a final settlement with BP - after which the right to sue is waved - will cover long term damages. The unfortunate reality, however, is that many spill victims cannot finance a potentially lengthy legal battle with BP and its affiliates; subsequently, some are uneasily taking the initial payments, but are not entirely committed to settling.

"The conern is you're going to have people essentially being taken advantage of because they have economic straits - they get quick, low settlements and out of economic necessity they take them, but in the long run they are not better off," Stephen J. Herman, a New Orleans lawyer, told The New York Times.

Throughout the past two months, Feinberg has toured the Gulf region conducting town hall meetings in an attempt to promote the $20 billion escrow account set up by BP in June, which will be used to compensate spill victims. At one meeting in July, he told a congregation that anyone with a legitimate claim that opts out of a settlement is "crazy."

There are other causes for concern. BP's business affiliates (Transocean, Cameron, Halliburton, and others) that were involved - directly, or indriectly - in the April 20 sinking of the Deepwater Horizon are shielded, so claimants cannot file suit following a settlement. What's more, spill victims that have been receiving emergency payments from BP, or fisherman that were hired to spot oil and lay booms thorugh BP's Vessel of Opportunity program, will have their wages deducted from any payment.

Damages Lawsuits Filed Against BP by Spill Victims Tests the Claims Process

Damages suits against BP to be heard in New Orleans

By Nicholas Moroni

Hundreds of lawsuits filed by spill victims seeking finanical damages from oil giant BP will be heard in a New Orleans court.

Federal judge, Carl Barbier will hear some 300 cases that have been filed by spill victims seeking reparations for financial damages allegedly suffered subsequent to the spill. BP had hoped to avoid such litigation when it agreed in June to earmark a $20 billion escrow fund for spill victims. However, the Financial Times reports the aftermath of the sealed Macondo well has all the makings of Exxon-Valdez litigation.

BP had hoped to have the cases heard in Texas (its headquarters are in Houston): perhaphs in an attempt to appear before a friendlier jury.

Judge Barbier's hearing the cases initally carried some controversy, as well. BP maintained that Barbier's presiding over the cases, would be a conflict of interest because of shares that he held in Transocean (the operator of the sunken Deepwater Horizon rig) and Halliburton, which was involved in the Macondo drilling. Barbier has since sold the shares, and a Court of Appeals conceded that the sale of the shares posed no conflict.

The oil giant claimed it respected the decision, and that it "look[ed] forward to the cases proceeding as expeditiously as possibly."