Report lays bare causes

C&I Issue 18, 2010

Things are looking up for the beleaguered oil giant BP as it confirmed that it has cemented shut the Macondo well that was responsible for the ecological disaster in the Gulf of Mexico. The news follows the recent release of a BP report that laid out the causes of the disaster. The report could aid BP in future court cases, allowing the firm to shift some of the blame onto its partners in the Deepwater Horizon venture.

The report, led by Mark Bly, BP’s head of safety and operations, concluded that ‘multiple companies and work teams’ were responsible for the disaster. One of the key findings of the report, says Gregory Lemaire- Smith, energy analyst at Datamonitor, is that the cement lining, produced by contractor Halliburton, failed to perform as it should have and hold the hydrocarbons in the well. But there is plenty of blame to go round, according to the report. Several safety and automated shutoff devices did not function correctly and tests on the well’s integrity by Transocean were incomplete, although incorrectly accepted by BP.

Transocean hit back in a strongly worded statement, describing the report as ‘self-serving’, blaming BP’s well design. The report found that it was unlikely well design was responsible for the disaster.

‘You can’t delegate accountability, only responsibility, and in this case I get a feeling that many people are trying to delegate accountability for their actions,’ Lemaire-Smith says.

BP’s incoming chief executive Bob Dudley laid out his stall in a statement: ‘We have said from the beginning that the explosion on the Deepwater Horizon was a shared responsibility among many entities.’

Several other reports are being prepared by US government bodies and their conclusions are likely to affect attempts to apportion blame. Lemaire-Smith says that, in the report, BP appears confident that much of the litigation is spurious and will be dropped. ‘I don’t know if this will happen, but it wouldn’t surprise me.’

He adds that the incident is likely to lead to reform of rig safety. In the past, such practices as oil and gas companies filling out inspection forms in pencil and then passing them to regulators to complete have not been unknown, he says.

Since the explosion at the rig in April 2010, which killed 11 workers, 4.9m barrels of oil are estimated to have leaked from the well. The total clean up cost for the disaster has been put as high as $50bn, (C&I 2010, 12, 5).

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