Lipstick On A Pig

Jim Brown
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BP accomplished a very difficult task on Wednesday. They succeeded in putting enough makeup on their view of the Horizon explosion that it would be difficult for the general public to see BP's role in the disaster. BP's report paints them as just another participant in the group that was responsible for the well's failure.

I doubt anyone actually expected BP to come right out and say "we screwed up, it is our fault" and list an address to send the cleanup expenses. Anyone who really thought about it would have expected BP to obscure the facts slightly and try to pass blame on to other companies. It is not that they are evil but just a corporation trying to offload liability.

First, BP did an outstanding job of producing the report. With billions at stake you can bet they pulled out all the stops in an effort to present BP's involvement in the disaster as a heroic effort under unimaginable circumstances who spared no expense in resolving the problem and shutting down the well. They did a great job in that regard. The 192-page report and 27-minute video are very professional and will be great archival footnotes in the decades ahead.

You have to admit that organizing a fleet of more than 150 vessels, five drillships and up to 27 ROVs at the peak of the effort was nothing short of amazing. The coordination necessary had never been done before other than in a military setting.

Working on a blown out well 5,000 feet below the surface in temperatures where methane gas freezes is a challenge where many would have failed. They had their mistakes and had to start over a dozen times but they eventually succeeded and made history, developed new technology and learned an incredible amount about deepwater wells.

Unfortunately this great publishing effort left out some important details. You know, the ones that would have been a clear indictment of BP. Instead they blamed Halliburton, Transocean and in a small way some of their own people.

BP blamed Halliburton for a bad cement job that allowed the hydrocarbons to escape up the casing but they glossed over the fact that BP canceled the required test to determine if they had a good cement job because it would have taken another day to complete. BP glossed over the Halliburton recommendation for a minimum of 21 centralizers and the BP decision to use only a third of those because of the time it would have required to install them. A centralizer keeps the casing in the center of the well so concrete can be pumped up the sides of the casing to seal the casing from the rock.

BP blamed Transocean for a failing blow out preventer but did not acknowledge that BP would not allow Transocean the time required to perform maintenance on the device because it would have put BP farther behind schedule.

BP blamed its engineers and Transocean drillers on duty for not recognizing a flawed pressure test after the cement job by Halliburton. In hindsight the test clearly showed problems with the well but the conflicting readings prompted a decision by BP management to conclude there was a valve problem not a pressure problem and they accepted the results and told the crews to proceed with removing the drilling mud. The company man, in this case BP, is always the final authority in decisions on the well. Transocean engineers on site argued with those in charge just before the blow out that the well was not under control. The BP man responsible was in a hurry to get back to a company tour elsewhere on the rig and told the Transocean employees to proceed anyway.

There were dozens of problems, short cuts and oversights that BP omitted from the 192-page report making it an obvious attempt to spread the blame and appear to the casual observer that all were equally guilty in the accident. You can read the report and view the video here: VIEW BP REPORT

In the report BP investigators claimed they were unable to identify any single action or inaction that caused the blowout.

"Rather, 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."

"Multiple companies, work teams and circumstances were involved over time."

Not surprisingly Transocean and Halliburton slammed BP for producing a "self serving" report that was full of errors and misrepresentations. Transocean immediately produced a press release that itemized five points that BP failed to mention that led directly to the disaster. Halliburton blasted the BP report saying it contained "substantial omissions and inaccuracies" and they would release their own analysis when it was completed.

Both Transocean and Halliburton reiterated that the existing contracts with BP fully indemnified them against any claims or damages. BP clearly can't claim gross negligence based on the flimsy accusations in their report because BP either approved or directed the work in advance. It appears that BP will be on the hook for the vast majority of the expenses. This was an excellent ploy by BP to gain public support and misdirect blame. 99% of the public will now believe it was a group problem not a BP problem.

It only took a few hours for U.S. lawmakers to start appearing a microphones and blaming BP for trying to minimize its role in the disaster. One spokesman for a panel investigating the event warned that BP will find it tougher to convince officials than consumers and the truth will eventually come out. Several independent investigators and government investigators have already characterized the spill as preventable and as the direct result of BP's actions.

While BP made many mistakes on the well it is hard to not find fault with Halliburton's cement job. The cement was supposed to block off the bottom of the well and prevent hydrocarbons from moving up the well pipe. BP said they tested the cement Halliburton used and found that it broke down faster than expected and was "likely unstable" inside the well. That remains to be seen but obviously if the cement job was successful there would have been no blowout.

That does not put the monkey on Halliburton's back. BP was given options on the cement based on Halliburton's significant experience. BP approved the cement used and the methods employed. Secondly, BP refused to run the cement bond log after the cement was injected in order to test for a successful job. Had the test been run and failed Halliburton could have done the job again until the test was successful. BP basically let Halliburton off the hook by refusing to run the test. BP also used only six centralizers instead of the 21 Halliburton recommended. Halliburton said that was not enough to stabilize the well and there was a strong potential for a blowout. Since this is on record from before the explosion it would appear Halliburton was not at fault. This is just one more of the problems BP glazed over. Thirdly, Halliburton's contract with BP specifically indemnifies Halliburton against any liability for any process so even if the cement job failed BP is still responsible.

That is just one of the dozens of problems leading up to the disaster. BP's report is a road map for litigation as it attempts to pass costs on to the other participants. The battleground for BP is about to move from the Gulf to the courthouse and by producing this monster report with tons of BP positive material they have launched the first salvo in the legal war.

Jim Brown

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