The Final Answer But Not the End of the Story

Jim Brown
 
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The presidential Oil Spill Commission released its final report on the Horizon disaster. It found that BP, Transocean and Halliburton all made bad decisions that led to the disaster.

The panel concluded that decisions intended to save time and money created an unreasonable amount of risk and triggered the largest oil spill in history. They also claimed the spill could happen again unless further regulatory steps were taken to prevent a recurrence.

The commission pointed out nine different technical and engineering calls that led to the disaster. In one example cited by the commission a BP request to set an "unusually deep cement plug" was approved by the Minerals Management Service in 90 minutes. That decision was a critical point of failure in the disaster.

Reportedly the cement plug failed because of the mixture of cement used and the pressure of the well at that depth. A faulty cement seal is suspected of leading to other failures in retaining the down hole pressures and allowing the blowout.

The commission produced a 48 page excerpt of its final report which will be released in two weeks. In the excerpt the commission claimed the blowout was not the product of a series of abnormal decisions made by a rogue industry or government officials that could not be expected to occur again. They warned the root causes were systemic and required significant reform in industry practices and government policies.

Despite the nine technical problems they outlined in the report the commission said the blowout was due to one major failure. That failure was in the management of the well by BP and the follow through by the crew. Each of the significant events could have been handled and corrected had BP management, both on the rig and onshore been paying close attention to the problems and the decisions.

BP responded saying that the commission report was in agreement with their own internal investigation and the blowout was the result of multiple causes involving multiple companies. Of course BP is trying to spread the blame to spread the cost of the cleanup and fines.

Transocean responded saying "the procedures being conducted in the final hours were crafted nd directed by BP engineers and approved in advance by federal regulators."

Halliburton repeated the claim it was acting on the direction of BP engineers and was fully indemnified by BP for all costs.

BP was also faulted for not running a cement bond log which would have shown if the cement job was stable. This is a normal procedure but BP skipped it because of the time involved. BP was also faulted for not putting in a second cement plug higher up the well before they attempted to remove the drilling mud. The commission said this unnecessarily and substantially increased the risk of a blowout.

Transocean was faulted for not having an established procedure for evaluating and interpreting negative pressure tests. Workers on the rig misread the failing test and proceeded to follow BP's instructions. Transocean reiterated that their workers were well trained and considered to be the best in the business but the final procedures were directed by BP engineers. "Based on the limited information given them by BP the Transocean workers took appropriate actions to gain control of the well."

The commission used a quote from the smoking gun email from a Halliburton employee. The email was originally discovered by Representative Henry Waxman, D-CA, in a probe by the House Energy committee. The Halliburton engineer was complaining about BP's decision to use only half as many centralizers than Halliburton had recommended. The stabilizers center the pipe in the hole and allow for a good seal all around the pipe by the concrete. He wrote in his email, "But, who cares, it's done, end of story, will probably be fine and we will get a good cement job." Obviously it was not fine and the cement failed.

Outside experts praised the panel for its detail but some complained the panel did not go far enough in placing specific blame for the disaster.

Despite the decision by the commission that a combination of nine decisions led to the disaster and multiple companies were at fault the bottom line is a big problem for BP. The majority of the decisions were made by BP and BP was responsible for skipping the crucial tests, cutting corners on the centralizers and telling Transocean and Halliburton what to do. On the rig the "well operator" in this case BP, always has the final say. That responsibility will fall back on BP when this report is used in court in the liability trial scheduled for 2012. Secondly, in the contracts with Transocean and Halliburton, BP assumed 100% of the liability for any contractor actions "even if the actions were the result of gross negligence." Based on the report it does not appear there was any gross negligence on the part of Transocean and Halliburton and it would be very difficult to prove that in court. That means BP will most likely end up paying the bill and reluctantly indemnifying RIG and HAL.

Jim Brown

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