Federal report on Gulf disaster doesn’t pin blame solely on BP

The president’s Oil Spill Commission has concluded that systemic failures in the industry and its overseers, not a “rogue” management style on the part of BP, caused the disastrous Gulf of Mexico well blowout in April.

“The blowout was not the product of a series of aberrational decisions made by rogue industry or government officials that could not have been anticipated or expected to occur again,” says the commission’s final report, released Wednesday. “Rather, the root causes are systemic and, absent significant reform in both industry practices and government policies, might well recur.”

That conclusion could prove devastating to the oil and gas industry, which is waiting with bated breath to see whether a new regulatory agency will issue new drilling permits in time for idle rigs under contract through the spring to return to work in the Gulf of Mexico.

The chapter of the report focusing on what caused the April 20 blowout makes it clear that poor management, mostly by BP, doomed the rig, leading to the death of 11 rig workers and considerable damage to Gulf resources from nearly 5 million barrels of spilled oil.

But the chapter also raises serious questions about Halliburton, a leading provider of cement to seal wells; Transocean, the owner of the Deepwater Horizon rig and employer of most of its crew; and federal regulators, who approved some of the less safe methods that led to the blowout.

The commission repeated concerns it first raised in October, that Halliburton kept troubling cement-stability test results from BP in the weeks leading up to the accident. It also said an incident on a Transocean rig in the North Sea in December 2009 was eerily similar to what ended up happening five months later off the Louisiana coast and that the Deepwater Horizon disaster might have been avoided if Transocean had shared lessons from that near-miss with other rigs in its fleet, the largest in the world.

William Reilly, the commission’s co-chairman, said the troubling actions by all of the countries involved suggest larger issues exist with management practices across the whole industry.

“Given the documented failings of both Transocean and Halliburton, both of which serve the offshore industry in virtually every ocean, I reluctantly conclude we have a systemwide problem,” Reilly said.

Full report due Tuesday

The chapter on the blowout’s causes was released ahead of the commission’s full report, due out Tuesday. That report will also include an assessment of government oversight, spill response and damages to natural resources.

BP praised the commission for finding, as BP did, that “the accident was the result of multiple causes, involving multiple companies.”

Halliburton and Transocean, meanwhile, questioned the commission’s conclusions and continued to focus blame on BP. Halliburton accused the commission of “selectively omitting” information it provided.

Although the commission’s report ultimately concludes that the root causes of the April blowout were systemic, the findings focus on avoidable human errors specific to the Macondo operation.

“Whether purposeful or not, many of the decisions that BP, Halliburton and Transocean made that increased the risk of the Macondo blowout clearly saved those companies significant time (and money),” the report says.

What’s more, the commission goes further than ever before to say that if BP and its partners had made different management decisions, they would have actually avoided the disaster.

“Better management by BP, Halliburton and Transocean would almost certainly have prevented the blowout by improving the ability of individuals involved to identify the risks they faced, and to properly evaluate, communicate and address them,” the report says. “A blowout in deepwater was not a statistical inevitability.”

BP’s ‘compromises’

The report repeats the well-worn theory that a series of human missteps caused the accident and that the massive stack of shut-off valves on the seafloor called the blowout preventer suffered various mechanical failures.

But it also does more than previous investigative reports to put BP’s management decisions into the larger context of an extremely difficult drilling project that should have caused BP and others to exercise far more caution. Instead, BP went on to make a string of “compromises” that placed prioritized ease and speed, not safety, the commission found.

BP distrusted a recommendation based on a risk analysis by Halliburton and chose to use a single, long central metal tube called a “casing” to line the well for later production. Halliburton had found it would be safer to use a shorter tube called a “liner” at the bottom. BP engineers changed some data Halliburton had used in its models to justify their conclusion, the commission found.

BP also ignored another Halliburton warning about how many devices called “centralizers” it would use to stabilize the telescoping metal tubes used to line the well. The commission called the components “critical … in ensuring a good cement job.” Halliburton warned BP, to no avail, that cement could form weak spots and allow oil and gas to flow into the well if BP used fewer centralizers.

When it was time to pour the cement into the well and form a final seal along its walls, a two-way valve near the bottom of the well needed to convert into a one-way valve. To do so, drilling mud needed to be sent through it at a high rate of speed. The rig crew never was able to achieve that speed, but BP’s rig leader, Bob Kaluza, and Transocean crew members decided the pressure gauge was broken and concluded the valve had properly converted.

Concerned about repeating an April 8 episode, where high mud weights fractured the sides of the well, BP decided against circulating fluids through the hole before cementing the well’s walls. The commission said BP’s fear was misplaced; circulating “bottoms up” would have cleaned the well and let technicians check for any invasion of gas.

Criticizing cement

Still nervous about exerting too much pressure on the well, BP ordered Halliburton to pump the sealing cement into the well at a “less-than-optimal” rate, the commission said.

BP and Halliburton chose a lighter type of cement, infused with nitrogen foam. When Halliburton ran a series of tests on the cement’s stability in the days leading up to the accident, it failed, sometimes miserably, but the contractor didn’t report some of the findings to BP, the commission found. Halliburton disputed that, saying the only test that mattered was the last one, run April 18, and, contrary to the commission’s suggestions otherwise, the successful results were known before the cement was actually used.

Assuming all was fine with the cement, BP made several major changes to its final plugging procedures, including the decision to remove critical drilling mud from the well before setting the final plug near the top of the well, rather than afterward. The commission also found that BP did all these last-minute changes without performing “any sort of formal risk assessment.”

In possibly the most fatal error of them all, BP’s Kaluza and the Transocean drilling crew blatantly misinterpreted the so-called “negative pressure test,” the industry-recognized best method for making sure oil and gas aren’t leaking into the well and, the commission report says, the “only test performed that would have checked the integrity of the bottom-hole cement job.” Pressure read zero in one spot and 1,400 pounds per square inch in another, an abnormal discrepancy. The different readings “could only have been caused by a leak into the well,” the commission concluded, but at the time, BP officials concluded there was no leak.

While displacing the protective drilling mud with lighter seawater, Transocean’s drill team decided to divert some of the mud directly overboard, rather than into mud collection pits, something that saved time but made it harder to monitor conditions in the well. At the same time, workers who were supposed to be checking computer screens showing pressure readings missed several signs that natural gas was kicking up the well and threatening a total blowout.

Original Article