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How guilty is BP?

BBC NEWS

Robert Peston | 12:15 UK time, Friday, 3 September 2010

How important will be BP’s report into the causes of the Deepwater Horizon oil disaster, which is due to be published in the coming week or so?

Well it certainly won’t be the last word on the subject: BP faces official investigations and court cases galore on how 11 rig workers lost their lives in April and why so much oil leaked into the Gulf of Mexico.

And some will refuse to believe any analysis by BP, on the basis that it can’t help but be tendentious.

But even if you see the report as the case for the defence, it still matters – partly because it is the first detailed evaluation of what went wrong.

And (call me naive) but I don’t see how it can be an utter whitewash. It is imperative for BP’s owners – its shareholders – to understand the risks their company runs when drilling in deep waters: any attempt to disguise those risks would not be tolerated by them (surely); it would be seen as grotesque negligence on the part of BP’s executives.

So I would expect a long, detailed, technical evaluation – which, even if it’s not the final word on BP’s culpability, will have implications for how oil companies endeavour to extract hydrocarbons from fields deep below the ocean.

In that sense, it should matter to more than just investors in BP. It should influence estimates of how much more tappable oil exists in the world – and what kind of price (direct financial, environmental) will have to be paid to tap it.

The investigation for BP was carried out by Mark Bly, BP’s Group Vice President for Safety and Operations, and a team of more than 70 engineers, technical specialists and business people, some from outside the company.

For what it’s worth, he has assured colleagues that he has felt no pressure from senior BP executives to cover anything up or deliver a particular verdict. And he feels he has had the resources to do the job (or so I’m told).

That said, he hasn’t had all the relevant data he requested from the important contractors, viz Transocean, which owned and operated the Deepwater rig on behalf of BP, and Halliburton, which cemented the well. So he has been forced to make some assumptions in reaching his conclusions.

What has he found?

Well we know he has not concluded that BP produced a shoddy design for the well or forced its contractors to cut corners in a significant way.

How so?

Well BP’s chairman, Carl-Henric Svanberg, said in July – when BP was announcing its second quarter results – that he was confident BP won’t be found guilty of gross negligence.

Now it’s impossible to know whether he’ll be proved right as and when BP’s culpability under the Clean Water Act is finally determined. But he couldn’t possibly have made the claim if his own colleague, Mark Bly, had uncovered proof of grotesque dereliction of duty.

That said, any report which doesn’t raise questions about safety practices would not be believable.

So as the named party on the relevant oil lease – for Mississippi Canyon Block 252 – BP (which owns 65% of property) will be embarrassed (at the very least) by its own investigation.

Even if there turned out to be important errors by employees of Transocean as operator of the platform, that would not absolve BP of blame: regulators and BP’s owners (and presumably the rest of us) would expect BP to assess, monitor and correct the quality of its contractors’ performance.

In a perverse way, the best that BP can hope for is that Bly has found systemic safety failures. Because it is unlikely those systemic problems would apply only to BP’s management of this one new well.

If questions are raised about the quality of safety kit, or the robustness of procedures for monitoring performance or about the skills of employees, these would probably be questions for the oil industry in general when drilling in deeper water, not just for BP.

One lesson from the debacle is that the catastrophic potential of drilling in deep water is (arguably) only marginally less than what can happen when a plane falls out of the sky or a nuclear power plant goes badly wrong.

Are the safety practices in oil on a par with standard practice in nuclear generation or the airline industry? I would be very surprised if that reassuring conclusion will be drawn from Mr Bly’s report.

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One Comment

  1. tim b says:

    The issue is that the operators of the rigs – not necessarily the partners operating the field, ARE NOT capable of handling a deepwater crisis.

    This was quickly apparent in Deepwater Horizon and is going to be true going forward. The situation surely endures with existing and continuing deepwater operations elsewhere in the world.

    The reaction by John Donovan / Bill Campbell highlights the issues that must be addressed – not withstanding the very urgent need for future technical solutions in place for just such a similar circumstance.

    Deepwater oil operations threaten catastrophy on Nuclear scale and nothing less. The issue of inquiry and resulting actions is as important as the control of oil spill and cleanup if not MORE important.

    Tim Bartram
    http://www.ukcitymedia.co.uk