BP state’s its case

BP, having plugged the hole in the Gulf of Mexico and staunched the haemorrhaging of its market value (see share price chart), has now issued its take on the causes of the disaster last April, when a hydrocarbons leak from its Macondo oil well led to an explosion, a subsequent fire and the sinking of the Deepwater Horizon rig, with the death of 11 workers and an 87-day well gusher that resulted in the worst crude oil spill in US history.

Partial recovery

The full report can be read here and BP has even produced a full video presentation of its findings as part of its efforts to make its case. The company puts forward eight “key findings” describing a “causal chain of events” involving “various parties” that led to the explosion, and offers recommendations of how to prevent similar disasters in future.

Inevitably, critics say the report is BP rationalising a disaster for which it bears ultimate responsibility as operator, even if there were shortcomings among its sub-contractors and in the oversight regime for oil drilling more generally. The report will be weighed against others that are yet to be concluded, especially the national commission ordered by President Barack Obama in May, which is due to report within six months of its first meeting in mid-July.

But the legal proceedings regarding the spill – not only claims on BP and BP’s defence of those claims, but also the claims and counter-claims already being pursued between BP and its sub-contractors – will go on for years, so the report can also be seen as part of BP’s legal defence process too.

For most people, references in BP’s report to “the annulus cement barrier” and “shoe track” and “overboard diverter line” will mean little. But it is clear that there were a series of mistakes made during what should have been routine engineering operations and a failure to recognise warnings signs and to take action.

The report concludes, “The [investigation] team did not identify any single action or inaction that caused this accident. 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.”

In BP’s press release, outgoing CEO Tony Hayward similarly spread the blame. Commentary has focused on his statement – “To put it simply, there was a bad cement job …” – as a clear reference to Halliburton, the company in charge of that operation. There is also reference to Transocean, owner of the Deepwater Horizon rig, and failure of its staff to recognise early warnings signs. No doubt both companies will have a response.

Clearly, the report is only the beginning of the disaster’s Phase II – the recriminations – which will end only after all of the reports have been issued, mulled over and ruled upon. The final phase – the implications – can then begin.

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