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Spill trial against BP and its partners gets under way

4th March 2013   ·   0 Comments

By Susan Buchanan
Contributing Writer

Editor’s Note: This is the first in a series of articles on the trial.

A landmark environmental trial kicked off last week at United States District Court on Poydras St. as Eastern District of Louisiana Judge Carl Barbier began the process of deciding fault between BP, Transocean, Halliburton, Cameron and M-I Swaco in the April 20, 2010 disaster that occurred off Louisiana’s coast, taking eleven lives.

BP was the operator and leased the Macondo site in the Gulf from the federal government. Transocean owned the Deepwater Horizon rig and was hired by BP to drill the Macondo well. Halliburton was contracted by BP to provide cement. Cameron produced the Deepwater Horizon’s blowout preventer, which it sold to Transocean. M-I Swaco was contracted by BP to provide drilling fluids and services.

In the accident, workers prepared to temporarily cap the Macondo well more than 4,000 feet under water when it exploded. The drilling vessel burned for two days before collapsing in the Gulf.

Plaintiffs or claimants in the trial include the United States, Louisiana and Alabama and many private individuals, businesses and others. In an admiralty trial without a jury, Judge Barbier will decide whether BP and Transocean acted with gross negligence or willful misconduct.

BP, which was behind schedule and $50 million over budget in drilling the Macondo well, placed cost-cutting above safety, causing the worst offshore U.S. spill ever, plaintiffs said last week.

The federal government is pursuing claims under the Oil Pollution Act of 1990 and the Clean Water Act of 1972. CWA civil penalties are based on whether the polluter acted with gross negligence or willful misconduct and on how much oil was leaked.

Barring a possible settlement during the trial, Barbier will decide how much BP and its drilling-project partners will be penalized for their roles in the disaster, beyond what they’ve been fined so far. BP has already committed over $35 billion to cleanup, coastal restoration and various payouts, settlements and fines. Its liabilities could be tens of billions of dollars more if Barbier decides BP was grossly negligent.

Phase One of the trial will last 54 days over three months, Barbier said, and will determine fault in the loss of well control, the ensuing explosion, the rig’s sinking and the initial release of oil. A Phase Two trial will likely to start in September to examine evidence relating to spill response and the amount of oil that escaped the well. A third phase, probably in 2014, will consider environmental and economic damages.

Monday began with opening statements that aren’t binding evidence. James Roy of Domengeaux Wright Roy & Edwards, LLC in Layette, a plaintiffs’ lawyer representing individuals and businesses, pointed fingers at BP, Transocean, Halliburton and Cameron.

Roy said a negative pressure test—which was a shared responsibility of BP and Transocean—was misread in spring 2010. The test, meant to determine whether cementing had sealed any leaks in the well, was interpreted to show the procedure was successful when it wasn’t. That led to the mistaken belief that the well was secure, Roy said.

Transocean failed to discover a major gas kick on April 20, 2010, he said. A kick is an entry of gas or fluid into the well and it can cause a blowout. “Transocean’s own standards state that a kick that’s over 20 barrels is code red and critical,” Roy said. The Macondo kick was off the chart, exceeding 700 barrels. It took 50 minutes to detect the kick and subsequent shut-in efforts were unsuccessful.

Roy said “an overarching Transocean management failure to adequately train the crew directly contributed to the events leading to the blowout.” He said automatic signals, which would have indicated an influx of gas, had been set in passive mode, essentially removing them from service. Alarms were inhibited to avoid waking workers who were sleeping on the rig, he said.

Roy also said the rig’s crew could have activated an emergency shutdown system, but didn’t. “After the blowout, there was chaos and mayhem on the bridge, shouts, directions being yelled that weren’t being enacted,” he said. The rig’s “Captain Kutcha had a deer-in-the-headlights look, was overwhelmed, dazed and confused.”

Transocean’s lack of maintenance on the Deepwater Horizon’s blowout preventer or BOP was a major cause of the disaster, Roy said. Audits had warned BP and Transocean that the BOP was out of certification, violating industry standards.

“Transocean willfully continued to lease the Deepwater Horizon, making over a half million dollars a day, instead of bringing the vessel into a shipyard for repairs of the BOP and other critical equipment,” Roy said. BP was aware of design and maintenance problems on the rig. “BP knew all of this, and still in late 2009 chartered the Deepwater Horizon to finish the Macondo well,” he said. “Since the Deepwater Horizon was first put into service in 2001, it had never, ever been to port for maintenance, repairs, refitting. Not one single time in nine years.” He also said Cameron’s blowout preventer was flawed and Halliburton’s mud—leftover from BP’s Kodiak well—was unstable.

BP’s executives pressured BP rig management to reduce costs by cutting corners and rushing through work. “Macondo was described variously by BP personnel as the well from hell, a nightmare well and a crazy well,” Roy said. In the months before the April 2010 disaster, four kicks and other incidents resulted in the loss of 668,000 gallons of mud, he noted. Roy said a push to complete the well caused so many changes to plans that John Guide, BP’s wells-team leader in Houston, said three days before the disaster “the well-site leaders have finally come to their wits’ end.”

Roy said BP’s executives created a culture that valued profit and production over safety and protection. From 2008 to 2009, BP management slashed costs by $4 billion and laid off 20 percent of its world force, with plans for another $1.4 billion in cuts in 2010.

In an effort to improve safety, BP executives in London implemented an operations management system or OMS well before the April 2010 disaster but didn’t extend the program to their leased drilling vessels, including the Deepwater Horizon, Roy said.

“The evidence will prove the Deepwater Horizon was unseaworthy on April 20, 2010 and had been for many months, if not years,” Roy said. “Transocean and BP both knew it. The evidence will also prove the negligence of BP, Trans-ocean, Halliburton and Cameron. And the evidence will prove the defendants’ gross negligence and willful and reckless conduct.”

In his opening statement Monday, Louisiana Attorney General Buddy Caldwell said the Pelican State was ground zero for the disaster. He said BP, in its application to drill, told the state there was no risk of oil reaching the shore 48 miles away. “Today, less than 30 miles from the door of this courthouse, Your Honor, over 212 miles of Louisiana coast are being polluted and continue to be oiled, especially Barataria Bay and Breton Sound,” Caldwell said.

Caldwell provided more statistics. “Based on an inspection of half of Louisiana’s shoreline—with BP refusing to inspect the other half—we’ve got 660 miles of marsh and shoreline oiled,” he said. One million barrels of oil are unaccounted for. Twenty-eight new oil mats were discovered and removed from Louisiana’s shore last year.

Sixty percent of all Gulf oiling from the spill occurred in Louisiana, he said. And 58 percent of all wildlife injured and collected in state identifiable waters since the spill was recovered in Louisiana.

In 2011, operations crews pulled more than a million pounds of oily material from subsurface mats on Elmer’s Island, Caldwell said. More than nine million pounds of oil and material collected were removed from the Louisiana coast between June 2011 and December 2012. In the several months after Hurricane Isaac last September, 1.7 million pounds of oily material were recovered in the state.

Caldwell said 93 percent of all spill-related oil removed in 2012 was from Louisiana’s shores. This year, oil has been recovered weekly from the state’s shores and beaches in the form of oil balls and mats.”We continue to be adversely affected,” Caldwell said. “This trial will show that BP and its contractors, all of them, bear some responsibility. They acted in a grossly negligent manner.”

Last Tuesday, Robert Bea, Univ?ersity of California at Berkeley professor emeritus of civil and environmental engineering, testified about risk management in offshore drilling. He was a risk consultant to BP before the spill.

Bea is an expert on “process safety,” a set of approaches and strategies to prevent catastrophic failures involving complex engineered, human-based systems. He said process safety dates back to farming decisions 5,000 years ago in the Tigris-Euphrates Valley. Personal safety is a subset of process safety, he said.

“BP management knowingly ignored process safety and risk management for deep water exploration wells drilled by contractor-owned mobile offshore drilling units,” Bea said. Process safety wasn’t implemented on the Deepwater Horizon project, with “tragic, egregious” consequences, he said.

Bea said BP had a culture of “every dollars counts,” equivalent to the National Aeronautics and Space Administration’s mantra of “better, faster, cheaper” that got that agency into trouble.

Bea also said downsizing, reorganization and outsourcing, all of which had occurred at BP before the blowout, can make a company brittle. “Brittle companies are at increased risk for major accidents,” he said.

Lamar McKay, chief executive of BP’s Upstream unit and the former president and chairman of BP America at the time of the blowout, testified late Tuesday and early Wednesday. He emphasized that operating the Deepwater Horizon rig was a shared responsibility between BP and its contractors. “Sometimes contractors manage risk, sometimes we do, “ he said. “Most of the time it’s a team effort.”

McKay also said “the operating management system that we have utilizes our own safety systems for our own facilities, and recognizes and utilizes contractors’ safety management systems for their facilities.”

On Wednesday, the court heard testimony from geophysicist Alan Huffman of Fusion Petroleum Technologies Inc., an expert on well drilling margins. Drilling margins refer to the required minimum weight of drilling fluid compared with the rock that the drill’s penetrating. The margin is the difference between pore pressure—or how much pressure oil and gas in an underground formation exerts—and fracture pressure—the pressure at which the formation would begin to break and absorb drilling muds.

Huffman said “the most critical aspect of well control is maintaining a safe drilling margin. Keeping the mud balanced so that you’re maintaining that margin, but also protecting for the kicks on the low side, is the basic principal.” He added “it’s the protection against losing control of the well.”

Huffman said “BP, in drilling its well, repeatedly violated the safe drilling margin, in some cases drilling with no margin at all.” Moreover, BP consistently misreported or didn’t report critical information to federal regulator Minerals Management Service. He said a kick in the Macondo well occurred during an interval in drilling, indicating pressure was unstable. But the work went ahead anyway. “It is truly egregious to drill that extra100 feet, knowing you could lose the well in the process,” Huffman said.

On Wednesday in the courtroom, attorneys for the federal government and Gulf Coast residents and businesses showed a 20-minute videoed deposition from former BP chief executive Tony Hayward in June 2011. Hayward said BP’s cost-cutting in the years before the 2010 spill didn’t affect drilling operations. He also said an organization’s leaders were important to shaping its culture.

On Wednesday afternoon and Thursday morning, Mark Bly, a civil and structural engineer who retires this spring after 29 years at BP, testified. He led the BP team that produced an assessment known as the Bly Report in September 2010, focusing on errors rig workers made before the explosion. In the report, BP took some responsibility for mistakes that led to the disaster but also blamed its partners. BP didn’t explore what role upper-level managers had in the catastrophe.

Bly said Wednesday that BP’s investigation wasn’t intended to look at the disaster through the “lens of responsibility.” And he said his team didn’t have enough information to conduct a systemic evaluation of what caused the Macondo blowout because it lacked cooperation from rig owner Transocean and other companies involved in the project.

Last week, Judge Barbier said the trial would run 54 days, with 53 expert witnesses listed—including 23 witnesses provided by BP. An attorney for BP said the company is willing to trim the number of its witnesses.

The start of the high-stakes trial was rescheduled by Barbier to late February so it wouldn’t overlap with Super Bowl in New Orleans on February 3 and Mardi Gras on February 12.

On January 29, BP pleaded guilty in the Eastern District of Louisiana to 14 criminal counts, including 11 felony counts of manslaughter following a Justice Dept. probe, and agreed to pay $4 billion in penalties in the biggest criminal resolution in U.S. history. On February 14, Trans?ocean pleaded guilty to one misdemeanor count of violating the Clean Water Act and agreed to pay $400 million in criminal penalties.

Attending the current trial are attorneys, staff from environmental groups, news reporters and interested citizens. Buddy Trahan, a former Transocean employee who was on the rig when it exploded, followed the proceedings last week. His lawyer Lance Lubel said Trahan is believed to be the most seriously injured of the victims who survived the explosion. “To date, he has had 11 surgeries with several more expected, 12 broken bones, 16 scars, nine deep lacerations, burns over 25 percent of his body, a closed head injury, post-traumatic stress disorder and many other injuries,” Lubel said.

This article originally published in the March 4, 2013 print edition of The Louisiana Weekly newspaper.

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