With the gushing flow of oil halted and the massive blowout preventer hoisted from a mile down in the Gulf of Mexico, we've now moved to the next stage of the BP
The stage was led off by an approximately 200-page tome by BP's Mark Bly, the company's safety honcho. It attempts to tell the story of the Transocean
A full crew
Don't assume, however, that Bly sat in a corner of BP's London headquarters, serving as his own counsel and cranking out the report by his lonesome. In reality, he headed a team of about 50 investigators comprised of mostly BP employees along with external consultants in a group unrepresented by the company's Gulf Coast unit. Its instructions were to limit its examination only the proximate causes of the accident, and not to other factors that may have played a role in it.
The process required four months, and the results are, to my admittedly non-expert mind, questionable. In essence, eight key errors are noted that Bly and his crew believe led to the Macondo disaster. Among the indicated errors were:
-
Halliburton's
(NYSE: HAL) faulty cementing job on the well permitted methane gas to drift into the drill column. - Those aboard the rig -- from both BP and Transocean -- misinterpreted a vital pressure test on the well.
- The rig crew did not recognize that gas was traveling up the well until it had passed the blowout preventer.
- Improper design of a venting system permitted a buildup of gas to encase the rig.
- The all-important blowout preventer (BOP), while initially shutting down the well, failed to permanently do so following the explosion. According to BP, the BOP, which had been manufactured by Cameron International
(NYSE: CAM) , failed because of damage from the explosion, a faulty valve, and weak batteries.
The report did fault BP for failing to properly interpret a negative pressure test, which was intended to indicate whether the well was sealed against the entry of hydrocarbons. However, it related culpability to the failure of rig hands to consult with their superiors in Houston.
Some BP blame
At the same time, the report glossed over more than one criticism leveled repeatedly at BP by experts on offshore drilling. For instance, the company removed drilling mud -- which helps prevent gas from contaminating the well -- before other steps to seal the well had been taken. Also, the use of a less common "long-string" in the well design resulted in fewer barriers to the flow of gas up the column. Further, BP has been accused of cutting corners to compensate for the 43 days and $20 million the well had fallen behind schedule and over budget.
It also can be argued that BP wasn't paying sufficient attention to the well's pressure. Its normal practice for the likes of the company's European neighbor, Royal Dutch Shell
Contractors' ire
The report is not being taken lightly by other companies with which BP would like to share blame for the disaster. Transocean, for instance, said in a statement that, "This is a self-serving report that attempts to conceal the critical factor that set the stage for the Macondo incident: BP's fatally flawed well design."
And from the other major contractor, "Halliburton remains confident that all the work it performed with respect to the Macondo well was completed in accordance with BP's specifications for its well construction plan and instructions."
BP's report is only the first of several analyses that will be released in the coming weeks and months. The Justice Department, the Coast Guard, the Bureau of Ocean Energy Management, Regulation, and Enforcement, and a presidential commission are also involved in investigations. Once their reports are distributed and the blowout preventer is thoroughly examined, we'll know considerably more about whether BP's effort is really self-serving.
If it is, it clearly stems from the company's need to share the blame with others, essentially to prove that it didn't act with gross negligence in the tragedy. Indeed, if it was negligent, it'll be expected to cough up sizable reparations. But add "gross" before "negligence," and its tab skyrockets infinitely higher.
Positive new procedures
On something of a more positive note, BP's report recommends that procedures should be considered to improve offshore drilling practices, including standards for reporting and investigating incidents. As you know, the other majors, including ExxonMobil
Finally, despite all that's taken place at BP of late, I wouldn't discourage Fools from sprinkling a few of its shares of into their portfolios. With its quality assets and its shares well below where they were before April 20, I sense an opportunity.
