BP, subcontractors: Spill is the other guy’s fault

By Steve Hargreaves

The three oil companies primarily involved in the Gulf of Mexico oil spill blamed each other Tuesday for the accident last month that left 11 workers dead and oil still spewing into the Gulf.

At a hearing before the Senate Energy and natural Resources Committee, BP (BP), the well’s owner and lead operator of the project, sought to turn attention to the valve that was supposed to shut off the well in case of an accident. The valve, known as a blowout preventer, is owned by drilling rig operator Transocean, which was contracted to drill the well for BP.

“Transocean’s blowout preventer failed to operate,” said Lamar McKay, chairman and president of BP America, according to prepared testimony. “Only seven of the 126 onboard the Deepwater Horizon were BP employees, so we have only some of the story.”

Transocean (RIG) said the blowout preventer performed fine in tests just a week before the accident.

While it’s still unclear why the blowout preventer did not work, Transocean chief executive Steven Newman said the preventer is not the ultimate cause the accident, and that it must have been a failure of the well’s cementing or casing that holds the wells in place.

Either way, Transocean said it’s the responsibility of the well’s owner to set all specifications for the drilling process, including dictating how the well is drilled, how thick the steel walls will be, and the composition and timing of mud injections and cement injections.

“All offshore oil and gas production projects begin and end with the operator…in this case, BP,” said Newman. “Here was a sudden, catastrophic failure of the cement, the casing, or both. Therein lies the root cause of this occurrence.”

The well’s cementing was done by Halliburton (HAL, Fortune 500). But Halliburton’s chief safety and environmental officer, Tim Probert, said responsibility also lay with BP.

“Halliburton, as a service provider to the well owner, is contractually bound to comply with the well owner’s instructions on all matters relating to the performance of all work-related activities,” said Probert. “Halliburton is confident that the cementing work on the well was completed in accordance with the requirements of the well owner’s well construction plan.”

Under federal law, BP, as the lead project operator, is responsible for all clean-up costs associated with the spill. On Monday, BP said it has spent $350 million on cleanup and related costs so far.

Oil spill costs: What will BP really pay?
But damages caused by closure of fishing grounds, shipping lanes and tourist spots could exceed the cleanup costs, and it’s unclear which party will pay those or how much they’ll add up to.

While the subcontractors are thought to have some legal reprieve from BP and the federal government, lawyers say they could still be open to lawsuits from fisherman or other impacted by the spill.

Ultimately, experts have said total costs could range from $2 to $14 billion or higher, depending on when the leaking well is closed and where the oil washes ashore.

Efforts are still underway to close the well, which is leaking some 200,000 gallons of oil into the Gulf each day.