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BP oil spill probe did not address cost overruns -exec

Thu, 28th Feb 2013 17:53

By Kristen Hays

NEW ORLEANS, Feb 28 (Reuters) - BP Plc's investigation of its 2010 Gulf of Mexico well rupture and oilspill did not address cost overruns, the executive who ran theprobe testified on Thursday.

Plaintiffs argue that concerns over expenditure led crewmembers to rush the wrapup of the drilling.

"I don't recall it being part of our discussions," Mark Bly,BP's global head of safety and operational risk, said when askedabout cost overruns at the Macondo well.

On the third day of testimony in the federal civil trialcentered on the disaster, plaintiffs lawyer Paul Sterbcow notedthe Macondo operation was $60 million over budget and more thana month past schedule at a cost of $1 million per day.

But Bly, who led BP's internal probe of the disaster in areport bearing his name, said he and the then-chief executive,Tony Hayward, set the scope of the probe three days after theexplosion in April 2010, and did not include budgetary issues.

The plaintiffs in the case have argued BP put profits abovesafety, while noted forensic engineer Bob Bea, co-founder of theCenter for Catastrophic Risk Management at the University ofCalifornia, Berkeley, testified this week that there was "ampleevidence of intense pressure" from BP to save time and money.

Bly, who said he plans to retire in about two months, waspromoted to serve on the London-based oil company's executivemanagement committee shortly after CEO Bob Dudley took the helmin October 2010.

He went through his report's conclusions in the case, inwhich the U.S. Justice Department, Gulf Coast states andplaintiffs are suing well operator BP, rig owner Transocean Ltd, well cement provider Halliburton Co and others.

BP's report spread the blame for mistakes that led to thewell rupture and explosion, which killed 11 men and let morethan 4 million barrels of crude oil foul the Gulf.

But the report laid most of the blame on Transocean, settingthe tone for finger-pointing among the companies.

Allocation of blame is one of two focuses in this firstphase of the non-jury trial before U.S. District Judge CarlBarbier, which will run for months if it does not settle first.The other focus is severity of negligence among the companies.

Bly said BP and Transocean crews missed critical signs ofwell pressure changes that signaled the well was not undercontrol until it was too late to stop the blowout. If pressurein the oil reservoir deep under the seabed is higher than thatin the well, oil and gas will flow upward.

Bly said BP's well site leader and Transocean crewsmisinterpreted a pressure test that showed that change, as wellas later pressure changes, losing key reaction time.

"That risk was neither recognized or addressed until it wastoo late?" Sterbcow asked.

"There were signs that the well was flowing," Bly said. "Itdidn't seem to be recognized or reacted to."

The case is In re: Oil Spill by the Oil Rig "DeepwaterHorizon" in the Gulf of Mexico, on April 20, 2010, No.10-md-02179, in the U.S. District Court, Eastern District ofLouisiana.

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Trades   Bids     Offers   Prev.    Sellers  Buyers
(vol.) Trades
Ebob $727.50
Barges
MOC
Platts E5
(fob ARA)
<EUROBOB-
ARA>
Ebob $728
Barges
E10
Platts(fo
b ARA)
Ebob $735.50 Varo, Trafigu
Barges (4KT) Glencor ra
Argus e
E5(fob
AR)
Ebob $727 Shell, Varo,
Barges 11KT Exxon Totsa
E10 Argus
(fob AR)
Jan. swap $741.25 $725.25
fob ARA
Premium
Unleaded
(fob ARA)
<PU-10PP-
ARA>
Cargoes
(fob MED)
Cargoes
(cif NWE)
Naphtha Jan
(cif NWE) +$14
<NAF-C-NW
E>

Ebob crack (per barrel) $8.6 Prev. $9.7
Brent futures
Rbob
Rbob crack <RBc1-CLc1>
(Reporting by Ahmad Ghaddar; Editing by Mark Porter)

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