BP: No Single Factor Caused Deepwater Horizon Blast

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By Siobhan Hughes and Tennille Tracy Of DOW JONES NEWSWIRES

WASHINGTON (Dow Jones)–BP PLC (BP, BP.LN) has found that “multiple companies and work teams” contributed to the Gulf of Mexico oil spill, releasing a long-awaited report Wednesday that says BP workers missed key warning signs but assigns much responsibility to others for the worst offshore oil spill in U.S. history.

The London-based company identified eight possible reasons for the Deepwater Horizon explosion and subsequent oil spill, involving decisions and actions by BP, Transocean Ltd. (RIG) and Halliburton Co. (HAL).

The report targets everything from the design and testing of cement that was used to prevent hydrocarbons from entering the wellbore to the failure of workers to spot problems in a pressure test.

The report also blames the oft-cited blowout preventer, which failed to activate and to seal the well. BP says the failure occurred “probably because critical components were not working.”

The blowout preventer has only recently been recovered from the sea floor and has yet to undergo a full inspection.

In releasing its findings, BP implicates itself and its own workers for possible mistakes. But it also takes aim at Transocean, which owned the Deepwater Horizon rig, and Halliburton, which handled the cementing work on the well.

Specifically, BP says Transocean’s crew members were among those who failed to see red flags in the pressure tests. It also says the rig crew failed to recognize an influx of hydrocarbons and to control the well in time.

The workers “reached the incorrect view that the test was successful,” the report found. The test checks for leaks in a well.

At hearings in Houston last month, BP attorneys also sought to raise doubts on Transocean’s maintenance regime on the Deepwater Horizon rig, saying that a BP audit in 2009 had pointed to hundreds of key issues. The attorneys also mentioned an incident in the North Sea when Transocean rig workers belatedly responded to signs of a blowout.

BP’s report also points a finger at Halliburton, highlighting possible problems with the cement design, testing, quality assurance and risk assessment.

Specifically, BP said “ineffective cement design” or “ineffective cement placement” could have allowed hydrocarbons to enter the space known as the annulus, located between the well bore and the casing.

“To put it simply, there was a bad cement job and a failure of the shoe track barrier at the bottom of the well, which let hydrocarbons from the reservoir into the production casing,” Tony Hayward, who led BP at the time of the explosion, said in statement.

BP said it was not able to fully evaluate the cement because Halliburton declined to provide samples equivalent to the cement used in developing the Macondo well.

Representatives for Halliburton were not available for immediate comment.

The process of assigning blame for the Deepwater Horizon disaster represents a high-stakes game of “who-dunnit” that is likely to play a central role in determining which companies eventually pay the billions of dollars to clean up the oil spill and compensate victims.

Within hours of the report’s release, Transocean criticized BP and accused the U.K. oil giant of attempting to gloss over its own mistakes–namely, flaws in the design of the well.

“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,” the company said in a statement.

Transocean, which is conducting its own investigation of the disaster, takes issue with several components of the well design, including the decision to use less than one-third of the centralizers recommended by Halliburton.

To be sure, the design of the well is likely to become a particularly thorny issue and has already been identified by Capitol Hill lawmakers as a possible source of problems.

For its part, BP downplays the role of the design, saying “it would appear unlikely that the well design contributed to the incident, as the investigation found that the hydrocarbons flowed up the production casing through the bottom of the well.”

BP is walking a fine line with the release of the report, which was compiled by a team of more than 50 people led by Mark Bly, BP’s head of safety and operations.

The company must show that it has made a good-faith effort to determine what caused the blast while also dealing with issues of whether it showed gross negligence–which could leave the company facing stiffer penalties–in the period leading up to the blast.

“There is no single action or inaction that caused the Deepwater Horizon accident,” Bly says in a video on the investigation. “This involved a number of companies, including BP.”

-By Siobhan Hughes, Dow Jones Newswires; (202) 862-6654; [email protected]

http://online.wsj.com/article/BT-CO-20100908-710203.html