BP exec: contractors share the blame for Macondo

27 February 2013
By Edward Gent
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Lamar McKay, who was president of BP America at the time of the Deepwater Horizon disaster, has given evidence at a federal trial in New Orleans

Lamar McKay, who was president of BP America at the time of the Deepwater Horizon disaster, has given evidence at a federal trial in New Orleans

A BP executive has told a court the oil giant and its contractors shared responsibility for preventing blowouts like the Deepwater Horizon incident.

Lamar McKay, who was president of BP America at the time of the disaster that killed 11 workers and spawned America's worst offshore spill in 2010, was the first BP executive to give evidence at a federal trial in New Orleans designed to identify the causes of BP's Macondo well blowout and assign blame to the companies involved.

Rig owner Transocean and cement contractor Halliburton are also defendants at the trial, which started on Monday.

A plaintiffs' lawyer pressed Mr McKay to agree with him that BP bore ultimate responsibility for the blowout, but Mr McKay insisted that managing the hazards of deepwater drilling were a "team effort".

"I think that's a shared responsibility, to manage the safety and the risk," said Mr McKay, now chief executive of BP's Upstream unit. "Sometimes contractors manage that risk. Sometimes we do. Most of the time it's a team effort."

Mr McKay said the rig explosion and spill in the Gulf of Mexico, which saw an estimated 172 millions of gallons of crude oil leak into the Gulf over the three months that followed, was a "tragic accident" resulting from a "risk that was identified."

Mr McKay appeared before the US Congress to give evidence under oath less than a month after the deadly rig explosion and is now in front of US District Judge Carl Barbier who is hearing the case without a jury.

Mr McKay's evidence yesterday followed that of an expert witness for people and businesses suing the company, University of California-Berkeley engineering professor Robert Bea, who said BP did not implement a two-year-old safety management programme on the rig that exploded in the Gulf of Mexico on April 20, 2010.

"It's a classic failure of management and leadership in BP," said Prof Bea, a former BP consultant who also investigated the 1989 Exxon Valdez spill and New Orleans levee breaches after Hurricane Katrina in 2005.

BP has said its "Operating Management System" was designed to drive a rigorous and systematic approach to safety and risk management and during cross-examination by a BP lawyer, Prof Bea said the company made "significant efforts" to improve safety management as early as 2003.

But BP implemented its new safety plan at just one of the seven rigs the company owned or leased in the Gulf at the time of the disaster.

Prof Bea said it was "tragic" and "egregious" that BP did not apply its own safety programme to the Deepwater Horizon before the Macondo well blowout triggered the deadly explosion.

Transocean owned the rig and BP leased it and BP lawyer Mike Brock said the company allowed contractors like Transocean to take the primary responsibility for the safety of rig operations as long as the contractor's safety system was compatible with BP's – an arrangement that he suggested was standard industry practice.

As he questioned Prof Bea, Mr Brock also recited a long list of steps that BP took to improve safety, citing them as evidence that the company was not "cutting corners in the area of safety".

A plaintiffs' lawyer showed Prof Bea a transcript of a deposition of Tony Hayward, BP's chief executive at the time of the disaster in which Mr Hayward was asked if the deadly April 20, 2010, blowout could have been averted if BP had implemented the safety management programme in the Gulf.

"There is possible potential," Mr Hayward responded. "Undoubtedly."

Prof Bea said BP's "culture of every dollar counts" was reflected in a May 2009 email sent by BP well team leader John Guide.

"The DW Horizon embraced every dollar matters since I arrived 18 months ago," Mr Guide wrote. "We have saved BP millions and no one had to tell us."

"Financially, BP had the resources to effectively put into place a process safety system that could have prevented the Macondo disaster," Prof Bea said.

Just last year, Prof Bea gave evidence for people who sued the US Army Corps of Engineers over broken levees in New Orleans following Hurricane Katrina.

BP has already pleaded guilty to manslaughter and other criminal charges and has racked up more than $24 billion (£16 billion) in spill-related expenses, including clean-up costs, compensation for businesses and individuals, and $4 billion (£2.6 billion) in criminal penalties.

One of the biggest questions facing Judge Barbier is whether BP acted with gross negligence as, under the Clean Water Act, a polluter can be forced to pay a minimum of $1,100 per barrel of spilled oil.

Fines nearly quadruple to about $4,300 a barrel for companies found grossly negligent, meaning BP could be facing a penalty of nearly $18 billion (£12 billion).

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