Investigation Shows BP Cut Costs Before Blowout

Wednesday, 16 June 2010 12:09 By Mike Ludwig, t r u t h o u t | Report | name.

Investigation Shows BP Cut Costs Before Blowout
(Image: Lance Page / t r u t h o u t; Adapted: a2gemma, hill.josh)

House Democrats are asking BP Chief Executive Officer Tony Hayward about risky cost-cutting and time-saving measures identified by a Congressional investigation that appear to have increased the risk of a blowout on the Deepwater Horizon oil rig in the Gulf of Mexico.

"Time after time, it appears that BP made decisions that increased the risk of a blowout to save the company time or expense," US Reps. Henry Waxman (D-California) and Bart Stupak (D-Michigan) said in a letter to Hayward on Monday. "If this is what happened, BP's carelessness and complacency have inflicted a heavy toll on the Gulf, its inhabitants, and the workers on the rig."

The letter states that BP appears to have made "multiple decisions for economic reasons" that violated industry guidelines and ignored warnings from BP's own employees and contractors, including the decision not to deploy a "lockdown sleeve that would have prevented the seal from being blown out from below."

Waxman and Stupak asked Hayward to address these decisions during his testimony before a House investigative subcommittee on Thursday. He will also join BP Chairman Cal-Henric Svanberg in a meeting with President Obama on Wednesday.

Obama wants the executives to set up an escrow account to compensate claims resulting from the oil spill. Senate Majority Leader Harry Reid and fellow Democrats sent a letter to Hayward Monday asking that the company put away $20 billion to pay for economic damages and cleanup in the gulf.

Jason Itkin, a Houston-based attorney representing workers and companies affected by the spill and the moratorium on offshore drilling, told Truthout that legal action will "absolutely" be taken against BP on behalf of those suffering economic consequences.

"Thousands of workers are off the job, dozens of rigs will sit idle, and companies now are invoking force majeure clauses to get out of drilling contracts because of one corporate irresponsibility," Itkin said.

The Offshore Marine Service Association (OMSA) claims the temporary moratorium on offshore drilling will have "long term economic hardships" for gulf coast mariners and communities, according to a release. Offshore drilling and other marine industries support 100,000 American families, according to the OMSA.

In an April 14 email to a colleague, BP drilling engineer Brian Morel called the oil well below the Deepwater Horizon a "nightmare well which has everyone all over the place," but Waxman and Stupak asserted that BP cut corners despite the well's difficulties.

The well took longer to complete than expected and the rig, which BP leased from Transocean, was 43 days late for its next scheduled drilling location by April 20, the day of the catastrophic blowout, according to Waxman and Stupak's letter. This may have cost BP up to $21 million in leasing fees and set the context for hurried, cost-cutting measures that lead to disaster.

One such measure involved testing the cement bond on the wellhead. Industry standards recommend that the cement bond between the casing of a deepwater well and surrounding formations be tested, and internal warnings from BP employees and contractors indicated the potential of an inadequate cement job.

A crew arrived to test the cement bond two days before the blowout, but BP told the crew their services we no longer needed and sent them back. The decision not to conduct the test on the cement bond saved BP more than $100,000 and several hours of operating time, according to the letter. One independent expert told the investigative committee that this decision was "horribly negligent."

Mike Ludwig

Mike Ludwig is a Truthout Fellow.

Last modified on Wednesday, 16 June 2010 14:52