Reference no: EM133206783

Case: BP and Deepwater Horizon US oil spill: 'Bad management' led to BP disaster -

The companies involved in the Gulf of Mexico oil spill made decisions to cut costs and save time that contributed to the disaster, a US panel has concluded. In a chapter of its final report, to be published next week, the presidential commission said the failures were "systemic" and likely to recur. BP did not have adequate controls in place to ensure safety, it found. The April blast aboard the Deepwater Horizon rig killed 11 people and caused one of the worst oil spills in history. The Macondo well, about a mile under the sea's surface, eventually leaked millions of gallons of oil into the Gulf of Mexico, damaging hundreds of miles of coastline before it was capped in July.

BP said in a statement that the report, like its own investigation, had found the accident was the result of multiple causes, involving multiple companies. But, it said, the company was working with regulators "to ensure the lessons learned from Macondo lead to improvements in operations and contractor services in deepwater drilling". Transocean, which owned the Deepwater Horizon rig, said that "the procedures being conducted in the final hours were crafted and directed by BP engineers and approved in advance by federal regulators". Halliburton also said it acted at the direction of BP and was "fully indemnified" by the oil giant. The new report criticises BP, which owned the Macondo well, Transocean and Halliburton, which managed the well-sealing operation, and blames inadequate government oversight and regulation. Specific risks the report identifies include:

A flawed design for the cement used to seal the bottom of the well

A test of that seal identified problems but was "incorrectly judged a success"

The workers' failure to recognise the first signs of the impending blow-out "Whether purposeful or not, many of the decisions that BP, Halliburton, and Transocean made that increased the risk of the Macondo blow-out clearly saved those companies significant time (and money)," the presidential panel wrote. "BP did not have adequate controls in place to ensure that key decisions in the months leading up to the blow-out were safe or sound from an engineering perspective." Don Boesch, a member of the investigating commission, told the BBC's World Today programme they had identified "a whole sequence of poor decisions with unfortunate consequences when put together". He said that not all the faults lay with BP, although the company did have overall responsibility.

"For example the lack of a proper test that was done and the cement that was used to seal the bottom of the well, that was pretty clearly the direct responsibility of Halliburton," he said. "When the well started to blow there were decisions made by Transocean about how the material coming up the well was handled, and those were unfortunate, fateful, decisions which actually led to the explosion." Mr Boesch said government regulators are also criticised in the report. "What we found was very limited oversight of these various activities and decisions, that the agency responsible in the Department of the Interior was understaffed, [and] didn't have the inspectors and technical analysts who were up to the task fully."

The findings came in the final report of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, which President Barack Obama convened in May to investigate the root causes of the spill and recommend changes to industry and government policy.

Though it lacked subpoena power, the panel reviewed thousands of pages of documents, interviewed hundreds of witnesses, and in the autumn conducted a series of public hearings. In a statement released on Wednesday, Bob Graham, former Florida governor and a cochairman of the commission, said the findings showed the blow-out was avoidable. "This disaster likely would not have happened had the companies involved been guided by an unrelenting commitment to safety first," he said. Risk factors In a months-long investigation, the panel found that mistakes and "failures to appreciate risk" compromised safeguards "until the blow-out was inevitable and, at the very end, uncontrollable". BP's "fundamental mistake", the panel wrote, was failing to exercise proper caution over the job of sealing the well with cement. "Based on evidence currently available, there is nothing to suggest that BP's engineering team conducted a formal, disciplined analysis of the combined impact of these risk factors on the prospects for a successful cement job," the report reads. The conclusions run counter to industry efforts to portray the Deepwater Horizon disaster as a rare occurrence, as oil companies prod the US government to open greater areas of the US coast to oil exploration. "The blowout was not the product of a series of aberrational decisions made by rogue industry or government officials that could not have been anticipated or expected to occur again," the report read. "Rather, the root causes are systemic and, absent significant reform in both industry practices and government policies, might well recur."

Use the Hopkins Model to explain and justify who is to blame for the fatal incident reported in the case study.