May 11, 2010 – As congressional hearings are set to get under way, BP, Transocean, and Haliburton are looking for ways to avoid the blame. Their testimony at an Energy & Natural Resources hearing today comes before anyone knows for sure exactly what happened on April 20th.
To date, the focus on what initiated the disaster has been on the so-called “blowout preventer.” The 450 ton valve that sits atop the wellhead during drilling operations was designed to be able to close remotely if pressure causes oil or natural gas to threaten the rig, but somehow the preventer malfunctioned. The reason why is still unclear.
According to Lamar McKay, chairman and president of BP, “We are looking at why the blowout preventer did not work because that was to be the fail-safe in case of an accident.”
Transocean chief executive Steven Newman was quick to respond, saying the blowout preventer wasn’t the root cause of the explosion, and in any event it was about to be removed. “The well barriers – the cementing and the casing – were responsible for controlling any pressure from the reservoir,” Newman was set to say according to his prepared testimony.
Which calls into question Haliburton, who was in charge of the cementing and casting. “Prior to the point in the well construction plan that the Halliburton personnel would have set the final cement plug, the catastrophic incident occurred. As a result, the final cement plug was never set,” says Tim Probert, chief health, safety and environmental officer at Haliburton.
As the main players scramble to avoid blame for the catastrophe, investors remain skittish as potential costs mount. ING analysts estimate some $5.1 billion for BP’s share of the likely eventual costs for the rig disaster and consequent oil spill, including $1.2 billion for direct net clean-up costs, $650 million for anti-pollution fines and $3.25 billion for net litigation costs.
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