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The Associated Press May 28, 2010, 4:31PM ET

Transocean: Equipment worked before explosion

The last-ditch safety equipment that failed to stop what has become the worst oil spill in U.S. history was working properly in the days before the explosion, the top executive of the company that owns the equipment said Friday.

The equipment, known as a blowout preventer, or BOP, failed to stop the explosion on the Transocean rig drilling an exploratory well in the Gulf of Mexico for BP on April 20.

"It is clear that the BOP was unable to shut off the well," Steven Newman, president and CEO of Transocean, told analysts Friday on a conference call. "Until we recover the BOP we won't know what debris is in it or what type of damage may have occurred."

The BOPs, sometimes as big as a double-decker bus and weighing up to 640,000 pounds, guard the mouth of wells. They act as the last defense to choke off unintended releases, slamming a gushing pipe with up to 1 million pounds (450,000 kilograms) of force.

"It is also clear that the drilling crew had very little if any time to react," Newman said. "The initial indications of trouble and the subsequent explosions were almost simultaneously."

While the precise cause of the explosion has yet to be determined, investigators are focusing on the blowout preventer on the Deepwater Horizon rig operated by BP PLC as one likely contributor.

Newman said the BOP was last tested on April 17.

Newman said he has been asked about one of the BOP's battery systems, leaks in the hydraulic system and changes made in the BOP at BP's request in 2005.

"But none of those questions have really caused me any concern with respect to the basic fundamental capability of the BOP," he said.

In an appearance before a U.S. Senate committee on May 11, Newman said the explosion was caused by a failure of drilling cementing, casing or perhaps both. He dismissed suggestions that the BOP may have been a cause.

Newman said Transocean, based in Zug, Switzerland, has received $560 million in insurance proceeds for the rig. The $560 million was in line with the fair market value of the rig when the insurance policy was renewed last May.

He also said the company, the world's largest offshore drilling contractor, will continue with its plan to distribute $1 billion in dividends to shareholders this year. He said payment of the dividend will not hurt the company's ability to meet its legal obligations stemming from the spill.

He said he is not sure yet how the decision to halt new deepwater oil exploration announced on Thursday by President Barack Obama will affect the company.

"I don't think anybody has a clear understanding what the president's comments yesterday really mean with respect to the application and the implementation of a suspension of drilling activity.

The company has two drilling rigs at the site of the explosion drilling relief wells. One has been removed from the area while BP is conducting its "top kill" effort to plug the well.

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