Bloomberg News

BP Spill Judge to Hear From Explosion Survivor This Week

March 03, 2013

The judge presiding over the trial of BP Plc (BP/) for the Macondo well disaster is set to hear from a survivor of the fatal rig explosion that sent millions of gallons of oil pouring into the Gulf of Mexico, according to a witness list prepared for the case.

U.S. District Judge Carl Barbier is slated to hear testimony this week from Randy Ezell, a drilling supervisor who performed safety tests on the Deepwater Horizon rig before the 2010 explosion, according to a witness schedule shown to Bloomberg News. The trial resumes today in New Orleans federal court as the U.S. and Gulf states continue talks with BP about a possible settlement of pollution claims over the spill, a person familiar with the negotiations said Feb. 26.

Evidence presented by the government and spill victims in the case’s first week “may have encouraged BP to think twice about whether it wants to proceed with a long, expensive trial,” said David Uhlmann, a former federal prosecutor who teaches law at the University of Michigan. Uhlmann is the former head of the Justice Department’s environmental crimes section.

After hearing all the evidence, Barbier must decide who is liable for damages over the spill, the largest of its kind in U.S. history. He also will rule on whether BP, Transocean Ltd. (RIG:US) or other companies were grossly negligent in their handling of the rig and well. His decision will affect what each company may have to pay.

The Deepwater Horizon explosion killed 11 rig workers and sent more than 4 million barrels of oil into the Gulf. The accident sparked hundreds of lawsuits against London-based BP, Vernier, Switzerland-based Transocean, owner of the rig, and Houston-based Halliburton Co. (HAL:US), which handled cement work on the well.

Gross Negligence

If well owner BP is found grossly negligent, the company may be liable to the U.S. for as much as $17.6 billion in Clean Water Act fines, as well as unspecified punitive damages to claimants who weren’t part of an $8.5 billion settlement of lawsuits. For Transocean and Halliburton, a similar finding would mean they could face punitive damage awards.

Lawyers for the government and spill victims contend BP was over budget and behind schedule on the Macondo deep-water drilling project off the Louisiana coast, prompting the firm to cut corners and ignore safety tests showing the well was unstable.

Crew Untrained

They also allege Halliburton’s cement job was defective and Transocean employees made a series of missteps on the rig, including disabling safety systems, failing to properly maintain the installation, and leaving the crew untrained for crisis situations.

BP sued its contractors, claiming Transocean workers’ miscues were the main cause of the explosion and that Halliburton officials concealed flaws with cement work done on the drilling project. Transocean and Halliburton countersued, pointing the finger back at BP on liability issues.

Federal and state officials have offered to let BP resolve environmental and economic spill claims for $16 billion, the Wall Street Journal has reported citing unidentified people familiar with the matter.

Scott Dean, a BP spokesman, declined to comment March 1 on whether the company was weighing a settlement offer.

‘Reasonable Compromise’

“A $16 billion settlement offer is a reasonable compromise position that BP should accept,” Uhlmann said. The offer would provide “a reasonable outcome” of allegations that BP is responsible for fouled wetlands, impaired fisheries and damaged state and local economies, he said.

The London-based company already has agreed to settle most spill victims suits in a deal BP now says is worth at least $8.5 billion. The settlement excludes claims of financial institutions, casinos, private plaintiffs in parts of Florida and Texas, along with residents and businesses claiming harm from the deep-water drilling moratorium.

It also didn’t cover federal government claims and those filed by Louisiana, Alabama and other Gulf Coast states. BP has said the states are claiming at least $34 billion in damages.

When the trial resumes, Barbier will hear from Ezell, one of the Deepwater Horizon’s senior drilling managers, about the crew’s actions the night of the blast.

Ezell, a Transocean employee, testified in a deposition that he helped BP well managers perform pressure safety tests the night of the explosion. Federal prosecutors said the results of those tests were misinterpreted by both BP and Transocean officials on the rig and that helped cause the blowout.

Criminal Pleas

BP pleaded guilty to criminal charges, including 11 manslaughter counts, in connection with the blast. It also agreed to pay $4 billion to resolve the federal government’s probe of its handling of the spill and $525 million to settle the U.S. Securities and Exchange Commission’s claims that the company misled investors about the rate of oil flowing into the gulf.

Transocean pleaded guilty to a misdemeanor charge of violating the Clean Water Act and agreed to pay $400 million in criminal penalties over the blast and spill.

Ezell said in his deposition that he was off duty when he was blown off his feet by the blast. He later helped rescue colleagues trapped in the damaged rig, according to the pre- trial testimony and other survivors’ accounts.

Barbier also will hear from Ronnie Sepulvado, a BP manager who was assigned to the Macondo project. Sepulvado said in his deposition he was off the Deepwater Horizon the night of the blast attending a safety training course. Sepulvado, a well-site leader for more than 30 years, will probably testify about how rig workers interpret the pressure safety tests results and techniques used to maintain control of oil wells.

‘Good Results’

During the first week of the trial, the judge heard testimony from Mark Bly, the BP executive who oversaw the company’s internal investigation of the incident. Under questioning by lawyers for the government and spill victims, Bly said his team didn’t focus on whether management failures contributed to the disaster.

BP officials ordered to review the Deepwater Horizon explosion zeroed in on operational issues rather than systemic safety flaws, Bly said. “We felt we had good results from what” investigators uncovered about the rig crew’s actions and BP managers “made the choice not to go” further with the probe, he said.

Profit Push

The government and spill victims contend that BP’s push for profits led the company on a cost-cutting campaign that impaired safety systems and the firm failed to learn from earlier rig and refinery accidents. Bly will face cross examination by lawyers for Transocean and Halliburton when the trial resumes.

The judge also heard testimony from Kevin Lacy, a BP drilling supervisor who warned his superiors in 2009 the campaign to rein in costs would result in unsafe oil-exploration operations.

“I was never given a directive to cut corners or deliver something unsafe, but there was tremendous pressure to cut costs,” he said in a video deposition. Lacy said he later left BP over his concerns that the company wasn’t committed to improving safety protocols.

Robert Bea, a retired engineering professor from the University of California who investigated the Macondo well incident, told Barbier that BP’s push to maximize profit was a “root cause” of the disaster.

The Macondo well operators faced “intense pressure to save time and money,” Bea said. As a result, he said, the company “made sacrifices in safety.”

The case is In re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).

To contact the reporters on this story: Jef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net; Laurel Brubaker Calkins in Houston at laurel@calkins.us.com

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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Companies Mentioned

  • RIG
    (Transocean Ltd)
    • $33.53 USD
    • -0.10
    • -0.31%
  • HAL
    (Halliburton Co)
    • $65.16 USD
    • 0.48
    • 0.74%
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