Bloomberg News

Transocean Maintenance Showed Negligence, Engineer Says

March 15, 2013

Transocean Ltd. (RIG:US)’s internal documents show the company failed to maintain the Deepwater Horizon, avoiding critical repairs and upkeep for years before the drilling rig burned and sank in the Gulf of Mexico in 2010, an engineer testified in the trial over fault for the disaster.

Edward G. Webster, a marine engineering expert testifying for plaintiffs, reviewed in court yesterday a Transocean computerized maintenance system report for the Deepwater Horizon, dated a day before the April 20, 2010, blast, which listed 222 overdue maintenance tasks, including 76 “high priority” jobs.

“Safety critical” systems and equipment had been waiting for maintenance or repairs for months and, in some cases, years, Webster said, citing the report. Transocean owned the Deepwater Horizon, which exploded and sank off the Louisiana coast, setting off the largest offshore oil spill in U.S. history.

“This shows gross negligence to the rig,” Webster testified. The maintenance history of the Deepwater Horizon was “recklessly kept,” he said.

The blowout and explosion aboard the Deepwater Horizon killed 11 workers and spilled more than 4 million barrels of oil into the Gulf of Mexico. The accident sparked hundreds of lawsuits against London-based BP Plc (BP/), owner of the well, Vernier, Switzerland-based Transocean, and Houston-based Halliburton Co. (HAL:US), which provided cement services.

Gross Negligence

A nonjury trial over liability for the disaster began Feb. 25 before U.S. District Judge Carl Barbier in New Orleans. Barbier will determine responsibility for the disaster and whether one or more of the companies acted with willful or wanton misconduct or reckless indifference -- the legal requirement for establishing gross negligence.

For BP, a finding of gross negligence would mean the company might 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 the $8.5 billion settlement the company reached with most private party plaintiffs last year. For Transocean and Halliburton, findings of gross negligence would mean the companies could be held liable for punitive damages for all plaintiffs.

Webster testified that an e-mail from the Deepwater Horizon’s chief engineer to a Transocean manager also showed a lack of attention to maintenance.

‘Top Performer’

“Historically, the rig has been a top performer that has traded performance and staying in operation rather than maintaining the equipment,” Stephen Bertone, the chief engineer and maintenance supervisor, wrote in an Oct. 30, 2010, e-mail to Paul Johnson in Houston.

“When the rig does receive maintenance time, that time is generally taken up by repairing the equipment that was broke,” Bertone wrote, according to the exhibit of his e-mail displayed in court.

“That first sentence says it all,” Webster testified, under questioning by a plaintiffs’ attorney. “It suggests a severe lack of maintenance. It should have been put in the shipyard” for repairs, he said.

The Deepwater Horizon hadn’t been to a shipyard during its nine years of operations in U.S. waters, Webster said. He said he reviewed almost 10 years of maintenance audits of the rig.

Conrad “Duke” Williams, an attorney for plaintiffs, asked Webster why Transocean wouldn’t bring the rig into a shipyard for repairs.

Dry Dock

“When the rig is in dry dock, it’s not making money,” Webster said.

Bertone has invoked the Fifth Amendment right against self- incrimination and declined to testify at the trial.

Williams asked Webster if the Deepwater Horizon was seaworthy on the night of April 20, 2010.

“No, it was grossly unseaworthy,” Webster replied. “It was unseaworthy several years before that.”

John Kinchen, a Transocean attorney, challenged Webster’s description of the rig as unseaworthy, citing audits and inspections by licensing authorities such as the U.S. Coast Guard and maritime classification agencies including the American Bureau of Shipping.

The American Bureau of Shipping concluded the Deepwater Horizon was in good condition and compliant with the bureau’s requirements, Kinchen said during his cross-examination of Webster.

‘Blinders’

“They said it was in good condition; we know it was not,” Webster said. The ABS inspector “must have had blinders on,” the witness said.

The Coast Guard, which had the authority to “take the vessel out of service,” found the Deepwater Horizon compliant with maritime safety requirements following inspections dating to 2002, Kinchen said.

Webster dismissed Coast Guard inspections of offshore rigs in general as “cursory.”

Kinchen asked the witness if he also had a “major disagreement” with another international classification agency that also found the rig in compliance with safe maritime standards.

“Yes -- because they were probably not given the truth,” Webster said.

The trial is set to enter its fourth week on March 18 with Transocean beginning its defense. Transocean attorneys have said they will start with testimony from a drilling rig expert and a company employee who was in charge of firefighting operations on the Deepwater Horizon.

Cement Samples

Before yesterday’s testimony began, Halliburton said it would turn over missing cement samples from the Macondo well to the court. The company said it found the samples and would produce a report to the court on why they hadn’t been produced earlier to lawyers suing Halliburton over the spill.

Halliburton provided a timeline to the court late yesterday on its transfer of samples to the U.S. Joint Investigation Team. The company “properly preserved all rig samples, fully complied with all preservation orders, and expeditiously turned over all Macondo samples for testing to the JIT,” Halliburton lawyers said in the filing.

The plaintiffs and BP claim that the Halliburton cement, used to seal the well from hydrocarbon leaks, was defective. They contend Halliburton used leftover cement from BP’s Kodiak well off the Louisiana coast to prepare a cement barrier for the Macondo.

Halliburton said in yesterday’s filing that the company is “currently investigating a recent discovery of certain materials associated with” BP’s Kodiak well “that have been preserved and are currently being stored” at a Halliburton lab at Broussard, Louisiana.

The case is In re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, 10-md-02179, U.S. District Court, Eastern District of Louisiana (New Orleans).

To contact the reporter on this story: Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net

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


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Companies Mentioned

  • RIG
    (Transocean Ltd)
    • $35.15 USD
    • 0.38
    • 1.08%
  • HAL
    (Halliburton Co)
    • $66.33 USD
    • 0.09
    • 0.14%
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