Bloomberg News

BP Loses Bid to Dismiss Gross Negligence in Spill Trial

March 18, 2013

BP Plc (BP/) lost an effort to eliminate the possibility of a finding of gross negligence that might trigger fines as much as $17.6 billion in the trial over the 2010 Gulf of Mexico oil spill.

“I’m not going to grant that motion,” U.S. District Judge Carl Barbier in New Orleans today told a lawyer for the London- based oil company. “I don’t see any point in arguing it.”

BP’s lawyer Andrew Langan asked Barbier to disallow a gross-negligence finding as lawyers for the plaintiffs suing the company rested their case. “We don’t think there has been a finding of gross negligence” against BP, Langan said, only to be immediately rebuffed by the judge in the nonjury trial.

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 a $8.5 billion settlement the company reached with most private party plaintiffs last year.

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, owner of the well, Vernier, Switzerland-based Transocean Ltd. (RIG:US) and Houston-based Halliburton Co. (HAL:US), which provided cement services.

Legal Tests

The trial over liability for the disaster began Feb. 25. 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 Transocean and Halliburton, findings of gross negligence would mean the companies might be held liable for punitive damages for all plaintiffs.

Scott Dean, a spokesman for BP, declined to comment on today’s ruling.

Lawyers for Halliburton and two other defendants, Cameron International Corp. (CAM:US), and M-I Swaco, a unit of Schlumberger Ltd. (SLB:US), told Barbier today they would file motions to erase the gross- negligence claim.

Houston-based Cameron, the maker of the blowout preventer on the project, agreed to pay BP $250 million in December 2011 in exchange for the oil company’s indemnifying it from damage claims. The settlement didn’t cover fines, penalties or punitive damages.

Drilling Fluid

M-I Swaco, which provided drilling fluid, settled with BP last year without disclosing the terms. Swaco’s lawyers filed a motion today asking Barbier to find that that there is no evidence that the company engaged in willful or wanton misconduct. It also asked for a finding that no acts or omissions by the company caused the disaster, according to court papers.

Transocean began presenting its defense with testimony by Calvin Barnhill, a petroleum engineer hired by the company as an expert witness.

Barnhill, who has investigated some 100 oilfield incidents, disagreed with earlier testimony by a U.S. Justice Department drilling expert who characterized the crew of the doomed Deepwater Horizon rig as complacent.

“They responded every time an event occurred,” Barnhill testified today. “They were trying to get it right. I think they just misinterpreted what they were seeing.”

No Intent

After three weeks of testimony in which plaintiff and government lawyers accused BP, Transocean and Halliburton of placing profits above safety, Barnhill said he saw no evidence that anyone on the rig intentionally ignored pressure anomalies in the minutes before the deadly blowout of April 20, 2010.

“I don’t think anybody out there deliberately misinterpreted what they were seeing,” Barnhill said.

Barnhill said Transocean’s drilling crew had the responsibility to monitor the Macondo well “at all times” for a dangerous “kick,” pressure anomaly or other indication of a blowout. A kick is an entry of gas or fluid into the wellbore, which can set off a blowout.

BP, as operator of the well, was responsible for designing and conducting a critical negative-pressure test, used to check whether cementing had sealed off any leaks in the well, he said. The test would have been used to shut down drilling operations, if it hadn’t been misinterpreted as successful, he said.

Barnhill said a negative test with even “inconclusive” results should have resulted in a shutdown.

‘Isn’t Baseball’

“This isn’t baseball,” he said. A “tie doesn’t go to the runner.”

Barnhill said the Transocean drill crew should have shut down the well at 9:30 p.m. the night of the explosion, at the same time that pumps were shut off.

The subsea blowout preventer and other emergency measures weren’t activated until approximately 17 minutes later, Barnhill testified. Transocean drilling supervisor, Randy Ezell, BP well site leader Donald Vidrine and others made phone calls alerting the command center of the vessel of continuing increases in pressure despite the shutdown of all pumps on the rig.

“They started taking actions consistent with well control,” Barnhill said of Vidrine and the Transocean drilling supervisors and crew members. “Unfortunately, they were too far gone” by that time, he said.

Moments later, pressurized oil and gas shot up from the well more than a mile below the Gulf of Mexico. The rig burst into flames and sank two days later, setting off the largest offshore oil spill in U.S. history.

Engineer Call

About an hour before the blowout, Vidrine told BP onshore drilling engineer Mark Hafle in a phone call that the test results showed pressure on the drill pipe and zero pressure on an additional pipe, called a kill line.

Hafle told Vidrine that “you can’t have pressure on the drill pipe and zero pressure on the kill line in a test that’s properly lined up,” Barnhill said. While this indicated the test was unsuccessful, Vidrine did not stop work and instructed the rig to proceed with operations, Barnhill testified.

Vidrine apparently never told the Transocean drilling crew about the 8:52 p.m. call with Hafle, Barnhill said.

Barnhill doesn’t believe that supervisors intentionally ignored what he thought was an “inconclusive” negative test, he said under cross-examination by plaintiffs’ attorney Paul Sterbcow.

“I really don’t believe these guys would have said ’damn the torpedoes’” if they didn’t believe they had correctly interpreted the negative test, Barnhill said.

Criminal Charges

Vidrine and Hafle have declined to testify, invoking their Fifth Amendment right. Vidrine and another BP site manager, Robert Kaluza, were indicted on federal charges of manslaughter, have pleaded not guilty and are scheduled to go to trial next January.

BP pleaded guilty to 14 federal charges, including 12 felonies, and admitted it misinterpreted a critical pressure test just before the explosion. It agreed to pay $4 billion in fines and penalties, plus $525 million to settle a Securities and Exchange Commission claim that the company underestimated the size of the spill.

BP, in settling the criminal prosecution, didn’t resolve the lawsuit seeking civil Clean Water Act fines.

Transocean pleaded guilty to a misdemeanor Clean Water Act violation and agreed to pay $1.4 billion, including $400 million in criminal penalties.

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 reporters on this story: Allen Johnson Jr. in federal court in New Orleans at allenmct@gmail.com; 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)
    • $42.89 USD
    • -0.36
    • -0.84%
  • HAL
    (Halliburton Co)
    • $68.99 USD
    • -0.36
    • -0.52%
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