BP Settlement Claims

Gulf Coast Disaster News

BP, other oil spill companies start the blame game

May 7, 2010, 11:06 am

By Matt Daily - Reuters - May 6, 2010

NEW YORK, May 6 (Reuters) - The companies behind the oil drilling disaster threatening the fragile waterways and beaches of the Gulf Coast are beginning to turn on each other. Oil giant BP Plc <BP.L> has been carefully playing the public relations game by saying it bore responsibility for the costs of the clean up of the oil that was shooting out of the damaged well a mile below the surface of the Gulf. But in recent days it has begun to point directly at driller Transocean Ltd as the main culprit.

"This was not our drilling rig and not our equipment. It was not our people, our systems or our processes. Their systems, their people, their equipment," BP Chief Executive Tony Hayward told the BBC on Tuesday.

Transocean <RIGN.S>, which is the world's largest offshore oil driller, with rigs used by oil companies around the globe, fired back on Thursday.

"It is inappropriate to speculate on what may have caused the catastrophic failure of a cased and cemented well in advance of that investigation," Transocean Chief Executive Steven Newman told a conference call.

At stake is potentially billions of dollars of damages for clean-up costs and damages resulting from the loss of work for people who live on the Gulf Coast, including many fishermen and shrimpers, and people who run hotels and other tourist businesses. Newman's comments suggested the subcontracting companies it hired and who were responsible for that part of the operation may also become part of the blame game.

Transocean's Deepwater Horizon rig drilled the well about 40 miles off the Louisiana coast when a pressure surge appeared to cause an explosion on the vessel on April 20. It sank two days later, leaving 11 workers missing and presumed dead. Well drillers place cement around the casing in the wells to secure the pipes and prevent them from breaking or leaking -- a job performed on the BP well by Halliburton Co <HAL.N>, the world's second largest oilfield services company.

But Halliburton has said cementing was completed 20 hours before the accident and that testing had shown the work was done properly. BP has also sent a letter to its drilling contractors, including Transocean, to verify the condition of their blowout protectors -- a valve fitted onto the wellhead that is designed to prevent catastrophic surges of oil and gas.

If the BOP was defective, that could drag its maker, Cameron International Corp <CAM.N>, into the fray. Investors have already punished Cameron, knocking its stock down 20 percent since April 26.

LIMITED DEFENSE

Under the Oil Pollution Act of 1990, BP has responsibility to pay for clean up of the spill that could run into the the billions of dollars, as well as up to $75 million liability for economic damages, according to Alfred Kuffler, a partner at law firm Montgomery McCracken in Philadelphia and an expert in maritime pollution law. "The responsible party has very limited defenses," he said of the law, which was created in response to the Exxon Valdez oil spill in Alaska. A company can only shift legal blame for the accident if it can show another party was responsible, he said, but BP's contractual relationship with Transocean may prevent such a maneuver.

Transocean said its contracts specifically call for BP to indemnify it from any pollution from the well. "We believe in this particular instance the contract is pretty clear about that," Transocean's Newman said. "Our industry has a long history of contract sanctity, and we expect BP to honor that."

With the oil slick still growing, the full cost of the cleanup and the damages will not be known for some time, according to Brent Coon, a Texas lawyer representing a Transocean worker who survived the April 20 explosion, as well as others in the area whose livelihoods are affected by the spill. "In this kind of case, there's usually some blame to pass around," said Coon, who previously represented victims in the BP Texas City refinery blast.

Anadarko Petroleum, BP's partner in the well with a 25 percent stake, is also on the hook for some clean-up liability, although the Woodlands, Texas company was quick to say it did not make any operational mistakes. Chief Executive Officer Jim Hackett told investors this week his company had nothing to do with the well design or operating procedures and came in only at the end of planning to approve the project's budget. [ID:nN04102706] Still, the company was expecting the different parties to begin trading accusations as the facts of the accident came to light. "There's going to be a lot of fingers pointing in a lot of different ways," Robert Reeves, Anadarko's general counsel said on a conference call on Wednesday. (Additional reporting by Braden Reddall in San Francisco; editing by Andre Grenon)

Brent Coon discussing Oil Spill Settlement

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