Transocean Turns on BP With Scorching Oil-Spill Document
NEW ORLEANS (CN) - BP prolonged the Gulf of Mexico oil spill by two months by concealing the rate of oil flowing from the broken Macondo well, Transocean claims in a document filed in the damages trial.
A bench trial to apportion damages is being held before U.S. District Judge Carl Barbier. Penalties for Clean Water Act violations alone could range from $4 billion to $17 billion.
Transocean wrote in a heavily redacted "supplemental answer and affirmative defenses" that "BP's fraud was the proximate, intervening and superseding cause of the well continuing to flow until mid-July 2010. BP's misrepresentation and concealment of material information about the flow rate caused source control decision-makers to approve proceeding with the top kill over the BOP-on-BOP strategy in mid-May 2010. Because of that, a well that could have been capped in early May 2010 emitted tens of thousands of barrels per day for another two months causing significant environmental pollution."
BOP-on-BOP was an alternative strategy that BP rejected, according to Transocean's document, which was filed Friday.
Transocean claims that BP's motive was to keep the true flow rate hidden, to minimize environmental fines, which are assessed by the barrel.
Transocean says in the 49-page document that "on January 29, 2013, U.S. District Judge Sarah S. Vance accepted BP's plea of guilty to a violation of 18 U.S.C. § 1505 (Obstruction of Congress). ... BP's guilty plea confirmed that BP made misrepresentations to the United States Government regarding the flow rate from the Macondo well. BP's admission that it misrepresented the flow rate constitutes not only criminal conduct, but tortious conduct as well. As more fully described below, BP fraudulently misrepresented and concealed flow rate and source control information from those who were working to stop the flow of oil from the Macondo well. Because BP's misconduct with respect to flow rate impeded efforts to contain and cap the Macondo well, BP's tortious acts constitute the superseding and intervening cause of oil flowing from the well for 87 days instead of a much shorter period of time."
Doug Suttles at the time was CEO of BP's Exploration and Production business, BP's lead representative at Unified Command, and the leader of BP's overall response to the oil spill.
Transocean's document states that "on April 28, 2010, Suttles represented to Admiral Landry in a meeting at Unified Command that BP's internal flow rate estimate was between 1,000 and 5,000 barrels of oil per day ('bopd') with 2,500 bopd being the most likely flow rate number."
Transocean claims those numbers "were false and misleading and omitted material information within BP's possession."
(An email conversation between BP officials on the day the rig sank, released last year, shows that BP had estimated that oil could have been flowing at up to 82,000 barrels a day, or well over 3.4 million gallons.)
(The email from Rob Marshall, BP subsea manager of the Gulf, on April 22, 2010, two days after the Deepwater Horizon explosion killed 11 people and set off the worst oil spill in U.S. history, stated: "Alistair Johnston altered his Macondo well model to approximate open hole flowing conditions and calculated a rate of 82,000 barrels per day."
(In reply, Gary Imm, a manager at BP, told Marshall: "A number of people have been looking at this and we already have had difficult discussions with the USCG [U.S. Coast Guard] on the numbers. Please tell Alistair not to communicate to anyone on this."
(Transocean does not cite this email exchange in its supplemental answer.)
But Transocean does cite a lawsuit the SEC filed against BP in November 2012 that alleges BP's initial flow rate estimates were intentionally "false and misleading."
According to Transocean's document, that SEC claimed that '"by April 28, 2010, BP possessed at least four internal pieces of data, estimates, or calculations and one external calculation that showed potential flow rates significantly higher than 5,000 bopd."'
Transocean's document adds: "on April 21, 2010, BP employee Walt Bozeman emailed a group of BP employees, including BP executive David Rainey, that he had 'modeled a flow rate at the sea floor (assuming riser falls) in Prosper [a modeling program] ...' as a result of this modeling the group calculated a 'worst case discharge' (WDC) number of 100,000 barrels of oil per day." (Brackets and parentheses in original)
Transocean claims that "as BP admitted in the plea agreement, BP withheld this information from its May 24, 2010 submission to the United States House of Representatives Committee of Energy and Commerce. BP also withheld these estimates from Admiral Landry, the press, and the public when it estimated that the flow rate was between 1,000 - 5,000 bopd in late April 2010." (Citation to BP plea agreement omitted.)
Transocean's document states that BP's persistently low estimates even stumped some BP personnel. For instance, on May 15, 2010, after reading an article on CNN.com in which BP said the flow rate was somewhere around 5,000 bopd, BP senior engineer Mike Mason wrote an email to CEO of BP's Exploration & Production business, Andy Inglis, according to the Transocean document:
'"I just read an article in CNN (May 14, 2010 1:00pm) stating that a researcher at Purdue believes that the Macondo well is leaking up to 70,000 bopd and that BP stands by a 5,000 bopd figure. With the data and knowledge we currently have available we cannot definitively state the oil rate from this well. We should be very cautious standing behind a 5,000 bopd figure as our modeling shows that this well could be making anything up to ~ 100,000 bopd ..."'
Transocean's document states that there "is no evidence that Mason's email, his concern about 'standing behind a 5,000 bopd figure' or the assumptions that had to be made to support a 5,000 bopd case, or the fact that 'modeling shows that this well could be making anything up to ~ 100,000 bopd' were shared with representatives of the United States Government who were involved in source control decision-making or in attempts to estimate flow rates."
Transocean says in the document that "BP's attempt to minimize the scope of the spill has now backfired on BP in the form of a criminal guilty plea and uncontested findings that BP violated federal securities laws. But the fallout from BP's flow rate misrepresentations directly impeded efforts to stop the flow of oil from the well and are therefore a key part of this case. ...
"Knowing that the top kill effort that ultimately failed at the end of May 2010 could not succeed if the flow rate was above 15,000 bopd, BP nevertheless recommended to the government in mid-May that the top kill should be prioritized above another strategy that could have succeeded in capping the well. Because BP had misled government decision-makers about the flow rate, they did not object to BP's flawed source control strategy. Had the alternative source control approach - known as the BOP-on-BOP - been attempted instead of the doomed top kill effort, the well could have been capped in mid-May, rather than in mid-July. In short, BP's tortious and criminal conduct caused the oil spill to last for two months longer than necessary."
On May 24, BP CEO Tony Hayward publicly stated that the top kill had a 60-70 percent chance of success. "BP knew, however, that the top kill's chances of success were poor or nonexistent," Transocean says in the document.
It claims that "BP's decision to pursue the top kill not only delayed efforts to cap the well, but also increased the flow rate by eroding obstructions to the well. [Three lines blacked out here.]
"BP's pursuit of the top kill needless put the lives, health, and safety of responders at risk. [Four lines blacked out here.]
"On May 28, 2010, the top kill effort ended without success. Weeks had been wasted preparing for a source control technique that BP knew was doomed to fail while tens of thousands of barrels of oil continued to flow into the Gulf of Mexico."
Transocean's document states that after BP's top kill failed, "when BP made misrepresentations and withheld information about the reason for the top kill's failure, it did so with the intent to defraud."
The document was filed by Transocean attorney Kerry J. Miller, with Frilot LLC of New Orleans.
This trial, which is expected to last three months, is to determine the causes and apportion the blame for the oil spill. A second trial, slated to begin in December, will try to determine how much oil spilled.
Clean Water Act fines could range from $1,100 per barrel up to $4,300 per barrel, if BP was grossly negligent.