The class claims that Transocean knew that the repeated incidents in past decade during which its blowout preventers failed “would likely result in scores of fatalities and millions of gallons of oil being released into the surrounding waters.”
But Transocean’s senior officers and directors “opted to conceal their knowledge of these known hazards while making false and misleading statements throughout 2009 and into 2010,” according to the complaint.
The Deepwater Horizon oil rig exploded on April 20, killing 11, injuring 17, and setting off the catastrophic oil spill in the Gulf of Mexico. Failure of the rig’s safety mechanisms, including the blowout preventer, are blamed for the accident, which is expected to eclipse the Exxon Valdez oil spill as the worst U.S. oil disaster in history. The oil spill already covers more than 2,500 square miles and oil continues to gush into the Gulf of Mexico from 1 mile deep, at the rate of 200,000 to 1.1 million gallons a day.
Blowout preventers are 5-story-tall, 900,000-pound contraptions expected to work as critical failsafe backstops for an offshore oil rig’s valve. By closing the valve, the crew usually regains control of the oil reservoir. Procedures can then be initiated to increase the mud density until it is possible to open the blowout preventer and retain pressure control of the formation.
blowout preventers come in a variety of styles, sizes and pressure ratings, all of which depend upon the type and depth of the well. Some blowout preventers can close over an open wellbore; some are designed to seal tubular components in the well, and others are fitted with hardened steel shearing surfaces that can cut through drilling pipe.
The class claims that Transocean was aware of problems associated with its blowout preventers, including that the deeper an oil well is, the tougher the drill pipe material must be. Advanced technologies for well pipes mean blowout preventer (BOP) slicing shears must be advanced enough to slice clean through the pipes.
The class claims that Transocean knew, “by virtue of the several industry papers on BOP failures that the equipment necessary to successfully drill at depths similar to those encountered with the Deepwater Horizon would interfere with the effective operation of Transocean’s safety protocols, including the BOP.”
A 2008 paper co-authored by Jeff S. Shepard, manager of Transocean’s “Subject Matter Team,” cautioned that “BOP shear rams may also have difficulty shearing today’s high-strength, high-toughness drill-pipe,” according to the complaint.
Because drill equipment and depths vary, blowout preventers must be highly specialized.
A 2003 report on deepwater drill systems found blowout preventer reliability issues directly related to the problem that drilling companies do not have detailed design and functional specifications to give BOP manufacturing companies, and that BOPs were being rushed into the field with limited testing.
If a blowout preventer malfunctioned, the pressure to keep drilling meant the contraption was fixed with little time spent trying to figure out what had caused the malfunction.
According to the report: “‘Because of the pressure on getting the equipment back to work, root cause analysis of the failure is generally not performed.'”
Transocean claims to adhere to a “safety vision” and vows in its mission statement that its “operations will be conducted in an incident-free workplace, all the time, everywhere.”
But The Wall Street Journal reported this week that nearly three out of four deepwater drilling incidents that triggered federal safety investigations on rigs in the Gulf of Mexico occurred on rigs operated by Transocean, though Transocean owns fewer than half the rigs operating in more than 3,000 feet of water.
As a result of that article, the class claims, the price of Transocean stock fell by nearly 28 percent.
During the 10 years before the catastrophic explosion of the Deepwater Horizon, Transocean was cited repeatedly, by consumers and governmental agencies, for BOP failures and lax oversight, according to the complaint.
On Aug. 24, 2005, Great Britain’s Health and Safety Executive issued a notice to Transocean for failing to ensure that a rig’s BOP was properly maintained, according to the complaint.
Again in June 2006, the Health and Safety Executive cited Transocean for problems and deficiencies on its BOP testing.
On March 1 this year, Transocean issued a statement to shareholders saying that although its executives qualified for bonuses, none would be given since the company had “‘incurred four fatalities with varying causes in varying regions around the world.'”
Named plaintiffs Thomas Yuen and Sumni Anh seek class damages for Transocean’s shareholder violations, including fraud. They are represented by Vincent Booth of New Orleans.
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