The Deepwater Horizon Disaster And The Search For The Cement Plug

The blame cycle that has emerged about which company caused the collapse of the Deepwater Horizon rig has come around to a cement plug. The “device” is supposed to seal the pipe that runs through the ocean’s floor so that oil and gas cannot run up the from the drill point and explode into the air. The plug was not set in the Deepwater Horizon as its operations were about to temporarily shut.

BP plc (NYSE: BP) and Transocean (NYSE: RIG), the owner of Deepwater Horizon, say that Halliburton (NYSE: HAL) had the job of setting the plug. Halliburton says that it did its job and is not responsible for the safety of the platform and that BP, or perhaps Transocean were. Transocean’s CEO Steven Newman will tell a Senate panel that “All offshore oil and gas production projects begin and end with the operator, in this case BP,” according to the AP.

Each of the three parties is attempting to avoid blame for the problem and by shifting responsibility, potential liability from lawsuits and government sanctions as well. The  blame process dodges the point that a cement cap is not a remarkably complex operation and that it was, therefore, easy for BP, Transocean, and Halliburton to all inspect the plug. This is particularly true because it is such a critical safety measure.

The effort to pass liability from one company to another in the Deepwater Horizon incident should cause the government to alter regulations about the oversight of the most important operations of deepwater drilling. The same probably holds true for the mining industry. BP prides itself on being the most prolific driller of wells miles below the ocean floor. It points to its track record for safety over the years. And yet,  three major companies seem to have overlooked a critical safety component, the installation of cement plug. If all three companies were required to inspect critical safety features, the entire catastrophe might have been avoided.

For want of a nail, the kingdom was lost.

Douglas A. McIntyre