BP Had 360 Problems On Deepwater Horizon

Employees of BP plc (NYSE: BP) said that they had found 360 problems related to overdue maintenance on the Deepwater Horizon rig, according to an investigation  by the US Coast Guard and the Bureau of Ocean Energy Management.

According to the FT,  these “included problems with the alarms and an emergency shutdown panel. ”

Why was the rig left to operate under such circumstances? That will be the question asked by the US government and lawyers for plaintiffs–the people and businesses that will file suit against BP and partners including Transocean (NYSE: RIG). If the testimony is confirmed, it could greatly increase liability claims against the firms, and it is not entirely clear whether those claims would be covered by the BP $20 billion escrow account. The lead administrator of the fund, Ken Feinberg, has said that claims settled by BP may not cover its partners in the Deepwater Horizon operation.The deeper question is how a corporate culture could have developed that would allow so many safety violations go on for so long. One answer is that BP and Transocean were pressing employees to speed the process of drilling the well. A similar project in the immediate areas had failed just before the well that caused the catastrophe began to be drilled.

The other explanation may be more damning. It is that BP’s culture was simply so complex and lax that the problems with the rig were never passed to management above the people who ran and oversaw Deepwater Horizon day-to-day. Accounts of problems may have contradicted one another and perhaps canceled each other out in the reporting process. Violations on rigs may have been so routine that they were accepted as part of the exploration process.

One of the criticisms of BP executives is that they allowed a culture of “drilling before safety to exist.” The appointment of Tony Hayward as BP CEO  that was meant to change this after years of safety problems under his predecessor Lord Brown. Either Hayward failed to keep his promises, or someone did not get his memos.

Douglas A. McIntyre