UPDATE:House Probe Raises 'Serious Questions' About BP Actions

14th Jun 2010 19:53

(Updates throughout with details from letter.) By Siobhan Hughes and Tennille Tracy Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)-- A U.S. House panel disclosed new details about the catastrophic blowout of a BP PLC (BP) well in the Gulf of Mexico, citing evidence that company executives had ignored red flags in the days and hours before the disaster. The details, outlined Monday in a letter from House Energy and Commerce Committee Chairman Henry Waxman (D., Calif.) to BP Chief Executive Tony Hayward, set the stage for a showdown when Hayward appears before the panel on Thursday. Hayward, who will testify for the first time before Congress since the April 20 disaster, is already under pressure from Senate Democrats to set aside $20 billion as a down payment on costs associated with the disaster. "Time after time, it appears that BP made decisions that increased the risk of a blowout to save the company time or expense," Waxman and his colleagues wrote in the 25-page letter. The letter deals with several issues touched on previously by the House panel, but offers the most complete details to date to suggest BP was warned by its own personnel and contractors about the risks associated with the well. The letter is based on interviews conducted and documents obtained by the committee. A BP spokesman said he was unaware of the letter. According to the letter, BP took the cheaper of two options in an important well-design decision by choosing a single string of steel casing from the sea floor all the way to the bottom of the well. The single-string approach provided two barriers against the flow of gas up the annular space, Halliburton Co.'s (HAL) vice president of cementing, Tommy Roth, told committee staff, according to the letter. That compares with four barriers of protection provided by hanging a steel tube called a liner from a hanger on the bottom of the casing already in the well and then inserting another stellar liner tube, called a tieback, on top of the liner hanger. Internal BP documents showed BP was aware of the risks of the single-casing approach, the letter said. A mid-April BP review plan offered four reasons against using the single-string approach, including that simulations indicated "it is unlikely to be a successful cement job due to formation breakdown." On April 14, BP Drilling Engineer Brian Morel told a colleague about the options and noted the well has been "a nightmare well which has everyone all over the place." But despite the risks, BP chose a single string of casing instead of a liner and tieback, applying for an amended permit on April 15, the letter said. The House committee said the decision appeared to have been made to save time and reduce costs. According to the letter, Morel said in a March 25 email that the long-casing string "saves a lot of time....at least 3 days." On March 30, Morel said in an email to another BP official, Mark Hafle, the BP completions engineer, that not using the tieback "saves a good deal of time/money." The letter also raised the issue of centralizers, which are attachments that go around the casing as it is lowered into the well to keep the casing in the center of the borehole. BP used only six centralizers, instead of the 21 that modeling by Halliburton suggested would achieve "only a 'minor' gas flow problem, the letter said. At a hearing in late May, BP America executive Lamar McKay had said he didn't know why BP used only six centralizers and said "that's part of the investigation that needs to continue." According to the letter, BP's Morel, the drilling engineer, replied to the Halliburton account representative that "it's too late to get any more product on the rig, our only option..is to rearrange placement of these centralizers." According to the letter, the issue was elevated to BP's well-team leader, John Guide, when another BP employee, BP Drilling Engineering Team Leader Gregory Walz, told Guide the company had located 15 centralizers and "worked things out with the rig to be able to fly them out in the morning." But Guide overruled Walz, saying he was against adding the additional centralizers because "it will take 10 hrs to install them...I do not like this and.. I [am] very concerned about using them." Guide's perspective prevailed, according to the letter from the House committee. "Even if the hole is perfectly straight, a straight piece of pipe even in tension will not seek the perfect center of the hole unless it has something to centralize it," wrote Brett Cocales, BP's operations drilling engineer. "But who cares, it's done, end of story, will probably be fine and we'll get a good cement job." Cocales wrote that "Guide is right on the risk/reward equation." Waxman's letter says Halliburton's account representative, Jesse Gagliano, was told that BP had decided to use only six centralizers and ran a model using seven centralizers and concluded in an April 18 cementing design report that the "well is considered to have a severe gas flow problem." Gagliano told the committee in a June 11 interview that BP proceeded even knowing that the well would have a problem. A Halliburton executive has already previously testified that BP decided not to run a test called a cement bond log to determine whether the cement had bonded to the casing. The committee said in the letter that federal regulations appear to direct a cement bond log if there is an indication of an inadequate cement job, and that warnings from Halliburton and BP personnel "should have served as an indication of a potentially inadequate cement job." On April 20, the morning the rig caught fire, a crew from Schlumberger AG (SLB) was on the rig to run a cement bond log. But BP told them their services were not needed, the letter alleged. An expert from Engineering Services LLP consulted by the committee said it was "unheard of" not to perform a cement bond log on a well using a single casing approach and called this decision "horribly negligent." The letter also cites a "questionable decision" not to fully circulate drilling mud in the well before cementing. This decision has not come up previously in other congressional hearings. According to the letter, a "bottoms up" procedure would have allowed rig workers to "test the mud for gas influxes, to safely remove any pockets of gas, and to eliminate debris and condition the mud so as to prevent contamination of the cement." But, the letter said, "BP decided to forego this safety step and conduct only a partial circulation of the drilling mud before the cement job." The committee also asserted that BP did not deploy a so-called casing hanger lockdown sleeve, which would have prevented the seal from being blown out from below. The committee says this step appears to have been made even more important by BP's decisions on the well design and the centralizers. -By Siobhan Hughes and Tennille Tracy, Dow Jones Newswires; 202-862-6654; [email protected] (END) Dow Jones Newswires June 14, 2010 14:53 ET (18:53 GMT)