April 18, 2024

BP Executive Testifies That Rig Explosion Was Known Risk

“There was a risk identified for a blowout,” said Lamar McKay, the former president of BP America and current chief executive in charge of global upstream operations. “The blowout was an identified risk, and it was a big risk, yes.”

Robert Cunningham, a lawyer for private plaintiffs, tried to pin down Mr. McKay on BP’s responsibility for the 2010 disaster that killed 11 workers and dumped millions of barrels of oil into the gulf. Mr. Cunningham suggested that the British company’s cost-cutting and risk-taking culture were at the heart of the explosion and spill. He pressed Mr. McKay on the fact that a BP report on the accident held contractors responsible, but did not cite management failures.

Mr. McKay repeatedly responded that BP was responsible for designing the well, but that the rig, cement and other contractors shared responsibility for safety on the drilling operations.

“It’s a team effort,” he said. “It’s a shared responsibility to manage the safety and risk.”

Mr. McKay testified for more than an hour at the end of the day and will continue on Wednesday. He told the court that there were risks involved with drilling both in deep waters and in shallow waters, but that a blowout could be more difficult to control, and therefore more damaging, in deep waters. There was little, if anything, in his comments that diverged from what BP executives have said in the past.

After the April 2010 spill, internal BP documents showed that the company had struggled with a loss of “well control” in March, after several weeks of problems on the rig. And for months before that, it had been concerned about the well casing and the blowout preventer, which are considered critical pieces in the chain of events that led to the disaster.

On June 22, 2009, for example, BP engineers expressed concerns that the metal casing the company wanted to use might collapse under high pressure.

“This would certainly be a worst-case scenario,” Mark E. Hafle, a senior drilling engineer at BP, warned in an internal report. “However, I have seen it happen so know it can occur.”

Early in his testimony, Mr. McKay shifted and appeared uncomfortable on the witness stand. He acknowledged that he had never read a textbook on safety system engineering before or after the accident, or a safety report written by a BP consultant who testified earlier in the day.

Mr. McKay was the second witness to appear in a multiphase trial that will determine who was responsible for the accident, whether they were grossly negligent and how much oil was spilled. He followed Robert Bea, a professor emeritus of engineering at the University of California, Berkeley, and former safety systems consultant for BP, who largely blamed the company’s culture for the accident.

“It’s a culture of every dollar counts,” Dr. Bea said. “It’s a classic failure of management and leadership.”

The Federal District Court trial in New Orleans is bundling suits brought by the Justice Department, state governments, private businesses and individual claimants against BP and several of its contractors. Decisions on culpability and damages could be a year or more away, but they are likely to have profound effects on environmental law and on the viability of BP as a major oil company with global ambitions.

Under the Clean Water Act, fines against BP could range from $1,100 for every barrel spilled through simple negligence to as much as $4,300 a barrel if the company were found to have been grossly negligent. The federal government has estimated that about four million barrels of oil were spilled, meaning liabilities of as much as $4.4 billion to $17.2 billion. BP has claimed that the amount spilled was at most 3.1 million barrels.

This article has been revised to reflect the following correction:

Correction: February 26, 2013

An earlier version of this article misstated Lamar McKay’s title when he headed BP America. He was president, not chief executive. Because of an editing error, the article also misstated the federal government’s estimate of the number of barrels spilled. It is about four million barrels, meaning a liability range of $4.4 billion to $17.2 billion, not 4.9 million barrels and a liability range of $5.4 billion to $21 billion.

Article source: http://www.nytimes.com/2013/02/27/business/energy-environment/bp-executive-says-explosion-was-known-risk.html?partner=rss&emc=rss

BP Appoints New Chief of Production

Mr. McKay is taking over from BP’s chief executive, Robert W. Dudley, who took over management of the so-called upstream unit in an effort to improve risk management after the spill. Mr. McKay, who is chairman and president of BP America, is to start in his new role at the beginning of next year. He will report to Mr. Dudley.

“During the past two years, we have successfully introduced a more centralized organization to our upstream, BP’s largest organizational change for two decades,” Mr. Dudley said in a statement. “I believe it is now timely and appropriate to appoint a fully dedicated chief executive to this, our largest business.”

The explosion in April 2010 on a drilling platform leased by BP killed 11 workers and created the largest oil spill in United States history. After the catastrophe, Andy G. Inglis departed as head of exploration and production and Mr. Dudley moved to impose a more centralized management structure and stricter safety standards.

As head of BP America, Mr. McKay, 53, has been overseeing the oil company’s restoration work on the gulf coast. Mr. McKay, who is already a member of BP’s executive management team, will move to London from Houston. His successor at the American unit will be announced later, BP said.

Mr. McKay joined BP through the company’s merger with Amoco, where he started his career in 1980. At BP, he previously worked as chief of staff for exploration and production; was responsible for the downstream, or sale and distribution, and upstream businesses in Russia and Kazakhstan; and led talks with BP’s former partners in its Russian joint venture, TNK-BP. He was named chairman and president of BP America in January 2009.

BP plans to start nine major development projects in 2013 and 2014, according to its Web site, in areas including Angola, the North Sea, the Gulf of Mexico and Azerbaijan.

Article source: http://www.nytimes.com/2012/11/24/business/global/bp-appoints-new-chief-of-production.html?partner=rss&emc=rss