Playing the Oil Spill Blame Game
The Wall Street Journal reports on the high stakes oil spill blame game being played between BP, Transocean and Halliburton. So who is to blame?
BP?
Couldn’t be. BP blames Transocean’s blow-out preventer:
BP, the well owner, blames the failure of a big set of valves on the sea floor, known as the blowout preventer, to halt the blowout once it started.
That seems reasonable. There was a blow-out and the blow-out preventer didn’t work. So it must be Transocean’s fault?
Transocean?
Couldn’t be. Transocean says its not to blame:
Transocean Chief Executive Steven Newman is expected to tell the Senate the explosion occurred "after the well construction process was essentially finished." His prepared testimony then blames the blowout on a failure of the well's lining, saying the blowout had to be caused by "a sudden, catastrophic failure of the cement, the casing or both."
Transocean also claims that it makes no sense to blame the blow-out on the blow-out preventer. Actually, it makes a lot of sense. I’m not saying Transocean is wrong because I don’t know. But it does make sense to at least point the finger at the blow-out preventer for not doing its job.
But Transocean says the blow-out preventer was not responsible for stopping the blow-out in the location where it occured. So it must be Haliburton’s fault?
Halliburton?
Couldn’t be. Halliburton blames Transocean and BP:
Halliburton says it was following Transocean's orders and is "contractually bound to comply with the well owner's instructions on all matters relating to the performance of all work‐related activities."
Before such a plug is placed, the job of keeping underground gas from coming up the pipe is done by heavy drilling fluid inside the well, commonly known as "mud." The plug is normally put in before the mud is removed, but according to the account of Halliburton, Transocean and the two workers, in this case, that wasn't done—drilling mud was removed before a final cement plug was placed in the well.
It is not clear why such a decision would have been made. Rig owner Transocean says that BP, as owner of the well that was just being completed, made key decisions on how to proceed. BP declined to comment on this account of the drilling procedures.
So whose fault is it? Who knows. Maybe we’ll find out one day. Maybe not.
Barring a settlement agreement among the oil companies, they will spend hundreds of millions of dollars in legal fees trying to prove that the other companies were responsible for the blow-out and resulting spill. I am not aware of any cross-claims being filed yet by the oil companies, but they are probably coming.
It will also be interesting to see if any of the oil companies take the initiative and file suit against the other companies in a chosen venue. After all, the MDL proceeding could go anywhere.
If I were advising the oil companies, I would recommend that they consider filing suit against one or more of the other companies in a hand-picked venue. Strategically, that move would make a lot of sense.
Finally, and this is a big point that we need to remember: It's still leaking. Maybe they should bring in those guys who got Apollo 13 back to Earth.
