BP cost-cutting measures are focus of U.S. inquiry into gulf spill
Friday, October 8, 2010; 9:43 PM
METAIRIE, LA. - There's been a lot of talk about the "safety culture" at BP in the wake of the Deepwater Horizon disaster in the Gulf of Mexico. Now, federal investigators are probing what looks to them like BP's save-money culture.
At a federal hearing this week, an investigator revealed that BP's top manager on a drilling rig is given a performance evaluation that includes the category "Every Dollar Counts and Simplification."
Of 13 employee evaluations reviewed by investigators, 12 had documented ways they had saved the company large sums of money, typically six-figure amounts, and one had put together a spreadsheet showing that he could account for $490,000 in savings, said Jason Mathews, an investigator for the Bureau of Ocean Energy Management, Regulation and Enforcement, which is conducting the joint inquiry with the Coast Guard.
BP witnesses have acknowledged this week and in previous hearings that oil drilling is a business, and costs have to be taken into account. But they've said safety always comes first, and they denied compromising safety to save money.
But the government this week raised the question of whether BP took incremental shortcuts because it felt rushed to finish the problem-plagued Macondo exploration well, a job costing BP about a million dollars a day. Simply leasing the Deepwater Horizon rig from Transocean was costing $525,000 a day. Eleven people died when the mile-deep well blew out April 20, and more than 4 million barrels of oil spewed into the Gulf of Mexico in the nation's worst offshore oil spill.
The hearing at a Holiday Inn conference room was packed with lawyers for oil companies and rig workers. Although not a trial, but rather a fact-finding inquiry, the hearings have had plenty of courtroom theatrics, including turbo-charged lawyers leaping to their feet to belt objections. There has been a smattering of accusations lobbed across the room to the effect that some attorneys are trolling for material for civil lawsuits.
One document introduced into evidence this week showed that the Macondo job, originally projected as a $96 million operation, was on track to cost $58 million more than anticipated.
BP kept track of estimated completion dates for drilling jobs, and tried to figure out where the rig could go next so that it could stay active and have minimal down time. E-mails discussed by attorneys this week showed that BP hoped to squeeze in a quick job in May - plugging a well called Nile - before tackling a more complex job at another site, the Kaskida well, that might take six months.
"I know you all are under pressure to finish Macondo so we can get Nile P&A moving and not jeopardize the Kaskida well," one BP employee, Merrick Kelley, wrote to Macondo well team member Brian Morel a week before the blowout.
On April 9, David Sims, a BP manager, explained to colleagues in an e-mail that the Nile job was a "gap-filler" between Macondo and Kaskida, and that he hoped the government regulatory agency, the Minerals Management Service, would provide some flexibility in its approved date for starting the Kaskida job because of delays in completing Macondo.
The Macondo well had been a "nightmare," in the words of one team member. The widow of a worker killed in the explosion testified this summer that her husband had told her that "Mother Nature just doesn't want to be drilled here." The first rig to drill the well was damaged in a hurricane and had to quit the job. The Deepwater Horizon, drilling fast, suffered a stuck drill pipe March 8 when the hole collapsed. The crew had to start over, drilling a new hole.
Mathews, the investigator, asked John Guide, the BP well team leader for the Macondo job, whether cost-consciousness colored decisions involving safety.