Most of the mistakes and oversights at Macondo can be traced back to a single overarching failure – a failure of management. Better management by BP, Halliburton, and Transocean would almost certainly have prevented the blow-out.
As Ed Crooks and Sylvia Pfeifer report:
The report identifies several central mistakes made by BP staff, including their misinterpretation of the vital “negative pressure test”, used to see whether the well had been properly sealed with cement before the rig moved away. It also highlights their decision to replace the heavy drilling “mud” in the pipes leading to the rig with lighter seawater before a seal had been placed in the top of the well.
And yet, the company’s shares are up nearly 2 per cent this morning. Part of the reason for this is that the blame is being shared between BP and its partners in the Macondo well, Transocean and Halliburton. William Reilly, one of the commission’s co-chairs, said:
Given the documented failings of both Transocean and Halliburton, both of which serve the offshore industry in virtually every ocean, I reluctantly conclude we have a system-wide problem.
But in pre-market trading, Transocean is up and Halliburton hasn’t budged. It seems investors are breathing a sigh of relief that the report wasn’t more damning of the companies involved, which could pave the way for multi-billion dollar lawuits.
Richard Griffith, an analyst at Evolution, says:
This supports our view that a gross negligence case against BP looks hard to prove and could ultimately reduce BP’s liabilities.
The key conclusion is that there was a systemic industry wide and government regulatory failure to manage a number of separate risk factors, oversights, and outright mistakes which combined to overwhelm the safeguards meant to prevent just such an event from happening.
Any hint of government regulatory failure will make it even more difficult for claimants to win huge sums from the companies involved.