An IoS Investigation

Oil spill disaster: The guilty parties

The blowout of Deepwater Horizon involved more than one organisation. There were other companies, and a regulator. And behind them, ourselves and our insatiable cars.

You would not think it possible for a major environmental disaster to take on the tone of a football match, but such is the case this weekend with the Gulf oil spill. The real issues – of what caused it, the impotence of technology to staunch it, and where the responsibility really lies – are being obscured by the waving of cheap national flags, the chanting of taunts and the ritual pointing of ignorant fingers.

This, it is sadly necessary to point out, is not some weekend grudge match. It is the pollution of hundreds of square miles of ocean, the soiling of beaches in state upon state, and the death of creatures uncountable. And, with each passing week, as efforts to stop the escaping oil and gas have failed until recent days to do much more than apply a hand towel to a rushing stream, estimates of the scale of the disaster have been increased. Nor, this weekend, is there any breakthrough to report on the efforts to stop this continuing disaster. For every barrel that gushes out of this hole 5,000ft below the surface, there is a bandwagon jumper ready to trade insult for insult, or put the dividend paid to pension funds before the real issues.

So, while BP has responsibility for this spill, is it the sole villain of this ugly piece? Or are there other companies, bodies and even governments that should carry some of the can? Time for as cool a look as can be achieved at the three levels of possible responsibility: the immediate accident, the planning and oversight, and the wider dilemma of our insatiable need for oil.

This was a BP operation, but other companies were involved, although there is no suggestion of wrongdoing by any of the companies mentioned in this report. There were 126 people working on the Deepwater Horizon rig, yet no more than eight of them were BP employees. Some 79 worked for Transocean, the firm that owned and operated the rig. A further 41 worked for contractors such as Anadarko Petroleum Corp, a BP partner on the well. BP had 65 per cent of it, Anadarko 25 per cent and Mitsui Oil Exploration 10 per cent. There was also a firm called M-I Swaco, a contractor providing mud-engineering services on the rig, two of whose workers were among the 11 killed. Halliburton, Dick Cheney's former company, had four staff on the rig, and was responsible for "cementing" on the sea bed. Another firm, ironically called Cameron International, supplied the rig's blowout preventer valves, which, as it happened, prevented no such thing. The rig suffered a catastrophic blow-out on 20 April, in which the 11 men lost their lives.

Which of the above companies bears blame, and in what degree, will be the subject of Congressional inquiries, and, ultimately, will be decided in the courts. (There are now at least 160 class action lawsuits filed against BP, and thousands more legal claims by individuals and small business have been filed.)

The best guide so far as to what went wrong is contained in a report produced by the Deepwater Horizon Study Group, led by Professor Robert Bea of the Center for Catastrophic Risk Management at the University of California, Berkeley. In his report, dated 20 May, he itemises seven steps which led to the blowout. They are worth quoting in full:

"Improper well design

* Improper cement design...

* No cement bond logs, ineffective oversight of operations

* Bad decision-making – removing the pressure barrier – displacing the drilling mud with sea water 8,000ft below the drill deck...

* Early warning signs not detected, analyzed or corrected

* Improper operating procedures

* Flawed design and maintenance of the final line of defense."

It seems unlikely that no other company than BP was responsible for these failures. Professor Bea does not specify any other company than BP, but he does have harsh words to say about one other organisation, the US regulator in this area. In the summary of his paper, he says: "The information available to me so far indicates that BP plc and the Department of Interior's Minerals Management Service failed to properly assess and manage the natural hazards in a prudent manner. Consequently, the public, resources and environment were, and are, being severely punished."

Even now, 54 days into the disaster, no one has any precise figure for the amount of oil leeched into the ocean. Scientists, not normally given to inexactitude, say it could be anywhere between 40m and 109m gallons. The total siphoned off the fractured well is about four million gallons, with the latest cap snaring about 650,000 gallons a day.

We have learnt in the past painful months that there exists nowhere on Earth the technology to immediately sort out such a deep-sea blowout. BP, the US government and the best minds of the energy industry have a problem where they have no alternative but to make up techniques as they go along. The only known solution – a relief well – will not be operational until mid-August.

Risk assessment as an activity gets a pretty bad press these days, but if ever a situation needed one doing it was drilling for oil a mile down on the ocean floor. For what we have learnt the hard way is that, whatever adherence or non-adherence to the present regulations, an enterprise was undertaken for which, if it went wrong, there was no immediate remedy. This is a failure of BP's planning and a failure of regulation.

The world has an unquenchable need for oil, and the Western part of it has an additional need to get it from cheap, reliable and politically friendly places. That is a realistic given everywhere, and regarded as a virtual birthright in the US. It plainly should be reduced, and satisfied with non-fossil means of propulsion as soon as possible. But, ultimately, that incessant demand is why BP and its partners were drilling in the Gulf.

But it is the job of government – and any company that wishes to parade itself as responsible – to ensure that such demand does not override protection against social and environmental damage, and the means to halt damage when inevitable accidents occur. This the US government, in the shape of its regulator, and BP and partners have plainly failed to do. The drilling on Deepwater Horizon went wrong, but it is the lack of any immediate remedy which has turned an accident into a still-unfolding disaster.

The most visible signs are the globules of black stuff appearing on beaches, the thin film of pollution covering the marshes of Louisiana, and the pathetic oiled pelicans. But, with undersea clouds of oil now drifting about the Gulf at depths of up to 3,000ft, entire ecosystems are jeopardised. More than 8,300 species of plants and animals are now estimated to be at risk. The oil has already fouled the Gulf's delicate ecosystem, and may ruin it for years to come – and so affect the people who live, work and play along the coast from Louisiana to Florida – and perhaps beyond.

This (with some minority interests) is a BP operation, and the company will have to bear most of the cost, in fines, compensation and legal damages. There are now, amid the continuing failure to stop the leaks, very exotic figures up to and beyond $100bn being talked about. Some have even said this might lead to the break-up, and sale, of the company. But there are grounds for believing that the impact on BP may not be quite as bad as some fear.

First, some of this speculation is caused by anger at the failure to staunch the oil spill, and at BP's cack-handed public relations. Any attempts at spin or gestures are doomed until the company announces the only thing that can change the present mood: a successful ending of the spill. Some of the heat on the company will evaporate at that point.

Second, the cost to the company may not be as calamitous as some imagine. At present, by statutory US scales, the current level of spill would translate into a civil fine of $2.8bn. If gross negligence or wilful misconduct was proved, then the fine would increase to $11.1bn. There are moves in Washington to remove the limit on fines and liability, but even were that to happen, the amounts would still fall a long way short of some of the more colourful estimates. Finally, the lawsuits, many as they are, will take a long time to wheel through the US court system, and other firms may yet be involved.



The verdict

Ten years ago, BP began rebranding itself. No longer British Petroleum, it was to be "Beyond Petroleum", with lower-case initials to show the world it was the corporation that was non-corporate, consumer-friendly, self-effacing, even. The company logo changed from the old shield to a pastel-shaded sunburst, and CEO Lord Browne talked of how the firm was now "performance-driven, innovative, progressive, and green". Much money was spent on television ads which extolled its green activities and credentials. Given how BP earns its money, and the problem of supervising a global operation of its size and scope, this was a high-risk strategy. When your PR team is saying – as spokesman David Nicholas did in 2009 – that "our aspirations remain absolutely unchanged: no accidents, no harm to people and no damage to the environment", it is taking big chances.

And now the spin has duly been exposed. BP changed its logo, and its mission statement. What it didn't change was the way it went about its business. Maybe it got too big. And now it must pay the full price. So, too, according to any detailed findings on levels of negligence, must the other companies involved. There were other companies on that rig, and they can't walk away leaving BP to foot the whole bill.

And then there is the US regulator. This has no funds (although its government does) that could adequately be used to pay compensation or damages, but it should shoulder responsibility in other ways. By changing its terms of reference so that environmental concerns are not some afterthought but the very primary consideration when a new drilling operation is proposed.

Finally, in any sane world, this accident should make governments, especially that of the United States, give immediate priority to investment in technology that will, as soon as possible, provide non-fossil ways of fuelling the vehicles the world cannot, seemingly, do without.

Some, especially in the US, seem to imagine that if BP is made to pay for everything, then the matter is resolved. It won't be. Deep-sea drilling needs to be reassessed, and some measure of responsibility needs to be accepted by anyone who gets in a vehicle powered by an internal combustion engine and turns the ignition. This is not just wicked BP, or nasty Americans trying to do down our pension divvies. It is far, far bigger than that.

The quotes:

1. President Barack Obama

"It is as enraging as it is heartbreaking, and we will not relent until this leak is contained, until waters and shores are cleaned up, and until the people unjustly victimised by this man-made disaster are made whole. BP is responsible for this leak. BP will be paying the bill."

2. Tony Hayward, BP chief executive

"We will stop the leak and return the Gulf Coast to the position it was in prior to this event."

3. Admiral Thad Allen, national incident commander of the Gulf oil spill

"BP will be graded on the things that I established early on that were the goals of this operation. The ability to stop the leak at its source; the ability to attack the oil at sea; to protect the resources ashore; and to recover and mitigate the impacted areas."

4. Melanie Driscoll, bird conservation director, National Audubon Society

"For birds, the timing could not be worse; they are breeding, nesting and especially vulnerable in many of the places where the oil could come ashore. We have to hope for the best, but prepare for the worst, including a true catastrophe for birds."

5. Steve Scalise, Republican Representative for Louisiana

"We've got experience from 30 years of drilling in the Gulf of Mexico that those safety mechanisms work when they're used properly. What happened in this explosion is something that should not have happened."

6. Keith Jones, father of Gordon, an oil worker who died on the rig, responding to Tony Hayward's remark that the BP chief wants his 'life back':

"My son died aboard the Transocean Deepwater Horizon. That's whose life Tony Hayward ought to want back."

Timeline of the US oil spill disaster

20 April: Explosion on BP’s Deepwater Horizon rig off the Louisiana coast: 11 workers killed. Two days later the rig sinks creating a five-mile slick. A week later the US Coast Guard estimates 5,000 barrels a day leaking

2 May: US President Barack Obama visits the affected areas vowing BP will pay. BP chief Tony Hayward says company will pay for the clean-up. Work begins on drilling a relief well

7 May: First attempt to plug the leaking well with a 100-ton concrete cap fails. Two days later it attempts a “junk shot” – rubbish including golf balls, tyres and mud – to stem the leak

11 May: Congressional hearing told explosion is the result of a “cascade of errors”. Shortly afterwards Mr Obama criticises “ridiculous spectacle” of oil industry officials blaming each other

20 May: First heavy oil from the rig reaches Louisiana. Experts begin to express concern that ocean currents could bring a slick the size of Luxembourg on to the coastline. The government triples the size of the area of the Gulf of Mexico that is off limits to fishing boats

26 May: BP starts Operation Top Kill to choke off the leak. It fails three days later. The next day President Obama extends the deepwater drilling ban for a further six months

1 June: BP shares fall 17 per cent as US announces criminal and civil investigations. Not long afterwards Mr Obama criticises BP again for failing to move fast enough

4-7 June: BP engineers place a cap on the well. Eric Holder, the US Attorney General, announces that he is to visit the site of the spill, increasing speculation that a criminal investigation is in prospect

8 June: President Obama says of BP’s chief executive Tony Hayward: “If he worked for me I’d sack him.” The comment and others from the US administration prompt concern in the UK about increasingly vehement attacks on the company

11 June: Admiral Thad Allen writes to BP’s chairman for first face-to-face summit as concern mounts about “anti-British sentiment” in attacks on BP. By this time the estimate on the leak has soared to some 40,000 barrels (1.7m gallons)a day

12 June: In a transatlantic phone call, David Cameron warns Mr Obama not to undermine BP’s economic value. Downing Street issues astatement stressing that the special relationship has not been undermined by the catastrophe

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