Federal investigators are looking into whether BP misrepresented how much it knew about the volume of oil spilling from the Macondo well in an effort to slow a drop in the company’s stock price.
Among the issues under investigation is whether BP workers or others hid what they believed were the most accurate estimates of flow rates from the well that started leaking after the deadly April 20 blowout, sources familiar with the case say. Also in question is whether workers traded stock based on inside knowledge of the scope of the spill.
Sources say the investigation began several months ago but picked up its pace in recent weeks. Investigators are questioning workers at all levels of the company, trying to determine what engineers and others were told to do and to report regarding the flow estimates.
BP declined to comment on the investigation.
Flow rate estimates became contentious soon after the accident.
Two days after the Deepwater Horizon drilling rig sank on April 22, the Coast Guard and BP estimated the volume of oil leaking from the severed and bent riser pipe coming out of the well was 1,000 barrels per day.
On April 27, SkyTruth.org founder John Amos released the first independent estimate of the leak based on satellite images, saying the spill rate could be 5,000 to 20,000 barrels per day.
Internal analysis completed by BP on April 30 said the rate could be as high as 14,000 barrels.
On May 13 three other independent estimates put the daily spill rate at 20,000 to 100,000 barrels.
A BP spokesman dismissed those estimates on National Public Radio, but subsequent investigations showed that BP’s internal estimates at the time were similar, according to a presidential commission investigating the accident.
Eventually a team of government scientists designated to estimate the flow rate put it at 53,000 to 62,000 barrels per day.
The investigators won’t necessarily focus on the accuracy of the estimates but on whether BP chose to report estimates at the low end to limit the effect of the news on the company’s stock price.
“Many times what brings companies to their knees are not the activities that are the subject of an investigation, but efforts to minimize their impact or obstruct investigations,” said Richard Roper, a former U.S. attorney for the Northern District of Texas now in private practice at Thompson & Knight in Dallas.
BP stock closed at $60.48 a share on April 20, a few hours before the accident, but dropped steadily as the spill continued, hitting a low of $27.05 on June 28.
Shares of BP closed at $47.93 in trading Friday on the New York Stock Exchange.
A presidential spill commission report in November criticized BP’s early efforts to measure the spill rate.
“If BP had devoted a fraction of the resources it expended on the top kill to obtaining a more accurate early estimate of the flow rate, it might have better focused its efforts on the containment strategies that were more likely to succeed,” the report concluded.
The top kill was an early, unsuccessful effort to stop the flow of oil by pumping mud and cement into the wellhead.
BP is challenging the official estimate of the total amount of oil spilled — about 4.9 million barrels – because it will influence the size of the fines the company is likely to pay for violating the Clean Water Act.
Heading the investigation into the spill estimates is the Justice Department’s fraud section in Washington, which specializes in complex white-collar crime cases.
That probe is separate from a criminal investigation into the blowout itself and subsequent spill, which is based out of a special New Orleans office.