Former BP America chief says company knew blowout was possible

Day 1: BP fires back: Gulf spill caused by multiple failures, not only its own

NEW ORLEANS —British oil giant BP had identified a deep-water blowout in the Gulf of Mexico as a “high-level” risk prior to the 2010 oil spill, the former chief representative of the company’s U.S. operations testified Tuesday at a civil trial over the disaster.

“As an engineer I knew a blowout was possible,” Lamar McKay, the former president of BP America, testified in federal court in New Orleans.

Plaintiffs attorneys called McKay on the second day of the trial in an effort to show BP knew of the risks and ignored them, causing the worst offshore oil spill in U.S. history and the deaths of 11 rig workers.

McKay didn’t budge, insisting that it was Transocean’s safety management system that was used on the Deepwater Horizon and that well and rig operations were a “shared responsibility.”

McKay also said he believes his company’s response to the disaster has been appropriate.

“I think we have been very clear from the start that we would try to learn from this” and minimize the risk of it happening again, he said.

Exchanges between the plaintiffs attorney and McKay were testy at times. McKay declined to comment on some questions. McKay was expected to continue testifying on Wednesday.

Earlier in the day, an engineering expert who has done risk assessment work for the company attacked BP’s commitment to safety, its standards for drilling wells and how it responds to warnings about its operations.

Robert Bea, a University of California-Berkeley professor who was consulted by the White House commission that investigated the Deepwater Horizon explosion and Macondo well blowout and has produced several reports faulting BP and its partners for their attitude towards safety, was a crucial witness for plaintiffs suing BP.

That’s because he has an intimate knowledge of BP’s safety procedures since he was a paid consultant for the company for years before the Gulf disaster. He said he warned BP several times over the years to improve its safety procedures and culture.

Bea said BP ignored safety warnings and its own protocols before the oil spill, then issued an internal investigation report afterward that was “incomplete” because it didn’t fully analyze how management actions contributed to the disaster.

Bea said he would characterize BP’s failures in overseeing the Macondo well project as “tragic, egregious.”

“It’s a classic failure of management and leadership in BP,” Bea testified.

On Twitter: Live tweets from inside the BP oil spill trial courtroom

Bea said he had warned BP to look for problems.

“I called it being afraid,” he said. He later added, “Unfortunately, the message apparently didn’t get through.”

Plaintiffs attorneys at the civil trial over a web of litigation related to the disaster are using Bea’s testimony to hammer away at the so-called Bly report that BP issued on Sept. 8, 2010. They also want to show BP didn’t learn the lessons of past disasters involving the company, including the 2005 Texas City refinery explosion that killed 15 workers.

Bea said “the systemic management causes” of the Macondo well blowout and Deepwater Horizon rig explosion were absent from BP’s report in violation of its own process safety standards at the time.  He said “management causes are crucial to understanding” failures of complex systems.

Bea also said that while BP considered process safety a bedrock of its foundation, it did not adhere to its own standards prior to the Gulf disaster.  He said the failures extended all the way up to the board room and CEO’s office in London.

“It was exempted. Process safety was not implemented on the Deepwater Horizon project,” Bea said.

Asked about BP’s motivation for ignoring its safety standards, Bea said cost-cutting was at play. He was shown a 2009 email from BP engineer John Guide that said, “The Deepwater Horizon has embraced every dollar matters since I arrived 18 months ago. We have saved BP millions and no one had to tell us.”

Bea said the “every dollar matters” theme was embedded in BP’s mindset prior to the Gulf disaster. Bea said he specifically warned BP that “money isn’t everything” and BP should reward workers for preventing accidents as much as it rewards workers for driving profits.

In 2007, concerned his message wasn’t getting through, Bea said he told BP, “You still don’t get it. You have not implemented my recommendations. Process safety is deadly serious, and you’ve turned it into a traveling roadshow.”

On cross examination, BP lawyer Robert C. “Mike” Brock tried to show inconsistencies between Bea’s deposition in the civil case and his testimony at the trial. The exchanges between the two were combative at times.

Bea acknowledged there were some people at BP prior to Gulf disaster that he would give high marks for safety mindedness. He also said BP took a positive safety step before the disaster when its board of directors set up a safety committee.

Brock also tried to chip away at Bea’s testimony about BP’s cost-cutting mentality before the oil spill.

“Treat the money like it’s your own. That’s a good message to send, isn’t it?” Brock asked.

“Yes,” Bea responded.

Brock also got Bea to acknowledge that he is not an expert in how to drill deepwater wells and cement.

But, on the whole, Bea stood his ground on his belief that BP largely paid lip service to safety before the Gulf disaster and then dropped the ball at the most critical time.

“Statements from the top are important for the talk, but they have to be backed up by the walk,” Bea said.

One of his reports, produced Aug. 26, 2011, was admitted into evidence as his testimony began. Tuesday evening, however, BP filed an objection  to portions of the report, including references to instances of prior, alleged improper conduct by BP, and evidence of prior civil, criminal, and regulatory proceedings against BP.

Bea, a professor emeritus in civil and environmental engineering, is co-founder of the Center For Catastrophic Risk Management. He also is a former engineer at Shell Oil.

Lawyers this week also are expected to play video footage of former BP CEO Tony Hayward’s deposition in the case.

During the first phase of the trial, expected to last up to three months, U.S. District Judge Carl Barbier in New Orleans will hear evidence on causes of the blowout and will determine how to allocate fault, which may or may not include percentages of blame.

The second phase will address the amount of oil that spilled.

Barbier also is expected to determine if the disaster resulted from gross negligence. Further proceedings could determine how much in punitive damages should be assessed, and separate trials could determine damage awards for individuals and businesses that opted out of a multibillion-dollar settlement last year between BP and private parties claiming economic or health damages.

Opening statements in the trial were presented Monday.

In blistering attacks on BP’s actions, corporate culture and motivations, lawyers for the U.S. government, Gulf states, victims and the company’s partners took turns accusing the oil giant of putting money before safety and causing the disaster.

BP fired back that multiple failures led to the disaster.

The finger-pointing and strong language set the tone for the start of a civil trial over a web of litigation stemming from the the disaster some 50 miles off the coast of Louisiana.

While the prospect of a settlement is still a possibility, BP faces a heavy price if the trial doesn’t go its way. Billions of dollars are at stake for a company alleged to have cut corners to save millions.

“Money mattered more to BP than the Gulf, much more,” Alabama Attorney General Luther Strange told Barbier in his opening statement at the bench trial. “Greed devastated the Gulf.”

BP owned the well that blew out a mile beneath the sea on April 20, 2010. It was leasing from Transocean the deepwater rig that exploded and sank.

Robert Bea report on Deepwater Horizon blowout

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Read ongoing FuelFix coverage of the legal trials surrounding the Gulf of Mexico oil spill:

Judge approves $1B civil settlement for Transocean (Feb. 19)
BP’s potential oil spill liability cut by $3.4 billion (Feb. 19)
Guilty: Transocean convicted in Gulf of Mexico oil spill (Feb. 14)
BP feud with US government over Gulf oil spill heats up (Feb. 13)
BP displays new Gulf of Mexico safety system (Feb. 12)
Documents: BP well-site leaders faced earlier indictment in spill case (Feb. 8)
BP completes $2.4B sale of Texas City refinery (Feb. 1)
Guilty: BP admits to causing deaths in spill disaster (Jan. 29)
Rig victim’s widow says Gulf disaster caused ‘inferno of grief’(Jan. 11)
Government accuses BP of being evasive on Gulf spill flow rate (Dec. 28)
Judge approves BP class action settlement (Dec. 21)