Feds charge BP with new oil spill violations

The federal government today issued a second set of citations to BP accusing the oil company of violating safety and environmental regulations while drilling the Macondo well that fatally blew out last year.

BP said it would appeal the new notices, which zeroed in on alleged problems with the company’s management of the well, including an accusation that the company continued drilling even when risks jumped outside government-approved boundaries.

The “incident of non compliance” notifications sent to the firm today build on earlier allegations that BP, Halliburton and Transocean together ran afoul of 15 offshore regulations in drilling, designing and cementing the well last year.

The three companies already face up to $45.7 million in fines for those earlier citations, which were issued in October and based on the conclusions of a federal probe of the Deepwater Horizon disaster.

Today’s citations go further. The Bureau of Safety and Environmental Enforcement issued the newest violation notices to BP today after taking a closer look at how the Macondo well was drilled.

Bureau director James Watson said the new citations were a result of that deeper dive.

“Further review of the evidence demonstrated additional regulatory violations by BP in its drilling and abandonment operations at the Macondo well,” Watson said in a statement.

“Our federal regulations exist to ensure safe and environmentally-responsible activities,” Watson added. “We will continue to be vigilant in enforcing those regulations.”

The safety bureau today sent BP five citations and accused the firm of violating two different regulations governing work on the outer continental shelf (in the case of one of those regulations, the violation is alleged to have occurred four times, in different sections of the Macondo well).

According to the safety bureau, BP violated a rule requiring the company to conduct an accurate pressure integrity test at the 13-5/8” liner shoe. The bureau also argues that BP violated a separate regulation four times, by failing to suspend drilling operations at the well when work slipped outside the safe drilling margin that had been identified in the company’s government-approved permit to drill.

That drilling margin represents the difference between the pore pressure exerted by oil and gas in the underground formation and the countervailing weight or pressure of drilling fluids at the site.

BP said it would challenge the violations before the administrative Interior Board of Land Appeals.

“The issues raised in today’s INCs regarding drilling margins and related integrity testing played no causal role in the accident,” BP spokesman Scott Dean said in a statement. “BP intends to appeal these INCs, as well as those issued several weeks ago.”

Each violation carries a penalty of up to $35,000 per day per incident. In the case of the oil spill, violations may have covered just one day or up to 87 days — the time crude was gushing into the Gulf — creating a maximum potential tab per incident of $3.05 million.

The new violations could add anywhere from $175,000 to $15.23 million to BP’s tab, on top of the $21.32 million in penalties the company was facing from the citations issued earlier. With today’s action, the government is ratcheting up BP’s potential civil penalties for the alleged offshore drilling violations to $36.6 million.

Rep. Ed Markey, D-Mass., said the potential fines are a drop in the bucket for companies such as BP that can spend $1 million daily renting a rig to drill in the deep waters of the Gulf of Mexico.

“These new violations reinforce BP’s culpability for their oil spill, but it is just a drop in the ocean of fines that the company still must pay to the American people for the worst environmental disaster in our history,” Markey said. “Today’s fines are unfortunately nothing more than a slap on the wrist for an oil giant like BP — the equivalent of a parking ticket on a Bentley.”

The safety bureau’s sanctions are separate from fines and penalties expected under the Clean Water Act, which could reach $21 billion for BP, based on estimates that 4.9 million barrels of oil gushed into the Gulf after its Macondo well blew out on April 20, 2010. The failure triggered a lethal explosion on board Transocean’s Deepwater Horizon drilling rig, killed 11 workers and unleashed the worst oil spill in U.S. history. Halliburton was responsible for cementing work at the site.

The incidents of non compliance kick off a long process of assessing civil fines.