Unsealed BP report could slash Gulf oil spill penalties by billions

Oil gushes from BP's Macondo well in the Gulf of Mexico on July 12, 2010. (AP Photo/BP)
Oil gushes from BP’s Macondo well in the Gulf of Mexico on July 12, 2010. (AP Photo/BP)

A London petroleum engineering professor hired by BP claims the U.S. government overestimated by 50 percent the amount of oil that spewed from the company’s undersea Gulf of Mexico well in 2010. The finding could cut the maximum Clean Water Act penalties BP faces by up to $7 billion.

Previously sealed court records reviewed by the Houston Chronicle provide for the first time in more than three years a detailed accounting of BP’s defense to the government’s official flow estimate.

The issue will be the main bone of contention during the second phase of a civil trial in federal court in New Orleans that is set to begin in September.

BP has long asserted that in a rush to punish the British oil giant for the worst offshore oil spill in U.S. history, the American government botched its flow rate estimates, which were calculated by a team of scientists from all over the country. But, up to this point, the company’s own calculations had never been made public. BP had only said previously that it believed the government’s calculation was overestimated by at least 20 percent.

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In a 209-page report (see below) prepared last month, Martin J. Blunt, a professor in Imperial College’s Department of Earth Science and Engineering, said he calculated that 3.26 million barrels of oil were released from BP’s Macondo well a mile beneath the sea off the coast of Louisiana. The government estimates that 4.9 million barrels were discharged.

Both figures include the 800,000 barrels of oil that BP and the U.S. government agree was collected at the wellhead and didn’t enter  the sea. Earlier this year, the government agreed not to count that oil  in calculating the penalties it seeks against BP.

By that reckoning, the  government estimates that 4.1 million barrels of oil entered the Gulf, and Blunt’s estimate is 2.46 million barrels.

Based on the government’s estimate, BP would face up to $17.6 billion in Clean Water Act penalties, if U.S. District Judge Carl Barbier finds that the company was grossly negligent. He has not yet ruled on that key issue. Based on Blunt’s calculation, the maximum penalty would be $10.6 billion.

Blunt said in his report that U.S. government experts switched the method they used to calculate the flow rate, resulting in the higher, and he believes erroneous, total.

The dispute involves compressibility, which determines how much oil is released from a reservoir as  the pressure drops.

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Blunt said the main difference between his estimate and those of several U.S. experts is that the government experts “double the compressibility from the value measured on Macondo rock samples.”

Blunt said that is a switch from the approach that one of the U.S. experts used when he first evaluated Macondo oil flow for the U.S. Flow Rate Technical Group in 2010. Blunt said the U.S. expert initially took a measured value for rock compressibility, as Blunt did in his report.

Blunt said that if U.S. experts used the same rock compressibility as he did, they would obtain roughly the same value for cumulative flow as he did.

The BP expert said that the U.S. experts have not provided a scientific justification for their decision to double the rock compressibility from the measured values.

“We will see that this has been a repeated problem in the work of the government experts,” Blunt wrote.

Blunt also said that U.S. investigators disregarded vital pieces of experimental evidence without justification. “Not all of their errors were identical, yet they arrived at the same final answer,” he asserted.

“There is a choice: either accept their calculation of (nearly) 5 million barrels, despite the lack of any scientific explanation of why the measurements are wrong, or perform a calculation consistent with the data and arrive at a lower value,” Blunt concluded. “I have chosen the latter approach.”

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Justice Department lawyers said in a court filing Thursday — which includes a copy of Blunt’s report — that they want to call at trial rebuttal experts who will challenge Blunt’s conclusions. They said that some of BP’s own internal experts at the time of the spill calculated higher rock compressibility values than Blunt is relying on now.

BP owned the undersea well that blew out 50 miles off the Louisiana coast on April 20, 2010, causing an explosion on the Transocean-owned Deepwater Horizon rig that killed 11 men. It took nearly three months to cap the runaway well.

Read Blunt’s report, in which he calculates 3.26 million barrels of oil were released from BP’s Macondo well in the Gulf of Mexico in 2010, far less than the government’s estimate of 4.9 million barrels. Part 2 of the report is further below: