Houston’s Black Elk Energy facing criminal charges for fatal Gulf explosion

WASHINGTON — Federal prosecutors have filed criminal charges against Black Elk Energy, accusing the Houston-based company of safety lapses that led to a fatal explosion at one of its Gulf of Mexico production platforms three years ago.

The Nov. 16, 2012 blast killed three Filipino construction workers and injured several others on the platform about 20 miles south of Grand Isle, La.

In the six-count criminal complaint filed with a federal court in New Orleans, U.S. Attorney Kenneth Allen Polite Jr. says Black Elk Energy violated five offshore safety regulations by failing to ensure a wet oil tank on the platform was clear of flammable gases before workers began welding on a pipe that led to it.

When a construction crew started the work, vapors from the wet oil tank ignited, setting off a series of explosions in three oil tanks on the platform. Two tanks were blown into the Gulf of Mexico. Another careened into the platform crane, destroying it. Oil rained down on the lower deck of the platform, where other crews were working.

Approximately 480 barrels of oil and water also are alleged to have negligently been spilled into the Gulf of Mexico as a result, providing the basis for a Clean Water Act violation that carries a potential fine of $528,000.

Black Elk Energy is also accused of knowingly and willfully violating federal regulations that require equipment containing any hydrocarbons be moved at least 35 feet away from any welding and demand that any piping, tanks or other vessels that have contained flammable substances be rendered inert and determined safe before the activity can begin.

Other charges under the Outer Continental Shelf Lands Act involve failing to inspect the work area, failure to perform in a safe and workmanlike manner and working without written authorization — a “hot work” permit before welding, grinding and other activities that can produce sparks.

A Black Elk Energy spokesman and a lawyer for the firm did not return calls seeking comment.

The complaint names Black Elk Energy as the sole defendant. Although other charges are possible in connection with the explosion, most federal regulations governing offshore oil and gas development put the onus for following them on operators, and not the contractors that may serve under them.

Criminal charges in connection with offshore accidents are relatively rare. The most significant recent examples stem from the Deepwater Horizon disaster, as the United States charged BP and drilling contractor Transocean in connection with the 2010 accident.

In May, a Houston man was sentenced to a year of probation and 40 hours of community service for making false statements about the testing of emergency equipment known as a blowout preventer on a Gulf platform.

And in 2013, W&T Offshore was ordered to pay a $1 million fine after pleading guilty to criminal Clean Water Act charges that stemmed from a contractor tampering with water samples to make them appear cleaner than they were.

Most safety-related violations of the Outer Continental Shelf Lands Act that governs drilling and energy production in federal waters result in civil fines levied by the Interior Department’s Bureau of Safety and Environmental Enforcement.

The charges against Black Elk spring from a federal investigation led by the safety bureau and the Coast Guard that concluded in November 2013 that the company and its contractors did not follow “proper safety precautions” and that workers worried about losing their jobs did not call a halt to captivities “despite apparent anomalies.”

Read more: Feds blame poor decisions and communication for lethal blast

For instance, before the lethal blast, workers conducted a cold cut on the pipe that led to the wet oil tank, but when liquids spilled out, no one halted the activity. And instead of producing original hot-work permits, a subcontractor new to the process copied the documents from previous days, without conducting a fresh assessment of potential hazards.

A third-party investigation of the explosion released by Black Elk effectively pinned blame on the web of contractors that worked on the facility, including Wood Group, which oversaw activities as the “person in charge;” Grand Isle Shipyard, which provided construction workers; Compass, which coordinated companies working at the site; and DNR Offshore Crewing Services, which was contracted by Grand Isle Shipyard to recruit workers from the Philippines.

The three killed workers were employed by Grand Isle Shipyard.

Related story: Houston’s Black Elk Energy had history of violations before fatal blast

Several victims have filed lawsuits against the company as well, with a trial in their consolidated cases set to begin next June in New Orleans.

One of them, Filipino pipe fitter Renato Dominguez, remains under medical care in Houston. Dominguez’s attorney, Jason Itkin, said he still needs skin grafts and other treatments to treat severe burns from the Black Elk blast.

Several executives at Black Elk Energy in 2012 have since left the firm.

Former CEO John Hoffman left late last year, to start a new company, P3 Petroleum.

The company also sold off a host of its Gulf of Mexico assets in 2014, partly to pay off debt and mounting costs tied to the 2012 explosion.