The Deepwater Horizon Trial: A Headache for Obama?
Just over three years after the explosion aboard the Deepwater Horizon, Halliburton has finally decided to face the music and increase its reserves for payment of civil damages by $1 billion.
Things did not go well for them in the seven weeks of testimony just concluded in federal court in New Orleans. They were caught hiding samples of the exact cement mixture that failed, which they had been ordered by the court to preserve. They had to admit that the cement formulation used "had a low probability of success."
With Halliburton now more amenable to seeking a settlement and willing to provide cold hard cash, the prospects go way up for a settlement before the decision of the court is announced in a few months. BP's expert witnesses also scored some major points against the federal government and Transocean. So the inclination by most of the parties to sweep this unfortunate episode down the memory hole has presumably gotten much stronger.
Here is a summary of the strategic situation for those who might have been inclined to fight on. There are only three defendants left: BP, Transocean, and Halliburton.
After withstanding three years of accusations, BP has now put forth some impressive expert witnesses for the defense. The defense always goes last, and BP saved their best for last. BP had been forthright early on that it bore much of the responsibility and very prominently created a $20-billion compensation fund way back in 2010. BP's people also put forth the Bly Report detailing their understanding of the causes of the blowout. Before the trial began, BP pled guilty to 14 criminal charges and the payment of a $4-billion fine, the "largest criminal payment in U.S. history." It seems that BP got the message early: oil spills are unacceptable.
Transocean was more reluctant to accept any of the blame, especially in light of the indemnity clause in their contract with BP to serve as the latter's drilling contractor. But Transocean also eventually fessed up with a detailed report of their perspective on the causes of the blowout. They pled guilty to a single count of violating the Clean Water Act and agreed to pay the second-largest fine ever, $400 million, and accept 5 years on probation. "The company also said it had paid more than $140 million in salaries and benefits, medical benefits and legal settlements since the accident." While it is not apparent to those not in the know, those sympathetic widows and orphans you saw on TV got multi-million-dollar settlements, paid for by Transocean.
Until this week, Halliburton has been the last holdout among the defendants. Now that Halliburton's people are actively looking for a settlement, the question becomes whether the plaintiffs are ready to make a final deal.
The primary plaintiff is the Department of Justice (DoJ). And judging by their bluster, one might be inclined to think they would battle for every dime in fines. But their position for the second phase of the trial is weak. Until now, the DoJ has been on offense. The second phase of the trial will deal with the subsea intervention and spill containment effort. That was run by the National Incident Command under Admiral Thad Allen, with input from the Scientific Advisory team under Steven Chu and the Flow Rate Technical Group under Marcia McNutt (with clear links all the way to the White House). Remember President Obama holding forth at a press conference about how he had, based on the advice of his daughter Malia, ordered everyone to plug the damn hole while he thought about the issue night and day?
If there is one overriding imperative at the Obama White House, it is to never get caught bearing direct responsibility for anything unpopular. And an oil spill that the administration itself has estimated at 5 million barrels is indeed very, very unpopular. The president's reputation for "leading from behind" has become firmly established as the conventional wisdom. Forcing the defendants to go to trial in the intervention and containment stage would put the onus squarely on the White House. As such, it is exactly the kind of news that you will not find in the media. How many stories have you seen about Phase One of this trial? It is not as if there was nothing newsworthy.
Here are a few bullet points about the news that's not fit to print in the New York Times.
- The blowout preventer was capable of successfully shutting in the well -- and would have done so, if not for the maintenance failures of Transocean in allowing an old, out-of-date battery to go dead in one control pod and having two relays mis-wired in the other. The relays were wired in opposite polarity rather than working together. A simple analogy would be to consider the effect on a flashlight if you installed one battery right-side-up and the other upside-down, rather than both being right-side-up. It won't work. When the explosions cut off the electrical and hydraulic connections to the blowout preventer, its automatic "deadman" function should have closed the blind shear ram without human intervention and sealed in the well. If not for these two maintenance deficiencies, there would have been no spill at all from the wellhead.
- A BP expert witness, Andrew Mitchell, made the point that master of the Deepwater Horizon saw drilling mud raining down on the deck of his ship several minutes before the explosions. On his bridge was a control panel for the Emergency Disconnect System with a prominent "big red button." Had he recognized that his ship was in deadly peril and pushed the button before the explosion, the signal would have traveled down those electrical connections to the blowout preventer to separate the riser (and consequently the ship) from the wellhead, and the automatic Autoshear function would have activated the blind shear ram and shut in the well. How should he have known that the situation was already out of control? Because the operation they were just finishing was intended to "displace the riser" with seawater. According to the plan, the top of the drilling mud in the well should have been at a depth of 8,367 feet, and the oil and gas should have been below the bottom of the shoe track at over 18,000 feet. In actuality, there was mud spewing out the top of the well, and the oil and gas were already above the blowout preventer at a depth of 5,000 feet. The mud was more than 8,000 feet higher than where it was supposed to be, and the oil and gas was over 13,000 feet above where they were supposed to be. Transocean was in charge of well control, and their men in the drill shack were unreactive until it was much too late. They paid for their inattention with their lives.
- The blind shear ram (BSR) was capable of cutting the drill pipe centered within it until the traveling block failed about 25 minutes after the first explosion due to the extreme heat of the fire. When this support holding up the drill pipe failed, the pipe had been firmly clamped in place by the pipe ram below the blind shear ram. The pipe ram took the weight of the drill string above it acting downward under the force of gravity. Less than a second later, the traveling block impacted the top end of the drill pipe with a massive hammer blow. Any carpenter who has ever bent a nail understands what happened then: the drill pipe bent against the inside of the cavity within the blowout preventer. The pipe was way off-center, and the blind shear ram could no longer make a clean cut. When this function was finally activated by an intervention with a Remotely Operated Vehicle (ROV), mere hours before the rig sank on April 22, 2010, the BSR made a ragged cut and stopped short of the fully closed position. That caused it to leak until July 15, 2010. (See the full details here.)
There is plenty of blame to go around. Will the DoJ risk putting the government's reputation on the line by persisting, or will they settle? If they do not choose to push this down the memory hole very soon, they will be facing the first criminal trials against BP employees Kurt Mix and David Rainey over the dispute about the size of the spill. BP has consistently argued that the government overestimated to flow. The DoJ tried to discredit these BP employees by bringing charges against them. Now Kurt Mix's trial is due to start June 10, 2013. So the DoJ has only about seven weeks to make this go away before the tables get turned around. The spectacle of a BP employee being tried under criminal charges would be a media circus perfect for the 24/7 news cycle -- except Mix's attorney is loaded for bear!
The AP reports:
Mix's lawyers also want copies of transcripts for the grand jury proceedings that produced a new indictment against their client on March 20. The new indictment added allegations that Mix deleted about 40 voicemails from a supervisor and roughly 15 voicemails from a BP contractor.
Stroz Friedberg LLC inspected Mix's phone for the Justice Department but could recover only a handful of 346 voicemails that callers left between April 20, 2010 -- the date of BP's deadly Deepwater Horizon rig explosion -- and Aug. 20, 2011.
Stroz Friedberg's report demonstrates the farcical nature of the newly-minted allegation that Kurt Mix 'corruptly' deleted voicemails from his iPhone," Mix's lawyers wrote. "Stroz Friedberg's findings not only reveal a complete absence of evidence for the new voicemail-related allegations, but also illuminate the distinct possibility that the original and superseding indictments against Mix were the products of a structurally defective grand jury proceeding."
Mix's attorneys accuse prosecutors of drafting the new indictment to imply "something nefarious" about the alleged voicemail deletions.
"The superseding indictment not only fails to mention that AT&T -- and not Kurt Mix -- might have been responsible for as many as 253 of the 346 voicemail deletions, but it also misleadingly suggests through use of the passive voice ("were deleted") that Kurt Mix was the culprit behind those deletions," they wrote.
So Obama faces a major dilemma: keep trying to collect big fines to fund the ravenous government maw, or announce a settlement late on a Friday afternoon and hope no one notices. The date of that Obama press conference, May 27, 2010, is not coincidentally exactly the same date on which Kurt Mix was busy trying to "plug the damn hole." It is the same day that the offshore drilling moratorium was written during the wee hours of the morning, while BP tried to stop the flow of oil until ordered to stop by Steven Chu. Does Obama really want the drilling moratorium back on the prime-time network news? He'll get it, if he persists in trying to prosecute Kurt Mix.
There seems to be a lot of news that does not fit the administration/media template! But you can keep reading all about it here on The American Thinker.
Bruce Thompson wrote the first publicly available Management of Change document detailing precisely how and why to perform the static kill operation, which permanently sealed the Macondo well in early August 2010.