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February 27, 2013

BP executive testifies at Gulf oil spill trial

NEW ORLEANS — A high-ranking BP executive testified Tuesday that the London-based oil giant and its contractors share the responsibility for preventing blowouts like the one that killed 11 workers and spawned the nation’s worst offshore oil spill in 2010.

Lamar McKay, who was president of BP America at the time of the Deepwater Horizon disaster, is the first BP executive to testify at a federal trial designed to identify the causes of BP’s Macondo well blowout and assign percentages of blame to the companies involved.

Rig owner Transocean and cement contractor Halliburton also are defendants at the trial, which started Monday.

A plaintiffs’ attorney pressed McKay to agree with him that BP bore ultimate responsibility for the blowout, but McKay insisted that managing the hazards of deepwater drilling are a “team effort.”

“I think that’s a shared responsibility, to manage the safety and the risk,” said McKay, now chief executive of BP’s Upstream unit.  “Sometimes contractors manage that risk. Sometimes we do. Most of the time it’s a team effort.”

McKay said the rig explosion and spill in the Gulf of Mexico was a “tragic accident” resulting from a “risk that was identified.”

This isn’t the first time McKay has testified under oath about the spill. He appeared before Congress less than a month after the deadly rig explosion.

U.S. District Judge Carl Barbier is hearing the case without a jury. Barring a settlement, Barbier will decide how much more money BP and other companies owe for their roles in the disaster.

McKay’s testimony followed that of an expert witness for people and businesses suing the company. University of California-Berkeley engineering professor Robert Bea testified that BP PLC didn’t implement a 2-year-old safety management program on the rig that exploded in the Gulf of Mexico on April 20, 2010.

“It’s a classic failure of management and leadership in BP,” said Bea, a former BP consultant who also investigated the 1989 Exxon Valdez spill and New Orleans levee breaches after Hurricane Katrina in 2005.

The London-based company has said its “Operating Management System” was designed to drive a rigorous and systematic approach to safety and risk management. During cross-examination by a BP lawyer, Bea said the company made “significant efforts” to improve safety management as early as 2003.

However, BP only implemented its new safety plan at just one of the seven rigs the company owned or leased in the Gulf at the time of the disaster.

Bea said it was “tragic” and “egregious” that BP didn’t apply its own safety program to the Deepwater Horizon before the Macondo well blowout triggered the explosion that killed 11 workers and spawned the massive spill. Transocean owned the rig; BP leased it.

BP lawyer Mike Brock said the company allows contractors like Transocean to take the primary responsibility for the safety of rig operations as long as the contractor’s safety system is compatible with BP’s — an arrangement that Brock suggested is a standard industry practice.

As he questioned Bea, Brock also recited a long list of steps that BP took to improve safety, citing them as evidence that the company wasn’t “cutting corners in the area of safety.”

A plaintiffs’ lawyer showed Bea a transcript of a deposition of Tony Hayward, who was BP’s CEO at the time of the disaster. Hayward was asked if the deadly April 20, 2010, blowout could have been averted if BP had implemented the safety management program in the Gulf.

“There is possible potential,” Hayward responded. “Undoubtedly.”

Bea said BP’s “culture of every dollar counts” was reflected in a May 2009 email sent by BP well team leader John Guide: “The DW Horizon embraced every dollar matters since I arrived 18 months ago,” Guide wrote. “We have saved BP millions and no one had to tell us.”

“Financially, BP had the resources to effectively put into place a process safety system that could have prevented the Macondo disaster,” Bea testified.

Just last year, Bea testified for plaintiffs who sued the U.S. Army Corps of Engineers over broken levees in New Orleans following Hurricane Katrina.

BP has already pleaded guilty to manslaughter and other criminal charges and has racked up more than $24 billion in spill-related expenses, including cleanup costs, compensation for businesses and individuals, and $4 billion in criminal penalties.

One of the biggest questions facing Barbier, who is hearing the case without a jury, is whether BP acted with gross negligence.

Under the Clean Water Act, a polluter can be forced to pay a minimum of $1,100 per barrel of spilled oil; the fines nearly quadruple to about $4,300 a barrel for companies found grossly negligent, meaning BP could be on the hook for nearly $18 billion.

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