Panel Says Low Estimates of Gulf Spill Hurt Response

WASHINGTON (Dow Jones Newswires), Nov. 22, 2010

The inability of BP and government officials to accurately gauge the amount of oil flowing from the blown-out Gulf of Mexico well contributed to the failure of an early effort to stop the leak, according to staffers on a presidential panel investigating the disaster.

The report suggested that if BP knew the well was leaking as much as 62,000 barrels of oil a day when it tried the "top kill" in May, about a month after the spill began, the procedure would have been redesigned or scrapped altogether. BP conducted the top kill, which involved pumping drilling mud into the top of the leaking well, under the mistaken belief that oil was leaking at a rate of about 5,000 barrels a day.

Obama administration officials have insisted that the initial low estimates had no effect on the response to the spill. But investigators for the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling concluded that the 5,000-barrel-a-day estimate "appears to have impeded" the top kill.

"Because BP did not pump mud into the well at high enough rates to counter the actual flow, the hydrocarbons flowing from the well ejected the mud back up," commission investigators found.

The White House, Energy Department and BP declined to comment. A call to retired Coast Guard Adm. Thad Allen, who was put in charge of the response to the oil spill, wasn't immediately returned.

The spill commission's staff's latest report finds that the oil industry wasn't prepared to deal with a deepwater blowout like the April 20 explosion that sank the Deepwater Horizon oil rig and killed 11 people. The commission staff also finds that the government was "similarly unprepared to provide meaningful supervision" of the effort to contain the disaster.

BP was eventually able to build and deploy a new system for containing the oil, and the government did provide effective oversight, the commission staff found. "Those impressive efforts, however, were made necessary by the failure to anticipate a subsea blowout in the first place," the report states.

The commission's latest report portrays a turbulent relationship between government officials and BP managers during the crisis. Conference calls involving administration officials and industry experts "were fairly disorganized with no pre-set agenda and people talking over one another," the investigators found.

One industry participant described an instance in which he learned he had been talking on a call with U.S. Energy Secretary Steven Chu without realizing it.

The spill commission staff report raises questions about the offshore drilling industry's capacity for handling a substantial offshore spill. BP, "one of the world's largest companies...still needed 87 days" to stop the gusher, the commission investigators said. Not all oil companies that drill in deepwater have BP's resources.

The government should require other oil companies "to demonstrate the capacity to respond to a disaster of this magnitude," whether through bonding or insurance requirements or by requiring companies that drill in deep water to belong to industry consortia focused on well control, the commission staff recommends.

That finding could be helpful to the Obama administration, which faces pressure from the oil industry and some Gulf Coast lawmakers to relax what some industry executives say is a de facto moratorium on new offshore drilling permits.

Interior Secretary Ken Salazar and other administration officials met with industry representatives in Louisiana Monday to discuss new safety requirements that the administration has imposed on drilling in the Gulf.

Industry officials came away disappointed that the federal government offered no commitments to speed up the approval of drilling permits, as had been hoped after their champion, Sen. Mary Landrieu (D., La.), said she had won unspecified commitments in exchange for yielding and allowing the White House budget nominee to be confirmed.

The spill commission investigators, in their latest report, shed some additional light on the sometimes tense interactions of Obama administration officials and BP executives as they struggled to stop the undersea gusher flowing from BP's blown out well.

Federal officials began to assert themselves more forcefully after the failure of BP's "top kill," the report said. On the night of May 28, Lars Herbst, the director of the Gulf of Mexico region for the Minerals Management Service, and Coast Guard Adm. Kevin Cook entered a BP meeting to analyze the top kill and stated that they had a right to be present--surprising BP workers. Previously, government personnel hadn't insisted on joining these meetings, some of which took place behind closed doors.

"Asserting the right to be present for BP's top kill analysis was a turning point for the government team," the report found. "The government significantly increased its oversight of the containment effort."

An unnamed senior government official told commission investigators that BP's attitude before the government stepped up its supervision was "hope for the best, plan for the best, expect the best." BP personnel felt that the government science team's input slowed the containment effort.

The tension escalated after BP installed a "capping stack" to seal the well. By the time the capping stack was installed, responders were working with newer estimates that reflected a much higher spill rate. But some government officials were anxious that the stack would put too much pressure on the well, creating a new rupture, the report found.

Officials agreed to wait another day for additional test results. On July 15, during that 24-hour waiting period, a U.S. Geological Survey employee used the camera on his cellphone to take a picture of the pressure readings, and sent it to a co-worker, Paul Hsieh, in Menlo Park, Calif.

Mr. Hsieh "apparently relied on the data in the single cellular phone picture" to determine that there might not be a significant leak--backing BP's view.

"Unrealized at the time, a critical point had passed: BP would not have to reopen the stack, and oil had finally stopped leaking from the Macondo well into the Gulf," the paper said.

Copyright (c) 2010 Dow Jones & Company, Inc.