US gov't prepares to release BP oil spill report

[September 14, 2011]  SAN DIEGO (AP) -- A key federal report into what caused the worst offshore oil spill in U.S. history was being readied for release as early as Wednesday amid revelations that BP made critical mistakes on the well and failed to tell its partners and the U.S. government when it realized it.

A investigation team of the U.S. Coast Guard and the agency that regulates offshore drilling held hearings over the course of a year following the April 20, 2010, Deepwater Horizon tragedy. The Coast Guard-Bureau of Ocean Energy Management Regulation and Enforcement investigation has been among the most exhaustive.

Other investigations have faulted misreadings of key data, the failure of the blowout preventer to stop the flow of oil to the sea, and other shortcomings by executives, engineers and rig crew members.

Meanwhile, interviews and documents obtained by The Associated Press show a BP scientist identified a previously unreported deposit of flammable gas that could have played a role in the Gulf of Mexico oil spill, but the oil giant failed to divulge the finding to government investigators for as long as a year.

While engineering experts differ on the extent to which the 2-foot-wide swath of gas-bearing sands helped cause the disaster, the finding raises the specter of further legal and financial troubles for BP. It also could raise the stakes in the multibillion-dollar court battle between the companies involved.

"This is a critical factor, where the hydrocarbons are found," Rice University engineering professor Satish Nagarajaiah said. "I think further studies are needed to determine where this exactly was and what response was initiated by BP if they knew this fact."

Two months ago, BP petrophysicist Galina Skripnikova told attorneys involved in the oil spill litigation that there appeared to be a zone of gas more than 300 feet above where BP told its contractors and regulators with the then-Minerals Management Service the shallowest zone was located.

The depth of the oil and gas is a critical parameter in drilling because it determines how much cement a company needs to pump to seal a well. Federal regulations require the top of the cement to be 500 feet above the shallowest zone holding hydrocarbons, meaning BP's cement job was potentially well below where it should have been.

Cement contractor Halliburton recently filed a lawsuit against BP asserting that Skripnikova's statements prove the oil giant knew about the shallower gas before the explosion and should have sought a new cement and well design. BP has denied the allegations.

Skripnikova's job involved analyzing data from BP's Macondo well to determine the depth and characteristics of oil and gas deposits, which in turn is used in a process called temporary abandonment, when wells are sealed so they can be used for production later.

Based on the initial information, regulators approved BP's well sealing plan, which called for placing the top of the cement at roughly 17,300 feet below the surface of the water. The cement was pumped April 19, the day before the explosion. But Skripnikova said that after she flew back from the rig, she and others re-examined the analysis, and on the day of the explosion she identified the shallower gas zone. That would have meant the cement should have been placed at just under 17,000 feet below the surface of the water.

She said she did not relay that information to drilling engineers on the Deepwater Horizon and warn them to hold off proceeding with the abandonment. She suggested in her deposition that she thought the information would be passed up the chain. BP was already $60 million over budget and stopping operations at that point and coming up with a new cement design would have meant millions of extra dollars in costs.

Later in the deposition, Skripnikova backtracked and said the new analysis was not discussed among her team until the day after the explosion.

Skripnikova was never questioned at public hearings before the presidentially appointed oil spill commission. Nor was she questioned before the joint U.S. Coast Guard-BOEMRE investigative panel. Her name and the information she has is not in BP's internal investigation report released last September.

BP spokesman Scott Dean insisted in a statement Tuesday to AP that when assessing top-of-cement requirements before the accident, BP did not identify the zone in question as bearing oil or gas. Dean said "BP has provided material concerning this zone to the parties in the multidistrict litigation and to government investigators."

BP provided a letter late Tuesday it said it sent the oil spill commission on Oct. 30, 2010, six months after the explosion. The letter said BP would be sending the commission draft reports the company prepared and more detailed studies to help inform its efforts to stop the flow of oil to the sea. The letter does not detail what the reports said, what data was provided, or whether the data was the same as what Skripnikova discussed in her deposition.

And an investigator with the presidential oil spill commission, which released a report on the disaster months ago and disbanded in January, told AP that BP did not specifically reveal the higher probable gas zone during the course of the panel's investigation. The investigator, who spoke on condition of anonymity because he was not authorized to speak publicly, said an independent petrophysicist reviewed the data available to the panel and did not express concern about gas being at a shallower depth.

[Associated Press; By HARRY R. WEBER and DINA CAPPIELLO]

Weber reported from Atlanta. Follow him at http://www.facebook.com/HarryRWeberAP

Cappiello reported from Washington. Follow her at http://twitter.com/dinacappiello.

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