BP oil spill probe did not address cost overruns -exec

NEW ORLEANS Thu Feb 28, 2013 12:53pm EST

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NEW ORLEANS Feb 28 (Reuters) - BP Plc's investigation of its 2010 Gulf of Mexico well rupture and oil spill did not address cost overruns, the executive who ran the probe testified on Thursday.

Plaintiffs argue that concerns over expenditure led crew members to rush the wrapup of the drilling.

"I don't recall it being part of our discussions," Mark Bly, BP's global head of safety and operational risk, said when asked about cost overruns at the Macondo well.

On the third day of testimony in the federal civil trial centered on the disaster, plaintiffs lawyer Paul Sterbcow noted the Macondo operation was $60 million over budget and more than a month past schedule at a cost of $1 million per day.

But Bly, who led BP's internal probe of the disaster in a report bearing his name, said he and the then-chief executive, Tony Hayward, set the scope of the probe three days after the explosion in April 2010, and did not include budgetary issues.

The plaintiffs in the case have argued BP put profits above safety, while noted forensic engineer Bob Bea, co-founder of the Center for Catastrophic Risk Management at the University of California, Berkeley, testified this week that there was "ample evidence of intense pressure" from BP to save time and money.

Bly, who said he plans to retire in about two months, was promoted to serve on the London-based oil company's executive management committee shortly after CEO Bob Dudley took the helm in October 2010.

He went through his report's conclusions in the case, in which the U.S. Justice Department, Gulf Coast states and plaintiffs are suing well operator BP, rig owner Transocean Ltd , well cement provider Halliburton Co and others.

BP's report spread the blame for mistakes that led to the well rupture and explosion, which killed 11 men and let more than 4 million barrels of crude oil foul the Gulf.

But the report laid most of the blame on Transocean, setting the tone for finger-pointing among the companies.

Allocation of blame is one of two focuses in this first phase of the non-jury trial before U.S. District Judge Carl Barbier, which will run for months if it does not settle first. The other focus is severity of negligence among the companies.

Bly said BP and Transocean crews missed critical signs of well pressure changes that signaled the well was not under control until it was too late to stop the blowout. If pressure in the oil reservoir deep under the seabed is higher than that in the well, oil and gas will flow upward.

Bly said BP's well site leader and Transocean crews misinterpreted a pressure test that showed that change, as well as later pressure changes, losing key reaction time.

"That risk was neither recognized or addressed until it was too late?" Sterbcow asked.

"There were signs that the well was flowing," Bly said. "It didn't seem to be recognized or reacted to."

The case is In re: Oil Spill by the Oil Rig "Deepwater Horizon" in the Gulf of Mexico, on April 20, 2010, No. 10-md-02179, in the U.S. District Court, Eastern District of Louisiana.

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