By Kathy Finn
NEW ORLEANS, March 19 The chief executive of
Transocean Ltd, owner of the rig destroyed after BP
Plc's Macondo well blew out in 2010, testified on Tuesday
that his workers made mistakes that day, but were not
responsible for overall safety at the site.
Steven Newman, who had been CEO for less than two months
when the blowout occurred, was emotional at times as he spoke of
the company's responsibilities prior to the accident that killed
11 people and caused the worst U.S. offshore oil spill.
"We acknowledge that we should have done more," he said
under questioning by a lawyer for Transocean, in the fourth week
of a civil trial to determine blame for the spill.
Newman's voice shook as he spoke of the April 20, 1010
disaster on the Deepwater Horizon rig, but he denied that
Transocean cut corners when it came to safety procedures.
The Justice Department, the U.S. Gulf states affected and
other plaintiffs are suing BP, Transocean and other companies
for economic and environmental damages related to the spill. BP
accepts its role in the accident, but believes Transocean and
well-cementing provider Halliburton Co share the blame.
Newman said Transocean was in charge of safely performing
its own operations on the rig, but that overall responsibility
for safety at the well site rested solely with BP.
In the same New Orleans federal court two weeks ago before
U.S. District Judge Carl Barbier, a Transocean worker who was on
the Deepwater Horizon during the blowout acknowledged there was
a misinterpretation of trouble signs beforehand.
Newman discussed how Transocean responds to potentially
dangerous situations such as a "kick," which results when
unexpected pressure forces fluids upward through the well.
Company policy states a well should be shut in if a kick pushes
as much as 20 barrels of hydrocarbons through the drill hole.
The kick size may be a key point in finger-pointing between
Transocean and BP. In testimony on Monday, well control expert
Calvin Barnwell, who reviewed the incident for Transocean, said
about 39 barrels of fluid pushed up through the Macondo well in
the early afternoon on the day of the explosion.
Asked by a BP lawyer if he agreed BP was "entitled to rely
on Transocean" to shut in the well after the 39-barrel kick,
Barnwell answered yes.
Transocean has pleaded guilty to federal charges connected
with Clean Water Act violations and agreed to pay $1.4 billion
in criminal and civil fines and penalties.
As for the civil case before Barbier, the companies must
show any mistakes do not meet the legal definition of gross
negligence required for the highest amount of damages. BP has
already spent or committed $37 billion on cleanup, restoration,
payouts, settlements and fines.
Barbier scheduled a hearing for April 5 to consider BP's
objections to some of the "fictitious" and "absurd" oil spill
compensation claims addressed through a claims facility set up
On top of that, liabilities could stretch into the tens of
billions of dollars if Barbier determines BP or other defendants
were grossly negligent.
Establishing management responsibility could be important in
proving gross negligence. Robert Cunningham, a lawyer for the
plaintiffs, finished grilling of Newman by asking: "So you have
identified no management failures that caused or contributed to
"No," Newman said.
Newman has been well compensated for Transocean's very
public struggles over the past three years. According to a
company filing on Monday, his total 2012 pay package of $14
million is more than double the level of 2010, lifted by stock
and option awards and non-equity incentives.
Transocean shares, which traded in the $80 range prior to
Macondo, hit a seven-year low of $38.22 in late 2011, and have
staged a relatively dramatic recovery from that trough since
then. The stock closed at $52.22 on Tuesday.
Newman was on the stand in New Orlesan a day after
presenting at the Howard Weil energy conference across town,
where much of the talk was about the dramatic post-Macondo
revival of drilling in the deepest waters of the Gulf of Mexico
- described as the world's fastest-growing deepwater market.
"If a typical deepwater well is like going to the moon, then
the Gulf of Mexico ultra-deepwater frontier is like going to
Mars," Martin Craighead, CEO of oilfield services company Baker
Hughes Inc, said in a speech at the conference.
The court 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