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* Rig official saw "confusion" over key pressure test
* BP engineer declines to testify before federal panel
By Chris Baltimore
HOUSTON, Aug 24 (Reuters) - There was "confusion" over the results of a key pressure test of the Macondo well hours before the Deepwater Horizon rig exploded in April, a senior rig official told federal investigators on Tuesday.
Swiss-based Transocean Ltd.'s (RIGN.S)(RIG.N) rig was drilling a well a mile (1.6 km) beneath the Gulf under contract for London-based BP Plc (BP.L)(BP.N) when it caught fire on April 20 and sank two days later, killing 11 crewmen and sparking the worst offshore oil spill in U.S. history.
Daun Winslow, a Transocean division manager, said he overheard an unusual conversation between BP and Transocean employees on the rig's drilling deck regarding a pressure test designed to measure gas pressure in the Macondo well.
"It appeared there was some confusion about some pressures," Winslow told a joint U.S. panel convened by the U.S. Coast Guard and the Interior Department's Bureau of Ocean Energy Management, Regulation, and Enforcement. "I thought it was not a good idea to have a tour group there."
Winslow was among a group of senior executives visiting the rig on April 20 to celebrate seven accident-free years of operation.
There are multiple federal investigations into the disaster's root cause, which is still unknown.
Winslow's statement corroborated testimony before the board on May 26 from the rig's chief mechanic, Douglas Brown, about a "skirmish" between a senior BP official and Transocean employees.
The discussion involved removing heavy drilling mud from the Macondo well and replacing it with seawater in an attempt to wrap up drilling operations and plug the well with cement.
Congressional investigators say BP and Transocean made a decision late on April 20 to begin removing mud from within the drill pipe despite pressure tests from within the well that a BP official described as "not satisfactory."
Because water is lighter and less dense than mud, the procedure allowed a flood of flammable methane gas to surge up the drill pipe, which ignited and led to a catastrophic fire, according to documents released earlier by the House of Representatives Energy and Commerce Committee.
The board has named two BP officials who have declined to appear at the hearings as "parties of interest" in the investigation.
On Tuesday, a third BP official, engineer Brian Morel, asserted his Fifth Amendment right not to testify on grounds of possbile self-incrimination after receiving a subpoena from the board, according to his lawyer, William Taylor.
On April 15, five days before the explosion, Morel wrote in an email to a BP colleague: "This has been (a) nightmare well which has everyone all over the place." (Editing by Todd Eastham)