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Posted in BP British Petroleum,Deepwater Horizon,Environment,Gulf Coast,Transocean on August 23, 2010
HOUSTON, TX – The U.S. Coast Guard hearings into the Deepwater Horizon disaster is scheduled to resume on Monday, August 23, 2010 in Houston, Texas. The timing of these hearings is not good for Transocean, the owner of the ill fated rig that exploded and sank in the worst environmental disaster in U.S. history.
Attempting to put out the fire on the ill-fated oil rig before sinking into the Gulf of Mexico.
On August 18, 2010, Moody’s Investors Service downgraded Transocean’s credit rating because Transocean faces laibility for the recent oil spill in the Gulf of Mexico. This information was published in an article in Bloomberg Businessweek. We believe that this is due in no small part to the recent facts coming to light about an incident that occurred in the North Sea in December 2009 where a Transocean drilling rig experienced an oil well blowout under eerily similar circumstances.
The main point that was addressed in the North Sea incident was lack of well control at the time of well completion when the drilling mud was being displaced with sea water. This situation was exactly the same on the Deepwater Horizon. Early in the day on April 20th a controversial decision was made by BP and agreed upon by Transocean to displace the drilling mud with salt water. This decision directly lead to the Deepwater Horizon disaster.
So what went wrong with management? The North Sea incident occurred about 4 months prior to the Deepwater Horizon disaster. Transocean’s internal report on the incident was dated April 14, 2010 – 6 days prior to the disaster on April 20, 2010 in the Gulf of Mexico at the Macondo well. Read: Transocean Withheld Internal Report That Proved Fatal For Deepwater Horizon 11
Had the report and subsequent recommendations from the North Sea incident been disseminated to the drilling management for the Gulf of Mexico operations, then it is likely that the Deepwater Horizon disaster would have been completely avoided.
Moody’s stands by its negative outlook for Transocean and feels that it’s liability for the Gulf Oil Spill could be in excess of $6 billion. We believe Moody’s did not make this decision lightly and takes seriously the role Transocean played in the Gulf of Mexico oil spill.
On the same day that Moody’s downgraded Transocean’s credit rating (August 18th), Transocean sent a letter to BP’s lawyers admonishing them for not being forthcoming with documentation on BP’s investigation into the incident.
Following this letter, BP answered back stating that it has provided 220,000 pages of documents to them and that Transocean’s claims that BP was withholding evidence amounted to nothing more than a “publicity stunt” to draw attention away from Transocean’s role in the disaster. BP’s retort also appears in an article at Bloomberg Businessweek.
It appears, according to Moody’s, that Transocean faces a much larger liability in the Gulf Oil Spill than previously estimated by industry analysts.