Transocean Releases Internal Investigation Report ($RIG, $BP)

I’ve written about Transocean (NYSE: RIG) several times since the monumental collapse of their share price following the Deepwater Horizon disaster last year. For those following the company, it may interest you to see the results of their internal investigation into what caused and exacerbated that disaster. As expected, they blame BP (NYSE: BP).

The Transocean internal investigation team began its work in the days immediately following the incident. Through an extensive investigation, the team interviewed witnesses, reviewed available information regarding well design and execution, examined well monitoring data that had been transmitted real-time from the rig to BP, consulted industry and technical experts, and evaluated available physical evidence and third-party testing reports.

There are four categories of problems they point to (I’ve edited the following down from their press release):

• Risk Management and Communication: Evidence indicates that BP failed to properly assess, manage and communicate risk to its contractors.
• Well Design and Construction: The precipitating cause of the Macondo incident was the failure of the downhole cement to isolate the reservoir, which allowed hydrocarbons to enter the wellbore. Without the failure of the cement barrier, hydrocarbons would not have entered the well or reached the rig. …
• Risk Assessment and Process Safety: Based on the evidence, the investigation team determined that BP failed to properly require or confirm critical cement tests or conduct adequate risk assessments during various operations at Macondo.
• Operations:
  • Negative Pressure Test: The results of the critical negative pressure test were misinterpreted.
  • Well Control: By the time actions were taken, hydrocarbons had risen above the blowout preventer and into the riser, resulting in a massive release of gas and other fluids that overwhelmed the mud gas separator system and released high volumes of gas onto the aft deck of the rig. The resulting ignition of this gas cloud was inevitable.
  • Blowout Preventer (BOP): Forensic evidence from independent post-incident testing by Det Norske Veritas (DNV) and evaluation by the Transocean investigation team confirm that the Deepwater Horizon BOP was properly maintained and operated. However, it was overcome by the extreme dynamic flow, the force of which pushed the drill pipe upward, washed or eroded the drill pipe and other rubber and metal elements, and forced the drill pipe to bow within the BOP. This prevented the BOP from completely shearing the drill pipe and sealing the well.

You can read the full report here.

Author Disclosure: Long RIG

Talk to Frank about Transocean

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