27 Oct 2016

Putting a Human Face on a Catastrophe: DEEPWATER HORIZON

By Thomas C. Fitzhugh, III, Esq., Schouest, Bamdas, Soshea & BenMaier PLLC

BP hired Transocean to drill in a well in 5,000 feet of water in Mississippi Canyon Block 252 (Macondo project) about 35 miles south of Venice, Louisiana. The semi-submersible, dynamically-positioned DEEPWATER HORIZON was assigned this job. This rig was built in a Korean shipyard in 2001, and the year before the disaster it had drilled the deepest oil well in history at 35,050 feet (over six miles deep). The structure was more than 100 yards high and was chartered at a rate of nearly $500,000/day.

Drilling began in February 2010, and the project fell well behind schedule. Like all leaseholders, BP was eager to make up time and complete the well so a production structure could be installed and it could start recouping its investment. Even those of us whose professional life is connected in some way to offshore drilling do not often think of the enormity of this challenge. This semi-submersible is a complex collection of machinery and computers, and supervising its operation takes broad experience and technical skill. 126 people were aboard when the blowout occurred, and seeing the intensity of the fire and collapsing structure it is amazing that only 11 were killed. The fact that 91% of the crew were successfully evacuated is a testimony to safety procedures and evacuation drills. In the deluge of facts that spewed forth after April 20, 2010, this important information was lost to me.

Peter Berg, the man who brought us Friday Night Lights, both the movie and television series, directed this masterpiece. (See http://www.deepwaterhorizon.movie/) He knows how to draw Southern characters and make them real. The people who work on the DEEPWATER HORIZON are a blend of skilled engineers and experienced hands. The movie is a short course in how offshore work happens – from the fleet and helicopters at Fouchon, Louisiana, to the crew change on the rigs. Although not every part of the rig is labeled and explained, the interaction between the company men (BP employees) and Transocean’s crew are quickly evident. The dispute about the integrity of the cement job, the exit of the Schlumberger well crew, and the pressure to start drilling unfold in the pre-explosion drama. To settle the question about the cement, Transocean orders a negative pressure test, and when those results show problems, the BP chief suggests running a test on the kill line, and when that test shows no pressure, he orders drilling to proceed.

During the above-water discussions, the cameras cut away to show the ocean floor and early signs of trouble. Once operations commenced, in the early hours of April 20, 2010, problems were immediately evident. Pressure monitors showed unsustainable pressure, mud came up on the drill floor, and then a series of explosions occurred that eventually caused sparks in the engines and a giant explosion. While I have no way match the film’s presentation of the explosions and fires, the focus on individuals taking care of each other and doing all they can to delay the inevitable is impressive. From the Coast Guard’s reaction to the emergency help from the OSV the coordination, crew evacuation, and rescue, training is evident. Getting 115 people off an exploding and burning rig was a miracle in itself. The drama and tragedy are handled with raw honesty, but the director did not let the legal issues cloud presentation of these human stories.

Although the movie makes the BP men look “guilty,” the U.S. government’s overcharging of them and ignoring the facts was not a part of this movie. Donald Vidrine initially was charged with manslaughter in the deaths but the government dismissed those charges and accepted a plea to one misdemeanor count related to the Clean Water Act. Ronald Kaluza was acquitted of misdemeanor charges by a federal jury in February of this year, long after shooting had wrapped. We know that the film’s producers made no effort to hear the BP men’s stories, as their attorney has stated his efforts to arrange a meeting or conversation were rebuffed by the film makers. Instead, they relied on newspaper accounts and the Coast Guard/NTSB hearings. Fortunately the file does not attempt to address the claims or liability aspects of this catastrophe. Federal judges quickly mobilized to force all suits into Judge Carl Barbier’s court, and the Fifth Circuit Court of Appeals has quickly handled appeals from his decisions. The claims process Judge Barbier created has worked well, and for the most part, the Fifth Circuit has denied challenges to it.

The criminal case against BP was settled in November 2012 by payment of $4.5 billion in fines. The class action for property damage and related claims was settled the following month with approval of a claims process. In September 2014 Judge Barbier found BP grossly negligent. In June 2015 the civil penalties claim against BP was settled by the U.S. government and Gulf states for payment of $20.8 billion, the largest settlement in history. States will share $5.9 billion, and another $4 billion of that amont will go towards coastal restoration. With payments and cleanup costs, that company has spent at least $40 billion (all uninsured) on DEEPWATER HORIZON claims plus billions more in legal fees. Schlumberger was dismissed from litigation, and Halliburton paid $1.1 billion to settle claims against it. It is now 6 ½ years after the explosion, and the damage claims all appear settled. There is some ancillary litigation involving BP shareholders, but the bulk of the litigation seems over, and it should take less than a year for the Fifth Circuit to act (if past performance is indicative). That Court has handled dozens of interlocutory appeals, and nearly every circuit judge has been involved in one or more of those decisions. The EXXON VALDEZ litigation lasted 20 years to reach a final resolution. The expertise of federal judges in the Fifth Circuit clearly made a difference, something not mentioned by the national press.

This movie deserves a wide audience. Anyone who drives a car or flies in commercial planes should have a better understanding of the immense complexities that accompany oil and gas exploration and production. The director did an excellent job to stick to the impact of this event on the lives of ordinary but skilled workers. And it should heighten appreciation for the hard work done to provide our energy.