We knew something was wrong when it exploded

Today at the BP trial, BP's safety officer Mark Bly is testifying. Bly compiled BP's official report on the Macondo blowout.

But the report laid most of the blame on Transocean, setting the tone for finger-pointing among the companies.

Allocation of blame is one of two focuses in this first phase of the non-jury trial before U.S. District Judge Carl Barbier, which will run for months if it does not settle first. The other focus is severity of negligence among the companies.

Bly said BP and Transocean crews missed critical signs of well pressure changes that signaled the well was not under control until it was too late to stop the blowout. If pressure in the oil reservoir deep under the seabed is higher than that in the well, oil and gas will flow upward.

Bly said BP's well site leader and Transocean crews misinterpreted a pressure test that showed that change, as well as later pressure changes, losing key reaction time.

"That risk was neither recognized or addressed until it was too late?" Sterbcow asked.

"There were signs that the well was flowing," Bly said. "It didn't seem to be recognized or reacted to."

Yes, yes, mistakes were made, but by whom? Key to Bly's testimony is whether the Transocean crew's "misinterpretation" happened independently or in consultation with BP overseers back in Houston.

A Justice Department lawyer, Mike Underhill, asked Bly about a certain call that was made between a BP well-site leader on the rig and a BP manager on shore about a pressure test on the well. Bly said the call wasn’t mentioned in his report, though a presidential commission that investigated the spill determined that the call in question had been made. Lawyers for the plaintiffs and Justice Department have asserted the call an hour before the blast concerned anomalies in the pressure test.

BP has admitted that it misinterpreted the test as a success and moved forward with procedures related to temporarily abandoning the well. By removing heavy drilling mud from the well, gas was allowed to freely flow up the well because the cement plug wasn’t holding.

Bly acknowledged under intense questioning that he was in charge of BP’s global safety operation at the time of the disaster and that his company has pleaded guilty to causing the deaths of 11 workers on the rig. But even though his probe didn’t look at management causes, he defended management’s actions.

“Obviously there was a terrible tragedy. I completely see that,” Bly testified. “But that doesn’t mean the management system we were using was an absolute failure.”

Not to get too bogged down in the semantics but "absolute failure" isn't the standard being applied in this case.  We're only looking for "gross negligence." Even though such distinctions may become academic to most of us once the rig catches on fire, it actually means quite a lot.

If U.S. District Judge Carl Barbier rules that the company was grossly negligent, then it could be fined up to $4,300 per barrel spilled under the Clean Water Act. (Barbier is hearing the case without a jury.) The government says 4.1 million barrels spilled, having reportedly backed away from an earlier estimate of 4.9 million barrels. If the judge accepts that figure, and also rules that BP was grossly negligent, the company may have to fork out $17.6 billion to the American people in Clean Water Act fines alone.

And that figure doesn’t include additional fines and compensation for damage that the spill caused, which is expected to be billions more, over and above the tens of billions of dollars in settlements and cleanup costs to date.

If Barbier rules that the company was just plain ol’ negligent, however, the Clean Water Act fines would be capped at $1,100 per barrel. If he also accepts BP’s claim that no more than 3.1 million barrels of oil was spilled, then the company could be liable for up to $3.4 billion in Clean Water Act fines.

And because Louisiana intends to apply Clean Water Act fines toward crucial coastal restoration projects, this decision is of the utmost import. Well, okay, maybe not utmost utmost, depending on whom you ask but you get the idea. It's a big deal.

On the other hand, Moseley offered this unsettling comment as part of The Lens news round-up yesterday.

The Environmental Trial of the Century — Gulf Restoration Network | GRN’s Aaron Viles advocates maximum penalties for BP and says approximately $50 billion in total restitution would fulfill BP’s promise to make things right. ” … [R]estoring our environment restores our economy,” Viles contends. (While I agree in principle, I think the time value of money must be factored in. If BP gets the maximum penalty, there’s no chance we’ll see that money soon. Remember that Exxon appealed judgments for nearly two decades after the Valdez disaster in Alaska, and then the U.S. Supreme Court slashed the amount owed in damages.)

In other words, this whole argument may only be to determine the difference between Louisiana receiving a woefully unhelpful sum now or a perhaps even more woefully unhelpful sum twenty years from now.  I'm sure after those two decades pass we'll all be able to look back from the decks of our floating cottages and/or fire ant rafts and laugh. But for now... maybe not so much.