BP’s report on the Gulf of Mexico disaster today blamed a sequence of failures from inside BP and Transocean as the reasons for the fatal explosion on 20 April this year.
According to the report cement slurry used at the bottom of the Macondo well failed to adequately contain the dangerous hydrocarbons within the reservoir, instead allowing the gas and liquids to flow up the production casing towards the rig.

The oil giant today said that when BP and Transocean received results of the negative pressure test they wrongly accepted them even though the actual integrity of the well had not be established.

It is suggested that over a 40 minute period, the Transocean rig crew did not recognise or act on the influx of hydrocarbons into the well until they were in the rise and rapidly flowing the surface.

The report claimed that after the well flow reached the rig it was routed to a mud-gas separator which sent the gas directly to rig instead of diverting it overboard.

As the gas flowed into the engine rooms through the ventilation system, the fire and gas system did not prevent the potential for ignition.

After the subsequent explosion, the BP report said the rig’s blow out preventer on the seabed failed to activate automatically to seal the well because key components were not working.

Tony Hayward, outgoing chief executive of BP, said the report provides critical new information on the causes of the accident.

He explained, ‘It is evident that a series of complex events rather than a single mistake or failure led to the tragedy. Multiple parties, including BP, Halliburton and Transocean were involved.

‘Based on the report, it would appear unlikely that the well design contributed to the incident as the investigation found that the hydrocarbons flowed up the production casing through the bottom of the wall.’

In June, Fitch Ratings downgraded the company’s long-term issuer default rating (IDR) and senior unsecured rating by six notches to BBB from its previous rating of AA.

The ratings agency cited concerns about the increased likelihood that demands from the US government and federal authorities over the disaster which were likely to result in a ‘legally supportable move against the company.’

Analysts at Fitch said the potential financial impact on BP is wide-ranging and warned investors to expect Long-term litigation related damages.

The cost of civil fines if BP were to be found guilty of gross negligence or willful misconduct would be in the region of US $2 billion – US $8 billion, according to the ratings agency.