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Report: Transocean Largely Contributed to Deepwater Horizon Disaster

In a preliminary report released Friday, the U.S. Coast Guard and Interior Department concluded that Houston-based Transocean Ltd., the owner of the doomed Deepwater Horizon rig, and its crew largely contributed to the disaster in the Gulf of Mexico a year ago.

"Although the events leading to the sinking of Deepwater Horizon were set into motion by the failure to prevent a well blowout, the investigation revealed numerous systems deficiencies, and acts and omissions by Transocean and its Deepwater Horizon crew that had an adverse impact on the ability to prevent or limit the magnitude of the disaster," said the 288-page report on the joint investigation of the agencies.

"These included poor maintenance of electrical equipment that may have ignited the explosion, bypassing of gas alarms and automatic shutdown systems that could prevent an explosion, and lack of training of personnel on when and how to shut down engines and disconnect the MODU [mobile offshore drilling unit] from the well to avoid a gas explosion and mitigate the damage from an explosion and fire.

"These deficiencies indicate that Transocean's failure to have an effective safety management system and instill a culture that emphasizes and ensures safety contributed to this disaster," the report said.

Transocean rebutted the report's findings. "We strongly disagree with -- and documentary evidence in the Coast Guard's possession refutes -- key findings in this report. The Coast Guard inspected the Deepwater Horizon just seven months before the Macondo incident and certified the rig as being fully compliant with all applicable U.S. and international marine safety compliance standards...Further, at the time of the accident, the Deepwater Horizon possessed all required valid documents verifying compliance with international and Coast Guard requirements." said the Houston-based offshore drilling contractor.

In addition to citing Transocean, the joint inquiry "revealed that the oversight and regulation of Deepwater Horizon by its flag state, the Republic of the Marshall Islands, was ineffective in preventing this casualty," it noted.

The Coast Guard and Interior's Bureau of Ocean Energy Management, Regulation and Enforcement began their investigation into the Macondo well blowout, which led to the explosion aboard the BP plc-leased Deepwater Horizon rig, a week after the blast. The rig exploded on April 20 last year and sunk two days later off the coast of Louisiana, killing 11 workers. A final report of the joint investigation is expected to be released July 27.

The report said Transocean fell considerably short in the area of safety. In particular, it noted audits finding contrary to the manufacturer's guidelines, which called for inspection and certification of the blowout preventer (BOP) every three to five years, Transocean did not arrange to have the Deepwater Horizon BOP certified for more than 10 years.

Furthermore, the report said Transocean had a history of International Safety Management Code violations on the Deepwater Horizon rig and other vessels; its Deepwater Horizon rig had two significant incidents in 2008 -- a loss of power that jeopardized the rig's ability to maintain its position above the well and the flooding of a compartment resulting from a failure to close valves; the company failed to ensure that its onboard management team and crew had sufficient training and knowledge to take full responsibility for the safety of the vessel; and Transocean failed to require that systems and personnel emphasize maximum emergency preparedness.

In a related development, Transocean and BP are squaring off against each other in U.S. District Court in Eastern Louisiana over who has full responsibility for all of the expenses and the environmental damage related to the massive spill.

Both companies filed cross-motions last week. Under the drilling contract for Deepwater Horizon, Transocean contends that "BP agreed, among other things, to assume full responsibility for and defend, release and indemnify Transocean from any loss, expense, claim, fine, penalty or liability for pollution or contamination, including control and removal thereof, arising out of or connected with operations under the contract." BP contends otherwise.

Transocean is the world's largest offshore drilling contractor and the leading provider of drilling management services. It has a fleet of 137 MODUs as well as one ultra-deepwater drillship and three high-specification jackups under construction.

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