BP drilling operations face scrutiny in Gulf oil spill trial

Two former BP executives testified Wednesday about the effect of cost-cutting measures on BP's drilling operations before the 2010 oil well blowout in the Gulf of Mexico. It marks the third day of the Gulf oil spill trial designed to figure out how much BP and other companies are to blame for the spill.

Charlie Riedel/AP/File
Oil from the Deepwater Horizon spill floats on the water as the sky is reflected in sheen on Barataria Bay, off the coast of Louisiana. A high-stakes Gulf oil spill trial to assign blame and help figure out exactly how much more BP and other companies should pay entered its third day Wednesday.

A U.S. judge heard conflicting testimony Wednesday from two former BP executives about the effect of cost-cutting measures on the company's drilling operations before the 2010 oil well blowout in the Gulf of Mexico.

On the third day of a trial designed to figure out how much BP and other companies are to blame for the spill, lawyers for Gulf Coast residents and businesses played excerpts of videotaped depositions of former BP chief executive Tony Hayward and Kevin Lacy, who served as BP's senior vice president for drilling operations in the Gulf before resigning four months before the spill.

Hayward said the cost-cutting didn't effect drilling operations; Lacy said BP slashed between $250 million and $300 million from its Gulf drilling budget from 2008 to 2009 while at the same time its production rose by more than 50 percent.

"I was never given a directive to cut corners or deliver something not safely, but there was tremendous pressure on costs," Lacy said. 

Plaintiffs' attorneys and government lawyers have accused BP of putting profits ahead of safety and cutting corners to save time and money on a project that was over budget and behind schedule. The lawyers played the videotaped testimony for U.S. District Judge Carl Barbier, who is presiding over the trial designed to identify the causes of BP's Macondo well blowout and assign percentages of fault to the companies involved.

Barring a settlement, Barbier will decide how much more money BP and its partners on the drilling project owe for their roles in the deadly disaster.

Hayward, who famously said at the height of the spill that he'd like his life back, was grilled by plaintiffs' lawyers for hours over the course of several days in 2011. Barbier only heard about a 20-minute excerpt in which a lawyer asked Hayward about a speech just give days before the Macondo blowout.

Hayward spoke about the company's "drive to increase efficiency and reduce costs."

"The context was I'd spent time talking about safe, reliable operations before I talked about any of this," Hayward said.

Hayward also drew a distinction between reducing "corporate overhead" and cutting "corporate operating costs."

Lacy said in his deposition that nobody at BP chose "cost over safety."

He didn't discuss his resignation in the portion of the deposition played in court. A federal class-action lawsuit in 2011 said he stepped down because of disagreements with BP over its commitment to safety.

Rig owner Transocean Ltd. and cement contractor Halliburton also are defendants at the trial and their lawyers have tried to minimize their roles in the disaster.

Transocean attorney Kerry Miller earlier questioned Lamar McKay, who was president of BP America at the time of the disaster. McKay said he personally did not know of any reason to be critical of Transocean or its crew members on the rig and acknowledged that BP still leases three rigs from Transocean operating in the Gulf.

He agreed that the Deepwater Horizon was a "very safe operating rig."

"Up until the accident, yes," McKay said.

McKay also said BP has accepted "part of the responsibility" for causing the blowout of its Macondo well.

"We have apologized for that," said McKay, now chief executive of BP's Upstream unit. "We have accepted responsibility for that in many ways."

BP pleaded guilty in January to 14 criminal counts, including 11 felony counts of manslaughter, and agreed to pay $4 billion in criminal penalties to resolve a Justice Department probe. Transocean pleaded guilty earlier this month to one misdemeanor count of violating the Clean Water Act and agreed to pay $400 million in criminal penalties.

Miller pointed out the differences between the companies' plea deals as he questioned McKay.

A lawyer for Halliburton, BP's cement contractor on the ill-fated drilling project, showed McKay copies of emails that BP engineer Brian Morel sent to colleagues on the day of the April, 20, 2010, blowout.

"Just wanted to let you know that the Halliburton cement team they sent out did a great job," Morel wrote in one.

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