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BP Shares Surge on Oil Spill Report

(Story updated with Transocean statement and details from the government findings)
NEW YORK ( TheStreet) -- A panel of government investigators have spread the blame for the devastating Gulf of Mexico oil spill between multiple parties.

"The loss of life at the Macondo site on April 20, 2010, and the subsequent pollution of the Gulf of Mexico through the summer of 2010 were the result of poor risk management, last minute changes to plans, failure to observe and respond to critical indicators, inadequate well control response, and insufficient emergency bridge response training by companies and individuals responsible for drilling at the Macondo well and for the operation of the Deepwater Horizon," the Bureau of Ocean Energy Management (BOEMRE) panel of investigators said.

The investigators said the main cause of the Macondo blowout was the failure of a cement barrier in the production casing string, which is a steel pipe set in a well to ensure its integrity and facilitate future production.

The failure of the cement barrier, the investigators said, allowed hydrocarbons to flow up and onto the rig, resulting in the blowout.

However, they said the precise reasons for the cement job are not known.

Instead, the report provided dozens of recommendations for improving safety procedures for offshore drilling industry and highlighted multiple ways in which BP (BP - Get Report), Transocean (RIG - Get Report) and Halliburton (HAL - Get Report) severely stumbled in the period prior to the disaster.

For instance, they said in the days leading up to the April 20 Macondo well blowout, BP made "a series of decisions" that complicated cementing operations, added incremental risk and may have contributed to the ultimate failure of the cement job. BP, according to the investigators' report, decided on the use of only one cement barrier -- no additional cement barriers were installed in the well.

Meanwhile, on Apr. 20, both BP and Transocean crew onboard the Deepwater Horizon "missed the opportunity to remedy the cement problems when they misinterpreted anomalies encountered during a critical test of cement barriers called a negative test ..."

The investigators said that Transocean's drilling rig crew should have recognized "a serious anomaly" and additional anomalies, but failed to detect them until it was too late. Still, they did not blame Transocean for the failure to maintain the blowout preventer.

BP and Halliburton, one the world's largest cementing contractors to the oil and gas industry, "failed to cement the well in a manner that would properly control ... pressures and fluids ..." according to the findings.

A Transocean spokesman said "[A]s the report rightly concludes, the magnitude of the hydrocarbon release made the ignition and explosion onboard the Deepwater Horizon unavoidable."

"We take strong exception to criticisms of the Horizon drill crew, nine of whom perished fighting to save their fellow crewmembers and the rig, for the actions they took in the face of such an unprecedented emergency," the spokesman continued.

NYSE-listed shares of BP rose 5% to $38.28 on Wednesday with volume of 18.9 million running well ahead of the issue's trailing three-month daily average of 10.4 million.

-- Written by Andrea Tse in New York.

>To contact the writer of this article, click here: Andrea Tse.
Copyright 2011 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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