SMOKE ON THE WATER: An oil burn is conducted near the source of the BP Deepwater Horizon oil spill in the Gulf of Mexico off the coast of Louisiana, US, on Thursday, July 15, in 2010. Picture: BLOOMBERG
SMOKE ON THE WATER: An oil burn is conducted near the source of the BP Deepwater Horizon oil spill in the Gulf of Mexico off the coast of Louisiana, US, on Thursday, July 15, in 2010. Picture: BLOOMBERG

ANADARKO Petroleum officials urged BP to drill deeper into the Gulf of Mexico well that caused the worst offshore oil spill in US history even after BP warned that doing so would be unsafe.

A BP executive and a geologist working on the Macondo well rejected Anadarko’s urging to deepen the well, according to e-mails sent the week before the April 2010 deep-sea blowout.

BP officials said in the e-mails, unsealed this month in lawsuits over the spill, that the well’s condition "provided for little to no margin to continue drilling" safely.

Lawyers for the US Department of Justice are asking US District Judge Carl Barbier in New Orleans to consider Anadarko’s e-mails as proof the oil explorer was involved in day-to-day monitoring and decisions at the Macondo well when he calculates a potentially multibillion-dollar pollution fine against the drilling partners.

Anadarko, which owned a 25% stake in the Macondo well off the Louisiana coast, contends that it was a passive investor and cannot be held liable for pollution fines from the spill, which sent more than 4-million barrels of oil spewing into the Gulf of Mexico, closing fisheries and tainting shorelines from Texas to Florida.

Judge Barbier was scheduled at a hearing yesterday to get an update on the scope of a trial over the size of potential pollution fines against BP and Anadarko. The trial may take place this year.

The spill sparked thousands of lawsuits against London-based BP and Anadarko, as well as Transocean — the owner of the Deepwater Horizon drilling rig that burned and sank, killing 11 — and Halliburton, which provided cement services for the well.

Anadarko spokesman John Christiansen declined to comment on the e-mails other than to refer to the company’s annual report filed on February 28. Given its "lack of direct operational involvement" and Judge Barbier’s ruling that it was not negligent during the drilling operation, The Woodlands, Texas-based company said it believed its exposure to penalties under the Clean Water Act would not materially affect it.

"The company currently cannot estimate the amount of any such penalty nor determine a range of possible loss," Anadarko said.

Judge Barbier is weighing whether BP, Transocean and Halliburton were grossly negligent in their work on the well. For BP, such a finding could mean more than $17bn in environmental fines.

Those penalties would be on top of the $9.2bn settlement of most private-party lawsuits that BP reached in 2012. Anadarko paid BP $4bn to resolve its share of liability for those suits.

BP pleaded guilty to 11 counts of felony seaman’s manslaughter, two pollution violations and one count of lying to Congress in connection with the spill. The firm agreed to pay $4.5bn in related criminal and civil penalties.

While Judge Barbier has concluded Anadarko was not negligent in connection with the Macondo drilling operations, the company remains potentially liable for spill damages and penalties under the Oil Pollution Act and the Clean Water Act.

The government points to the unsealed e-mails as proof Anadarko played an active role in assessing the well’s safety.

After urging BP to deepen the well the week before the blowout, Anadarko agreed to a drilling halt, according to the e-mails. "In the event BP concludes it is safe and prudent to continue drilling," Anadarko said it "would not oppose BP doing so."

Anadarko managers continued to brainstorm about how to persuade BP to deepen the oil well in the future, according to the e-mails.

The internal communications "demonstrate how intimately Anadarko monitored the drilling of the Macondo well; how it failed to take any precautions despite BP’s notorious prior safety and environmental problems; and how it failed to make inquiries at critical junctures," government lawyers said in a court filing.

The internal files will make it difficult for Anadarko to continue portraying itself as a silent investor in the Macondo site, says David Uhlmann, a University of Michigan law professor and former head of the Justice Department’s environmental crimes division.

"Anadarko was more than just a passive investor and therefore is going to be required to pay substantially more to settle its liability for the spill," Mr Uhlmann said, based on the e-mails. "The fact that Anadarko may pay more, however, does not mean that BP will pay less. Each company will be penalised based on its culpability."

Transocean, which handled drilling operations at the well, agreed to pay the government $1bn to resolve its spill liability under the Clean Water Act. Anadarko could be facing a similar fine based on the e-mails, Mr Uhlmann said.

The third partner in the Macondo well, Mitsui & Company’s Moex Offshore 2007 LLC unit, paid BP more than $1bn to resolve spill-damage claims stemming from its 10% ownership stake. It paid the government $90m to resolve all state and federal pollution claims from the spill.

Mr Uhlmann said the size of Moex’s environmental fine was linked to its status as a true silent partner in the Macondo well.

In other e-mails, Anadarko employees discussed technical aspects of the well while drilling proceeded and expressed worries about BP’s safety record. Two weeks before the blowout, Anadarko’s lead geologist on the project e-mailed a fellow employee that Macondo was still having "well-control issues" and leaking "6.3-barrels of mud every 2 minutes" into the underground formation.

Drilling mud is used to lubricate and control pressure within the well. "Yikes, that sounds like a lot," the colleague replied.

The day after the explosion aboard the Deepwater Horizon, an Anadarko manager messaged co-workers who were discussing the company’s stake in BP’s well.

"I tell you, BP is up s*** creek; between the Texas City refinery fire, the Alaska pipeline leak, Thunderhorse almost sinking — not sure I would partner with them anymore," the supervisor said in the e-mail.

BP admitted responsibility for the March 2005 explosion at its Texas City plant, which killed 15 and injured hundreds at its largest refinery. The company, which has denied it intentionally endangered workers at the facility, paid more than $2bn to settle lawsuits stemming from the incident plus a $50m pollution fine.

In 2006, BP’s Alaskan pipeline spilled about 200,000 gallons of oil at Prudhoe Bay. The company pleaded guilty to a misdemeanour pollution violation and paid a $20m fine to settle state and federal criminal claims.

Production at BP’s Thunderhorse oil and gas platform, one of the Gulf of Mexico’s largest, was delayed for about two years after Hurricane Dennis left the structure listing to one side in 2005.

The US is urging Judge Barbier to calculate Anadarko’s fine for the 2010 spill at the maximum rate of $4,300 for each barrel, and only consider a lower rate if he determines there were extenuating factors. Clean Water Act penalties are not pro-rated based on fractional ownership of an oil well under the law.

"Anadarko on several occasions encouraged BP to drill deeper despite the risks" and that should expose the firm to additional liability for environmental fines, the government’s lawyers said.

Anadarko is asking Judge Barbier to rule that the company should pay "zero" environmental fines and to reject the government’s arguments that the e-mails show it had input into drilling operations.

While Anadarko concedes it approved Macondo’s well design and drilling expenditures and had "limited access to certain forms of operational data," that does not mean it had "operational control" of the site "or contributed to the discharge."

Bloomberg