BP 2010 Annual Report Download - page 40
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Rig process safety
• Requirehazardandoperabilityreviewsofthesurfacegasanddrilling
uidsystemsforallBP-ownedandBP-contracteddrillingrigs.
• Includeinthehazardandoperabilityreviewsastudyofallsurface
systemhydrocarbonvents,reviewingsuitabilityoflocationanddesign.
Blowout preventer design and assurance
• EstablishminimumlevelsofredundancyandreliabilityforBP’sBOP
systems.Requiredrillingcontractorstoimplementanauditablerisk
managementprocesstoensurethattheirBOPsystemsareoperated
abovetheseminimumlevels.
• StrengthenBP’sminimumrequirementsfordrillingcontractors’BOP
testing,includingemergencysystems.
• StrengthenBP’sminimumrequirementsfordrillingcontractors’BOP
maintenancemanagementsystems.
• DeneBP’sminimumrequirementsfordrillingcontractors’
managementofchangesforsubseaBOPs.
• Developaclearplanforremotelyoperatedvehicleinterventionaspart
oftheemergencyBOPoperationsineachofBP’soperatingregions,
includingallemergencyoptionsforshearingpipeandsealingthe
wellbore.
• Requiredrillingcontractorstoimplementaqualicationprocessto
verifythatshearingperformancecapabilityofblindshearramsis
compatiblewiththeinherentvariationsinwallthickness,material
strengthandtoughnessoftherigdrillpipeinventory.
• IncludetestingandvericationoftheseBOPrecommendationsinthe
rigauditprocess.
National Commission report
BPhasco-operatedfullywiththeNationalCommissionontheBP
DeepwaterHorizonOilSpillandOffshoreDrilling(NationalCommission),
whichreleasedthefullreportofitsinvestigationon11January2011.The
NationalCommissionacknowledgedthecomplexitiesandrisksinherent
todeepwaterenergyexplorationandproduction;italsoconcludedthat
neitherindustrynorgovernmentwasfullypreparedtoassessormanage
thoserisks.TheNationalCommissionidentiedcertainmisstepsand
oversightsbyindividualsatBP,TransoceanandHalliburtonthatledtothe
blowoutandconcludedthatitsrootcauseinvolvedsystemicmanagement
failuresintheindustry.Thesemanagementissues,theNational
Commissionfound,extendedbeyondBPtocontractorsthatservethe
entireindustry.ThisincludedBP’sfailuretoadequatelyaddressrisks
createdbylatechangestowelldesignandprocedures,inadequatetesting
oftheMacondocementslurrybyBPandHalliburton,inadequate
communicationbetweenBP,HalliburtonandTransocean,inadequate
communicationbetweenTransoceananditscrew,andinadequate
decision-makingprocessesattheMacondowell.TheNational
Commissionalsofoundregulatoryfailurestobeacontributingfactorto
theMacondotragedy,inparticularthelackofadministrativeresources
andtechnicalexpertiseattheMineralsManagementService.
TheNationalCommission’sreportmadeanumberof
recommendationsinninedistinctareasforaddressingthecausesand
consequencesofthespill,includingprincipallythefollowing:improvingthe
safetyofoffshoreoperationsbyenhancingthegovernment’sroleandby
establishinganindustry-run,private-sectoroversightentity;safeguarding
theenvironmentbyincreasingsupportforenvironmentalscienceand
regulatoryreviewrelatedtoOuterContinentalShelfoilandgasactivities;
strengtheningspillresponseplanningandcapacity;advancingwell-
containmentcapabilitiesbyincreasinggovernmentexpertiseandrequiring
enhancedcontainmentplansbyoperators;dedicatingfundingbythe
USCongresstoGulfrestoration;ensuringnancialresponsibilitybyraising
the$75-millionliabilitycapforoffshorefacilityaccidents;promoting
Congressionalawarenessoftherisksofoffshoredrilling;anddeveloping
expertiseandresearchprogrammesdevotedtoexplorationandspill
containmentintheArctic.
GiventheemergingconsensusthattheGulfofMexicoaccidentwasthe
resultofmultiplecausesinvolvingmultipleparties,wesupporttheNational
Commission’seffortstostrengthenindustry-widesafetypractices.Weare
committedtoworkingwithgovernmentofcialsandotheroperatorsand
contractorstoidentifyandimplementoperationalandregulatorychanges
thatwillenhancesafetypracticesthroughouttheoilandgasindustry.
EvenpriortotheconclusionoftheNationalCommission’sinvestigation,
BPinstitutedchangesdesignedtofurtherstrengthensafetyandrisk
management.ThesechangesincludethecreationofanenhancedSafety
andOperationalRiskfunction,reportingdirectlytogroupchiefexecutive
BobDudley,thatmaintainsanindependentviewoftheimplementationof
internalandexternalrequirementsandofsafetyandoperationalrisks.
On17February2011,theCommission’sChiefCounselpublisheda
separatereportonhisinvestigationaboutthecausesoftheincident.The
ChiefCounsel’sinvestigationconcludedthattheblowoutresultedfroma
seriesofengineeringandmanagementmistakesbythecompanies
involvedintheincident,includingBP,HalliburtonandTransocean.
Consequences of the accident for BP and its shareholders
Financialconsequences
Thegroupincomestatementfor2010includesapre-taxchargeof
$40.9billioninrelationtotheGulfofMexicooilspill.Thiscomprisescosts
incurredupto31December2010,estimatedobligationsforfuturecosts
thatcanbeestimatedreliablyatthistime,andrightsandobligations
relatingtothetrustfund,describedbelow.
Costsincurredduringtheyearmainlyrelatedtooilspillresponse
activities,whichincludedthedrillingofreliefwellsandothersubsea
interventions,surfaceresponseactivitiesincludingnumerousvessels,
andshorelineresponseinvolvingdeploymentofboomandbeach
cleaningactivities.
UnderUSlawBPisrequiredtocompensateindividuals,
businesses,governmententitiesandotherswhohavebeenimpactedby
theoilspill.IndividualandbusinessclaimsareadministeredbytheGCCF,
whichisseparatefromBP.BPhasestablishedatrustfundof$20billionto
befundedovertheperiodtothefourthquarterof2013,whichisavailable
tosatisfylegitimateindividualandbusinessclaimsadministeredbythe
GCCF,stateandlocalgovernmentclaimsresolvedbyBP,naljudgments
andsettlements,stateandlocalresponsecosts,andnaturalresource
damagesandrelatedcostsarisingasaconsequenceoftheGulfofMexico
oilspill.In2010,BPcontributed$5billiontothefund,andfurtherquarterly
contributionsof$1.25billionaretobemadeduringtheperiod2011to
2013.Theincomestatementchargefor2010includes$20billioninrelation
tothetrustfund,adjustedtotakeaccountofthetimevalueofmoney.The
establishmentofthetrustfunddoesnotrepresentacaporooronBP’s
liabilitiesandBPdoesnotadmittoaliabilityofthisamount.
BPhasprovidedforallliabilitiesthatcanbeestimatedreliablyatthis
time,includingnesandpenaltiesundertheCleanWaterAct(CWA).The
totalamountsthatwillultimatelybepaidbyBPinrelationtoallobligations
relatingtotheincidentaresubjecttosignicantuncertainty.
BPconsidersthatitisnotpossibletoestimatereliablyany
obligationinrelationtonaturalresourcedamagesclaimsundertheOPA90,
litigationandnesandpenaltiesexceptforthoseinrelationtotheCWA.
Theseitemsarethereforecontingentliabilities.
BPholdsa65%interestintheMacondowell,withtheremaining
35%heldbytwojointventurepartners.WhileBPbelievesandwill
assertthatithasacontractualrighttorecoverthepartners’sharesof
thecostsincurred,norecoveryamountshavebeenrecognizedinthe
nancialstatements.
Forafullunderstandingoftheimpactsanduncertaintiesrelatingto
theGulfofMexicooilspillrefertoFinancialstatements–Note2on
page158,Note37onpage199andNote44onpage218.SeealsoRisk
factorsonpage27andProceedingsandinvestigationsrelatingtotheGulf
ofMexicooilspillonpages130-131.
38BPAnnualReportandForm20-F2010