NOSC Bartlit Comments

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NATIONAL COMMISSION ON THE BP DEEPWATER HORIZON OIL SPILL AND OFFSHORE DRILLING ---------------------------x FIFTH MEETING, DAY ONE : Transcript of Proceedings : ---------------------------x Monday, November 8, 2010 Grand Hyatt Washington 1000 H Street, NW Washington, DC (202) 582-1234 9:00 a.m.

CONTENTS Call to Order 4 Opening Remarks by Co-Chair Graham 7 Opening Remarks by Co-Chair Reilly 9 Presentation by Chief Counsel Bartlit 13 Presentation by Mr. Sankar 75 Presentation by Mr. Grimsley 116 Presentation by Chief Counsel Bartlit 155 PANEL DISCUSSION 1 Panel Discussion with BP, Transocean and 184 Halliburton: Mark Bly, Executive Vice President of Safety and Operational Risk, BP Bill Ambrose, Director of Special Projects, Transocean John Gisclair, Insite Support Service Coordinator, Halliburton/Sperry Sun Drilling Service Richard F. Vargo, Jr., Gulf of Mexico Region Manager - Cementing, Halliburton

Job No.: 5957 Pages: 1 - 398 Reported by: John L. Harmonson, RPR2

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National oil spill commission meeting held before:

SENATOR BOB GRAHAM, CO-CHAIR WILLIAM K. REILLY, CO-CHAIR FRANCES G. BEINECKE, MEMBER DONALD BOESCH, MEMBER TERRY D. GARCIA, MEMBER CHERRY A. MURRAY, MEMBER FRANCES ULMER, MEMBER CHRIS SMITH, Designated Federal Official

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Pursuant to Notice, before John L. Harmonson, Registered Professional Reporter in and for the District of Columbia.

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PROCEEDINGS MR. SMITH: Good morning, everybody, and welcome to this the fifth meeting of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. I am hereby calling this meeting to order. My name is Chris Smith and I am the designated federal official for this Commission. I also serve as the Deputy Assistant Secretary for Oil and Natural Gas for the U.S. Department of Energy. I'll be helping to guide this group through two days of busy hearings today and tomorrow. Before we proceed, I would like to familiarize everybody with the safety procedures for this building. In case of fire or emergency, you'll see the main exits to my left, your right. Simply exit, turn left and go up the escalators and you will see the exits to the street. So that's in case of emergency. I'd also like everybody to turn your phones and BlackBerries to silent or vibrate. The President established this bipartisan

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commission to examine the root causes of the BP Deep Water Horizon oil disaster and provide recommendations on how we can prevent future accidents offshore and mitigate their impacts should they occur. The President appointed two co-chairs to lead the Commission, former Senator Bob Graham of the state of Florida, and the Honorable William Reilly, who led the Environmental Protection Agency under President George H.W. Bush. The President -- The Commission is rounded out with five other distinguished Americans who are selected because of their extensive scientific, legal and knowledge of offshore operations. They include Frances Beinecke, the president of the Natural Resources Defense Council; Dr. Donald Boesch, president of the University of Maryland, Center for Environmental Science; Terry Garcia, the executive vice president of the National Geographic Society; Dr. Cherry Murray, dean of the Harvard School of Engineering and Applied Sciences; and Fran Ulmer, chancellor of the University of Alaska at Anchorage.

via the website, which is www.oilspillcommission.gov. That, again, is www.oilspillcommission.gov. And at this point I would like to hand the floor over to our two co-chairmen, Senator Bob Graham and the Honorable William Reilly. CO-CHAIR GRAHAM: Thank you very much, Mr. Smith. We appreciate the service that you have provided throughout our hearings. As a commission, we've been charged by the President with helping the American people understand the root causes of the largest oil spill in American history, a disaster that claimed the lives of 11 workers on the Deepwater Horizon rig. We have held four public meetings thus far and numerous site visits. We have heard from the people of the Gulf, learned about regulation of offshore drilling, examined the important issues of response and Gulf restoration, and had our first occasion to deliberate on key findings. Today we turn to an important piece of the puzzle. Our chief counsel, Mr. Fred Bartlit, will give an overview of what he and his team have learned

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This Commission is conducting its work in compliance with the Federal Advisory Committee Act which sets a high standard for openness and transparency. And as such, today's hearing are being broadcast via live video feed and are being held here in this public forum. Before I hand the event over to our two distinguished co-chairs, I would like to provide a quick summary of today's agenda. This morning we will be hearing a presentation by the Commission's chief counsel, Fred Bartlit. Mr. Bartlit will lead a discussion on the ongoing investigation on the causes of the accident and will present some preliminary findings for the Commissioners to consider and deliberate today and in future public sessions. We'll break for lunch at 12:30 and reconvene at 1:30 for a panel discussion with BP, Transocean and Halliburton. There will not be a public comment period today, but there will be one tomorrow afternoon at 5:00 p.m., and any member of the public who wishes to submit a written comment to the Commission may do so

to date about what happened on the rig. I believe this will be the clearest presentation the American people have received to date of what led to this tragedy. Fred Bartlit is the right man for this job. He is widely respected, a tenacious lawyer, has enormous credibility thanks to his unquestioned reputation as a straight-shooter. His experience with this issue is very deep. He led the influential investigation of the last major disaster on an offshore rig, the Piper Alpha explosion in 1988 in the North Sea. The commission that investigated the Columbia Shuttle disaster made a very important point. Complex systems fail in complex ways. There is a natural tendency to focus on one crucial decision or misstep as the cause of disaster. But as they observed, doing so gives a dangerously incomplete picture of what actually happened. We will learn for the next two days the many ways in which this complex system failed. We are not looking for scapegoats, but we do believe we have



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an obligation to uncover all relevant facts. Only by understanding what happened can we extract the important lessons from the Deepwater Horizon disaster. There is much that we know now. There are still areas of uncertainty and disagreement. These meetings will go a long way in clarifying where we stand. I want to personally thank, and on behalf of the Commission, Mr. Bartlit and his dedicated team for their work so far. I also would like to thank our witnesses today for their cooperation with the Commission. I would now turn the gavel over to co-chair, Mr. Bill Rielly. CO-CHAIR REILLY: Thank you, Bob. Good morning. The disaster in the Gulf undermined public faith in the energy industry, in government regulators, and even our ability as a nation to respond to crises. As a commission, it is our hope that a thorough and rigorous accounting, combined with

have an obligation to ensure that such a set of conditions offshore must be subject to a safety culture that is protective of lives, livelihoods and the environment. Extracting the energy resources to fuel our cars, heat our homes, power our industry and light our buildings can be dangerous. Our reliance as a nation on fossil fuels will continue for some time. And the bulk of new oil and gas discoveries lie not on land but under the water. The risks taken by the men and women working in energy exploration benefit all Americans. We owe it to those who manage and accept those risks to ensure that their working environment is as safe as possible. Over the next two days we will learn from Fred Bartlit and Sean Grimsley and Sam Sankar about what went wrong on the Deepwater Horizon. This detailed account of what led to the loss of 11 lives and the largest oil spill in American history will guide our thinking as we move to final deliberations on findings and recommendations.

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constructive suggestions for reform, can help restore public trust. Our prior meetings have confirmed that investigations -- that investments in oversight, safety and response capabilities failed to keep pace with the rapid move into deep water. It appears that at least in some quarters that business and regulatory culture exhibited inattention and a false sense of security. Over these next two days we will be looking in detail at what happened on the rig. Our investigative staff has uncovered a wealth of specific information that greatly enhances our understanding of the factors that led to the blowout. One question I think we all have and have had from the beginning is to what extent this was just a unique set of circumstances unlikely to be repeated, or was it indicative of something larger. In other disasters, we find recurring themes of missed warning signals, information silos, and complacency. Without prejudging our findings, no one can dispute that industry and government together

So today we are fulfilling the first of the fundamental tasks that -- and most fundamental tasks that the President gave to us in the executive order establishing this Commission, and that is determine the cause, find out what happened. I will be most interested in the lessons we may learn today that help inform the Commission's recommendations for the future for how we create policies that prevent something like this from ever happening again. I want to remind all of you here that the information that you will be exposed to today that was gathered by our investigative team was achieved without the power to subpoena witnesses or evidence. I compliment the companies whose cooperation made this possible. I compliment Fred Bartlit whose reputation earned the kind of trust and cooperation that this displays. And to those few senators who blocked this Commission from receiving subpoena power, let me just say that I hope you are pleasantly surprised by what we have learned and not disappointed.



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With that, I will turn to our chief counsel, Fred Bartlit. MR. BARTLIT: Thank you, Bill. I want to start by setting the stage, what we are going to accomplish today and how we are going to go about it. But first it's very easy when you're enmeshed in these technical engineering and scientific details against a background of huge financial exposure, it's easy to forget why we're here. We're here because 11 men died. And I've asked prior to today, and I'm going to ask today for all of us -- we're all lawyers most of us -- to put aside our natural desire to be advocates and keep in mind these brave, hard-working men that died on the rig that day. And keep in mind that we will honor them if we can get to the root cause without a lot of bickering and self-serving statements. A hundred years from now we want the world to say, they changed the safety regime in the Gulf of Mexico offshore drilling. So what I would like to do is start by having a few moments of silence where we

talk for three hours, we'll split it up. I'll be taking part of it. My partner Sean Grimsley will be taking part of it. Sam Sankar will be taking part of it. It's just -- As a matter of human interest, it's quite interesting that these two young men clerked together for the legendary United States Supreme Court Justice Sandra Day O'Connor. And they were picked back as young men to be the best and the brightest. And working on this Commission, they've shown that she was smart in picking them. Then this afternoon we will have witnesses from Transocean, Halliburton and BP up here, and we will ask questions. This is not a cross-examination. It's not a trial. We'll be trying to find out what the areas of differences are and what the areas of agreement are. Because it will save us a lot of time in writing up our report if we can put to side issues where there is disagreement and we can let the Commission know what the areas of disagreement are that they might need to focus on, and we might then have to suggest

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each reflect on these men that are gone now, and we each promise their families that we will honor them by getting to the root cause and being sure this never happens again. (A moment of silence.) MR. BARTLIT: Now, what are we going to accomplish? We very carefully hewed to the presidential mandate, which is examine the facts and circumstances surrounding the root cause of the blowout. We are not assigning blame. We are not making any legal judgments as to liability. We are not considering negligence or gross negligence or any legal issues at all. We're trying to walk a fine line between looking at root cause and not getting into the legal issues. It's a hard thing to do, and maybe we'll accidentally step across the line. But our goal is to look at cause, not liability. We'll first explain to the public what happened 18,360 feet down at the bottom of the Macondo well. Because nobody wants to hear one person talk for three hours, and maybe one person doesn't want to

other ways, perhaps, of resolving some of these issues. Then we will inform everyone at the end of the morning of our tentative views on root cause, and we -- the other -- the parties have these tentative conclusions. They are tentative. We want to be sure we get it right. They will be invited to comment on any of our tentative conclusions. Everybody will get a copy. And if any of them or any parties want to file written elaborations on these issues within five days, we invite that. The more information we can get, the better. Tomorrow there will be some panels of technical experts on deepwater drilling, Macondo, some regulators, and then we're privileged to have the CEOs of Shell and Exxon. Everywhere we went in the industry, people said to us informally, "Fred, Exxon is the gold standard of safety in offshore drilling." And Mr. Tillerson is going to come here and tell us how -how he achieved that position.



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I want to thank everybody for their cooperation here. As Bill observed, we don't have subpoena power. That means that to a certain extent BP, Halliburton, Transocean had to put aside the normal tendency of a trial lawyer to stonewall everything until the last -- until you finally have to go to court and cooperate with us. And I want to thank from BP John Hickey and Jamie Gorelick, their counsel. I want to thank Rachel Clingman for Transocean. And Don Godwin for Halliburton. They have given us an unprecedented degree of cooperation in situations where their clients had serious issues to face. It's a very unusual sacrifice they made, and we couldn't be where we are without it. I want to thank two other agencies. Sysco Corporation volunteered to send us one of their top litigators, Paul Ortiz, to work with us on our Commission gratis. Sysco is paying the cost of it. And I want to thank Trial Graphics, Megan O'Leary and Bill Lane. We don't have any money on this Commission. You're going to see today what is18

chance to prepare, and a chance to respond." And throughout this thing our purpose has been to be totally transparent. This is what we're thinking. If we're wrong, tell us. There is no pride of authorship. We must get it right, and we must get it right to honor the men that died that night. And to a degree that surprised me, the parties and counsel have kept in mind that purpose and often, I believe, sublimated what might be the normal reaction of trial lawyers to an investigation like this. And I thank you guys again. It's not only the parties that have cooperated. The entire offshore drilling industry has cooperated. As you'll see, we've had cooperation from Chevron, from Exxon, from Shell, from Dril-Quip, from parties that make this equipment, from Schlumberger. Everybody has pitched in. They've been willing to meet with us. They've leveled with us and cooperated. I particularly want to thank BP for the report they did. The report they did, which some people in the newspaper said was self-serving, we agree with about 90 percent of it. There is a lot of

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probably a half million dollars of graphics that basically were done for free by Megan and Bill. And I've worked with -- In 50 years as a trial lawyer, I've worked with the best graphics teams in America. They blew me away. They've been up all night. They're not getting paid. Megan unusually has a master's degree in engineering, and Bill is one of the top graphics artists in America. So their team was led by a real engineer, and the work product was done by one of the best graphics people, and we thank you guys very much. Finally, the presentation you will see today has been vetted as thoroughly as possible. We showed the presentation to some of the top deepwater drilling experts in major oil companies not involved in this litigation to be sure we got it right, to be sure that our observations were consistent with custom and practice in the deepwater drilling business. We also showed this presentation last week to Transocean, Halliburton and Sysco, told their counsel, "I don't believe in surprises. People ought to have a chance to know what is going to happen, a

extremely valuable work that was done there that cost BP a lot of money. We don't agree with everything, but it's a contribution to this hearing, and we're -we thank you for doing it. The last thing I want to say is that as we met with all the parties in the last week, as the people here will know and some of them will be smiling, every time we had a meeting, people said, "Fred, you're not getting it right. You're treating us harshly; you're being too nice to somebody else." Everybody said that when they -- during the meeting. And there were sometimes some hash words, because everybody was told in advance. So I told my guys, and I say to you guys, "We must be doing something right because everybody hates me." Okay. Now we'll start -- I'll -- I'll begin the run-through. And when we get to the cement issues, Sam Sankar will take over. When we get to the negative test and the temporary abandonment issues, Sean Grimsley will take over. So let's go. Now, we'll first talk about the rig itself. Just a -- We're all familiar with it, but so everybody



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is on the same page, they know where it was and what was unique about it. We'll then talk about what it's like to drill offshore wells generally, and then the Macondo timeline. Then we'll come to cement issues, some recent questions raised about cement, the temporary abandonment issues, kick detection. Kick means that -- We use the term "hydrocarbons." Hydrocarbons are gas and oil. Of course, you'll see gas expands rapidly as it comes to the surface. If gas comes to the surface and gets on the rig, that's bad. When gas gets in the well, in the riser, that's called a kick. So as we go through these terms that a lot of us have never heard before, I'll be sure to explain them. And then we'll talk about the blowout itself. Okay. Here is the Gulf of Mexico, here is Houston, here's Tampa, here's New Orleans. Here's the Macondo well. The Gulf last year -- The Gulf last year, there were $170 billion worth of oil and gas produced. Most people aren't aware there is a very dense network of wells, pipelines, subsea manifolds, a whole

established earlier by seismic work, the work of geologists and the like. What happened occurred right down here, the bottom of the well. This cement you see here -- and you'll see -- you'll see enough cement today you'll be sick of it -- but this cement down here is where the leak occurred, and we'll be spending -- we'll have big blowups and animations showing what happened down there. You will hear a lot of names. We all know BP. Transocean was the owner and operator of the rig. They have a lot of rigs all over the world. Halliburton, among other things, does cementing. M-I SWACO is a Schlumberger company that handled the drilling mud. You'll learn more about what drilling mud is and what the purpose of it is. Schlumberger was on the well the day of the explosion to do certain logging, and that -- we'll discuss that. A Halliburton unit called Sperry Sun captured data. The data that was on the rig that night went down with the rig, but Halliburton had a

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community of helicopters, offshore vessels. A huge industry here. Generally speaking, deepwater, we're talking about here begins about a thousand feet. Water depths, 10,000 feet. The water depth here was 5,000 feet, a mile down, and then they went down 13,000 feet into the formation underneath the seabed, what we call the mudline. Okay. Now, here is the Deepwater Horizon. It's in the Mississippi Canyon. It's actually a canyon that was formed as the Mississippi River came out eons ago. Here is the 5,000 feet of water. Here is the rig. Here is the famous BOP, the blowout preventer. And now we go down from the seabed another 13,000 feet, and what we'll be talking about, this is where the pay sands are. Pay sands is where oil and gas is. In the oil business they call it pay because that's where the payoff for drilling the well is. So down here 18,360 feet are the hydrocarbons they were drilling for that had been

Sperry Sun unit that sent shoreside -- they call it the town or Houston or shoreside -- certain data which was saved. And there's some interesting issues about that. Cameron made the blowout preventer. Oceaneering -- The work down there at the bottom is done by these robots. Oceaneering did it. Dril-Quip made wellhead and casing hangers. You'll see pictures of Dril-Quip equipment. They've been very cooperative. They have top engineers, and they've helped us interpret what happened with that equipment. And finally, the famous centralizers you've heard about were made by Weatherford. Now, in 50 years of trying cases, I've learned when people hear names they lose track of them, they can't keep track of where they are and that kind of thing. So what we've done is this: We have a chart of the onshore -- sometimes you'll see people call that in town -- the onshore organizational chart. The BP people, Transocean and Halliburton. And then we have the -- who was on the rig



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that night. The BP well-site leaders, the Transocean team operating the rig, Halliburton personnel. To make it easier to keep track, we've put around the room these big charts with all these names on it. And as far as I'm concerned, it's okay, if you get confused what's going on, to walk up and take a look at this. It's important that everybody understands what's going on. At the breaks you can walk up and look at it and get a feel for it. We won't talk about all these people today, but we've done this so that everybody can follow the names and follow what's going on. Of course, as we go through this, we'll also explain who the players are and who they work for. All right. Now we're going to learn a little bit about this rig generally. This is the Deepwater Horizon rig. It's a drilling rig. A lot of people don't know there are production rigs that stay on station for a long time and have a lot of dry gas separators and things on board, and pipeline shoreside. This was a drilling rig that was going to

can, under some circumstances, divert oil and gas overboard so maybe it doesn't end up on the rig. And the mud-gas separator pipe, if you have gas, natural gas entrained, caught up in mud, you can separate it here, get rid of the gas up here and put the mud in the mud pits. Now, a lot of people look at this and they think that the -- this is the deck and then there's -there's not much else. This is one of the lower decks. The moon pool. This business has been around a long time and there are terms -- Years ago somebody looked down there at night and saw a reflection of the moon coming up, and it's been called the moon pool ever since. The mud pits are important because when the drilling mud is circulated it's stored in the mud pits, it's taken from the mud pits, it's moved around in the mud pits and that sort of thing. And we'll hear a lot more about drilling mud in a moment. This rig is more complicated than it initially looks. The first place, it's not anchored. There are some rigs in the world that are anchored by

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drill down to 18 -- they originally were going to go down to 20,000 feet. They ended up going down to 18,360. It's easier to understand a rig when you do it in this sort of a cartoon fashion. High as a 40-story. Giant derricks on top that can handle 400 tons or more. Almost as long as a football field in two ways. Helicopter pad. Pipes stored. Now we're getting to where the action happened. Okay, this is the drill floor. Here is the rotary. This is where the well is drilled. And when you hear the mud came up, the gas came up and the explosion started, that's where it is. The drill shack where the drillers are is pretty close, and you'll see pictures from the inside of the drill shack of the people sitting there. It's like the captain of a 747. They've got all the controls and they sit in chairs, they work long shifts, 12-hour shifts, monitoring all this information. This is the mudlogger shack, which is Halliburton. You'll hear about the diverters which

tension legs, some by cables. The -- this rig is a ship. It floats. It's not anchored. It gets positioning signals from a satellite. It receives the positioning signals, and then there are computers onboard that operate these big thrusters underneath. And these thrusters keep the Deepwater Horizon over the well. This is the riser that goes down through the moon pool. When you're on it, you're not really conscious that you're being on a ship. It's a big thing and it's heavy. But the technology is amazing, because this thing is not towed around. It can actually sail away and go to the next location. It has a captain just like any ship has, and of course that's one of the reasons the Coast Guard has been involved in this. But you get an idea. It's kept on station by these thrusters. We tend to put the depth up here. Now we're going down the riser to the seabed. This is a mile down. When you're down there it is black dark. You can't see anything. It's 32 degrees. It's -We've had to artificially illuminate it here.


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The BOPs -- This is the seabed, sometimes called the mudline. This is the BOP, the blowout preventer, which is -- You'll hear more about it. It's a stack of valves designed to shut down the well in emergencies but also used for different tests and functions during the drilling of the well. It's not just an emergency device. The blowout preventer sits on the wellhead, and then the drilling goes down here through the sands through the formation. So we're already down a mile, and we're going down another 13,000 feet, another two and a half miles or so. Casing string. Now we'll go down. Now, down at 18,360 feet the temperatures are as high as 265 degrees Fahrenheit. The pressures are as high as 14,000 p.s.i. The -- When you get all the way down there, to pull up the drilling equipment takes 18 hours. So if you're going to -- if you want to do something down there, it takes 18 hours to pull up the drill string, put on the new tools, go down for many, many hours, do the work, another 18 hours up and, of30

what happened down here. Now we're going to talk about drilling offshore wells, because there are a lot of unique technologies and truly brilliant engineering involved in these endeavors. Here is a BOP. We'll talk about it and explain some of these functions so when we get down towards the end -- It's 50 feet high. There is a six-foot man. It weighs about 400 tons. It costs about $25 million. The BOP travels with the rig. This is the Horizon's BOP. As we say, it's a stack of giant valves that can open and close on the drill pipe. You'll hear about the annular preventers. You'll see them operate in a moment. These are the control pods you read about in the papers. The pipe rams close on the pipe. The blind shear ram is the last resort in shutting down the well in an emergency. The blind shear ram, as you will see, actually slices through the pipe. These rams weigh maybe one -- one blind shear ram may weigh 1400 pounds, very hardened steel. And we'll show how they operate now.

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course, then back down again. So when you do work down there, it takes a lot of time. The -- It won't surprise you to learn that the out-of-pocket all-in costs to somebody like BP of running one of these rigs is about a million and a half dollars a day. And, of course, if you're taking four or five days running drill strings up and down to do work, that -- that's a cost. Now, I'm going to say something now, I'll say it again at the end. To date we have not seen a single instance where a human being made a conscious decision to favor dollars over safety. I'll talk more about that later, but it's important you keep that in your mind as we go. There's been a lot said about it. Witnesses is one of the most important issues. We have not found a situation where we can say a man had a choice between safety and dollars and put his money on dollars. We haven't seen it. And if anybody has anything like that, we, of course, welcome it. Okay. Here is the pay sands. Again, this is where the action was. And you'll hear a lot about

Okay. And the blowout preventer sits at the wellhead on the sea bottom. The drill string comes down through it, the drill pipe. Now we'll show you -- we'll first show you how the annular preventer operates, because you'll hear a lot about it. Hydraulic pressure comes up here. When it comes up, this black deal here is like a giant 18-wheeler truck tire made out of the hardest rubber you've ever seen in your life. It's almost as hard as a Bakelite plastic. And when you want to close the annular preventer, you pressure up these deals. These arms go up and it squeezes this giant hard rubber tire into the annulus -- you'll hear more about the annulus -and keeps any hydrocarbons or pressure or anything from coming up the annulus outside the drill pipe. It does not close the drill pipe. It closes the area around the drill pipe. Okay. Let's look at the variable bore pipe ram. The variable bore ram, again, closes off the annulus and fits tightly around the drill pipe and closes it off. So this is what we'll call the annulus



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there. And here is the blind shear ram. This is the last resort. When you trigger it, it cuts through the drill pipe and no hydrocarbons, oil or gas or anything can come up the drill pipe. And you'll hear that the -- the drilling -the driller sits there at his chair. There is a big red button behind him. He can push that big red button and that energizes the blind shear ram, and about 40 seconds later it's cut through the drill pipe and the well is shut down in that regard. Now, although you've heard a lot about the BOP, you may be surprised to know that we're not going to talk much about the BOP. And the reason for that is this: The government has retained a Norwegian engineering company to analyze the BOP. And it's a 2- or 3-million-dollar contract, and they're going to analyze this thing from soup to nuts. It's not done yet. Some hoped it would be done by now, but it's not. And for us to speculate on what happened to

you can -- Here comes the drill. As you get into the pores here, you can start getting oil and gas out. I'll stop it. This is very important. The brown color here is drilling mud. Drilling mud is maybe 14 and a half pounds per gallon. You'll see that the weight can change. Drilling mud is used to take the cuttings from the drill bit and get them off the bottom. The mud comes to the top. It goes over a screen. The mud goes through and the cuttings stay so you don't get the bottom of the well just full of all these cuttings. The drilling mud also serves to keep the fluid, the gas and oil, under pressure in the reservoirs at bay, because the drilling mud is designed so that the weight of the drilling mud counterbalances the pressure of the fluid. The red arrows will always be the weight of the drilling mud, the green the pressure of the fluid. So when you come down to one of these layers of hydrocarbons, oil and gas, the drilling

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the BOP, was it energized; did it work; if it didn't work, why, all of these issues, it would be very premature for us to speculate when in some reasonable period of time we will know, hopefully, what happened. So we're not going to talk about the BOP simply because it's not productive. We'll be talking about when it's to be triggered and who is supposed to do what, but we will not be talking about any failure modes in the BOP today. Now, what a lot of people don't understand is people -- people think that there's these pools of oil and gas down there, and you drill down and you stick a straw in it and you suck it up. It's nothing like that at all. Down here these pay zones are pores in rock, and it's pretty hard rock. It's like a hard sandstone that you could stand on, and the rock is full of pores, and the pores have oil and gas in them under extremely high pressure, as you'll see. So that as you're drilling down here, you're drilling down to get to the pay zones so that

mud -- People continually monitor these pressures, and they keep the drilling mud at a weight such that it's heavy enough to keep the green oil and gas under pressure from getting into the well bore. And one of the key issues we'll be talking about again and again is the tension between keeping the drill mud at exactly the right weight, getting it too heavy and getting -- or getting it too light. If it's too light, the green oil and gas comes into the well. If it's too heavy, it can actually fracture the sides of the well. It gets heavier than what's called the fractured gradient. And we'll see that. But it's important to understand that the pay sands, the pay area we're drilling for is rock, actual rock with pores in it that contain this fluid under pressure. Okay. Now we're talking generically about drilling a deepwater well. Here's the drill bit. Here's the previous casing. Here's the pressure in the formation. At this height it might be seawater pressure. We're going down. The cuttings are going



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up. The brown is the drilling mud. The pressure of the mud has to overbalance the pressure in the formation. So the weight, the heavier the mud is, the easier it is to keep the hydrocarbons from getting into the well. You do not want, obviously, to get oil and gas in the well at the wrong time. While you're drilling, it would be really bad to get oil and gas in the well. If it does get in the well, it's what is called a kick, and it can be sensed at the top because if -- if the pressure starts coming in here, it'll change everything all the way up to the top and 18,360 feet up they'll say, "Uh-oh, the pressure's changed, there's a kick." So what we do is we -- we continually increase the mud weight as the pressure gets bigger. The pressure is here. It gets bigger. The mud weight is bigger. It gets bigger. Mud weight is bigger. And there is a mud engineer at the surface. Here it was somebody called M-I SWACO, which was a Schlumberger sub. And the mud engineers continually change the weight of the mud as they go down and get

down. You'll see casing, cement, casing, cement, casing, cement. And as you will see in a minute, you're going to keep -- This isn't the bottom of the well. You're going to have to keep drilling this. So they're going to have to -- they have to drill this out when they -- when they get this casing set. Remember, to set one of these casings at the surface, it doesn't take so long. When you're setting casings in the bottom it can take 18 hours to bring up the drill pipe, put on a casing, bring up the casing tool, put the drill pipe back down. It can take a couple of days to do some of these things. Now, this is key. Here's the pore pressure. Remember that the hydrocarbons are in pores in the rock. They're under very high pressure. As you go deeper, the pore pressure gets higher and higher and higher. This is the fracture gradient. The fracture gradient is the amount of pressure it will take to put a hole in the formation. If you put a hole in the formation or crack it, bad things can

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information on the formation. Okay. Now, this is important. You'll see the -- you'll notice when you look at these pictures of a well, it's like a telescope. It keeps getting smaller and smaller as we go down. The reason for that is that as you get down here and the pressure is higher, if the mud pressure keeps getting higher and higher and higher, the mud pressure which is needed -- the mud which is needed down here to counteract the pore pressure could be so high up here that it cracked the formation. So as you get deeper and the mud weight gets heavier and heavier, periodically you run a casing. Casing is just a circular piece of steel that comes down. And after you run the casing, which is here, then you run cement down the center. The cement goes to the then bottom of the well, turns the corner and goes up the side, so the casing is thoroughly cemented in. And you'll see -- every time you see a picture of a well, you'll see these from the top on

happen. You can lose some of your drilling mud, you can lose cement. So you don't want to break the formation unavoidably. And as they drill down here, you'll see they're continually changing the mud weight to stay in between the green line and the blue line. That is one of the secrets of deepwater drilling, keep the red mud in between these two lines as you go down, continually fine-tuning it. Up on the surface the mud engineer is doing this, and changing the mud, mixing the mud so it's exactly the right weight to stave it so it keeps out the green pressure and doesn't break through the blue formation. That's one of the keys. Here is a place where it's coming very close to the pore pressure but gets -- and when -when you get to a place where you're challenging these two, that's when you put in another casing. Up comes the drill string, down comes the casing, down comes the cement. It always turns the corner and goes up. Now, there is something I want to explain right now. This is hard for a lot of people to grasp



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right away. This area here is called the annulus. This is up the center of the casing. This is called the annulus. It looks pretty big. But we brought this out here, and Sean Grimsley will take this around and show people. But the annulus is very small. This is the casing in the center, this is the formation, and we have to pump cement, as you'll see, into this small area. At the bottom this might be a thousand feet of cement. That's as high as a hundred-story building. It is an art to be sure that all of this is filled with cement all the way around; there's no gaps. The gaps are called channels. We'll talk about that later. But this is pretty much to scale. And when you look at these, it looks like it's a big wide thing and it's just pumping up cement. But it's not easy to get cement all the way around here in this small little annulus over the height of a hundred-story building. Sean will just take this up and down the aisle so everybody can see it. The Commissioners are, of course, aware of this. We've gone -- We've shown42

contain the mud. So if you can imagine this, the drill pipe is like this and then there is a big riser around it that goes 5,000 feet up from the BOP to the rig. And you'll hear if hydrocarbons get in the riser, that's bad, because that's above the BOP. It means somehow they've gotten past the blowout preventer, they're in the riser. And as we'll see, once they get in the riser they come up very fast and they're very dangerous. Stop it, please. So remember, I told you that in all these interim steps as you go down, you cement around. Well, then you have to drill out the cement you just laid. You want to keep the cement in the annulus, but you need to drill that out so you can continue drilling down through the formation. Always please remember, when you look at the annulus here, this is a half inch to an inch. It's a very small space. This is -- We have to distort this in order to make our points, but as Sean showed you, this -- the annulus is very small and44

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the Commissioners at length. Okay. Now we're going to talk a little more about drilling a deepwater well. The rig up here, coming down through the moon pool. These are called tool joints. It's interesting that when you first start at the surface drilling a well, the formation is not as hard as it is, it's not as rocky as it is. So when you start drilling down, you can just jet out. This is maybe 36 inches. You can just jet out the formation with water. You simply send water through the drill pipe and jet it out. Just as a matter of interest, you don't have to drill it all the way down. And then, of course, you have to vent the water out through here. Set the casing. Up we go. Now, we've heard the term "riser." It's an important term. Before you -- at the -- at the very top you don't need any drilling mud to balance the pressure because the pressures aren't that great. But later on you need some tube to go around the actual drilling pipe, the drill pipe, to

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there's some skill involved and a mild -- a modicum of unpredictability in getting the cement and the annulus all around the well. But it has -- you have to get the cement in the annulus, as we'll see. Wellhead. Okay, now we've cemented in another casing. Now we're lowering this 400-ton BOP from the rig to put it on top of the wellhead. When you imagine somebody lowering from a mile up a 400-ton piece of equipment and putting it in place like that, you imagine the engineering talent that's involved in this deepwater drilling. Of course the drill string going through the well. Once the BOP is on, if it's operating properly, you can shut off -- you can close the annulus, as I pointed out, and you can -- you can actually cut -- cut through the drill string, completely shut the well down. It doesn't go this fast. I got tired of watching it go at the right speed so... (Laugher) Okay. Here's the riser. And once we get



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down a certain depth, the drill string is in the center of the riser, and the mud circulates on the outside of the -- down the center of the drill pipe and then comes up on the riser on the outside. Circulation of the mud is very important. You'll see more about it. But the mud will come down through here, they'll drill at the bottom, and the cuttings and the used mud will come up here, it will be cleaned, and then it will come back down and they just continue circulating it. I'll make a point that's very important. We'll make it again and again, but this is a closed system. And you ought to get as much mud up at the top as you put in the well. In other words, you put it in and it circulates. And if you begin losing mud, it means you've got a problem down there. That's called lost returns. And lost returns can be important. In other words, the mud is returned to the surface. If you're not getting up as much as you should be, you better stop and check it out. And there were lost returns here.

drilling, move it over, avoid the problem and start drilling again. That's called a bypass. Believe it or not, even after they bypass, the well is very straight. This is one of the most vertical wells people had seen. That means it's straight up and down; it wasn't at an angle or anything like that. And on April 3 they get severe lost returns. So we'll now learn what lost returns are. This, again, is very important. This is 17 days before the blowout. Now, we're back to where we started a little bit. We can now see the whole well. Remember, I told you the problem is at the bottom. Here's the cement work at the bottom. The formation that they were trying to produce oil and gas from was here. And this is the annulus. It's not big; it's tiny. And that the cement here has to isolate the hydrocarbon zone. It's called zonal isolation. And if the hydro -- if the cement here does not isolate the hydrocarbons in here, they can get into the well and come up to the surface. So the

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Okay, here is the Macondo timeline. Now, we've -- we've talked about the rig generally. We've talked about the science of drilling offshore. And you've seen how generally cement is used, you've seen how the casing is laid and that sort of thing. Now we're going to talk about the timeline of Macondo. Originally, Macondo was being drilled by a different Transocean rig called the Marianas. It was about 9,000 feet and Hurricane Ida came along. Marianas was damaged and they had to take it off and bring in Deepwater Horizon. Deepwater Horizon drilling began February. Here they had a kick. We now know what a kick is. Hydrocarbons are somewhere down there and there's an indication at the surface that pressure shows you that there's gas getting in. What they had to do here is the kick caused a certain piece of equipment to actually get stuck in the pipe. So what they did is they're able to -believe it or not, they can come down and they can just go off on an angle and keep drilling. So they can change the angle of the

cement job -- as we call this the primary cement job at the bottom. The cement job has to keep the hydrocarbons in those pores cemented off from the well bores so they don't come up the well. There were difficult drilling conditions here. Now, we've talked to everybody we can find about the Gulf of Mexico, and many say that you frequently encounter difficult drilling conditions. Some say not this difficult. There are different points of view. My only -- What we're going to do now is to show you -- let's back up one, please -- at the time of the key cement job, what was known about the situation in that well. So we're going to go through a number of things that were known. They started the cement job in I think the evening or the afternoon of April 19th, the day before the blowout. They finished a little after midnight on the day of the blowout. When they started the -- at the time they started the cement job, what did they know? No. 1, difficult drilling conditions.



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None of these -- This is the actual Macondo pore pressure fracture gradiant. And as you can see, as we go down, every time you get the mud over in this -- into one of these areas, you put a casing in. The mud gets closer here, you put a casing in. And you keep going down. And this is why you get this typical kind of a telescope-looking deal. And you can see here the mud is getting very close to the pore pressure from time and time and time again. So, this is -- this is the fracture -pore pressure fracture gradient at Macondo. They were having somewhat of a hard time keeping the mud in between where it had to be. Now, the things I'm showing you, this is -this is not at all abnormal. Each one of the things I'm showing you, there's various degrees of frequency. But that's what these guys do. I mean, they're good at keeping the mud where it ought to be and doing these things. So don't assume when we say that the -that there was a narrow fracture gradient here, "Oh, my God, that's terrible." People drill that all the

You can't see the cement down there at all. You have to sense by secondary measures like pressures. And Sam will explain more where the cement is. You want to be sure, obviously, the cement is placed high enough to block off the zone, but not so high that it causes a problem calling -- closing up the annulus and causing a heating problem, which Sam will talk about. So people knew when they were doing this, Halliburton and BP, that they had a challenge in getting a good cement job because of this narrow fracture gradient. Again, people look at things and say, "Oh, my God, that's terrible." It's not terrible. It happens, and people deal with it all the time because of the engineering talent that they have. Now, we've heard a lot about the long string. The press has said again and again, and many experts have said that nobody in their right mind would use a long string. Here's the difference. This is the well -- the design they did use. You'll notice that there is a long string all the way from the bottom, all the way up here into the wellhead. That's

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time, and they're supposed to drill it, and it works. Okay? Now, Transocean driller, Mr. Burgess, says it was a difficult well. Wouldn't say worse than others. It was difficult. This is the BP report. Considering the narrow pore pressure and fracture gradient in that well, planning the cement job to achieve effective placement and zonal isolation was a challenge. So there's no doubt here that the conditions they were facing created a challenge, two of them. They had to isolate the hydrocarbon zone. Remember, I told you, you've got to have the cement between the hydrocarbons and the well so it doesn't leak into the well. And Sam will talk more about this. But the cement placement is critical. And I'm going to say some things, and some of these things need to be said twice. Placing cement when you're up three and a half miles above, from here to the Iwo Jima Memorial or something like that, is not an easy thing to do.

called a long string. Here is another choice which is a liner. The liner would only go to here and would be tied back here. Some have said that the long string design does not have a barrier here. The annulus is open, so that a leak could go all the way up here into the wellhead. It doesn't have enough barriers. I will show you the proof I think all of us now believe, including I think BP and Transocean, that the leak did not come up the annulus. The leak came up the center through what's called the shoe. So that the -- the long string has implications. As Sam will explain, it has implications for cement placement. It has implications for whether the cement can get contaminated. But as we see it now, and again I'll say this as often as I can, we are ready to listen to anybody from any source that knows something we don't know. But talking to the designers of the equipment, looking at photographs of this equipment,



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which I will show you, our view is that the leak did not come up this annulus but came right up the center, right up through here into the riser. It's important you know the differences between these two. And Sam will explain the implications that the well design has for cement jobs. Okay. Now, we know there's difficult drilling conditions. We also know they had lost returns. What's a lost return? You're drilling. Here's our drilling mud circulating around up and down, taking away all the cuttings. And if the mud -if the drilling mud pressure gets too high, it can go into the formation. You're now losing drilling mud. If you're at the surface now, you're putting down more mud than is coming up. You want to get full returns. You want to have as much mud coming down -- coming up as is coming down. And this means if you -- if you lose returns, you're -- one thing that can happen is you've cracked the formation and the mud is going into the formation. If mud can go into the formation, then if you cement the job, cement could go in the formation,

18,360. So they saw conditions, caused probably by the formation, which caused them to stop short of where they planned to go. Now, I know I keep saying this. People look at this and say, "Oh, gosh, well integrity and safety." They stopped because they were interested in well integrity and safety. They didn't go as deep as they could have gone, and they might have reached more hydrocarbons because they wanted to stop so they didn't create safety problems. So you have to be aware of two things. You have to be aware that surprises in the reservoir can cause you to make changes. Surprises like that can affect what happens later. You have to keep it in the back of your mind. But it's good, not bad, to stop here for safety reasons. So BP, near as we can tell in talking to our experts, say, you know, they did the right thing here. Now, this next point is a complicated point but it's important. That's converting the float equipment. Let's put that up.

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too. This was something like a 60-barrel cement job. And it was a relatively low volume cement job. And you have to keep in mind that if you can lose mud into the formation, you can lose cement in the formation. There were pretty serious lost returns here as they got down near the bottom. Now, originally they were going to drill this well down to about 20,000 feet. They drilled it only to 18,360 feet. And why was that? Because when they got down there, they faced a tough decision. They were getting lost returns into the formation. This is a BP employee that says drilling -- they were going to drill to 20. They were at 18,000, 2,000 feet short. Drilling any further would jeopardize the well bore. Having a 14.15, this is the pore pressure, exposed sand and taking losses in a nearby reservoir, that means that this is higher pressure, this is lower, so it's actually circulating from one reservoir to another, had forced our hand. We had run out of drilling margin. At this point, it became a well integrity and safety issue. Total depth was caused at

Now, you're going to hear the term "shoe track." That's another one of these oil business terms. My wife's family is in the oil business. They talk about oil business, West Texas where she comes from. "Shoe track" is an oil business term. Let's look at it. Here's the bottom of the well. The reamer shoe at the bottom that leads the long string down. And here is something called the float valves up in here. And let's focus in on the float valves at the top. It's in the float collar. The shoe track -everything is big down here. It's the height of a 19-story building. So when you -- when you put the long string down these float collars, these valves, one-way valves -- Pull on this. Oh, it's the wrong one. (Laughter) MR. BARTLIT: It's nice to have Sandra Day O'Connor clerks to correct you when you screw it up. (Laughter) MR. BARTLIT: So -- Thanks, Sean. So as we -- This is a valve that has to be



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open when it's going down. It has to be open when it's going down because if it was closed, you'd try to push it down against all that mud in there, and you would create high pressures, maybe fracture the formation. I'm always glad to see a guy nodding that actually knows this and the press get's it right. (Laughter) MR. BARTLIT: So what -- you want to have this open while the long -- while the long string is going down. So they've got a pretty ingenious way of doing it. They have it open and they put -- This tube is in here. As you can see that the valve is now open and it holds it open. Now, when you get to the bottom and the shoe is in place, you want close this valve, because now it's down in place and you want to be sure that hydrocarbons and things can't come back up through it. So how do you take this at the bottom and convert it? It's pretty ingenious, pretty simple and pretty ingenious. What they do is they drop this little ball

We've now got the valve the right way. This may seem like a small issue, but normally these things convert pretty readily at about 750 p.s.i. It didn't work out this way. They had to try nine separate times to get this float collar to convert. Now, again, I have to keep warning you, don't put too much import on any one event. We're now building up to all of the different events that were known in the minds of the men on the rig that night when they got ready to pour the cement job. And there were some anomalies, as we've seen. Not anomalies that are never encountered, not anomalies that were necessarily anybody's fault, but there were anomalies that people would be aware of. So now let's talk about the problems in converting the -- the normal float valve conversion. Very simple. Reamer shoe comes down to the bottom of the well. It's 190 feet. Circulate it. About 750 p.s.i. Float collar converts. Valves close. You're set. Now, what happened here? Reamer shoe comes down. Shoe track. You've got to remember they want

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down in the center. It goes to the bottom. And we'll see these two little holes here. So the mud is coming out of the holes but the holes are smaller than the original deal was, so that you increase the mud flow and increase the mud flow, and pretty soon the pressure is such on the ball that this ball goes out, falls all the way down to the bottom. The valve is converted. It's closed. So 18,360 feet down, you turn a two-way valve into a one-way valve. Now, the problem is that these things are supposed to convert at about 750 p.s.i. We'll run through this again up here just so we get it. Here is the valve before it's converted. Pressure can come here, pressure can come here. It's a two-way valve. We'll run it. The ball falls. The ball sticks because there is a collar here. Then you pressure it and it goes all the way down to the bottom in the shoe track, 190 feet down, ends up in the reamer shoe. We'll talk more about the reamer shoe later. Now, this will give you an idea. Reamer shoe. Float collar. 190 feet. Here's the pay zone.

to get this out of there. They put it down. First attempt, 1800, it doesn't work. It's supposed to convert at 750 p.s.i. Second attempt, 1900, it doesn't work. Third attempt, 2000 p.s.i, it doesn't work. Fourth attempt, 2000 p.s.i, it doesn't work. Fifth attempt, 2000, doesn't work. Sixth, it doesn't work. Seventh, 2250, it doesn't work. Eight, 2500, it doesn't convert, it's still stuck there. Ninth, 2750. Finally at 3,000 it converts, maybe. Maybe. We don't really know if it ever converted or not because it's now cemented in down there, and there's a lot of different things that could have happened here. For example, what could have happened is that the ball was forced out of the tube on the ninth attempt but the tube stayed there so it's still a two-way valve and hydrocarbons or anything can go


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back up the valve. We don't know if that happened. These are the best judgments of possibilities and nobody will ever know what really happened. Secondly, if we could go back to No. 2. Okay, third. As Sam will explain, it's possible in a long string well that you can get debris, mud that's been scraped off the walls on that long trip down some 13,000 feet. On that long trip down it's possible that you can get debris in the bottom of the reamer shoe. It's possible that when they're pushing and pushing and pushing here that this was jammed with debris. Some debris went out, the pressure dropped, and they thought that the float collar converted. But it didn't; it was still wide open both ways. Now, secondarily here, it's not altogether certain that a failure to convert is a huge problem. Because most people in the industry do not consider the float collar as a barrier. You'll see the term "barriers." The cement is a barrier. Certain seals are a barrier. Some people will say this is a barrier,62

And we'll see that the cement job is important because the way -- the way the rig was handled on the evening of the blowout, beginning at eight o'clock at night, meant that the cement job was the only barrier, the only barrier preventing hydrocarbons from getting into the well. So as we're getting ready to do the cement job, it's worthwhile looking at what people knew. Okay. Now we've had a problem converting float equipment. Now we see that after it's converted, we see another anomaly. We see pressure lower than was expected. Low circulating pressure. This is the pressure. It was expected to be about 570. It was only 340. Now, this may mean something or it may mean nothing. Did -- Was this ever resolved? It was not. The pressure of the mud circulating was, you know, almost a little less than half of what it was -- a little more than half of what it was supposed to be. So what did the rig -- what did the crew do when after they just had this problem with the conversion of the float valve, these pressures showed64

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some won't. When you look at this valve, even if -even if it converts under the kind of pressures we're dealing with, it would not be impossible to get leaks around it. Clearly, though, if it's wide open, it's easier to get leaks. One could -- some say -- I've learned how -- the way the newspapers report things these days. (Laughter) MR. BARTLIT: Some say that this whole thing is such that under the kind of pressures that were established when the reservoir -- hydrocarbons got into the well, this whole thing could come apart. So what do we know? We know there was an anomaly. We know they normally convert at 750. It took nine tries and it was over 3,000, and we don't know if it ever converted. And the people up on the rig know this. We're not saying good or bad or up or down, we're just trying to list the events that were in the men's minds during that night as we come closer and closer to pouring the cement job.

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up wrong, not what was expected? Here's what they did. The company man -that's BP. Again, this is oil industry lore. The BP man on the rig, Messrs. Kaluza and Vidrine, the well-site leaders are always called the company man. That's always a BP guy. So BP was uncomfortable with the circulating pressure being so low. Spoke with Mr. Gagliano. That's the Halliburton cement engineer on the rig that night. And what did they do? Did they ever resolve this situation? Here's what happens next. I don't believe it ever got resolved. They felt the gauge was wrong. And they decided the rig stand point pressure gauge was incorrect. Maybe it was incorrect, maybe it wasn't. And you can debate about what was done to decide was it incorrect. Did they simply say "We think it's incorrect"? Did they test it? That's for further inquiry. But we know that they had a problem converting the low valve and after that the pressure was low. And apparently -- and I stand ready to be



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corrected -- apparently they assumed the gauge was wrong and that was the end of it. Now, would this make a difference? We're not saying that it did. We're listing things that happened and describing how the people on the rig reacted to it that night. No bottoms-up circulation. Here's bottoms-up circulation. Before you pour cement, they circulate the mud; it's coming down the center. Here's the indicator of the mud that was at the bottom. The bottoms-up marker goes all the way to the top, circulating, circulating, supposedly, hopefully, cleaning this out down here. Before you add cement, you wait for the bottoms-up marker to get to the surface. That is the normal way of proceeding. And there's reasons for doing it. The reasons are -- Now the cement is added. Sam will explain this when we get to the cement job. Why do you do bottoms up? Well, the mud is conditioned. Remember, you're changing the mud weights as we go. So when you circulate the whole thing, it makes sure you get uniform mud throughout

When you don't do full bottoms up, there can be consequences. We're not saying there are, but there can be consequences in that the shoe track cuttings might not have been cleared out, and maybe the hydrocarbons weren't tested before cementing. But again, no one of these things is the be all and end all. We see things happening and we see people having good reasons for it. One of the things that we'll talk about when we discuss this with the Commission is that it's important, maybe, not to put behind you events in the past and then start from scratch each time you do something new. Maybe there has to be a way where people keep in mind the other things they've been experiencing as they went down here when they make their final decision. And I'm not saying -- because we -- we'll never know for the reasons you've heard. We're not saying that people did forget all this. We're not saying they didn't either. But the fact is there were a lot of events, and it sort of looks like once another hurdle was over

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the well. Secondly, it -- it circulates the cuttings, gets any cuttings out of here, out of the shoe. We now know what the shoe is. It allows the crew to look at the mud. It comes up from the bottom to see if there's any hydrocarbons in it. This is normal. BP did not do bottoms up before the cement job here. They had a reason for doing it. They didn't just decide to hurry up and here's -- here's what they did, and here's what their reason was. Here's what BP did. Here's the bottoms-up marker. Remember, over here you waited until you got to the top. BP sent the cement down when the bottoms up was only there. So when they did bottoms up, they had done about -- I don't know, maybe a fourth of the circulations normally done. They had a reason for doing it. Remember, we'd had these formation problems down here. They had had lost circulation. They didn't want to disturb the formation anymore. That's -- Those are valid reasons for not doing full bottoms up.

people -- some people might have said, "Well, that's solved," and sort of started from scratch, and maybe there has to be a way to keep track of everything that's gone before. At any rate, for -- BP didn't just say, "We want to save time." BP said, "We lost circulation. If we do full bottoms up, we might have more problems with the reservoir down there, and we can always -once we get this up to the wellhead, we can always circulate it to the surface and check it and look at the cuttings and look at things." We don't know if that was done. Presumably it was, but we don't -- that's something I don't know as I stand here today. Okay. Mr. Guide is the shoreside -shoreside well team leader. If you're drilling a well in the Gulf and you go to Houston and you go to BP or Shell or any of these companies and you go in their offices, there will be a room almost as big as the end of this room that's dedicated to the Macondo well. And the shoreside engineers and personnel will be in that room.



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And the data from the well will go to that room, and the shoreside people who are -- can look at the data and communicate with the well are frequently asked questions about the well. So all of the information is gathered, and that's why we have some of it today. Now, Mr. Guide said, he asked, "Why didn't they do complete bottoms up?" The biggest risk with this cement job was losing circulation. That was the No. 1 risk, losing circulation. Remember, we explained that if the mud or cement gets into the formation, you're getting less at the top than you put in and you're losing circulation. So Mr. Guide said, "We decided to get circulation established and we could always do full bottoms up later once the cement was in place." That's why they made the decision. Now, this is something that a lot of people are not aware of. We explained that during the final hours of the well, the cement job at the bottom was the sole barrier, the only barrier in the well between the hydrocarbons and the rig. That's because to do70

centered in the well -- and as you'll see, it's pretty hard to center sometimes -- then maybe when you put the cement in around here, it doesn't get in here and leaves mud. Cement keeps hydrocarbons out of the well. Mud can't keep hydrocarbons out of the well at that -under those conditions. So you know there's a problem here, and you decide you want to replace that cement down there 18,360 feet, replace that mud there with cement. How in the world do you do that? Well, here's what you do. Send down this equipment. First comes a packer, a bridge plug. You're going to squeeze in here. This is the area. You set this down so the pressure is blocked off here. You still want to get cement in here. How are you going to do that? You set a packer here. So it's blocked off here and blocked off here and you want to get cement here. They put down basically a perforation gun. For those who have been in the military, these are like the shaped charges they use to

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what they did, as Sean Grimsley will explain, they had to have the BOP open. There were no other mechanical barriers in place. So the cement job was it. Now, what's interesting is, it is known in the industry that these cement jobs are from time to time not perfect. It's not an awful thing. Nobody has screwed up. It's not an easy thing, as we explained, to fill a thousand feet of narrow annulus with cement. So sometimes you have spaces in the annulus. And you have to -- you have to remediate or fix a cement job. So let's look at this. Here is a cement job, and you can see it -- this is that skinny little annulus that Sean Grimsley showed you. And for one or another reason the annulus doesn't have cement in it here, and it should. Believe it or not, these engineers have developed ways of being down there 18,000 feet and fixing that. And here's what they do. It's called squeezing. The term "squeezing" is important because there is a critical e-mail that uses that term. Here's the situation. If the casing isn't

penetrate tank armor. They are very powerful bullets in effect, and they send an electrical charge through and they actually put a hole in the casing. And then they send cement down, pull up the tool 18,000 feet, and they put in cement. Can't go here. Can't go here, it's stuck. So it fills up, fills up, fills up, fills up, fills up. And when it's full, it starts to squeeze through these holes into the formation. And suddenly they've repaired this -- this can take two to five days to do this, but they have repaired the missing cement in the annulus from the top. And, of course, this wasn't -- this is done with some frequency and it had been done twice before on this very well. So we know that in October they had done a squeeze job. February, cement squeeze. And March 6, squeeze. So what do we know now? We take stock. We know that the cement at the bottom in the last hours was the only barrier. We know that sometimes these barriers are somewhat defective when they first go



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down. It's not a big deal; it happens. And there are books written this thick on how to fix these jobs. We know there are ways to fix these jobs. So the issue you want to think about, the possible potential vulnerability of the very critical cement job, the potential -- we're not saying it was vulnerable, but the potential vulnerability was known, because it's down there. It's the only barrier. These jobs -- Sometimes these jobs have to be fixed and remediated. This particular cement job was never remediated for reasons that Sam Sankar will explain. But the importance is you know that the cement jobs are from time to time not perfect. And there is nothing wrong with that. It happens. That's routine. And they've developed all kinds of ways of fixing it. Now, there is something called cement modeling. BP has a program called OptiCem, optimizing cement. And it's a software program that -- a proprietary software program BP owns that is used to figure out what is going on down there. Design centralizer placement, evaluate job results, predict

So Sam will take over and talk about the -the rest of the cement issues. MR. SANKAR: So what we see here now is that the crew on the rig is facing a number of known issues at the time that they're doing their cement job. The one that we should focus on right now is the serious lost returns in the zone to be cemented. Having serious lost returns, again, is not in and of itself a tremendous problem, but it complicates the cementing. When you're cementing a job where you know you're going to have lost returns or you have a threat of lost returns down in the formation, you have to be careful. So BP designed a cement job for this process that was somewhat complicated. I'm going to show it to you a couple of times. The first time I'm just going to show it to you in three dimensions, and we're going to go through the various fluids that BP pumped down the well. Now, the first fluid -- what happens is you send these materials down the well, is you have to send them in sequence. The mud is oil-based and the76

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pressures, that kind of thing. And it turns out that the well team leader, John Guide, shoreside, didn't put any faith in the BP model, thought it was wrong a lot. Now, I imagine there will be a dispute emerging about whether it's right or wrong. The only question is what was known that night. And we're not saying that it was right or wrong and that that caused any problems. We're just saying that -- that the -- they were running these, as you will see as Sam explains, they were running these cement models, these software models, and the BP man in charge didn't think they were worth much. Okay. At this point we've been setting the stage for all the things that are known in the industry generally, and things that were known on this rig. Now we're going to turn to this particular cement job. And Sam Sankar is our cement guy on our team. He's been involved in this from the beginning. He went down with Chevron when they did the test. And -- And it's nice to hear somebody else's voice.

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cement is water-based. The two don't get along. So you have to send things between them to keep them separate. What you'll see here is an orange material called spacer, a purple material called base oil. I'll explain a little bit more what those were for. For now it's sufficient to recognize that these things went down in sequence, separated by separating fluids and by mechanical plugs. And at the end of the job you had cement in the shoe track between where -- between the location of the float valves and the reamer shoe. And you also have cement all the way up here in the annulus covering your pay zone. So we've been emphasizing a lot the importance of isolating the pay zone. You may be wondering how do you actually get the oil out after you do all this work to isolate the pay zone. I'm going to give you a little preview of something that Sean's going to explain a little more as well. When you come back to the well after you have finished drilling and cementing it, you produce



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it by doing something very similar to what you did when you squeezed it. You go back down to the bottom. You have that cement in the annular space, and you send a tool down, another perforating gun, much like the one used in the squeeze job, except now you're doing it in the pay zone. Now, this yellow area here is full of hydrocarbons, and you've got your cement currently isolating them from the annular space. To get them out, you send a perforating gun down, you poke holes in the casing and the cement. So now what you have is holes in the steel casing and in the cement that allow the oil to flow into the well. But that's later when you're getting the oil out of the well. For now we're first trying to get a good cement job that will allow us to isolate the hydrocarbons. So now I'm going to go back and explain again the cement job that BP used at the bottom of the well. And when I say BP here, I mean BP in conjunction with Halliburton. Halliburton was the cementing contractor for this job, and BP and

the cement from the mud. Now, you see some dark gray material and then some lighter gray material. The dark gray material is the cement, the base slurry that they were pumping down there. You've heard a lot probably about nitrogen foam cement recently. This is cement that hasn't yet had nitrogen added to it. The whiter stuff here is the cement that does have the nitrogen in it. So now we have a slug of unfoamed cement, followed by lighter cement, followed again by the heavier cement. Now, what's important to note here is that the first material that goes down the well is the first that comes up the annulus as well. So now what we have here is a stripe of the spacer and a stripe of the base oil. As these materials come up into the annular space, they're exerting pressure backwards. On the way down the well, gravity was helping you. On the way up here, it takes pressure to lift the cement up. And that pressure is something you feel in the formation. And remember that, again, they're very

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Halliburton worked together to perform the process. So again what we see here, now in schematic view, is the float valves, the reamer shoe, the volume in the shoe track, and also again the skinny annular space that Fred has shown you. Remember again when we're doing this that we're talking about the annular space that Sean had showed you when he walked around. It's the small narrow area in there between the casing and the formation itself. So to begin the job, as always, you're circulating mud. The mud is going down through the float valves. The first thing that comes down, again, is that base oil. The purple here is showing the base oil. Base oil is a lightweight oil that they decided to use on this well in order to lighten the weight of the materials in the annular space. I'm going to show you a little more what that is. The orange material again is a spacer. It's a material that's compatible both with the mud and with the cement and helps keep them separate. You're going to see a plug land out very shortly there. That plug right there mechanically separates

worried about lost returns at this point. Lost returns are caused by, among other things, overpressuring the formation. So a lot of this cement job was designed to reduce the pressure on the formation. Final position of the cement job is you have a top wiper plug in place, a bottom wiper plug in place. The shoe track should be full of unfoamed cement, and the annular space should be filled with lighter foam cement, primarily with a thinner layer of unfoamed cement at the top. Now, that slide may have struck you as a little bit complicated. In fact, they're right, this was a complicated cement job. The number of different fluids that were being placed down the well and the threat of lost returns led everybody to understand that this was a complicated cement job. There's e-mails showing as early as April 1st that BP recognized that this was an important job, that it was not going to be an easy one. And in BP's report issued after the incident it is repeatedly recognized that cement placement was



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critical, that there was a complex design, and that the cement crew and the cementing engineers and the design team were focused primarily on achieving an acceptable equivalent circulating density during cement placement to prevent lost returns. Equivalent circulating density is a fancy phrase for pressure on the formation. They were trying to make sure that the pressure on the formation didn't get too high. This was, as BP has acknowledged in its report, this was a challenge. Another way of reducing the pressure on the formation is to pump the cement more slowly. If you pump it very fast, it takes more pressure. You've probably had experience with that. In order to make a liquid flow through a pipe faster, you need to increase the pressure on it. So the design team chose a low cement flow rate. Again, this is showing that same animation again only we're going to emphasize flow rate now. Again, the faster you pump, the more pressure you use. And so the cementing design here, in order to avoid problems with overpressuring the formation, use the

and of itself is not a problem and it's not uncommon, but it's something that the crew needed to be keeping in their mind as they were thinking about the long-term quality of the cement job and what they could expect out of it. Another factor, low cement volume. Again, driven by the very same concern about pressuring -about overpressuring the formation. Again, what -- what we've been explaining is that if you -- if you overpressure this formation, you risk losing the cement into the formation -losing cement into the formation. The cement doesn't do what you want to. It doesn't isolate the hydrocarbon zone. So one way, again, to reduce the pressure is to reduce the top cement, keep the cement lower in the annular zone than it would otherwise have been. BP had at least two reasons for reducing the height of the cement that it put in the annular space. One reason was about trapped annular pressure. As this animation shows, if you close off all of the area in the annular space over here, you

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low cement flow rate. Now, a high cement flow rate is helpful generally when you're cementing because, among other things, it helps clean the formation and scour out any remaining gelled-up mud or debris from the annular space. Again, you have the experience that a fast jet of water will clean something better than a slow jet of water. And that's why a high flow rate in cementing is helpful. Here, however, we recognize that that would be preferrable but, because of that circulating density concern, because of the concern of overpressuring the formation, the team chose a lower rate. And again, as Fred has been saying, these were decisions that were made consciously. As the report acknowledges -- I'm sorry. As the cementing design acknowledged, they had consciously chosen a reduced rate of cementing in order to avoid -- again, there's that phrase, ECD -- ECD means pressur

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