Judge hears testimony from high-ranking BP official at trial over Gulf oil spill

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CORRECTS DATE TO TUESDAY, FEB. 26 - Lamar McKay, former president of BP America and current chief executive of BP's Upstream unit, leaves Federal Court after testifying in New Orleans, Tuesday, Feb. 26, 2013. McKay, who was president of BP America at the time of the Deepwater Horizon disaster, became the first BP executive to testify at the federal trial intended to identify the causes of BP's Macondo well blowout and assign percentages of blame to the companies involved. (AP Photo/Gerald Herbert)

NEW ORLEANS - A ranking BP executive testified Tuesday that the London-based oil giant and its contractors share the responsibility for preventing blowouts like the one that killed 11 workers and spawned America's worst offshore oil spill in 2010.

Lamar McKay, who was president of BP America at the time of the Deepwater Horizon disaster, became the first BP executive to testify at a federal trial intended to identify the causes of BP's Macondo well blowout and assign percentages of blame to the companies involved.

Rig owner Transocean and cement contractor Halliburton also are defendants at trial, which opened Monday.

A plaintiffs' attorney pressed McKay to agree with him that BP bore ultimate responsibility for the blowout, but McKay insisted that managing the hazards of deepwater drilling are a "team effort."

"I think that's a shared responsibility, to manage the safety and the risk," said McKay, now chief executive of BP's Upstream unit. "Sometimes contractors manage that risk. Sometimes we do. Most of the time it's a team effort."

McKay also defended BP's internal probe of the spill, which outlined a series of mistakes by rig workers and faulted decisions by other companies but didn't assign any blame to BP's upper-level management.

"I think it was a substantial investigation," McKay said. "I think we've learned what we can from the accident and we're trying to put those things into practice right now."

McKay, whose testimony will resume Wednesday, called the disaster a "tragic accident" resulting from a "risk that was identified."

It wasn't the first time McKay testified under oath about the spill. He appeared before Congress less than a month after the explosion.

U.S. District Judge Carl Barbier is hearing the case without a jury. Barring a settlement, Barbier will decide how much more money BP and other companies owe for their roles in the disaster.

McKay's testimony followed that of an expert witness for people and businesses suing the company. University of California-Berkeley engineering professor Robert Bea testified that BP PLC didn't implement a 2-year-old safety management program on the rig, which exploded on April 20, 2010.

An estimated 172 millions of gallons (651 million litres) of crude spilled into the Gulf over the three months that followed.

"It's a classic failure of management and leadership in BP," said Bea, a former BP consultant who also investigated the 1989 Exxon Valdez spill and New Orleans levee breaches after Hurricane Katrina in 2005.

BP has said its "Operating Management System" was designed to drive a rigorous and systematic approach to safety and risk management. During cross-examination by a BP lawyer, Bea said the company made "significant efforts" to improve safety management as early as 2003.

However, the plaintiffs say BP only implemented its new safety plan at just one of the seven rigs the company owned or leased in the Gulf at the time of the disaster.

Bea said it was "tragic" and "egregious" that BP didn't apply its own safety program to the Deepwater Horizon before the Macondo well blowout. Transocean owned the rig; BP leased it.

BP lawyer Mike Brock said the company allows contractors like Transocean to take the primary responsibility for the safety of rig operations as long as the contractor's safety system is compatible with BP's — an arrangement that Brock suggested is a standard industry practice.

In his May 2010 congressional testimony, McKay said BP's Operating Management System is "as good as anyone."

"I know of nothing that points me in a direction that we have deficiencies" in the system, McKay said.

As he questioned Bea, Brock recited a long list of steps that BP took to improve safety, citing them as evidence that the company wasn't "cutting corners" on safety.

A plaintiffs' lawyer showed Bea a transcript of a deposition of Tony Hayward, BP's CEO at the time of the disaster. Hayward was asked if the blowout could have been averted if BP had implemented the safety management program in the Gulf.

"There is possible potential," Hayward responded. "Undoubtedly."

Bea said BP's "culture of every dollar counts" was reflected in a May 2009 email sent by BP well team leader John Guide: "The DW Horizon embraced every dollar matters since I arrived 18 months ago," Guide wrote. "We have saved BP millions and no one had to tell us."

"Financially, BP had the resources to effectively put into place a process safety system that could have prevented the Macondo disaster," Bea testified.

BP has already pleaded guilty to manslaughter and other criminal charges and has racked up more than $24 billion in spill-related expenses, including cleanup costs, compensation for businesses and individuals, and $4 billion in criminal penalties.

Plaintiffs' attorney Robert Cunningham read portions of the plea agreement as he pressed McKay to say how much responsibility BP takes for the catastrophe. Cunningham noted that nothing in the document assigns blame to specific BP executives.

"That is not written in there. That's true," McKay said.

Two BP rig supervisors, however, have been indicted on manslaughter charges for the workers' deaths and are awaiting a separate trial.

"There were some misinterpretations and mistakes made" on the rig, McKay said.

One of the biggest questions facing Barbier is whether BP acted with gross negligence.

Under the Clean Water Act, a polluter can be forced to pay a minimum of $1,100 per barrel of spilled oil; the fines nearly quadruple to about $4,300 a barrel for companies found grossly negligent, meaning BP could be on the hook for nearly $18 billion.

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