Inside BP's war room

Details from third floor of the British oil giant's U.S. headquarters in Houston, where executives and engineers schemed up "top kill" and continue to deal with the oil spill crisis in the Gulf.

HOUSTON--Last Wednesday, five weeks into the worst oil spill in U.S. history, BP Chief Executive Tony Hayward locked himself in a room on the third floor of the British oil giant's U.S. headquarters in Houston.

For the next five hours, Hayward, BP executives, senior engineers, and the U.S. Energy Secretary and Nobel Physicist Steven Chu, who had flown in two days earlier, grappled with the latest plan to stem the thousands of barrels of oil a day gushing from a broken well at the bottom of the Gulf of Mexico.

The scheme was called "top kill" and involved pumping heavy drilling fluids, known as drilling mud, into the blown-out well to stifle the flow of oil and allow the top of the well to be sealed with concrete. The technique had worked to seal other wells, but never one out of control in 5,000 feet of water. There was a risk that the extra pressure caused by pumping in mud could rupture the top of the well, and increase the amount of oil gushing into the sea.

Even so, Hayward and his team gave the plan a 60 to 70 percent chance of success. Quietly, they hoped an end to the devastating leak--and BP's five week-long, media-saturated nightmare--might be within sight.

The room they worked in measured about 30 feet by 30 feet and is normally used for training sessions. BP's crisis unit had commandeered it and renamed it the "intervention room" soon after the leak began. Cables wrapped in yellow tape with the word "warning" written on it, snaked from the ceiling to the cheap, white laminated tables, which were crammed with laptops. Maps of the Gulf and diagrams of the equipment on the seabed covered the thin walls.

Next door, in an almost identical space called the "containment room," a separate group of engineers worked on strategies to capture the oil that had already leaked.

The team in the intervention room pored over the results of tests to see if the well could take the pressure. The mood was "intense," BP's director for the Americas Bob Dudley told Reuters in the narrow, artificially-lit corridor outside the room during a break in deliberations. "It's kind of like NASA and the Apollo 13 mission in there."

The uber-calm Dudley isn't normally given to hyperbole. He was formerly the head of TNK-BP, the British firm's joint venture with a group of Russian oligarchs, until the billionaires turned hostile and Dudley was forced to flee the country. He talks about that experience with the emotion of an oil man discussing his wife's choice of make-up. In Houston that afternoon, though, there was a flicker of tension in his eyes.

"It's pretty dramatic," he said.

Shortly before 1 p.m., as a crowd of employees dressed in button-down shirts, casual golf shirts and cotton pants, gathered outside to wait for a decision, Hayward gave the green light and a call was made ordering the vessels above the site of the spill to start "top kill." As drilling fluid flowed into the top of the well, morale in the command center lifted.

Unfortunately for BP and for everyone else, top kill misfired. If this were a NASA moment, it would have been more like the Challenger disaster than Apollo 13.

With BP's stock price plummeting and analysts predicting the leak could last until August when a relief well is completed, the stakes are starker than ever: for Hayward, his globe-straddling company and, of course, the waters and beaches and wetlands of the Gulf.

On top of the technical challenges of stopping a gushing oil well, BP must contend with a public that is growing angrier by the day as well as an increasingly frustrated, and criticized, Obama administration.

The White House has come under intense political pressure to take charge of the disaster--even if it is not entirely clear what the president could do apart from stepping up rhetoric and taking a harder line on the company.

In short, instead of getting easier, the coming few months will likely be even more dauntingly complicated for BP and its press-shy boss. During four days inside the Houston command center and traveling with Hayward to the site of the oil leak late last week, Reuters got an up-close picture of a company under siege.

Submarines and masseurs
In the hours after "top kill" began, BP workers in Houston seemed busier than they had been in the previous two days. A sense of quiet hope filled the offices. Some people even smiled.

BP's headquarters, a 20-story office block in west Houston, houses the firm's permanent crisis center, which handles the response to things like hurricanes. There are now between 500 and 600 people, including staff from Exxon, Shell, Anadarko and Chevron, working in the center, which operates around the clock. Shifts last 12 hours, though a handover period means most are at least 13.

On the landscaped campus outside, ducks and geese play in manmade ponds and multistory car parks are crammed with top of the range muscle cars, high-end SUVs, and European luxury saloons.

The intervention and containment rooms sit at the heart of the command center. There's also "the hive," which has blacked out windows and a video wall broken into multiple screens. The screens show different views of BP's remotely operated vehicles (ROV) --the miniature submarines at work thousands of feet below the Gulf.

About a dozen workers in the room talk to ROV operators on vessels around the spill site, communicating through microphones that hang from the ceiling. "It's kind of like kids with video games but with much bigger risks," BP senior vice president Kent Wells said.

Further along the corridor, inside the "simops" or simultaneous operations room, engineers coordinate the movement of the vessels involved in the crisis effort. On the day "top kill" began, more than a dozen large vessels, including drill ships, supply vessels and platforms were huddled in a one mile radius directly above the leaking well.

In an alcove along the long corridor that connects all the rooms, BP has laid on massage therapists for workers. "When you're working people as hard as we are, you have to provide some stress relief," Wells said. The afternoon "top kill" began the two massage chairs were empty.

Most of the workers in the command center are white, middle-aged and male. The few women present mostly fill support roles such as executive assistants or receptionists. U.S. accents are supplemented with Norwegian and British ones--experts flown in from around the world. To make it easier for workers to know what their colleagues do, some wear red singlets with their roles stitched on the back.

The center also houses a group from the U.S. Coast Guard. Dressed in navy blue uniforms and heavy black boots, they are there as a reminder from Washington that the government is a part of the response effort. But the Coast Guard personnel are often left with little to do. On the day "top kill" began, they confined themselves to a tiny windowless room along the corridor, seemingly unbothered by what was happening around them.

Trading the plume
Several hours after mud began pumping into the well, Hayward emerged from the intervention room in what has become his trademark open-necked shirt. Flanked by the head of Britain's largest financial public relations firm and by his own head of press, a former editor of the Financial Times, Hayward gave a brief update to Reuters and a local TV new crew in the "simops" room.

Behind Hayward, five large flat-screen televisions streamed video from the sea floor. On one, drilling mud was seen gushing from the well head while another screen showed a yellow panel with dials and controls and, in red letters, the name Cameron International Corp., the Houston-based company which manufactured the failed blowout preventer that BP initially blamed for the oil spill.

Under pressure from Washington, BP had added a video stream of the leaking oil well to its Web site. With "top kill" underway, Hayward cautioned against anyone trying to interpret changes in the size of the plume of oil as indication of success or failure. Not everybody listened to that warning. One BP insider said a few days later that there were "hedge funds trading the plume."

Hayward looked strained, and sounded cautious. "The operation is proceeding as we planned it," he said.

Death threats and defiance
The April 20 explosion on the Deepwater Horizon rig, which was drilling the Macondo oil prospect--named for a fictitious down-at-heel town in a number of Gabriel Garcia Marquez stories--killed 11 workers and triggered the disastrous oil leak.

So far, it has also lopped about $65 billion off BP's market capitalization and hit industry plans to expand deepwater drilling in the Gulf and in other parts of the U.S. As the environmental disaster drags on, it is likely to have a profound impact on the way Americans and others view deepwater drilling.

At first, BP responded to allegations that it had cut corners and put savings ahead of safety by diverting blame to its partners in the Gulf well. Now it says it is solely focused on stopping the leak.

Behind the scenes, though, BP workers have taken on a defensive, even defiant, mood. An employee who walked into the command center canteen last week found colleagues watching CNN. "So are they accusing us of covering stuff up again?" she asked sarcastically.

As public anger has grown, BP's press team has taken to routing all media calls straight through to voice mail, in part because of the volume of calls urging violence against Hayward. The worst abuse comes in the early hours of the morning, press officers say, when callers appear to have had a few drinks.

Louisiana-born political consultant James Carville has regularly demanded that President Barack Obama tell BP "I'm your daddy" and suggested that Obama might be inclined to shoot Hayward given the chance. People posting comments on U.S. newspaper Web sites have called Hayward a "jerk" with a "toffee-nosed accent."

"I understand perfectly why everyone is angry and frustrated that this leak has not been stopped," Hayward told Reuters late last week. "I am angry and frustrated. I want this thing stopped as fast as I can, as we can. We want it stopped and we're doing everything we can to stop the damn leak and we're going to continue to do everything we can to stop the damn leak. The reality is that's it's a very challenging technological challenge."

An Englishman and a president in the bayou
Two days after "top kill" began, Hayward touched down at Houma airport in Louisiana after a one-hour flight from Houston in a white Falcon corporate jet. He hopped into a Chevrolet Suburban--black with blacked out windows--and made the short drive across the parking lot to a trailer, where a group of medics tested the respiratory function of everyone booked to fly out to the spill site by helicopter.

Hayward, his executive assistant and a press officer then drove the 100 yards back to the heliport, a grey one-story building whose waiting room consisted of prefabricated cabins bolted together.

As Hayward left Houston earlier that morning, President Obama had arrived in Louisiana to meet with the Coast Guard, state officials and to visit a local beach.

The slow-motion disaster has not spared the White House. Opinion polls say 60 percent of Americans are unhappy with the government's response. Many in the Gulf region think the government should have acted more quickly to stop the oil spreading and should be doing more to help the thousands employed in the fishing industry.

That's the view of Carol Terrebonne, who sells shrimp to the public from a cramped roadside office in the steamy Louisiana shrimping hamlet of Golden Meadow. "I blame both (Obama and Hayward,)" Terrebonne said a day after Obama's visit to the state. "They should have done more before the oil got into our marshes. They could have brought in big skimmers right away."

Under a bright blue sky on Friday morning, Obama and Coast Guard Cmdr. Adm. Thad Allen, the president's point man on the spill response, met with local officials on an otherwise deserted Fourchon beach. A sign at the entrance to the beach read "Have fun, be safe and help keep our beach clean."

The president walked to the edge of the water, which was lined with brightly colored oil-absorbing plastic sponges that looked a bit like cheerleader pompoms as well as a long thin tubular boom designed to catch the oil. After chatting with officials, Obama called the press over and pointed out the gooey black balls that had washed up on the sand. "If you can see these little balls, these are the tarballs they were talking about," he said. "Obviously, the concern is that until we stop the flow, we've got problems."

Standing beside the president was Charlotte Randolph, LaFourche Parish President. Randolph regularly fished from the beach, Obama explained. "We want to be sure she can come back."

A reporter asked the president if the tar balls might be natural. "We attribute all oil that you see right now to BP," said Randolph.

Later that day, Obama was asked how confident he was that "top kill" would work. "All I can say is that we've got the best minds working on it and we're going to keep on at it until it is plugged," the president said.

'The world we live in'
Hayward is one of those minds. A geologist by training, he joined BP out of university and rose to the top job in May 2007. His predecessor, Lord John Browne, was forced to step down after admitting he had lied in a court bid to stop a British newspaper printing details of a gay affair.

Browne's star had already been tarnished by a 2005 explosion at BP's Texas City operation, which left 15 workers dead and which the safety regulator blamed on cost cuts initiated by the CEO. Pipeline leaks in Alaska a year later, which BP admitted were caused in part by cost cutting, and delays on key projects, added to the company's woes.

Hayward is known by colleagues for his keen focus on the nuts and bolts of oil production. A few months after taking over, he declared that BP's operational performance was "terrible." Vowing to change the way the company worked, Hayward said he would standardize and streamline the way BP did everything from drilling wells to ensuring safe working conditions.

The BP boss has a full head of dark brown hair and a boyish face. This, and his normally relaxed down-to-earth manner mean he could easily pass for someone a decade younger than his 53 years. As the crisis has dragged on, though, his face has begun to look more drawn. The night after "top kill" began, he worked until 4 a.m., he had no sleep and then headed off to do breakfast television. "I want to stop this thing as soon as anyone," he told Reuters. "I want my life back."

Unlike the camera-friendly Browne, Hayward is uncomfortable with media attention. Many in the United States have criticized comments he made early in the crisis that seemed to downplay the spill. Unfamiliar with the American political environment, Hayward has struggled to strike the right tone.

"The U.S., has a tendency to politicize and...sensationalize bad news," says John Hofmeister, the former head of Shell Oil Company, the U.S. division of Hague-based Royal Dutch Shell, the world's second-biggest publicly listed oil company. "For foreign-based executives to throw themselves into that debate, they don't know the territory, they don't know or understand how the dynamics work. They have a great deal of difficulty appreciating the nuances."

Still, BP officials have pushed their boss to become even more visible, and in recent days he has started to give regular TV interviews. On his first trip out to the Discoverer Enterprise, a drill ship from which a failed early attempt to tackle the spill had been conducted, Hayward was accompanied by a Reuters reporter and photographer and by a three-person ABC camera crew.

At the heliport in Houma waiting to board a large yellow Sikorsky chopper, Reuters asked him how he was coping with the blanket news coverage and round-the clock interview demands. Hayward shrugged. "We live in the world we live in," he said with a sigh.

Blame game
BP's world is changing rapidly. Obama has extended a moratorium on new deepwater wells and announced stronger regulations on existing drilling.

Credit Suisse estimates BP's cleanup costs could reach $9.8 billion. Legal challenges are likely to add billions more. Analysts have even begun speculating whether BP might be prey to a takeover bid by Shell or Exxon Mobil Corp, a move that industry executives have in the past consistently dismissed as unlikely to gain regulatory approval.

BP has made a bad situation worse thanks to crucial early missteps. In line with early estimates from the National Oceanic and Atmospheric Administration estimates, the company initially said that 1,000 barrels of oil a day were spilling into the Gulf, before increasing that to 5,000 barrels a day.

But as some scientists began to estimate a much higher flow rate, and especially after BP started to capture 5000 barrels a day of crude from the leak, even as thousands more barrels continued to spill into the ocean, many in Washington and around the country accused the company of covering up the extent of the spill.

BP's credibility took a further hit early last week when an independent U.S. government-sponsored panel said that the oil leak was likely discharging between 12,000 and 19,000 barrels a day. The panel, which reported its findings on May 27, estimated that between 650,000 and 700,000 barrels of oil had already spilled into the Gulf, easily surpassing the 260,000 barrels the Exxon Valdez discharged when it ran aground in Alaska's Prince William Sound.

"As upset as we are about the oil spill itself, we are also upset that we are not getting proper information from BP," Miles Grant at environmental group the National Wildlife Federation told Reuters.

Early on, Hayward tried to distance BP from the well failure, telling Reuters in an interview on April 30 that "this was not our accident." He repeated this message for days. "This was not our drilling rig, it was not our equipment, it was not our people, our systems or our processes," he told the BBC on May 3. The blame, he said, was better pinned on the maker of the blowout preventer or on Transocean, a publicity-shy company that BP hired to drill the well and which moved its headquarters from Houston to tax-cutting Switzerland.

But documents released by the U.S. House Committee on Energy and Commerce, which is investigating the accident, have highlighted BP's input into the design of the well and the role BP managers played in how drilling was conducted. Senator David Vitter said that BP had seemingly "made enormous mistakes and probably cut corners."

That's certainly what many along the Gulf coast believe. "I blame the BP engineers who cut corners," says Rick Murdoch, 61, a charter boat captain out of Alabama who had planned to fish Louisiana waters in May and June but now faces a bleak season.

Fueling the sense of outrage, a report by the Department of the Interior's Inspector General detailed a culture of corruption in the Minerals Management Service, the agency supposed to oversee offshore drilling. Obama said last week that the relationship between U.S. regulators and oil officials had been "scandalously close."

Standing on the deck of the Discoverer Enterprise last week, drips of perspiration rolling from the rim of his white plastic safety hat, Hayward appeared uncomfortable with the subject of blame. "I am not going to speculate on half facts, innuendo and spurious gossip. We need to wait for the facts and then we can determine who was at fault, at what time, but most important: how do we ensure it doesn't happen again?"

Junk shot
Forty-nine hours into "top kill," the chopper ferrying Hayward, a Reuters reporter and photographer and the ABC crew to the Discoverer Enterprise, took off from Houma and flew south across the vast Mississippi Delta. The lush green wetlands a few hundred feet below were crisscrossed by canals cut by the oil industry decades earlier to facilitate drilling just offshore. Later, when the drills and rigs moved far out from the coastline, there was no need to go through the swamps. But the damage to the Delta has never been repaired.

Hayward remained optimistic about the latest attempt to control the leaking pipe. As well as the regular "top kill" process, BP had tried a "junk shot," injecting heavier materials, such as shredded rubber and golf balls, into the well in a bid to block it off. "We have wrestled it to the ground but we haven't put a bullet in its head yet," Hayward said above the roar of the rotors.

After landing on the Enterprise, which is about the length of three American football fields and resembles an oil tanker with a giant derrick fixed on top, Hayward met officials from BP and Transocean. In the waters around the Enterprise sat dozens of ships and vessels working either to stop the leak or prevent the oil spreading. Hayward said there were between 1,000 and 1,500 people in the immediate vicinity working to stop the flow.

"This is the most extraordinary thing I have seen in my almost 30 years in the oil industry," he said.

BP's representative on the Enterprise, which had been drilling nearby when the Deepwater Horizon exploded, is George Walker, a tall Texan with 37 years experience in the oil industry. He explained to his boss what had happened after the rig blew. "We did everything we could," he said, his bottom lip quivering.

Later, when a reporter asked Hayward if the technology to stop the leak should have been developed earlier, a hint of defensiveness crept into the BP boss's voice. "We have the technology. We just haven't had to deploy it in this situation as this situation has not occurred in 20 years in drilling in the deep water. So the technology's here and we're deploying it."

On Air Force One on the flight back to Chicago that afternoon, Obama's spokesman Robert Gibbs told reporters that the president was optimistic about "top kill." "We're hopeful and I think we'll know over the course of the next many hours where we are," Gibbs said. "The president believes that we're making progress."

Looking down from his chopper on the still waters of the Gulf, Hayward, too, remained hopeful. He had seen the strips of rainbow-colored sheen and patches of brown--crude-oil mixed with dispersant--but preferred to focus on the wider ocean.

"There's a lot of clear water," he said, almost as if he was convincing himself that things would get better. "You can see some silver sheen here but most of the area is surprisingly clear in this location."

Less than 24 hours later BP announced "top kill" had failed.

This story was written by Tom Bergin with additional reporting by Ed Stoddard in Venice; Patricia Zengerle in Port Fourchon; writing by Tom Bergin; editing by Simon Robinson, Jim Impoco and Claudia Parsons.

 

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