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2013-09-05 BP and Anadarko Phase 2 Pre-Trial Memo - Quantification Segme

2013-09-05 BP and Anadarko Phase 2 Pre-Trial Memo - Quantification Segme

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BP and Anadarko's Pre-Trial Memo for Quantification
BP and Anadarko's Pre-Trial Memo for Quantification

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Published by: OSDocs2012 on Sep 18, 2013
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IN THE UNITED STATES DISTRICT COURTFOR THE EASTERN DISTRICT OF LOUISIANA
 
In Re: Oil Spill by the Oil Rig“Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010This Document Relates To:
All Case
 
*********
MDL No. 2179SECTION: JJudge BarbierMagistrate Judge Shushan
 
BP AND ANADARKO’S PHASE 2 PRE-TRIAL MEMORANDUMQUANTIFICATION SEGMENT
Warren Anthony FitchKy E. KirbyBINGHAM MCCUTCHEN LLP2020 K Street NWWashington, DC 20006Telephone: (202) 373-6000Don K. Haycraft (Bar No. 14361)LISKOW & LEWISOne Shell Square701 Poydras Street, Suite 5000 New Orleans, Louisiana 70139-5099Telephone: (504) 581-7979Facsimile: (504) 556-4108James J. DragnaBINGHAM MCCUTCHEN LLP355 S. Grand Avenue, Suite 4400Los Angeles, California 90071Telephone: (213) 680-6400Richard C. Godfrey, P.C.J. Andrew Langan, P.C.Barry E. Fields, P.C.Hariklia (“Carrie”) Karis, P.C.Matthew T. Regan, P.C.KIRKLAND & ELLIS LLP300 North LaSalle StreetChicago, Illinois 60654Telephone: (312) 862-2000Deborah D. Kuchler, T.A. (Bar No. 17013)
KUCHLER POLK SCHELLWEINER & RICHESON, LLC
1615 Poydras Street, Suite 1300 New Orleans, Louisiana 70112Telephone: (504) 592-0691Robert C. “Mike” Brock COVINGTON & BURLING LLP1201 Pennsylvania Avenue, NWWashington, DC 20004-2401Telephone: (202) 662-5985
 Attorneys for Anadarko PetroleumCorporation
 
 Attorneys for BP Exploration & Production Inc.and BP America Production Company
 
Case 2:10-md-02179-CJB-SS Document 11266 Filed 09/05/13 Page 1 of 13
 
 
Through innovative engineering approaches and unprecedented efforts, the flow of oilfrom the Macondo reservoir that began on April 20, 2010 was permanently ended on July 15,2010. Estimating the amount of flow during those 86 days proved no less challenging than theattempts to stop it, given the dynamic nature of the flow and events affecting it. Starting as aliquid, the reservoir fluid transitioned into multiple “phases”—a mix of oil and gas—as itencountered changing pressures and temperatures up the wellbore. This flow traveled throughand eroded various restrictions, including the downhole cement, the casing, the drillpipe, the blowout preventer, and the marine riser, which first bent, then developed a series of erosion holes before it was removed. Until the flow was stopped in mid-July through a custom “cappingstack,” multiple interventions and collection measures had been attempted, each of which had the potential to alter the relevant restrictions, geometries (piping configurations) and flowconditions. The blowout preventer was subsequently recovered and other forensic informationwas developed, confirming that significant erosion had occurred. Now, three years after those efforts to stop the flow of oil and the collection of evidenceabout that flow, the Quantification segment of the Phase 2 trial will determine the amount of oilthat was discharged. The evidence on this question at trial will come almost entirely fromexperts—with a total of 16 experts, spanning numerous technical disciplines, slated to testifyabout their assessments. To answer this question reliably, the methodology must account for theavailable evidence and the uncertainty of the flow conditions during the spill. That is where thedistinction among the experts is clear: BP and Anadarko’s experts honor the available data anddetermine the cumulative discharge using a proven methodology that that does not requiresimplistic and unverified assumptions about flow conditions. In contrast, the United States
Case 2:10-md-02179-CJB-SS Document 11266 Filed 09/05/13 Page 2 of 13
 
 
2experts employ unproven methods that require significant assumptions and extrapolations in lieuof, and even directly inconsistent with, the available data and other evidence.BP and Anadarko estimate that
3.26 million stock tank barrels
(MMstb) of oil werereleased from the reservoir. This estimate is grounded in industry-standard reservoir engineeringwork performed by one of the world’s foremost reservoir engineers, Dr. Martin Blunt. Dr.Blunt’s “material balance” analysis draws upon industry-recognized principles and techniques,and relies on actual measured data about the reservoir itself, including the amount of oil availableto be discharged, the compressibility of the rock in the reservoir, and the pressures before andafter the spill. This method does not require day-by-day calculations of flow through thewellbore and its restrictions, or suffer the inherent uncertainties in such methods. Using Dr.Blunt’s material balance calculation of 3.26 MMstb and subtracting the 810,000 collected barrels(
 see
Rec. Doc. 8620),
2.45 MMstb
of oil were spilled into the Gulf of Mexico.In contrast, the United States alleges a cumulative discharge of 4.9 MMstb (or 4.09MMstb excluding the 810,000 collected barrels). This is essentially the same figure theGovernment first published on August 2, 2010.
1
That original estimate was generated over asingle weekend by combining (i) flow calculations for a single day (July 15), and (ii) anassumption that no significant geometry changes took place in the outflow paths over the prior 85 days—an admittedly “fictional state.” Three years have since passed, but the United Statesstill advances its original figure as a valid estimate, relying upon the same flawed approach of the scientist that generated it. In addition, the United States offers testimony from expertsemploying different methodologies that, remarkably, arrive at almost exactly the original 2010estimate. This alignment of results can be traced to the U.S. experts’ inputs: Each U.S. expertrelies upon one or more faulty assumptions that increase his estimates. When actual evidence
1
 
See
TREX 8809. TREX 9376.
Case 2:10-md-02179-CJB-SS Document 11266 Filed 09/05/13 Page 3 of 13

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