Hayward Deposition - June 2011

PURSUANT TO CONFIDENTIALITY ORDER

1

1 UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA2

3 IN RE: OIL SPILL ) MDL NO. 2179

BY THE OIL RIG )4 "DEEPWATER HORIZON" IN ) SECTION "J"

THE GULF OF MEXICO, ON )5 APRIL 20, 2010 ) JUDGE BARBIER

) MAG. JUDGE SHUSHAN6

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17 *****************

VOLUME 118 *****************19

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21 Deposition of Anthony Hayward, taken at

Kirkland & Ellis International, 30 St. Mary Axe, 22nd22 Floor, London EC3A 8AF, England, United Kingdom, on the

6th of June, 2011.23

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1 A P P E A R A N C E S2

3 Magistrate Judge Sally Shushan UNITED STATES DISTRICT COURT

4 EASTERN DISTRICT OF LOUISIANA 500 Poydras Street, B345

5 New Orleans, Louisiana 701306

APPEARING FOR THE PLAINTIFFS' STEERING COMMITTEE:7 Mr. Robert T. Cunningham

Mr. William E. Bonner8 CUNNINGHAM BOUNDS, LLC

1601 Dauphin Street9 Mobile, Alabama 36604

10 Mr. Paul M. Sterbcow LEWIS, KULLMAN, STERBCOW & ABRAMSON

11 601 Poydras Street, Suite 2615 New Orleans, Louisiana 70130

12

Mr. Calvin C. Fayard, Jr.13 FAYARD & HONEYCUTT

519 Florida Avenue, SW14 Denham Springs, Louisiana 7072615 Mr. Stephen J. Herman

HERMAN, HERMAN, KATZ & COTLAR16 820 O'Keefe Avenue

New Orleans, Louisiana 7011317

Mr. Ronnie G. Penton18 LAW OFFICES OF RONNIE G. PENTON

209 Hoppen Place19 Bogalusa, Louisiana 70427-382720 Mr. John Parkerson Roy

DOMENGEAUX, WRIGHT, ROY & EDWARDS21 556 Jefferson Street, Suite 500

Lafayette, Louisiana 7050122

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1 APPEARING FOR THE DERIVATIVE PLAINTIFFS, MDL 2185SECURITIES PLAINTIFFS SUBCLASS:

2 Mr. Richard Warren Mithoff MITHOFF LAW FIRM

3 500 Dallas St. - Penthouse Houston, Texas 77002

4APPEARING FOR BP, INC.:

5 Mr. Richard C. Godfrey Mr. Mark R. Filip

6 KIRKLAND & ELLIS 300 North LaSalle

7 Chicago, Illinois 606548 Mr. Daryl A. Libow

SULLIVAN & CROMWELL9 1701 Pennsylvania Avenue, N.W.

Washington, D.C. 20006-580510

Mr. James J. Neath11 ASSOCIATE GENERAL COUNSEL

BP LEGAL12 BP AMERICA INC.

501 Westlake Park Boulevard13 Houston, Texas 7707914 APPEARING FOR ANTHONY HAYWARD:

Mr. Dan K. Webb15 Mr. Thomas L. Kirsch II

WINSTON & STRAWN16 35 West Wacker Drive

Chicago, Illinois 60601-970317

APPEARING FOR ANDY INGLIS:18 Ms. Kathleen H. Goodhart

COOLEY LLP19 101 California Street, 5th Floor

San Francisco, California 94111-580020

APPEARING FOR TRANSOCEAN:21 Mr. Steven L. Roberts

Mr. Daniel Johnson22 Mr. Jack Massey

SUTHERLAND ASBILL & BRENNAN23 1001 Fannin, Suite 3700

Houston, Texas 77002-67602425


4

1 APPEARING FOR ANADARKO PETROLEUM COMPANYAND MOEX OFFSHORE 2007:

2 Ms. Diane C. Hertz BINGHAM MCCUTCHEN

3 399 Park Avenue New York, New York 10022-4689

4APPEARING FOR CAMERON INTERNATIONAL CORPORATION:

5 Mr. David J. Beck BECK, REDDEN & SECREST

6 One Houston Center 1221 McKinney Street, Suite 4500

7 Houston, Texas 77010-20108 APPEARING FOR DRIL-QUIP, INC.:

Mr. C. Dennis Barrow, Jr.9 WARE, JACKSON, LEE & CHAMBERS

America Tower, 42nd Floor10 2929 Allen Parkway


APPEARING FOR M-I SWACO:12 Mr. Hugh E. Tanner

MORGAN, LEWIS & BOCKIUS13 1000 Louisiana Street, Suite 4000

Houston, Texas 7700214

Mr. Steven A. Luxton (Partial Appearance)15 MORGAN, LEWIS & BOCKIUS, LLP

1111 Pennsylvania Avenue, NW16 Washington, D.C. 2000417 APPEARING FOR HALLIBURTON:

Mr. Donald E. Godwin18 Ms. Jenny L. Martinez

Ms. Stefanie K. Major19 GODWIN RONQUILLO

1201 Elm Street, Suite 170020 Dallas, Texas 75270-204121 APPEARING FOR THE UNITED STATES:

Mr. R. Michael Underhill22 Attorney in Charge

West Coast office23 U.S. DEPARTMENT OF JUSTICE

TORTS BRANCH, CIVIL DIVISION24 450 Golden Gate Avenue

7th Floor, Room 539525 San Francisco, California 94102-3463


5

1 APPEARING FOR THE STATE OF ALABAMA: Mr. Luther Strange

2 Attorney General Mr. Corey L. Maze

3 Special Deputy Attorney General Mr. Winfield J. Sinclair

4 Assistant Attorney General OFFICE OF THE ATTORNEY GENERAL

5 STATE OF ALABAMA 501 Washington Avenue

6 Montgomery, Alabama 361047 APPEARING FOR THE STATE OF LOUISIANA:

Mr. Allan Kanner8 Ms. Elizabeth "Lili" Petersen

Attorneys for Louisiana Attorney General9 KANNER & WHITELEY

701 Camp Street10 New Orleans, Louisiana 70130-350411 APPEARING FOR OHIO PENSION FUNDS:

Mr. Jeffrey C. Block12 BERMAN DEVALERIO

One Liberty Square13 Boston, Massachusetts 0210914 ALSO PRESENT:

Mr. Peter Jennings, Logistics Supervisor15 Mr. Ray Aguirre, Case Manager

Mr. Max Kennedy, Videographer16 Ms. Lilia Garcia

Mr. Chad Paris17 Ms. Cecelia Aguilar18

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6

1 INDEX2 VIDEOTAPED ORAL DEPOSITION OF

ANTHONY HAYWARD3 JUNE 6, 20114

5 Appearances.............................. 26

Direct Examination-Mr. Cunningham........ 117 Examination-Mr. Sterbcow................. 232

Examination-Mr. Underhill................ 3468

9 Changes and Signature.................... 44410 Reporter's Certificate................... 44611

12 EXHIBIT INDEX13

Exhibit No. Description Marked14

15 6000 Tony Hayward Speech Transcription from Youtube.com, Entrepreneurial Spirit

16 Needed; 58 pages 2217 6001 June 17, 2010 Verbatim Transcript,

House of Representatives, Committee on18 Energy and Commerce, Subcommittee on

Oversight and Investigations, Committee19 Hearing on the Deepwater Horizon Oil

Spill; 102 pages 2520

6002 Printout of presentation, Leading from21 the top in BP, Steve Flynn, Vice

President, HSSE, BP Group Safety and22 Operations; 11 pages 3923 6003 Printout of 1 April 2005 speech by Tony

Hayward, Working Safety - a continuous24 journey, at the International Regulators'

Offshore Safety Forum, London; five pages 4625


7

1 6004 March 9, 2001 printout from Reuters, Exxon's Tillerson blames BP for Gulf

2 oil spill; one page 543 6005 February 3, 2000 printout of article by

Ben Spiess, OT: BP Fined $15.5 Million4 in Dumping of Toxic Waste in Alaska;

one page 615

6006 United States District Court, Southern6 District of Texas, Judgment in a Criminal

Case, United States of America v. BP7 Products North America, March 13, 2009,

attachments; 13 pages 658

6007 Printout from BP website, 17 August 2005,9 BP to Appoint Independent Panel to Review

U.S. Refinery Safety; two pages 7210

6008 United States District Court For The11 District of Alaska, United States of

America v. BP Exploration (Alaska), Inc.12 Information, Judgment in a Criminal Case;

seven pages 7413

6009 Printout from PBS Newshour website,14 August 8, 2006, Alaskan Oil Pipeline Leak

Raises Environmental Concerns; five pages 7815

6010 United States District Court For The16 Northern District of Illinois, Eastern

Division, United States of America v.17 BP America, Inc., Deferred Prosecution

Agreement, attachments; 70 pages 7918

6011 Emergency Planning: Preparedness,19 Prevention & Response by Center for

Chemical Process Safety, Lessons from20 Grangemouth: A Case History, by Michael

Broadribb, et al.; 17 pages 9021

6012 March 2007 U.S. Chemical Safety and22 Hazard Investigation Board Investigation

Report, Refinery Explosion and Fire,23 BP, Texas City, Texas, March 23, 2005;

341 pages 912425


8

1 6013 March 2007 Booz Allen Hamilton Management Systems Review, 2006 BPXA GPB OTL

2 Incidents, BP America Inc. Final Report; 164 pages 94

36014 Printout from The Guardian website, BP

4 boss warns of shake-up after dreadful results; two pages 108

56015 Printout of Tony Hayward's speech at 2008

6 Annual General Meeting, 17 April 2008, from BP website; four pages 110

76016 BP press release, April 16, 2009, BP AGM

8 Speech, Tony Hayward, BP Group Chief Executive, printout of presentation, 100

9 years of operating at the frontiers, Annual General Meeting; 16 pages 113

106017 BP press release, April 15, 2010, BP

11 Annual General Meeting 2010: Speeches, Tony Hayward, Group Chief Executive,

12 printout of presentation, Annual General Meeting; 24 pages 118

136018 Document 14 - From 'BP Parties' database,

14 2010 Drilling Excellence Update PowerPoint; four pages 123

156019 BP Gulf of Mexico Strategic Performance

16 Unit, Drilling and Completions, The Way We Work, marked CONFIDENTIAL;

17 BP-HZN-2179MDL00369620-369643 12518 6020 BP D&C HSSE Organization Change -

August 09, marked CONFIDENTIAL;19 BP-HZN-2179MDL00306832-306837 13020 6021 H. Lamar McKay, Chairman & President,

BP America responses for US House Energy21 and Commerce Subcommittee on Energy and

Environment Pre-hearing Questions, June22 15, 2010, Submission date: June 13,

2010; 10 pages 14123

6022 BP document, Horizon, Issue Three 2008,24 A Better Record on Safety and

Environment; one page 15425


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1 6023 BP Sustainability Reporting 2009, Safety; 48 pages 155

2

6024 BP p.l.c. Group results, Second quarter3 and half year 2010(a); 43 pages 1574 6025 Document 7 - From 'BP Parties' database,

SPU OMS gaps PowerPoint; eight pages 1645

6026 Failure to Learn, the BP Texas City6 Refinery disaster, by Andrew Hopkins;

200 pages 2047

6027 Printout from iWatch News, Renegade8 Refiner: OSHA says BP "systemic safety

problem," by Jim Morris, M.B. Bell,9 May 17, 2010; three pages 225

10 6028 Printout from OSHA website, OSHA Fact Sheet, BP History Fact Sheet; two pages 229

11

6029 Group of E-mails, various dates, among12 Scherie Douglas, Mark Hafle, Carl Butler,

Marty Rinaudo, David Sims, Ian Little,13 Kevin Lacy, Kevin Guerre, Michael Leary,

Jasper Peijs Martin Illingworth, Spencer14 Howe, Steve Chappell, Mike Daly, Subjects:

Casing test extension - GB 873 #001,15 Update on TO performance, Weekly Drilling

Report, marked CONFIDENTIAL;16 BP-HZN-MBI 00031629-31630, 37507-37508,

BP-HZN-2179MDL00004792 27717

6030 March 3, 2010 E-mail from Tim Burns to18 Glenn Nohavitza, David Schilling, George

Gray, Subject: Maersk Developer Subsea19 BOP Report, attaching presentation,

Subsea BOP Failures, Maersk Developer,20 Statoil Gulf of Mexico Experience

Transfer, marked CONFIDENTIAL;21 BP-HZN-2179MDL00281877-281905 28522232425


10

1 6031 March 22, 2010 E-mail from Jasper Peijs to Martin Illingworth, others, Subject:

2 Weekly Drilling Report, E-mail from Laura Rumelhart to Fergus Addison,

3 others, Subject: Tucker-2 Daily Update, June 11, 2010 Wilmer Hale letter to

4 Jeff Bingaman from Tonya Robinson, marked CONFIDENTIAL;

5 BP-HZN-2179MDL0004792, 45236-45237, 459-480 290

6

6032 RB Falcon DEEPWATER HORIZON BOP7 Assurance Analysis, marked Confidential;

BP-HZN-BLY00053046-53194 2998

6033 BP Annual Report and Form 20-F 2010;9 309 pages 347

10 6034 Printout from BP website, Fourth Quarter and Full Year 2007 Results; one page 358

11

6035 Printout from BP website, BP Fourth12 Quarter and Full-Year 2008 Results; one

page 35913

6036 Printout from BP website, BP Fourth14 Quarter and Full-Year 2009 Results; one

page 36015

6037 Printout from BP website, BP Fourth16 Quarter and Full-Year 2010 Results; two

pages 36017

6038 Printout from BP website, First Quarter18 2011 Results; one page 36119 6039 Profit for Years 7007-2010; one page 36120 6040 Printout from BP website, BP Announces

Settlement with Moex/Mitsui of Claims21 Between the Companies Related to the

Deepwater Horizon Accident; two pages 36522232425


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1 MR. CUNNINGHAM: We're ready.

2 THE VIDEOGRAPHER: On the record at

3 8:41 a.m., beginning the deposition with Tape 1.

4 ANTHONY HAYWARD

5 was called as a witness by the Plaintiffs and, being

6 first duly sworn, testified as follows:

7 DIRECT EXAMINATION

8 QUESTIONS BY MR. CUNNINGHAM:

9 Q. Your name, please?

10 A. Anthony Hayward.

11 Q. And you hold a Ph.D., correct?

12 A. I do, yeah.

13 Q. Dr. Hayward, you first went to work for BP as

14 a geologist and worked as a geologist for about eight

15 or nine years.

16 A. That's correct.

17 Q. Correct?


19 Q. And then in 1990 or 1991, you were asked to

20 become the Executive Assistant to John Browne, right?

21 A. That's right.

22 Q. Was he the CEO then?

23 A. No. He was the CEO of Exploration and

24 Production.

25 Q. All right.


12

1 A. The CEO of the company was a gentleman called

2 Robert Horton.

3 Q. And John Browne later became the CEO, correct?

4 A. That's right.

5 Q. The position of Executive Assistant was a new

6 position at BP, correct --

7 A. That's right.

8 Q. -- at that point in time.

9 Where was your office physically located?

10 A. It was in Queen Victoria Street.

11 Q. And where was John Browne's office physically

12 located?

13 A. He had two. He had one in Queen Victoria

14 Street and one in Britannic House across the city.

15 Q. All right. The one at Queen Victoria Street,

16 where was it physically located relative to your

17 office?

18 A. It was adjacent.

19 Q. Adjacent?

20 A. M-h'm.

21 Q. All right, sir. And until the late 1990s, BP

22 was a relatively small, regional oil and gas company,

23 correct?

24 A. No, it was -- it was one of the world's seven

25 largest oil companies at the time. Relative to today,


13

1 it was small, but relative to the world at the time, it

2 was actually relatively large.

3 Q. Well, in -- is this statement true or not:

4 Until the late 1990s, BP was a relatively small,

5 regional oil and gas company?

6 A. Well, I don't real -- I don't think it really

7 is true. It was a -- one of the world's seven largest

8 oil companies. It was one of the seven sisters.

9 Q. Well --

10 A. It had operations pretty well globally, had

11 operations in America and the U.K., in North Africa, in

12 the Middle East, in South America. I mean, it, you

13 know, depends how you define "small and regional," of

14 course. I'm not trying to be difficult, but I, you

15 know -- sort of --

16 Q. Well, if -- if it's not --

17 A. It's smaller than it was -- it's smaller than

18 it is today, that's for sure.

19 Q. Well, if -- if -- if that statement is not

20 true, would you please explain to the Court why you

21 made it in a speech you gave in July of 2009 to the

22 Stanford Business School?

23 MR. GODFREY: Objection as to form.

24 A. As I said, the -- it's all about the context

25 in which you're describing "small" and "regional." So


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1 in the context of my speech to the Stanford Business

2 School, was a description of how the world's oil and

3 gas industry developed. At the end of the 1990s, there

4 were a series of mergers between BP and Amoco, between

5 Exxon and Mobil, between Chevron and Texaco, that

6 created a new set of much larger companies.

7 Q. (By Mr. Cunningham) Was the statement, "Until

8 the late 1990s, BP was a relatively small, regional oil

9 and gas company" -- was that statement true when you

10 made it in 2009 in your speech at the Stanford Business

11 School?

12 MR. WEBB: I -- I object to the form of

13 the question.

14 A. It's clearly what I said. Yes, yes, it was --

15 Q. (By Mr. Cunningham) Okay. And then from 1999

16 until 2003, there was an extraordinary period of

17 mergers and acquisitions under John Browne in which you

18 were very much involved, true?


20 Q. You became Treasurer of BP in 2000, during

21 that period?

22 A. Yes.

23 Q. A promotion to a position that John Browne had

24 previously held, true?

25 A. That is correct.


15

1 Q. By 2003, you and Browne, John Browne, had

2 created BP in its current form, one of the largest

3 energy companies in the world, a super ma -- a super

4 major, correct?


6 Q. And in 2003, you were named to the No. 2 job,

7 CEO of Exploration and Production with BP, correct?


9 A. I think defining that as the No. 2 job would

10 probably not do justice to the Deputy Chief Executive

11 at the time.

12 Q. (By Mr. Cunningham) All right. Who -- who was

13 higher up the ladder?

14 A. It was a gentleman called Dick Oliver, who was

15 the Deputy Chief Executive of BP at the time. And

16 prior to that, there had been a gentleman called Robin

17 Chase, who was the Deputy Chief Executive. So I was

18 certainly not the No. 2. I would -- I thought of

19 myself at the time, you know, as -- with two or three

20 other peers, as the -- sort of the third rung of

21 Executive Management.

22 Q. Okay.

23 MR. ROBERTS: Bobo, could -- just a

24 second. Would -- would you pull his microphone up? We

25 can't hear. We can hear Bobo, but we can't hear the --


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1 MR. GODFREY: Or turn up the volume.

2 MR. WEBB: It's not really the

3 microphones --

4 MS. GOODHART: We're not -- we can't hear

5 anything down here.

6 THE WITNESS: Yeah.

7 MS. GOODHART: We're not hearing anything

8 from the witness.

9 THE WITNESS: It's not my microphone.

10 MR. CUNNINGHAM: If you'll keep your

11 voice up --

12 THE WITNESS: M-h'm. The microphone is

13 three inches from my mouth.

14 MR. GODFREY: Okay.

15 THE VIDEOGRAPHER: Just speak up.

16 MR. GODFREY: This -- I think we have --

17 THE WITNESS: Can I --

18 MR. GODFREY: The witness is going to

19 speak to the --

20 THE WITNESS: -- ask a --

21 MR. GODFREY: -- Examiner and, I think,

22 the other transcripts, and that's going to be fine.

23 The witness is not going to be shouting into the

24 microphone.

25 MR. ROBERTS: Well, I didn't ask for


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1 that. I just asked for the microphone to be placed so

2 we didn't have this problem.

3 MR. WEBB: I think the microphone is

4 placed about two inches below his throat right now. So

5 I think -- I'm not sure if we move it up, if that's

6 going to accomplish much, based on -- let -- let's see

7 how it goes.

8 Q. (By Mr. Cunningham) You wouldn't describe it

9 as the No. 2 position, but you were in the top

10 leadership --

11 A. Yeah.

12 Q. -- of BP, without question, weren't you?

13 A. Absolutely.

14 Q. And at that time, in 2003, you were also named

15 to the Board of Directors, correct?


17 Q. And you had been working very closely with

18 John Browne for 12 or 13 years at that point, right?

19 A. I'd been working closely with him for probably

20 the last three or four years of that period -- I mean,

21 I -- in the intervening period, I spent seven years or

22 six years in South America, a long way away from John

23 Browne and anything to do with John Browne, actually.

24 Q. As CEO of E&P?

25 A. Yes.


18

1 Q. So from 2003 to 2007, you were here in London?


3 Q. And you were part of the top leadership --

4 A. Yeah, absolutely.

5 Q. -- as he was, correct? He was the top

6 leader --

7 A. Yeah.

8 Q. -- correct?

9 A. That's right.

10 Q. And during those years, particularly the last

11 two of those years, BP's financial performance was

12 appalling, wasn't it?

13 A. It wasn't as good as it needed to be, that's

14 for sure.

15 Q. It was appalling, wasn't it?

16 A. I may have used that word. I'm sure you're

17 going to tell me I did. But it was not good.

18 Q. Okay. Well, if you used that word in your

19 speech at the Stanford Business School in 2009, was

20 that accurate to say that the financial performance was

21 appalling?

22 A. It was accurate in the context in which I --

23 where I was talking, yes.

24 Q. Well, the context in which you were talking

25 was describing BP's financial performance, wasn't it?


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1 A. It was.

2 Q. All right. Okay. You -- you underperformed

3 your competitors in those years by anywhere from 30 to

4 50 percent, didn't you?

5 A. We underperformed our principal competitors by

6 a considerable margin. I don't recall what the number

7 was, sitting here today, I'm afraid, but --

8 Q. Well, if you said that in 2009 --

9 A. If I said it, then -- then --

10 Q. -- that you underperformed your competitors by

11 anywhere from 30 to 50 percent, was that true or false?

12 A. Of course, it was true.

13 Q. All right. And that's all while you and John

14 Browne were part of the top leadership at BP, true?


16 A. No, I thi -- I -- well, I -- it was -- I mean,

17 I need to -- if you -- I don't recall what I said at

18 Stanford. I don't recall what period I was re --

19 talk -- talking to. If you're referring to our

20 performance in the period between 2005 and 2007, then

21 that's correct.

22 Q. (By Mr. Cunningham) All right. Well, that's

23 the period you were referring to in your speech.

24 A. Okay.

25 Q. And that was a period during which you and


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1 Lord Browne were in the top leadership at BP, wasn't

2 it?


4 Q. All right. When did John Browne become Lord

5 Browne, by the way?

6 A. My recollection is sometime around 2004,

7 something like that.

8 Q. Okay. So that brings us--

9 A. I'm not certain --

10 Q. Excuse me.

11 A. I'm not certain about that. I believe it was

12 around that time period.

13 Q. All right. So that brings us up to the Year

14 2007, and that's the year that Lord Browne admitted to

15 testifying falsely under oath in a legal proceeding,

16 isn't it?



19 Q. (By Mr. Cunningham) And he resigned before he

20 could be fired, correct?

21 A. He resigned.

22 Q. Well, he resigned before he could be fired for

23 lying under oath in a legal proceeding?


25 A. I know he resigned. I don't know whether that


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1 was before he was fired or not. It was -- I know he

2 resigned.

3 Q. (By Mr. Cunningham) And -- and you were on the

4 Board of Directors at that time, weren't you?

5 A. I was.

6 Q. Then you were appointed to his position, CEO

7 of BP, No. 1 in the company, right?


9 Q. And you had been right there with him at the

10 top and helped him lead BP into the financial hole it

11 was in in 2007, hadn't you?

12 MR. WEBB: Object to the form of the

13 question.

14 A. I had been there at the top of the company.

15 Q. (By Mr. Cunningham) And the general view of

16 the world in 2007 was that you, as CEO, had two years

17 to fix BP or someone was going to come along and put

18 the company out of their misery.

19 MR. GODFREY: Objection --

20 Q. (By Mr. Cunningham) Isn't that correct?


22 A. I don't know that I can pass a comment on the

23 general view of the world, but I'm sure you're going to

24 go to something I may have said at some point. If you

25 can show me what it is, then I could --


22

1 Q. I'm getting ready to show you --

2 MR. CUNNINGHAM: We'll mark this -- this

3 is Tab 2 -- as Exhibit 6001.

4 THE COURT REPORTER: Do you want to start

5 with 6000?

6 MR. CUNNINGHAM: That's what we

7 understood we were starting -- oh, 6000, okay, I got

8 you, instead of 6001.

9 (Exhibit No. 6000 marked.)

10 MR. GODFREY: So is this 6000 or 6001?

11 MR. CUNNINGHAM: 6000.

12 MR. GODFREY: Thank you.

13 (Discussion off the record.)

14 MR. WEBB: They want you -- it's got the

15 exhibit sticker on it.

16 Q. (By Mr. Cunningham) And my question to you

17 was: Whether or not the general view in the world was

18 that you had two years to fix it or somebody was going

19 to come along and put BP out of its misery. Turn to

20 Page 15.

21 MR. GODFREY: Do we have identification

22 as to where this document came from?

23 MR. CUNNINGHAM: Yeah. This is a

24 transcript of your speech that I had done. We've also

25 got an audio of your speech that we will offer as an


23

1 exhibit that's attached to the back of this, so that

2 you can correct anything you think may be inaccurate.

3 Q. (By Mr. Cunningham) But for now, assuming that

4 it's accurate, and my question is --

5 A. M-h'm.

6 Q. -- did you or did you not say in that speech

7 in the middle paragraph starting with line seven: "And

8 at the end of that two-year period -- so this is sort

9 of in the early spring of 2007 -- the sort of general

10 view in the world was -- this was either the analyst or

11 the news media -- two years to fix it, otherwise

12 someone is going to come along and put them out of

13 their misery," meaning BP?

14 A. Yeah.

15 Q. Did you say that when you gave the speech?

16 A. I did.

17 Q. Now, Lord Browne suffered no legal

18 consequences for his perjury, did he?


20 A. I'm -- I don't -- I have no knowledge as to

21 whether he did or didn't frankly.

22 Q. (By Mr. Cunningham) But you know he was not

23 charged and he did not go to jail, he was not fined.

24 He -- as far as you know, he suffered --

25 A. As far as I'm aware.


24

1 Q. As far as you're aware, he suffered no legal

2 consequences, correct?

3 A. As far as I'm aware, that is true.

4 Q. But his experience certainly brought home to

5 you the significance of taking an oath, didn't it?

6 A. It did.

7 Q. And you did not clude -- conclude from his

8 experience that testifying falsely under oath came

9 without legal consequences, did you?


11 A. I didn't.

12 Q. (By Mr. Cunningham) Okay. So you fully

13 understood the significance of the oath you took when

14 you testified before the Congress of the United States

15 on June 17, 2010, didn't you?

16 A. I did.

17 Q. And you testified both for yourself and on

18 behalf of BP, didn't you?

19 A. I did.

20 Q. And you raised your right hand and swore that

21 the testimony you give -- gave would be the whole

22 truth, and nothing but the truth, didn't you?


24 Q. And then you proceeded to testify falsely

25 under oath on multiple material issues, didn't you,


25

1 Dr. Hayward?


3 A. I certainly did not.

4 MR. CUNNINGHAM: Tab 1.

5 MR. BONNER: (Tendering.)

6 MR. CUNNINGHAM: This is Tab 1.


8 THE COURT REPORTER: 6001, Mr. Godfrey.


10 Q. (By Mr. Cunningham) I'll show you a transcript

11 of your Congressional testimony. Turn to Page 26,

12 please. And this is from your opening statement. Look

13 down at the bottom with the -- at the paragraph that

14 begins with the word "Fourth."

15 Do you see that?

16 A. Correct.

17 Q. Tell me if I read this correctly: "...we need

18 to know what went wrong so that we as a company and we

19 as an industry, can do better. That is why" -- "That

20 is why, less than 24 hours after the accident, I

21 commissioned a non-privileged investigation. I did it

22 because I want to know what happened, and I want to

23 share the results."

24 Did you say that?

25 A. I did.


26

1 Q. Turn to Page 68.

2 A. (Complying.)

3 Q. About one-third of the way down the page,

4 where it says: "HAYWARD: I believe I've set the" --

5 "set the right tone," did you say: "We...launched an

6 investigation within 24 hours. We've made it open and

7 transparent. And we're sharing with everyone" --

8 "everyone the results as they come out."

9 Did you say that?

10 A. I did.

11 Q. And the investigation that you were referring

12 to was the Bly investigation?


14 Q. Wasn't it?

15 A. It was.

16 Q. Okay. Turn to Page 67. In the middle of the

17 page where it says "HAYWARD:," did you testify, quote,

18 "We are conducting a full and comprehensive

19 investigation," end quote?

20 A. I did.


22 A. (Complying.)

23 Q. At the bottom of the page where it says

24 "HAYWARD:," did you testify, quote, "Our investigation

25 is covering everything," end quote?


27

1 A. I did.

2 Q. Turn to Page 90. About a quarter of the way

3 down the page, where it says "HAYWARD:," did you

4 testify, quote, "It will cover everything," end

5 quote.

6 A. I did.

7 Q. All right. Now, Dr. Hayward, you -- you knew

8 full well when you gave that testimony to the Congress

9 and to the American public what your investigation was

10 covering and what your investigation wasn't covering

11 because you're the one that commissioned it, aren't

12 you?

13 A. It was a terms of reference, which I'm sure

14 you've seen.

15 Q. You appointed Mark Bly to lead the

16 investigation, and he answered to you, right?

17 A. Yes.

18 Q. Because not only were you the CEO and a Member

19 of the Board, but you were the ultimate in the safety

20 chain of command, you were absolutely responsible for

21 safety at BP, weren't you?


23 A. Yeah, I was responsible for the safe and

24 reliable operations of the company.

25 THE COURT REPORTER: Could everyone


28

1 remove their BlackBerrys from the table, please.

2 Q. (By Mr. Cunningham) You were the ultimate in

3 the safety chain of command, absolutely responsible for

4 safety, weren't you?

5 MR. GODFREY: Objection to form.

6 A. I was responsible for safe and reliable

7 operations at BP.

8 Q. (By Mr. Cunningham) Well, does that mean that

9 there was somebody higher up than you that was

10 responsible for --

11 A. That's what I said, I was responsible for

12 safe and reliable --

13 Q. You were it, weren't you?

14 A. -- operations at BP.

15 Q. And that means you were the ultimate in the

16 safety chain of command, weren't you?

17 MR. GODFREY: Objection, form.

18 A. I was responsible for safe and reliable

19 operations at BP.

20 Q. (By Mr. Cunningham) Who was the ultimate in

21 the safety chain of command at BP?

22 A. In the safety chain of command?

23 Q. Yeah. Who was the ultimate?

24 A. What does --

25 Q. Who was at the top?


29

1 A. -- the "safety chain of command" mean?

2 Q. You don't know what the words "safety chain of

3 command" mean?

4 A. Well, I think you're -- I -- I just want to be

5 clear in the -- in the sense that you're using them --

6 Q. I'm using it in the plain old English

7 language, "safety chain of command."

8 A. Okay.


10 Q. (By Mr. Cunningham) Do you understand?

11 A. I do.

12 Q. Okay. Who was ultimate --

13 A. I was the --

14 Q. -- in the safety chain of command?

15 A. I was the ultimate in the safety chain of

16 command.

17 Q. You were?

18 A. M-h'm.

19 Q. Okay. And that's true across the entire BP

20 group, from BP, PLC, in London, all the BP

21 subsidiaries, true?

22 A. By definition, the CEO has an accountability

23 for safety in a company --

24 Q. And --

25 A. -- by definition.


30

1 Q. And you monitored the investigation that

2 Mr. Bly conducted from Day One, didn't you?

3 A. I -- I periodically checked in with him to see

4 how it was going.

5 Q. Well --

6 A. But he was -- he was left to, as -- as we --

7 we said at the time and as the terms of reference were

8 established, to conduct an independent operation, an

9 independent assessment.

10 Q. Right.

11 A. And I -- I think the report that he issued is

12 robust, rigorous --

13 Q. I didn't ask you about the report.

14 A. -- in terms --

15 MR. GODFREY: Excuse me, don't interrupt

16 the witness, please.

17 MR. CUNNINGHAM: The witness is -- is

18 answering a question that I didn't ask, and I have

19 limited time.

20 Q. (By Mr. Cunningham) My question was --

21 MR. GODFREY: Well, you're spending time

22 to interrupt the witness.

23 Q. (By Mr. Cunningham) You monitored the Bly

24 investigation, "Yes" or "No"?



31

1 A. Mark Bly is the -- was conducting the

2 investigation on my behalf; therefore, he reported to

3 me.

4 Q. (By Mr. Cunningham) All right.

5 A. I did not monitor the investigation on a daily

6 basis, weekly basis, or even, indeed, a monthly basis,

7 given everything else that was going on at the time.

8 Q. The -- the Board of Directors and you as CEO

9 get periodic reports on the progress and the findings

10 of the Bly investigation?

11 A. We had periodic reports when there were

12 findings -- findings to discuss.

13 Q. All right. And you knew what was being

14 investigated was, in fact, two of the three elements of

15 a standard BP investigation, didn't you?

16 A. I knew that we had set up an investigation to

17 establish the cause of the accident.

18 Q. You -- you knew what the investigation covered

19 because you knew what the terms of reference were,

20 didn't you?

21 A. I did.

22 Q. You did.

23 And you knew that what the investigation

24 covered was two out of the three elements of a standard

25 BP investigation, didn't you?


32

1 A. I didn't know that actually. I didn't.

2 Q. You didn't know that?

3 A. I -- I established the terms of reference

4 to -- to determine the cause of the accident.


6 MR. GODFREY: When you say "Tab 3," is

7 that an internal tab or is that a --

8 MR. CUNNINGHAM: That's the tabs on the

9 CD, so they know what I'm getting ready to show the

10 witness.

11 MR. GODFREY: Oh, fair enough. Okay.

12 Fair enough. I was looking for a tab, and I --

13 MR. CUNNINGHAM: Sorry.

14 MR. GODFREY: That's all right.


16 MR. GODFREY: It says previously marked

17 as Exhibit 269. Are we marking this?

18 MR. CUNNINGHAM: Yeah.

19 MR. GODFREY: So we mark --

20 MR. CUNNINGHAM: Or we can refer to it by

21 its prior exhibit number, 269.

22 MR. GODFREY: I think the practice,

23 Mr. Cunningham, has been to use prior exhibit numbers,

24 but I'm --

25 MR. CUNNINGHAM: Okay. That's fine.


33

1 MR. GODFREY: I want to defer to you on

2 this, I don't want to confuse you.

3 MR. CUNNINGHAM: No, that's fine. That's

4 fine.

5 MR. WEBB: So, for the record, is this

6 269 or 60 --


8 MR. WEBB: Okay.

9 Q. (By Mr. Cunningham) This is the terms of

10 reference, isn't it, Mr. Hayward?

11 A. It is.

12 Q. And you knew what these terms of reference

13 were?

14 A. I did.

15 Q. And if you look under "Critical factors" in

16 Paragraph 3 -- or Section 3, it clearly states that

17 you're investigating "Immediate Causes" and System

18 Causes," doesn't it?


20 Q. You knew that what was not being investigated

21 was the third standard element of a BP investigation,

22 which is systemic causes, which BP defines as root

23 causes or Management-related causes, you knew that,

24 didn't you, when you gave your testimony?



34

1 A. I -- I knew that this was the terms of

2 reference.

3 Q. (By Mr. Cunningham) Well --

4 A. That is what I knew.

5 Q. You testified under oath to the United States

6 Congress that you were doing a full and complete

7 investigation that covered everything, and you knew at

8 the time you gave that testimony that the investigation

9 did not cover systemic causes, which are root causes or

10 Management-related causes?

11 A. As far as I was concerned, this investigation

12 was designed to -- to unearth what happened in this

13 accident. And as far as I was concerned, that meant

14 covering all the bases. That's what we were doing.

15 Q. A full and comprehensive investigation, one

16 that covered everything, one that included an

17 investigation of systemic causes would have required

18 the executives to investigate themselves, wouldn't it?


20 A. As I said, the terms of reference are clear

21 here. We were trying to establish what was the cause

22 of the accident. That's what we did. I -- I believe

23 that we did that to -- to most people's satisfaction

24 and that the Report has stood the test of time. It's

25 not been contradicted by anyone to any significant


35

1 degree. It was deemed to be -- I think the

2 Presidential Commission said that they agree to more

3 than 90 percent of what was in the Report.

4 Q. (By Mr. Cunningham) Well, that's far --

5 that -- that's real interesting, but that's got nothing

6 to do what I just -- with what I just asked you.

7 My question to you is: The truth is, you did

8 not conduct a full and comprehensive investigation that

9 covered everything because the investigation

10 specifically excluded systemic causes, didn't it?


12 A. As I said, our investigation was designed to

13 un -- to determine the cause of the accident. That's

14 what we did.

15 THE COURT REPORTER: Counsel, would you

16 please take your BlackBerrys off the table. I cannot

17 hear with the interference. Right now it's going off.

18 So whoever has it on, just turn them off.

19 THE VIDEOGRAPHER: Yeah.

20 Q. (By Mr. Cunningham) If you --

21 THE VIDEOGRAPHER: Turn -- try turning

22 them off or going to straight WIFI and no -- no signal.

23 Just -- just turn them off.

24 Q. (By Mr. Cunningham) If you had said during

25 your testimony that we are conducting an investigation,


36

1 but it's not a full and comprehensive investigation

2 that covers everything, it only covers two-thirds of

3 our standard investigation, you know what the next

4 question would have been, don't you?


6 A. I couldn't possibly speculate.

7 Q. (By Mr. Cunningham) Well, the next question

8 would have been: What are you not investigating,

9 wouldn't it?

10 A. As I said, we -- we were investigating what

11 the cause of the accident was. And I -- I believe that

12 the Report determines with some degree of rigor and

13 confidence what the cause of the accident was.

14 Q. And if your testimony had been in response to

15 the question what are you not investigating, well,

16 we're not investigating Management causes, we're not

17 investigating ourselves, that would have been a public

18 relations disaster for BP, wouldn't it?


20 question.

21 A. I can't possibly comment on that, can I?

22 Q. You -- you don't --

23 A. How can I -- how can I speculate on that?

24 Q. You don't think --

25 A. It's not a question. It's an assertion --


37

1 Q. You don't think that if --

2 A. -- which is entirely theoretical.

3 Q. You don't think that if you had said, "We're

4 not conducting a full investigation, we're only

5 conducting two-thirds of investigation, and what we're

6 not investigating is ourselves and Management," you

7 don't think that would have been --

8 A. Yes, I think --

9 Q. Let me finish my question.

10 A. I'm sorry. I'm sorry. I apologize.

11 Q. You don't think that would have been a public

12 relations disaster in June of 2010, as you sat there

13 with the oil flowing in the Gulf of Mexico, you don't

14 think that would have been a public relations disaster

15 if you had told the truth and said that?

16 MR. GODWIN: Objection as to form.

17 A. I -- I'm not prepared to speculate on what

18 would or would not have been a public relations

19 disaster. What I can say, as I've said again, is we

20 were investigating ourselves. This was an

21 investigation that was open, transparent, it was

22 communicated as soon as we had the results, in stark

23 contrast to anyone else involved in this accident.

24 MR. GODWIN: Object to form.

25 Q. (By Mr. Cunningham) So is it your testimony


38

1 then, here today, that you conducted a full and

2 comprehensive investigation that included systemic

3 causes?

4 A. I believe we conducted --


6 A. -- a full investigation into the cause of the

7 accident, and that's --

8 Q. (By Mr. Cunningham) That's not the question.

9 A. Well, that's what we -- that's -- that is what

10 we did.

11 Q. Is it your testimony here today, that you

12 conducted a full and comprehensive investigation that

13 did cover systemic causes?

14 A. We conducted an investigation to determine

15 the -- the cause of the accident. That's what the

16 investigation was designed to do. That's what it did.

17 Q. I'm going to try it again: Is it your

18 testimony here today under oath that you did conduct a

19 full and complete investigation that covered systemic

20 causes?


22 A. We -- we conducted a full investigation into

23 the cause of the accident, and as you identified, it

24 did not look at the overarching Management process at

25 that time.


39

1 Q. (By Mr. Cunningham) Your Group Defined

2 Practice at BP GDP 4.4 lays out how incident

3 investigations are handled, doesn't it?

4 A. I believe it does.



7 Q. (By Mr. Cunningham) Previously marked as 1742.

8 (Tendering.) This is BP's "Group Defined Practice" for

9 "Incident Investigation," isn't it?

10 A. It is.

11 Q. And you knew what Incident Investigations

12 covered because of your capacity as the top person

13 responsible for safety at BP, didn't you?

14 A. I was the CEO, so as you've -- if -- as you

15 have correctly identified.

16 Q. Well, you were also the Head of the Group

17 Operating Risk Committee, the Group Operations Risk

18 Committee, weren't you?


20 Q. All right.







40


2 THE COURT REPORTER: Peter.

3 THE VIDEOGRAPHER: I -- I hear them

4 everywhere, a BlackBerry or some sort of device.

5 Q. (By Mr. Cunningham) Who is Steve Flynn?

6 A. The -- the Vice President for Health, Safety,

7 and Environment.

8 Q. All right. And this is a PowerPoint that

9 Mr. Flynn gave, correct?


11 Q. Turn to Page 6. Bottom right-hand corner is

12 where those numbers are. And the title of this

13 document is: "Leading from the very top The BP Group

14 Operations Risk Committee," correct?


16 Q. Tell me if I read this correctly: "The Group

17 Operations Risk Committee...is chaired by Tony Hayward

18 and meets monthly. It brings together our segment CEOs

19 with senior functional expertise to oversee and build a

20 foundation for consistent, safe, reliable operations.

21 This includes:" -- and the first bullet is: "Incident

22 analysis, learning and response," correct?

23 A. Correct.

24 Q. So you -- you, in your capacity not only as

25 CEO, but also in your capacity as Chairman of the Group


41

1 Operating Risk Committee, reviewed investigations,

2 didn't you?

3 A. We did.

4 Q. So you knew what an investigation covered and

5 what it didn't cover, didn't you?

6 A. I did.

7 Q. All right. And the group defined practices --

8 and by the way, you -- you have repeatedly stated in

9 public that you focus like a laser on safety, right?

10 A. I have.

11 Q. All right. And investigations and knowing

12 what investigations cover and what they reveal is part

13 of focusing like a laser on safety, isn't it?

14 A. It's an element of it, yes.

15 Q. All right. Turn to Page 84, and that's a

16 Bates number, bottom right of the Group Defined

17

18

19 Security, and Environment, correct?

20 A. It is.

21

22

23

24

25


42

1

2

3

4 Did I read that correctly?

5 A. Correct.

6

7

8


10 A. Correct.

11 Q. All right. Now, turn to Page 102, Bates

12 number at the bottom.

13 Gives a definition of root cause, doesn't it?

14 A. (Reviewing document.)

15 Q. Do you see it?

16 A. I do.

17

18

19

20

21


23 A. You did.

24

25


43

1

2

3

4

5

6

7 A. Correct.

8 Q. Turn to Page 85, Bates.


10 Q. See the section "2 Scope" toward the bottom?

11 A. M-h'm.

12

13


15 A. Yep.

16

17

18

19 You were a leader in group functions, weren't

20 you?

21 A. I was a leader in both senses, I think.

22 Q. In both senses?

23 A. M-h'm.

24 Q. All right. Turn to 86, the next page.

25


44

1

2

3

4


6 A. You did.

7

8

9


11 A. You did.

12

13

14

15

16

17


19 A. Correct.

20 Q. Turn to 95. 95 is a Severity Matrix, correct?

21 A. Correct.

22

23

24 A. Yep.

25


45

1

2

3

4

5

6

7

8

9 A. Correct.

10 Q. And does the third column tell what

11 investigation is required by BP when you have either of

12 those conditions?

13 A. Correct.

14

15

16

17

18

19

20

21

22

23

24

25


46

1

2

3

4

5

6

7 Q. And in addition to the fact that you were

8 familiar with this GDP, you knew exactly what a root

9 cause analysis was, didn't you?

10 A. I knew the -- the concept behind a root cause

11 analysis, yes.



14 THE COURT REPORTER: 6003.

15 Q. (By Mr. Cunningham) I'll show you Exhibit

16 6003. This is a speech you gave on April the 1st of

17 2005, correct? You can look at the top.

18 A. Yeah.

19 Q. And this is about one week, ten days, in that

20 vicinity --

21 A. M-h'm.

22 Q. -- after the Texas City disaster, isn't it?

23 A. It is.

24 Q. And did you say in this speech in the first

25 paragraph: "...last week BP experienced the most


47

1 serious and tragic safety accident in our recent

2 history. 15 of our people died in a major explosion at

3 a refinery in Texas - we do not yet know the cause of

4 the accident but we will and we will learn from it and

5 take action to ensure that it is never repeated"?


7 A. Correct.

8 Q. Did you say that?

9 A. I did.

10 Q. And then in the middle of the next paragraph,

11 did you say this: "We are applying our established

12 process of root cause analysis to determine the

13 underlying cause of the incident"?

14 A. I did say that.

15 Q. All right. You knew exactly what a root cause

16 analysis was because you described in this speech what

17 you were going to do after Texas City, and that was a

18 root cause analysis, didn't you?

19 A. I described --


21 A. I described in this speech what we're going to

22 do after Texas City, that is correct.

23 Q. (By Mr. Cunningham) So knowing everything that

24 you knew and holding the positions that you held on

25 June 17th of 2010, you told the United States Congress


48

1 and the American public under oath that BP was

2 conducting a, quote, "full and comprehensive

3 investigation," end quote that was, quote, "covering

4 everything," end quote, didn't you?

5 A. I believe that to be the case. I believe that

6 the investigation was full and comprehensive, and we --

7 it was published in an open and transparent way.

8 Q. The Senior Executives at BP certainly watched

9 your Congressional testimony, didn't they?


11 A. I have no idea whether they watched it. I --

12 I rather hoped they didn't, actually.

13 Q. (By Mr. Cunningham) You don't think that given

14 the circumstances that existed in June of 2009 with oil

15 still flowing into the Gulf of Mexico and the CEO of BP

16 giving testimony before the American public and the

17 Congress, you don't think that the high level

18 executives at BP bothered to watch your testimony?

19 A. It's not a case of bothering to watch it.

20 Most of them were very engaged trying to contain and

21 manage a spill, actually.

22 Q. Well, the Board of Directors wasn't engaged

23 trying to --

24 A. They may well have --

25 Q. -- contain it, were they?


49

1 A. They may well have watched it.

2 Q. Look, you're going to have to let me finish my

3 question because I'm afraid the court reporter's going

4 to have difficulty if we talk over each other --

5 A. I'm sorry. I apologize.

6 Q. -- so please let me finish my question. I'll

7 do my best to let you finish your answer. And I'm sure

8 if I don't, your lawyers will help me. Okay?

9 A. Okay.

10 Q. The Board of Directors of BP was not engaged

11 in the spill in the U.S., were they?


13 Q. All right. You certainly would believe,

14 wouldn't you, that the Board of Directors, at least

15 some of them would have watched your Congressional

16 testimony, wouldn't they?

17 MR. WEBB: Objection to the form of the

18 question.

19 A. I imagine that's probably true --

20 Q. (By Mr. Cunningham) Probably true.

21 A. -- I don't know, but probably true.

22 Q. And the Board of Directors knew because they

23 had been briefed by Mr. Bly that there was no systemic

24 investigation being conducted, didn't they?

25 MR. WEBB: Objection to form --


50


2 MR. WEBB: -- "they knew."

3 A. They'd been briefed on the extent of the

4 report of the investigation and what we had found at

5 that time.

6 Q. (By Mr. Cunningham) Yes, sir. And your

7 in-house legal counsel and your PR people knew what the

8 investigation covered, didn't they?


10 A. Well, you can clearly see in the terms of

11 reference.

12 Q. (By Mr. Cunningham) All right. And they

13 watched your testimony before the Congress you would

14 expect, wouldn't you?

15 A. I would expect.

16 Q. All right. Did your PR people congratulate

17 you on how you did after your testimony was concluded?


19 A. No one congratulated me after that day. Thank

20 you very much.

21 Q. (By Mr. Cunningham) You're fully aware,

22 though, that the Presidential Commission did

23 investigate management-related causes, aren't you?

24 A. I haven't read the Presidential Commission

25 Report because it was published a long time after I


51

1 left the company. I'm aware of it through the press,

2 and I -- I've skimmed it. So it's -- there is

3 certainly a section on management causes.

4 Q. All right.

5 A. I have no idea as to the depth or extent of

6 that investigation.

7 Q. Are you aware of the conclusion stated in the

8 Presidential Commission Report, quote: "Most of the

9 mistakes and oversights at Macondo can be traced back

10 to a single over-arching failure, a failure of

11 Management," end quote?


13 Q. (By Mr. Cunningham) My question is: Are you

14 aware of that statement?

15 A. I'm aware of that statement. And as I read

16 it, it referred to the immediate oversight of the

17 Macondo Well; that's to say, either on the rig or in

18 the immediate management over the rig.

19 Q. Okay.

20 MR. ROBERTS: Objection, form.

21 Q. (By Mr. Cunningham) All right. So as you read

22 it, it's the people on the rig or the immediate

23 managers on the rig that they were talking about and

24 not you and the other high level executives at BP. Is

25 that your testimony?


52

1 A. That's what I interpreted from the description

2 in the Report.

3 Q. All right. So -- so you -- you read it -- or

4 when you heard what it said, your conclusion was

5 "They're not talking about me"?

6 A. I didn't -- I didn't say that. I said my

7 interpretation was that the investigation and the

8 conclusions drawn in the Presidential Commission were

9 referring to management actions primarily on the rig.

10 Q. Well, do you or do you not think that that

11 statement that, "Most of the mistakes and oversights at

12 Macondo can be traced back to a single over-arching

13 failure, a failure of Management"? Do you or do you

14 not think that that statement included references to

15 you?


17 MR. WEBB: Object to form.

18 A. I have no idea what that referred to. It was

19 certainly not made clear in the report what it referred

20 to. So all I can do is draw an interpretation based on

21 the -- the extent of the -- of the report.

22 Q. (By Mr. Cunningham) You know that Rex

23 Tillerson, the CEO of Exxon, said virtually the same

24 thing, didn't he?



53

1 A. Said exact --

2 Q. (By Mr. Cunningham) Said virtually the same

3 thing?

4 MR. GODFREY: Same objection.

5 A. Well, what exactly did he say?

6 Q. (By Mr. Cunningham) Well, you don't know what

7 he said?

8 A. No. Well, I'm sorry, but I don't spend a lot

9 of time worrying about what Rex Tillerson says.

10 Q. Well, he's a friend of yours, isn't he?

11 A. He's certainly a -- a colleague in the

12 industry.

13 Q. He's a friend of yours, isn't he?

14 A. Well, I would say he's a colleague in the

15 industry, yeah.

16 Q. All right.

17 A. Yeah, he's a friend. You can call him a

18 friend.

19 Q. Well, you've called him a friend. You said he

20 was a friend in your speech in July of 2009, didn't

21 you?

22 A. Okay. Yeah.

23 Q. You said you'd known him a long time, that he

24 was one of your --

25 A. I have known him --


54

1 Q. -- didn't you --

2 A. -- a long time. We were in the in -- we've

3 been in the industry together a long --

4 Q. So --

5 A. -- time.

6 Q. -- so is he a --

7 A. I --

8 Q. -- is he a friend today or just a colleague

9 today?

10 A. Well, I'm sure he'd still be a friend if I --

11 Q. All right.

12 A. -- you know, was in Dallas.




16 Q. (By Mr. Cunningham) So you've never seen this

17 document before?

18 A. I haven't seen this document.

19 Q. Never heard or --

20 A. I was --

21 Q. -- read --

22 A. -- I was aware of the -- I -- I was vaguely

23 aware of it, but, you know, but -- but in March of this

24 year, I would -- I had been -- I'd left BP for over six

25 months.


55

1 Q. All right.

2 A. And I wasn't actually practicing in the

3 industry at the time.

4 Q. So you didn't know that a friend of yours who

5 held a similar position at another big major oil

6 company said what Mr. Tillerson said?

7 A. I -- I --


9 A. -- as I said, I -- I -- I -- I didn't -- I was

10 aware of it subsequently, but, you know, in -- at this

11 period in my life, I was not focused on any of this. I

12 was doing other things. I'm sorry, but I was.

13 Q. (By Mr. Cunningham) All right. Well, when

14 Mr. Tillerson said, "It was a breakdown of management

15 oversight... When you do things the proper way these

16 kind of things do not happen," did you -- did you

17 think, when you heard that, that he was talking about

18 the folks on the rig or --

19 A. I had --

20 Q. -- BP LC?

21 A. -- I had no idea what he was talking about.

22 And I -- I'm -- certainly have no idea today. I've

23 never asked him about it. He could have been talking

24 about anything, as far as I'm concerned. I --

25 Q. All right. Well, we'll -- we'll come back to


56

1 your Congressional testimony later, because there's --

2 there's more there, isn't it? There's more there what

3 you testified falsely under oath, isn't there?

4 MR. GODFREY: Objection.

5 A. I do not believe so --

6 MR. GODFREY: Move to strike.

7 A. -- at all.

8 Q. (By Mr. Cunningham) Now, as far as

9 investigations go, you know what a full and

10 comprehensive investigation is, because you and BP have

11 seen a lot of them since you've been in the top

12 leadership; isn't that true?


14 A. I've seen most of the investigations.

15 Q. (By Mr. Cunningham) All right. BP has been

16 the subject of, and you have been in the top leadership

17 for multiple investigations resulting in criminal

18 charges and guilty pleas; isn't that true?


20 A. To my knowledge, there is one accident where

21 the company subsequently pled guilty, to a guilty

22 charge.

23 Q. (By Mr. Cunningham) Okay. Well --

24 A. Criminal charge.

25 Q. -- one is all you know about?


57

1 A. To a criminal charge, yeah.

2 Q. All right. Well, let's start --

3 A. Well, perhaps --

4 Q. -- with 1999, then, all right? In Alaska.

5 You were Lord Browne's Executive Assistant. At that

6 point, you had been his Executive Assistant for almost

7 10 years, hadn't you?

8 A. Well, I'm sorry, but in 1999, I wasn't his

9 Exec -- I was his Executive Assistant for a year. I

10 then went to Colombia for four years. I went to

11 Venezuela for almost three years. And I came back to

12 take up an executive role in 1997. In 1999, I believe

13 I was the Group Treasurer.

14 Q. You were the Group Treasurer, the position

15 that Lord Browne had previously held?

16 A. No. The person who previously had that role

17 was a gentleman called John Buchanan.

18 Q. Is it a position that Lord Browne had held at

19 some point --

20 A. He had held --

21 Q. -- previously?

22 A. -- at an earlier point in his career in the

23 middle of the '80s in --

24 Q. Okay.

25 A. -- '86 to '88, I believe --


58

1 Q. You were --

2 A. -- when --

3 Q. -- you were the Treasurer then at that

4 point --

5 A. I was the Treasurer.

6 Q. -- in 1999?

7 A. Yes.

8 Q. And BP pleaded guilty to a felony for dumping

9 toxic waste in Alaska; isn't that true?


11 Q. All right. The crime occurred in 1999, and

12 sentence was handed down on February the 3rd of 2000,

13 while you were the Treasurer, right?


15 Q. There was a $500,000 fine, which was the

16 maximum allowable fine, and BP agreed to spend $20

17 million on an Environmental Management system, true?


19 A. I -- I -- I'm sure it is true, I can't recall

20 the details. I can't recall the fine or the

21 commitments we made -- -


23 A. But if your assertion is that's what we did,

24 I'm certain that's correct.

25 Q. Well, you were the Treasurer. Did you write


59

1 the check? Did you sign --

2 A. It's --

3 Q. -- the check?

4 A. -- 12 years ago, a -- a lot of water has

5 passed under a bridge. I cannot remember, but I'm sure

6 if that's what the record says, then it's correct.

7 Q. So you think you signed a $20 million check

8 and a $500,000 check for a --

9 A. Well, I --

10 Q. -- criminal fine, but you don't remember?

11 A. The answer -- with respect, sir, Treasurers

12 don't sign checks. And --

13 Q. But --

14 A. -- I do not remember. I'm sorry --

15 Q. Okay.

16 A. -- but I do not remember.

17 Q. All right. So you don't know how that money

18 got paid, in your position as Treasurer, then?

19 A. I -- it would have been -- it would have been

20 a bank transfer. But, you know, I -- I -- I -- I

21 honest -- I do not remember --

22 Q. All right.

23 A. -- those details --

24 Q. Well, you --

25 A. -- I'm sorry.


60

1 Q. -- remember that BP was put on five years'

2 probation, don't you?

3 A. I remember BP was --

4 Q. In --

5 A. -- put on probation.

6 Q. -- February of 2000, put on five years'

7 probation for a felony, right?


9 Q. (By Mr. Cunningham) Right?

10 A. I --


12 A. -- I -- I remember we were put on probation.

13 Q. (By Mr. Cunningham) All right. And in --

14 A. Thank you for reminding me why.

15 Q. -- and -- and in 2003, in 2003, while that

16 probation was in progress, you became a Member of the

17 Board, right?

18 A. Correct.

19 Q. And you were the CEO of E&P at that point --


21 Q. -- is that correct?

22 A. (Nodding.)

23 Q. And this is -- in 2000 -- the -- the Year

24 2000, when this felony conviction occurred, this is

25 during the period of acquisitions and mergers that


61

1 began in 1999 and ran through 2003, correct?


3 Q. All right. And BP got off probation for this

4 felony in February of 2005, and the Texas City disaster

5 that killed 15 people and injured 170 occurred the next

6 month, didn't it?


8 Q. (By Mr. Cunningham) March --

9 A. That's -- actually --

10 Q. -- of 2005?

11 A. -- the accident occurred in March of 2005.

12 Q. And it's after that felony conviction that we

13 see a quote that's going to be familiar in every

14 disaster BP's involved in, don't we. And that is,

15 "We're going to do everything to be sure it never

16 happens again." Isn't that what was said by BP?


18 A. I don't recall.

19 MR. CUNNINGHAM: (Indicating.)





24 Q. (By Mr. Cunningham) (Tendering.) This is a

25 news article that discover -- discusses the guilty


62

1 plea. And if you'll look down about four or five

2 paragraphs where it starts with "BP vice president," do

3 you see that?

4 A. I do.

5 Q. Do you know who Chris Phillips was at that

6 point?

7 A. I do.

8 Q. Do you see where he is quoted as saying, "We

9 are committed to ensuring this never happens again,"

10 end quote?

11 A. I do.

12 Q. Then comes the Year 2000. BP's Grangemouth

13 petrochemical complex, there are a series of major

14 incidents involving equipment failure and fire, true?

15 A. Correct.

16 Q. And at this point, you're the Treasurer of BP,

17 right?

18 A. That's right.

19 Q. Is your office in London?

20 A. It is.

21 Q. All right. And where is Grangemouth?

22 A. In Edinburgh, Scotland.

23 Q. Scotland. And various investigations were

24 conducted of the Grangemouth events, and BP was fined a

25 million pounds, true?


63

1 A. I believe that's correct.

2 Q. And did -- did you write that check, or did

3 you have anything to do with seeing that that was paid,

4 since you were the Treasurer?

5 A. As -- as I said, Treasurers do not write

6 checks.

7 Q. All right. And BP made statements after the

8 Grangemouth event such as "We changed our process

9 Management system to be sure this never happens again,"

10 correct?

11 A. I -- I don't recall that, but I'm sure that's

12 probably right.

13 Q. And Lord Browne said, "We are renewing our

14 commitment to safety," didn't he?

15 A. I -- I -- the -- I don't remember what Lord

16 Browne said. If you'd like to show me where he

17 said it --

18 Q. You would have --

19 A. -- I think --

20 Q. -- expected him to say something like that,

21 right?

22 A. Something like that --

23 Q. Yeah.

24 A. -- I would imagine.

25 Q. And -- and you -- when these events occurred,


64

1 you were right there in the top Management at BP,

2 weren't you?

3 A. I was at the top Management.

4 Q. And then comes 2005, Texas City. You're on

5 the Board of Directors. Are you still the Treasurer,

6 or have you now taken a higher position?

7 A. I'm, at that point, the CEO of E&P.

8 Q. CEO of E&P and on the Board of Directors. And

9 it's March 23rd, 2005, when that disaster occurs in

10 Texas, correct?

11 A. Correct.

12 Q. And BP had just gotten off probation the month

13 before for the Alaska felony --

14 MR. WEBB: Objection.

15 Q. (By Mr. Cunningham) -- right?


17 Q. (By Mr. Cunningham) Right?

18 MR. GODFREY: The same objection.

19 A. That's what the record shows.

20 Q. (By Mr. Cunningham) As a result of Texas City,

21 BP pled guilty to a felony, didn't it?

22 A. They -- we did. Or BP did.

23 THE COURT REPORTER: Two minutes.

24 MR. CUNNINGHAM: Let's stop here.

25 MR. GODFREY: Off the tape.


65

1 MR. CUNNINGHAM: He says we've got two

2 minutes, so I won't --

3 MR. GODFREY: It's a convenient time to

4 stop him.

5 MR. CUNNINGHAM: All right.

6 THE VIDEOGRAPHER: Off the record at

7 9:37 a.m., ending Tape 1.

8 (Recess from 9:37 a.m. to 9:57 a.m.)

9 MR. CUNNINGHAM: Ready.

10 THE VIDEOGRAPHER: All set?

11 On the record at 9:57 a.m., beginning Tape 2.

12 Q. (By Mr. Cunningham) Dr. Hayward, my closing

13 question was this: As a result of the Texas City

14 disaster on March 23rd of 2005, BP pled guilty to a

15 felony, didn't it?




19 Q. (By Mr. Cunningham) I hand you Exhibit 6006.

20 Judgment --

21 MR. GODWIN: Tab number? Tab number?

22 MR. CUNNINGHAM: Excuse me. 12.

23 MR. GODWIN: Thank you.

24 Q. (By Mr. Cunningham) Judgment was imposed on

25 March the 12th of 2009, true?


66

1 A. Correct.

2 Q. Excuse me?

3 A. Correct.

4 Q. And you were the CEO?

5 A. I was.

6 Q. BP was sentenced to probation for three years,

7 weren't they?


9 Q. So as of April 20th, 2010, the date of the

10 DEEPWATER HORIZON disaster and the deaths of 11 men, BP

11 was on probation for a felony related to the deaths of

12 15 people and still had two years to go on its

13 probationary term, true?



16 question.

17 MR. GODFREY: -- as to form.

18 Q. (By Mr. Cunningham) True?

19 A. We were still on probation on the 20th of

20 April for Texas City.

21 Q. And still had two years to go?

22 A. And still had two years to go.

23 Q. As a matter of fact, BP is still on probation

24 today, isn't it?



67

1 A. Yes.

2 Q. (By Mr. Cunningham) And there were conditions

3 of supervision for that probation, weren't there?

4 A. There were.

5 Q. If you look on Page 2, it required that BP

6 designate an official of the organization to act as

7 their representative and be the primary contact with

8 the Probation Officer, right?

9 A. Correct.

10 Q. Did you have to report to the Probation

11 Officer, or was that somebody else?

12 A. That was somebody else.

13 Q. And BP has violated this Settlement Agreement,

14 hadn't it?


16 A. I'm sorry? We had --

17 Q. (By Mr. Cunningham) BP violated the Settlement

18 Agreement that it entered as part of this guilty plea,

19 didn't it?

20 A. Can -- can you --

21 Q. You don't know anything about that?

22 A. It's not that I don't know anything about it.

23 I'd just like to be clear about --

24 Q. Paragraph 8 on Page 3 of 5 requires BP to

25 fully comply with the Settlement Agreement it exeted --


68

1 executed between it and the United States Occupational

2 Health and Safety Administration.

3 A. M-h'm.

4 Q. Right?

5 A. M-h'm.


7 Q. (By Mr. Cunningham) And the reason you're

8 hesitating when I asked you whether they violated that

9 Settlement Agreement is what?

10 A. Is because of the protracted discussion and

11 negotiation we had with OSHA over the exact terms of

12 the Settlement Agreement.

13 Q. So it is in dispute whether or not you

14 violated the Settlement Agreement?

15 A. I honestly can't recall the details of where

16 we got to with OSHA in the course of late 2009, early

17 2010.

18 Q. All right. Page 4, BP paid criminal monetary

19 penalties in the form of a fine of $50 million,

20 correct?


22 Q. And if you look at Page 7 of the Criminal

23 Information that's attached to these first few

24 documents, if you turn to Page 7 of that Criminal

25 Information, which is Page 7 of 8, top right corner --


69

1 do you have that page?

2 A. Does it start with E, "Excess Pressure"?

3 Q. Yes.

4 A. All right.

5 Q. And if you'll look down below H, BP pled

6 guilty to a knowing violation of risk management

7 practices, didn't it?


9 A. Well, what it says under H is that BP Products

10 failed since at least 1999 to perform a relief valve

11 study.

12 Q. (By Mr. Cunningham) Excuse me. I -- I --

13 MR. GODWIN: Objection, form.

14 Q. (By Mr. Cunningham) I misstated what I was

15 asking you to refer to.

16 Below H, the next paragraph --

17 A. I'm sorry.

18 Q. -- starts with "knowing violations of risk

19 management practices," correct?


21 Q. And it discusses the period between January of

22 '99 and March of 2005, correct?

23 A. Correct.

24 Q. All right. And included in the time frame

25 when the violations occurred, you were Treasurer of BP


70

1 PLC, correct?

2 A. Correct.

3 Q. Part of that time.

4 A. Correct.

5 Q. On the Board of Directors of BP PLC, correct?

6 A. Correct.

7 Q. Or the No. 2 man, or CEO of E&P?

8 A. CEO of E&P would be a more accurate

9 description.

10 Q. In the top Management. You were there,

11 weren't you?

12 A. I was in the top Management.

13 Q. Did you -- did you have to sign the check

14 paying these penalties?


16 A. I think I made it clear Treasurers don't sign

17 checks.

18 Q. (By Mr. Cunningham) Did you issue the check?

19 Did you order the check? Did you ever even see the

20 check?

21 A. No, I didn't ever see the check.

22 Q. You didn't?

23 A. I was -- most money is sent by bank transfer

24 these days, as I'm sure you're aware.

25 Q. Did you -- did you ever go to Court as a


71

1 result of this? Did you ever appear in Court for the

2 guilty plea?

3 A. No.

4 Q. Did you ever undergo questioning in a

5 deposition like this today, relative to the Texas City

6 disaster?

7 A. No, because it was -- in -- in reality, I had

8 no authority or accountability over Texas City at any

9 point in -- in this time.

10 Q. So even though you were in the top Management

11 of BP, you had no accountability. Is that your

12 testimony?

13 A. I said I was not accountable for the Texas

14 City refinery or any -- any part of my -- the

15 organization I was running was not accountable for the

16 Texas City refinery. That is why I was not deposed, I

17 am assuming.

18 Q. Did you ever give testimony such as you're

19 giving today either in the Alaska felony case, the

20 Grangemouth event, or the Texas City disaster?

21 A. I did not.

22 Q. And then after Texas City, Lord Browne said

23 the same thing that we've heard before, that BP says

24 after a felony convictions or disasters, and that is,

25 "We're going to do whatever it takes to see it never


72

1 happens again," didn't he?

2 MR. WEBB: Object to the form.

3 MR. GODFREY: Objection to the form.

4 A. If you can show me, I -- I can confirm or deny

5 whether that's the case.

6 Q. (By Mr. Cunningham) Tab 15.


8 THE COURT REPORTER: Exhibit 6007.

9 A. Thank you.

10 Q. (By Mr. Cunningham) This is a BP press

11 release, correct?

12 A. It is, yes.

13 Q. Dated 17 August 2005?

14 A. Correct.

15 Q. Which is a few months after the explosion,

16 right?

17 A. Correct.

18 Q. And it quotes "BP Group Chief Executive John

19 Browne," doesn't it?

20 A. It did -- it does.

21 Q. And does it quote him, in the third paragraph,

22 as saying, quote: "The Texas City explosion was the

23 worst tragedy in the recent history of BP, and we will

24 do everything possible to ensure nothing like it

25 happens again," end quote?


73

1 A. It does.

2 Q. Did I read that correctly?

3 A. Correct.

4 Q. And that's almost exactly the same thing you

5 had said in BP TV ads after the DEEPWATER HORIZON

6 blowout, isn't it?

7 MR. GODFREY: Object to the form of the

8 question.

9 A. I think I'd like to see the TV ad so I can

10 make the comparison, if you have them available. But

11 if not, then I -- I honestly don't remember what I said

12 in the TV ads, frankly.

13 Q. (By Mr. Cunningham) So you do not remember

14 having said, essentially, that the DEEPWATER HORIZON

15 was a tragedy and that you would do everything possible

16 to ensure nothing like it happened again? You don't

17 recall --

18 A. I'm sure --

19 Q. -- saying that?

20 A. I'm sure I said something very similar.

21 Q. And -- and you said it more than once and --

22 A. I'm sure I did.

23 Q. -- in more than one location, didn't you?

24 A. I did.

25 Q. Then we come to 2006, and that is the Prudhoe


74

1 Bay pipeline leak of some 200,000 gallons. You --

2 you -- you're familiar with that, aren't you?

3 A. I am, yes.

4 Q. You were CEO of E&P and on the Board of

5 Directors and you were in the top Management of the

6 company when that occurred, correct?

7 A. I was.

8 Q. And BP pled guilty to violations of the Clean

9 Water Act, didn't it?

10 A. Correct.




14 Q. (By Mr. Cunningham) (Tendering.)

15 A. Thank you.

16 Q. If you'll look at Page 1, sentence was imposed

17 on November the 29th of 2007, wasn't it?

18 MR. GODFREY: What page, please?

19 MR. CUNNINGHAM: Three, excuse me, three.

20 It actually is the third page down. It says "Page 1 of

21 5" at the top.

22 A. Yeah.

23 Q. (By Mr. Cunningham) Do you see that?

24 A. M-h'm.

25 Q. BP pled guilty -- or the sentence was imposed


75

1 on November 29th 2007, wasn't it?

2 A. Correct.

3 Q. And at that time, you were the head man at BP

4 PLC. You were the CEO, weren't you?

5 A. I was, yes.

6 Q. And, again, BP was put on probation for a term

7 of three years, true?

8 A. Correct.

9 Q. So as of the date of the DEEPWATER HORIZON

10 blowout, BP was on probation for two crimes, wasn't it?


12 Q. One related to multiple deaths, and the other

13 related to an oil spill --

14 MR. GODFREY: Ob --

15 Q. (By Mr. Cunningham) -- true?


17 A. We were on probation for two -- two accidents.

18 Q. (By Mr. Cunningham) Well, one of them --


20 Q. (By Mr. Cunningham) One of them related to

21 multiple deaths, and the other related to an oil spill?


23 Q. Didn't it?


25 Q. (By Mr. Cunningham) And there were conditions


76

1 of probation attached that are on Page 2 of 5 here,

2 right?

3 A. Sorry. (Reviewing document.)

4 Q. Do you have that, the standard conditions of

5 probation, the bottom of the page?

6 A. Yes, I do, yeah.

7 Q. Required the defendant organization to provide

8 a resi -- a representative to be the primary contact

9 with the probation officer, right?

10 A. Correct.

11 Q. I don't guess that was you, was it?

12 A. It wasn't me.

13 Q. And it required, in Paragraph 5, that "the

14 defendant organization...notify the probation officer

15 within seventy-two hours of any criminal prosecution,

16 major civil litigation, or administrative proceeding

17 against the organization."

18 True?

19 A. Correct.

20 Q. Did BP comply with its terms of probation by

21 notifying its probation officer about this litigation?


23 A. I -- I honestly don't know.


25 A. I have no knowledge whatsoever. I would


77

1 imagine that we complied with the terms of the

2 probation.

3 Q. All right. Turn to the next page. BP paid

4 criminal monetary penalties in the form of a $12

5 million fine and $8 million restitution, correct?

6 A. H'm.

7 MR. GODFREY: Which page are we at?

8 A. Sorry, I can't -- sorry. We're on Page 4 of

9 5, are we now?

10 Q. (By Mr. Cunningham) It say -- it says at the

11 top --

12 MR. GODFREY: Which -- which page are you

13 on?

14 Q. -- "Criminal Monetary Penalties."

15 MR. GODFREY: Oh, Page 4 of 5, thank you.

16 A. Yeah.

17 Q. (By Mr. Cunningham) Correct?

18 A. Correct.

19 Q. $12 million fine and $8 million restitution?

20 A. M-h'm, correct.

21 Q. And do we need to guess what BP said in the

22 wake of this event, or will you just go ahead and agree

23 that they said the same thing they had been saying in

24 every other disaster and every other criminal plea --



78

1 question.


3 Q. (By Mr. Cunningham) -- that it would never

4 happen again, would you agree?


6 A. I don't know what they -- I --

7 Q. (By Mr. Cunningham) You don't know what they

8 said?

9 A. If you'll demonstrate to me what we said, then

10 I can agree with you or disagree with you.




14 MR. GODWIN: What tab was that?




18 A. Thank you.

19 Q. If you'll turn to the next-to-the-last page of

20 this transcription of an interview, Steve Marshall,

21 President of BP Alaska. Do you see him?

22 A. I do, next-to-the-last page.

23 Q. And do you see in the quote on the left under

24 his picture where he says that: "...we need to bring

25 to bear" certain actions "to make sure an incident like


79

1 this does not happen again"?

2 A. Yeah, I think what he's referring to is "need

3 to put in place systems, including pigging, and

4 ultrasonic testing, and whatever technology we need to

5 bring to bear" --

6 Q. "...to make sure" --

7 A. -- "to make sure an incident like this" --

8 Q. -- "an incident like this does not happen

9 again"?

10 A. -- "does not happen again."

11 Q. Correct?

12 A. That's right.

13 Q. Now, we're through 2006, let's go to 2007.

14 In 2007, BP entered into a Deferred

15 Prosecution Agreement in Illinois for mail fraud and

16 wire fraud, true?


18 A. Could you just elaborate a little bit about

19 what was -- sorry.

20 Q. (By Mr. Cunningham) Mail fraud and wire fraud.

21 You don't know anything about it?

22 A. I -- I'm sure I do know something about it,

23 but I don't recall hearing it described in those terms.




80


2 Q. (By Mr. Cunningham) (Tendering.) If you will

3 look at Page 21 of "ATTACHMENT A" to this exhibit --

4 MR. CUNNINGHAM: Is that separate -



7 Q. (By Mr. Cunningham) -- which is a "STATEMENT

8 OF FACTS." It's Page 1, starts at Page 1.

9 MR. GODFREY: Which -- which -- I'm

10 sorry, which page?

11 MR. CUNNINGHAM: It's Attachment -- it's

12 Attachment A is how it's described, Rick, on -- it's

13 Page 21 --

14 THE WITNESS: I'm half through them.

15 MR. CUNNINGHAM: -- of 36.

16 MR. GODFREY: It's about halfway through

17 the document.

18 MR. CUNNINGHAM: Yeah, yeah.

19 MR. WEBB: Well, there's multiple

20 documents here, so I don't think the witness has any

21 idea where you are in the document.

22 MR. CUNNINGHAM: Well, I'm trying to help

23 him find it if I can.

24 A. I'm trying to find it --

25 Q. Let's just -- I'll show it to you. It's this


81

1 far down and it starts with Attachment A, "Statement of

2 Facts"?


4 Q. There are a series of Officer Certificates and

5 it follows those.

6 A. It follows those, okay. (Reviewing document.)

7 Okay.

8 Q. Have you found it?

9 A. Yeah, yeah.

10 Q. Okay.

11 A. Yes.

12 Q. If you'll look at Page 21 of Attachment A, and

13 I'm looking at the numbers at the bottom.

14 A. M-h'm, yep.

15 Q. Let me read to you the Paragraph 73 and see if

16 this refreshes your recollection about what BP pleaded

17 guilty to.

18 A. Okay.

19 Q. And in 2007, you were the CEO, right?


21 Q. And so when I say "mail fraud" and "wire

22 fraud," you don't remember that?

23 A. I -- I don't remember it because I always

24 referred to it as propane trading, not mail fraud.

25 Q. Oh, you called it trading. Okay. All right.


82

1 A. I -- I'm --

2 Q. See if I --

3 A. -- sorry. I apologize.

4 Q. See if I read correctly at the bottom. "Based

5 on the facts set forth above, BP admits that through

6 the actions of its employees, BP conspired to corner

7 the market and manipulate the price of February 2004

8 TET propane contrary to Commodity Exchange Act...and

9 engage in transactions that violated 18 U.S.C. 1341

10 (mail fraud)" --

11 A. M-h'm.

12 Q. -- "and 18 U.S.C. 1343 (wire fraud)."

13 Now does that refresh your recollection?

14 A. Yeah, yeah. Yeah.

15 Q. And if you look at Page 1 of the entire

16 exhibit, it sets out the various entities that entered

17 the agreement, in the first paragraph.

18 Do you see that?

19 A. I do.

20 Q. It included BP America, and the BP America

21 subsidiaries, BP Corporation North America, BP Products

22 North America, Inc., BP America Production Company, BP

23 Energy Company, and BP International Services Company,

24 correct?

25 A. Yes.


83

1 Q. And the Deferred Prosecution Agreement is for

2 a period of three years from October of 2007, isn't it?


4 Q. And BP agreed to pay monetary penalties in

5 this Deferred Prosecution Agreement of a hundred

6 million dollars to the U.S. Treasury, right?


8 A. I believe that's right.

9 Q. (By Mr. Cunningham) All right. And $53

10 million to a victim restitution fund, right?

11 A. I believe that's right.

12 Q. And $25 million to The U.S. Postal Services

13 Consumer Fraud Fund, right?


15 Q. It was signed in October of 2007, and you were

16 the CEO, weren't you?


18 Q. So on April 20th, 2010, the date of the

19 DEEPWATER HORIZON explosion, this Deferred Prosecution

20 Agreement was still in effect, wasn't it?

21 A. It was.

22 Q. Just to summarize, then, Dr. Hayward, as of

23 April 20, 2010, BP was on probation for two crimes and

24 was the subject of a three-year Deferred Prosecution

25 Agreement for mail fraud and wire fraud?


84





5 Q. (By Mr. Cunningham) And one of those crimes

6 involved multiple deaths and injuries, and one involved

7 an oil spill, didn't it?



10 Q. (By Mr. Cunningham) And all of that conduct

11 occurred while you were: A, Executive Assistant or in

12 some other position; B, No. 2 at BP, or as you say, on

13 the third level, CEO of E&P; or C, you were on the

14 Board of Directors; or D, you were CEO?

15 MR. WEBB: Objection to form. Compound.

16 Q. (By Mr. Cunningham) True?

17 A. We can debate exactly how you want to describe

18 it.

19 Q. Well, let me --

20 A. Let --

21 Q. Let me try it this way: When all of those

22 events and guilty pleas occurred, you were in the top

23 leadership at BP, weren't you?

24 A. I was in the leadership of BP, yes, correct.

25 Q. And despite everything that had occurred


85

1 before 2007, during which you were part of the top

2 leadership at BP, the Board of Directors promoted you

3 to CEO in 2007, didn't they?

4 A. They did.

5 Q. In fact, the entire time that you were the CEO

6 of BP, BP was on probation for criminal conduct, true?

7 A. For incidents that had occurred prior to my

8 becoming the CEO, that is true.

9 Q. Is it true that the entire time you were CEO

10 of BP, BP was on probation for criminal conduct?


12 A. As I said, BP was on probation for criminal

13 conduct during my time as CEO for incidents that had

14 occurred prior to me becoming the CEO.

15 Q. (By Mr. Cunningham) They occurred while you

16 were in the top leadership of BP, though, didn't they?

17 A. I was -- I was in the senior leadership.

18 Q. You were in the senior leadership, weren't

19 you?

20 A. I was.

21 Q. And it's true, isn't it, that the culture of

22 an organization is shaped by the leaders in it?


24 Q. (By Mr. Cunningham) That people do what

25 leaders do?


86


2 Q. (By Mr. Cunningham) That's true, isn't it?


4 A. I believe that the role of leaders is very

5 important in shaping the culture of an organization.

6 Q. (By Mr. Cunningham) Is it true that the

7 culture of an organization is shaped by the leaders in

8 it, and that people do what leaders do, and that that's

9 been proven --

10 A. I believe the role --

11 Q. Excuse me. Let me finish.

12 A. I'm sorry. I'm sorry. I thought you had. I

13 apologize.

14 Q. And that that's been proven time and time

15 again? That's true, isn't it?



18 A. As I said, I believe that the role of leaders

19 is very important in shaping the culture of an

20 organization. It's not unique, it's not the only

21 thing, but it's an important thing.

22 Q. (By Mr. Cunningham) Is the following statement

23 true, quote, "The culture of an organization is shaped

24 by the leaders in it. People do what leaders do.

25 That's been proven time and time again," end quote, is


87

1 that true or not?


3 A. As I've said to you, there are -- there is

4 more -- leaders are very, very important. Very

5 important. They take a major role in shaping the

6 culture of an organization.

7 There are other things that you need to put in

8 place besides having the right leadership to shape the

9 culture of an organization.

10 Q. Turn to Tab 2, Page 22.

11 MR. GODFREY: Which exhibit is that?

12 Q. (By Mr. Cunningham) Exhibit 6000.

13 MR. BONNER: (Nodding.)

14 MR. GODFREY: Oh, this is -- is this

15 earlier?

16 MR. CUNNINGHAM: Yes.

17 MR. GODFREY: What page number again?


19 Q. (By Mr. Cunningham) This is a speech you

20 gave --

21 A. Yeah.

22 Q. -- to the Business School at Stanford, and did

23 you or did you not say, quote, "...what I'm very

24 certain about is that a culture of an organization is

25 shaped by the leaders in it. People do what leaders


88

1 do...that's been proven time and time again"? Did you

2 or did you not say that?

3 A. I did say that. I did say that.

4 Q. You would agree, wouldn't you, Dr. Hayward,

5 that there were a couple of common threads running

6 through the various investigations by various parties

7 both inside and outside BP of Grangemouth, Texas City,

8 and Prudhoe Bay? There were a couple of common threads

9 running through those, weren't they?


11 A. I would like you to elaborate as to which

12 common threads you might be referring to --

13 Q. All right.

14 A. -- then I can --

15 Q. Well, let me refer you to two. Those

16 investigations focused, one after the other, on issues

17 including one, cost-cutting, and two, process safety,

18 correct?

19 A. I certainly believe that process safety was a

20 common theme. I think there is certainly no evidence

21 in the case of Alaska that it was anything to do with

22 cost-cutting.

23 Q. Well, then --

24 A. It was to do with the assessment of risk, but

25 it wasn't about cost-cutting.


89

1 Q. All right. Well, do you concede, then, that

2 the other two investigations a common thread was

3 cost-cutting by Senior Management?

4 A. I don't agree with that.

5 Q. You don't agree with that?

6 A. No.

7 Q. All right. Did you read press reports that

8 described cost-cutting by Lord Browne, aggressive

9 cost-cutting directed by him as one of the causes of

10 those events?


12 A. Did I read press reports?

13 Q. (By Mr. Cunningham) M-h'm.

14 A. I may have read press reports. I don't

15 recall.

16 Q. And in the lessons that were learned from

17 Grangemouth, was the subject of cost-cutting discussed?

18 A. I -- I don't recall.




22 Q. (By Mr. Cunningham) From a safety perspective

23 it was important that lessons be learned from prior

24 events such as Grangemouth, correct?

25 A. Correct.


90



3 MR. GODFREY: What's the Exhibit number

4 of this?


6 MR. GODFREY: Thank you. Now I get the

7 "11" part. Thank you.

8 Q. (By Mr. Cunningham) And, certainly, in your

9 capacity in the leadership at BP, you were interested

10 in what lessons there were to learn from events such as

11 Granemouth -- Grangemouth, correct?

12 A. Yes, indeed.

13 Q. And if you look at the first page of this

14 exhibit, we see that the three authors were, in fact,

15 employees of BP, weren't they?

16 A. M-h'm.

17 Q. So they would know that the Senior Management

18 level that BP would be reading this Report they wrote

19 about the lessons from Grangemouth, correct?

20 A. I'm sure that's correct.

21 Q. All right. If you look at Page 252 at the

22 bottom, tell me whether or not I read this correctly

23 under "Cost Targets": "There was too short a focus on

24 short term cost reduction reinforced by KPI's..."

25 That's key performance indicators, isn't it?


91

1 "...in performance contracts, and not enough

2 focus on longer-term investment for the future. HSE

3 was unofficially sacrificed to cost reductions, and

4 cost pressures inhibited staff from asking the right

5 questions; eventually staff stopped asking."

6 Did you read that when this Report was issued?

7 A. I can't recall. I almost certainly did, but I

8 can't recall it.

9 Q. You're almost certain you did, but you can't

10 recall it?

11 A. I can't recall it, no.

12 Q. Okay. And you're familiar with the U.S.

13 Chemical Safety Investigation Report out of Texas City,

14 correct?

15 A. I am.



18 MR. CUNNINGHAM: I'm going to mark the

19 full copy, Rick, and give y'all pages from it.

20 MR. GODFREY: That's fine.





25 A. Thank you.


92

1 Q. This report came out in March of 2007, seven

2 years after Grangemouth, correct?

3 A. Correct.

4 Q. And among the Key Findings, turn to Page 25,

5 if you will.


7 Q. Do you have that page?

8 A. I do.

9 Q. The first paragraph under Key Organizational

10 Findings, tell me whether I read this correctly, quote,

11 "Cost-Cutting, failure to invest, and production

12 pressures from BP group executive managers impaired

13 process safety performance at Texas City."


15 A. You did.

16 Q. And if you'll turn to Page 157, do you see

17 that there's a followup portion here or correction on

18 Page 158, Section 9.4, related to budget cuts?

19 A. M-h'm.

20 Q. It refers to a 2002 study. That's three years

21 before the Texas City explosion, correct?

22 A. Correct.

23 Q. Are you familiar with the study that was done

24 three years before Texas City?

25 A. I'm not familiar with it, no. I'm certain I


93

1 was at the time, but I'm not familiar with it.

2 Q. Tell me if I read this correctly: "The 2002

3 study identified a 25 percent cut in fixed cash cost

4 targeted in 1999" to "2000. In 1999, the BP Group

5 Chief Executive" --

6 That would have been Lord Browne?

7 A. Correct.

8 Q. -- "outlined his strategies and goals for" the

9 "newly merged company, with the target of" reducing

10 business -- "business unit cash costs for the year 2001

11 by at least 25 percent from year 1998 levels. He also

12 set out three year targets to cut" 1 point -- "1.4

13 billion from R&M worldwide."


15 A. You did.

16 Q. Turn to the next page, second paragraph:

17 "While some BP refinery leaders resisted the call for a

18 25 percent reduction in fixed costs, Texas City made

19 serious cuts and came close to the 25 percent reduction

20 target. Its cost reduction strategy was to

21 'aggressively drive costs out of the system at an

22 accelerated pace relative to other refiners.'"


24 A. Correct.

25 Q. And that same Report also noted what BP had


94

1 learned in the lessons -- in the way of lessons from

2 Grangemouth, didn't it, on Page 145?

3 Look down at the bottom and tell me whether I

4 read this correctly in the middle of the paragraph:

5 "...even though the group Chief Executive told staff in

6 October 2000 edition of BP's in-house magazine that BP

7 would learn lessons from Grangemouth and other

8 incidents. The CSB found that a number of managers,

9 including executive leadership had little awareness or

10 understanding of the lessons from Grangemouth."

11 Did you read that when it was published?

12 A. Did I read this -- this Report?

13 Q. Yes.

14 A. I did.

15 Q. All right, sir. And the Baker Independent

16 Panel Report, which BP commissioned, reached similar

17 conclusions, didn't it?

18 A. It did.

19 Q. And then if we move to Prudhoe Bay.





24 Q. (By Mr. Cunningham) I'm going to mark the full

25 report and give you excerpts.


95

1 MR. GODFREY: Right. Thank you.

2 Q. (By Mr. Cunningham) Are you familiar with the

3 Booz Allen Report that BP commissioned out of Prudhoe

4 Bay?

5 A. Yes, I am.

6 Q. And this is a Report or a study that BP paid

7 for, correct?

8 A. Correct.

9 Q. And if you look at Page 7, the bottom, where

10 it says: "BP XA had a deeply ingrained cost Management

11 ethic as a result of long periods of low oil prices,

12 constrained budgets, and multiple cost/head count

13 reduction initiatives."



16 A. It also says, just so we're complete:

17 "However, larger budgets alone would not have prevented

18 these incidents without fundamental changes in

19 corrosion and integrity Management."

20 Q. (By Mr. Cunningham) The question was: Did I

21 read the sentence before that correctly or not?

22 A. You did.

23 Q. All right.

24 A. I just wanted to make certain the context was

25 complete.


96

1 Q. And are you familiar with a Fortune article

2 that was published relating to this very issue?


4 A. No, I don't -- I don't -- I don't recall it.

5 Q. (By Mr. Cunningham) Of cost-cutting? You

6 don't recall --

7 A. I don't recall the Fortune article.

8 When was the Fortune article published?

9 Q. It was published in January of 2011.

10 A. I -- yes, I'm -- I'm aware.

11 Q. Are you familiar with that?

12 A. I'm aware of that article, yes.

13 Q. And are you familiar with the statement in

14 that article that "John Browne" -- quote, "John

15 Browne's legacy as CEO would be enormous - for better

16 and worse. After taking over in 1995 he imposed a

17 tough bottom-line mentality, ever focused on cutting"

18 cost?

19 Did you read that?

20 A. No.

21 Q. Is that true?

22 A. No.

23 Q. It's not true?

24 A. No.

25 Q. So he was not focused on cutting cost?


97

1 A. He was focused on running a very effective

2 business.

3 Q. Okay.

4 A. It wasn't just about cutting costs, or

5 anything --

6 Q. Well, it wasn't just about cutting cost?

7 A. It wasn't about cutting costs. It was about

8 building a -- a large oil and gas company.

9 Q. Is it -- is it your testimony, Mr. Hayward,

10 that John Browne did not aggressively cut cost when he

11 was CEO of BP?


13 A. I -- there was certainly cost management in BP

14 at the time.

15 Q. (By Mr. Cunningham) So --

16 A. But I'm not saying -- I -- I -- I don't think

17 that's in any way a complete description. So I'm

18 sorry, the answer is "No."

19 Q. The answer is "No," he did not aggressively

20 cut cost while he was CEO?


22 Q. (By Mr. Cunningham) Is that your testimony?

23 A. He certainly cuss -- cut costs, but as part of

24 running the business. It wasn't like it was the only

25 thing that was happening.


98

1 Q. Okay. It wasn't the only thing that happened,

2 but he certainly cut cost, correct?

3 A. He certainly reduced costs --

4 Q. All right.

5 A. -- yes.

6 Q. You were famil --

7 A. There's a difference, I think. Sorry -- I'm

8 sorry.

9 Q. Go ahead.

10 A. I interrupted you.

11 Q. All right. You were familiar with all of

12 these investigations and studies when you became CEO in

13 2007, weren't you?

14 A. I was.

15 Q. Because you had been there, and you had been

16 directly involved in the top leadership and as a Board

17 Member and as a Treasurer, correct?

18 A. Correct.

19 Q. All right. And when you testified in

20 Congress, on June the 17th of 2010, you knew by that

21 point that Congress knew and the public knew about BP's

22 history of cost-cutting and the relationship between

23 that and what occurred at Texas City, you knew that,

24 didn't you?

25 MR. WEBB: Objection, form.


99


2 A. I knew that some people had made that link.

3 Q. (By Mr. Cunningham) You knew that the --

4 A. That's certainly true.

5 Q. Okay. You knew that the Chemical Safety Board

6 had made a link between cust cotting -- cust --

7 cost-cutting and impaired process safety that they

8 believed had led to the Texas City disaster?

9 A. I knew what the Chemical Safety Board had

10 concluded.

11 Q. And your testimony before Congress came three

12 years after those Reports, three years after you were

13 CEO, and five years after Texas City, right?

14 A. And three years after I had launched a major

15 change program at BP to --

16 Q. I didn't ask you about that.

17 A. -- take account of the --

18 Q. Did you hear me --

19 MR. WEBB: Before you --

20 Q. (By Mr. Cunningham) -- ask you about a

21 change --

22 MR. WEBB: -- he can answer --

23 MR. CUNNINGHAM: No. I didn't ask

24 him about any change --

25 MR. WEBB: You interrupted -- you can


100

1 move to strike it, but he has a right to finish his

2 answer.

3 MR. CUNNINGHAM: He does not have to

4 right -- have a right to make a speech on my time

5 about something I didn't ask him.

6 MR. WEBB: He's in the middle of an

7 answer. I think he has a right to finish it.

8 A. You have your time back.

9 Q. (By Mr. Cunningham) When you took the oath

10 before Congress on June the 17th of 2010, the last

11 thing you wanted to admit was that since 2007, when you

12 became CEO, and despite what had happened at

13 Grangemouth, Texas City, and Prudhoe Bay, you had done

14 exactly the same thing as Lord Browne, you had

15 aggressively cut cost, didn't you?

16 A. Oh, that is fundamentally --


18 A. -- and completely inaccurate.

19 Q. (By Mr. Cunningham) Okay.

20 A. And I will -- if you would allow me to --

21 Q. No. I'm asking you --

22 A. -- please, sir, I would like to explain to you

23 what I did do.

24 Q. Here's the way it works: If I want an

25 explanation, I'll ask for one. If I don't ask your


101

1 lawyers, great lawyers, they can ask you to explain any

2 answer that they feel you need to explain. Okay?

3 My question was real simple: Did you or did

4 you not? And as I understand your answer, it's "No, I

5 didn't."

6 A. I categorically did not.

7 Q. You categorically did not. All right.

8 MR. CUNNINGHAM: Oh, I got it.


10 Q. (By Mr. Cunningham) Exhibit 6000. Tab 1, Page

11 37.


13 Q. (By Mr. Cunningham) It's a -- it's the -- it's

14 to your right. To your right. There.

15 MR. WEBB: I got it.

16 MR. CUNNINGHAM: Oh, it's -- that's not

17 it.

18 MR. WEBB: This is 6000? Tony's speech?

19 MR. CUNNINGHAM: Okay. Excuse me. 6001.

20 I'm sorry.

21 MR. WEBB: 6001.

22 MR. GODFREY: 6001.

23 MR. WEBB: Do you have 6001 in front of

24 you? That's --

25 THE WITNESS: I do.


102

1 MR. WEBB: Okay.

2 THE WITNESS: I do.

3 MR. WEBB: Go ahead.

4 MR. GODFREY: No. I think --

5 MR. WEBB: No, he's got 6000, too.

6 You -- you're looking at the Congressional testimony?

7 MR. CUNNINGHAM: Right.

8 MR. GODWIN: Tab what?

9 MR. CUNNINGHAM: Tab 1, Page 37.

10 MR. GODFREY: 37?


12 Q. (By Mr. Cunningham) Did you give this

13 testimony in Congress in the middle of the page?

14 "SULLIVAN: Do you think the other companies have

15 different or stricter or -- stricter guidelines with

16 their safety and spend more money on it? Because you

17 probably compare yourself to other companies, I'm

18 sure."

19 Was your -- was your answer: "I can't make a

20 detailed comparison. But I can be clear that what

21 we've done. We've invested billions of dollars, we've

22 recruited thousands of people, and we've changed

23 significantly our processes, systems and procedures in

24 the course of the last three years."

25 A. I did.


103


2 A. And I stand absolutely by it.

3 Q. You stated, quote, "We've invested billions of

4 dollars" and "we've recruited thousands of people,"

5 right?

6 A. Right.

7 Q. And it is true that when you took over in

8 2007, BP's financial performance, as you said, was

9 appalling, wasn't it?

10 A. Correct.

11 Q. All right. And you had two years to fix it,

12 didn't you?


14 Q. (By Mr. Cunningham) You said that, too, didn't

15 you?

16 A. I said that in this speech.

17 Q. And one of the things you did, if we look at

18 Tab 2, Page 19, that's the speech, Exhibit 6000.

19 MR. WEBB: I'm sorry, what page number?


21 MR. WEBB: Page 19, Tony.

22 Q. (By Mr. Cunningham) And tell me whether or not

23 I read this correctly, at Line 13: We had "lost track

24 of the competition. And we reinstated very" vigor --

25 "rigorous competitive benchmarking across the" country.


104

1 The most profound level or the most rudimentary level

2 actually, it was looking at our performance as a

3 company against our principal competitor, Shell.

4 "And in the second quarter of 2007 on an

5 annualized basis, we had a gap of 8 billion dollars

6 relative to Shell in terms of what we should have been

7 generating from our asset base versus what they were.

8 And we" use "that as a burning platform. You know, we"

9 use "that as" a "rallying cry behind this big change

10 that we" have..."we have subsequently been driving

11 through...BP."


13 A. You did. Am I allowed to state the context in

14 which it was said? As to completeness --

15 Q. If your lawyers want to ask you about the

16 context, they can ask you about the --

17 A. Well --

18 Q. -- context. I asked you whether or not you

19 said it.

20 A. And I said prior to --

21 Q. Did you say it?

22 A. -- saying that in the speech. We created

23 something called -- which we refer to as the forward

24 agenda, which was a focus on safe, reliable operations.

25 Having the right people with the right skills in the


105

1 right place. That was --

2 Q. Did you also say the words I just read?

3 A. I did.

4 Q. All right.

5 A. After I had said what I just said.

6 Q. And then BP had a very bad fourth quarter in

7 2007 after you became CEO, didn't it?

8 A. I think that's probably right.

9 Q. And you sought help. You called in the

10 investment bank, Morgan Stanley, didn't you, and

11 specifically, someone named Neil Perry, who was an oil

12 and gas specialist, correct?

13 A. I -- I didn't seek help from Morgan Stanley.

14 I asked --

15 Q. Did you seek advice?

16 A. -- Neil -- no. I asked Neil Perry to do one

17 thing and one thing only: To come to a management

18 conference and give an unblemished assessment of the

19 performance of BP at that time, and that is what he

20 did.

21 Q. And did he recommend cost-cutting --

22 A. He recommended --

23 Q. -- and austerity measures?

24 A. He recommended nothing. It wasn't a case of

25 --


106

1 Q. He recommended nothing?

2 A. -- asking Mr. Perry to make recommendations.

3 I asked him to come to a management conference for a

4 couple of hours and give an objective, independent

5 assessment of how he saw the industry and how he saw BP

6 in the industry at that time. He was in no position to

7 make any recommendations about anything.

8 Q. Did he make any suggestions about

9 cost-cutting?

10 A. He may have done, but they were of no

11 consequence.

12 Q. All right.

13 A. And they -- they were not something that

14 anyone was going to listen to, because he had no

15 standing to make that sort of recommenda --

16 Q. So you invited him to come to make a speech at

17 a BP meeting, and he had no standing to make any

18 suggestions?

19 A. I didn't -- I -- I -- like I said, I asked him

20 to come and give an objective assessment of the

21 industry and where BP stood in the industry. I did not

22 ask him for recommendations. If he gave

23 recommendations, very interesting. But they weren't

24 asked for, and they weren't acted on.

25 Q. Did he give a recommendation related to


107

1 cost-cutting and austerity measures?

2 A. I don't recall. Because as I said --

3 Q. But what you know is that you --

4 A. -- we weren't listening for that.

5 Q. Yeah. What you know is that you did not

6 engage in cost-cutting --


8 Q. (By Mr. Cunningham) -- and austerity measures

9 --

10 A. Well --

11 Q. -- because of BP's financial condition as of

12 2007?


14 A. Am I going to be allowed to explain what I

15 did?

16 Q. (By Mr. Cunningham) No --

17 A. In the course --

18 Q. -- you just get to answer the questions.

19 A. Well, the answer to the question is: I

20 engaged in what -- investment into the operations, in

21 terms of investment into people and investment into

22 plant. And I engaged in cost reductions above the

23 operations.




108





5 This is your copy. The other one is --

6 A. Oh, I'm sorry.

7 Q. -- your counsel's.

8 A. Thank you.

9 Q. You gave a speech that was reported in the

10 Guardian on September the 26th of 2007, correct?

11 A. Correct.

12 Q. It states in the first sentence: "Tony

13 Hayward, the new Chief Executive of BP, is to instigate

14 a thorough Management shakeup in an attempt to refocus

15 the group following a dreadful third quarter." Is that

16 true?

17 A. Correct.

18 Q. And it says in Paragraph 3: "Mr. Hayward

19 outlined new plans to slash management layers from 11

20 to 7, redeploying some staff and removing others to

21 kick start an oil group that he believes has become

22 overcautious, despite the fatal Texas City refinery

23 fire and other major accidents in the U.S."


25 A. You did.


109

1 Q. It then states: "He told a staff meeting of

2 American workers in Houston that the company share

3 price performance compared with that of its peers was

4 now at its lowest ebb since 1992." Is that true?

5 A. Correct.

6 Q. And then at the bottom, quote: "Assurance is

7 killing us," quote, "Mr. Hayward told U.S. staff noting

8 that too many people were engaged in decision-making

9 leading to excessive cautiousness."


11 A. I said that assurance is killing us because

12 there was lack of clarity as to who was accountable for

13 what. And when you don't have clarity of

14 accountability, no one is accountable for anything.

15 Q. The -- the article goes on to say: "The

16 speech in Houston builds on comments made at his first

17 press conference for BP's half yearly results in July

18 that the operating performance was not good enough and

19 he wanted change, including a 25 percent cut in staff

20 at the St. James Square Headquarters." Is that true?

21 A. That is correct, and in sharp contrast to

22 cutting staff in the operations.


24 Q. (By Mr. Cunningham) And did you also say on

25 the next page, quote: "We can be more efficient,


110

1 leaner, and fitter by ensuring we have a common and

2 consistent way of doing things by reducing our

3 overheads and doing a better job at managing our third

4 party spend." Did you say that?

5 A. I did. By reducing the overheads, not

6 reducing the money we invest into our operations --


8 A. -- or anything to do with our operations.




12 MR. CUNNINGHAM: (Tendering.)

13 MR. WEBB: Thank you.

14 Q. (By Mr. Cunningham) I'll hand you a document

15 which purports to be your speech that you gave on the

16 17th of April 2008 at the Annual General Meeting. Is

17 that what that document is?

18 A. It is.

19 Q. Turn to Page 3 at the top. Tell me whether or

20 not you said this in the speech you gave: "Corporate

21 simplification: There is a significant competitive gap

22 with our peers. If we are going to close that gap, BP

23 needs to undergo a process of change as big as anything

24 it has achieved in the last 20 years. Our way of doing

25 business is too complex. We are overly bureaucratic,


111

1 not consistent enough, and our costs are too high. In

2 October last year, we announced a forward agenda to

3 simplify BP and to fundamentally change the company

4 culture in our way of operating."



7 Q. And then dropping down to the next -- to the

8 two paragraphs below that, did you say: "Our objective

9 is to reduce the corporate overhead by between" 20 --

10 "15 and 20 percent"?


12 Q. All right.

13 A. A very significant difference in redu --

14 reducing the corporate overhead to reducing operating

15 costs.


17 Q. (By Mr. Cunningham) I didn't ask you that.

18 A. Well, I --

19 Q. I asked you whether or not you said what I

20 read.

21 See, your lawyers will get a chance,

22 Mr. Hayward, to explain anything. You can give any

23 self-serving explanation you want to give later.

24 A. I just want to make certain --



112

1 A. -- that the statements made here are not taken

2 out of context.

3 Q. (By Mr. Cunningham) You don't have the option

4 for making self-serving statements every time you have

5 to answer a question you don't like. Okay?


7 A. I'm not making self-serving statements.

8 Q. (By Mr. Cunningham) The question is real

9 simple. Did you say, quote: "Our objective is to

10 reduce the corporate overhead by between 15 to 20

11 percent," end quote? Now, either you said it or you

12 didn't.

13 MR. WEBB: Well, you didn't read the rest

14 of the paragraph.

15 MR. CUNNINGHAM: I know I didn't. I

16 don't intend to read the rest of the paragraph. I

17 asked him if he said what it said in the sentence.

18 MR. GODFREY: Objection as to the form.

19 He answered the question already.

20 Q. (By Mr. Cunningham) This is your speech,

21 right?

22 A. It is, yes.

23 Q. Okay. And then in 2009 --




113




4 MR. GODWIN: Excuse me.

5 Q. (By Mr. Cunningham) Is that document a speech

6 that you gave on April 16th of 2009 --

7 A. It is.

8 Sorry.

9 Q. And did you say when you gave in that speech

10 on Page 2, second paragraph: "We set out a plan to

11 deliver safe and reliable operations to restore

12 revenues and to reduce the complexity and cost

13 structure of BP. We've done" --

14 A. Yes.

15 Q. -- "exactly that," end quote --

16 A. I did.

17 Q. -- is that what you said?

18 A. It is.

19 Q. All right. And then on the next page, did you

20 say in the middle paragraph, quote: "At a corporate

21 level, we began to reduce the complexity and cost base

22 of our overheads. By the end of 2008, we had reduced

23 our organization by around 3,000 people and are on

24 track to exceed our original target of 5,000 by the

25 middle of 2009. We have also eliminated nearly 20


114

1 percent of the senior positions." Did you say that?

2 A. I did.

3 Q. And then on Page 5, third paragraph down --

4 MR. GODFREY: Hold on a second, please.

5 MR. WEBB: I don't see -- I just don't

6 see page numbers. Are they here or --

7 MR. CUNNINGHAM: All right. It's the

8 third page from the back of the speech portion of the

9 exhibit.

10 MR. WEBB: Three, four, five.

11 MR. GODFREY: Is this --

12 MR. CUNNINGHAM: Not the bullet point.

13 MR. GODFREY: Is this the fifth page in?

14 MR. CUNNINGHAM: I think it is.

15 MR. GODFREY: All right. I think I have

16 it.

17 MR. CUNNINGHAM: Yeah, it's the fifth

18 page in from the front.


20 MR. WEBB: I don't think you're on the

21 same page he's on. I just -- you want me to just make

22 sure he's on the same page you're on? You want five

23 pages from the beginning; is that correct?

24 MR. CUNNINGHAM: Right. It starts at the

25 top, "But so not only..."


115

1 Q. (By Mr. Cunningham) You got that?

2 A. Yeah.

3 Q. Okay. And did you say on the fourth

4 paragraph -- or third paragraph down: "At BP, we

5 started our drive to counter cost inflation some 18

6 months ago and managed to halt that inflationary trend

7 in 2008 despite the continued rise in oil prices for

8 most of the year"?


10 A. I did.

11 Q. Did you then say: "The challenge for the

12 industry now is to bring this cost base down - and to

13 do this fast, to align with new market conditions"?

14 A. I did.


16 A. I did.

17 Q. And then at the bottom of the next --

18 A. And then I went to on say: "We've been

19 working with our suppliers to improve" --

20 Q. I didn't ask you what you went on to say.

21 A. -- efficienty...with one important caveat -

22 safe and" reliable -- "reliable operations come first

23 whatever" the "cost."

24 Q. Mr. Hayward, I didn't --



116

1 Q. (By Mr. Cunningham) -- ask you to read

2 anything. I asked you whether or not you said what I

3 read to you. Okay? Can you follow the rules and read

4 or answer the question I ask you?


6 Q. (By Mr. Cunningham) You understand this isn't

7 a press conference where you get to say anything you

8 want?



11 MR. GODFREY: The colloquies are

12 inappropriate.

13 Q. (By Mr. Cunningham) Did you say at the bottom

14 of the next paragraph, quote: "We expect our cost to

15 fall by around $2 billion in 2009," end quote?


17 A. Yes.

18 Q. And did you say at the bottom paragraph, first

19 sentence, quote: "At BP we have a mantra, every dollar

20 counts, every seat counts, and we intend to follow it

21 through"?


23 A. And I did in the context of one important

24 caveat --

25 Q. The question was --


117

1 A. -- safe and reliable operations --

2 Q. -- did you say that?

3 A. -- come first whatever cost efficiency

4 measures we undertake.


6 Q. (By Mr. Cunningham) And you have repeated

7 multiple times that the first words out of your mouth

8 when you talk about BP are always "safe and reliable."

9 You've said that, haven't you?

10 A. I have.

11 Q. That that's your emphasis always that whenever

12 you give a speech, whenever you talk about -- the

13 emphasis is safe -- the first words are "safe and

14 reliable," right?

15 A. Correct.

16 Q. Correct. Well, Mr. Hayward, if -- if the

17 first words out of your mouth every time you open it

18 were "I am Superman," that wouldn't make you Superman,

19 would it?



22 Q. (By Mr. Cunningham) Would it?

23 MR. GODFREY: Object to form.

24 A. I'm not going to answer that question.

25 THE COURT REPORTER: Three minutes.


118





5 MR. CUNNINGHAM: I'll start on this

6 exhibit when we come back. Time's up.

7 MR. GODFREY: Let's take a break now.


9 10:54 a.m. Ending Tape 2.



12 THE VIDEOGRAPHER: All set. On the

13 record at 11:10 a.m., beginning Tape 3.

14 Q. (By Mr. Cunningham) Dr. Hayward, you have

15 before you Exhibit 6017, correct?

16 A. Correct.

17 Q. And that is a speech you gave to the General

18 Meeting of BP on April the 15th of 2010?

19 A. Correct.

20 Q. Correct?

21 A. (Nodding.)

22 Q. That was five days before the DEEPWATER

23 HORIZON blowout, correct?

24 A. Correct.

25 Q. I'll ask you to turn to Page 3, please, the


119

1 third page down. Tell me whether or not I read this

2 correctly. I'm looking at the fourth or fifth

3 paragraph down: "The drive to increase efficiency and

4 reduce costs remains a key focus for everyone at BP."


6 A. You did.

7 Q. And the next paragraph: "In the upstream, we

8 are leading our peer group and driving down production

9 costs, with BP's unit cost in 2009, 12 percent lower

10 than in 2008. We will maintain this momentum through

11 activity choice and in the way we manage the supply

12 chain. In the downstream, our efficiency initiatives

13 have reduced cash costs by more than 15 percent in

14 2009, and our goal over the next two to three years is

15 to return costs to 2004 levels. For the group as a

16 whole, we reduced our cash costs last year by more than

17 $4 billion." Did I read that correctly?

18 A. You did.

19 Q. And in the last paragraph, quote: "...and we

20 have furthered our corporate simplification agenda,

21 reducing head count by around 7,500," end quote. Did I

22 read that correctly?

23 A. Correct.

24 Q. And did you then or did you in conjunction

25 with your speech use a PowerPoint that's attached to


120

1 this speech?

2 A. I did.

3 Q. All right. And if you'll turn to Page 16,

4 those numbers in the bottom right-hand corner of the

5 PowerPoint, titled "Strategic Progress in 2009." Do

6 you have that page?

7 A. I do.

8 Q. As part of your PowerPoint, did you state

9 under "Corporate Simplification," "Head count: Reduced

10 by 7500 to date. Cash costs: Down by more than 4

11 billion in 2009"? Did you say that in your PowerPoint?

12 A. I did. These are all corporate overhead

13 reductions. And as I've said many times, the context

14 was I had spent a lot of time in the speech talking

15 about safe, reliable operations before I talked about

16 any of this.


18 Q. (By Mr. Cunningham) You understood when you

19 just answered that question that all I asked you was

20 whether or not you said that in the PowerPoint, didn't

21 you?

22 A. I did.

23 Q. Okay. But you went on and made an explanation

24 anyway that you weren't asked for, didn't you?

25 A. I did.


121

1 Q. All right. Well, that's not the way the Rules

2 work. We have Rules that govern this process, and

3 they're not made by you or by me. And I would ask you

4 to answer the question I ask you and only the question

5 I ask you. Would you do that?

6 MR. GODFREY: Objection as to the

7 colloquy. Ask your questions and move on.

8 Q. (By Mr. Cunningham) Would you do that?

9 A. I'll answer your questions.

10 Q. All right. So it is your testimony that your

11 cost-cutting initiatives and your philosophy, as set

12 out in these multiple speeches we've looked at, did not

13 flow down to drilling operations; is that your

14 testimony?

15 A. That is my testimony.

16 Q. That is your testimony. Do you know last week

17 that testimony was given under oath that there were

18 cost cuts in 2009 between $250 million and $300 million

19 in the Gulf of Mexico drilling and completion

20 operations? Do you know that?


22 A. I didn't know that.

23 Q. (By Mr. Cunningham) Okay. Is that testimony

24 that was given, false?

25 A. I don't --


122


2 A. I'm sure it was true.

3 Q. (By Mr. Cunningham) You're sure it was true?

4 A. But I -- I was not aware of the testimony.

5 Would you like -- in fact, could you show me the

6 testimony, so I can see it?

7 Q. No, I'm not going to show you the testimony.

8 A. Well, how can you --

9 Q. Is it --

10 A. -- expect me to --

11 Q. Do you deny --

12 A. With respect, sir --

13 Q. Forget the testimony. Do you deny that cost

14 cuts in 2009 in the Gulf of Mexico drilling and

15 completion operations were in the range of 250 to

16 $300 million?

17 A. I do not know what the Gulf --

18 Q. All right.

19 A. -- reductions in drilling and completions were

20 in 2009. If you can provide me with some material that

21 demonstrates it, then I can form a view, but I honestly

22 do not know.

23 Q. Well, we know what the two thousand tren --

24 '10 Drilling Excellence Plan had to say about costs.

25 Have you ev -- you've seen that document?


123

1 A. No, I haven't.




5 Q. (Tendering) I'll hand you 6018. Is that a

6 2010 Drilling Excellence Plan?

7 A. That's what it said it is. I haven't seen

8 this document prior to today.

9 Q. And do you see where it says on the next page

10 under "Performance Focus," "Every rig minute counts"?

11 A. I do.

12 Q. Turn to the next page. Do you see the bullet

13 point at the top that says "Time is Money"?

14 A. I do.

15 Q. And do you see the one at the bottom that says

16 "Every minute matters"?

17 A. And the one in between, "Efficient Wells are

18 Safer Wells." I do.

19 Q. Dr. Hayward, your cost-cutting -- your

20 cost-cutting in the wake of the Grangemouth

21 investigation and the Texas City investigation flowed

22 right down to the drill rigs, didn't it?

23 A. There was no cost-cutting conducted by me in

24 the wake of Grangemouth or Texas City. The

25 cost-cutting conducted by me upon bec -- upon becoming


124

1 the CEO of BP in 2007 was to reduce the corporate

2 complexity of the company and reduce the overhead.

3 Q. It --

4 A. That is a very different focus than

5 operations.

6 Q. Is it your testimony that your cost-cutting

7 initiatives did not flow right down to the rigs?

8 A. I -- I --

9 MR. WEBB: Objection, asked and

10 answered --

11 A. I do not know --


13 A. -- whether they flowed down to the rig, no --

14 Q. (By Mr. Cunningham) You don't know?

15 A. No, I don't, because my focus was on reducing

16 the corporate overhead of the company.

17 Q. Your --

18 A. That's the thing that I could most easily and

19 obviously focus on.

20 Q. Your -- your cost-cutting flowed right down to

21 the Gulf of Mexico in general and the DEEPWATER HORIZON

22 specifically, didn't it?

23 A. I do not believe that --

24 MR. WEBB: Objection, form. Objection,

25 form.


125

1 A. -- is the case.

2 Q. (By Mr. Cunningham) You do not believe that?

3 A. No.

4 Q. Your cost-cutting directly impacted safety in

5 the Gulf of Mexico on April the 20th of 2010, didn't

6 it?

7 A. It did not.

8 MR. CUNNINGHAM: Tab 27A. 27A.



11 Q. (By Mr. Cunningham) I'm handing you a

12 document. The title is "Gulf of Mexico SPU." That's

13 the Strategic Performance Unit, correct?

14 A. It is.

15 Q. "Drilling and Completions, The Way We Work."

16 Is that correct?

17 A. That's what it says on the document.

18 Q. All right. And it has a date of 4/1/09 on the

19 front, the date of the draft, correct?

20 A. Correct.

21 Q. Turn to Bates 29.

22 A. This is a draft for review, is it?

23 Q. Right. But it was issued, if you'll look at

24 the next page, in -- later in April, wasn't it?

25 A. Correct.


126

1 Q. Turn to Page 29, Bates 29. It says at the top

2 "Operations Team Model." Do you see that?

3 A. M-h'm, I do.

4 Q. Looking down the paragraph, tell me if I read

5 this correctly: "The Rig Ops Team will consist of two

6 parts. The first is a core group of dedicated rig team

7 members" --

8 A. Oh, I'm sorry. Can you -- I haven't found

9 out where you are --

10 Q. I'm on --

11 A. Okay. I got you. Okay.

12 Q. "The Rig Ops Team will consist of two parts.

13 The first is a core group of dedicated rig team members

14 (as represented on the right side of the diagram below

15 with the solid line reporting line)." Do you see that?

16 A. I do.

17 Q. And then if you look at the chart for the Rig

18 Ops Team, do you see the "Well Teams Leader" at the

19 top?

20 A. I do.

21 Q. And to the right, "One rig - one team

22 machine"? Do you see that?

23 A. M-h'm.

24 Q. And do you --

25 A. I do.


127

1 Q. -- see below "Wellsite Leaders," the fourth

2 block down, "HSE Advisors"?

3 A. I do.

4 Q. That's Health, Safety, and Environment

5 Advisors, isn't it?

6 A. It is.

7 Q. All right. Turn to Bates 38.

8 A. It says structure of this will be much as

9 today. Got it. That's 38.

10 Q. "Organizational Structure" is what it says at

11 the top, Bates 38. Do you see that?

12 A. I do.

13 Q. And it refers to an "Office HSSE Advisor" and

14 a "Field HSSE Advisor," correct?

15 A. Correct.

16 Q. And under the "Field HSSE Advisor," it says:

17 "Each rig will have two Field HSSE advisors (working

18 14/14)" -- correct?

19 A. Correct.

20 Q. Next bullet: "Assigned to a specific Rig and

21 will stay with the rig even if it moves to a different

22 operating area," correct?

23 A. Correct.

24 Q. "Focus on rig specific HSSE needs." Did I

25 read that correctly?


128

1 A. Correct.

2 Q. "Reports to HSSE Manager with dotted line to

3 Well Site Leader"?

4 A. Correct.


6 A. Correct.

7 Q. "Receives oversight of day-to-day activities

8 by the Office HSSE advisors." Did I read that

9 correctly?

10 A. You did.

11 Q. All right. Turn to the next page, titled

12 "Team Functions." Do you see that?

13 A. M-h'm.

14 Q. And do you see "Operations" below that?

15 A. I do.

16 Q. It says: "HSSE is accountable for providing

17 HSSE support for drilling, completions and intervention

18 operations. HSSE advisors will be embedded within

19 office-based teams for each Drilling Operations

20 Manager. Each rig and intervention activity will also

21 be staffed with onsite HSSE support." Did I read that

22 right?

23 A. Correct.

24 Q. And then it describes -- or it discusses the

25 subject of performance. And does it say: "Ensure HSSE


129

1 performance is continuously improving in drilling and

2 completion operations. Improvement activities will

3 include the following..."

4 And the third bullet: "Implementing HSSE

5 systems that are simple and consistent with OMS, GoM

6 SPU requirements and contractor management systems."


8 A. Correct.

9 Q. And below that, under "Assurance," does it say

10 that "HSSE is accountable for ensuring that all

11 applicable BP Policies and Agency Regulations are

12 followed"? Did I read that correctly?

13 A. Correct.


15 A. (Complying.)

16 Q. At the bottom, under "Assessment and Audit,"

17 does it say: "D&C" -- and that's Drilling and

18 Completions -- "conducts internal risk-based HSSE

19 self-assessments. The intent of the self-assessment is

20 to verify contractors are properly utilizing their

21 safety management systems and bridging documents"? Did

22 I read that correctly?

23 A. Correct.

24 Q. And finally, on Page 42, the next page, under

25 the Team Roles for Drilling and Completion HSSE, at the


130

1 bottom: "D&C Field" HSE -- "HSSE Advisor," "The Field

2 D&C HSSE Advisor is the day-to-day offshore interface

3 with all on" -- "onboard staff and contractors. This

4 role provides constant on-site support and coaching to

5 help ensure HSSE systems are fully implemented and

6 continually used by work crews." Did I read that

7 correctly?

8 A. You did.

9 Q. You gave your 2009 General Meeting speech,

10 which is at Tab 26, 16 days after the date of

11 implementation of this exhibit, correct?

12 MR. WEBB: Tab 26. What is -- is that an

13 exhibit?

14 MR. CUNNINGHAM: What is that exhibit?

15 MR. BONNER: 6016.

16 MR. CUNNINGHAM: 6016. Exhibit 6016.

17 A. It's this one, yeah. Okay. Yeah.

18 Q. (By Mr. Cunningham) You gave that speech 16

19 days after this document, this draft for review, was

20 issued on April the 1 -- April 1, 2009, correct?

21 A. Correct.

22 Q. And then if you'll look at Tab 27B, which

23 we'll mark as the nest -- next exhibit.




131

1 Q. (By Mr. Cunningham) Exhibit 6020.

2 MR. GODFREY: It's right there.

3 THE WITNESS: I'm sorry. I'm sorry. I'm

4 sorry.

5 Q. (By Mr. Cunningham) This is four months after

6 your April speech. In August of 2009, BP removed the

7 BP Safety Men from the rigs in the Gulf of Mexico;

8 isn't that true?


10 A. I don't know. Where does --

11 Q. (By Mr. Cunningham) Look at the top --

12 A. Where does it --

13 Q. -- bullet point.

14 A. Where does it say that?

15 Q. This is the "Drilling and Completions HSSE

16 Organization Change - August of '09." You gave your

17 speech in April where you discussed cost-cutting,

18 didn't you?

19 A. I did my speech in April where I discussed

20 cost-cutting. And you're -- you're now talking about

21 an organizational change in August, which --

22 Q. Right. And does the first --

23 A. -- doesn't seem to have much to do with my

24 speech.

25 Q. You don't think so, huh?


132

1 A. I don't think so, no.

2 Q. Does the first bullet say: "D&C has reached

3 the place in our HSSE journey where the Drilling

4 Contractors must take full responsibility for HSSE on

5 the rig"? Did I --

6 A. Because that --

7 Q. -- read that right?

8 A. -- that sounds like a very reasonable and

9 sensible position to take, that drilling --


11 A. -- contractors must take full responsibility

12 for HSSE on their rigs.

13 Q. (By Mr. Cunningham) And does it state at the

14 bottom --


16 Q. (By Mr. Cunningham) -- the next to last --


18 Q. (By Mr. Cunningham) -- next-to-last bullet

19 report: "Next step is to remove fulltime BP Field

20 staff and focus on verification"? Isn't that what it

21 says?

22 A. Sorry. Hang on. Which -- where -- where are

23 you?

24 Q. I'm at the next-to-the-last bullet --

25 A. Yeah. "The next step is to remove full-time


133

1 BP Field staff and focus on verification." Because the

2 drilling rigs are the responsibility of the contractor.

3 MR. ROBERTS: Objection, form --

4 Q. (By Mr. Cunningham) The document where --

5 A. It's very clear.

6 Q. (By Mr. Cunningham) The document where BP

7 describes the purpose of the HSSE Safety Men on the

8 rigs and the significance of it and what their role was

9 and the reason they were there came out in April of

10 2009, and then in August of the same year, BP

11 completely changed and removed the Safety Men from the

12 rigs in the Gulf, didn't it?


14 A. Bullet three says the Gulf of Mexico is

15 "...the only BP organizations that utilizes fulltime BP

16 Field HSSE Advisors on drilling rigs - most rely on the

17 Drilling Contractor..."

18 Q. (By Mr. Cunningham) Did anybody ask you about

19 that?

20 A. No, but --

21 Q. The question was --

22 A. -- taking statements out of context is --

23 Q. The question was -- the question --

24 Mr. Hayward, you need to listen to the question.

25 The question is: You gave your speech in


134

1 April, this came out in April. Before you gave your

2 speech about cost-cutting, this came out talking about

3 the purpose of the Safety Men, the BP Safety Men on the

4 rigs in the Gulf of Mexico and the importance of having

5 them there, and four months later, they're jerked off

6 all the rigs in the Gulf of Mexico; isn't that true?


8 A. I don't believe that there's any evidence of

9 jerking off. In my speech I talked about the costs

10 that had been reduced, talked very little about the

11 future, and certainly set no targets with respect to

12 the future.

13 Q. (By Mr. Cunningham) You were Head --

14 A. So I think trying to link this with anything I

15 know said at any general meeting is tenuous in the

16 extreme.

17 Q. You -- you were Head of the Group Operating

18 Risk Committee, weren't you?

19 A. I was.

20 Q. And certainly, with you as the Head of that,

21 you knew what was going on with safety, didn't you?

22 A. I probably would not have been aware of this.

23 I don't recall it.

24 Q. You "probably would not have been aware."

25 Let's go to Tab 47.


135

1 MR. CUNNINGHAM: Exhibit -- well, I've

2 already used it.

3 MR. BONNER: 6002.

4 MR. CUNNINGHAM: 6002?


6 MR. CUNNINGHAM: Correct.

7 MR. GODFREY: So you used it earlier?


9 MR. GODFREY: Okay. Thank you. One

10 second while we find it.

11 THE WITNESS: What does it look like?

12 MR. GODFREY: It looks like this one.

13 It's at the base of your pile, if you'll give me --

14 THE WITNESS: I think it's here.

15 MR. GODFREY: Yeah.

16 Q. (By Mr. Cunningham) Look at Page 6 of this

17 document.

18 MR. GODWIN: 47?



21 Q. (By Mr. Cunningham) At the top, it says:

22 "Leading from the very top, the BP Group Operations

23 Risk Committee," and we read this earlier. That's the

24 Committee you chair, right, the Safety Committee?



136

1 Q. All right. And does it say, the fifth bullet

2 down, that what is included in the oversight --

3 oversight by your Committee is oversight of HSE?


5 Q. So you would have certainly known that BP was

6 removing --

7 A. No, I would not.

8 Q. You would not have known?

9 A. And I was not aware, actually.

10 Q. Okay. Did you know that Mr. Daun Winslow with

11 Transocean testified that there were Safety Men, BP

12 safety people onboard the five rigs that he managed

13 from the time he was onboard in 2006 until 2009, and

14 that those people were removed in 2009?

15 A. I haven't seen his testimony, I'm afraid.

16 Q. Well, they hadn't been on those rigs for years

17 for no reason, had they?


19 A. I think if you would go back to the rationale

20 for removal, it's clear. It's leaving accountability

21 for the drilling rig with the drilling contractor,

22 whose rig it is --


24 A. -- whose systems operate on the rig, whose

25 procedures and processes are used on the rig.


137

1 Q. (By Mr. Cunningham) Had the BP Safety Men who

2 had been on the rigs assigned responsibility for safety

3 been on there for years for no reason?

4 MR. WEBB: Objection to form.

5 A. What it says in bullet two is triple redundant

6 HSE role -- roles. So I -- I wouldn't argue that it's

7 no reason, but there was clearly a lot of redundancy in

8 the matter of HSE professionals on the rigs.

9 Q. (By Mr. Cunningham) What did you do in your

10 capacity as the person ultimately responsible for HSE

11 to determine what effect this decision would have on

12 the rig floor?

13 A. I was not involved in this decision --

14 Q. What did you do --

15 A. -- unfortunately.

16 Q. -- to become aware of these types of decisions

17 and to make a determination of what effect it would

18 have on the rig floor?

19 A. I did not review this level of decision.

20 Q. Did it, in fact, make a difference in safety

21 on the rig floor?

22 A. I don't believe there's any evidence that it

23 made a difference in safety.

24 Q. You don't?

25 MR. CUNNINGHAM: 27D.


138

1 THE COURT REPORTER: B, Bravo?

2 MR. CUNNINGHAM: D, Delta.

3 Q. (By Mr. Cunningham) It's already -- 1351,

4 Exhibit 1351. (Tendering.)

5 A. Thank you.

6 Q. You've never seen this document, have you?

7 A. I haven't seen this document, I'm afraid, no.

8 Q. It begins at the top -- it's a Transocean

9 document, and it says: "Following a recent BP

10 performance review I have been tasked with following up

11 with our rigs to solicit feedback."

12 Did you ever ask to get any feedback from the

13 rigs about what the effect of removing the Safety Men

14 from the rigs might be?

15 A. I didn't.

16 Q. Look at the next page, at the bottom, and tell

17 me whether or not I read this correctly, as part of

18 this audit, quote, "It would be nice to have a BP

19 HS" --

20 A. Sorry, sorry, sorry, sorry. Can you -- can --

21 Q. Yeah. The bottom of the page, next to the

22 last paragraph.

23 MR. GODFREY: One second. He's never

24 seen the document. It's not a BP document.



139

1 THE WITNESS: So --

2 MR. CUNNINGHAM: The bottom of --

3 MR. GODFREY: Which page are you looking

4 at?

5 MR. GODWIN: What is this?


7 A. So we're -- actually I've found it. It's

8 half -- it's two-thirds of the way --

9 Q. (By Mr. Cunningham) It's the second page.

10 A. -- through the penultimate paragraph.

11 Q. It's the second page. It's the second

12 paragraph from the bottom of the second page.

13 A. M-h'm.

14 Q. The Bates number is 378 on the bottom right.

15 A. Yeah, I've got it.

16 Q. Do you have that page?


18 Q. (By Mr. Cunningham) Do you have that page?

19 A. I've got it, yes.

20 Q. All right.

21 A. That's what I said.

22 Q. Tell me whether or not I read this correctly:

23 "It would be nice to have a BP HSE Rep on board like we

24 used to. It really made a difference: they brought a

25 lot to the table, its like when they come out now its


140

1 only for maybe 5 days and they are not in tune with the

2 pulse of the rig crews any more. They also was very

3 involved with the 3rd parties, make sure they were

4 participating in our safety program, helped us out with

5 training that need to be done for 3rd parties and any

6 training that was required from BP for" Transocean,

7 period.



10 A. You read it correctly.

11 Q. (By Mr. Cunningham) Did you, as the person

12 responsible for safety, for HSE and the Group

13 Operations Risk Committee, ever ask to see any

14 information that suggested that removing the BP Safety

15 Man from the rig might make a difference?

16 A. I didn't.

17 Q. Now you said that --

18 MR. GODFREY: Excuse me. Is there a date

19 on this document?

20 MR. CUNNINGHAM: Not that I saw, but it's

21 obviously after the Safety Man is gone.

22 MR. GODFREY: Do we know what unit this

23 came from?

24 MR. CUNNINGHAM: It's an exhibit to the

25 to another deposition. I don't have the history of the


141

1 exhibit, but it's a Transocean document, as I said.

2 MR. GODFREY: Fair enough. Fair enough.

3 Q. (By Mr. Cunningham) Now, Mr. Hayward, the

4 reason that the cuts that you made, just like

5 Lord Browne had made, the reason they reached

6 throughout the organization and down to the rig floor

7 is because safety is included in your capital and your

8 operating spending, isn't it?


10 A. Of course investment in safety is part of the

11 overall investment into capital and operations, so by

12 definition, but it was, in fact, measured and monitored

13 separately such that I know that in the three years

14 that I was CEO, we invested $14 billion into integrity

15 of plant.

16 Q. (By Mr. Cunningham) What was that you just

17 said?

18 A. We invested $14 billion into the integrity of

19 plant.




23 Q. (By Mr. Cunningham) I'll show you 6021. Who

24 is Lamar McKay?

25 A. He's the President of BP America.


142

1 Q. Now, you just -- you just told us how much

2 money you claimed B spent -- BP has spent on safety,

3 right?


5 A. I -- my recollection is that it was $14

6 billion in plant integrity over a three- to four-year

7 period.

8 Q. (By Mr. Cunningham) Well, Mr. Lamar McKay

9 answered written questions to Congress before the

10 Hearing on June 17 where you testified, did he?

11 A. Yes.

12 Q. Submission date is June 13th, four days before

13 you testified, correct?

14 A. Right.

15 Q. And in No. 2, the question is asked how much

16 money has BP invested in various things, one of which

17 is: "How much was focused on technologies related to

18 rig safety and accident prevention?"

19 Do you see that --

20 A. Yes, correct.

21 Q. -- in that paragraph?

22 A. (Nodding.) I do.

23 Q. If you look at the answer, he didn't answer

24 it, did he? Instead what he said on the next page --

25 A. Let -- if you just let me read -- can I read


143

1 the answer, please --

2 Q. Sure.

3 A. -- to determine whether he's answered or not?

4 Q. Sure.

5 A. Thank you.

6 Q. You didn't read them before y'all gave them to

7 Congress?


9 A. I certainly didn't read this before it went to

10 Congress, of course. I was actually dealing with a

11 very significant oil spill at the time. (Reviewing

12 document.) Okay.

13 Q. (By Mr. Cunningham) He's asked how much is

14 spent on safety. He doesn't answer it with a number

15 like you have. Instead what he says --

16 A. Can I just -- sorry.

17 Q. -- on Page 2 -- and tell me whether I read

18 this correctly, at the top of Page 2: "Safety is

19 embedded in everything we do, thus much of our capital

20 and operating spend incorporates elements of safety."


22 A. You did, and that is correct. I would just if

23 I can, please, like to correct --

24 Q. I'm not asking you for a self-serving

25 explanation. I asked you whether or not he said it.


144

1 A. It's not self-serving. I want to state an

2 accurate fact.

3 Q. Did he say --

4 A. What I said, $14 billion in plant integrity.

5 That's not the same as safety. I just want it to be

6 clear.

7 Q. Is this true, that safety is embedded in

8 everything you do; thus, much of your capital and

9 operating spend incorporates elements of safety?

10 A. Indeed.

11 Q. Is that true?

12 A. It is.

13 Q. All right. And the speech you gave on April

14 15th of 2010, it was Tab 29 --

15 MR. CUNNINGHAM: What is it --

16 Q. (By Mr. Cunningham) -- 6017, this speech was

17 five days before the DEEPWATER HORIZON blowout,

18 correct?

19 A. Correct.

20 Q. And in this speech -- and I read this to you

21 earlier -- you said: "Head count reduced by 7500 to

22 date and cash costs down by more than 4 billion in

23 2009," didn't you?

24 A. I did.

25 Q. And in the -- it's the speech --


145

1 A. Immediately following a description of our

2 performance on safety.

3 Q. All right. And then 60 days later after the

4 DEEPWATER HORIZON blowout, you testified before

5 Congress under oath that you had, quote, "invested

6 billions and recruited thousands," didn't you?

7 A. That's true, and it remains true today.

8 Q. In the wake of Texas City, Dr. Hayward, you

9 instituted a program called OMS, true?

10 A. Correct. Operating Management System.

11 Q. It stands for Operating Management System, and

12 it was a cornerstone of achieving safety at BP, wasn't

13 it?

14 A. It was.

15 Q. You and the senior -- senior leadership at BP

16 touted OMS as a blueprint for safety, didn't you?

17 A. It was designed to make our operations safe.

18 Q. And most importantly for your testimony today,

19 an integral part of OMS was something called process

20 safety, wasn't it?

21 A. Correct.

22 Q. And the purpose of process safety is to

23 prevent, control, and mitigate major accidents,

24 correct?

25 A. Correct.


146

1 Q. Major accidents are ones that have the

2 potential to cause multiple fatalities, just like what

3 occurred on the DEEPWATER HORIZON, correct?

4 A. Correct.

5 Q. Major accidents include accidents with the

6 potential to cause catastrophic environmental damage,

7 just like what occurred on the DEEPWATER HORIZON,

8 correct?

9 A. Correct.

10 Q. Major accidents include a blowout just like

11 what occurred on the DEEPWATER HORIZON, correct?

12 A. Correct.

13 Q. And failures by BP in process safety were

14 cited as early as Grangemouth, weren't they?


16 A. There were certainly elements of process

17 safety failures in the Grangemouth incident.

18 Q. Tab 8 --

19 MR. CUNNINGHAM: What exhibit is that?

20 MR. BONNER: 6011.

21 Q. (By Mr. Cunningham) -- 6011 is the exhibit

22 number.



25 MR. GODFREY: Hold on one second, please,


147

1 while we find it.

2 Q. (By Mr. Cunningham) You have that?

3 A. I do.

4 Q. Turn to Page 252, please.

5 A. (Complying.)

6 Q. Do you see par -- Paragraph "4.9 Process

7 Safety"? Do you have --

8 A. I do.

9 Q. -- that?

10 A. I do.

11 Q. Does it say: "With no formal structure or

12 specific focus on process safety, many of the

13 components of process safety management (PMS) were not

14 formalized at Grangemouth. There was no site

15 governance structure to provide overview and assurance

16 that process safety issues were being handled

17 appropriately. Process safety needed to be evaluated

18 to the same level as personal safety"?



21 Q. And Grangemouth, again, is in the year 2000,

22 correct?

23 A. Correct.

24 Q. And, in fact, the Chemical Board Report cited

25 failures and process safety as one of the root causes


148

1 of the disaster at Texas City, didn't it?

2 A. It did.

3 Q. And even your own internal report on Texas

4 City, done by your Head Safety Man, at the time John

5 Mogford, recognized failures in process city -- at

6 Texas City, didn't it?

7 A. It did.

8 Q. The Chairman of the Chemical Safety Board

9 commented on this very subject after the Texas City

10 report was issued, didn't she?

11 A. I believe so, yes.

12 Q. All right. And so I can be sure we're both

13 referring to the same quote, let me read it to you and

14 see if this is the quote you had in mind. The Chairman

15 of the CSB was Carol Merritt, quote: "It is my" --

16 A. Sorry. Can you just remind me --

17 Q. Carolyn Merritt?

18 A. Quote from when was this? Sorry.

19 Q. After the CSB Report came out.

20 "It is my sincere hope and belief that our

21 report and the recent Baker Report will establish a new

22 standard of care for corporate Boards of Directors and

23 CEOs throughout the world. Process safety programs to

24 protect the lives of workers and the public deserve the

25 same level of attention, investment, and scrutiny as


149

1 companies now dedicate to maintaining their financial

2 controls. The Boards of Directors of oil and chemical

3 companies should examine every detail of their process

4 safety programs to ensure that no other terrible

5 tragedy like the one at BP occurs," end quote.

6 Is that what you remember her saying?

7 A. It's obviously there --

8 Q. Or words to that effect?

9 A. Words to that effect, yes.

10 Q. Okay. And you are very familiar with process

11 safety because of your position as Chair of the Group

12 Operating Risk Committee, aren't you?

13 A. I am.

14 Q. That's one of the responsibilities of the

15 Group Operating Risk Committee, isn't it?

16 A. What is the responsibility?

17 Q. Process safety?

18 A. Process safety.

19 Q. Part of OMS?

20 A. Process safety is part of OMS.

21 Q. All right.

22 A. And the group operating risk committee was

23 implementing -- charged with implementing OMS.

24 Q. All right. And it's OMS and its integral

25 component of process safety that you have repeatedly


150

1 referred to as the basis for the major changes that you

2 say you made between 2007 and 2010?

3 A. I didn't say I made them. I made them.

4 Q. All right.

5 A. We implemented major new process, major new

6 measurement, recruited many people, trained thousands

7 of people.

8 Q. Turn to your Congressional testimony, please.

9 Tab 1.

10 MR. GODFREY: Exhibit 6001?

11 MR. CUNNINGHAM: 6001, yeah.

12 MR. GODFREY: Okay. Hold on a second,

13 please.

14

15 THE WITNESS: Here it looks like --

16 MR. GODFREY: Well, it was here

17 somewhere. There's a lot of exhibits. Hold on,

18 please.

19 MR. CUNNINGHAM: It's in this stack, I

20 think. There it is.


22 Q. (By Mr. Cunningham) Turn to Page 27, please.

23 Did you say, Dr. Hayward, at the bottom of this page:

24 "Since I've been the CEO of this company, I have

25 focused on safe, reliable operations. I've set the


151

1 tone from the top by making it very clear to everyone

2 in B.P. that safe, reliable operations are our number

3 one priority"?

4 Did you say that?

5 A. I did.

6 Q. And on Page 28, about two-thirds of the way

7 down, where it says "HAYWARD," colon, did you say:

8 "There is no doubt that I've focused on safe, reliable

9 operations. We've made major changes in everything we

10 do over the last three years"?

11 Was that your testimony?

12 A. It was.

13 Q. And what you're referring to there is OMS,

14 right?

15 A. Referring to the implementation of OMS.

16 Q. All right. And that's what you were

17 specifically referring to when you gave this testimony

18 on Page 58, wasn't it?

19 MR. GODFREY: The same exhibit?


21 Q. (By Mr. Cunningham) And I'm looking about a

22 third of the way up from the bottom, or a quarter of

23 the way up, where it says "HAYWARD," colon --

24 MR. GODFREY: Hold on, please.

25 MR. GODWIN: 58, Bobo?


152


2 MR. GODWIN: Thank you. And what part of

3 the page are you looking at, please?

4 MR. CUNNINGHAM: Bottom third, where it

5 says "HAYWARD," colon, "We've implemented."

6 MR. GODWIN: I see it.

7 Q. (By Mr. Cunningham) Do you have that,

8 Dr. Hayward? Do you have that?

9 A. Yes, I found it. Thank you.

10 Q. "We've implemented major, major change

11 following the incidents in 2006 and 2007. We've

12 implemented changes to our people in terms of the

13 skills and capabilities we have. We've implemented

14 changes to the training that they get and the expertise

15 that they develop. And we've implemented significant

16 changes to all of our operating practices, including

17 the implementation of an operating management system

18 that covers all of the company's operations."

19 Is that what you testified to?

20 A. It is.

21 Q. So just -- just to be clear, you testified to

22 the Congress that you had implemented significant

23 changes to all of your operating practices, including

24 the implementation of OMS that covered all of the

25 company's operations. Isn't that what you said?


153


2 Q. All right. Now, that statement was false, and

3 you knew that it was false at the time you made it,

4 didn't you?


6 A. I wasn't aware -- well, we had implemented

7 OMS. It was not fully complete in all of the

8 operations, but it had been implemented.

9 Q. (By Mr. Cunningham) Okay. So you now -- you

10 know admit --

11 A. Let me just --

12 Q. -- that your testimony was false --

13 A. No, I don't --

14 Q. -- that you gave, don't you?

15 A. No, I don't agree with that at all, actually.

16 I'd just like to read exactly what I -- what I said.

17 (Reviewing document.)

18 Which page was it, 58? The implementation,

19 it's not complete. The implementation --

20 Q. That isn't what you said, is it?

21 A. Well, look, the implementation of Operating

22 Management System covers operations, the

23 implementation.

24 Q. I'm going to read it again: "And we've

25 implemented significant changes to all of our operating


154

1 practices, including the implementation of an operating

2 management system that covers all of the company's

3 operations," that's --


5 Q. -- what you said, isn't it?


7 Q. All right. Tab 51.




11 Q. (By Mr. Cunningham) This is a document from

12 "Horizon," which is the BP magazine, Issue 3, 2008,

13 correct?

14 A. Correct.

15 Q. Look down on the about the sixth or seventh

16 paragraph that begins with the words "The operating

17 management system," that's OMS, right?


19 Q. It says, quote, "The operating management

20 system, designed to reduce risks and improve the

21 quality of operations for the long term, is now being

22 implemented at 12 of the largest operations, including

23 five U.S. refineries, with" implement --

24 "implementation throughout BP due to have started by

25 the end of 2010?"


155


2 A. You did.

3 Q. And does it go in the -- two paragraphs down

4 state: "The Group Operations Risk Committee..." --

5 That's the one you headed, right?

6 A. M-h'm.

7 Q. -- "...which oversees process safety

8 management and reviews performance, met 14 times in

9 2007"?





14 Q. (By Mr. Cunningham) 6023 is Tab 37. What is

15 that?

16 A. It's the BP Sustainability Report from 2009.

17 Q. 2009. Turn to Page 5, please. At the top it

18 says: "Striving for safe operations." Do you have

19 that page?

20 A. I do.

21 Q. And does it say, quote, "BP continues to

22 implement its operating management system...a"

23 corner -- "a cornerstone of achieving safe, reliable

24 and responsible operations at every BP operation."



156

1 A. Correct.

2 Q. And then there's a segment on the "Progress in

3 implementation," correct?

4 A. Correct.

5 Q. And does the last sentence say: "This

6 represents around 80% of our planned implementation.

7 It is expected that the OMS will be adopted at all

8 operations in scope by the end of 2010."


10 A. That is correct. That is correct.

11 MR. CUNNINGHAM: Tab 29, 6017.

12 A. 6017.

13 MR. GODFREY: 6017?


15 MR. GODFREY: Hold on one second, please.

16 I don't have it yet, sorry. All right. Got it.

17 Q. (By Mr. Cunningham) This is a speech you gave

18 to the Annual General Meeting five days before the

19 DEEPWATER HORIZON blowout, correct?

20 A. Correct.

21 Q. Two months before you testified to Congress on

22 June the 17th of 2010, correct?

23 A. Correct.

24 Q. Look at Page 2 and tell me whether or not in

25 the next to the last couple of paragraphs, I read this


157

1 correctly: "We are continuing..." --

2 And this -- this is you talking, right?

3 A. M-h'm, yes.

4 Q. "We are continuing to improve our skills and

5 capabilities as we roll out a common Operating

6 Management System across our business. By the end of

7 2009 we'd fully implemented this at 70 sites - covering

8 around 80 per cent of our operations -- and the

9 remainder will be completed this year."


11 A. I did.

12 Q. And then did you say in the next paragraph,

13 "But implementation is just the beginning"?

14 A. I did.

15 Q. Okay. And in the PowerPoint you gave in that

16 same exhibit, Page 9, you discussed the "Forward

17 Agenda," right?

18 A. I did.

19 Q. And the second bullet point in the Forward

20 Agenda says, quote, "Implement Operating Management

21 System," end quote, correct?

22 A. It does.





158

1 Q. (By Mr. Cunningham) This is portions of the

2 Report, not the entire Report, but I'll call your

3 attention to Page 38. This is a BP Group results

4 report in July of 2010, correct?

5 A. (Reviewing document.) Correct.

6 Q. Your testimony was given in June of 2010,

7 correct?


9 Q. Turn to Page 38, at the bottom right-hand

10 corner. Do you have Page 38?

11 A. I -- yes, I do.

12 Q. All right. The third paragraph down, second

13 sentence, does it say this -- or in part does the first

14 sentence say this: "...BP continues to implement a

15 group-wide operational management system...at the

16 present time OMS has not yet been fully implemented

17 across the group."


19 A. It is correct.

20 Q. And, Dr. Hayward, if you had told Congress

21 that OMS -- the central safety system, the process

22 safety system, that, in fact, that OMS only covered

23 part of the company, the next question would have been

24 what part did it not cover, wouldn't it?



159

1 question about what Congress would have asked.

2 A. How can I speculate what Congress would have

3 asked?

4 Q. (By Mr. Cunningham) So you think if you had

5 told Congress that, "Look, we have this Operating

6 Management System, that includes process safety, and

7 it's been implemented across most of the company," you

8 don't think somebody might have been curious about what

9 part it had not been implemented across?


11 MR. WEBB: Objection as to form.

12 A. I think -- I think there were two things I

13 would have said, number one.

14 Q. (By Mr. Cunningham) No, that's -- the question

15 is: Do you think Congress --

16 A. I have no idea what Congress would have said.

17 Q. You don't know -- you don't know whether they

18 would --

19 A. I cannot possibly speculate.

20 Q. -- have been interested? Okay.

21 A. Because they may well have been inter --

22 interested. And what I would have said is that's not

23 to say there wasn't a process safety system in place

24 before OMS. OMS was designed to bring all of our

25 process safety systems to a common consistent standard.


160

1 It wasn't as if there was nothing there prior to OMS.

2 Q. When you told Congress that OMS had been

3 implemented across all the company's operations, you

4 knew that, in fact, OMS was nowhere near full

5 implementation in the Gulf of Mexico, didn't you?



8 Q. (By Mr. Cunningham) Didn't you?

9 A. I knew --


11 A. I certainly knew that OMS implementation was

12 not complete in many parts of the company because we

13 had made it very clear it was a five-year journey and

14 we were in Year 3.

15 Q. (By Mr. Cunningham) You didn't make that very

16 clear to Congress, did you, when you told them it had

17 been implemented across the entire company?

18 MR. WEBB: Object as to form.


20 A. Let's go back and just look again at what I

21 did say, shall we?

22 Q. (By Mr. Cunningham) Sure. Page 58, at the

23 bottom, quote, "And we've implemented significant

24 changes to all of our operating practices, including

25 the implementation of an Operating Management System


161

1 that covers all of the company's operations," end

2 quote.

3 A. That's true.

4 Q. That's what you said, isn't it?

5 A. That is true.


7 A. It wasn't complete, but the initiation of that

8 program had begun everywhere.

9 Q. (By Mr. Cunningham) I didn't ask you about the

10 initiation --

11 A. And you can verify --

12 Q. And you didn't say the initiation, did you?

13 MR. GODFREY: Object to form. Is it your

14 representation this is the only commentary on the OMS?

15 MR. WEBB: Well, I also object to him --

16 MR. CUNNINGHAM: I haven't represented

17 anything.

18 MR. WEBB: I'm going to object to

19 interrupting his last answer where he was explaining

20 and responding to your question.

21 Q. (By Mr. Cunningham) When you told Congress

22 that the OMS system had been implemented and covered

23 all of the company's operations, you knew that even

24 though it was ten years after Grangemouth and five

25 years after Texas City, the process -- the process


162

1 safety aspect of OMS, and OMS itself, had not been

2 implemented in the Gulf of Mexico, you knew that,

3 didn't you?


5 A. Was not -- what I knew was it was not fully

6 implemented across the entirety of the operations.

7 Q. (By Mr. Cunningham) And if you had told

8 Congress that it had not been implemented in the Gulf

9 of Mexico, that would have been a disaster for BP,

10 wouldn't it?


12 A. I -- I think we had plenty of disaster to be

13 going on with. Thank you.

14 Q. (By Mr. Cunningham) You had oversight of OMS,

15 didn't you?

16 A. I was the Chairman of the GORC.

17 Q. Yes.

18 A. The oversight of OMS was with Mark Bly and a

19 gentleman called John Sieg.

20 MR. CUNNINGHAM: Tab 47. What's the

21 exhibit number? 6002 is the exhibit number.



24 A. 6002.

25 MR. GODFREY: Bear with us a second,


163

1 please.

2 MR. CUNNINGHAM: Page 6.

3 MR. GODFREY: We need to find the exhibit

4 first, please.

5 THE WITNESS: Here we go. Got it.

6 Q. (By Mr. Cunningham) The title of it on the

7 cover is "Leading from the top."

8 A. I have it.

9 Q. And I'm looking at Page 6 which is "Leading

10 from the very top," which describes your role as Chair

11 of the Group Operations Risk Committee. Do you see

12 that?


14 Q. And one of the responsibilities you had --

15 A. M-h'm.

16 Q. -- as Chair of that Committee, look at the

17 fourth bullet -- bullet point and tell me whether I

18 read this correctly, quote, "Oversight of development

19 and implementation of BP's Operating Management

20 System..."


22 Q. Is that what it says?

23 A. Yep.

24 Q. Dr. Hayward, you knew when you gave your

25 testimony to Congress, on June the 17th of 2010, that


164

1 there were huge safety-related gaps in the OMS system

2 in the Gulf of Mexico, didn't you?

3 A. No, I did not.


5 Q. (By Mr. Cunningham) You did not?

6 A. I knew that we hadn't completed the

7 implementation of OMS.


9 A. It tells you nothing about safety-related

10 gaps. It just tells you we haven't completed the

11 implementation of OMS.





16 A. Thank you.

17 Q. This document is identified as a 2010 -- "2010

18 SPU" -- that's Strategic Performance Unit -- "OMS" --

19 Operating Management System" --

20 A. M-h'm.

21 Q. -- "Gaps," isn't it?

22 A. M-h'm.

23 Q. It's a "Ranking" Matris -- "Matrix" for OMS

24 gaps, isn't it?

25 A. Correct.


165

1 Q. To put this in perspective, before we go into

2 this document, this is five years after Texas City,

3 correct?

4 A. Three years after I assumed the CEO role of

5 BP.

6 Q. Three years after you became CEO. Three

7 years --

8 A. Three years into a five-year journey.

9 Q. Three years after you told the Congress that

10 you had made all these changes --

11 A. M-h'm.

12 Q. -- implemented all these changes, and three

13 years after OMS was in -- initiated, wasn't it?

14 A. Exactly.

15 Q. All right. Look at the first page of this

16 exhibit. On the right is "IMPORTANCE" and on the --

17 MR. GODFREY: The -- you mean the second

18 page of the exhibit?

19 MR. CUNNINGHAM: Excuse me, yes.

20 MR. GODFREY: Page Number --


22 MR. GODFREY: -- 1?

23 MR. CUNNINGHAM: 1, correct.

24 Q. (By Mr. Cunningham) Right is "IMPORTANCE" and

25 at the bottom, "GAP RISK TO THE BUSINESS."


166

1 Do you see that?

2 A. I do.

3 Q. It looks at the highest risk and the highest

4 important -- importance gaps, doesn't it?

5 A. It does.

6 Q. And the highest ones, when you add them up, is

7 in the top right corner where you got a "High" for

8 importance, and a "High" for risk to business. Do you

9 see that on the front?

10 A. Correct.

11 Q. On the front page?

12 A. M-h'm.

13 Q. And then if you turn to the second page,

14 it's -- there's "OMS Gap Detail." It tells you exactly

15 where the gaps are in safety in the Gulf, correct?

16 A. No. It tells you where the gaps are in

17 relation to the OMS standards.

18 Q. Okay.

19 A. It doesn't tell you anything about gaps

20 rela -- rela -- relative to safety.

21 Q. It tells you what the gaps are in the OMS.

22 A. It does.

23 Q. All right. And if you'll look in the

24 right-hand corner, you see the letters there? It tells

25 you where there are gaps for a given area on the left?


167

1 A. Yes.

2 Q. For example, "4.1 Procedures & Practices" on

3 the left, matches up with the blue A, B, C, D, E, F,

4 G --

5 A. M-h'm.

6 Q. -- under the "10," the highest risk, right?

7 A. Yes.

8 Q. All right. And if you turn down to the next

9 page, Practices & Procedures, and look in the item

10 number, you find which items under Practices &

11 Procedures are considered the highest risk gaps in OMS,

12 right?

13 A. M-h'm.

14 Q. And if you look to the right, under "Area,"

15 you see which ones of these relate to Health, Safety,

16 Security, and Environment, don't you?

17 A. Yes.

18 Q. And the highest risk under "4.1 Procedures &

19 Practices," are A, B, C, D, E, F, and G, aren't they?

20 A. Correct.

21 Q. For example, "A, Inconsistent methodology in

22 creating & reviewing Operating procedures," which is an

23 a -- HSSE gap, right?

24 A. Correct.

25 Q. And then "B, Lack of culture to use procedures


168

1 in the" Gulf of Mexico. Do you see that?

2 A. Correct.

3 Q. And then multiple other of the highest risk

4 gaps are HSSE gaps, aren't they, under "Procedures &

5 Practices"?

6 A. Correct.

7 Q. All right. And then if you go back to the

8 first page and look at the next color, which is the

9 gray, and you see an A, B, C, then you look over to the

10 left, you find that "2.2, People & Competence" is where

11 those major gaps exist, right?


13 Q. And then if you turn to the next page, under

14 "People & Competence" 2.2, and you look and see which

15 items of the highest risk A, B, and C, you can find out

16 where the gaps are, right?

17 A. That's right.

18 Q. And, for example, "B, Lack of process to

19 assess key operating risk decision makers," is an

20 example --

21 A. M-h'm.

22 Q. -- of one determined to be a highest risk gap,

23 right?

24 A. Correct.

25 Q. And then go back to the first page and look at


169

1 "Process Safety," 3.3, do you see that on the left, and

2 you match it up on the right --

3 A. Yes.

4 Q. -- to the A, B, C, and D --

5 A. Yes.

6 Q. -- and you go back down a few pages, and you

7 get to "Process Safety," right? Do you have that,

8 "3.3, Process Safety"?

9 A. I do.

10 Q. And if you look back, you see that the -- the

11 highest risk gaps were A, B, C, and D under Process

12 Safety, right?

13 A. Correct.

14 Q. And just to reiterate, again, process safety

15 is that aspect of safety that deals with major

16 disasters like the one that occurred on the DEEPWATER

17 HORIZON, right?

18 A. No, it doesn't, actually. It -- does it --

19 it -- it -- it -- it -- it often is, but process safety

20 is designed -- is defined as the systems around an

21 operation that maintain the integrity of the plant or

22 the control of work around an operation.

23 Q. Is the purpose of process safety to prevent,

24 control, and mitigate major accidents?

25 A. Absolutely.


170

1 Q. All right. And the DEEPWATER HORIZON was a

2 major accident?

3 A. It was a tragic and --

4 Q. All right.

5 A. -- major accident.

6 Q. So if you look under Process Safety, you see

7 that the major gaps were in A, B, C, and D. A, for

8 example, "Lack of information to provide-predictive

9 indication of process safety issues."


11 A. You did.

12 Q. All right. And then if you look back to the

13 first page, go to "Regulatory Compliance," 7.1, do you

14 see that the major gaps there are A, B, C, D, E, F, G,

15 and H, right?

16 A. Sorry. Where are you?

17 Q. "Regulatory Compliance." I'm back on the

18 front page.

19 A. Yep, okay.

20 Q. And you see that the gaps -- the major risk

21 gaps are A, B, C, D, E, F, G, and H --

22 A. M-h'm.

23 Q. -- correct?

24 A. Correct.

25 Q. And if we go back to Regulatory Compliance, A,


171

1 B -- you have a major gap in every single one, with one

2 exception, don't you?

3 A. Sorry. Which page are you looking at? Okay.

4 Q. "Regulatory Compliance." Do you see that?

5 Major gap in every single one. The one exception where

6 you don't have a major risk gap is "Incorrect

7 application of federal drinking water regs." Other

8 than that, you've got major high risk gaps, don't you?


10 A. Well, they're of -- of varying severity, I

11 would say, but --

12 Q. (By Mr. Cunningham) Yeah. Well, they're all

13 in the 10 -- they all rate a 10 --

14 A. They --

15 Q. -- the highest you can possibly --

16 A. Yes.

17 Q. -- get, don't they?

18 A. They do.

19 Q. All right. And do you understand in this case

20 that BP claims that the Federal Government didn't

21 regulate them enough?



24 question.

25 A. I have --


172

1 Q. (By Mr. Cunningham) Do you know that --

2 A. -- I have not said that.

3 Q. That -- do -- do you know that BP says that

4 the Federal Government is at fault, that it didn't have

5 enough regulations?


7 A. I'm not aware of that.


9 Sorry.

10 Q. (By Mr. Cunningham) The next one, 2.5, looking

11 back, "Working w/Contractors," do you see that? That's

12 the purple. A, B, C, D, E, F, G is where the gaps are

13 there, right?


15 Q. You got every one of them on that, didn't you?

16 A. I'm sorry. I'm -- not actually found your --

17 where you're referring to yet. "Working with

18 Contractors," okay.

19 Q. Yeah. Working with Con --

20 A. Okay. Let me just have a look.

21 Q. Every one of them --

22 A. Just hang on --

23 Q. -- had a high risk number 10, didn't it?

24 A. Lack of accountabilities between supply

25 chain's management and HSE.


173

1 Lack of standardization/documentation in

2 supply chain and management.

3 Q. Where are you?

4 A. I'm looking at "Working with Contractors."

5 Q. All right.

6 A. Lack of understanding --

7 Q. Working --

8 A. -- of supply chain management.

9 Q. Working with Contractors, and if you go back

10 to the front, every single one of those --

11 A. Well, not --

12 Q. -- fell into the high risk, didn't it?

13 A. It doesn't sound much like it's got anything

14 to do with safety, actually.

15 Q. "It doesn't sound like it's got anything to do

16 with safety?" Is that --

17 A. Yeah.

18 Q. -- what you just said?

19 A. Lack of understanding of supply chain

20 management. I don't know.

21 Q. Do you --

22 A. I haven't seen this document --

23 Q. Well, do you --

24 A. -- of course, so --

25 Q. Well, you read documents all the time you


174

1 haven't seen before, don't you?

2 A. Yeah, but not normally in this sort of

3 situation --

4 Q. Well --

5 A. -- where someone is firing questions at me

6 before I can have a chance to look at the document.

7 Q. You -- you say that this doesn't have much to

8 do with safety. What are the two words at the end of

9 "B"?


11 A. At the end of B?

12 Q. (By Mr. Cunningham) Yeah. "Process safety,"

13 isn't it?

14 A. "...incorporates robust" --

15 This -- yeah, but this is about tendering in

16 supply chain management.

17 Q. Well, this is a BP document, isn't it?

18 A. It is.

19 Q. All right.

20 A. But I --

21 Q. Over on the area on the right --

22 A. M-h'm.

23 Q. -- whoever wrote this BP document listed

24 "HSSE" under every single one of these major gaps --

25 A. As I --


175

1 Q. -- in Working with Contractors, didn't it?

2 Every one?

3 A. Every one is a -- as I -- as I understand this

4 document, having not seen it before, the -- this is --

5 this is referring to the interface between HSSE and

6 Engineering in the matter of supply chain management.

7 That's probably very serious, but it -- it is not

8 really about the -- you know, the inherent safety in

9 operation, I don't think. As I said, I haven't seen

10 this before.

11 Q. So where it says, "Inconsistent" or "absent

12 communication of applicable HSSE requirements," that

13 doesn't have anything to do with safety?

14 A. Well --


16 question.

17 A. It -- my -- without any backing up -- backup

18 information, it's very difficult to determine exactly

19 what this all means.

20 Q. (By Mr. Cunningham) Okay. So this would -- it

21 wouldn't have done any good if somebody had sent this

22 to you as head --

23 A. I --

24 Q. -- of the Group Operations Risk Committee

25 because you don't understand it?


176

1 MR. GODFREY: Object to the form.


3 question.

4 A. Can I just make a comment, please? This

5 document --

6 Q. (By Mr. Cunningham) Do you understand it?

7 A. -- this document was not designed as a written

8 document. It was designed as a presentation for

9 someone to be out -- to make on this issue. It has --

10 there -- there's no explanation of what's here.

11 Q. You read documents all the time that don't

12 have an explanation for everything in them, don't you?

13 A. Well, I -- I think in -- in this -- in this

14 particular situation, the -- this document is quite

15 difficult to understand without a bit of supporting

16 documentation and explanation.

17 MR. CUNNINGHAM: Let's take a break.


19 12:10 p.m., ending Tape 3.

20 (Recess from 12:10 p.m. to 1:03 p.m.)

21 MR. GODFREY: Okay. I believe we're

22 ready to start.



25 On the record at 1:03 p.m., beginning


177

1 deposi -- beginning Tape 4.

2 Q. (By Mr. Cunningham) Dr. Hayward, I call your

3 attention back to Exhibit 6025, and the last section I

4 want to ask you about is 4.5, "Control of Work." Do

5 you see the gaps noted for that area?

6 A. I see -- I can see the -- let me see what I

7 can see. "Control of Work," yes.

8 Q. A, B, C, D, E, correct?

9 A. Correct.

10 Q. And then if you turn back, where there's the

11 list of Items and Descriptions, do you see that covers

12 all of them but one?

13 A. Well, without -- without wishing to be

14 difficult, I can't actually see anything on this -- on

15 this copy that I've got.

16 MR. WEBB: The copy we have is all black.

17 A. It's completely black.


19 A. Thank you. Yeah.

20 Q. You see that? And one of those, C, says this:

21 "Inconsistent task based approach in JSEA process

22 resulting in process safety hazards/personnel safety

23 individuals." Do you see -- did I read that correctly?

24 A. You did, yeah.

25 Q. And if when you testified in Congress that


178

1 implementation of an Operating Management System

2 covered everything across the company's operations, if,

3 instead, you had said that "We have an Operating

4 Management System, but it has huge safety gaps, in the

5 Gulf of Mexico," BP stock prices would have tanked,

6 wouldn't it?



9 A. It's complete conjecture, but more

10 importantly, it's not true.


12 A. The whole notion of OMS is that you measure

13 gaps. It's a continuous improvement process. You

14 measure gaps, and you take action to close them. You

15 measure gaps; you take action to close them. It's the

16 fundamental tenet of the system that we're putting in

17 place.

18 Q. And what we've just looked at in the -- the

19 last exhibit is BP's evaluation of all of the gaps that

20 existed in OMS in the Gulf of Mexico in 2010, correct?


22 Q. (By Mr. Cunningham) Not some other time, but

23 2010.

24 A. That -- that is --

25 Q. -- correct?


179

1 A. -- what the document describes.

2 Q. And the truth is, as you sat there testifying

3 with the oil flowing in the Gulf of Mexico, that BP had

4 major gaps in the Gulf of Mexico and that those gaps

5 and those failures were a product of the failure of

6 Senior Management; isn't that true?

7 A. That's not true either.


9 Q. (By Mr. Cunningham) Well, you were the one

10 generally responsible for safety at BP?

11 A. I was im --

12 Q. And you were the one specifically responsible

13 for OMS implementation, weren't you?

14 A. Absolutely. And I was implementing it, we

15 were implementing it, the company was implementing it.

16 And we were very clear that it was a five-year journey

17 and we were three years into it. And as I've stated on

18 many occasions, it wasn't that there was nothing there

19 previously. There was process safety systems in place.

20 What we were doing is ensuring that they were a common

21 and consistent standard across the company.

22 Q. You not only testified before Congress that

23 OMS covered all the company's operations, you also

24 testified that, specifically as to the DEEPWATER

25 HORIZON, that safeguards were in place, didn't you, for


180

1 OMS?


3 A. I'm sorry. I don't understand the question.

4 I think you're referring --

5 Q. (By Mr. Cunningham) Tab 1 --

6 A. -- to something I may have testified. I'd

7 like to see it, please.

8 Q. Exhibit 6001. Turn to Page 36.

9 A. All right.

10 THE COURT REPORTER: It should be on the

11 top, second one down.

12 A. That's not -- there it is.

13 Q. (By Mr. Cunningham) Page 36. Did you say

14 in -- at the bottom of the page, a little bit up, about

15 a paragraph up, "HAYWARD: As I said, we acknowledged

16 the problems that we had in 2005 and 2006. The vast

17 number of those things that you've referred to date

18 from that time" -- "to date from that time period. And

19 we have made major changes in the company over the last

20 three to four years." That's OMS, isn't it?

21 A. It's not only --

22 Q. That's what you called it?

23 A. It is many other things in addition to O -- to

24 OMS. It --

25 Q. Does it include OMS?


181

1 A. It includes OMS, but it's --

2 Q. Okay.

3 A. -- many other things as well.

4 Q. And then you were asked: "Do you think the

5 changes you made in that time period you're talking

6 about when you were" C -- "CEO -- I understand what

7 you're saying -- do you think that they were using

8 those measures and protocols on the DEEPWATER HORIZON?"

9 That was the question, wasn't it?

10 A. And I said: "To the best of my knowledge,

11 they absolutely were."

12 Q. You testified that to the -- you testified

13 under oath that to the best of your knowledge, the

14 safeguards of OMS absolutely were being used --

15 A. No --

16 Q. -- on the DEEPWATER HORIZON, didn't you?

17 A. That actually is not --


19 A. False. That is not actually what I said.

20 I said: We acknowledge problems, and we've

21 made major changes in the company over the last three

22 years. I was asked: Do you think the -- those changes

23 apply to the DEEPWATER HORIZON?

24 And I said: To the best of my knowledge, they

25 did.


182

1 Q. You just told us --

2 A. I have no -- there's no reference to OMS

3 there.

4 Q. You just told us that when you said, "We have

5 made major changes in the company over the last three

6 to four years," that you meant to include OMS. You

7 just testified to that?

8 A. OMS was certainly part of that --

9 Q. All right.

10 A. -- of course.

11 Q. And then you said: Whether or not those

12 measures and protocols were in application on the

13 DEEPWATER, "to the best of my knowledge, they

14 absolutely were," is what you testified.


16 Q. Okay. And you knew when you gave that

17 testimony that not only had OMS not been fully

18 implemented in the Gulf of Mexico, but that an integral

19 part of it, the process safety part of OMS, had not

20 been implemented on the DEEPWATER HORIZON, didn't you?

21 A. I --



24 question.

25 A. I wasn't aware of the details of the


183

1 implementation in the Gulf of Mexico at the time.


3 A. But I was certainly aware that the

4 implementation of OMS was not complete across the

5 company. And I may -- I can't recall -- have been

6 aware that it was not complete in the Gulf of Mexico.

7 I probably was.

8 Q. When you gave the testimony that the measures

9 and protocols absolutely were being used on the

10 DEEPWATER HORIZON, you knew for a fact -- you knew for

11 a fact, didn't you, that critical aspects, process

12 safety-related aspects of OMS were not implemented on

13 the DEEPWATER HORIZON on April 20th, 2010?

14 A. No, I did --


16 A. I did not know that absolutely.

17 Q. (By Mr. Cunningham) Well, you had actually

18 been briefed on that very point less than a month

19 before you testified, hadn't you?

20 A. I -- I think you need to refresh my memory if

21 I had.

22 Q. Tab 49. Tab 49. This is Exhibit 1737,

23 previously marked. I call your attention to the E-mail

24 at the bottom of the first page, from John Baxter. Do

25 you see that?


184

1 A. It is, yeah.

2 Q. It's dated Wednesday, May 12th, 2010, right?

3 A. Correct.

4 Q. Your Congressional testimony was on June 17th,

5 2010, right?


7 Q. The subject is "URGENT DRAFT - GORC" -- that's

8 your Committee, Group Operating Risk Committee,

9 correct?

10 A. M-h'm.

11 Q. -- "/SEEAC" -- that is Security, Ethics,

12 Environment -- what is it -- Action Committee?

13 A. Audit Committee.

14 Q. Aud --

15 A. Safety, Environmental, Ethics and Audit

16 Committee.

17 Q. Audit Committee? All right.

18 And its Importance is High, correct?

19 A. It's a Subcommittee of the Board of BP.

20 Q. It shows, though, the Importance of the E-mail

21 as being High, doesn't it, right under "Subject"?

22 A. Yes, it does.

23 Q. Okay. And then does it say this: "I am

24 preparing a short brief for Tony Hayward at SEEAC 20

25 May (and will use it if necessary at GORC) on how we


185

1 apply 'risk assessment' and how we are using the ETPs

2 in the Gulf of Mexico."


4 A. Yeah. We're using the Engineering Technical

5 Practices.

6 Q. And then it goes on to say: "This has taken

7 on a bit more urgency as the Chairman has asked to see

8 me tomorrow morning." The Chairman is you, right?

9 A. No. I believe the --

10 Q. Who is that?

11 A. -- Chairman is Carl-Henric Svanberg.

12 Q. All right. "Topics not yet defined but it

13 will be on the Gulf of Mexico. I can explain the risk

14 GDP structure, but do not have all the detail on how

15 E&P have applied the various documents to drilling."

16 And then those various documents include S&O

17 risk -- what is that?

18 A. Safety and Operational risk.

19 Q. "MAR," what is that?

20 A. Major Accident Risk.

21 Q. "Haz/Op," what is that?

22 A. Hazardous Operations.

23 Q. "LOPA"?

24 A. H'm --

25 Q. Layers of Protection?


186

1 A. Layers of Protection Analysis.

2 Q. MAR is Major Accident Risk Assessment, isn't

3 it?

4 A. Correct.

5 Q. Last paragraph: "Please can you work up the

6 wording with Malcolm, Kieren, Cheryl, et al to cover

7 risk assessment of drilling where it is within a BP

8 Operation...and where it is outside a BP operation (eg.

9 Drilling Contractor exploring on BP acreage.)" That's

10 Transocean, correct?

11 A. Correct.

12 Q. And then above that, we see a response from

13 one of the recipients of Mr. Baxter's E-mail, named

14 Cheryl Grounds. Do you know who she is?

15 A. No, I don't.

16 Q. You don't know that she's the Chief Process

17 Safety Engineer, and was at the time, for BP?

18 A. I don't recall that. I -- I'm sure I knew it

19 at the time, but I don't recall that.

20 Q. And she replies, saying: "John, Attached is a

21 brief description of risk management activities in the

22 Gulf of Mexico Strategic" Unit -- "Performance Unit

23 including ETPs, GDP 3.1 on risk, and MAR," Major

24 Accident Risk Assessment, correct?



187

1 Q. And you know what a Major Accident Risk

2 Assessment is, don't you?

3 A. I do.

4 Q. This has been previously marked as 1734.

5 (Tendering.)

6 A. All right. Thank you.




10 MR. CUNNINGHAM: Correction. 52.

11 Q. (By Mr. Cunningham) This document is the

12 "Major Accident Risk Process," isn't it?

13 A. That's what it says it is, yes.

14 Q. And it's a Group-defined ETP that has been

15 approved by the GVP -- what is the "GVP Safety"?

16 A. Group Vice President for Safety and

17 Operations.

18 Q. -- for implementation across the BP Group,

19 correct?

20 A. Correct.

21 Q. Turn to the next page. In the Foreword, about

22 four paragraphs down or three paragraphs down, it

23

24

25


188

1

2

3

4

5

6

7

8

9

10

11 Q. Turn to Page Bates 43 at the bottom. Do you

12 have that?

13 A. I do, yes.

14

15

16

17

18

19

20

21

22

23 Q. Then if you'll turn to Bates 47, where it

24 describes the "Features of the MAR process." Do you

25 see that?


189

1 A. I do.

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20 A. I'm sorry. I -- can you just give -- say

21 again where that is?

22 Q. Sure.

23 A. Seven point --

24 Q. Under "Type of Risk" --

25 A. Yeah.


190

1 Q. -- "Covered," b.3?

2 A. Yep.

3 Q. Middle paragraph, where it says: "By

4 definition..."

5 A. Yes.


7 A. You did, right.

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


191

1

2

3

4

5

6

7

8

9 Q. And then if you'll turn to Page 59 Bates, it

10 discusses --

11 MR. GODFREY: 59?


13 Q. (By Mr. Cunningham) -- a "Methodology for

14 offshore operations," correct?

15 A. Correct.

16

17

18

19

20

21

22

23

24

25


192

1

2

3

4

5

6 Q. All right. Now, that's what an MAR is, and

7 what you learned when you were briefed is set out in a

8 confidential document describing the Gulf of Mexico

9 Risk Management activities; isn't that true?

10 A. I don't know which document you're referring

11 to. I don't -- can you --

12 Q. Well, what --

13 A. -- identify that --

14 Q. What --

15 A. -- for me?

16 Q. Yeah, we'll -- we'll -- I'll show you that in

17 just a second.

18 What you learned, though, when you were

19 briefed here a month before you testified in Congress

20 was that the Risk Management activities did not cover

21 MODUs, didn't you?

22 A. I don't recall that. I don't recall the

23 briefing. I'd like to see the document, please.

24 MR. CUNNINGHAM: Let me see that.



193


2 THE COURT REPORTER: Previously marked.

3 Q. (By Mr. Cunningham) Previously marked 1736.

4 (Tendering.)

5 A. Thank you.

6 Q. This is the brief of 12 May 2010, the Safety,

7 Ethics and Environmental Assurance Committee, is

8 actually the -- what that acronym means, isn't it?

9 A. Safety, Ethics and Environmental Assurance

10 Committee --

11 Q. Assurance Committee?

12 A. Yeah, yeah.

13 Q. And does it say at the top: "This brief

14 describes Gulf of Mexico SPU (Gulf of Mexico) risk

15 management activities in the following areas," and

16 included on the list is MAR, isn't it?

17 A. It is.

18 Q. Major Accident Risk.

19 A. Right.

20 Q. And does it say in the middle paragraph, in

21 the body below "ETPs," the third paragraph down, quote:

22 "The focus of the ETP application and assurance has

23 been on the existing assets as opposed to drilling from

24 Mobile Offshore Drilling Units"? Did I read that

25 correctly?


194

1 A. You did.

2 Q. And then if you turn to the next page, in the

3 second paragraph, does this brief say, second sentence:

4 "MODUs have not been included in Gulf of Mexico MAR

5 analysis to date"? Did I read that correctly?

6 A. You did.

7 Q. It says: "There are existing plans to include

8 MODUs" in the future, but MODUs have not been included

9 in the Gulf of Mexico MAR analysis, according to this

10 brief that was given within a month before you

11 testified, right?

12 A. Correct.

13 Q. So what you learned before you went to testify

14 to Congress, was not only were there huge gaps in

15 safety in OMS in the Gulf, but that with respect to the

16 DEEPWATER HORIZON specifically, that no MAR had been

17 done; isn't that true?


19 A. That -- that is certainly what this document

20 says, a Major Ri -- Accident Risk Assessment had not

21 been conducted on the Mobile Drilling Units.

22 Q. (By Mr. Cunningham) And not only had no MAR

23 been done, but you learned, didn't you, that there were

24 no Process Safety Engineers in place for drilling

25 operations, in addition to the fact that no MAR had


195

1 been done; isn't that true?


3 A. H'm, I --


5 A. I don't recall learning that. I'd like you to

6 show me where you think I learned that, please.

7 Q. (By Mr. Cunningham) Well, if that were the

8 case, as head of Safety, head of the Group Operating

9 Risk Committee, you wouldn't know it?


11 A. I wouldn't know the details of the personnel

12 in a drilling organization. What -- what you can do --

13 I -- I don't want this to sound wrong, but what you can

14 do at my level is set expectations and have measurement

15 and followup, which is what you've been showing to me

16 today.

17 Q. (By Mr. Cunningham) Were --

18 A. There was a lot of measurement going on in the

19 organization, designed to determine where -- where and

20 where there were not gaps.

21 Q. Well, Dr. Hayward, were you unaware whether or

22 not there was a Process Safety Engineer in place for

23 the Gulf of Mexico drilling operations?

24 A. I -- I wasn't -- I was not aware or unaware.

25 I don't recall being made aware of that, I'm afraid.


196

1 Q. If Cheryl Grounds, then, the Chief Engineer

2 for Process Safety at BP, testified that there's no

3 Chief Engineer of Process and Process Safety

4 Engineering for Drilling, then you would not be in a

5 position to disagree with that, would you?


7 A. I certainly wouldn't be in a position to

8 disagree with the testimony of one of my staff.

9 Certainly not.

10 Q. (By Mr. Cunningham) Well, what you did know,

11 though, was that DEEPWATER blowout was the highest risk

12 across the entire corporation and that it was the

13 highest risk for your Exploration and Production Unit,

14 wasn't it?

15 A. It was certainly one of the highest risks for

16 the corporation. It was the highest risk in the Gulf

17 of Mexico and one of the highest risks for the Ex --

18 for the Exploration and Production Unit.

19 Q. And despite that risk, by April of 2010, five

20 years after Texas City, there was no major risk

21 assessment done for the DEEPWATER HORIZON, was there?

22 MR. GODFREY: Objection as to --

23 A. As --

24 MR. GODFREY: -- form.

25 A. As it says in this document, the focus has


197

1 been on the existing producing assets in the Gulf of

2 Mexico.

3 Q. (By Mr. Cunningham) And that's not the

4 DEEPWATER HORIZON, is it?

5 A. It isn't, no.

6 MR. GODWIN: Bobo, I think everybody has

7 fallen off the real time.

8 Q. (By Mr. Cunningham) And in addition to there

9 being no Major Accident Risk Assessment, although you

10 don't know one way or the other, if there has been

11 testimony that there was no Process Safety Engineer for

12 Drilling in the Gulf, that would mean that despite the

13 fact that this was the highest risk at BP, that you had

14 done no MAR and had no Process Safety Engineer for

15 Drilling?


17 question.

18 A. It's certainly true that there was no MAR, as

19 you described. And I -- I will take it on trust that

20 there was no Process Safety Engineer. I don't know

21 that for a fact.

22 Q. (By Mr. Cunningham) If you --

23 A. It was certainly one of the highest risks,

24 not --

25 Q. Excuse me.


198

1 A. -- not the only.

2 MS. GOODHART: Excuse me. I'm sorry, but

3 we've all -- I think we've all dropped off. And if we

4 can't hear the answer and can't read the answer, then

5 we're sort of at a loss. So could we wait a minute

6 until we can get the system back up?

7 MR. CUNNINGHAM: Sure.

8 MS. GOODHART: Thank you.

9 THE COURT REPORTER: Go off.



12 1:27 p.m.


14 MR. CUNNINGHAM: Ready?

15 THE COURT REPORTER: Yes, sir.

16 THE VIDEOGRAPHER: 30 seconds.

17 On the record at 1:36 p.m.

18 Q. (By Mr. Cunningham) Dr. Hayward, if you had

19 told Congress that there were safety critical measures

20 and protocols that were not being used on the DEEPWATER

21 HORIZON, measures that were specifically created to

22 prevent exactly the kind of catastrophe that occurred,

23 you know, don't you, that the public outrage would have

24 been off the chart?



199

1 question.


3 A. I don't believe that was the case. So it's

4 entirely hypothetical and theoretical.

5 Q. (By Mr. Cunningham) You didn't believe what

6 was the case?

7 A. That the -- the DEEPWATER HORIZON was missing

8 safety critical systems and processes that you refer

9 to.

10 Q. Do you deny that you were briefed less than a

11 month beforehand and told that no MAR had been done on

12 this particular rig --

13 A. I -- I don't --

14 Q. -- as well as any other MODU?

15 A. I don't recall that briefing. I don't -- I

16 don't know whether it occurred or not, frankly, in the

17 circumstance at the time. It may have occurred, it may

18 not have occurred. I certainly do not recall it.

19 Q. Now, there -- there was no higher level

20 executive in BP than you, right --


22 Q. -- on April of two -- 2010?

23 A. That's right.

24 Q. And in your position as Chairman of the GORC

25 and as the CEO of BP, PLC, you monitored and supervised


200

1 the very system that was responsible for these gross

2 failures in safety management, didn't you?


4 A. The GORC had a role of oversight of the

5 Group's Safety Management Systems and Processes. That

6 is what the GORC did.

7 Q. (By Mr. Cunningham) Right. And in the --

8 A. I didn't do that in a personal capacity.

9 Q. You didn't do it in a personal capacity?

10 A. No. You can't, as the CEO or Chairman of the

11 GORC, monitor every -- every rig, every process, every

12 system. It's not possible. What you can do is to set

13 standards, create the right people around you to

14 implement the right sort of processes and measures that

15 they're be -- and measure that they are indeed being

16 implemented.

17 Q. Okay.

18 A. And that's what we were doing. That's what I

19 was doing.

20 Q. So do you suggest, then, that you were not

21 responsible for the gross failure of safety management

22 on the DEEPWATER HORIZON on April the 20th?

23 A. I was not --


25 MR. GODFREY: And objection as to form.


201

1 MR. WEBB: Go ahead, Tony.

2 A. I was not directly responsible in any way,

3 shape, or form for that drilling rig. I was certainly

4 responsible for establishing the systems, the

5 standards, the procedures, ensuring that we recruited

6 the right people, but I was not in any way directly

7 responsible for the DEEPWATER HORIZON drilling rig.

8 Q. (By Mr. Cunningham) And to the extent that

9 those systems and standards failed, you were the person

10 responsible, weren't you?

11 A. Well, we have to --

12 MR. WEBB: Objection to the form.

13 A. We have to assess -- determine that they did

14 fail. It's -- it's -- and that's not what the Bly

15 Report shows.

16 Q. (By Mr. Cunningham) If it is determined that

17 they did fail, you were the person responsible, weren't

18 you?


20 A. I was the person responsible for the

21 establishment of the systems and processes. I wasn't

22 accountable for implementing them. I wasn't

23 accountable for the drilling rig.

24 Q. (By Mr. Cunningham) You were not accountable

25 for implementing them?


202

1 A. How can one person be --

2 Q. Is that what you said?

3 A. -- accountable for implementing the

4 company-wide system, standards, and processes?

5 MR. CUNNINGHAM: What exhibit number is

6 47, Tab 47, please.

7 MR. BONNER: 6002.

8 MR. CUNNINGHAM: 6002?

9 MR. BONNER: Yes.

10 Q. (By Mr. Cunningham) Tab 47.

11 A. 6002?

12 Q. Yes.

13 MR. GODFREY: Hold on, please. Okay.

14 Q. (By Mr. Cunningham) Page 6, does this describe

15 what you did as Chair of the Group Operations Risk

16 Committee, and does it include oversight of the

17 development and implementation of BP's Operating

18 Management System?

19 A. It's -- it does.

20 Q. You were responsible for knowing where OMS was

21 functioning and where it wasn't functioning, weren't

22 you?

23 A. I -- I was measuring with the -- where we were

24 in implementation of OMS.

25 Q. Right. And the OMS was a group-wide policy


203

1 directed from the very highest levels at BP, PLC,

2 wasn't it?


4 Q. And a lack of implementation of that corporate

5 policy is ultimately your responsibility, isn't it?


7 A. I don't think there's any evidence of a lack

8 of implementation. What there is clear evidence of is

9 that the implementation of a system of this type does

10 not occur overnight. We said from the beginning, it

11 was a five-year process. This tragic accident occurred

12 three years into the process.

13 Q. (By Mr. Cunningham) If your investigation had,

14 in fact, included everything, as you testified to

15 Congress in June of 2010, it would have led right back

16 to you, wouldn't it?


18 A. Well, as I said, as far as I'm concerned, the

19 investigation did a very thor -- thorough job of

20 determining what was the cause of the accident.

21 Q. (By Mr. Cunningham) If there had been a full

22 investigation that included an investigation of

23 systemic Management-related causes, it would have led

24 right back to the top at BP, PLC?

25 MR. WEBB: Object to -- object to the


204

1 form.

2 A. That's entire speculation based on something

3 that didn't occur, that may or may not have been an

4 outcome.

5 MR. CUNNINGHAM: Let me see the book, my

6 copy.


8 Q. (By Mr. Cunningham) I'll hand you a book we'll

9 mark as the next exhibit.

10 MR. CUNNINGHAM: I don't have copies for

11 everybody, but here it is, and we'll pass it around

12 later if you don't already have it.



15 Q. (By Mr. Cunningham) Have you read this book,

16 Dr. Hayward?

17 A. I skimmed it when it was -- when it was

18 produced.

19 Q. So --

20 A. I didn't read it from cover to cover, but I

21 did look at it --

22 Q. Okay.

23 A. -- in the past.

24 Q. So when it came out in 2008 -- it's titled

25 "Failure to Learn." It's a safety analysis of the BP


205

1 disaster, the Texas City disaster, correct?


3 Q. So you knew it came out in 2008, you had the

4 book in hand, and you didn't read it?

5 A. As I said to you, I didn't read it from cover

6 to cover. I look -- I -- I skimmed it.

7 Q. You skimmed it. What do you mean you "skimmed

8 it"?

9 A. I looked -- I read it over in a -- in a --

10 perhaps over a course of four or five days, perhaps

11 half an hour a day, something of that sort.

12 Q. Okay.

13 A. But I didn't read it from cover to cover.

14 Q. You read it over the course of four or five

15 days, but you didn't read it from cover to cover. You

16 read parts of it, is that what you're saying?

17 A. Yes, that's right.

18 Q. Okay. And it was published about three years

19 after Texas City, correct?


21 Q. You were the CEO of BP when it came out,

22 that's correct?

23 A. Correct.

24 Q. Right?

25 A. (Nodding.)


206

1 Q. Did -- did some of the other safety leadership

2 at BP read the book?

3 A. I'm certain they did. It was widely

4 circulated.

5 Q. And the title, "Failure to Learn," refers to

6 BP -- BP's conduct before Texas City, correct?


8 Q. That's what it's about?


10 Q. And on Page 51, for example, when you skimmed

11 it, you saw that the chapter was titled "Blindness to

12 major risk," right?

13 A. I don't recall that. Which chapter are you

14 on, sir?

15 Q. 51, page --

16 A. Page --

17 Q. Chapter 6, Page 51, "Blindness to major risk,"

18 do you see that?

19 A. Correct.

20 Q. And in the middle of the page, it quotes from

21 the Baker Report, doesn't it, and specifically refers

22 to process safety hazards, right?

23 Do you see that?

24 A. Yep.

25 Q. It says: "Process safety hazards give rise to


207

1 major accidents involving the release of potentially

2 dangerous materials, the release of energy (such as

3 fires and explosions), or both. Process safety

4 incidents can have catastrophic effects and can result

5 in multiple injuries and fatalities, as well as

6 substantial economic, property, and environmental

7 damage."


9 A. You did.

10 Q. That -- that's exactly what had happened at

11 Texas City. That was a process safety accident, wasn't

12 it?


14 A. It was deemed to be a process safety accident.

15 Q. (By Mr. Cunningham) Yeah.

16 A. Correct.

17 Q. And this entire chapter discusses the subject

18 of process safety, doesn't it?

19 A. Let me just refresh my memory. It was four or

20 five years ago -- three or four years ago. (Reviewing

21 Exhibit 6026.)

22 Yes.

23 Q. And on Page 63, toward the end of this, it

24 states, in bold: "The major lesson: the need to focus

25 on process safety."


208

1 Did I read that --


3 Q. -- correctly?

4 A. Yes.

5 Q. And the second sentence in the first

6 paragraph: "All noted, in particular, that BP had

7 emphasized personal safety indicators and had paid

8 little attention to process safety indicators."



11 Q. "Correspondingly, their recommendations

12 focused on the need to give greater prominence to

13 process safety."

14 Right?

15 A. Correct.

16 Q. The same lesson we discussed earlier as having

17 been found in other events other than Texas City,

18 correct?

19 A. And that is why we --


21 A. -- implemented in 2007 and 2008 a safety

22 system focused on process safety called the Operating

23 Management System.

24 Q. (By Mr. Cunningham) That's why you implemented

25 OMS, because OMS focuses on process safety?


209


2 Q. Correct?

3 A. Correct.

4 Q. All right. And process safety is the kind

5 of -- is the safety program designed to prevent just

6 what happened on the DEEPWATER HORIZON, correct?



9 A. You would certainly hope that it would prevent

10 something of the -- of the tragic accident we saw with

11 the DEEPWATER HORIZON.

12 Q. (By Mr. Cunningham) All right. Now turn to

13 Page 65. Did you read or skim or scan Chapter 7 on

14 "Inability to Learn"?

15 A. Well, I don't recall, but I'm sure I did at

16 the time.

17 Q. All right. If you look down toward the middle

18 of the page, again, it refers to the Baker Panel, and

19 states: "Its final recommendation was that: Quote,

20 'BP should use the lessons learnt from the Texas City"

21 tragedy -- "tragedy and from the Panel's report to

22 transform the company into a recognized industry leader

23 in process safety management.'"

24 Do you see where it says that?

25 A. That's indeed what we were doing --


210

1 Q. And do you see the next --

2 A. -- to the point where by in 2009, BP was

3 recognized as an industry leader, ironically, in the

4 Gulf of Mexico.

5 Q. And you're talking about the same place where

6 we just went through those process safety gaps that

7 were high risk according to BP's own evaluation. We're

8 talking about the same Gulf of Mexico --

9 A. We're not talking --

10 MR. WEBB: Objection --

11 A. I'm not --

12 MR. WEBB: Objection. Argumentative.

13 A. I just --


15 A. I just want to, if I can.

16 As I tried to explain on a number of

17 occasions, the basis to improve safety is to take

18 action, measure gaps, take action, measure. You

19 don't --

20 Q. And you --

21 A. -- improve safety by just sitting in a room

22 talking about it. You go out and measure, identify

23 the -- where the gaps are, and take action to close

24 them.

25 Q. And five years --


211

1 A. And that is the process that we were going

2 through.

3 Q. And five years after Texas City, you were

4 still measuring in the Gulf --

5 A. We were still --

6 Q. -- right?

7 A. -- closing.

8 Q. And the next sentence here says: "The fact

9 is, however, that these lessons were widely available

10 previously." Do you see that?


12 Q. The lessons learned from Texas City, the

13 author states: "...these lessons were widely available

14 previously," doesn't it?

15 A. With respect to Texas City.

16 Q. Yeah.

17 A. (Nodding.)

18 Q. And then --

19 A. Correct.

20 Q. -- he discusses Grangemouth, correct --

21 A. Correct.

22 Q. -- in the next few pages?

23 A. Correct.

24 Q. And then he discusses something we haven't

25 discussed, Longford, which was not a BP operation but


212

1 which BP was fully aware of, an explosion at the ESSO

2 plant, correct?

3 A. Correct.


5 Q. (By Mr. Cunningham) BP knew all about that

6 because --

7 A. Well, I'm not sure we knew all about it, but

8 we certainly were aware of the explosion. And there

9 was a book published, I believe.

10 Q. There was a book published called "Excerpts

11 From Lessons From Longford" that was circulated within

12 BP, and John Mogford himself, the Head Safety Man at

13 BP, circulated an E-mail with highlights from that

14 book, didn't he?


16 A. Well --

17 MR. WEBB -- multiple parts to the

18 question, objection.

19 A. I don't recall that, but I'm -- as I read this

20 book, I'll just finish reading it, if I can, that seems

21 to have been the case.

22 Q. (By Mr. Cunningham) That seems to be the case.

23 Is that what you said?

24 A. That's what I said --

25 MR. WEBB: Objection. Leading.


213

1 A. -- but I haven't -- you know, I don't recall

2 that. I'm just reading the book now, and I'm -- okay?

3 Q. (By Mr. Cunningham) All right. And if you

4 turn to the next page, what he's referring to is laid

5 out in detail, Page 70, where the bold is "Messages

6 from major reviews." And it states that: "A major

7 external review of Texas City in 2002 described the

8 failings that it identified as 'urgent and

9 far-reaching.'" And does it then state, quote:

10 "Assets safety [process safety]...is one of the biggest

11 issues identified by the assessment team"?

12 Do you see that?

13 A. Correct.

14 Q. That's referring to a study that was done at

15 Texas City three years before the explosion in 2005,

16 where that study identified process safety as a

17 problem, correct?

18 A. I --


20 A. I know nothing about this. All I'm doing is

21 reading the book, as you are here.

22 Q. (By Mr. Cunningham) Okay.

23 A. So I can assume that the book is accurate. I

24 was not involved with Texas City at that time.

25 Q. Well, then, do you know about the major audit


214

1 done in 2003 by a team of BP people at Texas City

2 focusing on process safety that's referred to in the

3 next paragraph?

4 A. I don't --

5 Q. Do you know --

6 A. I --

7 Q. -- about that one?

8 A. I don't remember that.

9 Q. Okay.

10 A. I'm sure if it's in here it's correct, but I

11 don't remember that.

12 Q. And then we come to Page 73. Did you skim

13 this part of the book when you read it in 2008?

14 A. I -- I honestly don't know.

15 Q. On cost-cutting?

16 A. I don't know. I probably did.

17 Q. You --

18 A. I can't --

19 Q. -- probably did?

20 A. I can't remember.

21 Q. And it discusses the impact of cost-cutting on

22 process safety and how that led to the disaster of

23 Texas City, doesn't it?

24 A. Well, I don't know because --



215

1 A. -- I haven't actually read it.


3 A. So -- the best part of four or five years. So

4 if you want me to say "Yes" or "No," I need to read it.

5 Q. Well, I don't want you to stop and read the

6 whole chapter. So we'll -- we'll move on --

7 A. Okay.

8 Q. -- but whatever the case, at the time you read

9 this book and did or didn't read the chapter on

10 cost-cutting is when you were engaged in cutting

11 $4 billion in cost out of BP; isn't that --

12 A. Well, I was --


14 question.

15 A. As I've tried to explain to you on a number of

16 occasions, the costs that -- that were being removed at

17 BP were in Head Office, in the Corporate Offices of the

18 company. They were nothing to do with the operations.

19 Q. You cut $4 billion out of the Head Office?

20 A. Yes. We had -- yes. That's why we did it,

21 30 --

22 Q. Where -- where's Head Office?

23 A. -- $30 billion of overhead. Cost sitting

24 above --

25 Q. Where is the Head Office?


216

1 A. It's in London. It's in Houston. It's in

2 many different locations all over the world. We had a

3 very significant cost base, sitting above the

4 operation, had no impacts on the operation, added

5 nothing to the operation other than burden and

6 complexity. That is what we removed in the course of

7 2008 through 2010, and we supplemented the operations

8 by investing into them.

9 Q. Did your read the chapter, Chapter 9, Page 83

10 on the "Reward structures"?

11 A. As I said, I'm sure I did at the time, but I

12 don't recall what it says.

13 Q. Well, we haven't discussed this today, but do

14 you remember that it discusses --

15 A. No.

16 Q. -- Lord Browne tying compensation of employees

17 to cost-cutting?

18 A. I don't remember any of the details of this

19 book.

20 Q. Well, that's the exact same thing you did when

21 you became CEO, you tied compensation to cost-cutting,

22 didn't you?


24 A. I tied compensation, firstly, to safety and

25 then to financial performance. Safety --


217

1 Q. (By Mr. Cunningham) The financial performance?

2 A. Safety was a cost mark. You either -- you

3 either performed against the safety matrix or you got

4 nothing.

5 Q. Did you or did you not tie compensation to

6 cost-cutting?

7 A. There was an element of compensation that

8 related to management of costs.

9 Q. All right. Turn to page one --

10 A. It was subsidiary to safety performance.

11 Q. Turn to Page 107, "Leadership." Did you read

12 this chapter?

13 A. As I've said, I'm sure at the time I did, but

14 I don't recall. So --

15 Q. Well, if --

16 A. -- if you want me to answer questions, I -- I

17 will need to read it.

18 Q. Well, if you -- if you were the CEO of BP at

19 the time you saw this and saw a chapter on leadership,

20 it seems like you probably --

21 A. I probably would have done.

22 Q. -- would have read that.

23 A. But as I say, I can't remember whether I did,

24 and I can't remember what it says. So if we want to

25 have a question and answer, I'll need to read it.


218

1 Q. I'm going to ask you whether or not you agree

2 with the second paragraph that's quoted here out of the

3 Baker Panel Report, which says this, quote: "The Panel

4 believes that a primary reason that process safety is

5 not more widely shared as a core value in the US

6 refinery workforce is that BP executive and corporate

7 refining management have not provided effective process

8 safety leadership."


10 A. You did.

11 Q. And then on Page 120, in the "Conclusion" --

12 MR. GODFREY: Which page, please?

13 MR. WEBB: 120.


15 Q. (By Mr. Cunningham) Third sentence down,

16 quote: "BP's most senior executives failed to provide

17 appropriate leadership on process safety issues,"

18 period, end quote.

19 Did you read that when you scanned this

20 chapter?

21 A. I almost certainly did.

22 Q. You certainly did?

23 A. I almost certainly did.

24 Q. Okay.

25 A. And throughout my term as the Leader, I


219

1 focused exclusively on process safety.

2 Q. And in conclusion, did you -- or do you think

3 you read the concluding chapter --

4 A. I'm sure I read --

5 Q. -- page --

6 A. -- the concluding chapter.

7 Q. -- 157?

8 Second paragraph, quote: The major -- "The

9 major lesson coming out of the various reports written

10 about the accident is the need for a specific focus on

11 process safety" --


13 Q. -- "but this was not a new insight. Time and

14 again" --

15 A. Well --

16 Q. -- "reports about major accidents in the

17 petrochemical industry have drawn this conclusion.

18 What is most striking about the Texas City accident was

19 BP's failure to have learnt this lesson already. It

20 seems that the organisation suffered from a learning

21 disability in this respect."

22 Do you agree with that?


24 A. I -- I think that's -- I think that certainly

25 in 2005 we needed to shift our focus to process safety,


220

1 rather than personal safety. And in the time that I

2 was the CEO of the company, that's exactly what we did.

3 We had a relentless focus on process safety.

4 Q. (By Mr. Cunningham) And did you --

5 A. And notwithstanding the tragic accident in the

6 Gulf, all of the indications, measurements, showed that

7 we were improving significantly.

8 Q. And did you read the final conclusion on

9 cost-cutting on Page 162, where it says, quote: "Cost

10 cutting was perhaps the most obvious cause of the

11 failure to learn at Texas City," end quote?



14 A. It was certainly one of the things that

15 contributed to Texas City, that -- there's no doubt.

16 Q. (By Mr. Cunningham) And so you read this book

17 or you skimmed this book or you reviewed this book in

18 2008, when it came out, and in 2010 on the DEEPWATER

19 HORIZON, despite the institution of your OMS in 2007,

20 you still had not found the time to do an MAR on the

21 DEEPWATER HORIZON, correct?


23 question.

24 A. I don't do MARs.

25 Q. (By Mr. Cunningham) You don't do MARs?


221

1 A. But what is clear is that we had made major

2 changes to operations with explicit focus on process

3 safety. Consequently on Texas City, actually, in line

4 with a lot of what is written in here.

5 Q. Is that the reason that there was no process

6 Engineer responsible for the Gulf of Mexico drilling

7 operation?


9 A. I'm not sure --

10 Q. (By Mr. Cunningham) That's not consistent, is

11 it?

12 A. I'm not -- I'm not aware of why that was not

13 the case.

14 Q. Yeah.

15 A. But all I can tell you is there's been a lot

16 of focus on process safety in the intervening three

17 years. I when I have the opportunity to explain to

18 people, I will tell you.

19 Q. All right. So given BP's safety history at

20 the time you testified before Congress, you made the

21 point you've made here today multiple times, didn't

22 you, that you did everything possible to change

23 everything between 2007 and 2010 before the DEEPWATER

24 HORIZON occurred --



222

1 question.

2 Q. (By Mr. Cunningham) -- didn't you?

3 A. We changed a lot of things.

4 Q. Okay.

5 A. We changed a lot of things in terms of how

6 people were compensated, we changed things -- systems,

7 processes, we recruited people from outside of our

8 industry to bring expertise into BP. And we made

9 process safety and safe and reliable operations the

10 priority.

11 Q. And you made that statement or a similar

12 statement on five or six times in your Congressional

13 testimony, didn't you?

14 A. I did.

15 Q. Same thing. All right. And, of course, BP

16 PLC had the power to make all these changes that you

17 say you did make, true?

18 A. We did make a lot of changes.

19 Q. All right. You had the power to make any

20 change you wanted to make safety related, didn't you?

21 A. We -- and we made a lot of changes.

22 MR. GODFREY: Object as to form.

23 A. But change takes time. You can't change

24 everything in weeks or even years. It takes a long

25 time to change the operations of a company.


223

1 Q. (By Mr. Cunningham) And the specific event

2 that precipitated these changes that you've discussed

3 today and that you talk about in Congress was Texas

4 City, right?

5 A. I think the specific event was the publication

6 of the Baker Report and the recognition of what the

7 Baker Report said.

8 Q. All right. And we've read what portions of

9 the Baker Report said. But it's true that in the wake

10 of Texas City, you and Lord Browne repeatedly stated

11 that it would never happen again, didn't you?


13 A. I -- I believe we repeated we would do

14 everything possible to -- to --


16 A. -- stop it from happening again.


18 THE COURT REPORTER: Previously marked.

19 Q. (By Mr. Cunningham) Exhibit 870, previously

20 marked. This is a news release from the U.S.

21 Department of Labor in October, in fact, the end of

22 October of 2009, correct?

23 A. (Reviewing document.) Correct.

24 Q. Read the first two paragraphs into the record,

25 please.


224


2 Q. (By Mr. Cunningham) Loud enough for people to

3 hear it.


5 A. First two paragraphs?

6 Q. (By Mr. Cunningham) Yes, sir.

7 A. "U.S." -- beginning with "The U.S. Department

8 of Labor's" --

9 Q. Yes.

10 A. "The U.S. Department of Labor's Occupational

11 Safety and Health Administration (OSHA) today announced

12 it is issuing" an "$87,430,000 in proposed penalties to

13 BP Products North America...for the company's failure

14 to correct potential hazards faced by employees. The

15 fine is the largest in OSHA's history. The prior"

16 target "total penalty, $21 million, was issued in 2005,

17 also against BP."

18 "Safety violations at BP's Texas

19 City...refinery resulted in...massive explosion -- with

20 15 deaths and 170 people injured -- in March of 2005.

21 BP entered into a settlement agreement with OSHA in

22 September of that year, under which the company agreed

23 to corrective actions to eliminate potential hazards

24 similar to those that caused the 2005 tragedy."

25 Today -- "today's announcement comes at the conclusion


225

1 of a six-month inspection by OSHA, designed to evaluate

2 the extent to which BP has complied with its

3 obligations under the 2005 Agreement and OSHA

4 Standards."

5 Q. Now, this -- this news release is four and a

6 half years after Texas City, isn't it?

7 A. It is.

8 Q. And it's two years after you became the CEO,

9 isn't it?

10 A. Correct.

11 Q. And tell me whether or not -- whether or not I

12 read the statement below this made by the Secretary of

13 Labor correctly. Quote, "When BP signed the OSHA

14 settlement from the March 2005 explosion, it agreed to

15 take comprehensive action to protect employees.

16 Instead of living up to that commitment, BP has allowed

17 hundreds of potential hazards to continue unabated..."

18 end quote.


20 A. You did.





25 MR. WEBB: You said 27?


226

1 THE COURT REPORTER: (Nodding.)

2 Q. (By Mr. Cunningham) The news article I want to

3 ask you about, Mr. Hayward, it is titled: "Renegade

4 Refiner: OSHA says BP has 'systemic safety problem.'"

5 First paragraph: "Two refineries owned by oil giant

6 BP..." --

7 And this is dated May the 17th of 2010,

8 correct?

9 A. Correct.

10 Q. "Two refineries owned by" BP oil giant -- or

11 "oil giant BP account for 97 percent of all flagrant

12 violations found in the refining industry by government

13 safety inspectors over the past three years..."

14 Is that correct?


16 A. That's what it says.

17 Q. (By Mr. Cunningham) Is that a fact?


19 Q. "Most of BP's citations were classified as

20 'egregious willful' by the Occupational Safety and

21 Health Administration and reflect alleged violations of

22 a rule designed to prevent catastrophic events at

23 refineries."

24 Is that what it says?

25 A. It is.


227

1 Q. Going down to the next paragraph, last

2 sentence: "While continuing its probe in Texas City,

3 OSHA launched a nationwide refinery inspection program

4 in June 2007 in response to a series of fires,

5 explosions and chemical" lease -- "releases throughout

6 the industry. Refinery inspection data obtained by the

7 Center under the Freedom of Information Act for OSHA's

8 nationwide program and for the parallel Texas City

9 inspection show that BP received a total of 862

10 citations between" July -- June" 7 "and February 2010

11 for alleged violations at its refineries in Texas City

12 and Toledo, Ohio."

13 Is that, in fact, true?


15 A. That's what it says here.

16 Q. (By Mr. Cunningham) And June 2007 to February

17 of 2010, that's about the three-year period when you

18 were the CEO, isn't it?


20 Q. And then it goes on to say: "Of those, 760

21 were classified as 'egregious willful' and 69 were

22 classified as 'willful'...virtually all...the citations

23 were for alleged violations of OSHA's process safety

24 management standard..."



228

1 A. You did.

2 Q. "BP accounted for 829 of the 851 willful

3 violations among all refiners cited by OSHA during the

4 period analyzed..."

5 Do you disagree with those numbers?

6 A. I have no basis to disagree with them.

7 Q. "Top OSHA Officials told the Center in an

8 interview that BP was cited for more egregious willful

9 violations than other refiners because it failed to

10 correct the types of problems that led to the 2005

11 Texas City accident even after OSHA pointed them out."


13 A. You did.

14 Q. And then turn to the next page, fifth

15 paragraph down: "No other oil company inspected by

16 OSHA since June" of "2007 was even close to BP in the

17 number of citations issued."


19 A. Correct.

20 Q. And then we find that willful and egregious is

21 defined as follows: "OSHA defines a willful violation

22 as one 'committed with plain indifference to or

23 intentional disregard for employee safety and health.'"

24 Did I read that right?

25 A. You did.


229

1 Q. "An egregious willful violation is considered

2 so severe that it can result in a penalty each time a

3 violation occurs, rather than a single penalty for all"

4 the "violations..."


6 A. You did.

7 THE COURT REPORTER: Four --


9 THE COURT REPORTER: Four minutes.

10 MR. CUNNINGHAM: That's what I want. Tab

11 34.







18 A. Thank you.

19 Q. This is an "OSHA FactSheet," a "BP History

20 Fact Sheet." It relates to the BP Texas City refinery.

21 I'd ask you to look at the time line of events at the

22 bottom. You'll see on July 22nd, 2006, a fatality,

23 correct?

24 A. Yes.

25 Q. You'll see on June 5th, 2007, a fatality,


230

1 correct?

2 A. Yep.

3 Q. Correct?

4 A. Correct.

5 Q. And on January 14th, 2008, a fatality,

6 correct?

7 A. Correct.

8 Q. And on October the 9th, 2008, a fatality,

9 correct?

10 A. Correct.

11 Q. And who was absolutely responsible for safety

12 at BP during these three years cited in these articles?



15 Q. (By Mr. Cunningham) Who was it?


17 A. I was the Chief Executive of the company

18 during these three years.

19 Q. (By Mr. Cunningham) And despite these numbers

20 which you knew about, in the April 15th, 2010, BP

21 Sustainability Report, Tab 37 --

22 MR. GODFREY: What exhibit number,

23 please?

24 MR. CUNNINGHAM: I don't have one yet, I

25 don't think.


231


2 MR. CUNNINGHAM: Is it already in?

3 MR. BONNER: Yes. 6023.



6 A. Okay.

7 Q. (By Mr. Cunningham) You are quoted in this

8 document five days before the DEEPWATER HORIZON

9 blowout, and after these statistics were published?

10 A. Just --

11 MR. WEBB: He doesn't have the document.

12 A. -- help me get the document, please.

13 Q. (By Mr. Cunningham) This is what it looks

14 like.

15 A. Yeah.

16 MR. GODFREY: Is -- got the 2009 on the

17 front?

18 MR. CUNNINGHAM: Yeah.

19 MR. GODFREY: This was 6023?



22 A. 6023.

23 MR. WEBB: Just use this copy, Tony.

24 THE WITNESS: Thank you.

25 MR. WEBB: He's got the document.


232

1 Q. (By Mr. Cunningham) Page 2. The date of this

2 on the front is "15 April 2010," and you are quoted as

3 saying at the bottom of the first page, quote, "I am

4 extremely proud of BP's 2009 safety performance - it

5 reflects a sustained effort across all our operations

6 over many years," end quote. Did you say that?

7 A. I did, and I remain exactly that view, because

8 our safety performance has measured, my rigorous

9 statistical analysis had improved significantly over

10 the prior two years.

11 MR. CUNNINGHAM: Take a break. We're out

12 of tape.




16 MR. GODFREY: We're ready to start. Can

17 you shut the door down there, please?

18 THE VIDEOGRAPHER: All set. One second.

19 On the record at 2:25 p.m., beginning Tape 5.

20 EXAMINATION

21 QUESTIONS BY MR. STERBCOW:

22 Q. Mr. Hayward, my name is Paul Sterbcow, with

23 Mr. Cunningham. Both represent the PSC. I'm going to

24 use some more of our time.

25 Did you know who was in charge of safety in


233

1 the Gulf of Mexico Drilling and Completions Unit as of

2 2009?

3 A. No, I didn't.

4 Q. Do you know if there was any changeover in

5 personnel with respect to managerial Safety

6 representatives in the Gulf of Mexico in 2009, early

7 2010?

8 A. No.

9 Q. Have you ever met Kevin Lacy?

10 A. No, I haven't.

11 Q. Are you familiar with Mr. Lacy?

12 A. I've -- I've heard of his name.

13 Q. Do you know why Mr. Lacy was brought into the

14 company?

15 A. No, I don't.

16 Q. Do you know why he left the company?

17 A. No.

18 Q. Do you know Mr. Thierens?

19 A. I know Mr. Thierens, yes.

20 Q. Are you aware of the circumstances of his

21 leaving Gulf of Mexico and coming -- relocating back to

22 London in late '09?

23 A. Mr. Thierens? No --

24 Q. Correct.

25 A. -- I don't.


234

1 Q. Do you know a Curtis Jackson?

2 A. No.

3 Q. So you wouldn't be familiar with his HSSE

4 responsibilities were in --

5 A. No.

6 Q. -- the Gulf of Mexico either?

7 A. No.

8 Q. All right. So is -- suffice it to say from

9 the time that the Macondo Well started in October of

10 '09, through the tragedy, neither you in your capacity

11 as CEO nor in your capacity as Chair of the Committee

12 had any notion as to who was in charge of implementing

13 OMS and HSSE policy within Drilling and -- and

14 Completions in the Gulf of Mexico; is that fair?

15 A. I didn't know the name of the individual, no.

16 Q. All right. Do you recall ever meeting at any

17 point in your position to discuss with your colleagues

18 at BP whether or not the DEEPWATER well blowout in the

19 Gulf of Mexico was possible?

20 A. The identification of that sort of accident

21 was part of the Group-wide risk assessment.

22 Q. Okay.

23 A. So it was identified as a Group-wide risk, and

24 it was believed to have been mitigated by the things

25 that we had in place.


235

1 Q. Can you list for us the steps or the -- the

2 things you had in place that led the Committee to

3 conclude that that risk of a deepwater blowout had been

4 mitigated in the Gulf of Mexico?

5 A. Well, I don't recall ever discussing it in any

6 detail at GORC. I think subsequent to the accident,

7 that we -- the critical issue was, of course, we

8 believed that any blowout would be mitigated by a

9 functioning blowout preventer.

10 Q. And I think you mentioned to Congress on a

11 number of occasions that the blowout preventer was

12 considered the fail-safe piece of equipment, if you

13 will, to prevent an accident like that?

14 A. That was the intention.

15 Q. So if all other considerations that BP relied

16 upon to conclude that they had mitigated this risk --

17 had all of them failed, the last line of defense would

18 have been the fail-safe BOP, if you will?


20 Q. All right. Had BP done any research, to your

21 knowledge, into the performance of the blowout

22 preventer aboard of the -- the make/model of the

23 blowout preventer aboard the DEEPWATER HORIZON?

24 A. Not to my knowledge.

25 Q. Do you know why or on what basis BP came to


236

1 the conclusion that the blowout preventer would provide

2 the company with a fail-safe, last line of defense to a

3 deepwater blowout?

4 A. It was the design basis of a blowout

5 preventer. In the event of a blowout, it closes, and

6 the well is shut in.

7 Q. And what was the basis of concluding that that

8 design basis was fail-safe?

9 A. I don't know.

10 Q. Were there any discussions in the GORC

11 meetings about the fail-safe aspect of the --

12 A. No.

13 Q. -- of the piece of equipment?

14 A. No.

15 Q. Do you recall --

16 A. It was industry practice to assume that the

17 blowout preventer was -- would operate to the criteria

18 by -- which it was designed for, and in the event of a

19 blowout, it would close and seal the well.

20 Q. Was there any discussion about the actual

21 performance of blowout preventers on deepwater drilling

22 rigs operated by BP in the Gulf of Mexico --

23 A. Not --

24 Q. -- over time?

25 A. Not with myself.


237

1 Q. Do you know anybody within the company --

2 A. I -- I --

3 Q. -- this -- had this discussion?

4 A. I'm not aware of whether they did or whether

5 they didn't.

6 Q. You mentioned other companies. Is it your

7 testimony that Exxon, Shell, Chevron, other deepwater

8 operators in the Gulf of Mexico, also relied solely on

9 the blowout preventer as the fail-safe, last line of

10 defense?

11 MR. WEBB: Objection to the form --


13 A. I think --

14 MR. WEBB: -- of the question.

15 A. I think it's fair to say that the industry

16 generally -- I'm including those companies -- believed

17 that the blowout preventer was the last line of defense

18 if all other mechanisms, systems, and processes had

19 failed. That's what it was designed to do. That's

20 what it's been designed to do since the piece of

21 equipment was created when drilling for oil began, you

22 know, almost a hundred years ago.

23 Q. (By Mr. Sterbcow) And do you know if the

24 design criteria of the blowout preventers that we're

25 referring to kept up with the pace of deepwater


238

1 drilling, in terms of deeper and deeper depths, higher

2 pressures, and higher temperatures?

3 A. Well, they were certainly intended to. I -- I

4 think -- I -- I don't know where the analysis of the

5 blowout preventer has got to. I know it's not

6 complete. I -- I think, with the benefit of hindsight,

7 you might -- you might question that. But I think

8 until that analysis is complete, it's difficult to

9 know. I mean, I -- I'm not aware of why -- why we

10 believed the blowout preventer failed. I know that

11 analysis is still ongoing.

12 Q. Do you know whether or not BP is using

13 state-of-the-art blowout preventers in its drilling --

14 Gulf of Mexico deepwater drilling projects, or at least

15 was as of April 20, 2010?

16 A. To the best of my knowledge, they were, yes.

17 Q. Did you have any knowledge prior to April 20,

18 2010, as to how old this particular blowout preventer

19 at the Macondo Well was?

20 A. No, I didn't --


22 A. I didn't have any knowledge of how old this

23 particular blowout preventer was.

24 Q. (By Mr. Sterbcow) Given the restructuring of

25 deep -- deepwater Drilling and Completions in the Gulf


239

1 of Mexico, do you know if there was any person or job

2 position who would have been responsible for reviewing

3 design, maintenance, repair, and performance of blowout

4 preventers in deepwater drilling in the Gulf of Mexico

5 for BP in 2009, early 2010?

6 A. I'm unaware of them.

7 Q. Would the OMS -- implementation of OMS, to

8 your knowledge, had it been implemented in Drilling and

9 Completions in the Gulf, required someone within BP to

10 conduct that type of analysis?

11 A. I honestly don't know.

12 Q. Okay. Given that you don't know these things,

13 let -- let me make my questions a little more general.

14 Are you familiar with any studies that have

15 been conducted by or on behalf of MMS or the drilling

16 industry, in the period 1999 through 2005, that

17 specifically looked at the performance of deepwater

18 blowout preventers in the Gulf of Mexico and their

19 ability to actually prevent a disaster of the type that

20 happened on the DEEPWATER HORIZON?

21 A. I'm not aware of any.

22 Q. Do you know of anybody within the company, BP,

23 who would have looked at, looked for, or looked into

24 such studies to see what this piece of equipment's

25 performance record was in general?


240

1 A. I don't know --


3 A. -- of anyone.

4 Q. (By Mr. Sterbcow) Do you think that's

5 something that should have been done, given that BP

6 considered the blowout preventer the last line of

7 defense to an accident of this magnitude?


9 A. I -- I think it's reasonable to believe that

10 within the drilling organization, there were experts on

11 blowout preventers who were looking at blowout

12 preventers.

13 Q. (By Mr. Sterbcow) Are you personally aware of

14 any?

15 A. I'm not -- I'm not aware of anyone.

16 Q. All right. Do you know who the highest

17 position would be within BP PLC's organization who

18 would have the responsibility to either look at these

19 studies or ensure that somebody was familiar with such

20 studies?

21 A. I don't know. I -- and I'm not prepared to

22 speculate.

23 Q. Okay. So as we sit here, you -- you can't

24 testify as to either a person or a job position within

25 BP PLC that actually undertook the responsibility to


241

1 examine design and performance history of Gulf of

2 Mexico deepwater blowout preventers at any point, to

3 your knowledge?

4 A. I can't.

5 Q. All right. Have you been shown any documents

6 since this tragedy with respect to blowout preventer

7 performance in the Gulf?

8 A. H'm, I don't believe so, no.

9 Q. Do you know if BP --

10 A. Not to my recollection.

11 Q. -- since the tragedy, has undertaken any

12 study, looking --

13 A. Oh, I'm --

14 Q. -- into the future?

15 A. I'm certain that there has been lots of

16 studies. I clearly -- I haven't been involved in the

17 company now for almost nine months.

18 Q. Prior to your leaving when? When did you

19 leave?

20 A. I left in the -- I handed over the reins on

21 the -- effective the end of July and -- July and left

22 in the end of -- beginning of October.

23 Q. Okay. Can I assume, then, that once you

24 handed over the reins at the end of July, that your

25 involvement into both looking into the reasons for the


242

1 blowout and steps taken to prevent a future blowout

2 after the casualty -- all of -- all of your efforts in

3 that regard ended; is that fair?

4 A. Yeah. I -- I -- I clearly handed over the

5 leadership of the Company to someone else, and it was

6 right that whatever the future is going to be about

7 should be them and not me.

8 Q. Okay. So whatever BP has done or has not

9 done, for that matter, in terms of looking at its prior

10 reliance on the blowout preventer as the fail-safe

11 piece of equipment in Gulf of Mexico deepwater blowout

12 prevention, anything that happened after late July 2010

13 is something that you're not going to be familiar with?

14 A. I'm not familiar with. I'm sorry.

15 Q. Have you seen anything published? Have you

16 read anything about BP's efforts in this regard after

17 you've left?

18 A. The only thing that I've seen is the

19 Presidential Commission Report and the fact that the

20 analysis by a technical expert group, I think DN&O, on

21 the blowout preventer is, as far as I'm aware, still

22 ongoing. It's not -- it's not complete.

23 Q. So you're not familiar with any completed

24 investigation --

25 A. No.


243

1 Q. -- into the blowout preventer itself?

2 A. No, no.

3 Q. All right. Having said all of this, I'm

4 assuming the -- the answer to the following series of

5 questions is probably going to be "No," but let me ask

6 anyway: Were you aware of the fact that the blowout

7 preventer utilized on April 20, 2010 had undergone

8 significant downtime and maintenance and repair

9 problems in deepwater wells drilled in the Gulf of

10 Mexico in 2006 and 2007?


12 A. I wasn't aware of the details of that, no.

13 Q. (By Mr. Sterbcow) You've never seen any

14 documentations?

15 A. I've not seen any documentation.

16 Q. Were you aware of the fact that the blowout

17 preventer in place at Macondo as of the night of this

18 blowout had a ram that would have otherwise been

19 available to assist in blowout prevention converted to

20 a test ram six years prior?


22 A. I don't recall that. I'm -- you know, that

23 may -- I may have become aware of that in -- in the

24 immediate aftermath of the incident, but I -- I -- I

25 don't know.


244

1 Q. (By Mr. Sterbcow) Did you become aware that

2 there was a period of time between April 21 and May 5

3 when there was an ongoing, consistent effort by

4 Transocean and BP to utilize this test ram which had

5 been -- which had basically been rendered useless as a

6 blowout prevention tool to try and stop the ongoing

7 blowout?

8 A. What I recall is that we worked extensively on

9 the blowout preventer to try and get it to activate in

10 the subsea and were unable to do so it turns out for a

11 whole host of reasons to do with dead batteries,

12 switching not working, and various other things,

13 which -- you know, the details of which I can't -- I

14 can't remember exactly, and I -- and I wasn't really

15 ever fully party to --


17 A. -- the detail of that analysis, because it was

18 all coming out as I was leaving the company.

19 Q. (By Mr. Sterbcow) Did you know that BP

20 personnel in the Gulf of Mexico were receiving ongoing

21 reports of problems, maintenance, and repair of not

22 only this blowout preventer, but every blowout

23 preventer in use on a BP leased well?


25 A. I wasn't aware of that.


245

1 Q. (By Mr. Sterbcow) So if there were problems

2 with batteries and cables or whatever it might have

3 been, as of April 20, 2010, you were not aware that not

4 only whoever was running the rig for you as a

5 contractor, but also BP itself was receiving

6 contemporaneous information about the ongoing condition

7 and problems with every blowout preventer being used by

8 BP in the Gulf?


10 A. Every -- every blowout preventer?

11 Q. (By Mr. Sterbcow) Correct.

12 A. Not on every blowout preventer --

13 Q. Every -- ever --

14 A. -- on every drilling rig, every platform, on

15 every -- I find -- I wasn't aware of that. I find that

16 rather surprising.

17 Q. Okay. So it would be surprising to you in

18 your position that BP would be privy to and receive

19 contemporaneous records, ongoing records of

20 maintenance, repair, problem, et cetera, on blowout

21 preventers being used on its leased wells?

22 A. Yes.

23 Q. When did you become aware that there was an

24 ongoing attempt for a period of time to try to close a

25 test ram that had been converted to a test ram, at BP's


246

1 request, and with BP's consent?


3 A. I can't remember the details of the R -- the

4 BOP intervention using the ROVs, but there was a period

5 from immediately -- the immediate aftermath of the

6 accident on the 21st through to around the 5th of May

7 when we were trying to use ROVs to close the BOP. I

8 don't -- I -- you know, I wasn't involved in the

9 detailed Engineering that was going on at the time

10 because I was, quite frankly, focused on other things,

11 and I could not add very much to that --

12 Q. (By Mr. Sterbcow) Okay.

13 A. -- discussion.

14 Q. Do you know whether or not the ROVs that were

15 being utilized to try to operate the BOP were indeed

16 sufficient in terms of their ability to generate enough

17 hydraulic pressure to close any ram or any valve on

18 this BOP?

19 A. I don't know.

20 Q. Do you know whether or not the ROVs were

21 designed to provide enough hydraulic pressure and power

22 to close the type of ram equipment that was on this

23 specific BOP?

24 A. I don't know. I -- I believed that the ROVs

25 were capable of operating the BOP in the subsea.


247

1 Q. Do you know whether or not anyone with BP ever

2 questioned or had direct knowledge that the ROVs to be

3 used in the event of a blowout, in fact, could not

4 close the blind shear ram on a BOP like the one at the

5 Macondo Well?

6 A. I was not aware of it.

7 Q. Are you aware that on May 5th, Harry Thierens,

8 along with Billy Stringfellow of Transocean, discovered

9 that they had been attempting for days to close a test

10 ram that never was going to be closed in this

11 situation?

12 A. I recall that on or about May 5th, we

13 determined that the ROV intervention, if it had not

14 succeeded -- I -- I don't recall the details. I don't

15 even know whether I knew the details of exactly why the

16 intervention had not -- had not been successful. I --

17 I don't know whether we knew at the time why the

18 intervention had not been successful.

19 Q. All right. You don't recall learning that

20 Mr. Thierens, along with other folks, suddenly learned

21 on May 5th that this particular ram that they were

22 trying to use, in fact, whether it functioned 100

23 percent as intended would never, ever close in this

24 situation?



248

1 A. I don't recall that. I recall hearing that

2 there was significant variances with the BOP relative

3 to what we believed was on the seabed.

4 Q. (By Mr. Sterbcow) All right. Do you believe

5 that had the appropriate process safety measures been

6 put in place in Gulf of Mexico drilling and

7 completions, that someone with BP faced with this

8 situation would have or should have known not to try to

9 close a test ram to stop a blowing out deepwater well?



12 A. I think it's impossible to speculate whether

13 that's true or not. I would also have expected that

14 the Transocean team, whose blowout preventer it was,

15 would know how the blowout preventer operated.

16 Q. (By Mr. Sterbcow) Have you talked with anybody

17 with Transocean to determine the facts and

18 circumstances around -- surrounding how and why this

19 test ram was converted?

20 A. I haven't talked to anyone from Transocean.

21 Q. You used the term "their blowout preventer."

22 Do you believe that this was Transocean's blowout

23 preventer?

24 A. I believe it was part of the rig, and I

25 believe the rig is Transocean's, and, therefore, you


249

1 know, I would imagine it's a Transocean blowout

2 preventer.

3 Q. All right. Do you -- given that, do you think

4 that BP bore any responsibility, operational or

5 otherwise, for the performance of this blowout

6 preventer?



9 A. Clearly, we were -- we had operational

10 oversight of our contract with Transocean.

11 Q. (By Mr. Sterbcow) Would that include the

12 blowout preventer?

13 A. Including the equipment that they were using,

14 the rig and the blowout preventer.

15 Q. Do you believe that Federal regulation, United

16 States Federal regulation, governing the drilling of

17 deepwater wells in the Gulf of Mexico required BP to

18 ensure that blowout preventers operated as intended in

19 this situation?



22 A. Is that what the regulations state?

23 Q. (By Mr. Sterbcow) I'm asking you if you know.

24 A. I don't know.

25 Q. Okay.


250

1 A. I don't know.

2 Q. In fact, let me ask it in a broader sense:

3 Are you aware of the certified Federal Register

4 Regulations and the requirements they placed on BP in

5 this situation to ensure that an adequate blowout

6 preventer, both in terms of capacity, repair, and

7 maintenance, was in place on the Macondo Well as of

8 April 20, 2010?

9 A. No, I'm not aware of the details of that

10 regulation at all.

11 Q. Do you -- do you know whether Mr. Lacy was

12 aware of those regulations?

13 A. I don't know Mr. Lacy, so I'm afraid I can't

14 help you.

15 Q. Do you know whether Mr. Thierens was aware of

16 those regulations?

17 A. I don't know, and I -- I -- I won't speculate.

18 Q. Do you know whether or not BP's Gulf of Mexico

19 drilling and completions organization in Houston had

20 anyone who was designated to know and ensure that

21 the -- the certified Federal -- Federal Regulations

22 pertaining to the blowout preventer were properly

23 adhered to by BP?

24 A. I don't know that.



251

1 Q. (By Mr. Sterbcow) And in a broader sense, do

2 you know whether or not anyone with BP in Houston was

3 charged with the responsibility to ensure that BP was

4 complying with applicable Federal Regulations in the

5 drilling and completion of the Macondo Well?

6 A. I -- I don't know who that would be.

7 Q. Do you know whether or not BP was, in fact, in

8 compliance in terms of design, and drilling, and

9 completion of the Macondo Well with applicable

10 certified Federal Regulations?

11 A. To the best of my knowledge, yes.

12 Q. But you don't know what those Regulations are?

13 A. But what they -- I don't know for a fact.

14 Q. Okay. And you don't know who within the

15 organization would be able to tell us that they were,

16 in fact, so compliant?

17 A. I'm afraid not.

18 Q. When did you learn about the blowout?

19 A. On the morning of April 21st.

20 Q. And how did you find out?

21 A. I received a phone call at about 7:00 o'clock

22 U.K. time, which would be, I guess, 1:00 o'clock in the

23 morning U.S. time.

24 Q. Do you recall who called you?

25 A. Yes. My -- the Head of Exploration and


252

1 Production, Andy Inglis.

2 Q. Okay. Mr. Inglis was in the States, or was he

3 in the U.K. at that time?

4 A. No, he was in the U.K.

5 Q. What did he tell you?

6 A. He said, "We have a serious incident in the

7 Gulf of Mexico."

8 And I -- and I -- we said, "Right. We'll meet

9 in the office." He was in London. "We'll" -- "we'll

10 meet in the office in an hours' time to review what we

11 know."

12 Q. All right. Do you recall when your first

13 contact was with anybody who was based in Houston

14 charged with any managerial responsibility over

15 Macondo?

16 A. I would -- I don't recall precisely, but I

17 would think in the course of the early afternoon,

18 London time, on the 21st --

19 Q. And when --

20 A. -- which would be daybreak in Houston.

21 Q. Daybreak in Houston?

22 A. Yeah, I think.

23 Q. Right. Okay. Do you recall when BP began its

24 effort, its organizational effort, to respond to this

25 disaster?


253

1 A. Very soon after the incident. The Incident

2 Management Team was called in Houston, so within hours.

3 I don't know exactly how many hours, but within a few

4 hours.

5 Q. Was there a single person placed in charge at

6 that point?

7 A. There would have been the Incident -- the

8 Incident and Crisis Management Team leader. I can't

9 remember who they were.

10 Q. All right. Do you recall when you first came

11 to the States?

12 A. Yeah, I came on the -- the 23rd, I think. It

13 was Thursday or Friday.

14 Q. And once you came, did you play -- well, what

15 role did you play in terms of determining what was the

16 best method of responding to and capping the spill?


18 A. Relatively early in the process, probably on

19 the 24th, we -- I sat down with the team, the team of

20 technical experts, and Andy Inglis and Doug Suttles,

21 and we designed a multiple parallel path intervention

22 strategy. We had already recognized the need to drill

23 a relief well, the rig was moving to location, and it

24 spudded very shortly thereafter. The second relief

25 well spudded within a couple of weeks.


254

1 And then we drew up a series of options to

2 contain and limit the flow in the intervening period.

3 So there -- there was a -- there was a two-pronged

4 attack, really. One was to mount the surface response,

5 which was very significant, ultimately involved 48,000

6 people, 7,000 boats, hundreds of planes. And in the

7 subsurface, we identified options to contain the -- the

8 leak, to plug the leak in various forms, including

9 things like the top kill, the cofferdam, et cetera.


11 A. And each one of those was pursued in parallel,

12 and when it was ready to be implemented, it was

13 implemented.

14 Q. Prior to that effort, are you aware of any

15 research and development, done by or on behalf of BP,

16 to create a strategy and build equipment that would

17 allow you to respond to a spill of this nature?


19 A. We had significant equipment available on the

20 surface, in -- in the guise of the marine spill

21 response corporation, which is an industry body. It

22 was supplemented significantly in the course of the

23 response. And, in essence, because the intervention in

24 our Response Plan was relief wells, and because we

25 believe this risk had been mitigated, and it hadn't


255

1 occurred for over 25 years, the industry had been

2 exploring deepwater for 20 years, the ability to

3 intervene in the subsea was not in any way, shape, or

4 form complete.

5 Q. (By Mr. Sterbcow) Was BP's longtime first

6 option and only option for stopping a well flow of this

7 magnitude to drill relief -- one or more relief wells?

8 A. That is what was documented in our Oil Spill

9 Response Plan, which was approved by the appropriate

10 authorities.

11 Q. Correct. Having said that, then, was that

12 BP's -- at the time of this blowout, and this spill,

13 other than the documented relief well plan, did BP have

14 any other plans whatsoever before you got together with

15 these other gentlemen and started drawing up plans for

16 well control and well plugging, was there any other

17 plan on the table or had any plan been contemplated

18 other than relief wells to stop this?

19 A. In line with the rest of the industry, we did

20 not have a plan to intervene to prevent flow in the

21 subsea until the relief well was there.

22 Q. And -- and I understand the rest of the

23 industry, but the rest of the industry has also

24 testified and stated publicly that they would never

25 have drilled the well the way BP did. Okay.


256

1 So in terms of what we have here, regardless

2 of what the rest of the industry did, it's my

3 understanding that as of the time this tragedy

4 happened, BP's sole plan to respond and deal with this

5 was relief well drilling?



8 A. It was to contain the oil on the surface using

9 spill response capability on the surface and to drill a

10 relief well.

11 Q. (By Mr. Sterbcow) And how long did BP think

12 that one or more relief wells would take in Mississippi

13 Canyon Block 252?

14 A. On the order of three months.

15 Q. And did -- did BP know that going in?

16 A. We knew pretty well that it would be of the

17 order of three months. That -- that is what the Oil

18 Spill Response Plan articulated.

19 Q. And did BP drill the relief wells in the same

20 manner in terms of Engineering casing design, casing

21 depth, as the original Macondo Well was drilled, if you

22 know?

23 A. Broadly, yes, but in details, I honestly don't

24 remember.

25 Q. All right. So details in terms of length of


257

1 casing, size of casing, long string versus liner, those

2 are details that you're not familiar with?

3 A. We were drilling a relief well, so -- and --

4 Q. All right.

5 A. -- we weren't drilling a production well.

6 Q. Did you get involved in any of the details of

7 the -- of the drilling of the relief wells while you

8 were in the States?

9 A. No. No.

10 Q. Are you aware of any problems that BP

11 encountered in getting the DD2 and the DD3 over to

12 begin the relief well drilling?


14 A. I don't believe there was significant problems

15 because they were drilling very shortly after the

16 incident, or the accident.

17 Q. (By Mr. Sterbcow) What was the first option

18 that was put on the table other than the three-month

19 relief well plan to try to stop the oil from flowing?

20 A. The first option that we could create in terms

21 of time, not in terms of its likelihood of success,

22 because it's likelihood of success was deemed low, but

23 it was worth attempting, because it -- we -- we -- we

24 weren't certain whether it would or not work --

25 would -- would work or not, was, I think, the


258

1 cofferdam. I mean, at the time we had a very

2 complicated situation on the seabed. Had a -- a well

3 with a 5,000 feet riser snaking around the seabed, and

4 there was oil leaking from the end of the riser. And

5 the attempt with the cofferdam was to put it on the end

6 of the riser to contain at least some of the

7 hydrocarbons. It was not deemed to be a very likely

8 successful intervention, but it was worth a try.

9 Q. Were there any more options on the table

10 during the cofferdam design and implementation that BP

11 felt would be more successful?

12 A. As I said, what -- what -- what we set out to

13 do was create multiple interventions, all of which were

14 pursued in parallel, in terms of resourcing,

15 Engineering, any investment, and as they crystalized,

16 that's to say as they were completed, they were

17 implemented. So the more complex, more technologically

18 advanced, more difficult interventions, it took longer.

19 But probably by definition were more likely to work

20 occurred later. The ones that we could put together

21 quickly, were implemented earlier, but almost by

22 definition they had less likelihood of success.

23 Q. And the cofferdam did not work, correct?

24 A. It didn't work, no.

25 Q. And do you know why?


259

1 A. Yeah, because there was a -- the formation of

2 hydrates in the -- in -- in the structure, and, you

3 know, it was a -- it wasn't designed for operating in

4 5,000 feet of water.

5 Q. Was that a foreseeable problem going in?

6 A. It was --


8 A. It was, I think, foreseeable as much it was

9 identified as a risk of failure. But given that we

10 could create it easily, and quickly, it was worth a try

11 to see whether it could actually do anything by way of

12 containing the oil and gas. And -- and it was not done

13 in any way at the expense of the other interventions

14 that came later.

15 Q. Was there any attempt, to your knowledge, to

16 mitigate the risk of hydrates forming in the design and

17 implementation of the cofferdam?

18 A. Not -- not particularly, no, because it was --

19 what we were use -- do -- using was something that we

20 could sort of deploy because it was available. So the

21 mitigation of hydrates came in subsequent

22 interventions, where we would -- we had had the time to

23 design and build hydrate mitigation capability, such as

24 the ability to pump hot water from the surface up and

25 down the production string, which is what occurred with


260

1 the various capping mechanisms and the riser insertion

2 tool.

3 Q. What came after the cofferdam, do you recall?

4 A. I think the next int -- intervention was

5 the -- the so-called riser insertion tool, which was a

6 pipe that we inserted into the end of the broken riser,

7 and were able to produce some quantities of oil and gas

8 from it.

9 Q. And where was that gas being taken, the oil

10 and gas being taken?

11 A. It was -- the gas -- the -- the oil was being

12 collected on the surface and the gas was being flared.

13 Q. Did BP have enough containment vessels on the

14 surface to handle the amount of oil being taken out of

15 the riser by the riser containment tool?

16 A. Well, at the time of the riser insertion tool

17 broadly, I think the answer is yes.

18 Q. All right. Are you sure about that?

19 A. I'm most -- I -- no -- I -- I can't remember

20 the details, but the riser insertion tool never

21 produced a great deal of oil.

22 Q. That's -- I was -- my next question was going

23 to be: Do you have any idea on a daily basis, whatever

24 measurements you're comfortable with, how much oil was

25 being trapped?


261

1 A. I -- I can't re -- recall the precise numbers.

2 I know it was very variable. It was very variable

3 because of the nature of the riser insertion tool and

4 the nature of the intermittent flow from the well. The

5 well was flowing intermittently. The riser insertion

6 tool was moving around in a gas and oil flow, so the

7 flow rates were very variable over a period of time.

8 I -- I can't recall what we -- what we deemed the

9 average to be at that time.

10 Q. Did the riser insertion tool require design by

11 the team, or was that a tool that was already available

12 and just brought in and used?

13 A. It was a -- it was a tool that was modified,

14 really, and it was -- it was -- there were some

15 rudimentary pieces of equipment that could be rapidly

16 modified to correct the riser insertion tool.

17 Q. And who was in charge of the modifica -- who

18 created the modifications?

19 A. The person in charge of the containment effort

20 was Richard Lynch.

21 Q. And -- and likewise, was the cofferdam

22 something that had to be designed from scratch?

23 A. The cofferdam was available in Foshan. It's a

24 piece of equipment that we had used successfully

25 following Hurricanes Rita and Katrina to contain


262

1 leaking oil from shallow -- shallower water wells.

2 Q. So it was being tested in a deeper water

3 situation?

4 A. It was being tested for the first time in

5 deepwater.

6 Q. Okay. So that piece of equipment was

7 available, it just had to be brought out and put in

8 place?

9 A. Yeah.

10 Q. After the cofferdam, the riser insertion tool,

11 what was the next step, do you recall?

12 A. The next step was -- I think the terminology

13 was a capping stack. It was a -- a containment. As it

14 implies, it was like an up-turned cup that was put over

15 the -- over the flow to produce oil and gas to surface.

16 Q. And did that work?

17 A. It worked to some degree, and then following

18 that, we created a -- a containment -- a capping stack

19 which could actually be landed on top of the wellhead.

20 Q. Do you recall there being a top kill effort,

21 as well?

22 A. I do.

23 Q. Where did the top kill effort come, if you

24 remember, in this --

25 A. The top kill effort was post, I think, the


263

1 riser insertion tool and prior to the implementation of

2 the major capping stack, is my recollection.

3 Q. Now, if I understand it correctly, the -- the

4 top kill is essentially attempting -- an attempt to

5 regain hydrostatic pressure over the well as you would

6 try to maintain while you're drilling a well?

7 A. I mean, in essence, it's an -- it's an effort

8 to pump from the surface against the flow -- flow of

9 the well, to stop the flow.

10 Q. Okay.

11 A. I mean, it's -- it's -- it's a combination of

12 pumping at pressure heavy material to, as you say,

13 overcome the hydrostatic pressure.

14 Q. And did BP have available the sufficient

15 amount of volume and weight of mud to pump into the

16 hole in this -- in the Macondo Well for the capping

17 stack, excuse me, for the top kill effort to be

18 successful?

19 A. We certainly had a lot of -- we had a lot of

20 mud and a lot of material. It -- it was clear that the

21 top kill operation was only going to be successful

22 under some circumstances. And we judged, I think, at

23 the time, the likelihood of success to be between 50

24 and 60 percent, and it was seen in the -- in the

25 outcome, we were unsuccessful.


264

1 Q. And why was it unsuccessful?

2 A. Well, I -- I think -- I -- I don't honestly --

3 I haven't followed all of the analysis that has

4 subsequently taken place. But it is likely to being

5 that for two reasons: Were -- there were -- there were

6 two approaches to the top kill: One was to simply

7 overcome the well with pressure. And the second was to

8 try and create a bridging mechanism in the blowout

9 preventer to reduce the flow and then to pump.

10 So the first attempt was to just overcome

11 the -- overcome the flow with -- through sort of

12 pumping high pressure mud, high pressure, high density

13 mud. The second one required us to try and reduce the

14 flow through the blowout preventer. Both of them

15 failed. We weren't able to pump hard enough in the

16 first case. And in the second case, we were never able

17 to create a bridge within the blowout preventer to, in

18 any way, inhibit the flow. Why -- why that was, is --

19 I -- I don't know.

20 Q. All right. As -- as part of the top kill

21 effort, are you aware of any BP personnel who attempted

22 to determine the rate of flow so the amount and weight

23 of mud could then be calculated, in terms of trying to

24 successfully kill the well?

25 A. There were certainly estimates to try and


265

1 estimate under what circumstances the top kill could

2 work and on what circumstances it would not.

3 Q. And what do --

4 A. I don't remember the details of it now.

5 Q. Do you know what methods BP employed

6 specifically to determine the -- the flow rate --

7 A. I don't --

8 Q. -- as part of the top kill?

9 A. -- I don't know the specific.

10 Q. Do you know who was involved in that?

11 A. I don't know, no, I don't -- I'm afraid I

12 don't know who the -- who -- who was actually doing the

13 calculations, I don't know.

14 Q. So in terms of who would have made the flow

15 rate calculation to and then -- to -- to then in turn

16 decide volume and mud that would be required to --

17 A. Well --

18 Q. -- kill the flow --

19 A. No --

20 Q. -- you have no knowledge that?

21 A. -- we -- we -- yeah, but I just want to be

22 clear that the -- we gave it the maximum volume and mud

23 and pumping pressure. So it was not like it was

24 designed against a specific parameter. It was -- and

25 we -- we -- we maxed out on the surface facilities in


266

1 terms of our ability to pump --

2 Q. So --

3 A. -- and the volume we pumped and the density of

4 the mud that we pumped.

5 Q. Okay. So in terms of the available surface

6 equipment that you had to mix and create as -- as heavy

7 a density mud as you could and pump it as fast as you

8 could, you pushed the available equipment and

9 technology to its limit?

10 A. We did.

11 Q. Having said that, the top -- the -- the

12 pumping of the mud still could not abate the flow?

13 A. That's correct. It's unclear why it couldn't

14 abate the flow, but that's correct.

15 Q. Well, does that at least tell us that the flow

16 rate surpassed the capacity, the technological

17 capacity, of BP and the industry at that point to put

18 enough volume and weight of mud into the hole to kill

19 it?

20 A. I -- I think it -- I -- if -- I -- I'm -- I'm

21 not sure my memory is correct in this, but my

22 recollection is that if the well was flowing above

23 18,000 barrels a day, then the top kill operation,

24 through the pumping solely the mud was not going to be

25 successful.


267

1 Q. Did BP come to the conclusion, to your

2 knowledge, that this well was flowing in excess of

3 18,000 barrels a day?


5 A. I -- I -- I think that there were all sorts of

6 analyses going on at that time that suggested the well

7 was flowing -- I think there was a -- my recollection

8 is the Flow Rate Technical Group, which was the

9 Government body, suggested flow rates in between 12 and

10 18,000 barrels a day around this time.

11 Our -- the -- the results from the top kill

12 operation were not inconsistent with that.

13 Q. (By Mr. Sterbcow) Well, if it had been flowing

14 at 12,000 barrels, given --

15 A. We probably -- we probably, but not for

16 certain, would have been able to overcome it. But the

17 answer is "Probably," because it depended on, you know,

18 the configuration of the blowout preventer, the

19 configuration of the casing. So I -- I -- you know, at

20 the time when I left involvement with all of this,

21 in -- you know, the end of July, all of the -- all of

22 that analysis was not complete.

23 Now, I honestly don't know whether it has been

24 completed and there is a definitive view as to at what

25 point the top kill failed and why.


268

1 Q. But can we conclude from your knowledge and

2 what happened, that at least there was not existent

3 equipment and technology to allow BP to pump sufficient

4 mud, weight and volume, into this well, given its rate

5 of flow, to kill it?

6 MR. WEBB: Object --

7 MR. GODFREY: Objection as to --

8 Q. (By Mr. Sterbcow) It just didn't have --

9 MR. WEBB: -- objection to the form.

10 MR. GODFREY: -- form.

11 Q. (By Mr. Sterbcow) -- the capability to do

12 that?

13 A. Well, we -- we didn't -- that is one

14 interpretation. I'm -- I'm -- I'm not being cute.

15 It's one interpretation. There were other

16 interpretations at the time as to why the top kill

17 failed. And -- and I do not know whether they have

18 stood the test of time or not.

19 Q. Do you know what those other indications --

20 A. It was --

21 Q. -- were?

22 A. -- about the -- the flow through the choke and

23 kill lines and into the blowout preventer. What was

24 the flow path that we were actually achieving versus

25 the flow path that we believed we were achieving.


269

1 Q. And do you --

2 A. I --

3 Q. -- know if anybody has looked into those --

4 A. Well, I --

5 Q. -- considerations?

6 A. -- I -- I -- I don't know. I -- I imagine

7 they have, but I don't know.

8 Q. Okay. As you sit here today, though, have you

9 reached any conclusion that the Macondo Well was more

10 likely than not flowing at least at a rate of 18,000

11 barrels a day?


13 A. I -- yeah, I honestly haven't reached any

14 conclusions as to what the flow rate was at any

15 particular time. It -- it clearly evolved over time,

16 as restrictions on the well were removed.

17 Q. (By Mr. Sterbcow) H'm --

18 A. It's clear that -- what is clear to me is that

19 in the very early part of the accident, in the -- in

20 the -- in the first days, there was flow that was

21 coming through the blowout preventer, through a piece

22 of drill pipe, a longer piece of riser that was wrapped

23 round the fl -- all over the seabed, with many

24 constrictions and restrictions on flow.

25 And certainly the videotape at the time then


270

1 didn't appear to show very high flow.

2 Q. Did the flow increase over time?

3 A. It -- the flow increased over time, and it in

4 particular increased over time when we began to cut

5 away the restrictions on the riser such that we could

6 implement the capping stacks. That's when the major

7 increase in flow appeared to occur.

8 Q. So is it fair to say that the ultimate method,

9 the capping stack method that ultimately stopped the

10 flow, actually required BP to increase the flow over a

11 given period of time before it could then be stopped?

12 A. It require --


14 A. -- it required us to cut off the riser.

15 Q. (By Mr. Sterbcow) Which then increased --

16 A. Which --

17 Q. -- the flow?

18 A. -- by definition, would have increased the

19 flow for a brief period until we put the capping stack.

20 Q. All right. Do you recall whether or not the

21 Exploration Plan submitted by BP to the MMS provided

22 the Federal Government with a specific number of how

23 many barrels per day flow BP was capable of responding

24 to in a disaster like this?

25 A. I think the Oil Spill Response Plan referred


271

1 to our ability to respond on the surface. And I -- I

2 believe that the number was -- I think around 160,000

3 barrels a day. And it -- it was specifically about the

4 ability to respond on the surface.

5 Q. And -- and --

6 A. Of course, it was a -- a -- a plan that was

7 approved by the relevant authorities.

8 Q. I -- I understand that. Did the relevant

9 authorities rely on BP to be accurate and truthful in

10 their estimates?



13 A. I don't think there was any evidence

14 suggesting we weren't accurate and truthful in our

15 estimates.

16 Q. (By Mr. Sterbcow) Well, was BP capable of

17 responding to this spill on the surface at 160,000

18 barrels a day?

19 A. Well, we responded to it in very

20 significant -- significant measure. It -- the -- it --

21 the -- the -- the plan required us to still respond.

22 We responded.

23 Q. I understand.

24 A. 48,000 people, 7,000 boats, hundreds of planes

25 and helicopters, 30 million feet of boom.


272

1 Q. And yet oil still reached the coasts of

2 Louisiana, Mississippi, and Alabama.


4 Q. And --

5 A. Very regretfully.

6 Q. -- and oil still killed a lot of the wildlife

7 along those coasts, correct?


9 A. There was certainly wildlife killed.

10 Q. (By Mr. Sterbcow) And oil still shut down the

11 fisheries industries in Louisiana, Mississippi, and

12 Alabama, correct?


14 A. Well, the fishery industries were of course

15 shut down by the Government, consequent on a concern

16 about the extent of the oil.

17 Q. (By Mr. Sterbcow) Was that a legitimate

18 concern?


20 A. I'm sorry, it certainly was in some -- in some

21 respects.

22 Q. (By Mr. Sterbcow) Are you aware of documented

23 effects that the oil and the toxicity caused by the oil

24 and the dispersants has had on the oyster, the shrimp,

25 the crab, and fishing industries in South Louisiana,


273

1 Mississippi, and Alabama?

2 A. Well, I --


4 A. -- well, I haven't seen the documented

5 evidence.

6 Q. (By Mr. Sterbcow) Have you seen documented

7 evidence of exactly where this oil has been seen to

8 have gone?

9 A. Well -- well -- well, I had seen documented

10 evidence up until the time I was no longer involved.

11 Q. Which would be late July?

12 A. So late July, early August. And at that

13 point, I was no longer involved.

14 Q. Would you agree with me that oil having

15 reached the shoreline polluted the beaches and the

16 marshes and done the damage to the wildlife and

17 fisheries that have been documented, indicate that BP,

18 in fact, was not capable of responding to 160,000

19 barrels a day on the surface?



22 A. I -- I think the issue is that the Oil Spill

23 Response Plan, which was approved by the authorities,

24 made no guarantees that oil would not reach the shore.

25 That -- that may be what people have -- could have


274

1 expected, but it -- it did not make any guarantees.

2 And, in fact, that was the basis for all Oil

3 Response Spill Plans, in the Gulf of Mexico and

4 elsewhere.

5 Q. (By Mr. Sterbcow) Did the BP Exploration Plan

6 specifically tell the authorities that, because this

7 well was 48 miles offshore, that it was highly unlikely

8 that oil would ever reach the beaches, and it was not a

9 concern?


11 A. No, I don't know.


13 A. I honestly can't remember what it -- precisely

14 what was said in the Oil Spill Response Plan.

15 Q. (By Mr. Sterbcow) So you don't know if that

16 language is in there one way or the other?

17 A. No.

18 Q. At the end of the day, as of the time that you

19 left the company, what were you told by BP Officials

20 was the daily oil flow rate?

21 A. There were --

22 MR. GODFREY: Objection. Could you

23 re-read that? I didn't hear the question. I'm sorry.

24 Q. (By Mr. Sterbcow) And I'll rephrase it, make

25 it easy. As of the time that you left --


275

1 A. M-h'm.

2 Q. -- what was your understanding and what had

3 you been told by BP Officials as to what the oil --

4 daily oil flow rate was at Macondo?

5 A. Well, there was --


7 A. -- there wasn't a BP view of the flow rate.

8 From quite early in this accident, the Flow Rate

9 Technical Group, the Government body, was established,

10 and they assumed responsibility and accountability for

11 estimates of flow rate. So there was information being

12 passed to them. I wasn't part of that information

13 flow.

14 But the fact is the flow rate was actually not

15 in any way important in determining how we responded.

16 We responded with everything we could conceive of, from

17 the very beginning. And it -- the flow rate was never

18 something that I spent very much time on, because we

19 were trying to stop the well. And, you know, we were

20 deploying multiple interventions. And, of course,

21 ultimately, we succeeded in stopping the well, well

22 ahead of when the relief wells would have been done.

23 Q. How long did it take -- well, first, back up?

24 Let me back up and ask you this: Who designed

25 the ultimate capping stack device that worked?


276

1 A. Richard Lynch's team.

2 Q. So that was BP?

3 A. With input from many people.

4 Q. How long did it take Mr. Lynch's team with

5 input from third parties to design and build that piece

6 of equipment?

7 A. Well, it was finally deployed, I think,

8 something between 80 and 90 days after the spill

9 started.

10 Q. So from the time that the spill started -- and

11 I -- and -- and let me make sure I'm clear, prior to

12 this spill BP made no effort to design such a device,

13 correct?

14 A. That's correct, because we believed that the

15 blowout preventer would mitigate such a need for it.

16 Q. Okay. From the time that it became apparent

17 within a day or two of the spill that such a device

18 would be needed, it took approximately how long?

19 A. It was, I think, of the order of 85 to 90 days

20 from the spill to when we finally stopped the well.

21 Q. And how much did it cost?

22 A. I have no idea. Cost was never an issue.

23 Q. Do you have -- well, I think you may have

24 answered my question.

25 Was there no effort to design, build, and have


277

1 available such a device prior to April 20, 2010,

2 because BP assumed that the blowout preventer at

3 Macondo and every other place where BP was drilling a

4 deepwater well in the Gulf would, in fact, prevent an

5 accident like this?


7 A. Along with every one else in the industry. We

8 believed in the even of a blowout, the blowout

9 preventer, as it name -- the name implies, would stop

10 the blowout.

11 Q. (By Mr. Sterbcow) Let me show you --

12 MR. STERBCOW: Let's go to 3, Billy.


14 MR. GODWIN: Did you say Tab 5?

15 MR. STERBCOW: Tab 3.



18 MR. GODFREY: What exhibit is this?

19 MR. STERBCOW: This is -- I don't know.

20 Which one are we on?


22 MR. STERBCOW: 6029.

23 Q. (By Mr. Sterbcow) The top one -- actually you

24 have to read from the from the bottom, is an E-mail

25 from Scherie Douglas to Marty Rinaudo, Friday, December


278

1 8, 2006, where they're talking about a different well

2 in the Gulf of Mexico. And the reference specifically

3 is to a 13-day extension that this rig needed for its

4 thirteen and five-eighth inch casing test. And it

5 specifically references a 13-day shutdown during those

6 days repairing a failed ram on a BOP stack.

7 I take it in your position this is not the

8 type of event that you would be familiar with, correct?

9 A. I'm afraid not. No, I'm sorry.

10 Q. Who within -- within BP's Drilling and

11 Completions Division in Houston in 2006 kept track or a

12 record of events like failed rams on B -- BOP stacks in

13 the Gulf?

14 A. I don't know.

15 Q. Do you know if anybody did?

16 A. I don't know for a fact whether anyone did or

17 didn't.

18 Q. Okay. If you flip to the next one, which is

19 MBI 37507 and 37508, and you have to read from 08

20 forward because it's an E-mail chain. This is from

21 Kevin Lacy, who was basically in charge of safety in

22 Drilling and Completions Gulf of Mexico at this point,

23 updating Transocean performance, and he's asking those

24 below him with BP whether they have -- want to flag any

25 significant issues with Transocean's performance.


279

1 And the response is the current well, Cortez

2 Bank, had top quartile performance, however there is

3 evidence that there were BOP ram failures on the Cortez

4 Bank.

5 First of all, I'm assuming you have no reason

6 whatsoever to disagree with Mr. Sims' response to

7 Mr. Little, all of whom are in Drilling and Completions

8 in the Gulf of Mexico, the Transocean Horizon

9 performance remained excellent. You have no -- no

10 reason --

11 A. I've -- I've obviously not seen this before.

12 I --

13 Q. Were you --

14 A. -- have no memory.

15 Q. -- informed either directly or indirectly at

16 any time while the DEEPWATER HORIZON was spending ten

17 years drilling for BOP in deepwater Gulf of Mexico that

18 there was a problem with the qualifications or

19 performance of the Transocean DEEPWATER HORIZON rig

20 crew?


22 A. I wasn't informed of that.

23 Q. (By Mr. Sterbcow) Do you have any reason, as

24 you sit here today, to think that they were

25 undertrained, underqualified, or in any way incompetent


280

1 in doing their jobs in drilling deepwater wells in the

2 Gulf of Mexico for BP?


4 A. I think if you look at the results of the Bly

5 investigation it raises serious issues with a whole

6 number of companies, BP, Transocean, and Halliburton --


8 A. -- and some of those are to do with

9 potentially training. That's what the Bly

10 investigation found.


12 Q. (By Mr. Sterbcow) So would --

13 A. I have no prior knowledge.


15 Q. (By Mr. Sterbcow) That's what I was going to

16 ask you.

17 A. All I'm basing it on is what I've read in the

18 Bly Report.

19 Q. In the Bly Report?

20 A. Yeah.

21 Q. Okay. You have no other source of

22 information --

23 A. I have no other source of information, no

24 prior knowledge.

25 Q. All right. The E-mail above Mr. Sims' E-mail


281

1 is Little E-mailing back to Sims: "I guess at this

2 stage we don't want to raise any flags around BOP ram

3 failures?" And then at the top, Sims tells Little:

4 "My inclination is not say anything at this time. I

5 can't point to anything that TOI has done wrong to

6 cause the failures. Also, we drove the decision to

7 install test rams and put ourselves in this position of

8 having to pull the stack if one ram fails."

9 Would you agree with me that BOP through

10 Mr. Sims Drilling and Completions Gulf of Mexico admits

11 to, number one, Transocean not causing or contributing

12 to any BOP problems and, two, BO -- BP is the one who

13 drove the test ram decision and decreased the ability

14 of the brow -- blowout preventer to prevent a blowout?


16 question for several reasons.


18 A. That is what this E-mail out of context

19 appears to say. But I'm going to say, I didn't -- I'm

20 not in a position based on a one-line E-mail to make a

21 judgment one way or the other. I'm sorry.


23 Q. (By Mr. Sterbcow) Last E-mail, and we'll take

24 a break. This one is March 22nd, 2010, from Mr. Peijs

25 one month before Macondo. Do you have that E-mail?


282

1 A. Yeah. I found it, yeah.

2 MR. GODWIN: What Tab is that, Paul?

3 MR. STERBCOW: It's still Tab No. 3.

4 It's Bates 4792.

5 Q. (By Mr. Sterbcow) It talks about Macondo

6 actually sidetracking at 13,305 depth after taking a

7 kick. Then just below that, it talks about the Tucker

8 Well, set thirteen five-eighths casing at 24,160 feet.

9 "BOP failed; pulled riser and BOP stack to fix."

10 Would you consider this a fail-safe piece of

11 equipment?


13 A. I think there is no basis to assess one way or

14 the other based on one line in an E-mail which talks

15 about BOP failed, whether it is or isn't.

16 Q. (By Mr. Sterbcow) So from these E-mails, you

17 wouldn't even -- it would not even raise a concern to

18 you that maybe the fail-safe last line of defense to a

19 disaster like this one may have an issue with ongoing

20 failure problems?


22 A. We know nothing about what failure they're

23 referring to. Is it fundamental? Is it -- I mean,

24 what is it? I don't know. I don't know.

25 Q. (By Mr. Sterbcow) So you just --


283

1 A. So -- so in the event that it was shown to me,

2 I would probably make some inquiries, but, you know,

3 I'm not in a position to make that sort of judgment

4 based on this.

5 Q. Can you at least conclude that this piece of

6 equipment is not fail-safe?



9 A. I don't think you can conclude that, no.

10 Q. (By Mr. Sterbcow) Why is that?

11 A. Well, because in many fail-safe pie -- pieces

12 of equipment, there are, you know, ongoing tests that

13 demonstrate you need to make an intervention to -- you

14 know, to reaffirm its -- its worthiness, its

15 robustness. So I -- you know, I don't think that this

16 here can lead us to a conclusion that a BOP is not a

17 fail-safe piece of equipment. That's what it's clearly

18 designed to be.

19 Q. It is designed to be a fail-safe piece of

20 equipment as long as it is designed to handle the

21 environment it's in and the folks who are repairing,

22 maintaining, and inspecting it or doing their jobs and

23 the folks who are operating it are doing their job?

24 A. That's right.



284


2 Q. (By Mr. Sterbcow) Is that correct?

3 A. That's correct. And as I -- as I understand

4 it, this was a Transocean blowout preventer on a

5 Transocean drilling rig where the responsibility for

6 maintaining the equipment was clearly with Transocean.

7 Q. And so we'll take a break. We'll leave it at

8 that for now.

9 Your understanding, then, as the former CEO of

10 BP is that maintenance, repair, and operation of the --

11 of the blowout preventer at the Macondo Well, either by

12 practice in the industry, practice by BP, or pursuant

13 to Federal law governing this operation is solely the

14 responsibility of Transocean?



17 A. I didn't say solely responsibility. I do

18 believe, though, that we expect that under drilling

19 contracts to have an operating piece of equipment

20 called a blowout preventer.

21 MR. STERBCOW: Well, let's -- we'll take

22 a break now.





285


2 MR. GODFREY: Ready.


4 3:41 p.m., beginning Tape 6.

5 Q. (By Mr. Sterbcow) Okay. We're going to go to

6 Tab 6. Let's see here. And it's 60 --


8 MR. STERBCOW: Here you go, Dan.


10 Q. (By Mr. Sterbcow) Dr. Hayward, this is an --

11 an E-mail dated March 6, 2010, about six weeks before

12 the HORIZON, from Tim Burns to David Sims and Keith

13 Daigle, both of whom with D&C in --

14 A. M-h'm.

15 Q. -- Houston, referencing the MAERSK DEVELOPER.

16 First of all, just generally, are you -- are you

17 familiar with the MAERSK DEVELOPER?

18 A. No.

19 Q. Okay.

20 A. I -- I -- I haven't seen this --

21 Q. There's a picture of it on the second page.

22 It's a drillship fairly similar to DEEPWATER HORIZON,

23 but it operated in the Gulf of Mexico. And the team in

24 Houston was compelled to put together a PowerPoint

25 presentation regarding "Subsea BOP Failures" associated


286

1 with this particular rig. And if you go to the third

2 page, which is Bates 1879, under "Introduction," it

3 talks about "The..Developer commenced contract on 10

4 September '09," and in the ensuing -- December -- about

5 four months or so, it had developed "more than 50 days

6 of downtime related to the BOP." Many were prob --

7 problems that "required stack pull."

8 And the problems including -- included a

9 number of things, choke stab leaking, electrical short

10 on the control, and cap screw failure on the 22-inch

11 blind shear ram operators.

12 The "1st attempt," if you go to the next page,

13 "found older revision software on the drillers chair"

14 for the EDS, which "resulted in an incorrect sequence

15 of the EDS."

16 First of all, I assume in your position, you

17 would have no knowledge of any of these issues,

18 correct?

19 A. I'm afraid not, no.

20 Q. Do you know whether anybody in Houston in

21 Management of Drilling and Completions, beyond

22 preparing a PowerPoint and discussing it, actually took

23 any affirmative steps to investigate the performance of

24 this BOP and any design problems that may have existed?



287

1 A. Well, I -- I don't know anything about this.

2 This is the first time I've seen it, and I have no idea

3 what -- what was done with this presentation.

4 Q. (By Mr. Sterbcow) If you go to, let's see,

5 Bates Stamp 1886, you'll see that there were problems

6 involving erroneous readings at 5,000 feet water depth,

7 with blo -- both the blue and yellow pods when running

8 the BOP -- pieces of the BOP that were specifically

9 cited by the Bly Report. Do you recall that?

10 A. M-h'm, I do.

11 Q. Are you aware of any ongoing problems with the

12 blue and yellow pods on BOPs utilized by BP in

13 deepwater drilling 5,000 feet in the Gulf of Mexico?


15 A. No, I was not aware of any.

16 Q. (By Mr. Sterbcow) And you were never made

17 aware of any such issue?

18 A. No.

19 Q. All right. If you go to Bates 1896 of the

20 same PowerPoint, entitled "Failsafe Close Assist

21 Circuit Failure," it says, "Several leaks have been

22 encountered with the failsafe close assist circuit.

23 Swagelock fittings have failed on two different

24 occasions and pressure relief valves have failed."

25 Do you think it's a misnomer to label this


288

1 bi -- this piece of equipment or any component part

2 "fail-safe"?


4 A. I'm -- I'm not able to make that judgment. I

5 mean, it said -- encountered with the "Failsafe Close

6 Assist Circuit." I don't know what the "Failsafe Close

7 Assist Circuit" is, so --

8 Q. (By Mr. Sterbcow) But have you, since Macondo,

9 ever gone back and questioned BP's decision to consider

10 this a fail-safe piece of equipment when it's

11 mechanical equipment dependent on so many factors to

12 work properly?

13 A. I -- I think -- I haven't, but I think that

14 the industry generally is -- has looked at the nature

15 of BOPs and their reliability. I know that to be the

16 case.

17 Q. Do you know if BP specifically has done --

18 A. I --

19 Q. -- anything in that regard?

20 A. I certainly know that it was started, and I

21 have no idea what happened to it after I left.

22 Q. You a -- you concur that that's something that

23 absolutely needs to be done in deepwater drilling?

24 A. I do.

25 Q. If you go to 1898, Bates 1898, there was a


289

1 "major fluid run away." A "leak was discovered to be

2 coming from the blind shear ram." Let me ask you: Do

3 you know what the blind shear ram is designed to do in

4 the BOP?

5 A. Yeah. It's designed to cut the drill pipe in

6 the event of a blowout.

7 Q. Would you agree with me that of all the BOP

8 components, the blind shear ram is the most critical

9 well control blowout prevention device?



12 A. In the event of a well blowing out, the blind

13 shear ram is the most important piece of kit to stop it

14 blowing out.

15 Q. (By Mr. Sterbcow) Okay. And -- and do you --

16 are you aware of whether or not engaging the blind

17 shear ram also engages other protective devices, like

18 the emergency disconnect automatic function mode,

19 things of that nature?

20 A. My understanding is it is the engage --

21 engaging the ESD that activates the blind shear ram.

22 Q. Okay.

23 A. Not the other way around.

24 Q. And not the other way around.

25 A. Right.


290

1 Q. And -- and you know from, obviously,

2 experience in looking into the Macondo incident that

3 the ESD and blind shear rams on the BOP there failed?

4 A. Correct.

5 Q. All right. Wa -- had anybody made you aware,

6 or anybody within BP aware, to your knowledge, that the

7 cap screws from the blind shear rams on this BOP were

8 manufactured from a type of stainless steel that was

9 subject to hydrogen embrittlement in marine

10 environments?


12 A. I wasn't aware of anything of this BOP

13 analysis.

14 Q. (By Mr. Sterbcow) Do you know whether or not

15 the BOPs being used by BP in the Gulf of Mexico were

16 vulnerable to hydrogen embrittlement in the blind shear

17 ram component?


19 A. No.

20 Q. (By Mr. Sterbcow) You don't have any knowledge

21 of that?

22 A. I have no knowledge.

23 Q. All right. If we go to Tab 7 --




291

1 MR. STERBCOW: Sorry (Tendering.)



4 Q. (By Mr. Sterbcow) -- a Sunday, April 4, 2010

5 E-mail, 16 days before the Macondo incident. Again, we

6 go back to the Tucker Well that we discussed earlier.

7 If you go down one, two, three, four, five, six, seven

8 to "Day 199" of drilling, "March 29, 2010: Ran BOP to

9 1777...tested failsafe valves - failed." Had to "pull

10 the BOP and riser to repair..."

11 "Day 198: Run BOP to 202 feet and test choke

12 and kill in boost lines - failed. Pull BOP to repair

13 blue conduit line."

14 Knowing that you've never seen this before,

15 seeing these E-mails and hearing this information now,

16 does it lead you to question BP's reliance on this

17 piece of equipment the way it did?



20 Q. (By Mr. Sterbcow) And why is that?

21 A. Well, what -- what they seem to be doing is

22 testing to ensure that they're working, and when they

23 aren't working, they're intervening. And they're not

24 ac -- they're not deploying them until they -- they're

25 confident that they're working.


292

1 Q. And you noticed the E-mails are written by BP

2 representatives and to BP employees who are intimately

3 involved in both the testing and response thereto?

4 A. This is the -- I think this is the BP Drilling

5 Report, isn't it, right?

6 Q. Correct. Correct.

7 A. Which is -- is a Drilling Report.

8 Q. So BP has knowledge on an ongoing basis of --

9 of -- of blowout preventer testing, failure of

10 fail-safe valves, et cetera, and efforts or lack

11 thereof to address these issues --

12 MR. GODFREY: Same objection --

13 Q. (By Mr. Sterbcow) -- based on these reports?


15 A. Certainly has knowledge of the status of the

16 blowout preventer.

17 Q. And would you --

18 A. In this -- in the -- in the instance we're

19 talking about here.

20 Q. Would you have any reason to believe that the

21 Tucker blowout preventer reporting would be any

22 different than any other deepwater well in the Gulf of

23 Mexico?

24 A. No.

25 Q. So would it be fair to conclude that whether


293

1 we're talking about Tucker, Kaskida, Macondo, whatever

2 the deepwater well may be with BP as lessee, BP is

3 involved regularly in testing, test results,

4 maintenance, followup, to ensure that the BOPs are

5 functioning properly?

6 A. I think we're involved --


8 A. -- ensuring that tests are conducted. The

9 people performing the tests, I'm certain, are the

10 drilling contractors' operatives on the rig.

11 Q. (By Mr. Sterbcow) And do you think BP had any

12 responsibility, given its position that the BOP was the

13 last line of defense, to follow up to ensure that any

14 maintenance and repair that needed to be done, got

15 done?

16 A. You can say --


18 A. -- that in this case, there is -- we are, and

19 I'm certain that that's the case.

20 Q. (By Mr. Sterbcow) Do you have any reason to

21 believe that the BP Well Team Leaders, Well Site

22 Leaders, ensured that regular maintenance and testing

23 was done on the BOP at Macondo? Do you know whether

24 they did --

25 A. I don't know.


294

1 Q. -- one way or the other?

2 A. I don't know.

3 Q. Did you learn at some point following this

4 accident that this particular BOP was out of

5 certification? Have you ever heard that?

6 A. I -- I was made a -- aware of that in the

7 course of the investigation.

8 Q. Were you made aware of the fact that BP was

9 aware of the fact that it was out of certification?


11 A. I honestly can't recall that I was made aware

12 of the fact that we were aware of the fact that it was

13 out of --


15 A. -- certification.

16 Q. Do you know whether BP either knew -- or

17 should they have known -- should the company have

18 known, those involved, that the blowout preventer being

19 relied on as the fail-safe, last line of defense at

20 Macondo was out of certification as of the night of the

21 blowout?

22 MR. WEBB: Form.


24 A. We -- we probably should have known, and we --

25 we -- I would have hoped that the contractor would have


295

1 known and done something about it.

2 Q. (By Mr. Sterbcow) Did BP have any process in

3 place at that point in time, to your knowledge, through

4 OMS, the predecessor to OMS, whereby BP ensured that

5 its blowout preventers being relied upon as the last

6 line of defense, fail-safe, last line of defense, were

7 in certification, and if they weren't, such a problem

8 was addressed immediately?

9 A. I don't know.


11 Q. (By Mr. Sterbcow) You don't know one way or

12 the other?

13 A. I don't know.

14 Q. If you turn to the next page in this same Tab,

15 it should be a June 11, 2010 letter, and it's

16 Bates-stamped 459, 460, addressed to the Honorable Jeff

17 Bingaman, Chairman, Committee on Natural -- on Energy

18 and Natural Resources. And the letter is written on

19 behalf of BP in response to a May 17, 2010

20 correspondence to Mr. Lamar McKay.

21 If you go to the next page, Page 460, it

22 confirms what we've been talking about under Subsection

23 (d). "This data for the Deepwater" -- referencing

24 "Blowout Preventer Digital Test Data. This data for

25 the Deepwater Horizon was provided electronically to BP


296

1 by the contractor."

2 Again, you have no reason to disagree with

3 that, do you?

4 A. No.

5 Q. Okay. And, again, you have no knowledge of

6 any process, safety process, whatever name we're going

7 to call it, that BP had in place to ensure that any

8 problems noted in the data for the DEEPWATER HORIZON

9 provided electronically to BP were addressed to ensure

10 that the -- that the blowout preventer functioned

11 properly? You don't know?

12 A. I've got no knowledge of what processes may or

13 may not exist.

14 Q. Okay. If you would turn to -- it's Page 11 of

15 the letter, and it's Page 469, Bates stamp 469. No. 14

16 of the inquiry was: "Testimony was received to the

17 effect that the shear ram of the blowout preventer was

18 known to be unable to cut through certain material in

19 the well, including tool joints and possibly other

20 debris."

21 And in response on behalf of Mr. McKay, it is

22 written: "The 5-1/2 drillpipe tube that was across the

23 BOP stack was capable of being sheared and sealed by

24 the blind shear rams. It is known that the blind shear

25 ram cannot shear the tool joint of the 5-1/2 inch


297

1 drillpipe..."

2 Further down in that paragraph, it says:

3 "There are no other mechanisms available on the BOP

4 stack for the Deepwater Horizon that would shear the

5 drillpipe tool joint."

6 Were you aware of that fact before the

7 accident?

8 A. No.

9 Q. Were you aware of the fact that a high

10 pressure, high temperature well like Macondo could

11 indeed push drill pipe back up through the BOP in event

12 of a loss of well control?

13 A. In the event of a loss of well control, yes.

14 Q. Were you aware of the fact that if that

15 occurred and in fact did occur here, that a tool joint

16 otherwise kept clear of the blind shear ram could be

17 forced into the level of the blind shear ram?

18 MR. WEBB: Objection, form of the

19 question.

20 A. No, I wasn't aware of that.

21 Q. (By Mr. Sterbcow) All right. Would you agree

22 with me that if that foreseeable event occurred and in

23 fact did occur here, that would prevent an otherwise

24 well maintained, in repair, certified blowout preventer

25 from operating as the ultimate fail-safe and sealing


298

1 the well?


3 question.

4 MR. GODFREY: Objection to the form of

5 the question.

6 A. What I don't know is whether that was the case

7 or not. I --

8 Q. (By Mr. Sterbcow) Here.

9 A. I'm not -- I'm not aware as to whether or not

10 it was the tool joint across the blind shear ram that

11 prevented the blind shear ram closing. My

12 understanding from a cursory look at the Presidential

13 Commission is that -- is that is not what was found. I

14 don't know.

15 Q. Did you know before April 20th, 2010, that the

16 foreseeable possibility existed that a tool joint could

17 be forced back up to the level of the blind shear ram

18 and, therefore, prevent it from operating and sealing a

19 well that was undergoing --

20 A. No.

21 MR. WEBB: Object --

22 Q. (By Mr. Sterbcow) -- a well control event in

23 the Gulf of Mexico?




299

1 A. I didn't.

2 Q. (By Mr. Sterbcow) You did not know?

3 A. I wasn't aware of that, no.

4 Q. Do you know if anybody within BP knew that?

5 MR. WEBB: Same objection.

6 A. I -- I have no idea.

7 Q. (By Mr. Sterbcow) All right. If we go to

8 Tab 8 --



11 Q. (By Mr. Sterbcow) (Tendering.)

12 MR. WEBB: Thanks.

13 MR. STERBCOW: Rick.


15 Q. (By Mr. Sterbcow) Tendering 6032, did you know

16 that RB Falcon, in conjunction with BP, commissioned in

17 2001 a study specifically called DEEPWATER HORIZON BOP

18 Assurance Analysis?

19 A. No. I've not seen this document.

20 Q. Before now?

21 A. Before now. I wasn't aware of its existence

22 or of this study.

23 Q. If you could turn, it would be at the top page

24 iii, but it's Bates stamp 53052. It's the "EXECUTIVE

25 SUMMARY" --


300

1 A. M-h'm.

2 Q. -- of what is otherwise a lengthy study. We

3 won't go through the whole thing. But the third bullet

4 point says: "A risk assessment focused on reliability

5 was completed. Engineering and operations personnel

6 from RB Falcon, BP, Cameron, TSF and WEST identified

7 260 failure modes that could require pulling of the BOP

8 or LMRP. It was found that malfunctions of regulators,

9 solenoids, hoses, ST Locks, connectors, shuttle valves

10 and autoshear circuitry were the predominant failures."

11 Were you aware of the fact that as of 2001, BP

12 knew of at least 260 failure modes of the fail-safe BOP

13 aboard the DEEPWATER HORIZON?


15 A. No. I think to be precise what this says is

16 it identified 260 failure modes that could require

17 pulling of the BOP.

18 Q. (By Mr. Sterbcow) Correct. Were you aware of

19 that?

20 A. I wasn't aware of it.

21 Q. All right. Again, does that call into

22 question BOPs reliance on this particular B -- excuse

23 me, BP's reliance on this particular blowout preventer

24 because this is specific to the DEEPWATER HORIZON,

25 which at this time was a year old versus 10 years old,


301

1 does that call into question BP's reliance on this

2 piece of equipment as the final fail-safe prevention of

3 an accident like the one you had on April 20, 2010?


5 A. I can't judge on the basis of this whether

6 that's a -- an appropriate conclusion to draw or not.

7 What is clear is that everyone else in the industry

8 relied on the blowout preventers as the ultimate form

9 of containment in the event of a blowout, and the

10 industry has done that for 50 or 60 years.

11 Q. (By Mr. Sterbcow) Did anyone else in the

12 industry, to your knowledge, have the history of

13 criminal convictions and OSHA violations that BP had in

14 2010?


16 question.

17 A. I'm not aware of all of the history of the

18 industry, but what I am aware of is that the history of

19 BP's drilling in -- in the deepwater Gulf of Mexico was

20 it was deemed by the Regulators to be amongst the very

21 best, in terms of its --


23 A. -- safety performance.


25 Q. (By Mr. Sterbcow) And that deeming of being


302

1 the best would be specifically dependent upon

2 information provided to the Regulators by BP, would it

3 not?


5 A. I believe it was based on information provided

6 and on visits from the Regulator to our facilities.

7 Q. (By Mr. Sterbcow) Do you know that to be a

8 fact?

9 A. "I believe" I said.

10 Q. Okay. I see.

11 A. I don't know it for a fact. I believe that's

12 what it was based.

13 Q. Would you agree with me that Regulators,

14 accepting Exploration plans, accepting dispensations,

15 accepting requests for changes from BP in a deepwater

16 drilling situation, are relying on the operator such as

17 BP to provide truthful and accurate information in

18 making their decisions?


20 A. I'm certain that in all cases, BP provided

21 truthful and accurate information.

22 Q. (By Mr. Sterbcow) So is it your testimony that

23 the 52-page Exploration plan provided to the MMS for

24 the Macondo Well was true -- was truthful and accurate,

25 not only in all respects generally, but specifically


303

1 with respect to spill response information?


3 question.

4 A. As to the best of my knowledge, what was in

5 that re -- that report was accurate.

6 Q. (By Mr. Sterbcow) Have you read it?

7 A. I certainly haven't read it prior to the --

8 the accident. I read parts of it immediately following

9 the accident.

10 Q. Who with BP, if anyone, was charged the

11 respon -- with the responsibility of keeping up with

12 developments in terms of state-of-the-art design and

13 manufacture of blowout preventers?

14 A. I don't know.

15 Q. Do you know if anybody within the Gulf of

16 Mexico, be it D&C or Exploration & Production, was

17 anybody working in Houston with respect to -- to

18 deepwater exploration, production, drilling completion

19 activity, did anyone have any responsibility that

20 focused on knowing and possibly implementing

21 state-of-the-art changes and improvements in blowout

22 preventers in the Gulf of Mexico?

23 A. I'm not aware of who that would be.

24 Q. Do you know whether or not there was any

25 periodic review required of blowout preventers in terms


304

1 of age and history of performance by BP for blowout

2 preventers in use in deepwater drilling in the Gulf of

3 Mexico?


5 Q. Would the OMS that had not yet been

6 implemented have required such procedures, do you know?

7 A. I don't know. It's conceivable it might have

8 done. I don't know.

9 Q. All right. I don't -- I don't recall if you

10 were asked this, but do you know why the OMS didn't

11 make it in terms of implementation to the Gulf by April

12 2010?


14 A. It wasn't a case of not making it. To

15 implement a system such as that, you need to spend many

16 months in preparation. And the Gulf of Mexico had

17 spent many months in preparing to move to OMS and were

18 in the process of moving to OMS. It's not like turning

19 on a light switch unfortunately. It's a process that

20 takes months, indeed years to fully implement.

21 Q. (By Mr. Sterbcow) Have any steps been taken

22 since April 20th, 2010, to implement the OMS program

23 started by you, if you know?

24 A. I don't know. I would hope that they were.

25 They continued and were fully implemented, but I'm not


305

1 aware.

2 Q. Do you know whether or not a comprehensive

3 review of the blowout preventers currently in use by BP

4 in the Gulf of Mexico has been undertaken?

5 A. There was certainly the initiation of activity

6 of that sort, once I was still there. I wasn't around

7 to see it completed.

8 Q. Whether it was completed or not?

9 A. No.

10 Q. Okay. Were you aware in your position of any

11 organizational changes taking place in drilling and

12 completions in the Gulf of Mexico in late 2009 and

13 early 2010?

14 A. No, at the time, I was not aware. I clearly

15 became of them consequently after the accident.

16 Q. And why would you have become aware of those

17 organizational changes?

18 A. It was one of the things that was raised in

19 the course of the -- the -- the response to the

20 accident.

21 Q. Do you recall the Bly Report commenting on

22 that at all?

23 A. I don't recall.

24 Q. Do you know whether or not disorganization

25 within Drilling & Completions and a lack of both


306

1 leadership and clear absolute delineation of duties

2 contributed to this disaster in any way?

3 A. I don't believe I've seen that written

4 anywhere.

5 Q. Do you know whether or not any of the well

6 team or well site leaders were questioning what

7 authority they had and didn't have with respect to

8 operations at Macondo?


10 A. I believe in the course of the Congressional

11 Hearing I was shown an E-mail to that extent. That's

12 the extent of my knowledge.

13 Q. (By Mr. Sterbcow) You don't have any -- any

14 further knowledge --

15 A. No.

16 Q. -- beyond that?

17 A. No.

18 Q. Do you have any knowledge of exactly how Gulf

19 of Mexico Engineering on one side and Operations on the

20 other side was undergoing changes and reorganization

21 specifically?

22 A. I have no detailed knowledge at all.

23 Q. Do you know who was in charge of that,

24 overseeing those changes?

25 A. I believe that the Head of Drilling &


307

1 Completions at the time was Pat O'Bryan. I don't know

2 whether he was overseeing those changes or not, but I

3 think that was the name.

4 Q. Do you know whether those changes were being

5 made pursuant to the OMS implementation effort?

6 A. I don't know whether there was a direct

7 linkage.

8 Q. I -- I assume you've heard that Mr. O'Bryan

9 was actually on the rig?

10 A. Indeed.

11 Q. Have you spoken to him about that?

12 A. I -- I spoke to him, not so much about being

13 on the rig at the time of the accident, but, obviously,

14 he was intimately involved in the response and was part

15 of the response. I periodically met him on the third

16 floor of the Crisis Center in Houston.

17 Q. Okay. He -- he has never told you about what

18 he heard, what he saw, conversations he had, et cetera,

19 on the rig that night?

20 A. He hasn't, no.

21 Q. All right.

22 A. We never talked about it.

23 Q. Speaking of -- of -- I want -- you -- you

24 raise a point I wanted to touch with you briefly. The

25 Operations Center in Houston, do you know what the


308

1 realtime Operating Center capability was in terms of

2 BP's ability to monitor realtime data from the

3 DEEPWATER HORIZON as of April 2010?

4 A. No, I don't.

5 Q. Are you familiar with the facility at all, the

6 West Lake facility, in terms of how it was set up?

7 A. I -- I -- well, I -- I became very familiar

8 with it in the course of the crisis response, so I -- I

9 saw it operating in crisis mode, rather than being

10 familiar with the details of it in normal operation

11 mode.

12 Q. In your opinion, should realtime data from

13 Macondo, and any other deepwater well in the Gulf of

14 Mexico being drilled on BP's behalf, should that data

15 have been monitored 24 hours a day, seven days a week?



18 A. I don't know that I could pass a judgment

19 whether it should or it shouldn't. Well, there were,

20 of course, at least two sets of eyes monitor --

21 monitoring the data on the rig.

22 Q. (By Mr. Sterbcow) Right.

23 A. So could it have made a difference, I don't

24 know.

25 Q. In terms of policy and procedure, we've talked


309

1 about industry-wide practice. Do you know what the

2 industry practice was in terms of monitoring realtime

3 rig data in deepwater Gulf of Mexico drilling

4 activities?

5 A. I think the industry is in -- in a point of

6 transition, whereby some companies are and some

7 companies are not monitoring real time.

8 Q. Did -- did BP, to your knowledge, prior to

9 this blowout, ever tout itself as a Leader in realtime

10 Operating Center technology?

11 A. In some locations, yes.

12 Q. Would Houston have been one of them?

13 A. I don't recall. Possibly.

14 Q. Do you feel like the realtime Operating Center

15 technology in Houston was sufficient to adequately

16 monitor the Macondo Well?



19 A. I don't have a basis to take a view of that.

20 I just don't.

21 Q. (By Mr. Sterbcow) Do you know -- you have any

22 reason or do you know of any reason why the Macondo

23 Well would not have been monitored on the critical well

24 list as other ongoing deepwater wells in the Gulf of

25 Mexico?


310


2 A. I don't know.


4 the Macondo Well was even monitored in the same room as

5 other deepwater wells in the Gulf of Mexico?

6 A. No, I don't.

7 Q. Or who would have been monitoring or how long?

8 A. I don't know how it was being monitored, who

9 monitored it --

10 Q. Okay.

11 A. -- for how long it was monitored.

12 Q. Who would -- if you know, who with Gulf of

13 Mexico deepwater Drilling & Completions would have been

14 ultimately responsible for overseeing realtime

15 Operating Center --

16 A. I don't know.

17 Q. -- monitoring?

18 A. I don't know.

19 Q. All right. There's -- it's not a job position

20 you would know of?

21 A. No.

22 Q. Do you know if the OMS that was in the process

23 of being implemented had any provision for upgrading or

24 changing in any way realtime Operating senator --

25 Center monitoring?


311

1 A. I don't.

2 Q. All right. Let's go to Tab 10.


4 MR. STERBCOW: Yes. This -- well, this

5 was previously marked, I found, but you can go ahead

6 and put a sticker on it. It's 1166, but I don't have a

7 copy with the stickers already on it. We can let it

8 go, you can let it go, that's fine.

9 Q. (By Mr. Sterbcow) This is previous 1166.


11 MR. STERBCOW: You're welcome.

12 Q. (By Mr. Sterbcow) This is a copy of a Report

13 done for the Mineral Management Service, March of 2003,

14 by West Engineering Services. Do you know whether or

15 not West Engineering Services has had an ongoing

16 relationship with BP in terms of providing Engineering

17 evaluations over time for deepwater drilling

18 activities?

19 A. I've never heard of West Engineering Services,

20 and I have no idea what they do or --

21 Q. Okay. All right. We'll wait --

22 A. -- whether we have a rela -- BP has a

23 relationship with them or not.

24 Q. Okay. If you turn just past the cover page,

25 if you turn to Page 1.


312

1 MR. GODFREY: What page?

2 Q. (By Mr. Sterbcow) It -- well, it's actually --

3 it's a page -- there's no number on it, it's -- it's a

4 letter from -- to Mr. Bill Hauser.

5 MR. GODFREY: I see, thank you.

6 Q. (By Mr. Sterbcow) Sorry. Mineral Management

7 Services from Raleigh Williamson, Professional

8 Engineer. And what -- what Mr. Williamson tells him

9 is: "Based on your previous comments we have prepared

10 the final report for the research project "Evaluation

11 of Secondary Intervention Methods in Well Control" as

12 required by the contract for your review."

13 Do you know if anyone within BP Gulf of

14 Mexico, either Exploration and Production or Drilling &

15 Completions, ever saw this Report prior to --

16 A. No idea. No idea.

17 Q. And you've already told me you didn't.

18 A. I have no idea.

19 Q. Okay. At the bottom of the -- of the ensuing

20 pages you'll see the page numbers, and I wanted to go

21 to Page 20 of 85. Under 4.2, West concludes for the

22 MMS, "The ultimate success of the secondary

23 intervention system is completely dependent upon the

24 ability of the shear ram to shear the drill

25 pipe...under the specific well conditions experienced."


313

1 Did BP, to your knowledge, take the specific

2 well conditions experienced at the time of a given well

3 control event, when it determined the ability of the

4 shear ram to shear drill pipe in a deepwater blowout

5 situation?

6 A. I don't know.

7 Q. If you go to the next page, it sites: "New

8 MMS regulation" as of 2003 "30 CFR Part 250.416(e)

9 requires the lessee" -- in this case BP -- "to provide

10 information that shows that the blind-shear or shear

11 rams installed in the BOP stack (both surface and

12 subsea) are capable of shearing the drill pipe in the

13 hole under maximum anticipated surface pressures."

14 First question: Were you aware of that

15 Regulation at all?

16 A. No.

17 Q. Do you know whether or not anyone with BP

18 confirmed that this blowout preventer at Macondo

19 complied with this Regulation?

20 A. I don't.

21 Q. Do you know whether or not anyone at BP

22 calculated maximum anticipated surface pressures for

23 the Macondo Well?

24 A. I don't.

25 Q. So if -- if they did --


314

1 A. I knew nothing about the Macondo Well.

2 Q. Okay.

3 A. Other than it was an exploration well prior to

4 the accident.

5 Q. Well, were you notified when the Macondo team

6 hit pay sand?

7 A. I was notified that we appeared to have made a

8 discovery. That was the first I really knew of the

9 Macondo Well.

10 Q. From the time the well began till the time

11 that -- that you were notified that a discovery had

12 been hit, based on what you've said you had absolutely

13 no information on --

14 A. No.

15 Q. -- anything --

16 A. No.

17 Q. -- pertaining to that well?

18 A. No.

19 Q. Did you know the size of the discovery at the

20 time it was hit?

21 A. No, because no one did, of course.

22 Q. Was there any effort by BP going in through

23 its Geology Department to predict the size of the --

24 A. There was --

25 Q. -- discovery?


315

1 A. There was a prediction it would be a

2 relatively modest discovery if it was successful.

3 Q. And as of the time you left BP, do -- was

4 there any information within the company as to the size

5 of that discovery?

6 A. I think --


8 A. I don't believe there was any information that

9 in any way refined the initial estimate which was a

10 pre -- predrill estimate.

11 Q. (By Mr. Sterbcow) And the predrill estimate

12 was deemed a moderate discovery --

13 A. I think --

14 Q. -- I thought?

15

16

17

18

19

20 Q. And is that moderate in terms of all wells

21 drilled or just in terms of deepwater wells?

22 A. It's moderate in terms of all of the wells

23 that BP drills.

24

25


316

1

2

3

4 Q. Was a dollar figure put on that, a potential

5 dollar figure, revenue of BP?

6 A. Not -- not in terms of revenue, no.

7 Q. Was the fact that this was a moderate well

8 potential taken into account by BP at any point during

9 the effort to cap the well? And by that question, I

10 mean was there any consideration given to try and

11 preserve BP's ability to go back and extract

12 hydrocarbons from this well during the control effort?

13 A. None. None whatsoever. What we wanted to do

14 was stop it.

15 Q. Okay. No discussion whatsoever by anyone?

16 A. None whatsoever, to my --

17 Q. Do you know whether --

18 A. -- knowledge.

19 Q. Not to your knowledge?

20 A. To my knowledge.

21 Q. Do you know whether or not this well remains

22 producible today?

23 A. The -- I don't -- the completion of the well

24 occurred after I left, but I -- if the program that was

25 envisioned at the time of my leaving was implemented,


317

1 then the well would not be producible today, the well

2 that was drilled.

3 Q. And why is that?

4 A. Because it's full of cement.

5 Q. Given that, then, then did this tragedy cost

6 BP a moderate sized reser -- hydrocarbon reservoir?


8 A. You could describe it as that potentially.

9 But, of course, it cost the company greater more than

10 that. You know, this -- this was never in any -- any

11 part of any consideration about what we might do.

12 Q. (By Mr. Sterbcow) Are either one of the relief

13 wells capable of production, or are those strictly

14 relief wells?

15 A. They're strictly relief wells.

16 Q. Are there any -- or were there any plans as of

17 the time that you left, assuming deepwater drilling

18 would resume in the Gulf of Mexico, to try to drill

19 into this same reservoir from a different location?

20 A. None.

21 Q. Do you know if they have any plans like that

22 today?

23 A. I don't know.

24 Q. Okay.

25 A. I'd be surprised, but I don't know.


318

1 Q. All right. You mentioned the -- I think you

2 mentioned earlier in a question a response to me, the

3 moratorium. Do you have an opinion as to whether that

4 moratorium was directly the result of and caused by

5 this accident?



8 A. I think it was a response by the authorities

9 to say, "We want to understand what has happened here

10 before we have drilling continuing in the Gulf of

11 Mexico." At the time and the circumstance, probably

12 not an unreasonable thing to have done.

13 Q. (By Mr. Sterbcow) Do you have any reason -- or

14 did you have any reason in your position before you

15 left the company to believe that the Administration had

16 any plans whatsoever to either stop or limit or in any

17 way involve itself in deepwater drilling activity had

18 this not occurred?


20 A. I just want to make certain I've understood

21 the question.

22 So the question is did the -- did the

23 Administration have an intent to involve itself in

24 deepwater drilling operations had this not occurred?

25 Q. (By Mr. Sterbcow) Let me say a better


319

1 question.

2 A. They were involved --

3 Q. They were involved?

4 A. -- in deepwater --

5 Q. Correct.

6 A. -- operations?

7 Q. Do you have any reason to believe that but for

8 this incident a moratorium on deepwater drilling would

9 have ever taken place in the Gulf of Mexico?



12 A. Well, I think it's clear that the moratorium

13 was put in place following this accident until the --

14 the authorities could understand what had happened and

15 how to ensure there was not a repeat.

16 Q. (By Mr. Sterbcow) And do you think that

17 deepwater drilling in the Gulf of Mexico can be done

18 safely and reliably despite this accident?

19 A. I do.

20 Q. And do you think that deepwater drilling in

21 the Gulf of Mexico should, in fact, continue?

22 A. I do.

23 Q. And do you --

24 A. It's a very important part of America's energy

25 concept, as the President has recently enunciated.


320

1 Q. If you would, turn to Page 25 of 85.

2 MR. WEBB: It's that one.

3 Q. (By Mr. Sterbcow) Paragraph -- oh, I'm sorry.

4 THE WITNESS: Sorry.

5 Q. (By Mr. Sterbcow) It's Paragraph 4.3, called

6 "Response Time." "Response time is an issue because

7 well control events starts slowly and if handled early

8 can be more readily controlled. Waiting too long

9 allows the flow rates to increase vehemently, which can

10 wash out and damage the BOP equipment -- decreasing the

11 likelihood to be able to close in the well."

12 Do you agree with that statement?

13 A. I certainly do. The whole focus of drilling

14 well control is to act quickly and ahead of time.

15 Q. And were you aware of MMS Regulation 30 CFR,

16 250.442(c), requiring the accumulator system on the BOP

17 meet or exceed the provisions of API RP 53, Section 13?

18 A. I was not.

19 Q. Do you know whether or not the accumulator

20 system on this BOP was sufficient to provide enough

21 hydraulic pressure and force for this BOP to work under

22 the pressure that it was subjected to when the well

23 control event began?

24 A. I don't.

25 Q. Do you know whether or not there was any


321

1 attempt to activate this BOP before hydrocarbons

2 entered the BOP system itself?

3 A. I think our understanding on reconstructing

4 the accident suggests that there was an attempt to

5 activate the blowout preventer on the rig. Whether

6 that was done prior to or at the same time as

7 hydrocarbons into the blowout preventer I think's

8 unclear, certainly unclear from my understanding.

9 Q. Okay. And did -- did the facts and

10 information you had that and your understanding come

11 from the work of the Bly investigation team?

12 A. Everything I say about this accident --

13 Q. From that?

14 A. -- is predicated on the Bly Report.

15 Q. Okay.

16 A. I don't have any independent assessment. I

17 clearly was not on the rig at the time. I -- the only

18 basis of my assessment of what happened is the Bly

19 Report --

20 Q. All right.

21 A. -- which I think to be fair has stood the test

22 of time and certainly was, I think, agreed to -- at

23 least 90 percent of it was agreed to by the

24 Presidential Commission.



322

1 Q. (By Mr. Sterbcow) Would you agree with me that

2 the Presidential Commission was far more critical of BP

3 than the Bly Report was?

4 A. I think it's fair to say that the Presidential

5 Commission was critical of I think what was referred to

6 as systemic failure in management of the industry and

7 also critical of BP.

8 Q. Do you think that that criticism extended to a

9 systemic failure within BP Management, or was it just

10 industrywide management?


12 A. I haven't read the Presidential Commission in

13 detail. I've read the -- large part the reports in the

14 press, and the reports in the press that I read

15 referred to the industry. I think the Head of the

16 Presidential Commission was very clear when he said

17 that it's not the instance of a one rogue operator or

18 one outlier. It's an industry systemic issue. That's

19 what his principal conclusion was, and --


21 A. -- that's what I read in the press.

22 Q. And you -- you obtained that information from

23 the press but not sitting down and reading the entire

24 report?

25 A. Well, I -- I skimmed the report. I didn't go


323

1 through it page to page. But it seemed -- in terms of

2 what -- how that accident happened, it seemed to be

3 very consistent with the findings of the Bly Report,

4 and there was, as I said, some broader findings about

5 the industry.


7 Q. (By Mr. Sterbcow) Do you know whether --

8 did -- are you aware of the fact that Fred Bartlit

9 issued a Chief Counsel's independent, separate report

10 following the Presidential Commission Report?

11 A. I didn't see that, no.

12 Q. So you haven't seen that at all?

13 A. No.

14 Q. Okay.

15 A. I've seen the Presidential Commission.

16 Q. All right. Are you content, then,

17 understanding you've left the company, that you have a

18 good working -- accurate working knowledge of the facts

19 and circumstances surrounding this accident, including

20 all causes, from the Bly Report?

21 A. I would say that that would be an unreasonable

22 statement to make on my behalf at this time, given that

23 I have been away from this now for nine or ten

24 months -- almost a year, in fact -- and have only taken

25 a sort of -- I don't want to say cursory, because it's


324

1 not cursory, but a distant in -- distant interest in

2 how things have developed. I have not followed things

3 in detail since around the end of July.

4 Q. And I'm assuming because you're -- you're now

5 moving on to other things, you're not going to go back

6 and take a greater interest than you have?

7 A. I won't, because there are many -- plenty

8 other people doing it, frankly, and I really have no

9 role in doing that any more.

10 Q. All right. Were you aware of any issue in the

11 industry generally, in BP specifically, with respect to

12 the ability of the ROVs to accomplish the task of

13 remotely operating deepwater blowout preventers?

14 A. Well, I was not aware of any issues prior to

15 the accident. Clearly in the light of the accident and

16 having spent many days watching the -- the struggle of

17 the ROV operators to intervene on the BOP, then it's

18 clear that there were serious issues.

19 Q. All right. Are you aware of any -- any

20 industrywide or BP effort that has been undertaken

21 since to improve either the ability of the ROVs to

22 operate blowout preventers in these conditions or to

23 find an alternative method of subsea remote operation?

24 A. The only thing I'm aware of which is something

25 that we implemented very shortly after the accident,


325

1 which was to run multiple checks on the ability of an

2 ROV to in -- intervene on a BOP during the -- during

3 the testing protocol of the BOP. So we changed the

4 testing protocol of the BOP to require that ROV -- real

5 live ROV intervention took place not only on the

6 surface, which is where it had been done traditionally

7 as a consequence of Regulation, I suppose -- it was --

8 that was what the Regulation required -- but we took an

9 additional action to ensure that the intervention could

10 be proven to work from the seabed ahead of utilizing

11 the BOP.

12 Q. And -- and is that a change that BP made with

13 respect to its procedures?

14 A. It's a change that we made with respect to our

15 procedures, and we -- we recommended to the -- what was

16 then the MMS, now the BOEM, that that would be good

17 industry practice. Now, I have no idea whether it was

18 implemented across the industry.

19 Q. So if -- if BP's recommendation were followed,

20 henceforth, ROV testing, in terms of the ROV's ability

21 to subsea operate deepwater blowout preventers, would

22 actually be done subsea?

23 A. It would be take -- it would take a subsea,

24 yes.

25 Q. All right. Was that a feasible change, from


326

1 BP's perspective, prior to April 20, 2010?

2 MR. WEBB: Objection to form of the

3 question.

4 A. I -- I don't know. I wasn't -- you know, I'm

5 not an ROV expert, but I -- because we could implement

6 it post and then one has to -- a measurement could have

7 been done pre.

8 Q. (By Mr. Sterbcow) Was any thought given to

9 that prior to the accident, to your knowledge?


11 Q. Would -- is that change specifically in

12 response to this incident?

13 A. It's one of the things that changed in

14 response to this in -- incident.

15 Q. And is it --

16 A. I can't --

17 Q. -- is it BP's feeling that, by doing this,

18 the -- BP will have a much better sense of whether or

19 not ROVs are able to operate blowout preventers

20 deepwater subsurface in the event of a well control

21 problem?

22 A. Well, I -- I think it's one of many

23 interventions that were made, and I'm certain are

24 continuing to be made to improve the overall

25 reliability and safety of the entire system.


327

1 Q. And is the reason that it -- to your

2 knowledge, the reason that it wasn't done before this

3 accident, was simply because MMS didn't require such

4 testing?



7 A. I -- I don't know why it wasn't done prior to

8 the accident. It wasn't required, as I understand,

9 under MMS, and I think probably people believed that

10 testing on the surface was sufficient.

11 Q. (By Mr. Sterbcow) All right. If you look at

12 Page 40 of what's before you, 4.7.5, it spell -- it --

13 it references NORSOK, which, to my understanding, is

14 the Norwegian regulation equivalent of MMS; is that

15 correct, if you know?

16 A. I don't know, but I suspect that you're --

17 Q. Okay.

18 A. -- probably right.

19 Q. In the -- under -- under this section, Special

20 requirement for mobile offshore drilling units No. 3,

21 "When drilling with the" B -- "BOP system installed on

22 the seabed, an acoustic or an alternative control

23 system shall" be -- "in addition be installed."

24 Do you know whether or not the DEEPWATER

25 HORIZON BOP had an acoustic system?


328

1 A. I don't believe it did, and I -- I think there

2 was a good reason for that. I think there were --

3 there has -- and I -- I -- I'm -- this is from memory,

4 so it -- it may not be completely reliable.

5 But I believe that there was a view from the

6 experts that, below a certain water depth, the -- the

7 Norwegian Continental Shelf is much shallower than the

8 Gulf of Mexico.

9 At the depths we were operating in the Gulf of

10 Mexico, the acoustic system was unreliable.

11 Q. So if B --

12 A. And none -- there were -- there were -- sorry.

13 There were, I -- I think examples of activation when it

14 should not have been activated, which -- which is, in

15 some senses more -- as dangerous as not being able to

16 intervene using the acoustic system.

17 Q. Okay. So -- so did BP actually obtain expert

18 advice and look into this issue of -- of alternative

19 acoustic or alternative control systems prior to April

20 20, 2010?

21 A. I don't know.

22 Q. When did you -- when do you recall hearing

23 about the information received from experts regarding

24 the acoustic system probably being detrimental or

25 possibly being detrimental in deeper water?


329

1 A. In -- in the course of the months that

2 followed the accident.

3 Q. All right. That was not an issue that came up

4 before?

5 A. No.

6 Q. Do you know whether or not MMS --

7 MR. GODFREY: Excuse me, one second. I

8 need to ask a question, whether we're venturing into

9 privileged areas. You're asking about how he became

10 aware of certain things, and I think I need to have one

11 second --

12 MR. STERBCOW: Okay.

13 MR. GODFREY: -- before you ask your next

14 question.


16 MR. GODFREY: We're okay, then.

17 MR. STERBCOW: We're good?

18 MR. GODFREY: Not a problem. All right.

19 We're good.

20 Q. (By Mr. Sterbcow) H'm --

21 MR. GODFREY: Thank you for that. I just

22 wanted to avoid any un -- unnecessary interruption

23 about in -- instructions which would prove unnecessary.

24 MR. STERBCOW: All right.



330

1 MMS ever issued any Safety Bulletin or recommendation

2 regarding the presence of an acoustic or an alternative

3 control system be installed on deepwater BOPs in the

4 Gulf of Mexico prior to this accident?


6 Q. Are you familiar with a -- something, a device

7 called a bi-directional test ram? Is that --

8 A. No.

9 Q. How about a -- have you ever heard of a BOP

10 having a 20,000-pound psi stack? Are you familiar with

11 that --

12 A. Yes.

13 Q. -- capability?

14 A. Yes.

15 Q. Did BP ever consider installing 20,000-pound

16 psi stacks in deepwater in light of the pressures being

17 encountered in the wells being drilled in the Gulf of

18 Mexico?

19 A. I don't know.

20 Q. Who would have made -- considered or made such

21 a decision within BP?

22 A. The -- the Drilling Team.

23 Q. Do you -- in other words, in this case, it

24 would be Drilling & Completions Gulf of Mexico?

25 A. Yeah.


331

1 Q. And you don't know whether that was considered

2 or not?

3 A. I -- I'm not aware.

4 Q. All right. Have you ever heard of a 6 cavity

5 stack?

6 A. No.

7 Q. How about a double blind shear ram device?

8 A. I heard of a double blind shear ram as part of

9 the discussion around the BOP at the time of the

10 accident.

11 Q. Not before?

12 A. Not before and --

13 Q. All right.

14 A. -- you know, I don't real -- really recall

15 exactly what it was.

16 Q. All right. And, again, any discussion that

17 may have been -- that may have taken place within BP

18 regarding inclusion of these devices in Gulf of Mexico

19 deepwater BOPs would have gone on within the Gulf of

20 Mexico Drilling & Completions Team?

21 A. To my knowledge, yes.

22 Q. And that -- those discussions and decisions

23 would not make their way up to you?

24 A. No.

25 Q. Finally, Page 41 of the West Report discusses


332

1 Personnel Qualifications. At the top, "When and how to

2 operate" a "secondary intervention system on a given

3 vessel is critical; it goes without saying that having

4 a system in place is of little value if key staff are

5 not knowledgeable about how to operate it in a short

6 timeframe."

7 Then references MMS. MMS, as of 2003, Section

8 250.401(d) required the lessee, in this case, BP,

9 "...to establish standards of training and competency

10 of all personnel involved in oil and gas drilling

11 operations."

12 Do you know whether or not, as of April 20,

13 2010, BP had established standards of training and

14 competence -- competency for all persons involved in

15 oil and gas drilling operations aboard the DEEPWATER

16 HORIZON?

17 A. I don't know that. I have no knowledge of

18 that.

19 Q. So if, indeed, that did not occur, and

20 training and compency -- competency, as mentioned by

21 the Bly Report, may have played a role in the failure

22 to both detect this loss of well control and engagement

23 of the BOP. Based on this Regulation, would you agree

24 with me that BP bears some responsibility for this?

25 A. It's -- it's --


333


2 question.

3 A. -- it's --

4 MR. GODFREY: Objection to the form for

5 several reasons.

6 A. -- it's all conjecture, what you've said. I

7 don't know what BP had or hadn't done. So I can't

8 really comment.

9 Q. (By Mr. Sterbcow) Well, have you -- have you

10 come to the conclusion, in the way I interpret the Bly

11 Report, that there is an issue with respect to the

12 training and actions that night of the Transocean staff

13 in failing to control this --

14 A. There was --

15 Q. -- well?

16 A. -- there was certainly --

17 MR. WEBB: I'll object to the form of the

18 question.

19 Go ahead.

20 A. That is -- is undoubtedly true, that for

21 whatever reason, the Drilling Team that evening failed

22 to recognize that the well was flowing in the first

23 instance. And then failed to take the appropriate

24 action. I -- I can't judge whether that was a

25 consequence of training or what it was a consequence


334

1 of.


3 the Well Site Leaders -- the BP Well Site Leaders

4 aboard the DEEPWATER HORIZON also failed in both of

5 those respects?


7 A. I -- I don't believe that it's the role of the

8 Well Site Leader to monitor the minute-to-minute flow

9 of the well and to be taking action if it starts

10 flowing.

11 Q. (By Mr. Sterbcow) Do you believe --


13 Q. (By Mr. Sterbcow) Do you believe that the Well

14 Site Leader had any responsibility in properly

15 interpreting a negative test and taking the appropriate

16 responsive action?

17 A. I think that the --


19 A. -- the negative pressure test was, as the Bly

20 Report identifies, were only interpreted by the

21 Transocean toolpusher, the BP Well Site Leader, and the

22 Transocean driller. And they -- at the insistence of

23 the BP Well Site Leader, the negative pressure test was

24 conducted twice. Both times they misinterpreted it.

25 Q. (By Mr. Sterbcow) "They" meaning --


335


2 Q. (By Mr. Sterbcow) -- both Transocean and BP --

3 A. Transocean, the -- the -- the sue -- the

4 toolpusher, the driller, and the Well Site Leader.

5 Q. And if the driller and toolpusher weren't

6 properly trained and competent to interpret of a

7 negative -- interpret a negative test in this

8 situation, would you agree with me that BP bears some

9 responsibility for that under --

10 A. Well --

11 Q. -- this Regulation?

12 A. -- if that --


14 question.


16 the question.

17 A. If that was the -- the reason why they

18 misinterpreted it, that could be true, but I -- I don't

19 know that that's the case.

20 THE COURT REPORTER: Two minutes.

21 A. We know -- what we know is that they

22 misinterpreted it. I -- I don't think anyone has

23 established that that was because they hadn't been

24 trained.

25 MR. STERBCOW: Well, two minutes. You


336

1 know what, let's stop here, change the tape, and then

2 I'll -- I'll -- I'll -- I'll wrap it up. Take a

3 10-minute.




7 MR. STERBCOW: Ready.

8 MR. GODFREY: We're ready to go.



11 Q. (By Mr. Sterbcow) Okay. Dr. Hayward, would

12 you agree with me that you have made public statements

13 to the effect that BP was indeed unprepared for this

14 spill?

15 A. I'd like -- I'd like to know which statements

16 you are referring to before I answer that question, if

17 I can, please.

18 Q. I've -- I've got -- well, you know what, let

19 me do it this way: Have you ever read the 52 page

20 initial Exploration Plan for Macondo?

21 A. No.

22 Q. Okay. Do you know whether or not, or do you

23 know that BP indeed asserted that it was unlikely that

24 an accidental surface or subsurface oil spill would

25 occur from these activities, first?


337

1 A. I didn't know that's what it said.

2 Q. Did you know that BP estimated a worst case

3 discharge scenario of 162,000 gallons a day?

4 A. I think the number is 162,000 barrels.

5 Q. Barrels. I'm sorry. I'm sorry.

6 Did you know that BP assured the MMS that it

7 was -- was prepared to respond to such a spill?


9 A. And we did respond in a very full and complete

10 way. The fact that it wasn't immediately successful

11 does not say anything about the fact that we responded.

12 Q. (By Mr. Sterbcow) Did you know that in the

13 plan BP named a wildlife expert by the name of Peter

14 Lutz upon whom it would rely in terms of preserving

15 wildlife, who had died several years before the plan

16 was submitted?

17 A. I didn't know that. I -- I became aware of it

18 in the course of not my Congressional testimony, but

19 the testimony of my industry peers because it turned

20 out we all had essentially the same description in our

21 oil spill response plans, which is not a good

22 indictment of the industry.

23 Q. Did you know that BP listed seals and walruses

24 of species of concern?

25 A. We did, along with our colleagues at Chevron


338

1 and Exxon.

2 Q. Well, let -- does it -- does it excuse?

3 A. No, it doesn't.

4 Q. Okay.

5 A. But -- but it does point to the fact that the

6 industry was not -- we were not an outlier in the

7 industry.

8 Q. Was the entire industry -- industry grossly

9 negligent?



12 A. I'm not certain that any one's demonstrated

13 anyone has been grossly negligent thus far.


15 Q. (By Mr. Sterbcow) In your opinion -- in your

16 opinion, given everything that we've learned and

17 everything we know and everything you heard in your

18 capacity as CEO before the time that you left the

19 company, you have not heard anything that would

20 indicate that either BP specifically or the deepwater

21 Gulf of Mexico drilling industry in general engaged in

22 grossly negligent behavior?


24 question.



339

1 A. Well, I think -- and I'm not an American

2 lawyer, so the definition of "grossly negligent" is a

3 legal term. But based on my layman's interpretation of

4 what grossly negligence is, I don't think there's any

5 evidence of gross negligence on the part of the

6 industry or BP.



9 the response vessel summoned to the scene by BP at any

10 time during the effort could recover a half a million

11 barrels of oil a day?

12 A. The response vessels -- well, I -- I know that

13 we ultimately recovered somewhere north of 850,000

14 barrels a day of oil, and a vast amount of oily water.

15 So I don't -- I'm not certain I understand exactly the

16 question.

17 Q. Yeah. At any point in time, was the

18 recovery -- the response vessel capability in terms of

19 recovering oil, did it ever reach or exceed a half

20 million barrels a day, to your knowledge?

21 A. Reach or exceed a half a million barrels a

22 day?

23 Q. Or a half a million barrels total?

24 A. Well, we recovered 850,000 barrels total of

25 oil. And we recovered, I can't remember the number,


340

1 but a very large number of the same order of oily

2 water, so it seems to me that the evidence is there.

3 Q. Do you know how long it took those response

4 vessels to recover 850,000 barrels of oil?

5 A. The 850,000 barrels of oil was recovered over

6 the course of the response, which took place from very

7 soon after the accident to, I would say, I think from

8 recollection, by -- by the 20th of July, which was five

9 or six days after we'd stopped the flow, that there was

10 nothing left to recover.

11 Q. Okay.

12 A. So it was over that period of time.

13 Q. Do you know what that amount of oil

14 represented in terms of the total amount of oil that

15 was spilled?

16 A. No.

17 Q. What percentage of oil was BP able to recover?

18 A. Well, none --


20 A. -- of us know what the total amount of oil

21 spilled was, so -- there were various theories, but I'm

22 not certain that there was a -- a -- a definitive view

23 as to what the amount of oil spilled was. And the

24 reason for that is, of course, it was very difficult to

25 estimate the flow rate.


341


2 any of the folks who were involved in the private

3 effort, known as vessels of opportunity, have become

4 ill as a result of their exposure to oil or

5 hydrocarbons during the recovery effort?

6 A. I'm aware of reports of people becoming ill.

7 I don't know the details, and I don't know whether it

8 was a consequence of their involvement with the spill

9 or not. I just don't know. I -- I've seen -- seen

10 press reports, essentially, of people be -- becoming

11 ill.

12 Q. Do you know whether or not all involved in the

13 private vessel of opportunity spill response were

14 provided with the appropriate protective wear, both

15 respiratory and clothing, to protect them from the

16 exposure to hydrocarbons and dispersant?

17 A. That was certainly the intent. I'm not aware

18 as whether there were people who were not provided with

19 it, but that was, I believe, ab -- absolutely the

20 intent.

21 Q. Does BP have any study passed or is -- if not,

22 is BP engaging in any study currently, to your

23 knowledge, as to the potential effects of the

24 dispersants on the environment in the Gulf of Mexico?

25 A. At the time when I was the CEO, we established


342

1 a -- I can't remember the exact name, but it was, in

2 essence, an environmental assessment fund whereby we

3 committed $500 million to assess the impact of the

4 spill and our response to the spill over the course of

5 many years, and to my knowledge, that is ongoing, but

6 I've not seen any results from it --

7 Q. Do you know how long --

8 A. -- for obvious reasons.

9 Q. -- that will take, how long such a study would

10 take?

11 A. Well, the -- the study was designed to take

12 many years to determine fully and completely whether

13 there was or there was not any lasting impact. And I

14 think my view has always been we should allow time and

15 science to demonstrate what the impact was.

16 Q. Do you know whether or not BP ever tried to

17 exert any influence on this study to influence the

18 outcome in any manner?


20 Q. Do you know of any internal BP E-mails or

21 memos wherein there was a discussion about whether or

22 not BP could influence the activity of that research?

23 A. I certainly haven't seen those E-mails, and I

24 wasn't aware of --

25 Q. Nobody's ever brought that to your attention?


343

1 A. No.

2 Q. All right. Finally, do you recall two things:

3 No. 1, a BBC interview where you said you -- that BP in

4 terms of response was making it up day-to-day? Do you

5 remember saying anything like that?

6 A. I didn't say that with respect to the

7 response. I said that in respect to the extraordinary

8 innovation that was taking place in the subsea as we

9 optimized and changed the various capping and

10 containment facilities.

11 Q. That effort we talked about before?

12 A. Exactly.

13 Q. All right. And do you recall saying publicly

14 that -- that you did not -- "you" meaning BP -- did not

15 have tools you would want to have in your tool kit?

16 A. We certainly didn't have all of the tools that

17 in -- with the benefit of hindsight we could have had,

18 yes. We didn't have a capping stack that would go

19 instantly into place. We didn't have some of the

20 things that you would ideally want.

21 Q. And would you agree with me, that had BP

22 invested in that technology, that it would take -- it

23 would have taken a relatively short period of time,

24 given the fact that this capping stack was designed and

25 built in less than three months, to have had such a


344

1 stack built, in place, ready to go prior to April 20,

2 2010, had it wanted to do so?


4 question.


6 A. I'm sorry. Can you just repeat the question

7 again? What exactly are you asking?

8 Q. (By Mr. Sterbcow) I'm asking: Do you agree

9 with me that BP, had it wanted to do so, could have

10 designed, built, and had ready this same capping stack

11 prior to April 20, 2010, had it made any effort to do

12 so?



15 A. If we'd had the benefit of hindsight, it could

16 have been ready and available, but we didn't.

17 Q. (By Mr. Sterbcow) And you didn't, if I

18 understand you correctly, because you thought BP had

19 taken every step necessary and a spill of this

20 magnitude and type had been mitigated, correct?


22 A. BP, along with the rest of the industry,

23 believed that the blowout preventer prevented a well

24 blowing out, if it started to blow out, and, therefore,

25 that we had mitigated this risk.


345

1 Q. (By Mr. Sterbcow) And given what we've talked

2 about in terms of the blowout preventer and the

3 problems that it's fraught with, you still maintain the

4 opinion that neither BP nor the industry as a whole was

5 grossly negligent in coming to that conclusion prior to

6 April 20, 2010?



9 A. I absolutely do. I don't think there's

10 anything here that we've talked about at which

11 points -- I'm not a -- I'm not a lawyer. It's my

12 layman understanding of what grossly negligent means.

13 There's nothing in anything that we've talked about

14 today that points to that.


16 MR. STERBCOW: That's all the questions I

17 have.


19 MR. STERBCOW: Thank you. I appreciate

20 it.

21 MR. GODFREY: Next.

22 MR. UNDERHILL: Why don't you give me

23 about five to set up.




346

1 5:02 p.m.


3 MR. GODFREY: Okay. Are we ready? I

4 think we're ready to begin.

5 MR. UNDERHILL: I'm ready.



8 EXAMINATION

9 QUESTIONS BY MR. UNDERHILL:

10 Q. Good afternoon, Mr. Hayward.

11 A. Hello, sir.

12 Q. My name is Mike Underhill. I represent the

13 United States. And my Assistant, Cecelia, is sitting

14 to my right, and she's going to be the lucky person to

15 hand you exhibits during this deposition.

16 A. Right, thank you.

17 Q. It's been a long day, so can you bear with us

18 a bit longer?

19 A. I certainly can. It's been a long day --

20 Q. Okay.

21 A. -- for everyone.

22 Q. I think you're right on that one.

23 Mr. Hayward, I'm going to turn to some issues

24 that maybe you know something more about, financials,

25 okay?


347

1 A. M-h'm.

2 Q. So your title until October 1st of 2010 was

3 Group Chief Executive?


5 Q. And that's Group Chief Executive over all of

6 the BP companies and subsidiaries, right?

7 A. Yeah. It's Group Chief Executive, P -- BP

8 PLC.

9 MR. UNDERHILL: And why don't we go ahead

10 and have marked next, which I think is Exhibit 1033 --

11 THE COURT REPORTER: 6-0.

12 MR. UNDERHILL: -- 6033, and that's Tab 7

13 in the CD that you folks have been given.


15 MR. UNDERHILL: I'll give you a moment to

16 boot up.

17 MR. GODFREY: It's at Tab 7 in the

18 notebook?

19 MR. UNDERHILL: Roger that.


21 Q. (By Mr. Underhill) And, Mr. Hayward, we've

22 handed you what's now been marked as 6033, and it's the

23 "Annual Report and Form 20-F" for the Year 2010, for

24 BP. Are you familiar with this type of document?

25 A. Yes, I am.


348

1 Q. And when you were the Group Chair -- Group

2 CEO, did you sign documents like this?

3 A. I did, yeah.

4 Q. And I'm not -- you don't have to look at it,

5 but I think this particular one, Mr. Dudley signed in

6 March of 2011. Would that be --

7 A. That would --

8 Q. -- something that he would do in his new

9 position; that is, the successor to your job?


11 Q. And is it your understanding that this

12 particular type of document is something that's

13 required to be filed with the Securities and Exchange

14 Commission for a publicly traded company doing business

15 in the United States?


17 Q. And I -- just to clean it out, I also assume

18 there may be some requirements under British law?

19 A. Correct.

20 Q. But perhaps a different form?

21 A. Correct.

22 Q. And is it your understanding that it is

23 important that these types of documents -- that is,

24 these Annual Reports and 20 daf -- esh -- daf -- dash,

25 F forms be as accurate as reasonably possible?


349

1 A. Correct.

2 Q. And do you understand that there are legal

3 consequences -- I'm not going to go into them, but do

4 you understand that there are legal consequences if

5 there are material misrepresentations in a document

6 such as this?


8 A. Yes.

9 Q. (By Mr. Underhill) And this particular

10 document, Exhibit 6033, is for the Year 2010, and I

11 think I read in there that it ends on December 31st of

12 2010, correct?

13 A. Correct.

14 Q. And does BP have a calendar accounting year

15 that is January 1st through December 31st?


17 Q. So these kinds of documents would have been --

18 would be filed every year --

19 A. Correct.

20 Q. -- on the year, correct?

21 A. Correct.

22 Q. This particular year, you left the company

23 on -- what date did you resign your position?

24 A. The fir -- well, I announced my intention to

25 leave on the 27th of July, I think, and then enacted a


350

1 transition with my successor and left the company on

2 the 1st of October.

3 Q. Did you formally hold the title of Chairman --

4 or Chief Executive Officer, I should say, until the

5 date that you left on October 1st of 2010 --

6 A. October 1st, yeah.

7 Q. I'm sorry?

8 A. Yes.

9 Q. Thank you.

10 A. Yes.

11 Q. So this particular report would encompass ten

12 of the months in which you held the -- the CEO job,

13 correct?

14 A. Nine.

15 Q. Nine months.

16 A. Nine.

17 Q. Thank you. Please don't hesitate to correct

18 me if my math is wrong. I do it a lot.

19 Let -- let's turn -- it -- well, actually,

20 before we begin with this document, ha -- have you seen

21 this particular document before?

22 A. I haven't actually. I didn't -- I didn't read

23 the -- this when it was published a few months ago.

24 Q. Before we go into it, if -- if you could tell

25 me, given your experience when you were the CEO, is the


351

1 Annual Report something that the CEO reads prior to

2 being disseminated to the SEC and to the public?

3 A. Yes.

4 Q. And I -- I couldn't find a particular

5 accounting company listed in there. It could just be

6 that I overlooked it. Does -- at least when you were

7 the CEO, did BP have an accounting firm or company that

8 was responsible for assisting in the preparation of its

9 Annual Reports?

10 A. Ernst & Young is the accounting company.

11 Q. And do you know if it was through their New

12 York office or another office?

13 A. I -- I -- well, I suppose the principal

14 partner was in their London office, but clearly they

15 drew on their global organization, because this was, as

16 you correctly said, filed on the U.S. Securities. So

17 it was a -- benefited from the input from their New

18 York office, I'm certain.

19 Q. Got it. And -- and is it your understanding

20 that this is the type of document upon which either

21 investors or potential investors in BP may rely in

22 deciding whether to keep their investment in the

23 company or, alternatively, make a new investment in the

24 company?



352

1 A. It's certainly one of them, yes.

2 Q. (By Mr. Underhill) Let -- let's start looking

3 through it, if we could, please. And if you could turn

4 first to Page 38, numbered Page 38.

5 A. I would just like to make it clear, I -- I had

6 no role in producing this document, reviewing it, or

7 any part in its preparation. This all occurred many

8 months after I had left the company.

9 Q. I understand that, and I respect that, and I

10 didn't mean to imply otherwise.

11 On Page 38, let's go there first.

12 A. M-h'm.

13 Q. Over on the right-hand column, do you see

14 where it states, and I'll quote, "Consequences of the

15 accident for BP and its shareholders"?

16 A. Yeah.

17 Q. And below that, "Financial consequences." Do

18 you see --

19 A. Yes.

20 Q. -- that?

21 A. Yeah.

22 Q. And I'll read the first paragraph in the

23 record, and at the end, could you tell me whether I

24 read it accurately, please.

25 A. M-h'm.


353

1 Q. Quote, "The group income statement for 2010

2 includes a 'pre-cha'" -- "pre-tax charge of

3 40.9 billion" -- "dollars," that is -- "in relation to

4 the Gulf of Mexico oil spill. This comprises costs

5 incurred up to 31 December 2010, estimated obligations

6 for future costs that can be estimated reliably at this

7 time, and rights and obligations relating to the trust

8 fund, described below."


10 A. You did.

11 Q. And so we can put some of this in context, the

12 third paragraph down, and it's the second sentence,

13 where it begins "BP has established" --

14 A. M-h'm.

15 Q. -- a trust fund," do you see that?

16 A. Yep.

17 Q. Same drill. I'll read that. Tell me if I

18 read it correctly.

19 "BP has established a trust fund of 20 billion

20 to be funded over the period to the fourth quarter of

21 2013, which is available to satisfy legitimate

22 individual and business claims administered by the

23 GCCF, state and local government claims resolved by BP,

24 final judgments and settlements, state and local

25 response costs, and natural resource damages and


354

1 related costs arising as a consequence of the Gulf of

2 Mexico oil spill." And I'll leave it there.

3 Did I read that correctly --

4 A. You did.

5 Q. -- so far?

6 The next paragraph down, beginning with: "BP

7 has provided...," do you see that?

8 A. Yes.

9 Q. I'll read that, and I'll ask you again whether

10 I read it correctly: "BP has provided for all

11 liabilities that can be estimated reliably at this

12 time, including fines and penalties under the Clean

13 Water Act (CWA). The total amounts that will

14 ultimately be paid by BP in relation to all obligations

15 relating to the incident are subject to significant

16 uncertainty."


18 A. You did.

19 Q. Final -- I'm sorry. The penultimate paragraph

20 in that column: "BP holds a 65 percent interest in the

21 Macondo well, with the remaining 35 percent held by two

22 joint venture partners. While BP believes and will

23 assert that it has a contractual right to recover the

24 partners' shares of the costs incurred, no recovery

25 amounts have been recognized in the financial


355

1 statements." Did I read that correctly?

2 A. You did.

3 Q. What I'd like you to do next is turn to Page

4 158, please.

5 MR. GODFREY: 158?

6 MR. UNDERHILL: Correct.


8 Q. (By Mr. Underhill) Are you there, Mr. Hayward?

9 A. I am.

10 Q. Thank you. And, please, if you haven't seen

11 this before, please feel free to slow me down and tell

12 me you'd like time to --

13 A. M-h'm.

14 Q. -- study it. I have no problem if you do

15 that. Perhaps we could walk through it and make this

16 as simple as possible.

17 Do you see under where -- there are a series

18 of columns, financial columns --

19 A. M-h'm.

20 Q. -- numbers. Do you see that?

21 A. Yeah.

22 Q. Do you see the first one, "Income statement,"

23 and then "Production and manufacturing expenses"?

24 A. Yes.

25 Q. Do you see the column to the right where it's


356

1 $40,000,858,000 [sic]?

2 A. Yeah.

3 Q. If you'd like to study the document in more

4 detail, feel free, but my question to you initially is:

5 Do you understand that that represents the

6 $40.9 billion loss referred to on Page 38 that is the

7 loss projected to have been incurred or that will be

8 incurred as a result of the Gulf Oil spill?

9 A. Yeah. It's the provision that was made.

10 Q. And then down below that, a -- a few -- four

11 or five lines, do you see "Less: Taxation," and that

12 would be $12,000,894,000?

13 A. M-h'm.

14 Q. And if I -- I'm not an accountant. That's why

15 I became a lawyer, okay?

16 A. Nor am I.

17 Q. Fair enough.

18 A. I'm a geologist.

19 Q. But you were CEO, and I wasn't.

20 So do you understand that that means that

21 since BP didn't book income for that 40 million [sic]

22 that it projects as potential losses, it didn't have to

23 pay taxes on that amount; the wor -- there --

24 therefore, the net loss, if you factor in the need not

25 to pay taxes -- that the net loss they're projecting


357

1 there is 28 billion .041 [sic]?

2 A. M-h'm.

3 Q. That's "Yes"?

4 A. Yeah.

5 Q. And you've been doing really fine, but just to

6 be certain, the reporter needs to have "Yes's" --

7 A. I'm sorry. Yes.

8 Q. -- and "No's."

9 A. Sorry. Yes.

10 Q. Thank you very much. Makes his job easier.

11 So if we can put that in context, and

12 understanding all kinds of caveats that are probably in

13 this document about uncertainties about predicting with

14 certainty what the loss is going to be, this document,

15 at least, filed with the SEC indicates that the

16 projected after-tax loss is 28 billion and some-odd

17 change above it, correct?


19 A. That is what this document indicates.

20 Q. (By Mr. Underhill) And this document is BP's

21 Annual Report filed with the --

22 A. M-h'm, yes.

23 Q. -- SEC for the Year 2010, correct?

24 A. Correct.

25 Q. I'd like to shift -- why don't you go ahead


358

1 and keep that document out. We're going to go back to

2 it.

3 A. M-h'm.

4 MR. UNDERHILL: Exhibit -- Tab 1.




8 Q. (By Mr. Underhill) Handing you 6034,

9 Mr. Hayward.

10 A. Thank you.

11 Q. You're welcome.

12 And I'll tell you where we're going. I'm

13 going to hand you a series of documents that are very

14 similar to this which for the Years 2007, I think,

15 through 2010, or at least 2009, will list BP's yearly

16 profit --

17 A. M-h'm.

18 Q. -- as listed in its Financial Reports. That's

19 just the -- kind of the roadmap, okay?

20 A. (Nodding.)

21 Q. So Exhibit 6034, does it indicate there what

22 BP's net profit was for the period 2007?

23 A. It does.

24 Q. And what is that number?

25 A. On a replacement cost basis, it was 17.2.


359

1 Q. And there's a number above it, "Profit for the

2 period." Why don't we just use that one?

3 A. 20.8.

4 Q. And then for 2006, what were the replacement

5 cost profit and the profit for the period?

6 A. 22 and 22.253.

7 Q. And just because I need to know this, what's

8 the difference between profit unadorned and profit

9 replacement cost?

10 A. Replacement cost profit is -- it takes account

11 of the inventory, changes in the value of the inventory

12 that the company holds in the reporting period.

13 Q. Thank you.

14 A. Yes.

15 Q. Would -- would -- just for my edification

16 again, would inventory include oil that's still in a

17 reservoir?

18 A. No. That's oil in a refinery in a tank,

19 that's been processed.

20 Q. Thank you. Go to the next one, which we'll

21 have marked as 6035.


23 MR. GODFREY: Tab 2?

24 MR. UNDERHILL: That's correct, Tab 2.

25 Thank you.


360

1 MR. GODFREY: Sure.

2 Q. (By Mr. Underhill) Year 2008, same drill, sir.

3 Could you list the profits, both unadorned and

4 replacement cost, for the Year 2008?

5 A. 21.15 and 25.59.

6 Q. And the 25.9 is the replacement cost profit,

7 correct?

8 A. Replacement cost, yep. Yep.

9 MR. UNDERHILL: The next one, Tab 3 --


11 MR. UNDERHILL: -- Year 2008, and that's

12 going to be Exhibit 6036.

13 Q. (By Mr. Underhill) The same drill, for the

14 Year 2009, could you list the unadorned profit and the

15 replacement cost profit?

16 A. 16.57 and 13.95.

17 Q. Thank you.

18 A. Thank you.

19 MR. UNDERHILL: The next exhibit, which

20 is going to be 6037, which is behind Tab 4.


22 Q. (By Mr. Underhill) (Tendering.)

23 A. Thank you.

24 Q. Same drill, for the Year 2010, could you list

25 the replacement cost profit and the profit for the


361

1 period or loss?

2 A. Loss of 3.7 and a loss of 4.9.

3 Q. And 4.9 loss is the replacement cost --


5 Q. -- profits?

6 A. Correct.

7 Q. Thank you.

8 MR. UNDERHILL: And the next one which

9 will behind Tab No. 5, which is Exhibit 6038.


11 Q. (By Mr. Underhill) And this is -- lists first

12 Quarter 2011 results, does it not?

13 A. M-h'm.

14 Q. And what is the profit listed on Exhibit --

15 A. 7.1, replacement cost 5.48.

16 Q. Thank you. And just for the heck of it, could

17 you read to the right of that column for the Fourth

18 Quarter of 2010 both the replacement cost profit and

19 the profit for the period?

20 A. Profit for the period for the Fourth Quarter

21 2010 was 5.56, and replacement cost profit for the same

22 period was 4.61.

23 MR. UNDERHILL: And next could we have

24 marked as 6039 --



362

1 MR. UNDERHILL: -- which I'll tender as a

2 Rule 1006 Summary.

3 Q. (By Mr. Underhill) Does that appear to record

4 with the profits both unadorned and replacement costs

5 listed for 2007 through Fiscal Year 2010?

6 A. It does.


8 Q. (By Mr. Underhill) Thank you very much, sir.

9 A. Yes.

10 Q. Now I'm going to ask you to go back to the

11 Annual Report, if you could, please. That's the -- the

12 thick one there.

13 A. M-h'm, m-h'm.

14 Q. Let's go to -- again, to Page 158.

15 A. Yep.

16 Q. I'm going to first focus on that -- on the

17 profit for the period, the after tax --

18 A. M-h'm.

19 Q. -- on 158 which is 28 billion and something

20 above that, 28.041 to be precise.

21 A. Yep.

22 MR. GODFREY: You mean the loss after

23 tax?

24 MR. UNDERHILL: Correct.



363

1 Q. (By Mr. Underhill) If -- just a straight math

2 question, and I'll accept an approximation, it doesn't

3 have to be down to the tenth or the hundredth or the

4 thousands. If -- if we simply take the -- the First

5 Quarter profit for 2011, which is listed on one of

6 those previous exhibits, and let's -- let's take a

7 lower number, the replacement cost profit of five

8 billion 481 --

9 A. M-h'm.

10 Q. -- just rough ballpark figures, how many

11 quarters would it take of profit at that same level to

12 essentially pay off the 28 billion after tax loss?

13 A. Six.

14 Q. Six quarters?

15 A. M-h'm.

16 Q. So just on the straight math, I understand

17 that BP may have a -- the next quarter may be higher,

18 lower, the same, we -- we don't know yet. But if we

19 just take that number, that means that using these

20 figures from BP's own financial reports, it would pay

21 off its losses for the DEEPWATER HORIZON in year and a

22 half, correct?


24 A. That's the -- that is the maths of your

25 calculation.


364

1 Q. (By Mr. Underhill) And -- and if -- if you

2 want to take a more favorable number for the company,

3 let's take the 7.124 billion which is the -- whatever

4 you call it, the profit that is not the replacement

5 cost profit.

6 A. M-h'm.

7 Q. What do you call that?

8 A. There is an official name for it. I can't

9 remember because we always use "replacement cost

10 profit." And I honestly don't remember. Let me have a

11 look.

12 I think it was just "profit." I don't think

13 there's a -- it's just "profit."

14 Q. Just profit?

15 A. Yeah.

16 Q. So if we take the -- let's just round it down

17 to $7 billion.

18 A. M-h'm.

19 Q. A straight math question again: If BP was

20 fortunate to have successive quarters of $7 billion

21 profit, how long would it take to recoup the $28

22 billion loss projected on Page 158 of the Annual

23 Report?

24 A. Four quarters as --



365

1 Q. (By Mr. Underhill) So one year --

2 A. -- as your math says.

3 Q. So, again, with the understanding that these

4 numbers might change, BP might make more money, might

5 make less money, might make the same amount of money in

6 the future quarters, potentially BP, based upon its

7 Fourth Quarter results for the year 2000 -- I should

8 say First Quarter results for 2011 would pay off the

9 after tax loss listed in its 2010 Annual Report in only

10 one year, correct?



13 MR. UNDERHILL: Could you turn to Tab 8,

14 ladies and gentlemen, and I'll hand it to Mr. Hayward.


16 Q. (By Mr. Underhill) This is Exhibit 6040.

17 A. Thank you.

18 Q. Mr. Hayward, in deference to you, I -- you

19 probably haven't seen that before. Why don't you take

20 a look at it, and you tell me whether you've seen it

21 before.

22 A. I haven't seen it before. I don't --

23 Q. I'm not going to ask you very many questions

24 about this at all, especially since you haven't seen

25 it.


366

1 I'll represent to you that BP recently entered

2 into some kind of a settlement with MOEX, one of its

3 partners in the Macondo Well --

4 A. M-h'm, yep.

5 Q. -- whereby, I'll quote from the document:

6 "Under the settlement agreement, MOEX USA Corporation,

7 the parent company of MOEX Offshore 2000 [sic], will

8 pay BP $1.065 billion," period, close quote, and then

9 it goes on.

10 So that's the background of the document.

11 A. M-h'm.

12 Q. What I really wanted to show you is down

13 below, the very last sentence of the document. Tell me

14 if I read this correctly: "To date, BP has paid nearly

15 $6 billion dollars in claims."


17 A. You did.

18 Q. So the same math drill, if we go back to

19 Page 158 of the Annual Report, if -- if BP were to make

20 the same replacement cost profit that it made in the

21 First Quarter of 2011, it would recoup that $6 billion

22 in claims paid to date in a little over one quarter,

23 correct?


25 Q. And if we use 7.1 profit figure for the First


367

1 Quarter of 2011, BP would pay off the tot -- totality

2 of the 6 billion in claims paid so far, it would pay

3 the totality of those claims back, recoup the losses,

4 in less than three months, correct?


6 Q. I'd like you to turn to page -- it's -- same

7 on the annual statement. It's Note 37, titled

8 "Provisions" on that page.

9 A. On what page is that?

10 Q. I'm going to get you there in a second.

11 A. Okay.

12 Q. It actually starts on Page 199, but I'm going

13 to start asking questions at about Page 200. I'll let

14 you get there first.

15 A. Okay.

16 Q. And I'm going to go through some of these same

17 drills since, again, you haven't read this particular

18 page, have you, sir?

19 A. I haven't, no.

20 Q. Thank you. I'm going to read some sections

21 and, again, ask you if I read them correctly, okay?

22 A. M-h'm. M-h'm.

23 Q. This way, and I'll just -- as a nonlawyer,

24 I'll explain to you that's partly so if Judge Barbier

25 or a jury reads this transcript or looked at the video,


368

1 they don't have to refer to the separate document. The

2 document, at least the part I want to quote, is going

3 to be through testimony, or my reading of the record.

4 I'm going to go down, do you see where it says

5 "Litigation and claims"? It's a --

6 A. Yep.

7 Q. It's the second paragraph, and I'm going to

8 start with "The estimated future cost." Quote: "The

9 estimated future cost of settling Individual and

10 Business Claims, State and Local Claims under OPA 90

11 and claims for personal injuries, both reported and

12 unreported, has been provided for. Claims

13 administration costs have also been provided for."


15 A. You did.

16 Q. The next paragraph: "BP believes that the

17 history of claims received to date, and settlements

18 made, provides sufficient data to enable the company to

19 use an approach based on a combination of actuarial

20 methods and management judgments to estimate IBNR

21 (Incurred But Not Reported) claims to determine a

22 reliable best estimate of BP's exposure for claims not

23 yet reported in relation to Individual and Business

24 Claims, and State and Local Claims under OPA 90. The

25 amount provided for these claims has been determined in


369

1 accordance with IFRS and represents BP's current best

2 estimate of the expenditure required to settle its

3 obligations at the balance sheet date."


5 A. You did, sir.

6 Q. And the balance sheet date would be --

7 A. December 31st --

8 Q. -- December 31st --

9 A. Correct.

10 Q. -- of 2010?


12 Q. Okay.

13 A. Yes.

14 Q. So we can put this in context, I'm going to go

15 to the next page of the exhibit --

16 A. M-h'm.

17 Q. -- which is Page 201. At the very top, quote:

18 "Through the application of this approach, BP has

19 concluded that a reasonable range of possible outcomes

20 for the amount of the provision as of" December 31st,

21 2010, "is $6 billion to $13 billion. BP believes that

22 the provision recorded at 31 December 2010 of $9.2

23 billion represents a reliable best estimate from" with

24 this -- "within this range of possible outcomes. This

25 amount is shown as payable from the trust fund under


370

1 Litigation and claims" from "the table above. The

2 provision is in addition to $3.4 billion of claims paid

3 in 2010. Of this total paid, $3.2 billion is included

4 within utilization of provision in the table, and

5 remaining $0.2 billion was a period expenditure prior

6 to the recognition of the provision at the end of the

7 second quarter 2010. Also included within the total

8 utilization of provision of $4 billion under Litigation

9 and claims are amounts relating to claims

10 administration costs and legal fees. Of the total

11 payments of $3.4 billion during the year, $3 billion

12 was paid out of the Trust Fund and $0.4 billion was

13 paid by BP."


15 A. You read it correctly.

16 Q. And the next sentence, quote: "BP's

17 management has utilized actuarial techniques and its

18 judgment in determining this reliable best estimate.

19 However, it is possible that the final outcome could

20 lie outside this range."


22 A. You did.

23 Q. Can we go back to the table on Page 200. And

24 if you need time to study it, please feel free to let

25 me know and I'll be glad and let you --


371

1 A. It would depend on what the question is. I

2 certainly would need -- like some time to -- if you're

3 going to question me about this paragraph, I need to --

4 Q. Well, I'm not going to test your math -- or

5 maybe I will. I shouldn't say that. I only want to

6 focus on a few things.

7 A. Go.

8 Q. But, again, if you need to slow down, please

9 feel free --

10 A. Yeah.

11 Q. -- I'll be glad to give you that courtesy.

12 On the table, do you see where it says

13 "Litigation and Claims"?

14 A. Yes.

15 Q. Third column over.

16 A. Yep. Yes.

17 Q. And that's listed at 14 billion 939 --

18 A. M-h'm.

19 Q. -- million dollars, correct?

20 A. Correct.

21 Q. Similar -- see, I fibbed to you. I am going

22 to ask you about that math. If we use the $7 billion

23 profit figure for the First Quarter of 2011, that

24 number, 14 billion 939 million dollars would be paid

25 off in half a year, correct?


372

1 A. Correct.


3 Q. (By Mr. Underhill) And if -- if we understood,

4 if I understood, at least, the paragraphs we read in

5 the next page over, on Page 2001 [sic], that would

6 include legal fees, it would include claims

7 administration costs, and it would include claims

8 payable under OPA 90, to state Governments, private

9 parties for open liabilities and even personal injury

10 claims, correct?

11 A. That's what it says, yes.

12 Q. And to be fair, if we were to use that lower

13 replacement profit cost number of 5 point billion and

14 change -- let's round it out -- that would take roughly

15 three-quarters, would it not?

16 A. M-h'm. That's correct.


18 Q. (By Mr. Underhill) So if we take that

19 together -- and just, again, based on the assumption

20 that BP --

21 A. M-h'm.

22 Q. -- will continue to have good quarters like

23 they apparently did in the First Quarter of 2011 --

24 A. M-h'm.

25 Q. -- BP could pay off that entire $14 billion,


373

1 almost $15 billion, in projected outlays for the legal

2 claims we've described in between six months to nine

3 months, correct?

4 A. That's what your math's demonstrating.

5 Q. Okay. And that's the replacement cost?

6 A. M-h'm.

7 Q. And actually that would be the nine months.

8 The six months would be at the 7.1 billion figure,

9 right?

10 A. (Nodding.)

11 Q. Correct?


13 Q. Now, the subject dear to my heart, Clean Water

14 Act penalties, do you see the column to the right?

15 A. I do.

16 Q. That's my client's claim. That's why it's

17 dear to my heart. It's listed there at $3,510,000,000,

18 correct?

19 A. Correct.

20 Q. Now, I'm not going to quibble whether I think

21 that's low or not. Let's just use the figure that BP

22 used.

23 If we took that figure, projected figure, from

24 BP's 2010 Annual Report, if we took the replacement

25 cost figure for 2011, it would have been paid off in,


374

1 well, less than a quarter.

2 A. Correct.

3 Q. I mean, a period of just a short few months,

4 correct?

5 A. M-h'm.

6 Q. And if we were to take the 7.1 profit figure,

7 BP would have paid off that number in a month and a

8 half, right?


10 Q. There's one sentence there under that first

11 column. Do you see where -- fourth paragraph down --

12 A. Which page are you on, sir?

13 Q. Thank you very much. Page 201.

14 A. 201, yeah.

15 Q. Fourth paragraph down, it begins: "The

16 outcomes of claims," do you see that?

17 A. Yep.

18 Q. "The outcomes of claims in litigation are

19 likely to be paid out over many years to come," period.


21 A. You did.

22 Q. You're obviously familiar with the concept of

23 discount to present value?

24 A. M-h'm. I am.

25 Q. So the longer you stretch out a payment, the


375

1 less financial consequences it has in the immediate

2 term for the person that eventually is going to pay it

3 out, correct?


5 MR. UNDERHILL: It's poorly phrased,

6 isn't it?

7 MR. GODFREY: Yes.

8 A. Normally you stretch out the payment --

9 MR. UNDERHILL: Mr. Godfrey agrees with

10 me. He thinks it's poorly phrased. I -- we've got

11 agreement, I think it's poorly phrased. He agrees --

12 MR. GODFREY: It's fine, but other than

13 that.

14 Q. (By Mr. Underhill) So we'll skip it. We'll

15 have our Economist do that for me. Okay? Somebody

16 that can actually do justice to it.

17 Do you see what I'm getting at, though? Do

18 you --

19 A. Not -- not really, no. I'm sorry.

20 (Laughter.)

21 A. I'm sorry.

22 Q. (By Mr. Underhill) Come on, I'm being nice to

23 you. Don't insult me like that.

24 A. I'd like to say yes, but --

25 Q. Well, I can't -- I can't leave it completely


376

1 alone.

2 Can you explain to me, given the fact that you

3 were the CEO of one of the world's largest

4 multinationals, what discount to present value is? And

5 if you can't, tell me you can't.

6 A. I think I'll pass. It's 6:00 o'clock in the

7 evening, actually.

8 Q. Would it make any difference if I asked you at

9 8:00 in the morning?

10 A. Probably, yes.

11 Q. I'm going to ask one of my colleagues to hit

12 you back --

13 A. That's fine.

14 Q. -- with that one tomorrow. Okay? We don't

15 forget. I'm writing that down.

16 Let's continue on.

17 A. Yeah.

18 Q. Still on Page two -- 201, please.

19 You were asked some questions by Mr. Sterbcow

20 about flow rate, were you not?

21 A. I was, yes.

22 Q. So let's -- let's go through this and see if

23 there's any relevance here.

24 Under "Clean Water Act Penalties," do you see

25 that heading about a third of the way down the page?


377

1 A. Yes.

2 Q. Quote: "A provision has been made for the

3 estimated penalties for strict liability under Section

4 311 of the Clean Water Act. Such penalties are subject

5 to a statutory maximum calculated as the product of a

6 per barrel maximum penalty rate and the number of

7 barrels of oil spilled. Uncertainties currently exist

8 in relation to both the prebarrel penalty rate that

9 will ultimately be imposed and the volume of oil

10 spilled."

11 Did I read it correctly?

12 A. You did.

13 Q. Next paragraph, quote: "A charge for

14 potential Clean Water Act Section 311 penalties was

15 first included in BP's Second Quarter 2010 interim

16 financial statements."

17 Did I read that sentence correctly?

18 A. You did.

19 Q. And that would have been during your tenure as

20 CEO, would it not?

21 A. It was.

22 Q. Continuing on: "At the time that charge was

23 taken the latest estimate from the interagency flow

24 rate technical group created by the national incident

25 commander in charge of the spill response was between


378

1 35,000 and 60,000 barrels per day."


3 Q. Continuing on, quote: "The mid point of that

4 range, 47,500 barrels per day was used for the purposes

5 of calculating the charge. For the purposes of

6 calculating the amount of the oil flow that was

7 discharged into the Gulf of Mexico, the amount of oil

8 that had been or was projected to be captured in

9 vessels on the surface was subtracted from the total

10 estimated flow up until when the well was capped on 15

11 July 2010."

12 Did I read it correctly so far?

13 A. That's correct, yeah.

14 Q. Continuing on: "The result of this

15 calculation was an estimate that approximately 3.2

16 million barrels of oil had been discharged into the

17 Gulf. This estimate of 3.2 million barrels was

18 calculated using a total flow of 47,500 barrels per day

19 multiplied by the 85 days from 22nd April 2010 through

20 15 July 2010, less an estimate of the amount captured

21 on the surface (approximately 850,000 barrels)."


23 A. You did.

24 Q. Continuing on: "This estimated discharge

25 volume was then multiplied by $1100 per barrel, the


379

1 maximum amount the statute allows in the absence of

2 gross negligence or willful misconduct. For the

3 purposes of estimating a potential penalty, this

4 resulted in a provision of 3 billion 510 million

5 dollars for potential penalties under Section 311."


7 A. You did.

8 Q. Next paragraph, I'm going to skip the first

9 sentence, and it begins -- where I'm going to begin is

10 begins "In particular." Do you see that?

11 A. Yep.

12 Q. Quote: "In particular in determining the

13 amount of the civil penalty, Section 311 directs the

14 Court to consider a number of enumerated factors,

15 including the 'seriousness' of the violation or

16 violations. The economic benefit to the violator, if

17 any, resulting from the violation. The degree of

18 culpability involved. Any other penalty for the same

19 incident. Any history of prior violations, the nature,

20 extents, and degree of success of any efforts of the

21 violator to minimize or mitigate the effects of the

22 discharge. The economic impact of the penalty on the

23 violator, and any other matters as justice may

24 require," close quote.



380

1 A. You did.

2 Q. Continuing on: "Civil penalties above $1100

3 per barrel up to a statutory maximum of" 4300 per

4 barrel -- "$4300 per barrel of oil discharged would

5 only be imposed if gross negligence or willful

6 misconduct were alleged and subsequently proven. The

7 company expects to seek assessment of a penalty lower

8 than $1100 per barrel based on several of these

9 factors. However, the $1100 per barrel rate was

10 utilized for purposes of calculating the charge after

11 considering and weighing all possible outcomes and in

12 light of (1) the company's conclusion that it did not

13 act with gross negligence or engage in willful

14 misconduct and (2) the uncertainty as to whether a

15 Court would assess a penalty below the $1100 statutory

16 maximum."


18 A. You did.

19 Q. Continuing on: "On 2nd August 2010 United

20 States Department of Energy and the flow rate technical

21 group had issued an estimate that 4.9 million barrels

22 of oil had flowed from the Macondo Well and 4.05

23 million barrels had been discharged into the Gulf (the

24 difference being the amount of oil captured by vessels

25 on the surface as part of BP's well containment


381

1 efforts)."


3 A. You did.

4 Q. Continuing on: "It was and remains BP's view

5 based upon the analysis of available data by its

6 experts that the 2nd August 2010 Government estimate

7 and other similar estimates are not reliable estimates

8 because they're based on incomplete or inaccurate"

9 data -- strike that -- "information rest in large part

10 on assumptions that have not been validated and are

11 subject to far greater uncertainties that then have

12 been acknowledged. As BP has publicly asserted,

13 including at a 22nd October 2010 meeting with the staff

14 of the national commission on the BP Deepwater Horizon

15 oil spill and offshore drilling, the company believes

16 that the 2nd August 2010 discharge estimate and similar

17 estimates are overstated by a significant amount. That

18 the flow rate is potentially in the range of 20 to 50

19 percent lower. If the flow rate is 50 percent lower

20 than the 2nd August 2010 estimate, then the amount of

21 oil that flowed from the Macondo Well would be

22 approximately 2.5 million barrels and the amount

23 discharged into the Gulf would be approximately 1.6

24 million barrels. If the flow rate is 20 percent lower

25 than the 2nd August 2010 estimate, then the amount of


382

1 oil that flowed from the Macondo Well would be

2 approximately 3.9 million barrels and the amount

3 discharged into the Gulf would be approximately 3.1

4 million barrels which is not materially different from

5 the amount we used for our original estimate at the

6 second quarter."

7 Did I quote that correctly?

8 A. You did.

9 Q. And based upon what we've read so far,

10 Mr. Hayward, is it correct that BP has made those

11 estimates; that is, the 3,510,000,000 estimate, based

12 upon the assumption that BP will not be found grossly

13 negligent and/or that it did not exercise willful

14 misconduct?


16 question.


18 A. That is what it says in the document.

19 Q. (By Mr. Underhill) I'm not asking you to agree

20 whether BP was grossly negligent or not --

21 A. Okay.

22 Q. -- I'm simply saying, is that the assumption

23 that it is made in --

24 A. That's --

25 Q. -- the documents?


383

1 A. -- that's the assumption in --


3 A. -- in black and white in the document.

4 Q. (By Mr. Underhill) In fact, in its Annual

5 Report filed with the SEC?

6 A. Correct.

7 Q. We're almost done with my belabored quoting.

8 I couldn't have said it better, nor could you, so let's

9 quote from the document.

10 Page 202, of the same exhibit, please.

11 "Therefore, for the purposes of calculating a

12 provision" of fines -- "for fines and penalties under

13 Section 311 of the Clean Water Act, the company has

14 continued to use an estimate of 3.2 million barrels of

15 oil discharged to the Gulf of Mexico as its current

16 best estimate, as defined in paragraphs 36-40 of IAS 37

17 'Provisions, contingent liabilities and contingent

18 assets', of the amount which may be used in calculating

19 the penalty under Section 311 of the Clean Water Act.

20 This reflects an estimate of total flow from the well

21 of approximately 4 million barrels, and an estimate of

22 approximately 850,000 barrels captured by vessels on

23 the surface. In utilizing this estimate, the company

24 has taken into consideration not only its own analysis

25 of the flow and discharge issue, but" of the "analyses


384

1 and conclusions of other parties, including the US

2 government."


4 A. You did.

5 Q. When you were -- still held the position of

6 CEO of the Group, did you make representations that BP

7 was providing all available technical data to the Flow

8 Rate Technical Group, in order that it could calculate,

9 to the best of its abilities, the amount of flow of oil

10 into the Gulf of Mexico?

11 A. I did.


13 A. To the best of my knowledge, that's exactly

14 what was happening.

15 Q. (By Mr. Underhill) And --

16 A. The Flow Rate Technical Group were intimately

17 embedded in the Operating Team on the third floor of

18 the Crisis Center in Houston and had access to all and

19 every piece of data and information that was available.

20 Q. And was it your expectation that, to the

21 extent BP secured data that would be relevant to

22 calculating the rate of flow, that that data would, in

23 turn, be provided to the Flow Rate Technical Group?

24 A. To --



385

1 A. To the best of my knowledge, all of the data

2 that was available in -- throughout the accident and

3 the aft -- in the aftermath was available to the Flow

4 Rate Technical Group.

5 Q. (By Mr. Underhill) And was that your

6 expectation, that it, in fact, be provided?

7 A. Well --

8 Q. And I'm talking about your expectation when

9 you were in the position of --

10 A. -- it was --

11 Q. -- CEO of the Group?

12 A. -- my expectation and my belief.

13 Q. Did -- did you tell people in your

14 organization to provide the Flow Rate Technical Group

15 with all of the relevant --

16 A. Oh, I --

17 Q. -- technical data --

18 A. -- I didn't issue an instruction to that

19 effect. I'm sorry. I mean, I was not focused on the

20 flow rate, actually. I was focused on plugging the

21 well and containing the oil on the surface. It

22 won't -- the flow rate was not going to determine what

23 it is we -- or what it was that we did or did not do

24 with respect to containing the oil or plugging the

25 well, actually.


386

1 Q. Do you know if, in fact, BP did not provide

2 all of the relevant technical data to the Flow Rate

3 Technical --

4 A. I'm -- I'm not --

5 Q. Let me finish, please.

6 A. Sorry. I'm sorry.

7 Q. Are you aware of that?

8 A. That we did not?

9 Q. Correct.

10 A. I'm not aware that BP did not.

11 Q. Are you aware that BP -- I'm choosing my

12 cur -- words carefully -- did not provide relevant

13 technical data, because that data was retained by -- or

14 I should say behind the wall of attorney-client

15 privilege and/or attorney work product?

16 A. I --


18 A. -- I wasn't aware of that. I -- like I said,

19 I wasn't focused on the flow rate, I was focused on the

20 spill response and plugging the well. So I'm -- I'm --

21 I'm just not aware that that was the case.

22 Q. (By Mr. Underhill) Are you aware that, as we

23 sit here today, June 6 of 2011, that BP still has not

24 provided all of the revel -- relevant technical data to

25 the United States Government, whether either the Flow


387

1 Rate Technical Group or someone that's working --


3 Q. Let me finish.

4 A. I'm sorry. Sorry.

5 Q. I don't need to review, just --

6 A. No, I'm sorry.

7 Q. -- he needs to do it. Let me start all over.

8 As we sit here today, June 6, 2011, are you

9 aware that BP has still not provided all of the

10 relevant technical data that would be relevant to the

11 determination of flow, that they have not provided that

12 data to the United States Government, including but not

13 limited to, the Flow Rate Technical Group?


15 A. Well, I was not aware that that was the case.

16 I -- I'll take your word for it that it is the case,

17 but I wasn't aware of it.

18 Q. (By Mr. Underhill) Could you go back to Page

19 2002 [sic]? I'm not going --

20 A. M-h'm. Sure.

21 Q. -- trust me. I'm not going to read the whole

22 thing again.

23 A. Sure.

24 Q. I couldn't stand it. I'm sure you couldn't,

25 either.


388

1 In that first paragraph, I only want to focus

2 on a clause.

3 MR. GODFREY: Two-thousand -- Page 202?

4 MR. UNDERHILL: Yeah, that's correct.

5 Q. (By Mr. Underhill) It's the -- the fifth line

6 down, and it's the clause that says, "...the company


8 of the flow and discharge issue," close quote, and then

9 it goes on.

10 A. M-h'm.

11 Q. Has BP ever -- other than in its Annual

12 Report, do you know if BP has ever come out with a

13 statement as to what it believes the volume of flow was

14 during those days between April 22nd of 2010 and the

15 well was finally capped on July 15th of 2010?

16 A. Not to my knowledge. I -- I know that in --

17 in the time that I was CEO, there was no statement

18 made, because we had the Flow Rate Technical Group, so

19 we didn't need to make an assessment. The Flow Rate

20 Technical Group was charged with that undertaking. And

21 clearly, since I'd left, I -- I'm not aware what has

22 exactly has gone on.

23 Q. Fair enough. And perhaps you're the wrong

24 person to ask of this, but since you're the witness of

25 day --


389

1 A. M-h'm.

2 Q. -- I -- I -- I --

3 A. Sure.

4 Q. -- will ask you --

5 A. M-h'm.

6 Q. -- begging your pardon.

7 When -- when BP's 2010 Annual Report filed as

8 a document with the SEC states, quote, "...the company


10 of the flow and discharge issue," close quote, and it

11 goes on, do you know what is meant by the words "its

12 own analysis"?

13 A. I don't.

14 Q. That is, what analysis is the Annual Report of

15 BP referring to?

16 A. I -- I have no idea. Because clearly, it was

17 written in the time leading up to -- this was published

18 sometime in February, and I had left the company six

19 months prior to that. I -- I've got no idea what that

20 refers to.

21 Q. Even when you were the CEO, before you

22 resigned, didn't you have, on your own, a curiosity as

23 to how your company, BP, would quantify and evaluate

24 the amount of oil put into the Gulf of Mexico was the

25 result of the con --


390

1 A. I --

2 Q. -- Macondo spill?

3 A. -- I --

4 MR. WEBB: I'm going to object to the

5 form of the question.

6 A. I -- I -- I think you have to go back to the

7 time, and then the time when I resigned, and what was

8 going on at that time. And my focus then was the

9 response and plugging the well. And -- and at -- at no

10 point was an estimate of flow going to have any impact

11 on how we responded, or the nature of the attempt to

12 plug the well.

13 We did all and everything we could conceive of

14 to bring the thing to a speedy end. And it was only in

15 a relatively shortly after we succeeded in plugging the

16 well, only 15 days, less than 15 days, 13 days, that I

17 announced my resignation. And from that point on, I --

18 I was not front and center of any of this at all.

19 Q. (By Mr. Underhill) So my question was: Did

20 you or did you not have any curiosity, just yourself --

21 A. M-h'm.

22 Q. -- whether it was a part of your day job -- I

23 mean, if -- if you --

24 A. I --

25 Q. -- let's put it this way --


391

1 A. -- well -- I --

2 Q. -- if you didn't have any curiosity --

3 A. Right.

4 Q. -- you must have been the only person in the

5 country --

6 A. Well --

7 Q. -- that didn't.

8 A. -- well --

9 MR. WEBB: Let me object to the form of

10 the question.

11 (Laughter.)

12 A. I -- I think there was a lot of people clearly

13 speculating and curious as to the flow rate.

14 Q. (By Mr. Underhill) But you weren't one of

15 those curious --

16 A. Well --

17 Q. -- people?

18 A. -- the -- the -- no. The -- the bottom line

19 was that I concluded early on that we had very few ways

20 of coming up with any sort of credible flow rate,

21 frankly. So it -- no, it wasn't impacting what I was

22 trying to do day-to-day. I mean, it really wasn't. It

23 was not -- my day was taken up with trying to liaise

24 with Governments, coordinate thousands of people and

25 thousands of boats, and figure out what intervention we


392

1 were next going to do on the seabed. I -- I didn't

2 have time to worry about any curiosity of whether it

3 was 5, 10, or 20,000 barrels a day or even more.

4 Q. What was the basis for your statement just a

5 moment ago, that you didn't believe that BP had any

6 credible way to estimate --

7 A. Well, we didn't --

8 Q. -- the amount of flow?

9 A. Be -- because we had no measurement. We had

10 no device able to measure flow. There was no -- you

11 know, the flow was coming up a piece of drill pipe

12 along a kinked piece of riser. We didn't know what the

13 reservoir was doing. We knew it was pulsing. We --

14 there was no basis on which you could come up with a

15 credible estimate. The -- the credil est -- credible

16 estimates emerged once we were in a position to capture

17 oil on the surface. And those -- those remain the only

18 credible estimates, frankly.

19 Q. And what are those credible estimates that

20 you're --

21 A. The volume --

22 Q. -- referring to now?

23 A. -- the volumes that make up the 850,000

24 barrels a day that was captured.

25 Q. Other than that, are you aware of any other


393

1 credible estimates that BP has made as to the volume of

2 oil that was discharged into the Gulf of Mexico as the

3 result of the Macondo --

4 A. I'm not --

5 Q. -- spill?


7 A. -- I'm not aware of any. I've not seen any

8 other thoroughgoing analysis of what -- what -- what --

9 what the number was.


11 Q. (By Mr. Underhill) So before I leave this --

12 A. M-h'm.

13 Q. -- when BP's 2010 Annual Report refers to --

14 using its words, "its analysis," BP's analysis --

15 A. M-h'm.

16 Q. -- of the flow rate, you don't know what

17 that's referring to?

18 A. I don't know what that was referring to.

19 Q. Before we do leave that page, up at the very

20 top of 2001 [sic], somewhere there, it -- it states

21 that BP has used --

22 MR. GODFREY: At 201 or 2 --

23 MR. UNDERHILL: 201.

24 MR. GODFREY: Okay. Thank you.

25 Q. (By Mr. Underhill) -- BP has used actuarial


394

1 techniques and its judgment at arriving at the numbers

2 as to potential losses. Do you know what kind of

3 actuarial techniques BP used?

4 A. Well, actuar -- actuarial techniques normally

5 refer to some form of life expectancy estimate, but

6 I -- I don't know what that was. I really don't know

7 what that was.

8 MR. UNDERHILL: Okay. Why don't we go

9 ahead and change our tape now.

10 THE WITNESS: Sure.

11 MR. UNDERHILL: Thank you.





16 MR. UNDERHILL: We're ready.



19 Q. (By Mr. Underhill) Mr. Hayward, the same

20 exhibit, the Annual Report, Page 218, please. And

21 while you're getting to that page, I'll read the top.

22 It says -- it's Note 44, "Contingent liabilities and

23 contingent assets." And go down to the -- see where it

24 has a heading, "Contingent assets relating to the Gulf

25 of Mexico oil spill"?


395

1 A. Yes, I do.

2 Q. Okay. Second paragraph, quote: "As of 31

3 December 2010, $6 billion has been billed to the

4 co-owners, which BP believes to be contractually

5 recoverable. Billings to co-owners are based upon

6 costs incurred to date rather than amounts provided in

7 the period. As further costs are incurred, BP believes

8 that certain of the costs will be billable to our

9 co-owners under the Operating Agreement. Our co-owners

10 have each written to BP indicating that they are

11 withholding payment in light of the investigations

12 surrounding, and pending determination of the root

13 causes of, the incident. In addition, APC has publicly

14 accused BP of having been grossly negligent and stated

15 that it has no liability for the incident, both of

16 which claims BP refutes and intends to challenge in any

17 legal proceedings."


19 A. You did.

20 Q. And the bottom sentence on that page, quote:

21 "BP believes that it has a contractual right to recover

22 the co-owners' shares of the costs incurred, however,

23 no recovery amounts have been recognized in the

24 financial statements as of 31 December 2010."



396

1 A. Correct.

2 Q. So what that means is that 40.9 billion

3 figure, then tax is taken off, so I think that --

4 strike it.

5 Why don't we go to Page 200 -- Page 158,

6 sorry.

7 A. 150 --

8 Q. Correct. 158.

9 A. 158.

10 Q. Are you there?

11 A. I am.

12 Q. So we're focusing on that profit loss for the

13 period after taxes. That's 28 billion 41 million,

14 correct?

15 A. Correct.

16 Q. If what I just read before from the contingent

17 assets, that $28 billion loss projected after taxes

18 does not include any monies that BP hopes to recoup

19 from its drilling partners, correct?

20 A. That's correct. What -- what -- what I'm not

21 certain is the accounting treatment of the costs that

22 will be recouped, whether they will be -- come in above

23 the tax line or below the tax line.

24 Q. Fair enough.

25 A. So I think you probably have to take that


397

1 number off the 40.1, rather than the 28.

2 Q. Fair enough. And are -- are you aware that

3 BP -- in addition to its co-lessee partners, Anadarko

4 Petroleum, Anadarko E&P, and MOEX Offshore 2000, are

5 you aware that in addition to those parties, BP has

6 filed, in addition to any monies it hopes to recoup

7 from those parties, that BP has litigation pending with

8 other entities including, but not limited to,

9 Halliburton and Transocean?

10 A. I read the newspaper report of that.

11 Q. And if you know the answer to this question,

12 tell me; if not, tell me you don't know. Do you know

13 if those -- any monies that BP hopes to recoup as a

14 result of its lawsuit against other parties in the

15 litigation, do you know if those monies are included in

16 the 28 billion after-tax loss projected in the

17 Financial Report?

18 A. I don't know, but I'm sure it states in this

19 report somewhere the basis on which the 28 has been

20 created, so I'm certain we can find that.

21 Q. Thank you. Before we took the break, do you

22 recall reading in the sections about the Clean Water

23 Act penalty --

24 A. M-h'm.

25 Q. -- a -- a reference to gross negligence and


398

1 willful misconduct?

2 A. Yes.

3 Q. And in addition to that, we just read in the

4 report concerning allegations that one of its -- BP's

5 co-lessees has also made against BP with respect to

6 gross negligence, correct?


8 Q. I'd like to you turn to a series of E-mails,

9 the first one is behind Tab 10. It's been previously

10 marked as Exhibit 1127. I'll hand you the exhibit.

11 A. Thank you.

12 Q. And the first question I'm going to ask is

13 whether you've ever seen that E-mail before. So take

14 the time you need to review it, and then if you can

15 answer that question for me, please, I'd sure

16 appreciate it.

17 A. I haven't seen this before.

18 Q. And I want -- I -- I -- I accept your answer,

19 but I really want to make sure that, in fact, your

20 answer is accurate, that you've never seen it before I

21 just handed it to you today.

22 A. (Reviewing document.) I haven't seen this

23 before.

24 Q. Never?

25 A. Not -- not as far as I'm aware.


399

1 Q. I'll represent to you that this is a draft

2 E-mail. I'll represent to you it wasn't sent. It was

3 a draft E-mail authored by David Sims to John Guide in

4 March of 2010. And if I'm challenged later in Court,

5 I'll have to connect that up, but that's my

6 representation to you, and I hope you accept it for the

7 purposes of my questions.

8 A. M-h'm.

9 Q. Do you know who David Sims is?

10 A. He was a member of the Drilling Team in the

11 Gulf of Mexico. In fact, it says here well who he is.

12 He's a Drilling Engineering Team Leader in the Gulf of

13 Mexico Deepwater/Deep Gas Exploration at present.

14 Q. And do you know who John Guide is?

15 A. I don't know who John Guide is, no.

16 Q. I'll represent to you --

17 A. Sorry.

18 Q. -- that John Guide, at the time that this

19 E-mail was drafted in March of 2010, and also on April

20 20th of 2010, the -- the day of the DEEPWATER HORIZON

21 tragedy, that John Guide was BP's Well Team Leader in

22 Houston for the Macondo Well. I'll ask you to accept

23 my representation.

24 A. M-h'm.

25 Q. I'll also represent to you that by April 20th


400

1 of 2010, Mr. Sims had received a promotion and he was

2 John Guide's boss, not at the time of the draft E-mail,

3 but as of the time of the explosion.

4 Are you with me so far?

5 A. Yes.

6 Q. Let's just try to plug in some names, some

7 categories here. It's not necessarily people, but --

8 but titles for positions.

9 You're aware of what a Well Site Leader is in

10 the BP organization, correct?

11 A. I am.

12 Q. And just in the 25-cent version or 25-pence

13 version, layman's version, what does a Well Site Leader

14 do on a drill rig that's being operated for BP?

15 A. The layman's version would be something along

16 the following lines, that the Well Site Leader is there

17 to ensure that the well is being constructed as BP

18 intended and designed it. So it's not there to oversee

19 the operation. He's there to ensure that the

20 construction of the well is being carried out and in

21 line with how it was designed.

22 I mean, perhaps in a rather overly simple way

23 of thinking of that is that BP designs the well, and

24 then a drilling contractor builds the well, and the

25 Well Site Leader there is to represent the architect of


401

1 the well.

2 Q. Aboard -- typical a situation, let's take the

3 DEEPWATER HORIZON before the blowout. Who typically

4 would be the title, that is, what title is the highest

5 ranking BP person that's aboard the rig, you know, on a

6 given day? I'm not talking about there for special

7 purposes, but on a daily event, would it be the Well

8 Site Leader?

9 A. The Well Site Leader. The Well Site Leader.

10 Q. And, in fact, that would be --

11 A. In a typical drilling operation, there is

12 perhaps two Well Site Leaders, and they are, in a

13 normal day, the only BP people on the rig.

14 Q. And they would each stand a tour, a 12-hour

15 tour on a given day, correct?


17 Q. So while one is off duty, sleeping, eating,

18 the other is on duty and then they switch out --


20 Q. -- another 12-hour?

21 A. Correct.

22 Q. Okay. So that's -- thank you very much.

23 So that's what a Well Site Leader does, at

24 least the 25-pence version?

25 A. M-h'm.


402

1 Q. What, in terms of BP structure, is a Well Team

2 Leader? What -- what is his day job, 25-cent version?

3 A. He leads the -- a Drilling -- a team of

4 Drilling Engineers looking after a series of drilling

5 operations.

6 Q. And I'm looking at the word -- or the words,

7 "Well Team Leader." Is it what it implies, that that

8 person is the Leader of the Well Team?

9 A. Is the Leader of a group of Drilling

10 Engineers.

11 Q. And to whom, if you know, not -- not names,

12 but titles, to whom do the Well Site Leaders aboard the

13 rig, to whom do they report?

14 A. I -- I'm not certain. I'm not certain.

15 Q. You're not certain whether it's the Well Team

16 Leader?

17 A. No, I'm not certain -- I'm not certain whether

18 it's directly to the Well Team Leader or it's to the

19 Drilling Engineers that are on the beach as it were.

20 Q. I'll represent to you that based upon

21 testimony in the case, at least with respect to the

22 Macondo Well and the DEEPWATER HORIZON, that the Well

23 Site Leaders reported to the Well Team Leader.

24 A. Well Team, okay.

25 Q. And if anybody challenges me, it will be my


403

1 obligation to prove that up at the time of trial.

2 A. I accept that.

3 Q. I'd like you to take -- with the understanding

4 that Mr. Sims, at least as of April 20th, 2010, was

5 Mr. Guide's boss, and Mr. Guide, with the assumption

6 that he was the Well Team Leader, I'm going to walk you

7 through this E-mail, at least portions of it.

8 About maybe two-thirds of the way down, begins

9 with the: "I also heard you say..."

10 Do you see that?

11 A. Yeah.

12 Q. Quote -- this is Mr. Sims drafting an E-mail

13 to Mr. Guide, the Well Team Leader?

14 A. Do -- do we know if he ever sent the --

15 Q. I can represent to you he did not.

16 A. Okay.

17 Q. He did not.

18 This is his draft, quote --

19 A. M-h'm.

20 Q. -- "I also heard you say" -- "you" being

21 Mr. Guide -- "I also heard you say disgustedly that we

22 'can't take forever to make a decision,' closed quote,

23 after a few second pause while everyone was thinking.

24 Also heard, 'I had to go outside to save my family from

25 being killed,' close quote, apparently randomly during


404

1 the call. I'm sure nobody had a clue what you were

2 talking about."


4 A. You did.

5 Q. Third paragraph from the bottom, quote, "You,"

6 Mr. Sims talking to Mr. Guide now in the draft E-mail,

7 "You seem to love being the victim. Everything is

8 someone else's fault. You criticize nearly everything

9 we do on the rig but don't seem to realize that you are

10 responsible for everything we do on the rig."


12 A. Yes, you did.

13 Q. Next paragraph, Mr. Sims to Mr. Guide again,

14 in an E-mail that Mr. Sims drafted but did not send,

15 quote: "You seem to think that running is more

16 important than well control. Left to go run in the

17 middle of trying to pull the stuck logging tool free."


19 A. You did.

20 Q. Next paragraph, "You will not call the rig in

21 the ops room. You have to sneak out of the room and

22 call them on your cell phone or go back to your office

23 while everyone one is in the ops room."


25 A. You did.


405

1 Q. Next paragraph, "you" again Mr. Sims in a

2 draft E-mail that he did not send to Mr. Guide: "You

3 can't sit in a meeting and listen to others' opinions

4 without arguing them. You think when somebody has an

5 opinion...they are demanding action. You complain that

6 a bunch of young engineers are throwing out all kinds

7 of wild ideas and that it is driving you crazy. You

8 don't listen. You key on a random word or phrase and

9 then you fixate on that and don't hear anything else.

10 You are always defensive and the victim. You seem to

11 not want to make a decision so that you can criticize

12 it later."


14 A. You did.

15 Q. Next paragraph and the final paragraph, "I,"

16 Mr. Sims, speaking to Mr. Guide in a draft E-mail he

17 did not send: "I will hand this well over to you in

18 the morning and then you will be able to do whatever

19 you want. I would strongly suggest, for everyone's

20 sake, that you make logical decisions, based on facts,

21 after weighing all the opinions. Taking action just

22 because the" Well Site Leaders "want to do it, when

23 there is strong argument against and multiple contrary

24 opinions is not advised."



406

1 A. You did.

2 Q. I'd like your honest reaction as to what you,

3 as the CEO of the BP companies at the time that

4 Mr. Sims drafted this E-mail to Mr. Guide, the Well

5 Site Leader for the DEEPWATER HORIZON that blew up,

6 blew out, April of 2010, what's your reaction as to

7 that E-mail or that draft E-mail?



10 question.

11 A. I'm not really sure I have a reaction, really.

12 It's an E-mail, as you said, was never sent. He was

13 clearly very frustrated with his colleague, and he

14 wasn't very happy with him, but I'm not sure what else.

15 If -- if you conclude.

16 Q. (By Mr. Underhill) If you -- I didn't mean to

17 butt in. Go ahead.

18 A. I'm not sure what else we can conclude on the

19 basis of that. He clearly thought better of it and

20 decided never to send it.

21 Q. Well, if you thought --

22 A. Sure.

23 Q. Put it this way: Let's play pretend. You're

24 my boss, I report to you, and I'm a Well Site Leader

25 for the DEEPWATER HORIZON, I, as the Well Site Leader


407

1 represent my company, I'm its representative onboard,

2 I'm -- I'm the highest representative onboard. If you,

3 my boss, thought of me and my abilities what Mr. Sims

4 wrote down in this draft E-mail to Mr. Guide, why in

5 the world would you keep me as an employee? Why

6 wouldn't you fire me?

7 MR. GODFREY: Ob -- objection as to form.


9 question.

10 A. I'm not certain there's anything in here that

11 suggest -- talks about his capability. There's clearly

12 references to his behavior. I don't think there's

13 anything in here that talks about Mr. Guide's ability

14 as a Well Site Leader. I don't know what -- what

15 circumstance was being described here. I guess -- I

16 don't know. You may do, I don't. So I -- I'm

17 reluctant to draw any great conclusion based on a draft

18 E-mail that was never sent, I'm afraid.

19 Q. (By Mr. Underhill) So if you drafted that

20 E-mail to me and I was your employee and I'm the Well

21 Site Leader, you wouldn't fire me?



24 A. As I said, I -- I don't -- I don't think this

25 E-mail is the basis for firing or making a


408

1 determination of firing anyone, frankly. You need

2 something more than a draft E-mail that was clearly --

3 well, "clearly." I imagine it was drafted in a moment

4 of frustration. I -- and I imagine -- I don't know, of

5 course -- that in -- with the cold light of day,

6 Mr. Sims decided not to send it, be -- believing that

7 there was a better way to engage with his employee.

8 But I don't -- I can't see anything here that says that

9 this gentleman doesn't have skills and capability to be

10 a Well Site Leader.

11 Q. (By Mr. Underhill) The next exhibit, behind

12 Tab 11, previously marked as Exhibit 1129. Please take

13 a moment -- it's a short one.

14 A. M-h'm.

15 Q. Take a moment to read it, and let -- my

16 question when you're finished is: Have you ever seen

17 this document before?

18 A. I have not ever seen this document before.

19 Q. Now, this E-mail, at least according to the

20 document, appears to have been sent --

21 A. M-h'm.

22 Q. -- actually.

23 A. M-h'm.

24 Q. It's a string.

25 A. M-h'm.


409

1 Q. The first one in the exhibit -- it's the

2 bottom one -- is dated Thursday, April 15th of 2010,

3 five days before the DEEPWATER HORIZON tragedy,

4 correct?

5 A. Correct.

6 Q. Mr. Sims E-mails Mr. Guide, quote: "John, Can

7 you meet me tomorrow morning in the meeting room around

8 6:15 to 6:30? David." Did I read that correctly?

9 A. Correct.

10 Q. And the same day, Thursday, April 15th, did

11 Mr. Guide respond to the E-mail?

12 A. He did, yes.

13 Q. And what did he respond? What did he say to

14 Mr. Guide?


16 A. All right --

17 Q. (By Mr. Underhill) What did he write --

18 A. The -- the --

19 Q. -- in the E-mail to Mr. Guide?

20 A. The E-mail says: "Are you going to fire me?"

21 I'm a bit confused by the -- the sequencing

22 action. Wasn't the -- the first E-mail was sent at

23 2:48, and the second one was sent at 3:30, according to

24 the sequencing on the E-mail.

25 Q. It's a BP document. That's the best I can


410

1 tell you, sir. Does it say --

2 A. It says, "Are you going to fire me," but I

3 don't know whether the "Are you going to fire me" came

4 before or after the "Can you meet me in the meeting

5 room?" It would be logical to imagine it did, but the

6 date and timing doesn't seem to imply that. And I'm

7 not being --

8 Q. Next, behind Tab -- behind Tab 12, Exhibit

9 96 -- previously marked as Exhibit 96.

10 A. Okay.

11 Q. It's a series of E-mails. What I'd like you

12 to do is -- is go through them front to back, and the

13 first question will be: Have you seen any of these

14 E-mails before?

15 A. I was -- I believe I was shown this E-mail in

16 the course of the Congressional testimony.

17 Q. And when you say "this E-mail," the exhibit

18 itself is actually a compilation. The first one is

19 from Mr. Kent Corser to some other BP employees, dated

20 Tuesday, June 22nd of 2010, correct?

21 A. Yes. Yes. Well -- correct.

22 Q. And that top page there, Bates No. 97030, you

23 have seen that page before?

24 A. I don't think I've seen this page before, no.

25 I was referring to this page, "dancing to Village


411

1 People." I don't think I've seen this one.

2 Q. I'll represent to you that the top page was

3 from Mr. Corser, who was a mem -- do -- do you know

4 that Mr. Corser was a member of the Bly Team?

5 A. No, I didn't know.

6 Q. I'll represent to you that he was and that

7 he's writing to other Members of the Bly Team.

8 A. Okay.

9 Q. And according to the E-mail, it says what,

10 "Please read"?

11 A. It says: "Please read."

12 Q. Does it appear that Mr. Corser is asking the

13 people listed on the recipient list of that June 22nd,

14 2010 E-mail to read the attached E-mails; that is,

15 those between Mr. Sims and Mr. Guide?

16 A. It does, indeed.

17 Q. And the exhibit consists of three other pages

18 Bates-stamped BP-HZN-BLY00097031 through 33, correct?

19 A. Correct.

20 Q. Let's go to the page -- I think you're on the

21 correct one. Bates No. 031, do you have that before

22 you?

23 A. 031. That's it.

24 Q. Are you there?

25 A. I am.


412

1 Q. Thank you.

2 The bottom part of the string there, who is it

3 from, and who is it to?

4 A. It's from John Guide to David Sims.

5 Q. And dated when?

6 A. April the 17th.

7 Q. 2010?

8 A. 2010.

9 Q. Three days before the blowout?

10 A. Correct.

11 Q. Could you read the text of the E-mail into the

12 record for me, please?

13 MR. GODFREY: Objection to foundation,

14 objection as to form.

15 MR. UNDERHILL: Fine.

16 Q. (By Mr. Underhill) I'll do it for you, and

17 then could you tell me when I'm done whether I've read

18 it correctly or not.

19 A. Okay.

20 Q. "David, over the past four days there has been

21 so many last minute changes to the operation that the

22 WSL's have finally come to their wits end. The quote

23 is," quote, "'flying by the seat of the pants,'" close

24 quote, period. "Moreover, we have made a special boat

25 or helicopter run every day. Everybody wants to do the


413

1 right thing, but, this huge level of paranoia from

2 engineering leadership is driving chaos.

3 "This operation is not Thunderhorse. Brian

4 has called me numerous times trying to make sense of

5 all the insanity. Last night's emergency evolved

6 around the 30 barrels of cement spacer behind the top

7 plug and how it would affect any bond logging," parens,

8 (I do not agree with putting the spacer above the plug

9 to begin with)," close parens. "This morning Brian

10 called me and asked my advice about exploring

11 opportunities both inside and outside of the company."


13 A. You did.

14 Q. Final paragraph: "What is my authority? With

15 the separation of engineering and operations, I do not

16 know what I can and can't do. The operation is not

17 going to succeed if we continue in this manner,"

18 period. Did I read that correctly?

19 A. You did.

20 Q. Three days after this E-mail was sent from

21 Mr. Guide to Mr. Sims, what happened?

22 A. The accident, the DEEP -- on the DEEPWATER

23 HORIZON.

24 Q. Did Mr. Sims, according to the exhibit,

25 respond with an E-mail to Mr. Guide?


414

1 A. I think this is -- is this -- is this the

2 response at the top of the --

3 Q. I think the full --

4 A. Yeah.

5 Q. -- E-mail is actually on the next page --

6 A. Okay.

7 Q. -- Bates No. 032. Did he respond?

8 A. Yes, he did.

9 Q. And did he do so the same day, April 17th of

10 2010?

11 A. He did.

12 Q. Let me see if I read it correctly, quote:

13 "John, I've got to go to dance practice in a few

14 minutes. Let's talk this afternoon. For now, until

15 this well is over, we have to try to remain positive

16 and remember what you said below - everybody wants to

17 do the right thing. The Well Site Leaders will take

18 their cue from you. If you tell them to hang in there

19 and we appreciate them working through this with us (12

20 hours a day for 14 days) - they will. It should be

21 obvious to all that we could not plan ahead for this

22 well" -- "for the well conditions we're seeing, so we

23 have to accept some level of last minute change.

24 "We've both been in Brian's position before.

25 The same goes for him. We need to remind him that this


415

1 is a great learning opportunity, it will be over soon,

2 that the" issues -- "and that some issues - or worse -

3 exist anywhere else." Did I read that correctly?

4 MR. GODFREY: Objection, no. You did

5 not.

6 Q. (By Mr. Underhill) Let me start all over, that

7 last sentence: "We've been both in Brian's position

8 before. The same goes for him. We need to remind him

9 that this is a great learning opportunity, it will be

10 over soon, and that the same issues - or worse - exist

11 anywhere else." Did I read it correctly?

12 A. You did.

13 Q. Continuing on: "I don't think anything has

14 changed with respect to engineering and operations.

15 Mark and Brian write the program based on

16 discussion/direction from you or best engineering

17 practices. If we had more time to plan the casing job,

18 I think all this would have been worked out before it

19 got to the rig. If you don't agree with something

20 engineering related, and you and Gregg can't come to an

21 agreement, Jon or me gets involved. If it's purely

22 operational, it's your call." Did I read it correctly?

23 A. You did.

24 Q. Finishing up, it goes on, quote: "I'll be

25 back soon and we can talk. We're dancing to the


416

1 Village People," close quote. Did I read that

2 correctly?

3 A. You did.

4 Q. Based upon just your normal understanding, the

5 usage of the word "paranoia" in the English language,

6 can you give me your understanding of what that means?


8 Q. (By Mr. Underhill) I'm not asking for a

9 psychological definition, just your understanding.

10 MR. WEBB: I will object to form.

11 A. My understanding, broadly, would be concerned.

12 Q. (By Mr. Underhill) "Paranoia" is "concerned,"

13 under your understanding?

14 A. "...huge level of paranoia from engineering

15 leadership is driving..." -- concern.

16 Q. "Chaos"? Can you give me your layman's

17 understanding of what that means?


19 A. Unstructured.

20 Q. (By Mr. Underhill) "At their wit's end," can

21 you give me your layman's understanding of what that

22 means?


24 A. I'm not sure how I describe "wit's end." The

25 limit of -- in the limit of something, sort of


417

1 frustrated about change.

2 Q. (By Mr. Underhill) "Flying by the seat of

3 their pants," can you give me your layman's

4 understanding of that term?


6 A. H'm, not -- not operating in an organized or

7 structured way.

8 Q. (By Mr. Underhill) If we plug in the positions

9 for the people that are both writing these E-mails,

10 receiving the E-mails, and referred to in the E-mails,

11 first one, where Mr. Guide is writing to Mr. Sims, the

12 Wells Team Leader for the Macondo Well is writing

13 E-mail to his boss, BP boss in Houston, and using words

14 like "paranoia," "chaos," "level of insanity," "at

15 their wit's end," "flying by the seat of their pants,"

16 "the operation is not going to succeed if we continue

17 in this manner." The Well Team Leader is writing to

18 his boss and using those words and phrases, correct?

19 A. That's what you've shown me, yes.

20 Q. And the WSLs, Well Site Leaders, referred to

21 by Mr. Guide, the Well Team Leader, those are the BP

22 representatives on -- on the DEEPWATER HORIZON rig,

23 correct?

24 A. I believe that's the case, yes.

25 Q. So if what I represented to you earlier was,


418

1 in fact, correct, in reporting the organizational

2 structure, the Well Site Leaders aboard the rig, their

3 boss in Houston is referring to them as "flying by the

4 seat of their pants" and "at their wit's end," assuming

5 I have my reporting structure correct; is that right?


7 A. We may have to go over it again. So John

8 Guide -- John Guide to David Sims. He's the Well Site

9 Leader?

10 Q. (By Mr. Underhill) John Guide is the Well Team

11 Leader.

12 A. Well Team Leader, okay. Okay.

13 Q. David Sims is his boss.

14 A. Yeah.

15 Q. You didn't ask, but I'll be glad to tell you,

16 the Well Site Leaders are -- at that time were Bob

17 Kaluza and Don Vidrine. Do you still have the question

18 in mind, or would you like me to repeat it?

19 A. No, sir, I'm -- I'm clear.

20 Q. Okay. Could you answer the question?

21 A. So sorry. What was the question again?

22 Sorry.

23 MR. UNDERHILL: Mr. Reporter, could I

24 prevail upon you to go back and read my question?

25 (Requested portion was displayed and read as


419

1 follows:

2 QUESTION: "And the WSLs, Well Site Leaders,

3 referred to by Mr. Guide, the Well Team Leaders,

4 through the -- the BP representatives of the DEEPWATER

5 rig" --

6 THE WITNESS: Slow -- slow down, slow

7 down. I need to understand the question.

8 (Requested portion was displayed and read as

9 follows:

10 QUESTION: "And the WSLs, Well Site Leaders,

11 referred to by Mr. Guide, the Well Team Leaders,

12 through the BP representatives on the DEEPWATER HORIZON

13 rig, correct?")

14 THE WITNESS: I still don't understand

15 the question. Sorry.

16 MR. UNDERHILL: I don't know if you have

17 it -- I don't think it's complete there. Let --

18 let's --

19 THE WITNESS: Okay.

20 MR. UNDERHILL: Let's just try it again.

21 Q. (By Mr. Underhill) If -- if I've given you

22 accurately the titles and positions --

23 A. M-h'm.

24 Q. -- of the Well Site Leaders, the Well Team

25 Leader, and Well Team Leaders' boss, Mr. Sims --


420

1 A. M-h'm.

2 Q. -- BP's Houston Well Team Leader is referring

3 to the two highest individuals on the rig, three days

4 before it blows out, as "flying by the seat of" their

5 "pants" and at "their wits end," correct?

6 A. He's referring --


8 A. He's saying the quote is "flying by the seat

9 of" their "pants," yeah.

10 Q. (By Mr. Underhill) And, Mr. Guide, the Well

11 Team Leader in Houston, is telling his boss, using

12 words like "paranoia," "chaos," --

13 A. Well --

14 Q. -- "insanity," he's using --

15 A. -- he's --

16 Q. -- those words to his boss, is he not?

17 A. I think he's using those words to refer to the

18 Engineering leadership concern, the oversight. That's

19 what it -- what it appears to be. The "...huge level

20 of paranoia from engineering leadership," which is, one

21 presumes, the leadership above Mr. Guide, which is

22 therefore, the Leadership -- the -- one presumes

23 Mr. Sims and his colleagues, who are concerned to

24 ensure that things are done appropriately on the well.

25 I think that -- I think that's --


421

1 Q. Have you ever seen -- have you ever seen a

2 reference to any well -- other than this document and

3 this particular well, have you ever seen BP Well Team

4 Leaders, and Executives in Houston, referred to --

5 whether it's the Engineering Team or the entire team,

6 and the well, with words like "paranoia," "insanity,"

7 "chaos," "wits end," "seat of their pants"? Have you

8 ever seen that before?

9 A. I haven't.

10 Q. Would you expect to see that --

11 A. No.

12 Q. -- in a communication like this, between --

13 A. I wouldn't expect to see that.

14 Q. Is this the standard of care that, when you

15 were the Chief Executive Officer of BP, is this kind of

16 language, these kinds of references, the standard of

17 care that you would expect for the people that are

18 responsible for a rig, for the people aboard the rig,

19 for the property itself, for the environment?

20 A. I'm not certain --



23 question.

24 A. -- the E-mail says anything about the standard

25 of care. It clearly articulates a dialogue that was


422

1 going on between a number of people on the Team. It

2 doesn't in any way allow you to draw a conclusion as to

3 the standard of care that they were exercising --

4 Q. (By Mr. Underhill) You don't think that --

5 A. -- one way or another.

6 Q. I'm sorry. Go ahead.

7 A. No, that's okay. That's fine.

8 Q. You don't think, just as an example, that Well

9 Site Leaders flying by the seat of their pants, you

10 don't think that that -- that that has relevance to the

11 standard of care?

12 MR. WEBB: Ob -- object to the form of

13 the question.

14 A. The -- the -- the reflec -- that -- that

15 reference is a quote on a -- of a quote. I -- I don't

16 think you can draw any conclusion as to the standard of

17 care that was being exercised by the Well Site Leaders

18 in carrying out their task based on this E-mail.

19 Q. (By Mr. Underhill) You don't think that your

20 Well Team Leader, Mr. Guide, in this case, referring to

21 Well Site Leaders at their wits end and flying by the

22 seat of their pants, that doesn't have any relevance to

23 the standard of care exercised by the Well Site Leaders

24 aboard the rig?



423


2 question.

3 A. I -- I don't believe that you can draw any

4 conclusions about the standard of care taken from a

5 couple of E-mail interchanges.

6 Q. (By Mr. Underhill) I'll represent to you, and

7 I don't have the testimony to quote it, so I'll

8 paraphrase it -- and I'm sure I'll be challenged, but

9 it'll be my duty to connect up at the time of trial

10 before Judge Barbier. Mr. Sims was asked in testimony,

11 deposition under oath, whether he had more

12 responsibility for safety than the bed maker and the

13 cook employed by Transocean aboard the DEEPWATER

14 HORIZON. And I will further represent to you that

15 Mr. Sims couldn't answer the question.


17 MR. WEBB: What -- what's the question?

18 Q. (By Mr. Underhill) Would you expect the Well

19 Team Leaders' boss, that is, Mr. Guide's boss,

20 Mr. Sims, to have more responsibility for safety aboard

21 the DEEPWATER HORIZON than the cook and the bed maker

22 employed by Transocean aboard that rig?

23 MR. WEBB: Objection to form of the

24 question.



424

1 A. I -- I -- I would expect that --

2 Q. (By Mr. Underhill) And -- and let me pref --

3 let me go back. And I'm asking you for your opinion as

4 of the time that you held the Chief Executive Officer

5 position --

6 A. Yeah.

7 Q. -- prior to October 1st of 2010.


9 question.


11 A. I -- I would expect that Mr. Sims had

12 accountability for ensuring that the -- the right

13 people were in place, the right structures, processes

14 were in place, the operation was being conducted in a

15 safe way. But -- but of course, he wasn't actually on

16 the rig or anytime on the rig, so I can imagine how you

17 could answer the question rather differently.

18 So if your question is about on the rig in the

19 moment, then it's entirely reasonable for him to say

20 something rather different. But of course in the

21 context of the -- a more -- a more global view of the

22 operation, then clearly, he has more responsibility.

23 Much more.

24 Q. (By Mr. Underhill) Having looked at these

25 E-mails, the Guide/Sims E-mails, you've talked a lot


425

1 about during -- during prior testimony here this

2 morning, you were asked questions about process safety,

3 about root cause, root cause analysis. These E-mails

4 we've just been reading for the last half hour or so,

5 can you see a systemic problem there?

6 A. I don't think in the few E-mails that you've

7 shown me allows anyone to draw any conclusions about

8 systemic problems.

9 Q. Well, I didn't ask about anyone. I asked

10 about you.

11 A. Well, it doesn't -- it certainly does not

12 allow me to draw a -- a conclusion as to a systemic

13 problem.

14 Q. Do you think that these -- whether you think

15 these E-mails' evince a deeply flawed systemic problem

16 or not, do you think at least these E-mails merited a

17 mention in the Bly Investigation Report?



20 A. The Bly Investigation Report was an entirely

21 independent Report. It was conducted by Mr. Bly and

22 the Team doing the investigation. I played no part in

23 dictating what or should -- what should or should not

24 go into it. I -- I --

25 Q. (By Mr. Underhill) I didn't ask you if you


426

1 did. I asked you a different question. I asked you:

2 Can you -- I'll ask you this: Do you think you --

3 strike that.

4 Go back. The Bly Report was issued on, I

5 believe, September 8th or 9th of 2010 --

6 A. Yes.

7 Q. -- correct?

8 And as of that date, you still held the title

9 of --

10 A. I did --

11 Q. -- Chief Executive Officer --

12 A. Correct.

13 Q. -- for BP Group, correct?

14 A. Correct.

15 Q. As of the time that the Bly Report was issued,

16 and at the time you still held that position, do you

17 believe that these E-mails we've just gone through,

18 particularly Exhibit 96, the insanity, paranoia, chaos,

19 et cetera, E-mails, do you think that that merited at

20 least a mention in the Bly Report?


22 question.

23 A. I -- I -- I don't think I have a basis to say

24 that. I -- I don't know the context in which they

25 were -- they were clearly, as you identified. They


427

1 were identified by at least someone on the Team that

2 wrote the Bly Report. I -- I'm not able -- able to

3 judge whether they should or shouldn't have been --

4 have been included, based on what you've presented to

5 me today.

6 Q. (By Mr. Underhill) From that exhibit, quote --

7 this is the Guide to Sims E-mail, quote, "The operation

8 is not going to succeed if we continue in this manner,"

9 close quote.

10 Three days later, did it succeed?



13 Q. (By Mr. Underhill) The Operation, did it

14 succeed?



17 A. There was a cran -- tragic accident involving

18 multiple causes and multiple people.

19 Q. (By Mr. Underhill) Can we conclude from your

20 answer that it did not succeed?

21 A. Well --


23 Q. (By Mr. Underhill) I didn't ask you what

24 caused it. I simply asked you: Did the operation

25 succeed?


428

1 A. And what we don't know from this is what

2 operation were they referring to.

3 Q. Well, let me give you context. My context,

4 the context of my question.

5 The Operation, from my question, and the

6 context for that Operation, is a blowout, an explosion,

7 a fire, 11 souls who were lost, people that were

8 injured, some severely, a rig that lies at the bottom

9 of the Gulf of Mexico, the largest oil spill known in

10 our nation's history, that's my context.

11 MR. GODFREY: Objection as to form. Is

12 there a question pending?

13 MR. WEBB: Is there a question? I -- I

14 don't hear a question yet.

15 MR. UNDERHILL: And we'll get to it, so

16 if you'll do me the courtesy of letting me finish, and

17 I'll do you the courtesy of waiting for your objection.

18 MR. GODFREY: I'd appreciate that you

19 start your question --

20 Q. (By Mr. Underhill) So the question -- so the

21 question, sir --

22 MR. UNDERHILL: -- and counsel --

23 Q. (By Mr. Underhill) -- is given that context

24 that I just gave you, did the operation succeed?



429


2 A. This -- the E-mail trail refers to an

3 Operation. I -- I -- I -- I don't believe it's

4 referring to the totality of the Operation. I don't

5 know that. But I can't -- I can't determine one way or

6 another what this reference to Operation --

7 Q. (By Mr. Underhill) My question was: If you

8 accept -- and perhaps you don't, but if you accept my

9 context for the term "Operation," did it succeed?



12 A. Clear -- clearly, the -- there was a tragic,

13 tragic accident. That's what you've described. Now,

14 whether that links this ref -- reference to Operation,

15 to a tragic accident, I can't tell from this E-mail.

16 Q. (By Mr. Underhill) Can you see how a

17 reasonable person and, indeed, a reasonable jurist,

18 could look at Mr. Guide's last sentence, and look at it

19 not as a statement, but as prophecy?



22 question.

23 A. I can imagine how that could be interpreted

24 that way. Indeed.

25 Q. (By Mr. Underhill) Do you know why the Bly


430

1 Report did not include a root cause analysis?

2 A. The Bly Report was set up to determine the

3 cause of the -- of the accident, and -- and that's

4 what -- what it did to -- I -- I -- I -- I -- I believe

5 in a rigorous and robust way. And it certainly, to my

6 knowledge, it has stood the test of time in determining

7 the cause of the accident. And as I understand, the

8 Presidential Commission agreed with around 90 percent

9 of the Report.

10 Q. Are -- were you finished?

11 A. (Nodding.)

12 Q. Are you aware that Matthew Lucas was a member

13 of the Bly Investigation Team? Do you know who Matt

14 Lucas is?

15 A. I don't know who Matthew Lucas is.

16 Q. I'll represent to you that he was a member of

17 the Bly Report -- or the Bly Investigation Team, and in

18 fact, his -- he's a root cause specialist. That's his

19 day job in BP.

20 A. M-h'm.

21 Q. That he had to seek a dispensation to exclude

22 root cause analysis from the Bly Investigation and its

23 ultimate Report?

24 MR. GODFREY: Objection as to form. And

25 I instruct the witness not to answer. The Magistrate


431

1 has already ruled on that, and you know that.

2 MR. UNDERHILL: I'm sorry. Does the

3 witness -- I haven't asked him about what counsel said.

4 I'm asking him is he aware that he --

5 MR. GODFREY: That's the subject of a

6 Motion before Magistrate Judge Shushan on the Bondi

7 document was -- was --

8 MR. UNDERHILL: I'm not asking about a

9 Bondi document. I'm asking if he knows that Lucas --

10 regardless of where he got it, that Lucas sought a

11 dispensation. Not who gave it to him, not who granted

12 it. That Lucas sought a dispensation to exclude root

13 cause analysis from the Bly Investigation. That's the

14 only question.

15 MR. GODFREY: Let me consult with my

16 client to determine whether or not --

17 MR. UNDERHILL: Certainly.

18 MR. GODFREY: -- his knowledge is

19 unrelated --


21 MR. GODFREY: -- to privilege.



24 MR. GODFREY: You may answer the

25 question.


432

1 A. I wasn't aware.

2 Q. (By Mr. Underhill) Okay. So you, who at the

3 time the Bly Report was commissioned, initiated,

4 whatever you want to call it, all the way through the

5 date that it was ultimately issued in September of

6 2010, you were never aware that root cause analysis,

7 was expressly and specifically excluded from the Bly

8 Investigation?

9 A. I was aware of the terms of reference as we

10 discussed earlier today, which were very clear.

11 Q. But, actually, the terms of reference include

12 systemic causes, did it not?

13 A. The terms of reference are as we reviewed

14 today. We can go back and just confirm what was in the

15 terms of reference.

16 Q. You're right. Be glad to.

17 MR. UNDERHILL: Do we have it?


19 MR. UNDERHILL: My Report.

20 Q. (By Mr. Underhill) I don't have the exhibit

21 number, Mr. Hayward.

22 MR. GODFREY: Exhibit 2.

23 MR. UNDERHILL: Exhibit 2. Thank you.


25 MR. GODFREY: Well, the terms of


433

1 reference are Exhibit 2. The Bly Report is Exhibit 1.

2 MR. UNDERHILL: It -- it -- hold on.

3 Hold on. Hold on. We'll get there, sir.

4 Q. (By Mr. Underhill) If you'll take the binder,

5 which is -- includes the Bly Report, if you open it up,

6 you'll find the appendices. The appendices are Exhibit

7 2, in this MDL Litigation, and the first page of

8 Exhibit 2 is the -- the terms of reference.

9 What I want to ask you, is that the terms of

10 reference?

11 A. It is the terms of reference.

12 Q. Under Paragraph 3D, why don't you tell me what

13 that says?

14 A. It says: "Critical factors."

15 Q. Let me back up actually. Paragraph 3 reads:

16 "Prepare a report to include" and then colon, correct?

17 A. Correct.

18 Q. And then "d.," critical factors listed under

19 that are what?

20 A. "Immediate Causes, System Causes."

21 Q. So why were system causes not included in the

22 Bly Report?


24 A. To -- to my knowledge and my understanding,

25 the Bly Report was completed in line with the terms of


434

1 reference described here. It was issued three weeks

2 before I left BP.

3 Q. (By Mr. Underhill) So does that mean that you

4 understand that the Bly Report did, in fact, look to --

5 I'm looking at terms of reference, quoting, "System

6 Causes"?

7 A. It looks at the causes of the accident and --

8 and identified them --

9 Q. Do you know --

10 A. -- and made recommendations.

11 Q. I'm sorry. I didn't mean to cut you off. Go

12 ahead.

13 A. And made recommendations based on what they

14 found to be the cause of the accident.

15 Q. Do you know -- you don't know whether they

16 looked at root causes or not, though?

17 A. They followed the terms of reference.

18 Q. Okay. Almost done. Could you go back to the

19 Annual Report, please? Page 12.

20 MR. GODFREY: This is the 6033?

21 MR. UNDERHILL: That is --

22 MR. GODFREY: The big one?

23 MR. UNDERHILL: -- correct, correct.


25 Q. (By Mr. Underhill) Page 12. Just let me know


435

1 when you're there, Mr. Hayward.

2 A. Page 12? (Reviewing document.)

3 Q. There you go. I'm going to focus on Page --

4 Page 12. And this is -- there's some graphs. On the

5 right-hand column the middle graph, do you see "Number

6 of employeesa (thousands)"?

7 A. Yep.

8 Q. I'm going to do my old reading drill here

9 again. Tell me if I read it accurately. Quote,

10 "Employees include all individuals who have a contract

11 of employment with a BP Group entity."

12 "In 2007 we began a process of making BP a

13 simpler, more efficient organization. Since then our

14 total number of employees has reduced by approximately

15 18,000, including around 9,200 in our non-retail

16 businesses."

17 Did I --

18 A. Correct.

19 Q. -- quote that correctly?

20 You probably have this figure reasonably at

21 the tip of your hand.

22 A. I would have done a year ago. I don't

23 anymore, I'm afraid.

24 Q. Approx -- what I was actually going to ask is:

25 Rough figures, do you know how many people BP employed


436

1 in that period? Was it a hundred thousand, 90,000?

2 A. I believe it was around 90,000.

3 Q. Around 90,000. So I'm not going to do this to

4 you on the math part, but if we wanted to figure out

5 what the percentage of employee cuts were, we would

6 divide 90,000 into 18,000, correct?


8 Q. Okay.

9 A. In as much as that -- a lot of it was related

10 to businesses that we sold, in particular retail

11 businesses, which were probably 10,000 people of the

12 18.

13 Q. Actually, it says 9200, does it not?

14 A. Yeah, yeah.

15 Q. Thank you. When BP decided, when you were at

16 the position of CEO, to cut employees as part of

17 cutting costs, could you describe briefly the process?

18 Did you come up with a number, 18,000, for example, or

19 did you come up with a percentage, we'll cut 20

20 percent, 5 percent, 7 percent? How did you do it?

21 A. We -- we didn't have a going-in target at all,

22 actually. We -- we -- we went through a process of

23 simplifying our organization, reducing overlap

24 redundancy. We did an analysis of the organization,

25 and looked at -- as I said earlier, it was focused very


437

1 much on the 30,000 people that operates above the

2 Operations.

3 Q. The -- was there a matrix by which BP, when it

4 was making employee cuts, tried to balance and

5 calculate the effects upon safety, or not, if you felt

6 there were no effects upon safety?

7 A. No, there was no matrix, because as I said,

8 this focus was at the overhead level.

9 Q. So --

10 A. At the -- at the level of corporate centers

11 and head offices. It wasn't about operational people

12 at all. It was trying to make operational -- the lives

13 of operational people simpler, by reducing the layers

14 of --

15 Q. You know, I'm not a conceptual guy. Go ahead.

16 A. -- reducing the layers of Management and the

17 complexity of the reporting lines.

18 Q. I'm not a conceptual guy, I like concrete

19 examples, so let me give you a concrete example. HSSE

20 employees that used to be assigned to the Transocean

21 rig DEEPWATER HORIZON, that job was eliminated. Would

22 you call that an overhead position?

23 A. I think in that case, as -- as we saw this

24 morning, I was reminded there were three people doing

25 that job on that rig.


438

1 Q. Who?

2 A. There were -- I -- I don't recall what we

3 read -- we looked at this morning, but there was a

4 couple of people from -- there's a Transocean HSE rep

5 and a BP HSE rep, and the decision was taken that --

6 that there was over -- overlapping lack of clarity

7 around who was accountable.

8 Q. Well, you're not suggesting Transocean made

9 the rig or made the decision to cut BP's --

10 A. No, I'm not suggesting that at all.

11 Q. So -- so it was BP that made the decision to

12 cut those positions, correct?

13 A. It was.

14 Q. So it's not fair to blame Transocean for

15 cutting those positions in BP's employees?

16 A. No, I --

17 MR. GODFREY: Object to the form of

18 question.

19 A. I wasn't for one minute suggesting that was

20 the case. What I was highlighting is there were

21 multiple people on the rig doing that task, and that,

22 as I understand it, was the basis for moving the

23 position in BP.

24 Q. (By Mr. Underhill) The word -- the letters

25 HSSE, what do those stand for?


439

1 A. Health, Safety, Security, and Environment.

2 Q. DEEPWATER HORIZON tragedy, as you have used

3 the word, or the phrase, were there effects upon

4 health? I'm not being --

5 A. Yes.

6 Q. -- facetious, I'm very serious --

7 A. Yes.

8 Q. -- about this. Were there effects upon

9 peoples' health?

10 A. Yes.

11 Q. And, obviously, people that died, had an

12 ultimate effect on health, correct?

13 A. Correct.

14 Q. Safety, an effect on safety?

15 A. Yes.

16 Q. Security, effect on that?

17 A. Probably, yes.

18 Q. Effect on the environment?

19 A. Yes.

20 Q. So the people who held the title of Health,

21 Safety, Security, and Environment that used to work

22 aboard the DEEPWATER HORIZON, were cut, those positions

23 cut, prior to, as you termed it, the tragedy, they

24 weren't there to supervise health, safety, security,

25 and environment on April 20th of 2010, were they?


440


2 question.

3 A. There's no evidence from the investigation

4 that if they had have been present, it would have made

5 any difference. They would not have been able to

6 interpret. They would not have been able to oversee

7 Halliburton's pumping of the cement. They wouldn't

8 have interpreted negative pressure differently. They

9 wouldn't have been able to indicate to the drillers

10 that they weren't doing the right thing with respect to

11 what hydrocarbons are coming into the wellbore. They

12 wouldn't have been able to instruct the drillers as to

13 what procedures to take when the well started flowing.

14 They wouldn't have changed the design of the fire and

15 gas system. And they certainly wouldn't have changed

16 the outcome of the blowout preventer failing.

17 Q. (By Mr. Underhill) You said the evidence

18 shows --


20 Q. (By Mr. Underhill) You said the evidence

21 shows -- forgive me, sir, but I wasn't aware that Mark

22 Bly or BP was appointed as judge and jury in this case

23 to decide what was the cause of the accident, or not.

24 Or if am I mistaken on that?

25 MR. GODFREY: Objection, move to strike.


441


2 question.

3 A. I -- I may have used a word that you interpret

4 in a legal sense inappropriately. For that I

5 apologize.

6 Q. (By Mr. Underhill) Well --

7 A. What I was -- what I was trying to indicate

8 was that the results of the Bly Investigation. I don't

9 believe that the presence or absence of an HSSE

10 professional on that rig would have changed the outcome

11 given the multiple failures that occurred on that day.

12 Q. Well, how about if --


14 Q. (By Mr. Underhill) How about if the HSSE Rep

15 did just one thing he was there, or she, for the

16 conduct of the negative pressure test and said

17 "Fellows, not a good test" --

18 A. Well --

19 Q. -- "do not proceed, do not pass go, do not

20 collect $200, stop what you're doing and figure out

21 whether you have a well flowing."

22 A. Yeah.

23 Q. Would that be one thing perhaps that --

24 A. Well -- well --

25 Q. Let me finish, please. Would that be perhaps


442

1 one thing that that position that was cut, would that

2 be one thing that perhaps that person contributed to?

3 MR. WEBB: Objection, form -- form of the

4 question.


6 A. The HSSE individual would not have had the

7 training or the skills to interpret a negative pressure

8 test.

9 Q. (By Mr. Underhill) Do you know what a job

10 hazard analysis is?

11 A. I do.

12 Q. And do you think that the HSSE people, that

13 position, whether they have anything to contribute in

14 terms of a job hazard analysis?

15 A. Potentially.

16 Q. In terms of -- you -- you indicated that there

17 were no matrices used when BP decided to cut a position

18 that is relative to safety. There was no matrix you

19 said. If we cut this, what's the effect on safety.

20 Does that also apply to the decision, whomever made it,

21 to cut the HSSE positions from the DEEPWATER HORIZON?

22 A. I don't know what -- on what basis that was

23 taken.

24 THE COURT REPORTER: Tape.

25 A. But I doubt very much there was any -- any


443

1 belief that it was increasing risk.

2 MR. UNDERHILL: Are we out of time?

3 Thank you.



6 (Deposition adjourned at 7:18 p.m., to be

7 resumed Wednesday, June 8, 2011, at 7:30 a.m.)

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1 CHANGES AND SIGNATURE

2 WITNESS NAME: ANTHONY HAYWARD

3 DATE OF DEPOSITION: JUNE 6, 2011

4 PAGE LINE CHANGE REASON

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445

1

2 I, ANTHONY HAYWARD, have read the foregoing3 deposition and hereby affix my signature that same is4 true and correct, except as noted on the attached5 Amendment Sheet.6

7

ANTHONY HAYWARD8

9

THE STATE OF )10

COUNTY OF )11

12 Before me, , on

this day personally appeared ANTHONY HAYWARD, known to13 me (or proved to me on the oath of

or through )14 to be the person whose name is subscribed to the

foregoing instrument and executed the same for the15 purposes and consideration therein expressed.

GIVEN UNDER my hand and seal of office this16 day of , 2011.17

18

Notary Public in and for19 The State of20

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22

23

24

25


446

1 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA

2

3 IN RE: OIL SPILL ) MDL NO. 2179BY THE OIL RIG )

4 "DEEPWATER HORIZON" IN ) SECTION "J"THE GULF OF MEXICO, ON )

5 APRIL 20, 2010 ) JUDGE BARBIER ) MAG. JUDGE SHUSHAN

6

7

8 REPORTER'S CERTIFICATION TO THE ORAL AND VIDEOTAPED DEPOSITION OF

9 ANTHONY HAYWARD JUNE 6, 2011

10 VOLUME 111

12

I, Emanuel A. Fontana, Jr., Certified Shorthand13 Reporter in and for the State of Texas, hereby certify

to the following:14

That the witness, ANTHONY HAYWARD, was duly sworn15 by the officer and that the transcript of the oral

deposition is a true record of the testimony given by16 the witness;17 That the deposition transcript was submitted on

, 2011, to the witness or to18 Attorney , for the witness to

examine, sign, and return to Worldwide Court Reporters,19 Inc., by , 2011.20 That the amount of time used by each party at the

deposition is as follows:21

Mr. Cunningham - 3 Hours, 51 Minutes22 Mr. Sterbcow - 2 Hours, 7 Minutes

Mr. Underhill - 1 Hour, 57 Minutes23

24

25


447

1 I further certify that I am neither counsel for,

related to, nor employed by any of the parties in the2 action in which this proceeding was taken, and

further that I am not financially or otherwise3 interested in the outcome of the action.4 SUBSCRIBED AND SWORN to by me on this 6th day of

June, 2011.5

6

7 ____________________________

Emanuel A. Fontana, Jr., RPR8 Texas CSR No. 1232

Expiration Date: 12/31/129 Worldwide Court Reporters

Firm Registration No. 22310 3000 Weslayan, Suite 235

Houston, Texas 7702711 (713) 572-200012

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448

1 UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA2




) MAG. JUDGE SHUSHAN6

7

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16

17 *****************

VOLUME 218 *****************19

20

21 Deposition of Anthony Hayward, taken at

Kirkland & Ellis International, 30 St. Mary Axe, 22nd22 Floor, London EC3A 8AF, England, United Kingdom, on the

8th of June, 2011.23

24

25


449

1 A P P E A R A N C E S23 Magistrate Judge Sally Shushan

UNITED STATES DISTRICT COURT4 EASTERN DISTRICT OF LOUISIANA

500 Poydras Street, B3455 New Orleans, Louisiana 701306 APPEARING FOR THE PLAINTIFFS' STEERING COMMITTEE:

Mr. Stephen J. Herman7 HERMAN, HERMAN, KATZ & COTLAR

820 O'Keefe Avenue8 New Orleans, Louisiana 701139 Mr. Robert T. Cunningham

Mr. William E. Bonner10 CUNNINGHAM BOUNDS, LLC

1601 Dauphin Street11 Mobile, Alabama 3660412 Mr. Ronnie G. Penton

LAW OFFICES OF RONNIE G. PENTON13 209 Hoppen Place

Bogalusa, Louisiana 70427-382714

Mr. John Parkerson Roy15 DOMENGEAUX, WRIGHT, ROY & EDWARDS

556 Jefferson Street, Suite 50016 Lafayette, Louisiana 7050117 Mr. Calvin C. Fayard, Jr.

FAYARD & HONEYCUTT18 519 Florida Avenue, SW

Denham Springs, Louisiana 7072619

APPEARING FOR THE DERIVATIVE PLAINTIFFS, MDL 218520 SECURITIES PLAINTIFFS SUBCLASS:

Mr. Richard Warren Mithoff21 MITHOFF LAW FIRM

500 Dallas St. - Penthouse22 Houston, Texas 7700223 APPEARING FOR BP, INC.:

Mr. Richard C. Godfrey24 KIRKLAND & ELLIS

300 North LaSalle25 Chicago, Illinois 60654


450

1 Mr. Michael Brock COVINGTON & BURLING

2 1201 Pennsylvania Avenue, Northwest Washington, D.C. 20004-2401

3

Mr. Daryl A. Libow4 SULLIVAN & CROMWELL

1701 Pennsylvania Avenue, N.W.5 Washington, D.C. 20006-58056 Mr. James J. Neath

ASSOCIATE GENERAL COUNSEL7 BP LEGAL

BP AMERICA INC.8 501 Westlake Park Boulevard

Houston, Texas 770799

APPEARING FOR ANTHONY HAYWARD:10 Mr. Dan K. Webb

Mr. Thomas L. Kirsch II11 WINSTON & STRAWN

35 West Wacker Drive12 Chicago, Illinois 60601-970313 APPEARING FOR ANDY INGLIS:

Ms. Kathleen H. Goodhart14 COOLEY LLP

101 California Street, 5th Floor15 San Francisco, California 94111-580016 APPEARING FOR TRANSOCEAN:

Mr. Steven L. Roberts17 Mr. Carter L. Williams

SUTHERLAND ASBILL & BRENNAN18 1001 Fannin, Suite 3700


Ms. Heather G. Callender20 TRANSOCEAN OFFSHORE DEEPWATER DRILLING INC.

4 Greenway Plaza21 Houston, Texas 7704622 APPEARING FOR ANADARKO PETROLEUM COMPANY:

Ms. Diane C. Hertz23 Mr. Robert C. Stillwell

Mr. Peter C. Neger24 BINGHAM MCCUTCHEN

399 Park Avenue25 New York, New York 10022-4689


451

1 APPEARING FOR CAMERON INTERNATIONAL CORPORATION: Mr. David J. Beck

2 Mr. David W. Jones BECK, REDDEN & SECREST

3 One Houston Center 1221 McKinney Street, Suite 4500

4 Houston, Texas 77010-20105 APPEARING FOR DRIL-QUIP, INC.:

Mr. C. Dennis Barrow, Jr.6 WARE, JACKSON, LEE & CHAMBERS

America Tower, 42nd Floor7 2929 Allen Parkway


APPEARING FOR M-I SWACO:9 Mr. Steven A. Luxton

MORGAN, LEWIS & BOCKIUS, LLP10 1111 Pennsylvania Avenue, NW

Washington, D.C. 2000411

Mr. Hugh E. Tanner12 MORGAN, LEWIS & BOCKIUS

1000 Louisiana Street, Suite 400013 Houston, Texas 7700214 APPEARING FOR HALLIBURTON:

Mr. Donald E. Godwin15 Ms. Jenny L. Martinez

Ms. Stefanie K. Major16 GODWIN RONQUILLO

1201 Elm Street, Suite 170017 Dallas, Texas 75270-204118 Ms. Stephanie T. Bragg

HALLIBURTON19 2107 CityWest Boulevard, Building 2


APPEARING FOR WEATHERFORD:21 Mr. Wayne G. Zeringue, Jr.

JONES, WALKER, WAECHTER, POITEVENT, CARRERE &22 DENEGRE, LLP

201 St. Charles Avenue23 New Orleans, Louisiana 701702425


452

1 APPEARING FOR THE UNITED STATES: Mr. R. Michael Underhill

2 Attorney in Charge West Coast Office

3 U.S. DEPARTMENT OF JUSTICE TORT BRANCH, CIVIL DIVISION

4 450 Golden Gate Avenue 7th Floor, Room 5395

5 San Francisco, California 94102-34636 APPEARING FOR THE STATE OF ALABAMA:

Mr. Luther Strange7 Attorney General

Mr. Corey L. Maze8 Special Deputy Attorney General

Mr. Winfield J. Sinclair9 Assistant Attorney General

OFFICE OF THE ATTORNEY GENERAL10 STATE OF ALABAMA

501 Washington Avenue11 Montgomery, Alabama 3610412 APPEARING FOR THE STATE OF LOUISIANA:

Mr. Allan Kanner13 Ms. Elizabeth "Lili" Petersen

Attorneys for Louisiana Attorney General14 KANNER & WHITELEY

701 Camp Street15 New Orleans, Louisiana 70130-350416 APPEARING FOR OHIO PENSION FUNDS:

Mr. Jeffrey C. Block17 BERMAN DEVALERIO

One Liberty Square18 Boston, Massachusetts 0210919 ALSO PRESENT:

Mr. Peter Jennings, Logistics Supervisor20 Mr. Ray Aguirre, Case Manager

Mr. Max Kennedy, Videographer21 Ms. Lilia Garcia

Mr. Chad Paris22 Ms. Cecelia Aguilar232425


453

1 INDEX2 VIDEOTAPED ORAL DEPOSITION OF

ANTHONY HAYWARD3 JUNE 8, 2011

VOLUME 24

5

6 Appearances.............................. 4497

Examination-Mr. Strange.................. 4578 Examination-Mr. Kanner................... 477

Examination-Mr. Roberts.................. 5399 Examination-Mr. Godwin................... 595

Examination-Ms. Hertz.................... 66010 Examination-Mr. Beck..................... 734

Examination-Mr. Godfrey.................. 80011 Redirect-Mr. Cunningham.................. 85912

Changes and Signature.................... 90313

Reporter's Certificate................... 90514

15

16 EXHIBIT INDEX17

Exhibit No. Description Marked18

19 1356A Drilling Contract No. 980249, RBS-8D Semisubmersible Drilling Unit, Vastar

20 Resources, Inc. and R&B Falcon Drilling Co., December 9, 1998, marked

21 CONFIDENTIAL; beginning Bates number, BP-HZN-MBI00021461, ending Bates,

22 number 21545 75123 6018A Complete Document 14 - From 'BP

Parties' database, 2010 Drilling24 Excellence Update PowerPoint 84925 6055 DVD, Tony Hayward, Apology 458


454

1 6056 June 25, 2010 E-mail string among Tony Hayward, Andy Inglis, Bernard Looney,

2 Christina Verchere, Kent Wells, Subject: Tech update, marked as

3 CONFIDENTIAL; BP-HZN-2179MDL00965473 5304 6057 BP Media Communication Plan for next

2 weeks, May 3, 2010, marked as5 CONFIDENTIAL; BP-HZN-2179MDL01890180 -

1890185 5336

6058 Tony Hayward Townhall GoM Response7 Update, July 16, 2010, marked as

CONFIDENTIAL; BP-HZN-2179MDL01115520 -8 1115523 5359 6059 July 9, 2010 E-mail from Tony Hayward,

Subject: Gulf of Mexico update from10 Tony Hayward, marked as CONFIDENTIAL;

BP-HZN-2179MDL01617349 - 1617350 53711

6060 United States House of Representatives12 Committee on Energy and Commerce

Subcommittee on Oversight and13 Investigations, statement by Tony

Hayward, Chief Executive, BP plc,14 June 17, 2010, marked as CONFIDENTIAL;

BP-HZN-2179MDL01164162 - 1164167 54315

6061 Printout of 5/18/10 Forbes.com16 interview, In His Own Words: Forbes

Q&A With BP's Tony Hayward; seven pages 55117

6062 Tony Hayward Townhall GoM Response18 Update, July 16, 2010, marked as

CONFIDENTIAL; BP-HZN-2179MDL01124483 -19 1124486 58520 6063 September 8, 2010 E-mail from Employee

Communications, marked as CONFIDENTIAL;21 BP-HZN-BLY00076345 & BP-HZN-BLY00076346 59022

6064 Gulf of Mexico SPU Major Hazards Risk23 Management Policy, marked as

CONFIDENTIAL; BP-HZN-2179MDL02027549 -24 2027569 xx25


455

1 6065 Gulf of Mexico SPU GoM Drilling and Completions; GoM D&C Operating Plan/

2 Local OMS Manual, marked as CONFIDENTIAL; BP-HZN-MB100193448 - BP-HZN-MB100193520 689

3

6066 Exploration and Production, Drilling and4 Completions, Beyond the Best Common

Process, marked as CONFIDENTIAL;5 BP-HZN-2179MDL00333308 6926 6067 Document GP 10-35, Dated 11/18/2008, Well

Operations, Group Practice, BP Group7 Engineering Technical Practices, marked

as HIGHLY CONFIDENTIAL;8 BP-HZN-2179MDL00407729 - 407747 7099 6068 Article of The Washington Post, June 27,

2010, Headline: Trouble at the tiller;10 If Hayward beats a retreat, it's unclear

who could lead BP; three pages 71911

6069 April 8, 2010, E-mail from Tony C.12 Emmerson to Robert Kaluza with

Attachments, marked as CONFIDENTIAL;13 BP-HZN-2179MDL00305452, 305464 - 305477 72114 6070 2009 Annual Individual Performance

Assessment of Robert Kaluza, Period15 Reviewed: 2009, marked as CONFIDENTIAL;

BP-HZN-MBI00193095 - 193098 72516

6071 January 11 and 12, 2010 E-mail string to17 various parties with Attachment: Process

Safety 2010 Plan.ppt, marked as18 CONFIDENTIAL; BP-HZN-2179MDL01109991,

seventeen pages 73019

6072 Final Report, Blow-out Prevention20 Equipment Reliability, Joint Industry

Project (Phase I?Subsea), May 12, 2009,21 West Engineering Services, marked as

CONFIDENTIAL, BP-HZN-2179MDL00210163 -22 210280 77323 6073 April 22, 2010, Press Release, BP

INITIATES RESPONSE TO GULF OF MEXICO24 OIL SPILL, marked as CONFIDENTIAL

TREATMENT REQUESTED BY BP p.l.c.;25 BP-HZN-SEC00104535 -104536 805


456

1 6074 April 25, 2010, Press Release, BP FORGES AHEAD WITH GULF OF MEXICO OIL

2 SPILL RESPONSE, marked as CONFIDENTIAL, BP-HZN-2179MDL02176212 - 2176213 807

3

6075 May 5, 2010, Press Release, UPDATE ON4 GULF OF MEXICO OIL SPILL RESPONSE, marked

CONFIDENTIAL, BP-HZN-2179MDL01588108 -5 1588109R809 8096 6076 May 6, 2010 BP Press Release, UPDATE

ON GULF OF MEXICO OIL SPILL RESPONSE,7 marked as CONFIDENTIAL;

BP-HZN-2179MDL01588106 - 1588107 8128

6077 July 28, 2010 BP Document, MAKING9 THINGS RIGHT, marked as CONFIDENTIAL;

BP-HZN-2179MDL01830445 - 1830446 81410

6078 March 4, 2009 BP document from David11 Bickerton to SEEAC, Subject: BP

Sustainability Review, attaching12 BP Sustainability Review, marked as

HIGHLY CONFIDENTIAL;13 BP-HZN2179MDL00085565 - 85595 83714 6079 BP Annual Report and Accounts 2006;

seven pages 86415

6080 Printout from BP website, Executive16 management/Governance/BP; three pages 88217

18

19

20

21

22

23

24

25


457

1 MR. GODFREY: Good morning. Welcome to

2 Day 2.

3 MR. STRANGE: I believe we're ready.


5 On the record at 7:33 a.m., continuing the

6 deposition with Tape 10.

7 ANTHONY HAYWARD,

8 having been previously duly sworn, continued to testify

9 upon his oath as follows:

10 EXAMINATION

11 QUESTIONS BY MR. STRANGE:

12 Q. Good morning, Mr. Hayward. My name is Luther

13 Strange. I'm the Attorney General of the State of

14 Alabama. Your lawyers have probably told you the

15 Attorney General is the Chief Law Enforcement Officer

16 for a State.

17 I'm also the coordinating counsel for all the

18 States involved in this multidistrict litigation in New

19 Orleans, so I represent not only the State of Alabama

20 but other States that are involved in this case.

21 I want to put you at ease off the bat, and I'm

22 going to tell you I'm not going to ask you if you've

23 gotten your life back. Frankly, I don't care.

24 I'm here to talk to you about things you said

25 to the people of the Gulf. My focus is on what has


458

1 happened in the Gulf and what BP has done and plans to

2 do to make it right.

3 So what I'm going to do is I'm going to play

4 for you a CD of a commercial that you made shortly

5 after the disaster on April 20th. I'd like you to look

6 at the CD, along with the other folks in the room here,

7 and then will ask you some questions about it.

8 MR. STRANGE: Kym, I'd like --

9 MR. GODFREY: Is this going to be marked

10 as an exhibit?

11 MR. STRANGE: This will be marked as an

12 exhibit. Counsel, here's a copy of it.


14 MR. STRANGE: Rick, here's a copy. I'm

15 also going to distribute for the room copies of the

16 written transcript so that they can refer to that,

17 so --

18 MR. MAZE: They'll be coming from that

19 end.

20 MR. STRANGE: -- that should be coming

21 along.

22 THE COURT REPORTER: Mark one of the CDs,

23 Ray.

24 May I have one of the CDs, please?

25 MR. MAZE: It's right here.


459

1 MR. STRANGE: It's right here. Sorry,

2 Kym.


4 MR. WEBB: Will there be a date when this

5 plays, so we know what date this is coming from?


7 MR. STRANGE: It was played countless

8 times across the Gulf. I don't have an exact date for

9 this particular --

10 MR. WEBB: Or --

11 MR. STRANGE: -- broadcast.

12 MR. WEBB: -- you don't have a date range

13 when it did play?

14 MR. STRANGE: It would have been starting

15 approximately 30 days after the accident, I guess.

16 THE WITNESS: Yeah, I thi -- I think

17 probably from sometime towards the second half of May.


19 THE COURT REPORTER: Okay, Peter.

20 (Video played as follows:)

21 "The Gulf spill is a tragedy that never should

22 have happened.

23 "I'm Tony Hayward. BP has taken full

24 responsibility for cleaning up the spill in the Gulf.

25 We've helped organize the largest environmental


460

1 response in this Country's history. More than

2 2 million feet of boom, 30 planes, and over 1300 boats

3 are working to protect the shoreline.

4 "Where oil reaches the shore, thousands of

5 people are ready to clean it up. We will honor all

6 legitimate claims, and our cleanup efforts will not

7 come at any cost to taxpayers.

8 "To those affected and your families, I'm

9 deeply sorry. The Gulf is home for thousands of BP

10 employees, and we all feel the impact. To all the

11 volunteers and for the strong support of the

12 Government, thank you. We know it is our

13 responsibility to keep you informed and do everything

14 we can so this never happens again.

15 "We will get this done. We will make this

16 right."

17 (End of video.)

18 Q. (By Mr. Strange) Mr. Hayward, would you like

19 to see that again?

20 A. No.

21 Q. To the best of your knowledge, is this a true

22 and accurate recording of a commercial you made and BP

23 aired after the disaster?

24 A. It is.

25 Q. While we're on the subject of media, would it


461

1 surprise you, Mr. Hayward, to learn that BP spent

2 $93 million in advertisements such as this for the

3 period April through July of 2010?

4 A. I wasn't aware of the number, but I was aware

5 that --

6 Q. But you wouldn't be surprised at --

7 A. I was aware --

8 Q. -- at that number?

9 A. -- that we were advertising to try and, in

10 essence, provide information to people about what we

11 were doing and what we intended to do on an ongoing

12 basis.

13 Q. So it wouldn't surprise you that you spent 300

14 percent more in '10 than in '09 on media and

15 advertising in the U.S.?

16 A. Of course, with respect, we weren't faced with

17 the challenge that we had in -- after the terrible

18 accident in the Gulf. So what we were trying to do was

19 inform people. Those were information broadcasts, in

20 essence.

21 Q. At the time this commercial was made and

22 broadcast, you were the CEO of BP, correct?


24 Q. And you served on the Board of Directors; is

25 that correct?


462


2 Q. So when you made these statements, you had the

3 full and complete authority to make these promises

4 binding, didn't you?

5 A. The statements were accurate and reflected

6 what we -- what we were doing and intended to do.

7 Q. And you had the authority to make them?

8 A. And I had the authority to make them.

9 Q. Okay. Now, let me turn to some of the

10 specific things you said in the broadcast. First of

11 all, you said, "The Gulf spill is a tragedy that never

12 should have happened," correct?

13 A. I did.

14 Q. That's an acknowledgement this whole

15 catastrophe could have, in fact, been avoided, isn't

16 it?

17 A. I think it's evident from all of the

18 investigations that have occurred subsequent that it

19 could have been avoided if any number of things had

20 fallen into place. If there had been a good cement

21 job, it would have been avoided. If the negative

22 pressure test had been properly interpreted, it would

23 have been avoided. If the well control procedures had

24 been followed, it would have been avoided. If the

25 blowout preventer had worked, it would have been


463

1 avoided. There -- there are multiple things that could

2 have happened.

3 Q. But it could have --


5 Q. (By Mr. Strange) -- been avoided?

6 MR. ROBERTS: I'll object. Objection,

7 form.

8 A. And it could -- could have been avoided,

9 undoubtedly.

10 Q. (By Mr. Strange) Could have been avoided.

11 That's --

12 A. Yeah.

13 Q. That's what I want to know.

14 Then you said, "BP has taken full

15 responsibility for cleaning up the spill in the Gulf."

16 Is that correct?


18 Q. Did BP take responsibility for the cleanup

19 because it was responsible for the spill?

20 A. We took responsibility for the cleanup because

21 we were a responsible party under OPA 1990, and it was

22 our responsibility to clean up the spill.

23 Q. Is that because you caused the spill?

24 A. Doesn't say anything about who caused the

25 spill. It says very clearly under the -- I believe


464

1 under the statute, that we had a responsibility to

2 clean up the spill. I -- I believe that there were

3 four parties named by the Government as responsible

4 parties.

5 Q. But you took full responsibility for the

6 cleanup?

7 A. We took responsibility for the cleanup.

8 Q. Full responsibility?

9 A. We took responsibility for the cleanup. We

10 made it clear that we expected the other responsible

11 parties to share their burden, and that remains --

12 Q. I'm just asking you --

13 A. -- in place today.

14 Q. -- what you said about your responsibility,

15 which is full responsibility. It wasn't conditioned on

16 what you just said on --

17 A. I just --

18 Q. -- contributions from other parties or

19 insurance or --

20 A. I -- I -- I said --

21 MR. WEBB: I object to the form of the

22 question.

23 You can answer.

24 A. I said that we would take responsibility for

25 the cleanup. That's what -- have we got a


465

1 transcription --

2 Q. (By Mr. Strange) Do you say you would take

3 full responsibility for the cleanup?

4 A. BP has taken full responsibility --

5 Q. It's a simple question.

6 A. -- for cleaning up the spill in the Gulf.

7 Q. Thank you.


9 Q. That's all I wanted -- that's the answer to

10 the question.

11 So BP didn't limit its commitment to any set

12 time period, did it?

13 A. It didn't.

14 Q. BP didn't limit its commitment to any amount

15 of money, did it?

16 A. It didn't.

17 Q. In fact, there were no strings attached, were

18 there?

19 A. There were no limits to time or to money.

20 Q. No limits to time or to money. Thank you.

21 That sounds like a pretty unqualified

22 commitment, doesn't it?

23 A. I think what we've done and continue to do has

24 been pretty unqualified.

25 Q. So that means BP will continue to work until


466

1 every drop of oil is removed and every legitimate claim

2 is paid, correct?

3 A. We've -- we've said all along that we will be

4 there until we have restored the Gulf to its -- its --

5 what's the word I'm looking for? Restored the Gulf to

6 the -- the way it was prior to the spill.

7 Q. Good. Well, I'm not just so concerned about

8 what happened in the past, but there are future

9 concerns, as well.

10 So let me ask you this: There are reports

11 that 15 miles of oil in the form of tar mats still lie

12 off Alabama's coast. Forecasters are predicting as

13 many as 18 named storms in the Gulf of Mexico this

14 hurricane season. If one of those hurricanes washes

15 the remaining oil from the spill onto Alabama's

16 beaches, or any other State's beaches, for that matter,

17 will BP honor its promise to, quote, "clean up the

18 spill," to, quote, "get this done," and to, quote,

19 "make this right," by cleaning up that oil?

20 A. My --


22 A. My view is that BP will honor the commitment

23 that I made. Clearly, I'm no longer in a position to

24 make a commitment about what might happen in the

25 future with --


467

1 Q. (By Mr. Strange) Correct.

2 A. -- respect to that, because I no longer have

3 the authority.

4 Q. The commitment has already --

5 A. My --

6 Q. -- been made.

7 A. My --

8 Q. We covered that.

9 A. -- expectation is that the company will

10 fulfill the commitments that I made.

11 Q. At no cost to the innocent taxpayers of the

12 region?

13 A. Well, there was -- it was -- we always made it

14 very clear that the taxpayer would not bur -- share any

15 burden in this.

16 Q. Good.

17 A. It would be BP --

18 Q. That was your promise.

19 A. It was. And I believe so far that's been the

20 case.

21 Q. The next thing you said, you said, "BP will

22 honor all legitimate claims," correct?


24 Q. So that included States' claims?

25 A. It included all legitimate claims. I --


468

1 Q. Individuals?

2 A. I wasn't -- I wasn't -- all legitimate

3 claims --

4 Q. Let me just go over the categories, and you

5 can just answer it "Yes" --

6 A. Okay.

7 Q. -- or "No."

8 A. Well, I can --

9 Q. States' claims, "Yes" or "No"?

10 A. Legitimate claims are legitimate --

11 Q. Right?

12 A. -- claims.

13 Q. "Yes"?

14 A. I -- I --

15 Q. That's a "Yes."

16 Individuals?

17 A. If it's a legitimate claim, yes.

18 Q. Businesses?

19 A. Legitimate claim, yes.

20 Q. As it relates to economic damages and losses

21 due to the spill?

22 A. Le --


24 A. Legitimate claims are legitimate claims. I --

25 I --


469

1 Q. (By Mr. Strange) As it relates --

2 A. -- don't have the full legal listing of what

3 the claims might be.

4 Q. I just said covered categories, and I just

5 want to confirm what you've said.

6 A. All right.

7 Q. Environmental claims?

8 A. Legitimate claims.

9 Q. Thank you.

10 A. I -- I can't speak --

11 Q. That's enough.

12 A. -- to the --

13 Q. That's all I needed to know.

14 A. -- comprehensive listing of all the various

15 claims.

16 Q. I'm just trying to make sure I understand what

17 you were committing to do when you said "all legitimate

18 claims."

19 A. Yeah, I think --

20 Q. So we've covered, I think, most of the

21 categories.

22 A. And I think --

23 Q. Now --

24 A. -- there's no evidence that that's not been

25 the case.


470

1 Q. That's not what I asked.

2 Now, you said you know at BP that "...it's our

3 responsibility to do everything we can so this never

4 happens again," correct?


6 Q. Wasn't it BP's responsibility to ensure that

7 this never happened in the first place?


9 A. Clearly, the -- no one would have wanted a --

10 such a tragic accident to have occurred. And, you

11 know, that is why we had so many systems and processes

12 in place to prevent it from happening. And if, you

13 know -- if any one of them had not failed, then the

14 accident would not have occurred.

15 Q. (By Mr. Strange) Was it your responsibility at

16 BP to ensure this never happened in the first place?

17 A. I think --


19 A. -- in -- in a situation as complex as this,

20 where so many parties having so many different pieces

21 of it, ascribing our responsibility to ensure it never

22 happens, you -- you cannot take responsibility for

23 human error. So the answer is "No."

24 Q. (By Mr. Strange) Well, I'm not sure I agree

25 with what you just said, but would you give me the


471

1 answer to the question?

2 Was it BP's responsibility to ensure this

3 never happened? If it wasn't BP's responsibility --

4 A. It was our responsi --

5 Q. -- whose B --

6 MR. WEBB: And I object, asked and

7 answered.

8 Q. (By Mr. Strange) -- responsibility was it?

9 MR. WEBB: -- form of the question.

10 A. Well, I -- it was clearly our responsibility,

11 to -- to the very best of our ability, to ensure that

12 no accidents occurred in our Operations, m-h'm.

13 Q. (By Mr. Strange) Right.

14 A. Whether that describes the responsibility, I'm

15 not -- I don't know.

16 Q. Well, pre -- to prevent this from happening

17 again, don't you first have to understand and admit

18 what you did wrong?

19 A. I think --


21 A. -- we have den -- identified very clearly in

22 the Bly Report what -- the causes of the accident and

23 who was involved at which stage.

24 Q. (By Mr. Strange) What did BP do wrong that

25 could have been prevented -- could have prevented --


472


2 Q. (By Mr. Strange) -- the spill?


4 A. I -- I think if you look at the Bly Report,

5 there are eight causes for this accident, and BP had

6 direct involvement in a part of one of them. We didn't

7 design the cement. We didn't pour the cement.


9 A. That was Halliburton.

10 MR. GODWIN: Excuse me. Object to form.

11 Q. (By Mr. Strange) I know. I'm just asking --

12 MR. WEBB: Keep going.

13 Q. (By Mr. Strange) -- about BP.

14 MR. WEBB: Go -- go ahead. Finish your

15 answer.

16 A. We didn't -- we, along with Transocean,

17 erroneously interpreted the negative pressure test.

18 MR. ROBERTS: Object to the form.

19 A. BP was not monitoring the well, was not

20 monitoring the mud system. BP was not holding the --

21 the drill brake and taking corrective action when the

22 well started flowing. BP did not intervene to send the

23 con -- the flow to the gas pass diverter rather than

24 the diverter, which is what the well control procedures

25 described. BP didn't design the blowout preventer or


473

1 maintain it.

2 So we acknowledged in the Bly Report -- I

3 think it was a very rigorous piece of analysis which

4 has stood the test of time -- exactly where and where

5 not BP was involved in the accident.


7 Q. (By Mr. Strange) Well, have you learned

8 anything you could tell me about how to prevent this in

9 the future?

10 A. I think we and the industry have learned an

11 enormous amount. An enormous amount.

12 Q. So if this kind of accident happens again,

13 what can the citizens of our State expect?

14 A. Well --


16 A. -- the first thing they should expect is that

17 the -- BP and the industry will do everything in its

18 power to ensure it never does happen again.

19 If -- if it -- if, God forbid, it ever did

20 happen again, the industry and BP will be massively

21 better prepared to be able to intervene in the subsea,

22 because we've learned from this accident.

23 Q. So if this accident were to happen tomorrow,

24 how long do you think it would take to stop --

25 A. I can't --


474

1 Q. -- the well?

2 A. -- speculate on that, because it would depend

3 on the specifics of the accident. If it was --

4 Q. The same accident.

5 A. -- exactly the same?


7 A. I -- I -- impossible to speculate, but you

8 would -- you would have to believe that the ability to

9 stop the well flowing would be achieved faster than we

10 were able to in this case.

11 Q. (By Mr. Strange) So had you been prepared, had

12 you been responsible, you might have saved some time?


14 A. This isn't about being responsible. As I

15 said, we learned a lot in this accident, which, if it

16 was a direct repeat, clearly could be applied.

17 Q. (By Mr. Strange) The last thing you said in

18 this commercial was you were "deeply sorry." Is that

19 correct?

20 A. I -- I was and I remain deeply sorry.

21 Q. Does that mean you personally or BP as a

22 corporation, or both?

23 A. Both. It means me personally, and it means

24 the company.

25 Q. What would you personally do differently to


475

1 prevent an explosion -- to have done differently,

2 looking back?


4 A. I -- I think it's difficult for someone at --

5 at the top of a company, with a hundred-thousand people

6 and multiple thousands of operations ongoing every day,

7 to say precisely what they would do differently with

8 respect to an individual accident.

9 Q. (By Mr. Strange) So you don't have an opinion

10 on that?

11 A. I don't have an opinion on that.

12 Q. What would you personally do differently to

13 contain the spill sooner?

14 A. We did --


16 A. -- everything that we could, and I did

17 everything that I could possibly have done at the time,

18 and I -- I don't know that I could have done anything

19 different, frankly, to contain the spill sooner, given

20 the sit -- sit -- situation and circumstance at the

21 time.

22 Q. (By Mr. Strange) You're a man of your word,

23 aren't you, Mr. Hayward?

24 A. I am.

25 Q. So could I go back to the people of Alabama


476

1 and the other Gulf States and tell them that when you

2 promised BP would make this right, you were committing

3 that BP would keep working as long as it takes,

4 whatever it costs BP, to make the people, the States,

5 the businesses, and the environment whole, for the

6 catastrophic damages BP caused with the explosion of

7 April 20th, '10 -- 2010 and the resulting oil spill?


9 MR. WEBB: Object, form of the

10 question --

11 MR. GODFREY: Form.

12 MR. WEBB: -- for multiple reasons.

13 A. Can I read the question, as it's a very long

14 question.

15 Q. (By Mr. Strange) I'll just repeat it for you.

16 A. Okay.

17 Q. When I go back, can I tell them that you've

18 promised and reiterated and affirmed your promises

19 to -- that BP will keep working as long as it takes,

20 whatever it costs, to make the people, the States, the

21 environment, and the economy whole for the damages

22 caused by the oil spill?



25 A. You can certainly tell them that we


477

1 continue -- we will -- we have and we will continue to

2 honor our ob -- obligations and meet all legitimate

3 claims, and we will continue to be there cleaning up

4 whatever residual environmental impact there is for as

5 long as it may occur.

6 Q. Okay. Thank you.

7 MR. STRANGE: That concludes my time for

8 now. I'm going to reserve whatever time I have left

9 and turn it over to Louisiana.

10 You want to break here and let them come in?

11 MR. WEBB: I -- whatever -- Kym, whatever

12 you want to do.


14 MR. GODFREY: We're ready -- we're ready

15 to continue.


17 THE VIDEOGRAPHER: Off the record at 7:51

18 a.m.


20 MR. KANNER: Ready.


22 On the record 7:54 a.m., beginning Tape 11.

23 EXAMINATION

24 QUESTIONS BY MR. KANNER:

25 Q. Good morning --


478

1 A. Hello.

2 Q. -- Mr. Hayward. My name is Allan Kanner, and

3 with my law partner, Lili Petersen, we're representing

4 the State of Louisiana today.

5 A. Yes.

6 Q. Yesterday, I think the Department of Justice

7 showed you a number of E-mails, exchanges between

8 Mr. Sims and Mr. Guide. Do you recall that?

9 A. I do.

10 Q. I have one question about that: Where was the

11 adult supervision?



14 question.

15 Q. (By Mr. Kanner) I mean, shouldn't BP have

16 somebody in there to supervise, work these differences

17 out?

18 A. I think there was -- there was plenty of

19 people supervising actually.

20 Q. But -- well, okay. We took the HSSE people

21 out of the equation, correct?


23 A. We reduced, as I understand it from our

24 discussion on Monday, the overlapping HSEs -- HSSE

25 roles to create clarity of accountability on the rig.


479

1 Q. (By Mr. Kanner) Okay. Who -- you just said I

2 think that adult supervision was being provided.

3 Who -- who specifically --

4 A. No, I --

5 Q. -- with respect to the DEEPWATER HORIZON and

6 MC 252 was responsible for the adult supervision --


8 Q. (By Mr. Kanner) -- of -- of this exploratory

9 well?



12 question.

13 A. I didn't say anything about adult supervision.

14 I said there was supervision of the Drilling Team.

15 There was a management structure in place. I -- I

16 don't recall the names of the individuals.

17 Q. (By Mr. Kanner) You would ultimately be

18 responsible, though, as Chief Executive?

19 A. I'm responsible for establishing processes,

20 systems, and the tone. I can't be responsible for

21 every specific operation in a company of a hundred

22 thousand people operating in a hundred countries.

23 Q. You said during Attorney General Strange's

24 questioning, you can't take responsibility for human

25 error.


480

1 Do you recall that?

2 A. I do.

3 Q. Shouldn't there be supervision in place to

4 help avoid human error? Shouldn't there be systems and

5 processes in place to avoid human error?



8 A. There was a lot of systems and processes in

9 place. And the -- the investigations have identified

10 that each one of them in this tragic accident was

11 unfortunately breached. But there was a lot of systems

12 and process in place. And it required multiple

13 breaches of many systems and processes to result in

14 this accident.

15 Q. (By Mr. Kanner) You don't recall which

16 individual was supposed to provide supervision of this

17 exploratory well?

18 A. I don't.

19 Q. After you first learned of the tragedy at

20 DEEPWATER HORIZON, didn't you try to meet with or talk

21 to the person who was in charge?

22 A. What -- what I did was two -- two things:

23 Firstly, I oversaw the mounting of the biggest re --

24 spill response in history; and, secondly, initiated an

25 investigation to get to, as best as we were able to,


481

1 what has caused the accident.

2 Q. Well, you -- you had to respond. You -- you

3 had to oversee a response, correct?

4 A. I did.

5 Q. Because you had to clean up your mess,

6 correct?


8 A. We were clearly a responsible party under the

9 OPA 1990 Regulations, and we took that responsibility

10 seriously and led, in conjunction with the Coast Guard,

11 the biggest response any company has ever mounted.

12 Q. (By Mr. Kanner) Because this was the biggest

13 marine spill in history, it would be the biggest

14 response, correct?


16 A. It was certainly the biggest -- biggest oil

17 spill in the U.S. history, that is correct.

18 Q. (By Mr. Kanner) And you say that systems and

19 processes were -- were breached. Do you know -- did

20 you change any systems and processes before you left

21 the company?

22 A. Did I change?

23 Q. Yeah. In order --

24 A. I caused --

25 Q. -- to avoid these sorts of tragedies?


482

1 A. I caused as -- as we learned about the causes

2 of the accident, we changed a number of things, and I'm

3 certain more things have been changed subsequent, as --

4 as is the case across the industry. It is what happens

5 every time there's an accident, unfortunately.

6 Q. The -- I think you've already said that you're

7 sorry this oil spill happened, and you are sorry

8 that -- about the severe environmental and human

9 consequences, correct?

10 A. Correct.

11 Q. Do you personally as CEO feel any

12 embarrassment that this happened during your watch?



15 A. I am deeply sorry, and -- that the accident

16 occurred, that so many people's lives were impacted,

17 and it caused so much distress for so many people.

18 Q. (By Mr. Kanner) Do you feel remorse?

19 A. Of course I feel remorse. Eleven people died.

20 Q. And --

21 A. How could you not feel remorse?

22 Q. And the ecosystem of the Gulf has been

23 changed?

24 A. I think I'm not in a position to say whether

25 the ecosystem of the Gulf has been changed or not.


483

1 I've long held the view that we should allow time and

2 science to determine what the environmental impact is,

3 and that remains my position today.

4 Q. In hindsight, would you personally do anything

5 differently, for example, maybe have a hotline, if

6 people believed they have a "nightmare" well?


8 A. I wouldn't advocate the CEO of any company

9 getting involved in Operations in that way.

10 Q. (By Mr. Kanner) Why not?

11 A. Because, A, I'm not qualified; and, B, it

12 would -- it had potential to create chaos and

13 short-circuit all of the -- all of the systems and

14 processes that were in place.

15 Q. But you could save lives?


17 A. I don't think that would -- that would -- I'm

18 not certain that you could say that would be the case

19 or not.

20 Q. (By Mr. Kanner) You're aware that this was

21 described by your own people as a "nightmare" well?

22 A. I'm aware because I was shown an E-mail in my

23 Congressional testimony that one of the young Drilling

24 Engineers described it as a "nightmare" well.

25 Q. Do you disagree with that assessment?


484

1 A. I'm not in a position to make an assessment

2 one way or the other as to whether it was a "nightmare"

3 well. Based on what I have seen subsequent to the

4 accident, it doesn't appear that it was significantly

5 more challenging than many wells that the company

6 drills in the Gulf of Mexico.

7 Q. As CEO, did -- did you receive any E-mails or

8 updates or presentations on the progress of wells that

9 were being drilled?

10 A. No.

11 Q. Why not?

12 A. Because there are lots of other people

13 receiving them, and we would -- BP drills hundreds of

14 wells every year. It's not the role of the CEO to

15 monitor individual wells.

16 Q. Well, this particular well was behind

17 schedule, and I guess it was approximately 21 million

18 in payments, extra days with Transocean at this point

19 in time. Is that something that the CEO would be

20 involved with?


22 A. It's not unusual for wells to be behind

23 schedule, and BP was investing close to $20 billion a

24 year, so I'm afraid at the level of the CEO, a $20

25 million -- $20 million cost overrun actually wasn't


485

1 that significant.

2 Q. (By Mr. Kanner) Because you make about seven

3 billion a quarter?


5 A. The First Quarter result was $7 billion, as we

6 heard from the Department of Justice lawyer on Monday.

7 Q. (By Mr. Kanner) You had said that you were

8 determined to see it through, the -- the response. And

9 earlier I think you -- you said you lead the response.

10 Why didn't you stay with the company?


12 A. I decided with my Board colleagues that the

13 company needed a new face in America, actually.

14 Q. (By Mr. Kanner) Were you fired?

15 A. No.

16 Q. Do you -- do you still have a relation with

17 the company as a consultant?

18 A. No.

19 Q. Are you still a shareholder of the

20 corporation?

21 A. I am as a private citizen.

22

23

24

25


486

1

2

3

4

5

6 Q. Did you ever specifically talk to either

7 Anadarko, MOEX, or Transocean CEOs about this disaster?

8 A. I spoke twice to Jim Hackett at Anadarko.

9 Q. What did you discuss?

10 A. We just -- we discussed the response.

11 Q. Did you discuss -- was he just asking what you

12 were doing, or did you also ask him to chip in his fair

13 share?

14 A. No, I didn't ask him to do anything. We

15 discussed the response. There was no discussion. That

16 discussion was left for the lawyers.

17 Q. You -- you referred a few times to industry

18 practices during your testimony yesterday. For

19 example, you said that the BOP was viewed as a

20 fail-safe by the industry.


22 A. Correct.

23 Q. And I think when you mentioned your Emergency

24 Response Plan with the walruses, you mentioned, well,

25 just like everybody else in the industry, right?


487


2 Q. Do you recall that?

3 A. I do, yeah.

4 Q. Would you agree with me that it's -- it's not

5 sufficient, that one of the lessons learned is it's not

6 sufficient to just rely on what everybody else in the

7 industry is doing or thinking?


9 A. I think what I would say is that the -- there

10 were a lot of lessons for the industry from this

11 accident as the Presidential Commission found. This is

12 an industry issue, not a BP-specific issue.

13 Q. (By Mr. Kanner) Do you -- do you think the

14 fact that you at BP shared this alleged industry belief

15 that the BOP was a guaranteed fail-safe, do you think

16 that that encouraged scrimping on safety?

17 A. No.


19 question.

20 A. No, none whatsoever.

21 Q. (By Mr. Kanner) Well, if it was --

22 A. And there's no evidence from any of the

23 investigations there was scrimping on safety.

24 Q. Well, safety was certainly mishandled, and

25 there was substantial evidence of that. You -- you


488

1 itemized --


3 Q. (By Mr. Kanner) -- a couple of -- you -- you

4 itemized some of the material for General Strange:

5 The -- the BOP had not been inspected, there was a

6 hydraulic problem, there was a dead battery, correct?

7 A. Correct.


9 MR. ROBERTS: Object to the form.

10 Q. (By Mr. Kanner) These are your contractors,

11 you expect your contractors to be complying with all

12 applicable Regulations, correct?


14 A. I do.

15 Q. (By Mr. Kanner) Okay. So -- so I ask you

16 again: Were -- was it your belief -- because you

17 believed that this BOP would be a fail-safe, is that

18 one reason you didn't police your contractors, say,

19 with respect to the BOP?


21 A. To the best of my knowledge, we were providing

22 the appropriate oversight to the contractors.

23 Q. (By Mr. Kanner) You -- you say "to the best of

24 your knowledge," but earlier you said that you really

25 had no knowledge of what was going on at the well,


489

1 correct?

2 A. I had no knowledge prior to the accident of

3 this well at all, other than it was drilling and

4 appeared to have made a discovery. That is when I

5 first became aware of this well.

6 Q. In -- in your mind, when -- when -- when this

7 catastrophe happened, did -- did you feel that -- that

8 somebody was to blame, maybe Head of Exploration?


10 A. Well, I was never interested in the blame

11 game. I was interested in understanding the cause of

12 the accident, which I believe the Bly Report was a

13 pretty good basis. And I was interested in responding

14 to the accident in terms of the spill response.

15 Q. (By Mr. Kanner) Well --


17 Q. (By Mr. Kanner) -- leaving aside the blame

18 game, one way you avoid human error is by holding

19 people accountable for their actions; isn't that true?

20 A. That's true.

21 Q. Okay. So did you make an effort to hold

22 anybody accountable for their actions or mistakes?

23 A. I -- I said a number of times, if we found any

24 evidence of people putting costs ahead of safety, we

25 would hold them accountable, but we -- we have not, nor


490

1 has anyone else.

2 Q. You -- let me just be sure I've got that

3 right. Your testimony is BP has never held anybody,

4 any person accountable for any of the mistakes, errors,

5 that led to the DEEPWATER HORIZON disaster, correct?

6 A. I --


8 question.


10 the question.

11 A. I think -- two things I would say. I -- at

12 the time when the Report was published, I was leaving

13 the company. So that was beyond my tenure at the

14 company. So the honest answer to the question is I

15 don't know.

16 But based on my reading of the Report, which

17 was published two or three weeks before I left the

18 company, I think it would be difficult to identify

19 anyone in terms of, you know, culpability because it

20 was an accident.

21 Q. (By Mr. Kanner) Well, the Report specifically

22 did not look at Management failures, correct? We --

23 you discussed --

24 A. The report --

25 Q. -- this on Monday.


491

1 A. The Report was designed to determine the cause

2 of the accident, and it did so pretty effectively, I

3 think.

4 Q. But it did not -- but it specifically excluded

5 looking at Management failures, correct?


7 A. It was designed to identify the cause of the

8 accident. And the terms of reference are clear. We

9 can go back to the terms of reference if you'd like,

10 but it is -- it's clear what the terms of reference

11 were.

12 Q. (By Mr. Kanner) Well, you agree that

13 Management failures could be a possible cause of -- of

14 a serious accident, right?


16 A. In a theoretical context, absolutely.

17 Q. (By Mr. Kanner) Yes. Theoretically, yes, is

18 that your testimony?

19 A. Theoretically.

20 Q. So when you have an accident like this, why

21 don't you at least investigate that possibility, as

22 well?


24 question.

25 A. The investigation was focused on the cause of


492

1 the accident. That's all I can tell you.

2 Q. (By Mr. Kanner) Well, if it didn't look at all

3 of the theoretically possible causes, wasn't it an

4 incomplete investigation?


6 question.


8 A. I believe the Report stands on its face as a

9 vigorous and robust investigation into the accident.

10 Q. (By Mr. Kanner) You say it's vigorous and

11 robust. Did you hire any consultants, independent

12 analysts to help you design a comprehensive or robust

13 investigation?

14 A. The Investigation Team have certainly had

15 expertise from outside of the company. I don't know --

16 Q. Well, Mr. Bly --

17 A. -- to the -- what extent, because I -- I -- I

18 wanted it to be independent. So it was under the

19 direction and leadership of Mr. Bly.

20 Q. Who has been promoted since then, has he not?

21 A. I believe he's in -- broadly in the same role,

22 actually, but --

23 Q. You were shown -- so your testimony is you

24 don't believe he's been promoted?

25 A. I think -- I --


493


2 question.

3 A. I don't know, because I'm not in the company

4 anymore. I don't -- I don't -- I haven't followed what

5 he's been doing, but I -- I believe he's in,

6 essentially, the same role.

7 Q. (By Mr. Kanner) You were shown a lot of

8 documents on Monday about safety and cost-cutting. Do

9 you recall that?

10 A. I do.

11 Q. Okay. Would you agree that -- that both were

12 important to you, safety and cost-cutting?


14 A. As I explained, the first focus was on safe

15 and reliable operations, and a -- the second focus was

16 on having the right people with the right skills in the

17 right place, and the 3rd focus was on performance. And

18 part of that performance was reducing the overhead cost

19 factor of the company; simplifying it, removing the

20 bureaucracy and the complexity of the corporate head

21 offices.

22 Q. (By Mr. Kanner) Why is it that prior to the

23 accident you never wrote a memo or gave a presentation

24 telling your people that cutting cost was important but

25 not at the price of compromising safety?


494

1 A. I think I said that --


3 question.

4 A. -- on multiple, multiple occasions, if you go

5 back -- and we can do it if you'd like, go back through

6 any one of my speeches and texts, I make it very clear

7 that safety is safety and cannot be compromised by

8 cutting costs.

9 Q. (By Mr. Kanner) You -- you're saying there's a

10 document where you specifically say that -- that

11 safety's -- that you should not compromise safety when

12 you cut cost?

13 A. M-h'm.

14 Q. Which documents are you talking about?

15 A. My speech to the AGM in 2009 says exactly

16 that, I believe.

17 Q. Who's the AGM?

18 A. Annual General Meeting.

19 Q. Say that again.

20 A. The Annual General Meeting of Shareholders at

21 BP.

22 Q. You told the shareholders?

23 A. That -- that communication goes to every

24 employee at BP. Every employee in BP is a shareholder.

25 Q. Can you think of anything else?


495

1 A. I think you could go to pretty well anything I

2 said at my time as CEO and find essentially the same

3 statement.

4 Q. Your testimony is -- you were -- you were

5 shown a commercial, a television commercial, that y'all

6 paid for by Attorney General Strange --

7 A. M-h'm.

8 Q. -- do you recall that?

9 A. Yes, I do.

10 Q. Why didn't you immediately start spending --

11 taking that money instead of helping the BP brand and

12 try to do -- direct that money at actually avoiding

13 negative impacts on tourism and maybe the Gulf seafood

14 brand?

15 A. We did.


17 question for multiple reasons.

18 A. We did.

19 Q. (By Mr. Kanner) Later --

20 A. I gave -- pretty much synchronously with that,

21 we gave 25 million pound grants to each of the states

22 to promote tourism.

23 Q. The 25 million you gave was for tourism?

24 A. It was designed to -- we -- there were

25 multiple grants. The first 25 million pound grant was


496

1 to accelerate the area contingency plans for each

2 state. There were then subsequent grants to -- to

3 support tourism through -- through ad -- advertising

4 and that sort of thing.

5 And I -- I want to be clear that those

6 commercials were about information. They weren't

7 advertising the brand of BP. They were about

8 information as to what was happening and what we were

9 doing. We wanted the people of the Gulf Coast to know

10 the scale and scope of the response that was being

11 mounted and the nature of the commitments that we had

12 made.

13 Q. You wanted to preserve the BP brand. You were

14 concerned about the BP name, were you not?

15 A. I think --


17 A. That was not our focus at that point in

18 this -- in this.

19 Q. (By Mr. Kanner) Okay. Let's break it up. You

20 were concerned about BP's name, protecting it, correct?

21 A. Clearly our brand was being damaged.

22 Q. All right.

23 A. Those commercials were not designed to restore

24 the brand.

25 Q. Okay.


497

1 A. They were designed to provide information to

2 the people of the Gulf Coast as to the scale of the

3 response and our commitment to stay with it until it

4 was complete.

5 Q. And you're concerned about your brand both for

6 your share prices and your ability to -- to deal with

7 Regulators in the future, correct?

8 MR. GODFREY: I'm going to object as to

9 form.

10 A. The brand's the brand, yeah. I mean, it's --

11 but it -- I say the brand was not at all my focus at

12 that moment. The best way of protecting the brand was

13 to be able to mount the response and stop the well.

14 But --

15 Q. (By Mr. Kanner) You say -- oh, I'm sorry.

16 A. Go ahead.

17 Q. You say these were grants for tourism,

18 correct?

19 A. M-h'm.

20 Q. Did you do anything to ascertain if that was

21 enough money to actually fix the problem?

22 A. Fix what problem?

23 Q. The people weren't coming to the Gulf. The

24 people weren't enjoying Gulf seafood. I mean, did you

25 undertake that that was enough money? Was it an


498

1 arbitrary figure?

2 A. It wasn't -- it wasn't designed to compensate

3 people. It was designed to mitigate the extent to

4 which people were not coming to the Gulf.

5 Q. And my question is: Did you undertake an

6 investigation --

7 A. No.

8 Q. -- to determine if it fully mitigated?

9 A. No.

10 Q. So sitting here today, you have no reason to

11 think that the $25 million grant either did or didn't

12 fully mitigate the problem, correct?

13 A. It was designed to simply support advertising

14 in the tourist in -- industry.

15 Q. So, really, all you were doing at that point

16 was mitigating your own corporate damages since you

17 would be responsible for those tourism losses, correct?



20 A. I think we were trying to help the Gulf Coast

21 States, actually.

22 Q. (By Mr. Kanner) Would you also --

23 A. At the time they all seemed extremely grateful

24 that it was something we were prepared to do, because I

25 met with each one of the Governors, and they expressed


499

1 their thanks and gratitude for us doing it.

2 Q. Well, they -- they certainly needed help after

3 the explosion on the DEEPWATER HORIZON, and we

4 certainly appreciated you helping us out of the

5 disaster that was created here. But isn't it true that

6 by -- by spending that limited amount of money you were

7 at least also trying to mitigate your own corporate

8 damages because, as you said earlier, BP is going to

9 make people whole, put them --


11 Q. (By Mr. Kanner) -- in a position they would

12 have been in but for the disaster?


14 question for several reasons.


16 A. Our focus was trying to help the States.

17 That's what we did.

18 Q. (By Mr. Kanner) Well, the State of Louisiana,

19 for example, had asked for more money for tourism and

20 for seafood safety testing. You -- you're aware of

21 that?

22 A. I don't recall that -- I honestly don't recall

23 that.

24 Q. Okay. We received less than what we had asked

25 for, and we -- we had presented our reasons for why we


500

1 thought --

2 A. M-h'm.

3 Q. -- we needed what we needed.

4 A. M-h'm.

5 Q. Why wasn't it all provided?

6 A. I can't --


8 A. -- can't answer that question. I mean, I do

9 recall that we -- not only did we do that in Louisiana,

10 we also provided a very large sum of money to build

11 berms and do shoreline protection.

12 Q. (By Mr. Kanner) Correct.

13 A. $350 million is my recollection.

14 Q. I think you spent 260 million on berms. And

15 that's to be expected in an environmental disaster like

16 this --

17 A. Well --

18 Q. -- that you got to take response actions,

19 right?

20 A. It would be -- it would have been expected if

21 it had been part of any sort of Spill Response Plan,

22 which it clearly was not, and if -- and if there had

23 been a belief that it was going to be an effective

24 mitigant to the spill. But I think time has

25 demonstrated that that was not the case.


501

1 Q. You --

2 A. And it certainly was not part of any Spill

3 Response Plan.

4 Q. You're not criticizing -- you the company with

5 the Walrus Emergency Response Plan are not criticizing

6 the State of Louisiana for not having a better Response

7 Plan for this tragedy?

8 A. No --


10 A. -- I'm not -- I'm not criticizing the State of

11 Louisiana. I'm simply making the observation that

12 building berms was not part of any approved Oil Spill

13 Response Plan by anyone.

14 Q. (By Mr. Kanner) Didn't Admiral --

15 (Speakerphone conversation.)

16 MR. KANNER: Stop horsing around down

17 there.

18 MR. WEBB: Did we ever get the answer?

19 Did you get the answer? Okay.


21 MR. GODFREY: You've got the answer, Kym?

22 THE COURT REPORTER: Yes.

23 Q. (By Mr. Kanner) You say the berm was not

24 approved. Admiral Allen approved the berms, didn't he?

25 A. I said --


502

1 Q. President Obama?

2 A. I simply meant that in terms of the

3 preapproved Response Plan that was in place prior to

4 the accident there was no notion or obligation or idea

5 of building berms.

6 Q. Yeah. But berms are built all -- throughout

7 the south. I mean, in inlets, correct, there are lots

8 of different types of berms?

9 A. There were berms built in Louisiana comprising

10 major removal of sand. There wasn't any other berms

11 built, I don't believe.

12 Q. There are berms built in Florida to protect

13 certain beaches, correct?

14 A. I don't think so. Not to my knowledge. I'm

15 honestly not sure, but I don't think so.

16 Q. Okay. You keep saying it wasn't part of an

17 approved plan. I -- I -- just don't understand what

18 you're -- you're talking about. Were you saying that

19 the state was supposed to have a plan in place for each

20 well that you're drilling --

21 A. No.

22 Q. -- in the event that any of them --

23 A. I didn't say that at all.

24 Q. All right.

25 A. I said it was not part of the approved


503

1 Response Plan which the company submitted to the

2 authorities and was approved by authorities.

3 Q. Oh. You're saying once the well started

4 leaking you developed a Response Plan and the berms

5 were originally not a part of it?

6 A. No.


8 A. We -- we deployed our Response Plan that had

9 already been approved prior to commencing operations.

10 There was no part of berms in that Response Plan.

11 Q. (By Mr. Kanner) Okay. And the State felt that

12 they wanted some berms for protection. The matter was

13 taken up with Admiral Allen, and he approved it and BP

14 spent the money, correct?


16 Q. You, if anybody, I think, might agree that in

17 the context of a disaster where you've got uncontrolled

18 oil, hurricane seasons, that people have to do -- that

19 -- that a great deal is being done kind of as you go

20 along, people are trying to take precautionary

21 measures, correct?

22 A. M-h'm.

23 Q. And hindsight, that may or may not have been

24 your first choice, but you're in the middle of a crisis

25 and you're dealing with a crisis; is that fair?


504

1 A. That's fair.

2 Q. You said a -- a Junior Engineer had described

3 this as a "nightmare" well. Do you recall that?

4 A. I do.

5 Q. You certainly want your -- your Engineers to

6 be expressing their opinions, correct?

7 A. Correct.

8 Q. And you try to take every opinion from a

9 professional seriously in your company?

10 A. Correct.

11 Q. Do you know why nobody ever followed through

12 on the -- the "nightmare" well issue?


14 A. I -- I'm not aware of any of the details

15 around it.

16 Q. (By Mr. Kanner) You agree that the oil spill

17 has already caused extensive and severe damage to the

18 marine and wildlife habitats in Louisiana?


20 A. As I said previously, I think we need to allow

21 time and science to determine the full extent of the

22 damage. I'm not in a position to make any assessments,

23 sitting here today.

24 Q. (By Mr. Kanner) I didn't ask you about the

25 full extent of the damage. I asked you if you agreed


505

1 that, based on what you knew at the time you left the

2 company that, in fact, the oil spill has already caused

3 extensive and severe damage to marine and wildlife

4 habitats?


6 question.

7 A. The answer is, I don't know the answer to that

8 question.

9 Q. (By Mr. Kanner) Okay. You -- you -- you saw

10 oiled animals, correct?

11 A. M-h'm.

12 Q. "Yes"?

13 A. Clearly -- it was clearly a tragic and serious

14 oil spill.

15 Q. Right. And -- and I'm asking if you viewed

16 severe damage to marine and wildlife or their habitats.

17 Would the answer be "Yes," you would?

18 A. We were clearly -- there were clearly birds

19 impacted, and that was -- that was a tragedy.

20 I -- I can't judge the impact on the habitat.

21 Q. Okay. You were -- you -- you actually went to

22 some of the marshes --

23 A. Yes.

24 Q. -- that were oiled, correct?

25 A. I did.


506

1 Q. Did anybody explain to you what the

2 consequences were of the oiling of the marshes?

3 A. I think the consequences were still being

4 determined when I was there, and I -- I honestly don't

5 know what the conclusions were.

6 Q. Were you told that marsh grass might die as a

7 result of the oil?

8 A. I was told that marsh -- marsh grass might

9 die.

10 Q. Were you told that the root system of the

11 marsh grash -- grass would then cease to hold soil

12 together?

13 A. I didn't go into any details, I'm afraid, of

14 the --

15 Q. You weren't told --

16 A. -- marsh grass.

17 Q. -- that -- that this sort of damage might

18 accelerate erosion, coastal erosion?

19 A. I wasn't -- as I said, I wasn't -- I didn't go

20 into any of the details that I think that the -- the

21 science that is being progressed as we speak will

22 determine, you know, the extent of the damage.

23 Q. But you agree that the environmental damage

24 that you observed firsthand and that you were spending

25 money responding to was, in fact, severe environmental


507

1 damage?


3 A. I can't make an assessment about the severity.

4 It's clear there was oil on beaches and there was oil

5 on marsh.

6 Q. (By Mr. Kanner) How many animals needed to die

7 before it became severe, in your mind?



10 A. In the matter of bird impact, it was clear it

11 was severe. In the matter of the habitat impact, I --

12 I have no -- no basis for assessing the impact on

13 marine environment. I've never seen any data.

14 In the matter of the habitat, I -- I think

15 it's -- without the benefit of science and time,

16 it's -- you can't make an assessment.

17 Q. (By Mr. Kanner) A full assessment?

18 A. A full assessment.

19 Q. But you can make an interim assessment?

20 A. You can make an assessment that says we had to

21 do -- we had to take steps to remediate, and that's

22 what was -- was happening.

23 Q. Okay. And part of the reason -- by

24 "remediate," you mean going out to the beaches and

25 picking up tar balls, for example?


508

1 A. Yeah, and going to marshes and cleaning the

2 grass blade by blade.

3 Q. Okay. And you understand that even after you

4 went to the marshes and cleaned blade by blade, there

5 was still oil in the marshes, correct?

6 A. I understand that in some areas, the cleaning

7 operation is very challenging.

8 Q. And you understand that re-oiling has -- has

9 occurred, and is still occurring, correct?

10 A. I -- I'm not at all current with the current

11 state of what is occurring in Louisiana, I'm afraid.

12 Q. As of the time you left the company in

13 October, re-oiling was still occurring?

14 A. I was aware that the remediation was certainly

15 not complete, and that if you tell me re-oiling was

16 occurring, then I believe you. I don't remember that,

17 but I'm sure if that's what you're saying, then it's

18 true.

19 Q. Do -- do you recall rough any metrics, like

20 600 miles of Louisiana Coastline were oiled?

21 A. No, I don't -- I don't recall the details, I'm

22 afraid.

23 Q. You -- you agree with General Strange when he

24 mentioned that -- that there were tens of thousands of

25 gallons of oil, or some oil residue still in the Gulf


509

1 today?

2 A. I haven't seen any data to know whether that's

3 right or not. If that -- if -- if you're telling me

4 that there is hard data that says that's the case,

5 then, of course, I believe you, but I -- you know, I

6 have not been involved in this now, and I haven't been

7 party to any information for, you know, almost nine

8 months, so I can't --

9 Q. As of --

10 A. -- really help you.

11 Q. I'm sorry. As of the time you left the

12 company, you understood that there was still

13 uncontrolled oil in the Gulf of Mexico, correct?


15 A. What I understood was that we hadn't completed

16 the cleanup operation. It was still ongoing, and --

17 Q. (By Mr. Kanner) As of the time you left the

18 company, was there a plan to clean up the oil that is

19 loose in the Gulf?

20 A. There was a plan to remediate the

21 environmental impact. I'm not -- I'm sure if someone

22 can identify where there is oil in the Gulf, it will be

23 remediated.

24 Q. Do -- what is your understanding -- strike

25 that.


510

1 You're saying that you believed BP has a plan

2 to remediate any and all oil, wherever it's found,

3 that -- that came from this oil spill?

4 A. I believe that's the intent.

5 Q. Do you -- do you agree that the -- the oil

6 spill has also caused extensive and severe damage to

7 the Gulf fishing industries?


9 A. It's certainly created a significant impact at

10 the time. I'm not in a position to judge the lasting

11 impact, because again, I've not seen any current

12 information, so all I can -- all I can say is that at

13 the time, it clearly caused significant impact because

14 many of the fishing grounds were closed.

15 Q. (By Mr. Kanner) And --

16 A. I believe they're now all open, and I believe,

17 and it's only hearsay, frankly, newspapers, that the

18 fishing catches are as good, if not better, than

19 they've ever been, but I don't know whether that's true

20 or not. That's what I've read in newspapers.

21 Q. Actual -- actually the brown shrimp season has

22 been quite disastrous this year. Have you heard about

23 that?

24 A. No. Sorry.

25 Q. You're aware that the oil spill also caused


511

1 extensive and severe damage to Gulf tourism industry?


3 A. I'm clearly aware that in the middle of the

4 accident last Summer and the aftermath, a lot of people

5 that would have come to the Gulf Coast didn't.

6 Q. (By Mr. Kanner) The -- do you agree that the

7 spill also had adverse consequences for deep and

8 shallow water drilling industries operating in the Gulf

9 of Mexico?


11 A. Clearly, the moratorium imposed by the

12 Government had a big impact on shallow and deepwater

13 activity.

14 Q. (By Mr. Kanner) I think yesterday you said you

15 thought that was reasonable, correct?

16 A. I thought it was a reasonable decision at the

17 time until the nature of the accident was understood.

18 Q. Leave aside the former moratorium, if you

19 would, for a second.

20 A. M-h'm.

21 Q. And I -- I certainly agree that the response

22 efforts were -- were unprecedented. I think you

23 had 48,000 people involved at one point in time,

24 some 6700 vessels, 125 aircraft. I think you -- you --

25 you bought all the dispersant that was available in the


512

1 United States of America, and most of the boom; is

2 that -- is that fair?


4 Q. I -- I have one question about that: Had

5 there been -- would you agree that it was prudent at

6 the -- during the course of your response, at least

7 until the well was plugged, would you agree that there

8 weren't resources available, dispersant or boom, for

9 another spill at another well?


11 A. That's speculation. No, I can't -- I can't --

12 there was clearly a lot of equipment in the Gulf.

13 Q. (By Mr. Kanner) Well, didn't you specifically

14 buy all the dispersant that was available at one point

15 in time?

16 A. What -- what we did, actually, was to work

17 with the dispersant manufacturer to ramp up production.

18 And at no time then was dispersant ever an issue. And

19 I suspect if there had, God forbid, been another

20 accident of the same sort, dispersant would have been

21 available --

22 Q. It would have?

23 A. -- because of the rampup in production.

24 Q. What about boom?

25 A. Well, we -- we deployed a lot of -- we had


513

1 available a lot of boom. In the end, we didn't -- you

2 know, it -- we had a lot of boom deployed, but never

3 got anywhere near -- we had millions of feet of boom in

4 Florida, but never saw even a tar ball.

5 Q. And so you don't know what resources would

6 have been available to other companies if they --

7 A. It's entirely speculation.

8 Q. Did -- did BP shut down its other wells when

9 this -- when this accident happened?

10 A. Well, we -- we were subject to the moratorium,

11 so everyone shut down all their wells.

12 Q. Before the moratorium?

13 A. The moratorium was announced very early, I

14 think. I -- I can't recall whether -- the precise

15 sequencing of the shutdown, but it was --

16 Q. But --

17 A. -- it was announced very shortly after the

18 accident.

19 Q. But prior to the moratorium, BP was going to

20 continue to operate its other wells in the Gulf?

21 A. We had -- we had no other exploration wells

22 drilling. We had no -- to my recollection, we had no

23 other production wells drilling at the time, but I

24 can't honestly recall. I'm -- I'm certain about the

25 exploration wells.


514

1 Q. You've talked a bunch about remediation,

2 which, to my mind, means cleanup. Is that -- is that

3 how you understand it?


5 Q. What about restoration of the ecosystem to its

6 pre-pollution condition?

7 A. M-h'm, right.

8 Q. Has anything been done in that regard at this

9 point in time?


11 Q. (By Mr. Kanner) As -- as of the time you left

12 the company?

13 A. As of the time I left the company, that

14 process was beginning, but only had just begun, so I'm

15 afraid I -- I'm just not familiar with the details of

16 what have -- what has occurred over the last nine

17 months.

18 Q. But you agree that the company needs to

19 restore ecosystem that's been damaged, correct?

20 A. I believe --

21 MR. GODFREY: Object to the form of the

22 question.


24 A. I believe we have an obligation to restore and

25 remediate under the environmental damage provision, I


515

1 can't remember the exact --

2 Q. (By Mr. Kanner) OPA?

3 A. Under OPA, yeah.

4 Q. Okay. But that's something you would -- you

5 believed the company ought to do anyway, whether that

6 law --

7 A. M-h'm --

8 Q. -- existed or not --

9 A. It was --

10 Q. -- correct?

11 A. -- something I believe the company is doing.

12 Q. Now, to the extent that people were not able

13 to enjoy recreational fishing, enjoy beaches, you also

14 agree that there should be compensation for their loss

15 of use of those resources during the period that they

16 were contaminated until they were restored to their

17 prepollution condition?


19 A. Yeah, I -- I mean, the -- the statement we

20 made is that all legitimate claims for business impact,

21 personal impact, would be -- would be honored, and I

22 believe that the -- the fund -- the $20 billion fund

23 that we established has to date dispersed on the order

24 of $5 billion.

25 Q. (By Mr. Kanner) Okay. But my question was --


516

1 was different. My question was: We talked about

2 restoring resources, we talked about cleaning up

3 resources, but some of those resources are out of play

4 for a certain period of time, you would agree with

5 that, correct?


7 Q. (By Mr. Kanner) People can't use them.

8 A. Well, I -- I -- what sort of resources are you

9 referring to? Are we referring to today or are we

10 referring to last Summer? Clearly last Summer, they

11 were out of play. I -- I had -- I'm not --

12 Q. Okay.

13 A. -- I'm not in a position to know whether they

14 are still out of play.

15 Q. Fair enough. With respect to last Summer --

16 A. Right.

17 Q. -- to the extent that people weren't able to

18 use some of the resources that they typically use,

19 that's something that also ought to be compensated,

20 correct?

21 A. I'm -- I'm -- I'm --


23 A. -- I'm not -- I don't understand the -- the --

24 the -- the obligations around this, I'm afraid, so I

25 don't --


517

1 Q. (By Mr. Kanner) But you said, "We are taking

2 full responsibility for the spill, and we will clean it

3 up and where people can present legitimate claims for

4 damages, we will honor them."


6 Q. "We are going to be very aggressive in all of

7 that."

8 A. We have been, I believe.

9 Q. Okay. What -- what --

10 A. I can't think of any other accident in history

11 where $5 billion has been paid out within nine months

12 of the accident.

13 THE COURT REPORTER: Mr. Hayward, would

14 you fix your microphone.

15 THE WITNESS: Sorry, that's --

16 Q. (By Mr. Kanner ) Well --

17 THE WITNESS: -- apologies.

18 Q. (By Mr. Kanner) -- when you're -- when you're

19 talking about the worst spill, I guess the amount of

20 money is less interesting than whether everybody has

21 been made whole or not, correct?

22 A. I think we --



25 A. -- have to separate whether it was the worst


518

1 spill from it was the largest spill. It was certainly

2 the largest spill. We need to determine, with the

3 fullness of time, whether it was the worst spill.

4 Q. (By Mr. Kanner) And certainly the five billion

5 may turn out to be just a drop in the bucket.

6 A. I think that's --


8 A. -- most unlikely.

9 Q. (By Mr. Kanner) Most unlikely?

10 A. M-h'm.

11 Q. Did you have -- you made various

12 representations to your shareholders about the

13 consequences of the spill. When you say "most

14 unlikely" that it would be -- five billion would be a

15 drop in the bucket, are you relying on any --

16 A. It sort of depends on how big your bucket is.

17 Q. H'm --

18 A. If it's --

19 Q. -- h'm --

20 A. -- a small bucket, it might be.

21 Q. Well, here the bucket is all of the losses of

22 the States and --

23 A. M-h'm.

24 Q. -- individuals and businesses throughout the

25 Gulf --


519

1 A. M-h'm.

2 Q. -- Region until this -- until the environment

3 is restored to its --

4 A. M-h'm.

5 Q. -- prepollution condition --

6 A. M-h'm.

7 Q. -- which could be an enormous bucket.

8 A. It could or it could be --



11 Q. (By Mr. Kanner) Correct?

12 A. -- it could or it could be a $6 billion

13 bucket.

14 Q. Did you have any consultants help the company

15 understand the size of that bucket of damages?

16 A. I -- I'm not aware of whether we did or

17 didn't, actually.

18 Q. So you don't -- when you say it might be six

19 billion, you're just pulling that number --

20 A. That's just --

21 Q. -- out of the air?


23 A. -- that's Tony Hayward talking as a private

24 citizen --

25 Q. (By Mr. Kanner) Okay.


520

1 A. -- not in any other capacity.

2 Q. You -- you didn't hire any experts to do at

3 least a --

4 A. Not -- not --

5 Q. -- quick and dirty assessment?

6 A. -- in the time when --

7 MR. GODFREY: Objection as --

8 A. -- I was at --

9 MR. GODFREY: -- to form.

10 A. -- BP.

11 Q. (By Mr. Kanner) H'm --

12 A. To my knowledge. I mean, I don't know, but

13 I'm not aware of any of that.

14 Q. BP committed $500 million for research on

15 ecological impacts of the spill, correct?


17 Q. You agree that, to the extent that research

18 finds problems or damages in the Gulf as a result of

19 the spill, that those are things that BP should pay for

20 whether they find them today or 20 years down the road,

21 correct?

22 A. I think if there is --


24 A. -- clear and unequivocal linkage between the

25 damage and the spill, then we've made it clear that we


521

1 will restore and remediate.

2 Q. (By Mr. Kanner) "Unequivocal linkage"?

3 A. Yeah.

4 Q. That's -- that's your standard?

5 A. Well, I -- I --

6 Q. I mean, how much science --

7 A. -- I'm not a lawyer, so I'm not going to split

8 hairs with you about legal terminology, okay?

9 Q. No, no, no. What I'm --

10 A. If there is -- if there is clear linkage

11 between the science and the spill, then I believe the

12 company has made it clear that it will take the

13 necessary action to restore -- restore any damage.

14 Q. Well, what about a situation like we have

15 here, where there -- there hasn't been a lot of science

16 with massive oil spills in the deep Gulf, you would

17 agree with that, correct?


19 A. That's true.

20 Q. (By Mr. Kanner) Okay. So if you -- the

21 standard were unequivocal linkage, I mean, isn't that

22 certainly --

23 A. As I said, I don't want to get into a lawyer

24 debate about what "unequivocal" means. If there is a

25 clear linkage, I'm certain -- I -- I -- I can't say.


522

1 Q. And --

2 A. Because I no longer have any authority. But I

3 can imagine that the company would honor the

4 obligations that we made.

5 Q. Well, when you said you were going to be very

6 aggressive about paying all claims, would you agree

7 that, to the extent the science comes out 50/50 on some

8 of these ecological issues, that those are things BP

9 should take responsibility for?

10 A. Well, I --



13 A. -- I think that's for someone in BP to make

14 that decision today, not myself.

15 Q. (By Mr. Kanner) What was your intent when you

16 told people that you were going to be very aggressive

17 about paying all claims? Would it have been that if

18 there's a -- if there's a doubt 50/50 that that's

19 something BP will probably --

20 A. It was -- it was --

21 Q. -- ought to take care of?

22 A. -- it was about two things: It was about

23 getting money into the hands of people fast, which I

24 believe we succeeded in doing. And -- and it -- it was

25 in -- in the -- in -- in the matter of individuals and


523

1 small businesses, which was our focus, erring on the

2 side of generosity, which I believe is what has

3 happened over the last year or so with the fund.

4 Q. But with respect to the $500 million dollars

5 dedicated to research in the Gulf, your goal at BP,

6 when -- when you authorized the -- the establishment of

7 that sum of money, was to discover all harms, and

8 ultimately remedy those as to which there's a linkage?

9 A. That's true.



12 Q. (By Mr. Kanner) You also paid a hundred

13 million dollars to workers hurt by the moratorium?


15 Q. (By Mr. Kanner) Yes?

16 A. We established a fund for work that's impacted

17 by the moratorium.

18 Q. Well --

19 A. I don't know to what extent it has been

20 deployed.

21 Q. Okay. And was part of the reason for that, a

22 feeling that the moratorium was connected to the spill?

23 A. No, it was a -- it was a -- a request of the

24 Administration.

25 Q. The President asked you to put a hundred


524

1 million into --

2 A. The President --

3 Q. -- a fund?

4 A. -- the President's team asked us to establish

5 a fund.

6 Q. And you agreed to, why?

7 A. Because we were trying to reach a broad-based

8 agreement with the Government at the time to allow us

9 to move forward together to deal with the spill.

10 Q. Well, you certainly had an obligation to your

11 shareholders to be -- to only pay money as to which you

12 thought you might have some responsibility, correct?

13 A. As I said --



16 A. -- we were trying to reach a broad-based

17 agreement which would be beneficial to the Government,

18 to BP, and, therefore, to its shareholders.

19 Q. (By Mr. Kanner) H'm. Let's see. Oh. BP has

20 subsequently put money up for mental health issues

21 associated with ecological damage to the Gulf. Were

22 you involved in any of that?

23 A. I have no knowledge of that at all, I'm

24 afraid.

25 Q. Would that have been after your time?


525

1 A. As I no -- have no knowledge, I surmise it was

2 after my time.

3 Q. Do you agree it's important to monitor, for

4 possible problems associated with the spill, things

5 that might manifest in the future?

6 A. I -- it --


8 A. -- it seems like an entirely sensible thing to

9 do, yes. Excuse me.

10 Q. (By Mr. Kanner) The -- you've worked on rigs,

11 have you not?

12 A. A very long time ago, yes.

13 Q. Okay.

14 A. They were very different operations when I was

15 working on them, of course.

16 Q. The -- safer or less safe?


18 A. Undoubtedly less safe. Today the industry has

19 gotten massively safer over the last 20 years.

20 Q. (By Mr. Kanner) You agree drilling muds

21 contains some toxic materials?

22 A. I think some drilling muds have some materials

23 that are potentially tox -- potentially toxic in --

24 toxic in some situations.

25 Q. You -- you told Congress that, during the top


526

1 kill, that no toxic materials were used. Was that

2 correct, or not?

3 A. I subsequently, under advice of my Technical

4 Team, corrected that to say that in some particular

5 circumstances, some components of the mud that we are

6 using could possibly be toxic. That the point I was

7 trying to make is that we were using water-based mud

8 with no oils or anything of that sort. So it was then

9 the most benign mud that you could use in -- in terms

10 of mud systems available.

11 Q. So at the very least, you could have been a

12 little clearer with Congress on that point?

13 A. It was --


15 MR. WEBB: Object to the -- object to the


17 A. It was simply a misunderstanding on my part.

18 Q. (By Mr. Kanner) Okay. It was a

19 misunderstanding on your part, and that

20 misunderstanding led to a miscommunication, correct?


22 question.

23 A. It was a misunderstanding which I communicated

24 and subsequently clarified with Congress.



527

1 A. I believe to their satisfaction.

2 Q. It seems that most of the safety eff --

3 efforts that in -- you talked a lot about safety. It

4 seems that most of the emphasis was focused on the high

5 incidence events: The slip and falls, people hurting

6 themselves working on rigs, those sorts of accidents.

7 Does that seem right to you?

8 A. No. It was completely not right.

9 Q. Okay.

10 A. And in the time that I was the CEO, we focused

11 extensively on process safety, and implemented a whole

12 series of new systems and standards which were focused

13 on process safety.

14 Q. And who was in charge of that? Who --

15 A. The --

16 Q. -- reported to you on that?

17 A. -- the Head of that -- of the organization

18 accountable for creating those standards and then

19 implementing them, was Mark Bly.

20 Q. Who?

21 A. Mark Bly.

22 Q. The author of the Bly Report?

23 A. Correct.

24 Q. So he really investigated his own work, right?



528

1 A. No, he --


3 A. -- didn't investigate his own work. He

4 investigated the accident. He was the most qualified

5 person in the company to lead that investigation.


7 A. It was done with a team of 55 Engineers and

8 professionals, some of them drafted from outside of the

9 company, to ensure that the full skills of the industry

10 were deployed in the investigation.

11 Q. Did you have a -- one or more E-mail accounts

12 when you were at the BP?

13 A. No.

14 Q. You did not -- you -- you didn't receive

15 E-mails?

16 A. I had an E-mail account. I'm sorry, I thought

17 you said if I had one -- more than one, sorry.

18 Q. Okay.

19 A. I had an E-mail account.

20 Q. Okay. It was a BP E-mail --

21 A. It was a BP --

22 Q. -- account?

23 A. -- E-mail account, yes.

24 Q. Did you also have a private E-mail account?

25 A. No.


529

1 Q. So if you're sending an E-mail to a friend at

2 that time, it would have been --

3 A. It was BP.

4 Q. -- it would have been BP?

5 A. Yes.

6 Q. And were you -- in any of the -- did you send

7 your own E-mails, or was this something you had your

8 assistants do from time to time, or both?

9 A. Both. Sometimes E-mails were sent from my --

10 from my E-mail, you know, communication broadly to BP

11 and the company employees, then it would go -- go from

12 my E-mail box or would be -- or would be sent by one of

13 my assistants.

14 Q. H'm. Just one moment.


16 MR. KANNER: Can I take my break here if

17 you've got four minutes?


19 a.m., ending Tape 11.


21 MR. GODFREY: Okay. We're ready to go,

22 please.

23 Shut the door down there, please. We're ready

24 to go.

25 MR. KANNER: Ready.


530



3 Q. (By Mr. Kanner) Okay. In Exhibit 512 --

4 Exhibit 512 is the Baker Report. I just want to read a

5 quote from you and ask if -- if you agree with it. It

6 says: "Preventing process accidents requires

7 vigilance. The passing of time without a process

8 accident is not necessarily an indication that all is

9 well and may contribute to a dangerous and growing

10 sense of complacency." And it goes on to say people

11 can forget to be afraid.



14 A. I think it's undoubtedly one of the things

15 that can -- could create a process accident, yeah.

16 Q. (By Mr. Kanner) Complacency. I'd like to --

17 MR. KANNER: Has this been marked?

18 MS. PETERSEN: No.

19 MR. KANNER: Tab 9, please. I'd like to

20 mark that as 6056.


22 Q. (By Mr. Kanner) So we'll mark this one. Do

23 you have that in front of you?

24 MS. PETERSEN: It's --

25 Q. (By Mr. Kanner) It should be in your --


531

1 A. I'm sorry. Tab 9, did you say?

2 Q. I -- I'm just going to read a quick quote from

3 that. This is an E-mail from Tony Hayward, June 25th,

4 to Andy Inglis and a few others.

5 A. Sorry, can you --

6 Q. Tab 9.

7 A. Tab 9.

8 MR. WEBB: This is Exhibit 6056?

9 MR. KANNER: Correct.

10 MR. GODFREY: Bates No. 861 are the last

11 three?

12 THE WITNESS: Is the Bates No. 861, is

13 it?

14 MR. KANNER: No. It's 5473.

15 MR. WEBB: I don't think he has -- he

16 does not have the right exhibit in front of him.

17 THE WITNESS: It's not in --

18 MR. GODFREY: It's not Tab 9.

19 THE WITNESS: Not -- not Tab 9.

20 MS. PETERSEN: Here, take this one.

21 MR. GODFREY: I -- I -- I removed Tab 9

22 from what you gave me.

23 Q. (By Mr. Kanner) Let me just read from this,

24 and --

25 A. Okay.


532

1 Q. It says: "Andy" --

2 MR. GODFREY: Tab 10?

3 MS. PETERSEN: Yes.

4 Q. (By Mr. Kanner) The very bottom two lines:

5 "Andy can u make sure we get the technical briefing on

6 the relief well out today - there are all sorts of

7 ridiculous stories going around - it's the main reason

8 behind" the -- "the share price weakness Tony."

9 Do you recall writing that?

10 A. No, I don't.

11 Q. Were -- were -- were one of the goals of the

12 tech -- technical briefings and the -- the -- the --

13 the media blitz, if you will, to keep share price up?

14 A. No.


16 A. The -- the objection -- the objective of the

17 technical briefing was to provide clear, coherent,

18 factual information as to what was and was not going on

19 at any moment in time.

20 Q. (By Mr. Kanner) With respect to --

21 A. And then people could form their own view as

22 to whether that was good or bad for the share price.

23 Q. If -- if it was informational, as you said

24 earlier, why were you buying ads in New York Times,

25 Washing -- you know, Wall Street Journal, in California


533

1 papers, Connecticut papers, Ohio papers?

2 A. Such -- such that the -- so the -- the

3 American people knew what we were doing.

4 Q. Why -- why was it more important to spend the

5 money in Connecticut than on the Gulf?

6 A. It wasn't more important. It was in addition

7 to. The focus was in the Gulf, clearly, because that's

8 where people were being impacted.

9 Q. And --

10 A. And the -- the nature of the adverts was much

11 more specific in the Gulf, as -- as I recall, and more

12 generic, but, you know, we found it was equally

13 important to let the American people know what we were

14 doing by way of responding.

15 Q. The -- I'd like to show you Tab 7, which is a

16 Media Communication Plan for the next two weeks.

17 MR. WEBB: Does this have an Exhibit

18 number?

19 MR. KANNER: Let's get an exhibit number

20 for it.

21 MR. WEBB: 60 --

22 MR. KANNER: That would be 6057.


24 Q. (By Mr. Kanner) On the first page --

25 A. I -- I have not seen this document previously.


534

1 Q. Okay. Do you know what a media communication

2 plan was?

3 A. Yes, I do.

4 Q. Okay. And the first -- the -- the second page

5 of the document, there would be a daily press release

6 from your press office and a daily press conference?

7 A. Yeah.

8 Q. You see that?

9 A. Yes.

10 Q. And on the third page, your consistent -- big,

11 consistent, leadoff messages every day were supposed to

12 be: "We're doing everything possible. We are working

13 in partnership. Deeply appreciate the efforts of all

14 responders."

15 Do you see that?

16 A. I do.

17 Q. Is -- is that -- is that your recollection

18 that those were your talking points?

19 A. It is.

20 Q. As a practical matter, wasn't it true that --

21 that only the relief well could ever really stop the

22 leak? You never really thought that the top kill, the

23 junk shot, or any of those other things would -- had a

24 chance of working, did you?

25 A. Of course. It wasn't the relief well that


535

1 stopped the leak. It was the capping stack that

2 stopped the leak.

3 Q. Okay.

4 A. So whatever we thought, it was not relevant.

5 What we had to -- what we determined to do was to apply

6 every intervention we could design, as soon as we could

7 design it, as soon as we could make it available. And

8 in the -- in the -- in the final analysis, the capping

9 stack stopped the leak well ahead of when the relief

10 well would have stopped the leak.

11 Q. And why wasn't the capping stack used earlier?


13 A. It wasn't available earlier.

14 Q. (By Mr. Kanner) On Tab 14, the last -- this is

15 a Tony Hayward Townhall Gulf of Mexico Response Update,

16 July 16.

17 MR. KANNER: And we'll call that Tab --

18 I'm sorry, Exhibit 6058.


20 Q. (By Mr. Kanner) The very last page, one --


22 MR. KANNER: Correct.


24 Q. (By Mr. Kanner) One, two, three, four, five

25 Q's up from the bottom.


536

1 MR. GODFREY: What page?

2 MR. WEBB: What page are you on?

3 MR. KANNER: The last page.


5 MR. KANNER: Yeah.

6 Q. (By Mr. Kanner) It's how -- underlined "How do

7 we know when we are done?" It says: "When we stop the

8 leak, clean up the oil, remediate any environmental

9 damage, and get the communities back on their feet

10 (...the way they use to)."

11 You meant that then?

12 A. Well, I don't -- can -- can we just ascertain

13 the veracity of this document? I don't know whether

14 this is a recorded transcript, a description of someone

15 taking notes, I have no idea what the -- what this is.

16 But -- so I don't -- so --

17 Q. I -- I -- when I saw this document, I assumed

18 it was talking points that were prepared for you for

19 Town Hall in or about that -- that period of time. Is

20 that incorrect?

21 A. I don't -- I don't know. I don't ever

22 remember seeing this, to be quite honest with you.

23 Q. Do you disagree with the sentiment?

24 A. I don't disagree with the sentiment.

25 Q. As read?


537

1 A. When we stop the leak, clean up the oil,

2 remediate any environment and damage and get the

3 communities back on their feet. Correct.


5 MR. GODFREY: Have you been ceded more

6 time, or are you --

7 MR. KANNER: I think I have another

8 minute. One last exhibit.

9 MR. GODFREY: Just as long as we keep on

10 the track of the time.

11 MR. KANNER: Tab 11.

12 MR. GODFREY: Is he over his time?

13 MR. WEBB: Someone keep track of time.

14 Okay.

15 Q. (By Mr. Kanner) This is 6059. It's an

16 employee communication from Tony Hayward, July 9th.

17 Have you seen this document before?

18 A. I'm certain at the time I saw it. I don't

19 recall now, I'm afraid. But this --


21 A. -- these were going out on a regular basis.

22 Q. (By Mr. Kanner) You say at the -- about this

23 far down, you go -- you say: "You should also be in

24 no" --

25 A. Sorry, where are we, please?


538

1 Q. Right -- right here. Right before --

2 A. Okay. Down at the bottom, yeah.

3 Q. You say: "You should also be in no doubt that

4 we fully intend to hold all parties responsible for the

5 cost of the oil spill to their obligations."

6 You see that?

7 A. I do.

8 Q. Did you take any actions to hold other parties

9 responsible for their share of the cost?


11 A. As I said earlier, at this point in time, on

12 the 16 -- or 9th of July, four parties had been named

13 as responsible parties under OPA 1990, and you would

14 therefore expect that they would be paying their share

15 as reference to that. At this point in time, we had

16 billed other parties. They had not been forthcoming.


18 MR. KANNER: Right. Thank you. That's

19 my time.

20 THE WITNESS: Thank you very much.


22 a.m., ending Tape 12.


24 MR. ROBERTS: Ready.



539


2 EXAMINATION

3 QUESTIONS BY MR. ROBERTS:

4 Q. Doctor, my name is Steve, and the most

5 important question I'm going to ask you today is: What

6 do you think of my tie?

7 A. It looks like a great British tie, to me.

8 MR. ROBERTS: I just want y'all to hear

9 that: He likes my tie.

10 Q. (By Mr. Roberts) Do you know Transocean, sir?

11 A. I do, yeah.

12 Q. How do you know it?

13 A. As one of the world's largest and most

14 respected drilling contractors.

15 Q. How long have you, in your industry, worked

16 with Transocean?

17 A. Personally, or as BP -- with BP? I'm not --

18 I've --

19 Q. BP.

20 A. I've -- yeah. Well, for many years, decades.

21 I mean, since the company was formed through the merger

22 of -- I'm trying to remember who it was formed through.

23 Q. Global/Santa Fe?

24 A. Global/Santa Fe and -- was it Global Santa

25 Fe -- Global and Santa Fe, wasn't it?


540

1 Q. M-h'm.

2 A. Yeah.

3 Q. Is -- was BP, at least as of the time you

4 left -- excuse me.

5 Was Transocean, as of the time you left BP,

6 one of the preferred providers throughout the world for

7 BP in drilling its deepwater wells?

8 A. It was.

9 Q. Who -- who would be some of the other

10 companies that would have been preferred providers?

11 A. Pride.

12 Q. Which is no longer there.

13 A. Which is no --

14 Q. Been sold to Ensco?

15 A. Ensco. Ensco now.

16 Q. Now.

17 A. I'm trying to think of who are the other big

18 deepwater -- give me some names, and I'll tell you

19 whether --

20 Q. Well, I can't give you the names of my -- my

21 client's competitors. That -- that would seem

22 inappropriate.

23 But getting back to Transocean, during the

24 period that you were with BP, was Transocean, as a

25 drilling contractor, held in a high regard?


541

1 A. Yes, they were.

2 Q. All right. Did anyone in your Senior

3 Management or lower down ever come to you and suggest

4 to you that Transocean, as a corporation, had a

5 philosophy of indifference to the welfare of the

6 environment?

7 A. No.

8 Q. Or that any of its employees were indifferent

9 to the welfare of the environment?

10 A. No.

11 Q. Did anyone in your Senior Management ever come

12 to you and say Transocean was indifferent to the

13 welfare of individuals, the employees and -- and their

14 health?

15 A. No.

16 Q. All right. Have you ever heard that suggested

17 by anyone?

18 A. Not in the time I was at BP.

19 Q. As -- one of the roles that I gathered

20 yesterday from your conversation with one of the

21 lawyers was you were at -- at least over HSSE while you

22 were at BE -- BP?

23 A. Well, I -- the CEO is, by definition, over

24 everything.

25 Q. Yeah. Including depositions.


542

1 A. Including depositions.

2 I was the Chair of the Group Operating Risk

3 Committee, which was the focal point in the company for

4 reviewing safety performance and HSSE matters.

5 Q. If anyone in your company had ever come to you

6 and suggested that Transocean was callous, indifferent,

7 or just didn't plain give a damn about the welfare of

8 the environment or individuals, wouldn't it have been

9 your obligation as CEO to either terminate the

10 relationship with Transocean or appoint someone to look

11 into those allegations?



14 A. The reality, of course, that if that was --

15 had been the case, other -- others would have taken

16 action before it got to me, I'm certain.

17 Q. (By Mr. Roberts) Yeah. But you've never heard

18 any of that?

19 A. I haven't heard any of that.

20 Q. Do you know any individuals with Transocean?

21 A. I knew from a -- I knew the Chairman, Bob --

22 Q. Bob Long?

23 A. Bob Long.

24 Q. Okay. Did he seem to be a conscientious

25 individual concerned about the industry you were both


543

1 involved in?

2 A. He did.

3 Q. Did he seem, from your discussions with him,

4 to be concerned about the safety and welfare of both

5 the environment and the people?

6 A. He did.

7 Q. Okay. Did he express the same type of goals

8 that you would want expressed as a partner to BP in the

9 offshore drilling business?

10 A. I -- I -- we -- neither -- Bob and I did not

11 at any point talk in any detail about goals and

12 objectives, but I have no reason to believe that he

13 wouldn't.

14 Q. Okay.

15 MR. ROBERTS: I don't what the next

16 exhibit number is.

17 MR. GODFREY: Is this the new one you

18 were talking about?

19 MR. ROBERTS: Yes, sir.

20 MR. GODFREY: The next exhibit number

21 should be 6060, according to my record. Is that the

22 correct number --

23 MR. ROBERTS: 6060.


25 THE COURT REPORTER: Mark one of them.


544


2 THE COURT REPORTER: No, no, no, not you,

3 not you. I'm talking to my manager.

4 MR. ROBERTS: The court reporters from

5 Houston are testy sorts.

6 THE COURT REPORTER: Objection, form.

7 (Laughter.)

8 MR. ROBERTS: Oh, God, help me.

9 THE COURT REPORTER: Objection, form.

10 Q. (By Mr. Roberts) Doctor, I've handed you a

11 document that's been produced by BP. It -- it appears

12 to be your testimony before -- a transcript of your

13 testimony before the House Representatives' Committee

14 on Energy and Commerce.

15 MR. GODFREY: Excuse me. Do you have

16 another copy that I might have, please?

17 MR. ROBERTS: I'm sorry.

18 MR. GODFREY: His personal counsel has

19 it. The company counsel does not. Do you need this --

20 MR. ROBERTS: No.

21 MR. GODFREY: Okay, thank you.

22 MR. ROBERTS: There's so many BP lawyers

23 here, I just didn't bring enough copies, right?

24 Q. (By Mr. Roberts) Let me go back over this.

25 This appears to be a transcript of your testimony on


545

1 June 17 before the House Committee -- Subcommittee on

2 the Oversight and Investigations. And I'm sure you

3 recall that particular day?

4 A. How could I forget it?

5 Q. I have highlighted for your attention a -- a

6 couple of parts in that.

7 A. Yeah.

8 Q. The first is the paragraph that begins: "When

9 I learned that 11 men had lost their lives in the

10 explosion and fire on the DEEPWATER HORIZON, I was

11 personally devastated." Do you recall making those

12 comments?

13 A. I do.

14 Q. It goes on to say: "Three weeks ago I

15 attended a Memorial Service for those men, and it was a

16 shattering moment. I want to offer my sincere

17 condolences to their friends and families. I can only

18 imagine their sorrow." Do you recall saying that, sir?

19 A. I do.

20 Q. That -- that service, the Memorial Service you

21 attended, was that the Transocean Memorial Service?

22 A. It was. It was.

23 Q. And -- and at that service, you met a number

24 of the families?

25 A. I did.


546

1 Q. A number of the people involved in the rig?

2 A. Yes.

3 Q. And you at least got a sense of their

4 feelings, their attitudes, and their emotions, correct?

5 A. I did, yes.

6 Q. What did you think about those folks?

7 A. I thought they were great people, and I was

8 deeply touched by the sorrow that they were feeling and

9 the loss that they experienced.

10 Q. Did you get any inim -- any impression from

11 them that they were callous or hardened people that

12 didn't care about the welfare of others?

13 A. No.

14 Q. Quite the contrary, did you -- did you get the

15 impression that those employees that you met were

16 deeply care -- deeply cared about others and their own

17 family?

18 A. Indeed, yes.

19 Q. Their own drilling family, I'm talking about.

20 A. Yeah. I -- I understand your -- entirely your

21 sentiment.

22 Q. Did you get the impression of how close the

23 family on the drilling rig was; that is, the men that

24 worked together on the --

25 A. I did.


547

1 Q. -- drilling rig?

2 Did you get a chance to talk to some of your

3 employees who worked on the DEEPWATER HORIZON with

4 these men?

5 A. I did.

6 Q. And did you get the impression that they all

7 considered themselves one big family, even though they

8 were from different companies?

9 A. Yes.

10 Q. Do you remember any of the names of the

11 individuals who lost their lives?

12 A. I -- I remember some of them. Ja -- James

13 Anderson.

14 Q. Yes, sir.

15 A. Gordon Clark. Karl Kleppinger, I think.

16 Q. Yeah. One --

17 A. I can't remember any more of them, I'm afraid.

18 Q. On April 20th of this year, BP filed a

19 lawsuit, a legal pleading, claiming, among other

20 things, that these men were callous, indifferent, and

21 grossly negligent in causing this explosion. Are you

22 aware of that, sir?

23 A. It's after I left the company. I --

24 Q. Sir?

25 A. It was after I left the company. I've had no


548

1 involvement in it.

2 Q. Does April 20 have any significance in your

3 life?

4 A. Of course, it does.

5 Q. It's the anniversary of --

6 A. I know exactly what it is.

7 Q. It's the anniversary --

8 A. I remember the anniversary. I spent an hour

9 in the church on my own, reflecting.

10 Q. As did many.

11 A. I'm sure that's right.

12 Q. I -- I gather that you weren't consulted in

13 the decision by BP, on the anniversary of these men's

14 deaths and these many injuries that you knew took

15 place -- you weren't consulted on whether they should

16 be accused of being incompetent, not knowing what they

17 were doing, or grossly negligent?

18 A. I have --


20 A. -- not been consulted on anything with respect

21 to BP since I left the company on the 30th of

22 September.

23 Q. (By Mr. Roberts) You saw these people at the

24 Memorial Service, and you saw the families of the

25 deceased workers, and you saw the surviving workers and


549

1 their families. Can -- can we agree just as humans --

2 can we agree that it would have been insensitive, at

3 the minimum, on the anniversary of these folks' tragic

4 incident, to file a claim saying they were grossly

5 negligent?

6 MR. WEBB: I object to the --


8 MR. WEBB: -- form of the question.

9 A. I had no part or parcel in any of that. I'm

10 not -- I'm not --

11 Q. (By Mr. Roberts) Oh, I understand that, sir.

12 A. -- prepared to pass any judgment one way or

13 the other as to the sensitivity or not. I don't know

14 the context, I don't know the legal context, so I'm

15 afraid I'm not prepared to pass a judgment.

16 Q. You're not prepared to say that it's

17 insensitive to claim that these dead men were

18 incompetent on the anniversary of their deaths?


20 A. As I said, I'm not prepared to pass a judgment

21 because I don't know the context in which that decision

22 was taken.

23 Q. (By Mr. Roberts) Whatever the context the

24 decision was made by BP, are you seriously telling me

25 you're not in a position to say that that would have


550

1 been, at a minimum, insensitive?



4 A. As I said, I was no part of the decision. I

5 had left the company almost nine months, it was.

6 Q. (By Mr. Roberts) You -- you met those wives?

7 A. I did.

8 Q. Can you imagine what it would have been like

9 for them to find out on the year anniversary of the

10 deaths of their husbands and loved ones, that those men

11 are being accused of incompetence?



14 MR. GODFREY: Move on.

15 A. I'm not aware of what they've been accused of.

16 I'm very sorry, but I don't -- I have no basis to

17 make --

18 Q. (By Mr. Roberts) I'm asking you to assume that

19 was the case. If that is the case, can you understand

20 how that might have been at least insensitive?

21 MR. GODFREY: Objection as to form. Move

22 on, please.

23 A. I can --

24 Q. (By Mr. Roberts) Sir?

25 A. I can imagine how -- how, on the anniversary


551

1 of the accident, the families and particularly the

2 wives were very upset. It's the anniversary of the

3 accident.

4 Q. Thank you, sir.

5 Let me make sure -- (tendering).

6 A. Thank you.

7 MR. GODFREY: Is this 6061?

8 MR. ROBERTS: I -- no, no, no. I think

9 we have -- pass 6061. I need one for the court

10 reporter.


12 Q. (By Mr. Roberts) What I've handed to you is a

13 transcript of a -- it's actually a copy of a "Forbes"

14 magazine interview entitled, "In His Own Words: Forbes

15 Q&A With BP's Tony Hayward," and dated May 18, 2010.

16 Do you see that, sir?

17 A. I do.

18 Q. Do you recall giving this interview?

19 A. I don't, no.

20 Q. Sir?

21 A. I don't recall it, no.

22 Q. You were giving a lot of interviews --

23 A. I was doing lots of -- lots of things.

24 Q. It -- it says: "Last" -- it begins: "Last

25 week Forbes sat down with BP Chief Executive Tony


552

1 Hayward at the company's emergency response center in

2 Houston," then goes on to say something that I am sure

3 is inaccurate: "A well-rested Hayward shared his

4 thoughts..."

5 I can't imagine you were well-rested at that

6 point.

7 A. It's the definition of "well-rested," of

8 course, but at the time I was getting probably four or

9 five hours' sleep a night.

10 Q. Yeah.

11 I want to go to the last page. There's a

12 question that's asked of you beginning at the top:

13 "That makes me think...you didn't mean a real insurance

14 policy of course, but if one was to go to Lloyd's of

15 London and insure against a 25 billion hit to my market

16 cap and 5 billion in punitive damages, what kind of

17 premiums would you have to pay?"

18 The answer that's written down here is: "You

19 can't insure. That's why we're self-insured. You

20 can't insure risks you want to insure. And the things

21 you can insure, premiums are so high that it makes no

22 sense for a company like" P -- "BP to do anything other

23 than self-insure." Do you see that, sir?

24 A. I do.

25 Q. Do you recall giving that answer?


553

1 A. I -- I don't, but it's -- it's not an

2 unreasonable answer. I don't recall it, no.

3 Q. You're not denying that you gave it?

4 A. No.

5 Q. You just --

6 A. Yeah, yeah.

7 Q. -- don't recall giving it?

8 A. I don't recall, yeah.

9 Q. And the answer that is there is certainly

10 consistent with your thought process and your

11 understanding of the situation?


13 A. Certainly that BP is self-insured. We don't

14 have insurance policies in place, correct.

15 Q. (By Mr. Roberts) Right.

16 A. Certainly --

17 Q. It goes on to say that if you did get

18 insurance, "...the premiums are so high that it makes

19 no sense for a company like BP to do anything other

20 than self-insure." Is that accurate as well?

21 A. Can -- sorry. The -- you -- you mean the next

22 question, or is --

23 Q. No, the next statement, "...and the things you

24 can insure, the premiums" --

25 A. I'm sorry.


554

1 Q. -- "are so high..."

2 A. I'm sorry. Yes. M-h'm, yeah. Yes.

3 Q. All right. Let's start with that. What does

4 "self-insurance" mean to you, at least when you were

5 CEO of BP?

6 A. It meant that the company didn't have an

7 insurance policy against the risks it was -- it was

8 undertaking, in essence, and the -- and as it says

9 here, we self-insured and took those risks onto our

10 balance sheet.

11 Q. Is -- is "self-insured" an -- another way of

12 saying "no insurance"?

13 A. Yes. Well, no -- no external third-party

14 insurance, yeah.

15 Q. All right.

16 A. Yes.

17 Q. So BP elected to have no external insurance --

18 A. M-h'm.

19 Q. -- for terms of the environmental risks that

20 might be occasioned in connection with deepwater

21 drilling?


23 A. We had no external insurance for anything at

24 BP.

25 Q. (By Mr. Roberts) For anything at BP?


555


2 Q. Okay. I don't know about the cars y'all drive

3 or that kind of stuff. I'm -- I'm only interested in

4 deepwater drilling --

5 A. Obviously we're think -- thinking of --

6 Q. -- particularly the Gulf of Mexico.

7 A. -- any other operational activity.

8 Q. Okay. The statement here that the premiums

9 are so high that it makes no sense, like BP, to do

10 anything else other than self-insure, am I right that

11 BP, some years ago, made a corporate decision that the

12 differential between the cost of having insurance in

13 connection with the claims that it was covering were

14 such that BP might as well not have insurance, handle

15 the claims itself, and in the end save itself money?

16 A. That's cor -- that was a decision taken in

17 about 1991.

18 Q. And that was still the decision in effect at

19 the time --

20 A. M-h'm.

21 Q. -- you undertook your --


23 Q. -- undertook the CEO position?


25 Q. That was still the situation as of Macondo?


556


2 Q. Is there any reason, in your mind, to think

3 that deepwater well pollution insurance, if it's not

4 affordable on a practical level to BP, would be

5 affordable on a practical level to somebody like

6 Halliburton or MI or Dril-Quip or Transocean?


8 MR. GODWIN: Objection as to form.

9 A. I don't know anything about the insurance

10 market, I'm afraid, so I can't make that -- take that

11 view. I think everyone, every company, looks at the

12 risks that they're undertaking, the cost of insurance,

13 and weighs that against the likelihood of occurrence,

14 and makes a decision appropriately. I -- I'm -- I --

15 but I'm not an expert in the insurance market, so I

16 can't answer your question, I'm afraid.

17 Q. (By Mr. Roberts) Did you have any expectation

18 that your subcontractors would go out and purchase

19 insurance for you, since you had a -- made a corporate

20 decision not to purchase insurance for yourself?



23 A. We had no expectation of what our contractors

24 did and did not -- insur -- what insurance our

25 contractors did and did not purchase with respect to


557

1 risks that they were undertaking.

2 Q. (By Mr. Roberts) As -- while you were CEO of

3 BP, as between BP, on the one hand, and its contractors

4 that were involved in drilling of wells, in the other

5 hand, was there a normal allocation of environmental

6 risks in the contracts that BP entered into?


8 A. Would you just repeat your question again?

9 Q. (By Mr. Roberts) Sure. You know what

10 environmental risks are?

11 A. Yeah. Yes.

12 Q. All right. And you know that in your

13 contracts with subcontractors, there is an allocation

14 of who's responsible for those risks?

15 A. M-h'm.

16 Q. You're familiar with the term of indem --

17 you're familiar with the term "indemnity"?

18 A. Yes.

19 Q. All right. While you were CEO, what was the

20 policy with respect -- at BP -- as to who would assume

21 environmental risk for blowout pollution, for

22 instance -- BP or its subcontractors?


24 A. I think the -- it de -- it de -- in the

25 contracts, of course, it's -- I -- I -- I -- I don't


558

1 have a contract in front of me, and I won't remember

2 the right language. But if there was -- if there was

3 reasons to believe that the contractor was at fault,

4 then the indemnity may or may not apply.

5 Q. (By Mr. Roberts) "At fault" meaning what?

6 MR. WEBB: Well, object to the form.

7 Object to the form of the question, without a document.

8 MR. GODFREY: The same objection.

9 A. A -- a -- a -- some sort -- some form of

10 fault. I'm not a lawyer. I'm not going to try and

11 describe a legal description.

12 Q. (By Mr. Roberts) All right. Well, let's --

13 A. I certainly won't try and do it without the --

14 Q. Let's go back up --

15 A. -- without the contract in front of us.

16 Q. Let's go back up to your level, the

17 40,000-foot level of a CEO. And I don't mean that

18 disrespectfully. I understand you don't read the

19 details of every contract -- of all your contracts.

20 But what -- what was the industry -- you

21 talked yesterday at length about the industry. In

22 general, what was the industry allocation of

23 environmental risk between an Operator such as BP and

24 subcontractors who worked for the Operator while

25 drilling wells for the Operator?


559




4 A. The industry norm would be, in most

5 circumstance, that the Operator would take that risk.

6 Q. (By Mr. Roberts) Okay.

7 A. But circumstances, of course, differ in time

8 and place.

9 Q. Right. But that was the industry standard?

10 A. M-h'm, yeah.

11 Q. Has been that way for years, hasn't it?

12 A. Yeah, it is.


14 Q. (By Mr. Roberts) All right. If you would,

15 that notebook that's in front of you, turn to Tab --

16 let's see if this helps. I've got mine upside down.

17 Tab 4.

18 THE COURT REPORTER: Do you want it

19 marked, Mr. Roberts?

20 MR. ROBERTS: No, sir. It's been

21 previously marked as Exhibit 1488, and it is on the --

22 the disc that everybody has.

23 THE COURT REPORTER: Thank you, sir.

24 MR. ROBERTS: You're welcome, sir.

25 Q. (By Mr. Roberts) Do you have Tab 4, sir?


560

1 A. I do.

2 Q. It is the -- as you can tell, it's Amendment

3 No. 38 to the Drilling Contract. It's dated -- it's

4 for the DEEPWATER HORIZON. It's dated September 28th

5 2009, and it goes into effect, I believe, in September

6 of 2010.

7 So to put this in perspective, it was signed

8 before Macondo, concerning the DEEPWATER --

9 A. M-h'm.

10 Q. -- HORIZON, to go into effect after Macondo.

11 Are you with me, sir?

12 A. I am.

13 Q. The day rates are specified there with

14 Mr. Suttles -- and, by the way, do -- you do know

15 Mr. Suttles?

16 A. Yes, I do. Yes, I do.

17 Q. He was the COO of the company?


19 Q. Was he the --

20 A. He was Chief Operating Officer of the

21 Exploration and Production Company.

22 Q. Okay. Was he a direct report to you?

23 A. No.

24 Q. Okay. Who did he directly report to?

25 A. To Mr. Ingalls.


561

1 Q. Mr. Ingalls. Was Mr. Ingalls a direct report

2 to you?

3 A. He was.

4 Q. And what was his position with respect to BP

5 PLC?

6 A. Mi -- Mr. Ingalls was the Chief Executive

7 Officer of Exploration & Production.

8 Q. Did he serve any ca -- in --

9 A. And was on the Board of BP PLC.

10 Q. All right. And did he have any other position

11 other than being on the Board of PLC?

12 A. He was the Chief Executive of Exploration and

13 Production.

14 Q. All right. That's --

15 A. Well, I don't think I understand --

16 Q. No, not -- it's -- it's -- my question is not

17 artful.

18 Is Exploration and Production part of PLC?

19 A. It's -- yes, it's one of the -- it -- it's not

20 a legal subsidiary. It's an internal organizational

21 unit.

22 Q. Okay. It's an organizational format created

23 under PLC, or within PLC?

24 A. It's within PLC, yes.

25 Q. All right.


562

1 A. That's a better way to think about it.

2 Q. So when we talk about him being a COO of

3 Exploration and Production, that -- that is a position,

4 it's not a company that he's over?


6 Q. It's a group?

7 A. Well, within the Exploration and Production

8 business, there are a series of legal entities.

9 Q. This Amendment 38, I did the math with

10 Mr. Suttles, and the value of this contract over its

11 lifetime is in excess of a half a billion dollars. And

12 I asked him whose authority it would have required for

13 this contract to be approved by BP. And he said this

14 contract would either have been approved by Mr. Ingalls

15 or by yourself.

16 A. (Nodding.)

17 Q. And so I'm asking yourself, are you the one

18 that approved the entering in --

19 A. It was Mr. Ingalls that approved.

20 Q. That's a great answer.

21 A. Well, it -- it is a fact, though.

22 Q. And I'm not suggesting it's not.

23 A. On long -- long-term capital commitments, we

24 made a distinction between capital allocation and

25 long-term commitments, of which this contract is one.


563

1 Q. Did Mr. Ingalls need to consult with you

2 before he approved this contract?

3 A. He probably -- I don't recall, but he probably

4 would have made me aware he was going to sign a

5 contract, but not in any formal sense.

6 Q. Not in any detailed sense?

7 A. Not in any formal sense or detailed sense.

8 Q. Would he have been --

9 A. It was within his delegated authority.

10 Q. That's a good word. I hear it throughout this

11 case, "delegated authority."

12 A. It's -- it's a fact. If you go and look at

13 the delegated authorities from -- brought to me and

14 from myself to my reports, you'll find that this

15 contract -- a contract of this type is within the

16 delegated authority of Mr. Ingalls.

17 Q. So Mr. Ingalls would have been the one who had

18 the delegated responsibility to review the details of

19 the contract, decide whether it should be approved, and

20 then would have simply advised you of the generalities,

21 and approval would have been agreed downstream?


23 A. That's broadly correct.

24 Q. (By Mr. Roberts) All right. This contract --

25 and if you would, turn to Page 9 of the document.


564

1 MR. GODFREY: Page, or the Bates number,

2 please?

3 MR. ROBERTS: Yeah, it's 9 of the

4 document. It's -- it's -- the BP number is 41484.

5 MR. GODFREY: Okay, thank you.

6 Q. (By Mr. Roberts) Do you see that, sir?

7 A. I do.

8 Q. It -- it -- and I will tell you generally, you

9 see highlighted the words "indemnity and willful

10 misconduct"?

11 A. M-h'm.

12 Q. You see that, sir?

13 A. I do.

14 Q. Did Mr. Ingalls have the authority to, on

15 behalf of BP, enter into an agreement that included

16 indemnity for another party's willful misconduct?


18 A. He had the approval to approve this contract,

19 so --

20 Q. (By Mr. Roberts) Whatever is in here, he had

21 that authority?

22 A. Yes. Actually, he had the authority to

23 approve this contract, not the approval to approve this

24 contract.

25 Q. I'm sorry, I couldn't hear you.


565

1 A. I, inaccurately, said he had the approval to

2 approve this contract. What I meant to say was he had

3 the authority to approve this contract. I was just

4 correcting the court recorder here.

5 Q. If you would, turn to Page 15 of that same

6 document.

7 MR. GODFREY: Is that No. 490 of that?

8 MR. ROBERTS: 41490.


10 MR. ROBERTS: M-h'm.

11 Q. (By Mr. Roberts) You see in the middle there

12 is the BP Code of Conduct --

13 A. Yes.

14 Q. -- as part of this contract?

15 A. I do.

16 Q. Let me just start there. It says in the

17 middle, "BP wishes to make it clear that it intends its

18 business dealings to be characterized by honesty, and

19 freedom from deception and fraud, and that it finds

20 unethical behavior unacceptable. Practices that BP

21 considers dishonest, unethical or unacceptable

22 include," and the second bullet point is "Deception."

23 Is that correct, sir?

24 A. It is.

25 Q. What is the BP Code of Conduct in general,


566

1 what -- what --

2 A. It's -- it's the Code by which we expect

3 everyone in BP to conduct business. It sets out the

4 norms and standards of performance and behavior --

5 Q. So you would --

6 A. -- in business.

7 Q. I'm sorry, did I --

8 A. Yes.

9 Q. -- interrupt you?

10 A. No, no. Go. I finished.

11 Q. You would expect all representatives of BP to

12 conduct themselves at the highest level of

13 professionalism consistent with this Code of Conduct?

14 A. I would.

15 Q. You would, for instance, expect all levels of

16 BP representatives to honor contractual commitments

17 that they make?

18 A. I would.

19 Q. You would, of course, expect all BP

20 representatives not to enter into contracts that they

21 didn't intend to honor?



24 A. Indeed.

25 Q. (By Mr. Roberts) Did I say that wrong? Let me


567

1 say it again.

2 A. No, you -- indeed. I said, "Indeed," yes.

3 Q. All right. I got a lot of objections, and I

4 wondered if I said something nasty.

5 A. I think it was to your question rather than --

6 the phrasing of your question, perhaps.

7 Q. Yeah, but --

8 A. But I'm not a lawyer, so --

9 Q. I'm obviously not much of one with all the

10 objections I'm getting, but the --

11 A. There are plenty of experts in the room.

12 Q. But shorthand is, is you expect your

13 representatives, when they're entering into contracts,

14 to intend and to honor the contractual -- the

15 contractual obligations they enter into?



18 Q. (By Mr. Roberts) That's part of your Code of

19 Conduct?


21 A. It is.

22 Q. (By Mr. Roberts) Don't enter into agreements

23 and be deceptive, meaning don't enter into an agreement

24 that you really don't intend to perform under?



568

1 A. That's correct. We also expect those who

2 enter into contracts with us to perform.

3 Q. (By Mr. Roberts) No doubt about it.

4 A. So --

5 Q. That's the way the oil industry has worked

6 since --

7 A. It's a binary process, two sides of the party.

8 Q. It's worked that way since you've been in this

9 business, hasn't it, sir?


11 Q. It's worked that way since you did your first

12 handshake deal with your first opposition in drilling a

13 well, hasn't it?

14 A. I'm not sure I ever did a handshake deal

15 drilling a well, but, yes, correct.

16 Q. Well, you know that this industry, the

17 industry that you've been a proud member of for over 30

18 years, is characterized by men of great integrity and

19 honesty?


21 A. I agree with that.

22 Q. (By Mr. Roberts) Well --


24 Q. Despite your lawyer, I knew you were going to

25 agree with that. And you know that men in this


569

1 industry expect others to honor their contractual

2 commitments?



5 Q. (By Mr. Roberts) And that's been a cornerstone

6 of this industry throughout its existence?


8 Q. It's the only way it works, isn't it, sir?



11 A. It is.

12 Q. (By Mr. Roberts) And you're still in this

13 industry, aren't you?

14 A. I'm sort of in the industry. I --

15 Q. I saw --

16 A. I intend to become part of the industry

17 again --

18 Q. I -- I saw --

19 A. -- in the relatively near future.

20 Q. You -- you've got a -- what do you call it, an

21 IPO, investment group going in the energy business

22 that's starting up now?


24 Q. What's the name of that company?

25 A. It's called Vallares.


570

1 Q. Vallares?

2 A. M-h'm.

3 Q. Sounds like a song, "Vo-la-re." That's not

4 that same group, though, I guess.

5 Anyway, what is this company going to do?

6 A. It's -- it's going to invest in oil and gas

7 opportunities.

8 Q. As in drilling?

9 A. Potentially in drilling, almost -- almost

10 certainly at some point will be involved in drilling, I

11 expect.

12 Q. If -- if the opportunity comes up, any reason

13 you wouldn't use Transocean to drill one of those

14 wells?


16 A. We would look very hard at all the potential

17 contractors and make an appropriate decision.

18 Q. (By Mr. Roberts) All right. Barbara Yilmaz,

19 what is her position with your company? And I may have

20 said her name incorrectly.

21 A. She -- she certainly was last year -- I

22 don't -- I don't know what her position is now, but she

23 was last year the Head of Global Drilling Operations.

24 Q. What does that mean in terms of her

25 responsibilities over the Gulf of Mexico drilling?


571

1 A. She had global oversight of the Drilling

2 Operations Worldwide, which was not in a -- in -- to

3 have sort of direct operational oversight on a

4 day-to-day basis, but to ensure that the right people

5 with the right skills are in the right places to insure

6 that we had the right standards in place to take a

7 leading role in managing the global rig fleet that BP

8 was contracting on an ongoing basis.

9 Q. Was she still with the company as -- as of

10 when you left?

11 A. Yes, she was.

12 Q. So ultimately all drilling responsibilities go

13 to her worldwide?

14 A. Yes, not in the -- not in the matter of

15 specific operational decision-making, but in the matter

16 of people, the rig fleet, with systems and processes

17 that we use. She wasn't involved in the day-to-day

18 operational decision-making around any particular well,

19 because there were people beneath her doing that.

20 Q. Yes, sir, I understand. She's not going to be

21 deciding what mud weight to be putting down a hole, but

22 she is going to be involved in a decision as to what

23 drilling contractor will be --


25 Q. -- retained --


572


2 Q. -- what rig will be used, high-level decisions

3 of that sort?


5 Q. Would you turn to -- same document, turn to

6 Page 41561.

7 MR. GODFREY: This is in 1488, 41561 did

8 you say?



11 Q. (By Mr. Roberts) Beginning at the bottom,

12 there's a Section E.2.3, "Ram Pipe Preventers," and it

13 carries over to the next page with E.2.4, "Stack

14 Configuration"?

15 A. Yeah.

16 Q. Do you see that, sir?

17 A. I do.

18 Q. How is it determined within your company how

19 you decide what the stack figuration will be on

20 deepwater drilling rigs that your fleets use?


22 Q. That would be in Barbara's area?

23 A. I would certainly believe that it's in

24 Barbara's area, but I don't know the -- the basis for

25 that sort of decision.


573

1 Q. You are aware that your company decides what

2 the stack configuration will be, aren't you, sir?

3 A. I believe that's the case.

4 Q. Okay. You are aware that your company

5 instructs not just Transocean, but other drilling

6 contractors what type of rams and where the rams are to

7 be located in a BOP?

8 A. I'm -- I wasn't personally aware of that. If

9 that's -- if that's your assertion to be true, then I

10 accept it. I wasn't personally aware of that.

11 Q. Well, we can look at this document, this

12 contract, and you can see that the location and types

13 of rams have been specified by BP?

14 A. Yeah.


16 Q. (By Mr. Roberts) Are you aware that some of

17 your rigs under contract are equipped with two blind

18 shear rams and some are equipped with only one?

19 A. I am aware of that now.

20 Q. Okay. Is the reasoning for equipped --

21 equipping some of the rigs with two blind shear rams

22 opposed to one based upon on how the rig is going to be

23 utilized or what pressures are expected to be seen or

24 what?

25 A. I don't -- I don't know the basis for that


574

1 decision-making.

2 Q. Do you know why it was that of the six rigs in

3 the Gulf of Mexico, for instance, that Transocean had

4 under lease to BP, four of them had two blind shear

5 rams and two had one blind shear ram?

6 A. I don't know.

7 Q. Were you aware that --

8 A. I wasn't aware that was the case --

9 Q. Okay.

10 A. -- prior to the accident. And I don't know

11 what the basis of that situation was.

12 Q. Were you -- were you aware that the two rigs

13 that had one blind shear ram were the two rigs that

14 were placed and instructed by BP to go to Macondo, the

15 MARIANAS and the DEEPWATER HORIZON?

16 A. I wasn't aware of that -- I wasn't aware of

17 the configuration of either of those rigs with respect

18 to whether they had one or two blind shear rams.

19 Q. Were you aware that all of the relief rigs

20 that BP asked Transocean to redeploy were two blind

21 shear rams?

22 A. I became aware of that in the course of the

23 response.

24 Q. Has BP gone to a system where it requires its

25 rigs to be equipped with two blind shear rams in


575

1 deepwater drilling?


3 Q. (By Mr. Roberts) At least as of when you left?

4 A. I -- I don't -- I don't know. I don't recall.

5 Q. Sir?

6 A. I don't know. I don't know.

7 Q. That would be a question for Ms. Yilmaz?

8 A. I'm certainly -- I would imagine that

9 Ms. Yilmaz would be able to answer that question, but I

10 don't know the answer to it.

11 Q. Okay. Well, is there anybody else that you

12 would suggest that I ask that of BP other than

13 Ms. Yilmaz?

14 A. Well, I -- I'm not certain what role

15 Ms. Yilmaz now has.

16 Q. I -- I'm sorry, it's an inartful question. At

17 least as of the time you left BP, can you --

18 A. She would be the best person to ask.

19 Q. She would be the best person to discuss blind

20 shear rams in drilling rig allocation?

21 A. I believe so.

22 Q. All right.

23 A. I believe so.

24 Q. She'll probably hate you for saying that,

25 but --


576

1 A. I said I believe so, I didn't say it was a

2 fact. I said I believe so.

3 Q. Okay.

4 A. It's a truthful answer to your question.

5 Q. Is there any difference in the blind shear ram

6 utilization by BP in other parts of the world, any

7 difference, from your understanding, between what BP

8 did in the Gulf of Mexico and what BP did in other

9 parts of the world?

10 A. I'm not aware. I don't know the -- the

11 details of blind -- of BP's blind shear ram

12 utilization.

13 Q. Okay. I have a couple of questions to ask

14 you, sir, and -- and --

15 MR. GODFREY: Are we done with this

16 notebook or at least this Tab?




20 MR. GODFREY: I'm juggling things here.

21 Q. (By Mr. Roberts) Want to ask you a couple of

22 statements and see if you agree or disagree with them,

23 okay? I have a feeling I know what the answers are

24 going to be.

25 Statement No. 1, that BP's history is littered


577

1 with inappropriate actions and decisions pertaining to

2 wells with little or no accountability?



5 Q. (By Mr. Roberts) Agree or disagree?

6 A. I disagree.

7 Q. No. 2, for too long --

8 A. Can I -- are you citing from a document, can

9 I see what --

10 Q. No, sir, I'm reading my notes.

11 A. Okay. So where --

12 Q. I'm reading my notes.

13 A. I'm not allowed to know where these are from,

14 or they're just from you, are they? I guess you'll

15 let --

16 Q. I may be making it up.

17 A. Okay.

18 Q. Okay. No. 2, for too long BP treated wells as

19 one would treat a hire car. There is little or no

20 oversight or ownership of our wells, outside the

21 drilling and completion construction phase. Agree or

22 disagree with that?



25 A. I -- I disagree with it.


578

1 Q. (By Mr. Roberts) Okay. No. 3, there is a lack

2 of accountability in BP's Well Engineering. Agree or

3 disagree?



6 A. I don't know -- I don't have a basis for

7 agreeing or disagreeing on any of this.

8 Q. (By Mr. Roberts) So there may be a lack of

9 accountability in BP's Well Engineering from your --



12 A. I'm -- I'm not -- I'm just not in a position

13 to make --

14 Q. (By Mr. Roberts) As of when --

15 A. Today or when I left or --

16 Q. As of when you left BP. All of my questions

17 are as of the day you walked out the door. Was there a

18 lack of accountability from your standpoint as CEO in

19 Well Engineering?


21 Q. All right. As of the day you left BP as CEO,

22 do you agree or disagree that the only time there was

23 crystal clear accountability in Well Engineering was

24 during the construction phase?



579


2 A. I don't have a basis for forming a judgment,

3 I'm afraid.

4 Q. (By Mr. Roberts) All right. So there could

5 have been --


7 Q. (By Mr. Roberts) -- this lack of

8 accountability?

9 A. Could have been, there could not have been.

10 I just don't have a basis for -- to forming a judgment.

11 Q. (By Mr. Roberts) You agree or disagree that as

12 of the period you were CEO, that the greatest obstacle

13 in delivering appropriate levels of integrity across

14 BP's well stock is the lack of clear accountability?


16 question.

17 A. I -- I don't have any basis to agree or

18 disagree on that.

19 Q. (By Mr. Roberts) Well, you sure wouldn't want

20 that to have been the case, would you?


22 A. I say I don't have any basis to agree or

23 disagree whether that's the case.

24 Q. (By Mr. Roberts) No, that wasn't my question.

25 You wouldn't -- you would not have wanted that to be


580

1 the case while you were CEO --


3 Q. -- right?


5 Q. If that was the case, it wouldn't have been

6 with your approval?


8 A. That's, indeed, the case.

9 Q. (By Mr. Roberts) All right. Do you agree or

10 disagree that all BP's major well integrity incidents

11 prior to Macondo were due to simple bad practice?


13 Q. (By Mr. Roberts) That the well integrity --

14 that well integrity is no more than an output of

15 competent, basic operation practice, complexity and

16 cost is a product of having to replace failed wells?


18 A. I don't have a basis to agree or disagree. I

19 don't know what you're --

20 Q. (By Mr. Roberts) Well, let me --

21 A. -- referring to or assuming.

22 Q. Would you agree that you would not want -- you

23 wouldn't have wanted, while you were CEO at the

24 company, all of your well incidents to have been due to

25 simple bad practice?


581


2 A. Correct.

3 Q. (By Mr. Roberts) All right. Do you agree that

4 all of BP's well integrity train wrecks resulted from

5 simple bad practice?


7 Q. (By Mr. Roberts) As an example.

8 FIRE ALARM VOICE: The fire alarm system

9 is about to be tested.

10 (Fire alarm drill sounding.)

11 FIRE ALARM VOICE: Attention, please.

12 Attention, please. A fire has been reported in the

13 building.

14 THE COURT REPORTER: Somebody just shoot

15 me.

16 FIRE ALARM VOICE: Please leave the

17 building immediately by the nearest exit.

18 The fire alarm test is now completed.

19 MR. ROBERTS: I know -- I know you

20 arranged this.

21 (Laughter.)

22 MR. GODFREY: There -- there actually was

23 a sign coming in this morning that informed us of this.

24 I -- it was somewhat disbelief, but the building is

25 unrelated to Kirkland, so I apologize on behalf of the


582

1 building, but we're also --

2 MR. ROBERTS: I don't know who owns the

3 Gerkin anymore. It used to be Swiss Reed, didn't it?

4 MR. GODFREY: Yep.

5 A. It did.

6 Q. (By Mr. Roberts) Who owns it now? I don't

7 know.

8 A. I don't know.

9 MR. ROBERTS: All right. Are we back on?

10 THE COURT REPORTER: We never left.

11 Q. (By Mr. Roberts) All right. Back to my

12 questions. Do you agree that all of BP's well

13 integrity train wrecks resulted from simple bad

14 practice? As an example, the Alaska A22 procedures

15 were not followed, and there was little or no

16 understanding of the effect of a cement retainer?


18 Q. (By Mr. Roberts) Sir?

19 A. I don't have a basis to agree or disagree

20 about cement --

21 Q. Do you know the Alaska A22?

22 A. No, I don't know the Alaska A22.

23 Q. Okay. Do you know the OLA A5?

24 A. I don't.

25 Q. Do you know the Colombian blowout?


583

1 A. The Colombian blowout, no, I don't.

2 Q. What is an SPU?

3 A. Strategic Performance Unit.

4 Q. Is that an -- an --

5 A. It's an --

6 Q. -- important part of your business?

7 A. It's an organizational entity within BP.

8 There were around 30 of them.

9 Q. What was the function or the intention of an

10 SPU?

11 A. It was an organizational unit.

12 Q. I mean, what did they do?

13 A. A business -- organizational business unit.

14 It ran -- they ran a business.

15 MR. GODFREY: Excuse me. What --

16 A. A production business, a retail business,

17 and --

18 Q. (By Mr. Roberts) Excuse me, sir.

19 MR. GODFREY: I was going to shut the

20 door because we had some background noise. Hold on for

21 one second, please, I apologize for interrupting.

22 Okay.

23 Q. (By Mr. Roberts) Was an SPU an important part

24 of the business Operations of BP at least as of when

25 you --


584

1 A. Yes.

2 Q. -- left BP?

3 A. It was.

4 Q. What types of individuals were appointed to

5 head an SPU?

6 A. Relatively Senior Executives.

7 Q. Senior Executives. Would you agree with me,

8 sir, that the SPUs of BP were motivated by greed and

9 fear?


11 A. No, I would not.

12 Q. Would you agree with me, sir, that the wells

13 were BP's biggest asset, yet they were treated with

14 much indifference at the corporate level?


16 A. I wouldn't agree with that, sir.

17 Q. (By Mr. Roberts) Okay. Who is David Andrews?

18 A. I don't know.

19 Q. You don't know him to be the Global Well

20 Integrity Lead of the segment Engineering Technical

21 Authority part of that SPU?

22 A. Part of which SPU? I don't know the name, I'm

23 afraid. I'm sorry, but I don't know him.

24 Q. You've never heard of him?

25 A. I haven't.


585

1 Q. I gather you've never seen the paper he did in

2 August of 2009 about well integrity?

3 A. I haven't.

4 MR. ROBERTS: Okay. What's the next

5 exhibit?



8 THE COURT REPORTER: Here comes the

9 exhibit sticker.

10 MR. GODFREY: Is this 6062?


12 Q. (By Mr. Roberts) Exhibit 6062 has been

13 produced by BP, and it appears to be your working notes

14 or Town Hall notes for a July 16, 2010, meeting.


16 A. I do.

17 Q. On Page 2 there is -- there's a bullet point

18 that I've highlighted. And -- and I guess these are

19 notes that -- or comments, thoughts that you were

20 making at this time?

21 A. I -- I didn't write this document and I -- I

22 don't recall it and I don't know that I've used it. I

23 think this was written by someone else for -- for me --

24 Q. By?

25 A. -- but I certainly didn't write it.


586

1 By an Executive Assistant, I expect.

2 Q. By a PR person or whom?

3 A. No. By a -- an assistant, one of mine.

4 Q. All right. Is this something that you worked

5 from while you were making your --

6 A. No.

7 Q. -- presentation?

8 A. No.

9 Q. What was -- what was to be done with this?

10 A. I hon -- honestly don't know. I didn't use

11 this in the presentation. I -- I don't know.

12 Q. Fair enough.

13 Let's go to the -- the second page, and let's

14 start with -- there -- there is a bullet point that

15 says: "Accusations and blaming going on is rubbish."


17 A. I do.

18 Q. Is that something that you would have agreed

19 with at that time?

20 A. I probably wouldn't have expressed it that

21 way, actually.

22 Q. "Rubbish" is a little bit too strong a word?

23 A. Yeah.

24 Q. But you did express earlier in this deposition

25 that you're -- you're not going to endorse the blame


587

1 game. That wasn't your role?


3 A. I said -- I don't recall exactly what I said,

4 but I think I was referring to -- I can't remember. I

5 mean, if -- I mean, if we have to go back to the

6 record, we should look at it, but --

7 Q. Have you engaged in any blaming of anybody for

8 the cause of this incident?

9 A. I have not, no --


11 A. -- I don't believe so, no.

12 Q. (By Mr. Roberts) Okay. You need to let your

13 lawyer yell at me first, and then you get to answer,

14 because I -- even with hearing aids, I can't

15 discriminate two conversations.

16 So what was your answer again, sir?

17 A. I don't believe so.

18 Q. All right. The second part of the bullet

19 point was that the "accident was not about poor well

20 design," end quote.



23 Q. All right. Do you believe that to be the

24 case?

25 A. I believe that the Bly Investigation, which


588

1 was only part way through at this point, at the poi --

2 at the date of this -- this Town Hall, has concluded

3 that well design was not part of the accident.

4 Q. So at least as of the time you left BP, you

5 believed that poor well design was not a reason, an

6 underlying reason for this incident?

7 A. I believe that's what is documented in the Bly

8 Report.


10 Q. (By Mr. Roberts) I don't care about the Bly

11 Report, but --

12 A. Well, that's what my date -- that's what my --

13 Q. But --

14 A. -- my statement was based on. So it's

15 important that I preface my statement with that was in

16 the Bly Report, I accepted the Bly Report, and that's

17 the basis for my statement that well design was not

18 part of this accident.

19 Q. All right. So maybe --


21 MR. ROBERTS: Anybody else?

22 Q. (By Mr. Roberts) All right. Let me approach

23 it this way: Do you have any understanding from any

24 other source about the cause of this incident aside

25 from what's in the Bly Report?


589

1 A. I have the Bly Report and a very high level

2 cursory overview of what the Presidential Commission

3 found.

4 Q. All right.

5 A. That's the extent of my knowledge.

6 Q. So from -- as we sit here today, from all

7 sources you've reviewed, you can find no evidence of

8 well design being part of the cause --

9 A. From the two sources that I've reviewed, the

10 Bly Report and the cursory inspection of the

11 Presidential Commission.

12 Q. You get to let me get my --

13 A. I'm sorry.

14 Q. -- question out.

15 A. I apologize.

16 Q. I'm --

17 A. I'm sorry.

18 Q. I'm a Texan, and I talk slow.

19 From your review of the two documents that you

20 looked at, the Bly Report and the cursory review, and

21 no other things that you reviewed, you have no reason

22 to believe that well design played any role in the

23 cause of this incident?

24 A. Correct.

25 Q. And you have reviewed nothing else and have


590

1 heard nothing else that would give you any reason to

2 believe that well design played any role in this

3 incident?


5 Q. All right.



8 Five minutes.

9 MR. GODFREY: Is it in the notebook, or

10 is it --

11 MR. ROBERTS: No, sir.


13 MR. ROBERTS: Even the court reporter's

14 getting tired of hearing me.

15 THE COURT REPORTER: Getting?

16 Q. (By Mr. Roberts) All right. Turning to

17 Exhibit 6063, do you recognize this, sir, as a

18 communication -- employee communication by you and

19 Mr. Bob Dudley?

20 A. I do.

21 Q. Dated September 8th, 2010?

22 A. Yes.

23 Q. Is this the communication that -- that was

24 issued as you were leaving the company?

25 A. Yes. I believe it was issued on the day that


591

1 we published the internal investigation, which is, I

2 guess, 20 days before I formally left the company.

3 Q. It -- it says in this, and I quote: "Based on

4 the report, it would appear unlikely that well design

5 contributed to the incident, as evidenced by the fact

6 that hydrocarbons flowed up the production casing

7 through the bottom of the well," unquote.


9 A. I do.

10 Q. I'm intrigued by that. Are you intending to

11 suggest that the fact that well -- that "hydrocarbons

12 came up the production casing" means that well design

13 could not have played any role in the incident?

14 A. I think you have to go back to the -- the

15 alternative theory, where well design was an issue,

16 where the flow was up the annulus, up the back side of

17 the production casing, and there is no evidence of

18 that.

19 So on that -- on the -- on that basis, I think

20 the Bly Report concluded that well design did not

21 contribute to the incident.

22 Q. But that's a little bit --


24 Q. (By Mr. Roberts) That's a little bit different

25 than -- than your communication here. Your


592

1 communication indicates, it says as the -- as evidenced

2 by the fact that hydrocarbons flowed up the production

3 casing through the bottom of the well, it appears that

4 well design didn't contribute to the incident. That's

5 what you said, isn't it, sir?

6 A. That is what I said.

7 Q. So, therefore, I conclude that you concluded

8 that since the hydrocarbons came through the production

9 casing from the bottom of the well that means that well

10 design wasn't implicated?


12 A. The conclusions of the Bly Report was that

13 well design wasn't implicated, and that is paraphrased

14 in this communication.

15 Q. (By Mr. Roberts) But you adopted --


17 Q. (By Mr. Roberts) -- that philosophy.

18 A. I re -- I communicated what the Bly Report

19 found.

20 Q. You're not communicating --

21 A. And I was not any -- any position to make any

22 other judgment.

23 Q. Sir, this is your communication and Bob

24 Dudley's communication to the employees. This isn't

25 Mr. Bly's communication. You --


593

1 A. But what --

2 Q. Let me finish.

3 A. Sorry.

4 Q. You and Mr. Dudley have told your employees

5 that since hydrocarbons flowed up the production casing

6 and through the bottom of the well, that it appears

7 unlikely that well design contributed to the incident?


9 Q. All right. So as I understand what you're

10 saying, the fact that it came through the production

11 casing, that means it couldn't have been due to bad

12 well design?


14 A. Which meant it did not go up -- the flow

15 through the production casing excluded the -- the flow

16 through the annulus, which was the ba -- which had been

17 a basis for concerns around the well design.

18 Q. (By Mr. Roberts) So to the extent that the Bly

19 Report looked at well design, it concluded that since

20 hydrocarbons came up through the production casing well

21 design was not implicated?


23 A. It concluded that based on this and other --

24 other things that are documented in this Bly Report.



594

1 A. And we can go to the Bly Report to understand

2 exactly how that conclusion was drawn.

3 Q. (By Mr. Roberts) And --


5 Q. (By Mr. Roberts) And you accepted that as a --

6 A. And I accepted the Bly Report.

7 Q. You accepted that as a thorough analysis of

8 how well design could have contributed to this

9 incident?

10 A. I accepted the Bly Report as a thorough

11 analysis of the incident, which effectively ruled out

12 well design as a cause of the accident.

13 MR. ROBERTS: Thank you, sir. It's been

14 a pleasure talking to you.


16 MR. ROBERTS: Nice meeting you.

17 THE WITNESS: The same. Thanks.


19 10:14 a.m. Ending Tape 13.


21 MR. GODFREY: Can you shut the door down

22 there, please?

23 We're ready to go. Thank you.


25 10:25 a.m., beginning Tape 14.


595

1 EXAMINATION

2 QUESTIONS BY MR. GODWIN:

3 Q. Good morning, Dr. Hayward. How are you, sir?

4 A. I'm very well, thank you.

5 Q. Good. Good. You and I, I think, met on

6 Monday briefly, to exchange --

7 A. Pleasantries.

8 Q. -- pleasantries, if you will.

9 A. Yes.

10 Q. Is that the first time that we have spoken

11 about any matter whatsoever?

12 A. It is.

13 Q. Okay. As you know, having been introduced by

14 me or to you, by Rick Godfrey, I represent Halliburton.

15 A. Yes.

16 Q. And I'm here accompanied in your deposition

17 today by my partner, Jenny Martinez, seated here to my

18 immediate right.

19 A. Hi, Jenny.

20 Q. Have you at anytime prior to Monday or at

21 anytime during this deposition spoken to Jenny about

22 any subject pertaining to this litigation?


24 Q. Okay, sir. Thank you.

25 And a couple of things I want to have an


596

1 understanding with you about is, is that while I'm

2 asking you questions, if you don't understand one of my

3 questions, I want you to ask me to repeat it or clarify

4 it.

5 I know you've given in your life, I believe in

6 your career, you said a number of depositions, but it's

7 important that -- that you allow me to ask my question,

8 and it's equally important that I allow you to give

9 your answer. So if you're trying to give an answer and

10 I start asking another question, either hold up your

11 hand or say something if your lawyers don't do it, and

12 I'll definitely stop because I want to give you the

13 courtesy of answering my questions and for you to do so

14 completely, okay?

15 A. Thank you very much.

16 Q. You're very welcome, sir.

17 Now, I understand -- understood you to say on

18 Monday that you have a Ph.D., did you say in Geology?


20 Q. Okay. Sir, in what year did you get that

21 Ph.D.?

22 A. 1982.

23 Q. Okay, sir. And I understood you to say during

24 the course of your deposition, that a long time ago,

25 you had worked on a -- on a drilling rig?


597


2 Q. And had you -- have you ever worked on an

3 offshore drilling rig in deepwater?

4 A. It wasn't in deepwater.

5 Q. It was --

6 A. It was an offshore drilling rig in a few

7 hundred meters of water.

8 Q. Okay. In shallow water?

9 A. Shallow water.

10 Q. Okay. Have you at any time been onto a

11 drilling rig in the deepwater in the Gulf of Mexico?

12 A. I have, yes.

13 Q. Okay, sir. With regard to the relief wells,

14 relief well that was drilled here next to the Macondo

15 following the incident on April 20, did you ever go out

16 to the relief well --

17 A. I didn't go to the relief well.

18 Q. -- to the --

19 A. I went to other operations, but not to the

20 relief well.

21 Q. Okay. Never flew out to the rig? Okay.

22 A. I flew out to the ENTERPRISE, which was the

23 production vessel --

24 Q. Right.

25 A. -- that was actually -- to the drilling.


598

1 Q. Okay. I understand, sir.

2 Now you had you had said that I believe it was

3 in the latter part of July of 2010, you ceased being

4 the CEO of BP?

5 A. Yeah. I -- I announced my intention to step

6 down on the 27th and went through a transition to Bob

7 Dudley and left the company on the first of October.

8 Q. Okay. I believe you said you, quote, "handed

9 over the reins" at the -- in late July --


11 Q. -- to Mr. Dudley?


13 Q. Since late July of 2010, have you spoken to

14 Bob Dudley at any time regarding any subject pertaining

15 to the incident on April 20, 2010?

16 A. We spoke regularly -- regularly in the period

17 between July the 27th and the 1st of August -- 1st of

18 October, and we've not spoken about it since then.

19 Q. Okay. So up until when you left the company,

20 you said -- was it in --

21 A. On the 30th of September.

22 Q. 30th of September, you actually left the

23 company. Since that date, you and Mr. Dudley have not

24 had a single conversation pertaining to anything

25 regarding the incident of April 20, 2010; is that


599

1 correct?


3 Q. Now, Mr. Mark Bly, you said that he was the

4 gentleman that you appointed to head up the internal

5 investigation of BP, as I understood your testimony?


7 Q. And since you left the company, effectively

8 September 30 of 2010, have you spoken to Mr. Bly

9 concerning any aspect of his internal investigation of

10 what is referred to as the Bly Report?

11 A. I have not.

12 Q. You have not.

13 I understood you to say here earlier today,

14 that the reason you chose Mr. Bly was that you felt

15 that he was the person that was most qualified within

16 the company to head up the investigation?


18 Q. Okay. And I believe you said that you thought

19 by selecting him, that you would be getting a -- a --

20 what was it you called it, a --

21 A. I said I thought that the investigation or the

22 Report that resulted from that investigation was both

23 rigorous and robust.

24 Q. Okay. And I believe you -- and did I

25 understand you to say that you thought that -- that


600

1 even though Mr. Bly was employed by BP, that you

2 thought that his heading up the investigation, it would

3 be an independent investigation?

4 A. I believe that it was an independent

5 investigation.

6 Q. Well, you believe that it was, but was it your

7 intention when you chose him that it be an independent

8 investigation, even though he was an employee working

9 within the company?

10 A. It was my intention that it would be an

11 inde -- independent investigation.

12 Q. Okay.

13 A. He was outside of the line. He was outside of

14 the operating line.

15 Q. All right.

16 A. And he had a role that was not in any way to

17 do with the operations where the accident occurred.

18 Q. Okay. And he was outside of the line, and as

19 I understand it, he appointed all of the people that

20 were on his in -- his investigative team, both internal

21 and external?


23 Q. Okay. Now, while he may have been outside of

24 the line, he reported to you, did he not, with regard

25 to the investigation?


601

1 A. He reported to me, and he reported to the

2 SEEAC and the Board.

3 Q. Okay. And, of course, the Board had the

4 interest of BP stockholders always at -- in mind. That

5 would be part of its function, would it not?

6 A. Certainly part of its --


8 A. It's part of any Board's duties to take care

9 of the shareholders of the company.

10 Q. (By Mr. Godwin) Okay, sir. And -- and that

11 is -- and doing that, as long as the law is followed,

12 to do it to the exclusion of all others?

13 A. I'm sorry?

14 Q. Even -- and while carrying forth and carrying

15 out its duties as a Board Member or as a Board as a

16 body is to look after the interest of the shareholders

17 to the exclusion of others, so long as the law -- the

18 law is followed?


20 Q. (By Mr. Godwin) Would you agree with that?


22 A. I would say that to protect the interest of

23 shareholders --

24 Q. (By Mr. Godwin) Okay, sir.

25 A. -- in the context of ensuring that other --


602

1 other people are equally taken care of as well.

2 Q. Okay. All right.

3 A. It's not to the exclusion of.

4 Q. I understand, sir.

5 Now, let me ask you this, Dr. Hayward: You --

6 I understood you to say here earlier today that you

7 accepted the Bly Report?

8 A. (Nodding.)

9 Q. Did you mean to convey when you said you

10 accepted the Report, that you agreed with all aspects

11 of the Bly Report?

12 A. I had no basis to disagree. I --

13 Q. Okay. So the answer would be "Yes"?

14 A. Yes, I had no basis to disagree.

15 Q. Okay.

16 A. I accepted the Report as it was written.

17 Q. Okay. Now, let me ask you this: Whenever

18 you -- when you chose Mr. Mark Bly, who you know who

19 has been deposed in this case, you're aware of that?

20 A. I am.

21 Q. Let me, before I go there, how much time have

22 you spent preparing for your deposition today, in terms

23 of number of days, and then in terms of number of

24 hours?

25 A. I've spent of the order of three full days


603

1 reminding myself of the events because, you know, as I

2 think you're well aware, I -- I've been out of the

3 company now for a long time, and I've been pursuing my

4 future.

5 Q. Right.

6 A. I'm not really spending any time at all on any

7 of the events of 2010.

8 Q. Well, from what I read in the paper and the

9 Internet, it sounds as though you have a bright future

10 in the business that you spoke of earlier today, and I

11 congratulate you on that.

12 A. Thank you. I hope that's the case.

13 Q. You -- you're welcome.

14 But in terms of -- in terms of the appointing

15 of -- of Mr. Bly to report to you with regard to the

16 investigation, why was it that you did not go to the

17 outside of BP to hire someone to perform the

18 investigation as opposed to using an insider?

19 A. I think one -- one of the reasons is we wanted

20 to initiate it very quickly.

21 Q. Okay.

22 A. And finding someone from outside and getting

23 organized would -- would have taken a lot of time. So

24 Mark was very well qualified.

25 Q. Okay.


604

1 A. He was outside of the business line. He had

2 no accountability for the operation where the accident

3 occurred. So he was in some -- and he was the ultimate

4 "expert" is the right -- is the wrong word, but he was

5 the ultimate -- he was at the pinnacle of the knowledge

6 of safe -- safe -- Safety and Operations in the

7 company, so he was -- I -- I believed he was the right

8 person to lead the investigation.

9 Q. Okay, sir.

10 A. All right.

11 Q. And did you -- did you even try to look for

12 anyone outside of the company prior to when you chose

13 Mr. Bly to conduct an --

14 A. Well --

15 Q. Let me finish.

16 A. I'm sorry. Of course.

17 Q. Prior to the time that you selected Mr. Bly

18 for the investigation, did you try to locate someone

19 outside of the company to head up the internal

20 investigation?

21 A. I did not.


23 Did anyone do so on your behalf?

24 A. No.



605

1 Now, when the Report was issued September 8 of

2 2010, you had, of course, as you say, "handed over the

3 reins," but you still were employed by BP up -- for

4 about three weeks longer after that, were you not?


6 Q. Once the Report was finalized, did Mr. Bly

7 and/or others on his team, did they make a presentation

8 to you regarding the Report itself?

9 A. They made a presentation to the Board of BP --

10 Q. Okay.

11 A. -- and to the Safety, Ethics and Environmental

12 Assurance Committee separately. I was present in both

13 of those presentations.

14 Q. And in terms of the date of the Report being

15 September 8, I'll just show it to you. It's been

16 marked as Exhibit No. 1 in the deposition a long time

17 ago, if you will, in these depositions, was the -- was

18 the meeting or the meetings that you attended where

19 the re -- where the Report was discussed after it was

20 finalized, were those on or -- on or before or after

21 September 8?

22 A. I can't remember. I think it was probably a

23 meeting -- well, I'd have to go back to a diary. I

24 honestly can't remember whether the review with the

25 Board preceded the formal publication or post-dated the


606

1 formal publication, but I'm certain that will be

2 available in the -- in the Minutes of the Board

3 meeting.

4 Q. All right, sir. Let me ask you this: Did

5 you -- did you have a draft of the Bly Report or any

6 parts of it presented to you for any reason prior to

7 when it -- the Report was finalized?

8 A. There -- there were interim presentations to

9 inform myself and others as to where the findings had

10 got to --

11 Q. Okay.

12 A. -- for information.

13 Q. And -- and would this have been on a chapter-

14 by-chapter basis --

15 A. No.

16 Q. -- or some other way?

17 A. No. It was a summary of the overall findings

18 of the investigation at a moment in time.

19 Q. Okay. So when was it that you actually hired

20 or asked Mr. Bly to -- to conduct the investigation?

21 A. Within 48 hours of the accident.

22 Q. Okay. And about how long was it before he or

23 anyone under his jurisdiction on the investigation

24 actually started giving you reports about the findings

25 of that team?


607

1 A. I think some of the early insights were

2 provided to Congress and to myself at about the same

3 time, which was -- would have been, I believe, in early

4 June.

5 Q. Okay. And -- of 2010?

6 A. Of 2010.

7 Q. Okay. And when you were receiving these

8 reports or meetings, interim reports from Mr. Bly and

9 perhaps others on his team, were there notes made of

10 those meetings?

11 A. Well, I certainly didn't make any notes.

12 Q. Did anybody make any notes --

13 A. I -- I -- I --

14 Q. -- to your knowledge?

15 A. Not to my knowledge. I'm -- I'm not aware

16 that they did.

17 Q. Where did those meetings take place? Were

18 they in person or by phone or both?

19 A. They were -- they were in person and by video

20 conference.

21 Q. Okay. All right. And -- now when they were

22 in person, where did the meetings take place?

23 A. I can remember one meeting in Houston, and a

24 second meeting in London.

25 Q. In London?


608

1 A. Yeah.

2 Q. Okay. When was the one in Houston, your best

3 estimate as time?

4 A. It would have -- would have been in the course

5 of late May, early June, I think.

6 Q. Okay. And how about the second one, the other

7 one you say that was in London?

8 A. I think that would have been sometime in the

9 second half of July.

10 Q. Okay. All right. Now, did Mr. Andy Ingalls,

11 did he attend any of those meetings where they -- where

12 there were interim reports that were provided to you

13 and others regarding the Bly Investigation?

14 A. He did, yes. He did. He did.

15 Q. Okay.

16 A. Not -- I don't recall all of them, but he

17 certainly was present in some of them.

18 Q. Okay, sir. Now, with regard -- I understood

19 you to say that the only knowledge you have about the

20 events leading up to the incident and the terrible

21 accident on April 20, came from your reading the Bly

22 Report and what the Members of the Investigative Team

23 told you. Did I remember that correctly?




609

1 Q. (By Mr. Godwin) Okay. Now, in terms of the --

2 in terms of the investigation itself, you were not

3 personally involved in the investigation, were you?

4 A. I was not.

5 Q. Okay. And did you have any personal knowledge

6 of the design or execution of the cement job on the

7 production casing?

8 A. I had no personal knowledge prior to the

9 investigation.

10 Q. After the incident, did you go back and ask to

11 review a copy of the design -- the well design?

12 A. I didn't, no.

13 Q. You did not. After the incident, did you --

14 did you go --

15 A. I don't -- sorry, I apologize.

16 Q. I'm sorry, sir. Had you finished?

17 A. My rationale was simply that I had launched an

18 investigation --

19 Q. Right.

20 A. -- to get to the cause of the accident, and I

21 wanted the intervent -- investigation to take its

22 course and determine the accident, so I did not do

23 anything over and above the investigation.

24 Q. Okay. Well, you, as a Ph.D. in -- a Ph.D. in

25 Geology, you certainly --


610

1 MR. GODWIN: Do you need some water, Dan?

2 MR. WEBB: I'm fine.

3 Q. (By Mr. Godwin) Yeah -- you certainly had the

4 ability to go back and look at the well design and

5 understand it, had you chosen and had the time to do

6 so?

7 A. I would have been able to make a layman --

8 take a layman's view of it, frankly. I'm -- I'm -- I'm

9 not a Drilling Engineer, I'm a Geologist. And that was

10 a long time ago, as well --

11 Q. I understand, sir. Okay. Now, did you --

12 with regard to my client, Halliburton, are you familiar

13 with the name Sperry?

14 A. Sperry-Sun, yes.

15 Q. Okay. Used to be, I think, referred to as

16 Sperry-Sun and now referred to as Sperry --

17 A. M-h'm, m-h'm.

18 Q. -- as a -- a unit of Halliburton?

19 A. Yes.

20 Q. Did you have any -- did you -- after the

21 incident on April 20, did you form any opinion

22 regarding the mud logging services that were provided

23 by Halliburton Sperry there prior to the incident on

24 April 20?



611

1 A. I had -- I -- I had no view prior to, and I

2 form no view post --

3 Q. (By Mr. Godwin) Okay, sir.

4 A. -- until such time as I read and received

5 the -- the Bly Report.

6 Q. Okay, sir. And other than the Bly Report, did

7 you undertake to talk to anyone, other than Members of

8 the Bly Investigative Team, about the -- the mud

9 logging services that Halliburton Sperry had provided?

10 A. No --

11 Q. Okay.

12 A. -- I did not.

13 Q. With regard to the cementing services that my

14 client provided, Halliburton, the foam cement slurry,

15 you're aware that a foam cement slurry was used on the

16 Macondo Well in the production casing string, are you

17 not?

18 A. I -- I am.

19 Q. Okay. Now, other than Members of the Bly

20 Investigative Team, did you speak to a single person

21 about any aspect of the cementing job that Halliburton

22 provided to -- to BP in connection with the production

23 string casing?

24 A. I did not.

25 Q. You did not. Thank you, sir.


612

1 Now, you, of course, know the company

2 Halliburton as -- as one of the significant third-party

3 providers of services to BP, do you not, sir?

4 A. I don't know them very well.

5 Q. You do not?

6 A. I do know them very well.

7 Q. You do know them very well. Okay, sir. And

8 over the years that you served as -- for three years,

9 as the CEO of BP, and prior to that as a Senior Officer

10 of the company, did you form an opinion about the

11 company Halliburton?

12 A. I did.

13 Q. And what was your opinion of Halliburton

14 during the time that you were with BP, particularly in

15 those last years when you were the CEO, sir?

16 A. They were a very good provider of services to

17 the oil field across a broad -- broad range of

18 activities, and had -- were well-respected in the

19 industry and -- and well thought of.

20 Q. And -- and in terms of your familiarity with

21 Halliburton, did you form an opinion as to whether or

22 not their leadership would -- mandated, if you will,

23 and expected of its people to always perform at the

24 highest level of service, when providing services to a

25 company such as BP?


613


2 Q. (By Mr. Godwin) And I'm speaking only -- only

3 about BP.

4 A. I don't -- I don't know for certain, based on

5 personal knowledge, but I have a belief that the

6 expectation was set by the leadership of Halliburton,

7 that services were performed -- performed properly and

8 appropriately.

9 Q. And in accordance with the expectations of BP,

10 and certainly to the extent of your involvement and

11 knowledge, would you agree with that?

12 A. I'd agree with that.


14 Q. (By Mr. Godwin) Thank you. Had you --

15 A. I would agree with that.

16 Q. Thank you, sir. Do you know Mr. Dave Lesar?

17 A. I do.

18 Q. And the Chairman and CEO and President of

19 Halliburton?

20 A. I do.

21 Q. How long have you known Dave?

22 A. I have known him a long time. Twenty-five

23 years probably.

24 Q. I understand. A long time. What's your

25 opinion of Dave Lesar as a -- as --


614

1 A. He's -- he's a very -- he's been a very good

2 CEO of Halliburton. He's been a very good Leader of

3 the oil and gas industry over a long period of time.

4 Q. Based upon your dealings and -- and being

5 around Mr. Lesar, do you believe that he would expect

6 at all times that everyone working for Halliburton

7 would provide to the very best of their abilities the

8 very best service that could be provided to BP when

9 engaged by BP to perform any service?


11 A. I'm certain that is Dave Lesar's expectation

12 of his employees.

13 Q. (By Mr. Godwin) Thank you, sir. I understood

14 you to say here earlier today that whatever happened

15 there on the well, on the -- on the day and evening of

16 April 20, you thought whatever happened was as a result

17 of human error. Did I understand that correctly?

18 A. I think the Bly Report found that to be one of

19 the causes of the -- of the -- of the accident, not the

20 sole cause --

21 Q. Right.

22 A. -- but certainly one of the causes.

23 Q. Well, I'm certainly not going to go off into

24 that again. You spoke of that this morning and that

25 record will speak for itself.


615

1 My question is this: In all of your

2 conversations with Members of the Bly Team, the

3 Investigative Team, did you learn from any source that

4 anybody on that team thought that Halliburton did

5 anything with the intent of -- of not performing at the

6 very highest level with respect to the services to be

7 provided to BP under its contract?

8 MR. WEBB: Object, form.

9 A. I don't think there was any conversation that

10 said that their intent --

11 Q. (By Mr. Godwin) Right.

12 A. -- was not to do that.

13 Q. Okay.

14 A. Whether that was the result, of course, is a

15 matter for debate --

16 Q. Right.

17 A. -- of the intent.

18 Q. And -- and with -- and did all the time that

19 you were meeting with Members of the Bly Investigative

20 Team, did you see anything that suggested to you in any

21 way that anyone with Halliburton did anything in a

22 conscious matter to -- to in any way harm BP? Did you

23 see anything like that?

24 A. I didn't see anything, no.

25 Q. Did you hear anything from Mr. Mark Bly or


616

1 anyone else --

2 A. No.

3 Q. -- with his team that would suggest to you

4 that Halliburton had done anything with a conscious

5 effort, if you will, made to not do it, not perform in

6 the interest of BP? Did you see anything like that?

7 A. I did not.

8 Q. The whole time that you were talking to

9 Mr. Mark Bly and others on his team -- or let me ask

10 this: Other than Mr. Mark Bly, did anyone else on his

11 team make any presentation to you?

12 A. They -- they did not.

13 Q. They did not?

14 A. It was -- it was just Mark.

15 Q. Okay. So there -- he was the only one that

16 ever spoke to you about it --

17 A. M-h'm.

18 Q. -- from his team?

19 A. Yes.

20 Q. Okay. Did you read anything that others had

21 prepared, other than perhaps Mark Bly, with regard to

22 the investigation?

23 A. I did not.

24 Q. You didn't?

25 MR. GODFREY: Objection as to the extent


617

1 you're calling for anything privileged.

2 Q. (By Mr. Godwin) Well, let me say this: These

3 lawyers know I certainly -- and Rick knows, worked with

4 me a lot -- I'm not going to ask you any questions

5 which are designed to elicit a response that would be

6 privileged. And if I should ask you one there, stop

7 me, don't ask, say, "Don, you're going in -- in the

8 wrong direction," or whatever, sir. I certainly

9 don't want to violate that privilege, okay?

10 MR. GODFREY: Or -- or we could do it

11 simply, which is, I'm assuming you're asking about

12 nonlawyer --

13 MR. GODWIN: Right.

14 MR. GODFREY: -- conversation?

15 MR. GODWIN: Absolutely.

16 MR. GODFREY: So his company counsel --


18 MR. GODFREY: -- not his personal

19 counsel, but as his company counsel I'm assuming you're

20 asking that about anything. I may have had

21 conversations with him at the time he was CEO --


23 MR. GODFREY: -- or his company when I

24 was company counsel.

25 MR. GODWIN: Same thing applies to Rick


618

1 as your -- as the company counsel as it does to Don as

2 your personal lawyer.

3 MR. GODFREY: Right.

4 MR. GODWIN: I'm not after back --

5 anything you talked to him about.

6 MR. GODFREY: I -- I assumed that, but

7 I -- I thought we just should --

8 MR. GODWIN: Yeah.

9 MR. GODFREY: Okay. Fair enough.

10 Q. (By Mr. Godwin) Okay. So you understand that

11 the rules are in that regard, Dr. Hayward?

12 A. I do.


14 Now, I understand that the only person on the

15 Bly Team you spoke with was Mark Bly, no one else, and

16 you didn't read anything or see anything that anyone

17 else prepared other than Mark Bly?


19 Q. Okay. And your belief is that the ultimate

20 Report that was prepared, while others may have

21 assisted him in preparing it, he had actually put his

22 name on it as the author of the Report when it was

23 finalized?

24 A. He certainly did.

25 Q. Okay, sir. Thank you.


619

1 Now, the -- did you -- and -- and, again, so

2 I'll understand, with regard to the Bly Report itself,

3 and say with particular reference to the negative test,

4 my understanding is, is that you -- all opinions you

5 formed regarding this case, no matter what aspect of

6 it, came from the Bly Report?


8 Q. Okay. Okay. Now, did the -- you talked about

9 Process Safety in the first day of your deposition, as

10 well as today. Do you recall that, sir?

11 A. I do.

12 Q. Would you agree that one goal of Process

13 Safety is to postulate what events could happen, say,

14 on a -- on a deepwater drilling wig -- rig such as the

15 Macondo?


17 A. The primary goal of Process Safety is to -- is

18 to have the right systems and procedures in place such

19 that accidents don't happen. And part of --

20 Q. (By Mr. Godwin) I wrote down -- I'm sorry. Go

21 ahead.

22 A. -- part of that is to do what amounts to job

23 risk assessment to understand what risks may be

24 associated with a particular activity to ensure that

25 that's been properly managed and eliminated.


620

1 Q. And to have Process Safety in place, that

2 would prevent incidents from happening. Would you

3 agree with that?

4 A. I would.


6 Q. (By Mr. Godwin) And would you also agree that

7 you have Process Safety in place -- systems in place

8 that would -- that would prevent potential incidents

9 from happening that may not have yet occurred?

10 A. That is the intention of Process Safety.

11 Q. Okay. Do you believe that it is critical

12 that -- that BP with regard to Process Safety get it

13 right, and that is understand it and have the

14 procedures and systems in place so that they make the

15 very best effort, if you will, to protect the interest

16 of the well and the people on it and the property?


18 A. I do.

19 Q. (By Mr. Godwin) Okay, sir. Do you know

20 Mr. Sam DeFranco with BP?

21 A. No, I don't.

22 Q. Okay. Have you read Mr. DeFranco's

23 deposition?

24 A. I have not.

25 Q. Have you read Mark Bly's deposition?


621

1 A. I have not.

2 Q. Have you read any depositions in this case?

3 A. I haven't read any depositions in this case.

4 Q. Okay, sir. All right. Would you agree that

5 there's really nothing worse on a deepwater rig from a

6 Process Safety perspective than act -- than a blowout

7 of a well?

8 A. A blow -- a blowout of a well in any situation

9 is clearly a -- a catastrophic incident.

10 Q. Okay. Do you -- do you agree that there are

11 always going to be risks associated where it is shown

12 that a well is flowing in an uncontrolled manner?

13 A. Where -- I do agree that where a well is

14 flowing in an uncontrolled manner there will be risk --


16 A. -- significant risk.

17 Q. Do you believe that any thorough Process

18 Safety study for a deepwater well should consider a

19 blowout as a possible hazard?


21 A. I do.

22 Q. (By Mr. Godwin) Okay, sir. Do you believe

23 that all steps should be taken by BP in the terms of --

24 of executing on its Process Safety Plan and Procedures?

25 Do you believe that all steps should be taken to ensure


622

1 against the remote possibility that a blowout could

2 occur?


4 A. And I think the way you do that is through

5 looking at the breakdown of the activities that take

6 place. So you can't say we're going to do an

7 assessment of a blowout because it --

8 Q. (By Mr. Godwin) Right.

9 A. -- could occur through many different things.

10 So you need Process Safety in place to put the relevant

11 barriers in place to prevent a blowout occurring.

12 Q. Right. And another way of saying that is, is

13 that to the extent that BP is involved in the well as

14 an owner and an operator BP is going to try to put in

15 place procedures to do its very best with regard to

16 everything it has oversight over to ensure that a

17 blowout would not occur?



20 A. BP is going to endeavor to ensure that the

21 people in involved constructing the well --

22 Q. (By Mr. Godwin) Yes, sir. Thank you.

23 A. -- many people have in their systems and

24 processes the right systems and processes in place to

25 prevent a blowout.


623

1 Q. They may be doing that, as well, but I'm

2 talking about BP. You would expect as the former CEO

3 for everybody involved in the well, specifically one

4 such as the DEEPWATER HORIZON, for all the people there

5 working on that well for BP to do everything they could

6 to carry forward with the Process Safety procedures to

7 ensure that the likelihood of a blowout would not

8 exist?


10 A. That's --

11 Q. (By Mr. Godwin) Would you agree with that,

12 sir?

13 A. I would agree with that in -- inasmuch as, of

14 course, the -- let's talk about the well control, for

15 example. The well control procedures are not BP's

16 procedures. They're the procedures of Transocean.

17 Q. And I'm talking really about just -- about

18 just what BP was doing --

19 A. What BP was doing --

20 Q. -- not what others were doing.

21 MR. ROBERTS: Objection to form.

22 A. What BP was doing was endeavoring to ensure

23 that respective contractors had the right processes in

24 place and that they were being followed.

25 Q. (By Mr. Godwin) Thank you, sir.


624

1 A. Because BP was not actually undertaking the

2 processes.

3 Q. Would you expect if BP received

4 recommendations from a contractor there on the Horizon

5 well that would put the well at risk? Would you expect

6 BP to follow the recommendations of the third-party

7 contractors?

8 A. I would.

9 Q. Okay. And if you were to learn that BP

10 employees were told by a third-party contractor, one of

11 its employees, that what BP was doing could put the

12 well at risk and the lives of those working on the rig,

13 would that give you some reason for wanting to have

14 some study, investigation made to see why BP was making

15 that decision?



18 A. I believe that was investigated as part of

19 this investigation.

20 Q. (By Mr. Godwin) Are you aware -- do you know

21 a -- an Engineer, an experienced Engineer, with BP by

22 the name of Greg Walz, W-a-l-z?

23 A. No, I don't.

24 Q. All right. Do you know the name Greg Walz

25 insofar as he was one of the Engineers that was


625

1 actually working on the Macondo Well?

2 A. I don't. I don't know the name, and I've not

3 come across the name previously.

4 Q. Okay, sir. Sometime ago we took the

5 deposition of a Mr. Greg Walz in New Orleans, a senior

6 level Engineer there for BP working on the -- on the

7 Macondo, and he testified in his deposition that on the

8 morning of April 19, 2010, he and Mr. Jesse Gagliano of

9 Halliburton, who designed the cement job, they met

10 there at BP's office in Houston.

11 A. M-h'm.

12 Q. And he testified further that during the

13 course of that meeting that Mr. Gagliano told him that

14 BP's decision to only put six centralizers on the

15 casing string would give rise to a -- the possibility,

16 or the potential, for a severe gas flow problem. And

17 he testified that he heard that from Jesse and that

18 Jesse had, in fact, put that in what is known as an

19 OptiCem Report the night before, on the 18th. And he

20 said, "But we did -- I did have him tell me that, and

21 re -- and even though he told me that on behalf of

22 Halliburton, that there was going to be a severe gas

23 flow problem, we assumed the risk," BP did, "We made

24 the decision to run the casing with only six

25 centralizers."


626

1 Other than through lawyers, have you heard

2 anything to that effect prior to me just stating it?


4 question.


6 A. I haven't heard anything even through

7 lawyers --

8 Q. (By Mr. Godwin) Okay.

9 A. -- about that meeting.

10 Q. All right.

11 A. What I do know is that the Bly Report

12 concluded that it was very unlikely stabilizers had

13 anything to do with this accident --

14 Q. Okay.

15 A. -- as the flow of the hydrocarbons was up the

16 production casing --

17 Q. All right.

18 A. -- not the annulus.

19 Q. Okay.

20 A. And as I understand the findings, it would

21 have been an issue if the flow was up the annulus, but

22 it wasn't.

23 Q. Well, that's what the Bly Report says. And

24 you, of course, know nothing about that opinion you

25 just gave other than what you read in the Bly Report?


627


2 Q. Okay. Now, let me go back and ask this

3 question from this perspective, and forgetting what the

4 Bly Report said about what caused the blowout. I'm not

5 after that at this point. I'm talking about Process

6 Safety, doing things to ensure that -- that the well is

7 not put at risk and the lives are not put at risk.

8 Would you expect as the former CEO of BP if

9 one of your Senior Engineers on a deepwater rig,

10 deepwater well, such as the Macondo, were told by a

11 company, a third-party provider of services,

12 Halliburton, that what BP was going to do was going to

13 create a severe gas flow problem, would that cause you

14 to be concerned about what that BP employee did?



17 A. I would expect that the BP employee would take

18 that input, discuss it with his colleagues, and take

19 the appropriate action.

20 Q. (By Mr. Godwin) If you were to learn that

21 Mr. Walz testified in his deposition that after he

22 learned from Jesse Gagliano that there was going to be

23 a severe gas flow problem on the morning of the 19th of

24 April, that he did not discuss that with anyone at BP,

25 he simply allowed the decision to go forward to have


628

1 the casing run with only six centralizers, would that

2 concern you about his action in that regard of not

3 discussing what Mr. Gagliano told him with other

4 members of the BP Team?



7 A. With no context, it's very difficult for me to

8 make a judgment.

9 Q. (By Mr. Godwin) You understand where I'm going

10 with that, don't you?

11 A. In -- in -- so I'm not -- you know, I'm not

12 prepared to make a judgment about whether that was the

13 right thing to do or not, the right thing to do without

14 the full context of the meeting and the situation at

15 the time.

16 Q. Well, you remember, you testified,

17 Dr. Hayward, a little while ago, you said that -- that

18 there's always going to be risk where gas could be

19 shown to be flowing in an uncontrolled manner?

20 Remember that?

21 A. I don't remember --

22 Q. You said --

23 A. -- that, actually.

24 Q. Earlier today, you said that -- when I asked

25 you, you said that -- that there would be risk


629

1 associated in terms of doing --

2 A. I think when a well --

3 Q. -- a Process Safety?

4 A. If a well was flowing in an uncontrolled

5 manner --

6 Q. There would be risks?

7 A. -- there is risks.

8 Q. There would be risks?

9 A. M-h'm.

10 Q. And -- and my point being is with that

11 backdrop, with that knowledge that you testified about,

12 if the Senior Engineer there on the Macondo Well were

13 told by Halliburton that, "If you run the casing with

14 only six centralizers, you're going to have a severe

15 gas flow problem of a..." then would that cause you to

16 think, "Well I would expect that BP Engineer to make

17 certain that what was being done was the right thing"?

18 Is that the conclusion you would reach?

19 A. I would --



22 A. I think it's reasonable to expect that the

23 Engineer would take that information into account and

24 make the right decision.

25 Q. Okay. And would you expect before the cement


630

1 job were to be run, that if BP had that information

2 from Halliburton, through Mr. Gagliano, that BP would

3 want to stop whatever was going on with the well to

4 make certain that it made the right decision regarding

5 the number of centralizers, in view of the warning that

6 it had been given by Halliburton?

7 A. I -- I think --


9 A. -- trying to take one Report, one meeting --

10 Q. (By Mr. Godwin) Yes, sir.

11 A. -- out of context and make judgments about

12 what I wouldn't -- would and would not expect is --

13 I -- I don't have a basis for making a judgment. I

14 don't know anything about the credibility of the

15 Report, I don't know anything about the circumstance

16 in -- in which --

17 Q. Right.

18 A. -- the meeting took place. So in a -- in a

19 normal situation, yes, I think --

20 Q. Okay.

21 A. -- I think the answer is "Yes." But without

22 the context --

23 Q. Right.

24 A. -- I think it's not possible to make a -- a

25 sensible judgment.


631

1 Q. Well, according to -- according to Mr. Walz,

2 he had received, on the night before at about 9:00

3 o'clock in the evening, an OptiCem Report, as well as

4 had several other peoples, many of whom are BP

5 employees, from Jesse Gagliano, showing that -- what

6 would happen if they ran seven centralizers. And it

7 would be a severe gas flow problem.

8 Mr. Walz said that the next morning, that he

9 was approached by Mr. Gagliano, who came in expressing

10 concern. That if you're going to run six or seven

11 centralizers and not run the 21 Halliburton

12 recommended, you're going to have a big problem.

13 Even though I know there are other factors

14 you'd want to consider, it's my understanding you're

15 saying that, if you had an Engineer that received that

16 Report from an employee of a provider of services, such

17 as Halliburton, with its credibility, if you will, that

18 you would expect your employee to make certain that he

19 had looked at all the necessary aspects of going

20 forward so to make sure that it was done safely.


22 Q. (By Mr. Godwin) Would that be a -- would that

23 be a fair conclusion to reach?


25 question.


632


2 A. Provided the Report was a -- based on accurate

3 set of input data and it was a credible Report, in

4 terms of the projection of what might happen, then I

5 would expect that to be the case. Now, I don't -- I

6 don't know whether it was or it wasn't.

7 Q. (By Mr. Godwin) Well, if you were to learn

8 here that Mr. Walz testified in his deposition when I

9 deposed him, that once Mr. Gagliano told him that, I

10 asked him, "Would you have any reason to disagree that

11 there would be a severe gas flow problem," he said

12 "No."

13 Does that help add to further you say if it's

14 a credible Report and Mr. Walz said that it was --

15 A. M-h'm.

16 Q. -- would that give you some reason for concern

17 about the decision Mr. Walz participated in --

18 A. Well --

19 Q. -- to allow -- excuse me -- to allow only six

20 centralizers to be run?


22 question.


24 Q. (By Mr. Godwin) Would it, sir?

25 A. I think I would have expected him to at least


633

1 understand that the -- what the Report said.

2 Q. Okay, sir. And why Mr. Gagliano was making

3 the recommendation that he was recommending, would you

4 expect him to also look into that; that is, Mr. Walz,

5 your BP Engineer?



8 A. I would.

9 Q. (By Mr. Godwin) Thank you, sir. Let me hand

10 you, if I can, please, a sen -- Tab 66 in the materials

11 that we passed out, there's a document that was

12 formerly marked as Exhibit 862, Dr. Hayward. And

13 it's -- you spoke of it on Monday. It's GP 48-02.

14 It's a "Hazard and Operability (HAZOP) Study." And

15 it's from the BP Group Engineering Technical Practices.

16 You spoke of -- of this document on Monday. And it has

17 been previously marked.

18 Have you read this document before, sir, or

19 all -- or any part of it?

20 A. No.

21 Q. Okay. Are you familiar with this document or

22 any part of it?

23 A. No.

24 Q. It shows that the date of it is June 12th,

25 2008, in the upper right-hand corner, does it not?


634

1 A. It does.

2 Q. Okay. And at that time, you were the CEO of

3 the BP, what, Group?

4 A. I was.

5 Q. Okay, sir. Now, do you know -- are you

6 familiar with what is known as a HAZOP?

7 A. I am.

8 Q. Okay, sir.

9 A. In -- in a -- in a --

10 Q. Broad sense?

11 A. -- broad sense, yes.

12 Q. I understand, sir. I respect that.

13 Is it your understanding that one of the

14 reasons for a HAZOP is so as to include barriers to

15 prevent a blowout?

16 A. It's -- one of the reasons of a HAZOP is --

17 is --

18 Q. Okay.

19 A. -- to provide barriers to prevent an accident.

20 Q. An accident --

21 A. I don't --

22 Q. -- that could result in a blowout?

23 A. -- I don't believe this is focused on

24 blowouts.

25 Q. Okay, sir.


635

1 A. It's a broad-based --

2 Q. All right.

3 A. -- description of how to preserve -- how to

4 undertake --

5 Q. Okay.

6 A. -- hazard operability studies.

7 Q. Okay, sir. And are you aware that BP Policy,

8 specifically Exhibit 862, requires that the HAZOP Study

9 be in a written form manner?

10 A. Yes.

11 Q. Okay, sir. And are you aware that, on the

12 Macondo Well, that there was not a written HAZOP

13 prepared by BP or anyone in connection with the Macondo

14 Well? Are you aware of that?


16 Q. Okay. Well, have you learned through any

17 source, from Mr. Mark Bly, or anybody else, that the

18 Macondo Well was considered to be, by BP's definition,

19 a critical well?


21 Q. (By Mr. Godwin) Have you learned that, sir?

22 A. I -- I don't -- no, I don't believe I have

23 heard it described as a critical well. Critical in

24 what sense?

25 Q. Well, critical well according to the


636

1 deposition -- excuse me, the definition that -- that BP

2 uses. And -- and Mr. David Rich, who's a -- was

3 formerly an Interim Vice President there for BP, he

4 testified that a critical well is -- let me give you

5 that -- he said that a critical well is any -- any

6 deepwater well in the Gulf of Mexico, in his opinion.

7 A. Okay. Well, I wasn't aware that Macondo was

8 classified as a critical well. Or that someone had

9 identified any well in the deepwater Gulf of Mexico as

10 a critical well. I -- I don't know whether that's an

11 official designation.

12 Q. Okay. You're familiar with the designation of

13 a well's Director at the Gulf --

14 A. M-h'm.

15 Q. -- of Mexico?

16 A. Yes.

17 Q. Do you know that -- do you know David Rich?

18 A. No.

19 Q. Okay. Do you know Pat O'Bryan?

20 A. I know Pat O'Bryan.

21 Q. Do -- have you learned through any source that

22 Mr. Pat O'Bryan was involved there with the relief well

23 effort?

24 A. I was -- I was aware of that, yes.

25 Q. Have you learned through any source that his


637

1 replacement as a Vice President of BP in the Gulf of

2 Mexico --

3 A. M-h'm.

4 Q. -- that his replacement, while he was on the

5 relief well, was Mr. David Rich?

6 A. No, I didn't know that.

7 Q. I deposed Mr. Rich recently, and he testified

8 within the last several days, that while he was

9 operating as a -- as a Vice President in the place of

10 Pat O'Bryan, that he formed the opinion that the

11 Macondo Well was, in fact, a critical well. Now --


13 Q. (By Mr. Godwin) -- and I asked him, "What did

14 you mean by critical well?"

15 He says, "My opinion is, as a Well's Director

16 for BP and an Interim Vice President, is that any

17 deepwater well in the Gulf of Mexico."

18 Would you dis -- would you disagree with his

19 conclusion --

20 A. I -- I --

21 Q. -- in that regard?

22 A. -- I'm not --

23 MR. WEBB: Object -- object to the form

24 of the question.

25 A. I'm not qualified to determine --


638


2 A. -- which wells are critical or not. I'm not a

3 Drilling Engineer, so --

4 Q. I understand, sir. Okay.

5 A. I presume that's based on some

6 technical assessment or --

7 Q. It could --

8 A. -- challenges of the well. And I --

9 Q. It could well be.

10 A. And I --

11 Q. But that's what he said.

12 A. -- have no opinion with regard to that.

13 Q. Now, my question to you, is: Is -- with re --

14 are you aware that, on the Macondo Well, that over the

15 life of the well, that the Presidential Commission

16 Chief Counsel Report you spoke of quite extensively

17 today, reported that this well had lost 16,000 barrels

18 of mud during the drilling of the well?


20 Q. Are you aware that the Chief Counsel Report,

21 Fred Bartlit's Report for the Presidential Commission,

22 which you said you had some familiarity with, that the

23 losses -- that the cost to BP for the losses of the mud

24 was in excess of $13 million in time and materials?

25 Are you aware of that?


639

1 A. I was not --

2 MR. GODFREY: Objection as to the form of

3 claiming the Presidential Commission when it was the

4 Chief Counsel's Report.

5 MR. GODWIN: Okay.

6 Q. (By Mr. Godwin) Now, with regard to -- going

7 back again to the HAZOP, are you aware that, in the

8 Exhibit 862, that requires that the HAZOP be in

9 writing, that if there's going to be any deviation from

10 that Policy, that that deviation would also have to be

11 in writing and approved? Are you aware of that?

12 A. I've -- if I was, I've forgotten it.

13 Q. Okay.

14 A. I probably was at the time, but I'm not --

15 I --

16 Q. Okay.

17 A. -- I can't recall that.

18 Q. All right. We deposed here yesterday, a lady

19 by the name of Gill -- Gillian Cowlam, C-o-w-l-a- --

20 l-a-m. Do you know Ms. Cowlam?

21 A. I don't.

22 Q. She's a for -- or she is a BP employee based

23 in the U.K., and she's worked in -- in -- she --

24 A. M-h'm.

25 Q. -- worked on the investigation for about three


640

1 weeks over in the Houston area.

2 And she testified yesterday in her deposition,

3 that she thought that it would be almost virtually

4 impossible for a well like the Macondo, for there to be

5 an exception that the HAZOP Report not be reduced to

6 writing. Were you aware of that?

7 A. I wasn't aware --


9 A. -- of it and I clearly -- I have none of the

10 technical knowledge and understanding --


12 A. -- that she can have to make that judgment.

13 Q. Okay. Well, with regard to a HAZOP as you

14 understand it, and you said that you were aware of a

15 HAZOP, you have not read Exhibit 862, but you know what

16 a HAZOP is, within the confines of BP.

17 A. (Nodding.)

18 Q. Are you aware of any incident -- instant --

19 instance when the HAZOPs can be changed or modified

20 without the change being reduced to writing?


22 A. Well, I --


24 A. -- I believe that -- and I haven't read

25 this --


641

1 Q. (By Mr. Godwin) Yes, sir.

2 A. -- but I think you said, and I don't have any

3 reason to disagree with you, that in here it says if

4 you want to change the HAZOP, you need to achieve

5 dispensation, you have to do it in writing.

6 Q. Yes, sir, it does that.

7 A. Where -- where does it say that? I'm sure

8 it's true.

9 Q. Let's see here. Let's look at -- is terms of

10 the "in writing" part of it, you can look at pa --

11 what's number -- Bates No. 7797.

12 A. Okay.

13 Q. If you see there where it says -- talks about,

14 under e., "A HAZOP report" shall include the following

15 sections," and it talks about all others. And then

16 there's other places in here that I'm not going to take

17 the time to find it, talk about if there's going to be

18 any changes or amendments, they must be in writing, as

19 well.

20 But that is a part of a HAZOP, and that is

21 what Ms. Cowlam testified to, as well.

22 Now, my question to you, sir, is -- is: Would

23 it surprise you -- or does it surprise you to learn

24 here today, that with a -- that with a well that was

25 almost three and a half miles below the seabed, would


642

1 it surprise you that there was not a written HAZOP

2 prepared for the Macondo Well?



5 Q. (By Mr. Godwin) In the face of Exhibit 862,

6 which required that it be in writing?



9 Q. (By Mr. Godwin) Would that surprise you, sir?

10 A. I don't -- I honestly don't feel that I'm

11 qualified to express surprise or otherwise --

12 Q. Well --

13 A. -- because --

14 Q. -- as -- I'm sorry, sir. Have you finished?

15 A. I have.

16 Q. As -- as the former CEO of BP, would you

17 expect that the policies and the procedures pertaining

18 to a HAZOP, would you expect them to be performed by --

19 A. I would.

20 Q. -- and followed by all employees of BP?

21 A. I would.

22 Q. Okay. And if the -- if the HAZOP document,

23 which is marked 862, required that it be in writing,

24 you would expect that that be done in accordance with

25 the terms of the document for each well that it would


643

1 be associated with, would you not?

2 A. I would --



5 A. I -- I would, and I'd like to -- I -- I would

6 like to understand why it was not done in this case if,

7 indeed, it was not done.

8 Q. (By Mr. Godwin) And if you were the CEO today,

9 and you learned, as you've learned here, that

10 Ms. Cowlam said that it was not -- that it was not

11 reduced to writing, that is, a HAZOP, if you learned

12 that, would you want to go back and check with someone

13 to find out why on the Macondo Well we had no written

14 HAZOP plan, would you --

15 A. I would like to understand --

16 Q. -- would you expect to do that?

17 A. I would like to understand the full context of

18 what did and did not go on with respect to the HAZOP.

19 Q. Okay.

20 A. Although I don't feel I --

21 Q. Mister --

22 A. -- have a basis today.

23 Q. I understand, sir, and I respect that.

24 Mr. DeFranco also testified in his deposition --

25 A. Who is Mr. DeFranco again, sorry?


644

1 Q. -- Sam DeFranco of BP, Process Safety

2 Engineer. He testified sometime ago in this

3 litigation.

4 A. He -- he was a member of the Bly Team, or what

5 was -- what was his --

6 Q. He was a member -- there was a -- there were

7 different members of the Bly Team, but only one aspect

8 of the Bly Team dealing with certain parts of it, it

9 was a team that was made up of Ms. Gillian Cowlam. She

10 testified yesterday.

11 A. M-h'm.

12 Q. Mr. DeFranco.

13 A. Okay.

14 Q. And there was a third member of that team.

15 A. Okay.

16 Q. And there were other member -- members of

17 different parts --

18 A. M-h'm.

19 Q. -- of the team --

20 A. M-h'm.

21 Q. -- that Mr. Bly put together. And

22 Mr. DeFranco, he also testified in his deposition that

23 he was unaware that there was a written HAZOP plan that

24 was done on the Macondo Well, and that he had looked

25 and could not find one, had asked about it, and there


645

1 was no -- not one prepared, to his knowledge.

2 Now, having heard that now from me, where it's

3 been testified by two members of the Bly Team that

4 there was not a HAZOP plan that was in writing pursuant

5 to Exhibit 862, do I understand you to say that that

6 would concern you, as -- as the CEO of BP, and you

7 would want to look into it?

8 A. I would cert --

9 MR. WEBB: Objection -- objection to the



12 Q. (By Mr. Godwin) Go ahead, sir.

13 A. I would certainly like to understand fully the

14 situation surrounding the presence or absence of the

15 HAZOP, the basis of why the decision was taken, if it

16 was taken, not to do one, and what the grounds for it

17 were.

18 Q. Okay, sir. And -- and do you -- are you

19 aware, sir, that with regard to the HAZOP plan, that

20 that would have been, pursuant to Exhibit 862, the

21 responsibility of the BP Operation Leader, Mr. Pat

22 O'Bryan, to have prepared that report -- that plan or

23 had it done under his direction, are you aware of that?

24 A. I wasn't --



646

1 A. I was not aware of who was deemed to be the

2 accountable person with respect to a HAZOP study that

3 may or may not have been done on the Macondo Well.

4 Q. (By Mr. Godwin) Well, Mr. DeFranco testified

5 that the person -- the position -- it changes with

6 different wells, if you will, but the position of the

7 person doing the HAZOP written document would have been

8 the BP Operation Leader, who on the Macondo Well was

9 Mr. Pat O'Bryan.

10 A. Well, I have no basis to disagree with

11 Mr. DeFranco's testimony.

12 Q. Okay, sir. And if you were still the CEO and

13 you were to learn that, in fact, there was no written

14 report prepared by Mr. Pat O'Bryan, as the BP Operation

15 Leader, or anyone on -- on his behalf and his

16 direction, would you want either him or Mr. Andy

17 Ingalls to give you some explanation why that did not

18 occur?

19 A. I would like to und --


21 MR. GODWIN: May the witness finish?

22 MR. WEBB: Well, no. I -- I don't have

23 time to get my objection in because --


25 MR. WEBB: -- the form of the question


647

1 was improper. He now can answer the question.

2 MR. GODWIN: Okay. Well, the form of the

3 question was not improper, but you made your objection.

4 Q. (By Mr. Godwin) Will you give your answer,

5 please, sir?

6 MR. GODFREY: I join the objection to the

7 improper question.

8 Q. (By Mr. Godwin) Go ahead, sir.

9 A. I was -- I would certainly want to understand

10 the basis on which the decisions were made around the

11 HAZOP -- HAZOP Operability Report.

12 Q. And -- and you would really want to understand

13 why it was not reduced to writing, would you not, sir?

14 A. I would like to understand the full

15 circumstances of the decisions around this.

16 Q. Thank you, sir. Now, with regard to the

17 negative test that was performed --

18 A. Yes.

19 Q. -- did you learn, from talking to Mr. Bly and

20 reading his Report, that he and others on his team

21 formed the opinion that BP had misinterpreted the

22 negative test?

23 A. No, I -- from the Report and from the

24 discussion we had, I -- I learned that the negative

25 test was misinterpreted by three people: the


648

1 Transocean Toolpusher, the Transocean Driller, and the

2 BP Well Site Leader.

3 Q. Okay. So what you're --


5 Q. (By Mr. Godwin) -- you're stating then that in

6 terms of the negative test, that it was interpreted

7 by -- your understanding is by BP and also by TO?

8 A. By TO and by BP, yeah.

9 Q. Okay. And is your understanding that Mr. Bly

10 and his Investigative Team formed the opinion that TO

11 and BP had misinterpreted the test?


13 Q. Did you learn, from talking to Mr. Bly or

14 reading his Report, that, in fact, there were two

15 negative tests that were performed?

16 A. I did, at the -- at the insistence of the BP

17 Well Site Leader, who was not satisfied with the

18 procedure that had been followed for the first

19 negative --

20 Q. Was that Mister --

21 A. -- pressure test.

22 Q. Was that Mr. Don Vidrine, or was that Mr. Bob

23 Kaluza that made that decision?

24 A. I -- I -- I don't know.

25 Q. And it was one --


649

1 A. I can't recall.

2 Q. Were you aware that there were two Well Site

3 Leaders there --

4 A. I was.

5 Q. -- for BP on the rig?

6 A. I was.

7 Q. Okay. And your understanding is the second

8 test was -- was requested by BP's Well Site Leader, one

9 of those two gentlemen?


11 Q. Because he was not satisfied with the

12 procedure that was use -- being used in the first one?

13 A. That's my understanding.

14 Q. Okay.

15 A. Based on the Bly Report.

16 Q. I understand. But in talking to Mr. Bly?

17 A. Yeah. In -- in essence, based on what's in

18 the Report.

19 Q. Okay. Do you have familiarity with what a

20 negative test is performed for --

21 A. I cert --

22 Q. -- on a deepwater well?

23 A. I certainly didn't, ahead of this accident.

24 Q. Do you now?

25 A. And I suspect no one else in the room did.


650

1 Q. Okay. Do you know, sir?

2 A. I -- I have a layman's knowledge now of what a

3 negative pressure test is, and -- and how you -- some

4 idea as to how it's conducted, but I certainly couldn't

5 conduct one, nor could I interpret the results of one.

6 Q. Had -- and the Bly Report speaks to a negative

7 test, and it states that a -- and words to this effect:

8 That a properly conducted interpreted negative test

9 would have eliminated or mitigated the consequences of

10 the cement job that failed to isolate hydrocarbons.

11 In terms of your reading of the Bly Report,

12 did you understand that -- that if the negative test

13 had been properly interpreted, that any consequences

14 associated with an unsuccessful cement job could have

15 been determined?


17 Q. (By Mr. Godwin) Did you -- did you understand

18 that from Mr. Bly?

19 A. I --


21 A. I think there were many things that went on in

22 the rig that could have mitigated the effects of what

23 was clearly an unsuccessful cement job. Unfortunately,

24 none of them did.

25 Q. (By Mr. Godwin) Okay. And I'm talking about


651

1 right now the negative test.

2 A. (Nodding.)

3 Q. And in terms of your speaking with Mr. Bly,

4 did he tell you that it was his belief that if the

5 negative test had been properly interpreted, one or

6 both of them, if they had been properly interpreted,

7 that that would have eliminated or mitigated the

8 consequences of an unsuccessful cement job?


10 A. It certainly could have mitigated the -- the

11 consequences of -- of a bad cement job.

12 Q. (By Mr. Godwin) Of a bad cement job?

13 A. M-h'm.

14 Q. Okay. And when you say that if they had

15 properly interpreted the negative test, that that could

16 have mitigated the consequences of a, as you define it,

17 bad cement job, what did you mean by that, sir, when

18 you just said it?

19 A. If they had been taking the correct remedial

20 action, it may -- may -- it may not have been too late

21 to prevent flow into the well.

22 Q. Okay, sir, which could have ultimately

23 prevented the blowout?

24 A. Exactly.

25 Q. Thank you, sir. Now --


652


2 MR. GODWIN: Three minutes, okay.

3 Q. (By Mr. Godwin) When you -- I want to close on

4 this point before we take our break. When you said,

5 "They could have then taken the proper remedial work or

6 efforts or -- or moves," if you will, tell us, if you

7 will, briefly, what you meant by that.

8 A. Actions to control the flow of hydrocarbons

9 into the wellbore. Exactly what they would have done,

10 I'm not certain, because I'm not a Drilling Engineer,

11 but I'm certain that they would have taken some action.

12 Q. Would one of those things have been the

13 performance of a cement bond log?


15 A. I think that's unlikely at that point in time.


17 A. I assume what they would have wanted to do is

18 to control the well.

19 Q. Want to control the well, would that mean shut

20 it in?

21 A. Probably shut it in, yes.

22 Q. So that nothing further could go on, so that

23 no hydrocarbons could be allowed to escape to the

24 surface?

25 A. Correct.


653

1 Q. And by doing that, had the negative test been

2 properly interpreted, proper remedial efforts could

3 have been taken, part of which would have been shutting

4 in of the well. Had that occurred, we likely would not

5 be here today, would we, sir?


7 question.

8 MR. GODFREY: Objection as to form of the

9 question.

10 Q. (By Mr. Godwin) Had that occurred, we likely

11 would not be here today, would we, sir?


13 question.

14 MR. GODFREY: Objection as to form of the

15 question.

16 A. The same would be true --

17 Q. (By Mr. Godwin) Would that -- just that

18 question. All I'm asking is that question.

19 A. The same would be true if the cement job had

20 been good, if the well control procedures had been

21 followed, if the correct actions had taken once the

22 well started flowing. So as the --

23 Q. So in terms --

24 A. As the Bly Report very clearly stated, which

25 is the only basis I have to assess --


654

1 Q. Yes, sir.

2 A. -- the cause of this accident --

3 Q. Right.

4 A. -- the misinterpretation of the negative

5 pressure test was one of eight causes of the accident.

6 Q. But -- but just --


8 Q. (By Mr. Godwin) -- limiting it right now to

9 the negative test --

10 A. Any -- any one of them could -- any one of

11 them could have prevented the accident.

12 Q. Let's talk about the negative test. You've

13 already said that if they properly interpreted, the

14 improper remedial efforts could have been taken that

15 could have pre -- that would have allowed for the

16 shut-in of the well, which would have -- would

17 precluded the existence of the blowout, would you agree

18 with that, sir?



21 Q. (By Mr. Godwin) Would you agree with that,

22 sir?



25 Q. (By Mr. Godwin) Sir?


655



3 Q. (By Mr. Godwin) Did you agree with that, sir?



6 Q. (By Mr. Godwin) You did?

7 A. Yes.


9 MR. GODWIN: We'll take a break.

10 THE VIDEOGRAPHER: Off the record

11 at 11:24 a.m., ending Tape 14.


13 MR. GODWIN: Ready, Rick?

14 MR. GODFREY: Yes.


16 On the record at 11:34 a.m., beginning Tape

17 15.

18 Q. (By Mr. Godwin) Dr. Hayward, I thank you for

19 your time, sir.

20 MR. GODWIN: Halliburton passes the

21 witness at this time.

22 And I appreciate your patience and the way

23 you've handled yourself in answering my questions.


25 MR. GODWIN: Thank you, sir.


656




4 11:34 a.m., ending Tape 15.

5 (Proceedings on the stenographic record only.)

6 MS. HERTZ: As you know, Anadarko and

7 MOEX have historically had an hour and fifteen minutes

8 to conduct their examinations. As you also know, MOEX

9 has recently settled with BP. I believe that the

10 position -- MOEX attorneys are not here, the counsel --

11 THE COURT REPORTER: Hold it, hold it,

12 hold it, hold it.

13 MS. HERTZ: There -- there is -- there

14 are no coun -- there is nobody here representing MOEX.

15 I intend -- and -- and we have been repre -- Kathy

16 McCollum, who's in-house at MOEX, represented to Deb

17 Kuchler, who you know, that there was no problem with

18 the time that we could have if they weren't coming to

19 London. I have, based on the representation, prepared

20 to examine Mr. Hayward, Dr. Hayward, for an hour and

21 fifteen minutes.

22 The other point I would like to make is that,

23 you know, Anadarko, next to TO and BP, have as much

24 skin in this game as anybody. You know, we're possibly

25 liable for OPA damages, we've got Clean Water Act. And


657

1 so to try to relegate us to half of an hour and 15

2 minutes seems like it would be extraordinarily

3 prejudicial. I have a good deal to explore with this

4 witness, and based on the Mitsui representation, I had

5 planned to take up a -- an hour and 15.

6 MR. GODFREY: Let me state our position.

7 First, I'm not aware of the Mitsui

8 representation. What I asked for today was to be put

9 on the record so that we could have a basis as to who

10 made it. It's news to us. I'm not going to say it

11 wasn't given, but I'd like to know who made it.

12 Second, I think that the assumption that

13 Anadarko has that they get all MOEX's time has not been

14 true in the events subsequent to the settlement. I

15 know Anadarko -- that MOEX asked some questions the

16 other day at a deposition.

17 And third, if we want to talk about prejudice,

18 I'm relegated to half an hour, while my witness has,

19 you know, 16 and a half hours of hostile questioning

20 from every lawyer in the one -- room. And I think it's

21 a fundamental due process issue to get Anadarko more

22 time and have me less time.

23 Now, fortunately, in this instance,

24 Weatherford has been gracious enough to save me its

25 time, unless they want to take it back for some reason


658

1 that comes up due to a unique issue, which I don't

2 anticipate.

3 But I want the representation on the record,

4 and if the Court thinks that that's appropriate that

5 they have the time, I don't think so, but I do not

6 think anyone should assume that because MOEX has

7 settled in part -- it still has skin in the game --

8 that Anadarko, therefore, gets twice the time that BP

9 gets, when BP is the one producing most of the

10 witnesses, most of the documents, and is undergoing

11 most of the discovery effort in this case.

12 MAGISTRATE SHUSHAN: Let me ask counsel:

13 Is this one of the depositions that we reallocated time

14 on before we came over?

15 MR. GODFREY: You gave --

16 MAGISTRATE SHUSHAN: I just don't recall.

17 MR. GODFREY: You gave additional time,

18 Your Honor.

19 MAGISTRATE SHUSHAN: Right.

20 MR. GODFREY: Yes.

21 MAGISTRATE SHUSHAN: Exactly. Did we

22 allocate time relative to Anadarko and MOEX? We did

23 not.

24 MR. GODWIN: I don't believe that's the

25 case. There's an additional time limit for the PSC,


659

1 Your Honor.

2 MAGISTRATE SHUSHAN: Right.

3 MR. GODWIN: You left everything else

4 intact --

5 MAGISTRATE SHUSHAN: Everything else --

6 MR. GODWIN: -- the way it had --

7 MAGISTRATE SHUSHAN: -- was intact.

8 MR. GODWIN: That's right, Judge.

9 MAGISTRATE SHUSHAN: But because of the

10 settlement, we did not reallocate the time like we did

11 on a couple of the others?

12 MR. GODWIN: That's right.

13 MAGISTRATE SHUSHAN: Okay. All right.

14 MR. CUNNINGHAM: As far as I understand.

15 MR. GODWIN: That's correct, Your Honor.

16 MR. GODFREY: That's -- that was my

17 understanding, Your Honor.

18 MAGISTRATE SHUSHAN: Okay. So we've not

19 reallocated.

20 MR. GODFREY: That -- that would be news

21 to us, and that --

22 MAGISTRATE SHUSHAN: And it's your

23 representation that the time has been ceded to you?

24 MS. HERTZ: That's what I was told.

25 MAGISTRATE SHUSHAN: And --


660

1 MS. HERTZ: And that's the inception of

2 the --

3 MAGISTRATE SHUSHAN: -- it is my

4 understanding that, by agreement, cessation of time has

5 been agreed to, right?

6 MS. HERTZ: Many times.

7 MAGISTRATE SHUSHAN: Does anybody besides

8 BP disagree with the ceding of time? I'm sorry, but

9 we're going to allow the ceding of time.

10 MR. GODFREY: Thank you, Your Honor.

11 MAGISTRATE SHUSHAN: Okay.



14 11:43 a.m., beginning Tape 16.

15 EXAMINATION

16 QUESTIONS BY MS. HERTZ:

17 Q. Good morning, Dr. Hayward.

18 A. Good morning.

19 Q. My name is Diane Hertz. I'm here with my

20 colleague, Robert Stillwell. We represent Anadarko

21 Petroleum Corporation. You understand that Ana -- and

22 I'm going to call them "Anadarko" for short.

23 You understand that Anadarko was a

24 nonoperating investor in the lease for the Macondo

25 Well?


661

1 A. I understand they're a nonoperating party.

2 Q. Nonoperating party.

3 And before the blowout and explosion on

4 April 20th, 2010, did you personally ever speak with

5 anyone from Anadarko or any entity which you knew to be

6 affiliated with Anadarko regarding the Macondo Well?

7 A. Not regarding the Macondo Well, no.

8 Q. Okay. To the best of your knowledge, no one

9 from Anadarko played a role in the design of the

10 Macondo Well, correct?

11 A. I don't have any knowledge of that.

12 Q. Okay. Do you have any knowledge as to whether

13 or not Anadarko played a role in connection with the

14 operation of -- the operations at the Macondo Well?

15 A. I don't have any detailed knowledge.

16 Q. Do you have any general knowledge?

17 A. I -- I believe that they were provided with

18 information as to how the operating was proceeding, but

19 that's the extent of my knowledge.

20 Q. Thank you.

21 You mentioned you had two discussions with Jim

22 Hackett --


24 Q. -- the CEO of Anadarko?



662

1 Q. And those were after April 20th, correct?

2 A. They were.

3 Q. And in connection with the relief efforts?

4 A. With -- in connection with the response.

5 Q. With the response. Okay.

6 What role did Anadarko play in connection with

7 the -- the response efforts?

8 A. To -- to my knowledge, they provided some of

9 their people and some of their -- their Technicians,

10 Engineers --

11 Q. Okay.

12 A. -- to help with the response.

13 Q. So they were assisting?

14 A. They were assisting, yes.

15 Q. Are you aware of -- of any decisions that

16 Anadarko made with respect to the relief efforts or

17 leading the relief efforts in any way, or was it your

18 understanding they were simply assisting?

19 A. They were assisting.

20 Q. Okay. Have you had any other communications

21 with Anadarko since April 20, 2010, other than those

22 two discussions with Jim Hackett?

23 A. I haven't.

24 Q. Thank you.

25 Go back to an old, familiar subject, the OMS.


663

1 Did you know in April of 2010, that the OMS had not

2 been fully implemented in the Gulf of Mexico?

3 A. I -- yeah. I believe I was aware that it had

4 not been fully implemented. It was in the process of

5 being implemented as it was in other parts of BP.

6 Q. But specifically with respect to the Gulf of

7 Mexico, that's your answer?

8 A. Yes.

9 Q. Okay. When did you come to learn that?

10 A. I would have been aware of it prior to the --

11 you know, in the course of doing my -- my job.

12 Q. Okay.

13 A. Because we had a -- as I've explained a number

14 of times through this deposition, the Group Operations

15 Risk Committee was looking at the progress of

16 implementation.

17 Q. So you were getting reports as to where it was

18 implemented, where it was not yet implemented?

19 A. And where it -- where it was entrained, so to

20 speak.

21 Q. Okay. Were there any parts of OMS, to your

22 knowledge, that were applicable in the Gulf of Mexico

23 in April of 2010?

24 A. That were applicable? It was all applicable.

25 I'm --


664

1 Q. That were implemented then?

2 A. I'm -- I'm not aware of the precise status on

3 that date of the implementation.

4 Q. Okay. Now, I want to read you something from

5 BP Magazine, Issue 3, 2006, and it's a statement made

6 by -- you're welcome to look at it if you want. It's

7 Tab 1, but you don't need to. It's a statement that

8 John Mogford made in an article entitled, "Safety, THE

9 NUMBER ONE PRIORITY."

10 Let me ask you first: Who is John Mogford?

11 A. He was the Head of Group Operations -- Group

12 Safety and Operations prior to Mark Bly.

13 Q. Okay. All right. On page -- the numbered

14 Page 13 of this article, he's talking about OMS, and he

15 says: "It is about" -- and he means -- he's discussing

16 OMS: "It is about how we make our operations people

17 understand more of the context, increase their

18 awareness of inherent risk, empower them to continually

19 improve what they do, and enable them to build their

20 learning into the system for future use."

21 Do you agree with that --

22 A. I do.

23 Q. -- description of OMS?

24 A. I do.

25 Q. Okay. And in the same magazine on, let's see,


665

1 numbered Page 19, Mr. Mogford also says at the top

2 right corner: "Whatever we say in the centre, if it

3 doesn't help people who are conducting hazardous

4 activities day-to-day in our plants, we have failed and

5 have only a management piece of paper."

6 And, again, he's referring to the OMS. Do you

7 agree with that statement?

8 A. I do.


10 Now, you said on Monday that although --

11 although OMS was not rolled out across the entire

12 company, that you said, quote, "That's not to say there

13 wasn't a Process Safety system in place before OMS.

14 OMS was designed to bring all our Process Safety

15 systems to a common, consistent standard."

16 Do you remember that testimony?

17 A. M-h'm. Yes.

18 Q. Okay. So I take it that it's your position,

19 then, that there were, in fact, BP Process Safety

20 systems and procedures applicable to the Gulf of

21 Mexico -- implemented and applicable to the Gulf of

22 Mexico on April 20th, 2010?

23 A. Correct.

24 Q. And that you believed that those were designed

25 to mitigate against major accidents or -- such as the


666

1 DEEPWATER HORIZON?


3 Q. Okay. And these were BP Process Safety

4 systems, correct?

5 A. The BP Process Safety systems are in the

6 matter of the drilling operation. They were systems

7 and processes designed by Transocean, which BP had

8 oversight of.

9 Q. Okay. So is it -- is it your position, then,

10 that BP had none of its own safety processes in place

11 in April 2010?


13 A. It -- it had many of its own -- a -- a

14 complete suite of Process Safety systems in place in

15 April 2010. The point I was making is that the systems

16 and processes on the rig were Transocean systems and

17 processes, which were required to be consistent and

18 verified by BP.

19 Q. (By Ms. Hertz) Okay. So just so I understand,

20 are you -- are you saying that BP -- the BP processes

21 and systems didn't apply on the Transocean rig, or they

22 applied in conjunction with Transocean processes?

23 A. They applied in conjunction with.

24 Q. So they were fully applicable to the DEEPWATER

25 HORIZON?


667

1 A. Correct.

2 Q. You also testified on Monday that the

3 identification of a blowout was the sort of accident

4 that was, quote, "part of the Group wide risk

5 assessment," and that such risk was, quote, "believed

6 to have been mitigated by the things we had in place"?


8 Q. Do you recall that?

9 A. (Nodding.)

10 Q. Okay. And when you were asked by Mr. Sterbcow

11 what those things were in place, you stated you didn't

12 recall discussing that with anybody in detail, but that

13 one such thing that would have mitigated it would have

14 been a blow -- a functioning blowout preventer.

15 Do you remember that?

16 A. Correct.

17 Q. Okay. What other things in place were you

18 talking about, other than the blowout preventer?

19 A. Effective well control systems --

20 Q. Okay.

21 A. -- as an example.

22 Q. Okay. And what is an effective well control

23 system?

24 A. It is a set of procedures that, if implemented

25 when a well begins to flow, as I -- as I understand it


668

1 because I'm not a driller, but -- and I'm going to give

2 you the -- my layman's version as to what a well

3 control system is. It's a system of measurement and

4 monitoring to determine the state of the well, and it's

5 a system of interventions to be taken in the event that

6 a well starts flowing.

7 Q. And, again, the effective well control system,

8 is that something that is both part TO's and part BP's?

9 A. Yes, very largely Transocean, because it is a

10 Transocean Drilling Team that implement the well

11 control procedures. There's no one from BP involved in

12 implementing well control procedures.

13 So what we have to do is determine that the

14 well control procedures that Transocean has and that

15 are documented as their well control procedures are

16 appropriate, and, of course, that they're -- they're

17 followed.

18 Q. Okay. But if there are well control

19 procedures and process procedures in place in the Gulf

20 of Mexico, BP procedures, those are applicable as well

21 as the TO procedures?

22 A. Well, I don't want to be pedantic, but BP

23 doesn't have well control procedures to manage a well

24 that is beginning to flow, because we're not actually

25 drilling any of the wells that our contractors are. So


669

1 what we want to verify is that those procedures are in

2 place, and they're deemed to be appropriate, and people

3 have been trained such that they know them, and when a

4 situation occurs, that they implement and follow them

5 to control the well.

6 Q. Well, does BP have procedures regarding well

7 operations that apply to wells being drilled off

8 someone else's rig?


10 A. Do we have procedures relating to -- sorry, I

11 don't understand the question.

12 Q. (By Ms. Hertz) Related to BP drilling --

13 A. Okay.

14 Q. -- from a rig that's not owned by BP.


16 A. Well, again, not to be -- we're not -- BP is

17 not conducting the drilling operation.

18 Q. (By Ms. Hertz) Is BP is not the operator?

19 A. BP is the operator, but we're not actually

20 physically conducting the operation.

21 Q. Okay. Well, I'm going to show you some

22 specific procedures because I want to understand --

23 A. Yeah. Sure.

24 Q. -- how they relate to the drilling that was

25 going on in the Gulf of Mexico on a non-BP-owned rig.


670

1 A. All right.

2 Q. So --

3 A. I will try and help you to the best I can.

4 Q. Thank you. I'll appreciate it.

5 MS. HERTZ: Let's turn to Tab 2, please,

6 and we need to mark this as -- what is this going to

7 be?


9 MS. HERTZ: Thank you.


11 Q. (By Ms. Hertz) Tab 2 is the "Gulf of Mexico

12 SPU Major Hazards Risk Management Policy," and have --

13 I just wanted to know first if you've ever seen this

14 document before.

15 A. I haven't.

16 Q. Okay.

17 A. Not to my recollection.

18 Q. All right. On the first page of the document,

19 it says: "SPA Integrity Management."

20 What do you understand the term "SPA" to mean

21 in BP's --

22 A. Single point authority, I think.

23 Q. -- the way that BP uses it?

24 Single point of authority?

25 A. I think.


671

1 Q. And what do you understand that to mean?

2 A. That there's an account -- who has the

3 authority for this -- this document.

4 Q. Okay. And single point of authority is --

5 would mean the only person that has the authority for

6 whatever?

7 A. The -- the person who has authority for this

8 document.


10 If you would turn to Page Bates 551, please.

11 A. (Complying.)

12 Q. Okay.

13 A. In the same tab, 55 -- right, yeah. Sorry.

14 Sorry.

15 Q. That's all right.

16 A. Sorry.

17 Q. I wanted to direct your attention to 1.2

18

19

20

21

22

23

24

25


672

1 And I'm going to stop there.

2 "Shall" is mandatory; is that right?


4 Q. (By Ms. Hertz) As you understand it and

5 used -- as used in the BP document?

6 A. Yeah, will -- "shall be achieved," an

7 expectation that they would be achieved.

8 Q. All right. But you understand "shall" to be a

9 requirement?


11 A. Yeah, I think so, yes.

12 Q. (By Ms. Hertz) Okay.

13 A. Let me just --

14 Q. All right. Now a document like this from

15 the --

16 A. Let me read this.


18 A. Yeah. "Shall," will, I mean, it's --

19 Q. It's mandatory, right?


21 A. It doesn't actually say "are mandatory." It

22 says "shall." So we can have a debate about the

23 interpretation of "shall," but it said "shall," so I

24 would say --

25 Q. (By Ms. Hertz) You would understand it as a


673

1 requirement?

2 A. I would say -- I would use -- yeah, it --

3 it -- you would -- I would believe it implies a

4 requirement.

5 Q. Thank you. Okay.

6 And now with that context that, the -- the

7 purpose of this document, is it your understanding that

8 something -- that a policy such as Major Hazard Risk

9 Management Policy would apply to the drilling of a well

10 in the Gulf of Mexico from a rig that is -- where BP is

11 the operator but not the owner of the rig?

12 A. I would expect that it would be -- sorry,

13 could you say again the question so I was half

14 reading --

15 Q. Okay. As in the deepwater --

16 A. -- and half --

17 Q. As --

18 A. -- half reading the document and half

19 listening to you.

20 Q. Okay. As with the DEEPWATER HORIZON, BP's

21 drilling a well -- or BP's the operator on a rig owned

22 by Transocean, and what I'm wondering is: Is this

23 procedure or policy applicable to that kind of

24 situation?

25 A. Yes.


674


2 A. I would expect that it would be.


4 All right. If you'd turn to Bates 553,

5 please.

6 One more quick question on the first page,

7 because I just didn't establish this. I know you

8 haven't seen it, but it indicates an issue date of

9 September 1, 2007, correct?


11 Q. Okay. So unless it had been revised, would it

12 be your understanding, just from looking at this

13 document, that it was in effect as of September 1, '07?

14 Is that how you would interpret that?

15 A. I think that's how I would interpret it.

16 Q. Okay. So Bates 553, I wanted to look at

17 Section 2.2 called "Hazard Identification, Risk

18 Assessment and Prioritization." Do you see that?

19 A. I do.

20 Q. Okay. The first line under that heading

21 reads: "Hazard identification and risk assessment is

22 an evergreen process through a Facility's life-cycle."

23 Do you have an understanding as to what an

24 "evergreen process" is?

25 A. Continuous.


675

1 Q. Continuous. And "throughout a facility's

2 life-cycle," how would you interpret that to apply to

3 the drilling of a deepwater well?

4 A. I don't think that terminology is really

5 focused on a deepwater well, to be honest with you.

6 It's focused on a production facility. I think as

7 applied to a deepwater well -- I'm -- I'm not honestly

8 certain how you would apply that terminology to a

9 deepwater well, actually. I don't know whether that

10 would mean that the identification risk assessment was

11 continuous through the course of the drilling --

12 drilling operation. I think that would be a reasonable

13 interpretation.

14 Q. That would be a reasonable interpretation.

15 You certainly wouldn't stop, want to stop hazard

16 identification and risk assessment in the middle of a

17 drilling procedure, would you?

18 A. I agree.

19 Q. Okay. And then again -- the next sentence

20

21

22

23

24

25


676

1 Now, again, with our understanding of the word

2 "shall," that appears to be a mandatory pro --

3 provision; is that correct?

4 A. Yes.


6 Q. (By Ms. Hertz) And the reason for a policy

7 such as this, to identify hazards and to conduct a

8 continual risk assessment, is to mitigate the risk of a

9 major hazard, correct?

10 A. It's to manage and mitigate.

11 Q. To manage and mitigate. And it's extremely

12 important, right?

13 A. It is.

14 Q. Okay. And failure to comply with this policy

15 could potentially lead to a catastrophic event,

16 couldn't it?



19 A. In some situations, that could be the case.

20 Q. (By Ms. Hertz) Okay. And the sentence that I

21 read, the second sentence, talks about the fact that

22 risk evaluation and hazard identification should be

23 updated throughout the facility's life cycle, or I

24 would translate that as drilling operations; is that

25 right?


677

1 A. Well, it says "Facility's life-cycle," and as

2 I said, it is written with, I think, a specific thought

3 around, you know, a production facility. So we have to

4 determine how it would and should have been translated

5 to a drilling operation, and I can't determine that

6 from this line, I'm afraid. And I'm not aware of how

7 that translation takes place.

8 Q. I understand. But if, in fact, this policy

9 applies to deepwater drilling in the Gulf of Mexico,

10 then that would certainly mean that throughout the --

11 A. It could apply.

12 Sorry. I apologize.

13 Q. Sorry?

14 A. Sorry. I apologize for --

15 Q. That's okay.

16 A. -- interrupting you.

17 Q. If it, in fact, applies -- and we think it

18 does -- then we would -- then wouldn't you agree, then,

19 that this provision requires them to continually

20 identify hazards and risk assessments throughout the

21 drilling operations?



24 A. I agree that it certainly applies to drilling

25 operations and there should be ongoing assessment of


678

1 risk in a drilling operation.

2 Q. (By Ms. Hertz) Okay. Okay. And the last line

3

4

5

6

7 Does that appear to be mandatory language to

8 you?


10 A. It is. I'm just troubled by this referral

11 back to "Facility" and whether and how this -- this

12 sort of policy is then translated to a -- a mobile

13 drilling unit, drilling an exploration well.

14 Q. (By Ms. Hertz) Well, I understand. Do you --

15 do you have a familiarity with the term "Risk

16 Register"?

17 A. Yes.

18 Q. All right. And what is that, to the best of

19 your understanding?

20 A. It's documentation of the principal risks in

21 any operating business.

22 Q. Okay. And are risk registers to be part of

23 the evergreen process, meaning that they are to be

24 continually updated, or at least reviewed as the

25 operations are continuing to identify hazards and


679

1 continue the risk assessment process?

2 A. I think there's an important distinction --

3 again, I don't want to split hairs. Okay? But there

4 is an important distinction to -- to separate between a

5 Risk Register --

6 Q. M-h'm.

7 A. -- which is a periodic assessment of risk, and

8 the management of risk on an ongoing operation minute

9 by minute, hour by hour.

10 Q. M-h'm.

11 A. So you would not look at a Risk Register to

12 see it being updated every minute --

13 Q. M-h'm.

14 A. -- because of the way in which an operation

15 was developing.

16 Q. It's not like Facebook?

17 A. It's not Facebook. It wouldn't be very

18 helpful.

19 Q. All right. But you would anticipate that a

20 Well Team would consider and review a Risk Register

21 throughout the operation?

22 A. I would expect the Well Team to be reviewing

23 and managing risks on a -- on an ongoing basis. I'm

24 not certain how that relates to, you know, the

25 establishment of a Risk Register. The Risk Register


680

1 concept is much more about a sort of periodic

2 assessment of risk at a more macro level.

3 So the Risk Register for the Gulf of Mexico is

4 a risk of a deepwater well blowing out and the risk of

5 pipeline failing, the risk of a hurricane impact, the

6 risk of -- sort of macro level risks.

7 Q. So you don't --

8 A. It's not a -- it's not a -- I don't believe

9 it's -- a Risk Register is a tool that is used in the

10 hour to hour, minute to minute oversight of an

11 operation.

12 Q. Okay. Do you consider it to be static; once

13 it's created, it should --

14 A. No, it's not static.

15 Q. -- just been put aside?

16 A. It's clearly not static. It's something that

17 should be updated on a regular basis.

18 Q. Okay. Just not hour to hour, minute by

19 minute, but it is certainly something that should be

20 updated and risks should be documented; is that

21 correct?

22 A. Correct.

23 Q. Okay.

24 MR. GODFREY: Object to the form -- I'll

25 withdraw that.


681

1 THE WITNESS: I apologize.

2 MR. GODFREY: No. I was -- I was

3 withdrawing my objection.

4 (Laughter.)

5 MR. GODFREY: You're very quick, but I

6 decided I was going to withdraw.

7 Q. (By Ms. Hertz) Now, again, back up to the

8 second paragraph, it talks about a Hazard and Risk

9 Evaluation Plan, that "Every Facility shall have," and

10 I understand that you're not quite sure how "Facility"

11 translates to deepwater drilling. But my question is:

12 If you were told while you were the CEO of BP that the

13 DEEPWATER HORIZON Wells Team did not have a Hazard and

14 Risk Evaluation Plan, what would your ex -- what would

15 your reaction be?

16 A. I would want to know why --


18 Q. (By Ms. Hertz) You'd want to know why,

19 wouldn't you?

20 And would you want to know if there was a

21 dispensation to -- that -- that allowed them not to

22 have one?

23 A. I'd want to know why they didn't have one.

24 Q. Okay. Would you have expected them to have

25 one?


682

1 A. I think it's reasonable to expect that there

2 should be one.

3 Q. Okay.

4 A. And I'd want to understand why there was not

5 one.

6 Q. Okay. You would have looked into it and

7 investigated it?

8 A. I would have someone look into it and

9 investigate it.

10 Q. Okay. All right. Let's turn to Tab 3,

11 please, which is previously been marked as Exhibit 910.

12 And this is a PowerPoint on the Major Hazard and Risk

13 Management Policy Leadership Action.

14 Have you ever seen this document before,

15 Dr. Hayward?

16 A. I have not.

17 Q. All right. Could you turn to Bates 983 for

18 me, please.

19 A. (Complying.)

20 Q. Have you ever seen this slide?

21 A. No.

22 Q. No? Well, this appears to be a -- a

23 presentation or a slide deck internally created at BP,

24 and page bearing Bates 983 is entitled "Risk

25 Ownership." Do you see that?


683

1 A. I do.

2 Q. And it says: "Who Owns The Risk?" And at the

3 bottom of the page, it says: "Ultimately it is the BP

4 Wells Team." Do you agree with that statement?

5 A. Well, I --


7 A. -- I think it's very difficult to make any

8 sensible comment. And, again, I'm not trying to be

9 cute, but, you know, this is a view graph. I've got no

10 idea what the context is. It's got three lines on it,

11 and it says "Ultimately it is the BP Wells Team," but

12 I -- we don't know which risk they're talking about.

13 Q. Well, they're talking -- it says: "The key

14 drivers associated with management of risks around

15 drilling, completions and intervention" actions. So

16 around those intervention actions, who owns the risk?

17 A. Well, it says here --


19 A. -- it ultimately is the BP Wells Team.

20 Q. Do you have any reason to disagree with that?

21 A. I don't have any reason to disagree with it

22 with -- without -- other than I have no idea what

23 context they're talking about --

24 Q. Okay.

25 A. -- and exactly what risk they're talking


684

1 about.

2 There are many risks involved in drilling,

3 completions, and intervention activities. Some of

4 which it is right for the BP Wells Team to own and some

5 of which it is right for others to own.

6 Q. Okay. Will you turn to Bates 989, please.

7 All right. If you'll look in the box at the

8 top of the page, it's entitled "GoM SPU Major Hazards

9 Risk Management System," and it -- below is discussing

10 the Gulf of Mexico SPU Major Hazards and Risk

11 Management Policy, which is the document that we just

12 looked at and marked as the previous exhibit, which it

13 says came into effect on the 1st of September 2007.

14 Below that, it says: "The policy has five

15 components shown in the boxes with a goal of achieving"

16 continuous -- "Continuous Risk Reduction."

17 And in the five boxes, one of them is

18 "Implementation & Operation." Do you see that?

19 A. M-h'm.

20 Q. Okay. And then at the bottom of the page, it

21 says, quote, "Implementation and Operation addresses

22 the practical development of plans to implement the

23 decisions taken to reduce risks. The Operation

24 component involves verifying that the hazard identified

25 are fully accounted for in the emergency response plans


685

1 and that people who work on the facilities are aware of

2 the hazards and controls in place to manage them." Do

3 you see that?

4 A. I do.

5 Q. Okay. And above -- again, back to the box,

6 there's a section that says "Tools" for "Hazard

7 Identification, Risk Assessment & Prioritization." Do

8 you see that?

9 A. I do.

10 Q. Okay. And you've already talked about -- I

11 believe you identified a "HAZID" and a "HAZOP"?

12 A. Yes.

13 Q. A "HAZOP" is Hazard Operations. "HAZID" is

14 a --

15 A. Hazard Identification.

16 Q. -- Hazard Identification. "LOPA" is a Layer

17 Of Protection?

18 A. Correct.

19 Q. Do you know what a "What If" is?

20 A. I don't actually, no.

21 Q. Do you know what a "QRA" is?

22 A. Quantified Risk Assessment.

23 Q. Okay. Quantified Risk Assessment. All right.

24 And the other two, I believe, are probably

25 self-explanatory.


686

1 Let me ask you something: Are those

2 documents, or those tools, as you understand them, are

3 each of those a written document?


5 A. HAZID, HAZOP, and Layers Of Protection

6 certainly is. I'm -- I'm not certain about What If.


8 A. Quantified Risk Assessment is a written

9 document.

10 Q. All right. And would you presume that Fire &

11 Smoke Studies and Blast Studies are also written --

12 A. Yes.

13 Q. -- assessments?

14 A. Yes, I would.

15 Q. Okay. And what is the purpose of documenting

16 perceived risks?

17 A. Such that they can be managed and mitigated.

18 Q. Thank you. And when a risk is identified in

19 these documents as it says in here, you would agree,

20 right, that it's imperative that the people who work on

21 the facilities are made aware of the hazards and

22 controls in place to manage them?


24 Q. Okay. So when risks -- risks are identified,

25 the Well Site Leaders and others on the rig who are in


687

1 charge of operations must be told about the risks so

2 that they can be aware of the hazards and be in a

3 position to manage them, correct?

4 A. Well --


6 A. -- the way it would normally work is that they

7 would be identifying the risk. There's not some sort

8 of higher authority sitting up somewhere identifying

9 risk. The people who are most able to identify the

10 risk are those ones involved in managing it, so

11 documenting it and then ensuring that the right action

12 is taken is --

13 Q. (By Ms. Hertz) But you're not just saying the

14 guys on the rig were identifying, were you?

15 A. No, I'm -- but I'm also -- the -- there are

16 many people involved in risk identification in drilling

17 operation.

18 Q. Right.

19 A. Clearly the people on the rig are intimately

20 involved in risk identification.

21 Q. M-h'm.

22 A. The Well's Team who designed the well are

23 involved in risk identification.

24 Q. M-h'm. And mitigation, right?

25 A. And, of course, mitigation. And there may be


688

1 some higher generic concern about risk in a -- in a

2 drilling operation.

3 Q. Okay. So let me restate my question, or -- or

4 just sort of try to pinpoint that then.

5 A. All right.

6 Q. So where risks are identified by the Drilling

7 Team, the Well's Team Leader, or somebody like that,

8 it's important that those risks are communicated to the

9 folks on the rig, the Well Site Leaders and the others,

10 so that they're in a position to be aware, to look out

11 for, and to mitigate against those risks; is that

12 right?



15 Q. (By Ms. Hertz) Thank you. All right. Could

16 you turn to Tab 4, please. See, we're moving quickly.

17 A. That's good. You may not take your hour

18 and 15 minutes.

19 Q. Oh, no, no.

20 A. That whole big debate will not --

21 Q. No, no.

22 A. -- have been necessary.

23 Q. I'll need it all. Sorry.

24 Okay. Tab 4 is --

25 MS. HERTZ: We need to mark this as a new


689

1 exhibit -- oh, 6065, please.


3 Q. (By Ms. Hertz) This document is entitled Gulf

4 of Mexico Drilling & Completions "Operating Plan/Local

5 OMS Manual." And the authority for this document is

6 shown on the front page as Kevin Lacy, and the date of

7 this document is November 1, 2009. Is that what you

8 read, as well?

9 A. It is.

10 Q. Okay. Have you ever seen this document

11 before?

12 A. I haven't, no.

13 Q. All right. Can you turn to Bates 452, please.

14 And we're back to your favorite subject, OMS. And I'd

15 like to direct your attention to the fourth paragraph,

16 I think fourth letter -- fourth sentence that says,

17 quote: "We use two main procedures for managing work

18 processes: Beyond the Best Common Process, and Major

19 Project Common Process. The" Gulf of Mexico "D&C Risk

20 Management Plan will bring our process into alignment

21 with OMS so that the risk is managed effectively and

22 consistently, in compliance with OMS requirements. All

23 risks shall be recorded in and managed by the BP RAT."

24 Do you see that?

25 A. I do.


690

1 Q. And does that comport with your understanding

2 of OMS?

3 A. Indeed, it does.

4 Q. Okay. What is "Beyond the Best Common

5 Process"?

6 A. It's a process designed to continuously

7 improve the drilling operations in all dimensions, be

8 it safety or -- or drilling performance.

9 Q. Okay. Now, if there are requirements in

10 Beyond the Best Common Practice [sic], they're supposed

11 to be followed, correct?


13 Q. (By Ms. Hertz) As opposed to recommendations

14 if there's --

15 A. No. Beyond the Best Common Process is a --

16 it's -- it's not mandatory --

17 Q. It's not?

18 A. -- in the sense that you're trying to imply.

19 Q. Okay.

20 A. It's not mandatory.

21 Q. Okay. All right. The last sentence I read

22 is: "All risks shall be recorded and managed by the BP

23 RAT." Do you know what that is?

24 A. I don't know what the BP RAT is, I have to

25 confess.


691

1 Q. If I were to tell you it was a Risk Assessment

2 Tool, would that --

3 A. Sounds --

4 Q. -- refresh your recollation -- recollection?

5 A. Sounds sensible, yes.

6 Q. Great name, right?

7 A. Great.

8 Q. Okay. And that appears to be a requirement as

9 well, right, all risks shall be included --

10 A. M-h'm.

11 Q. -- and managed by the --

12 A. Yes.

13 Q. -- BP RAT?

14 A. Yes.

15 Q. Okay. And what is Major Project Common

16 Process?

17 A. Again, it's the -- it's the -- a process used

18 to measure performance safety and -- and business

19 performance in the delivery of major projects, big

20 facilities, or things of that sort.

21 Q. Okay. And would you consider these two

22 documents to be the cornerstones of Process Safety

23 within BP prior to the implementation of OMS?

24 A. Not really the cornerstones of Process Safety.

25 They're the cornerstones of improving performance, a


692

1 component of which is -- is safety, but they weren't

2 the cornerstones of Process Safety.

3 Q. Okay.

4 A. There were some other tools in place, such as

5 things like the control of work standard, the integrity

6 management standard, that are the cornerstones of

7 Process Safety.

8 Q. Okay. Can you turn to Tab 5, please. And

9 this is a document called "Beyond the Best Common

10 Process." This is Exhibit 6066.

11 MR. GODFREY: What number, please?

12 MS. HERTZ: 6066.



15 Q. (By Ms. Hertz) And you've seen this document

16 before, I assume?

17 A. I haven't.

18 Q. Oh, you have not?


20 Q. Is this the one you were just referring to?

21 A. It's the one I was referring to, but I haven't

22 seen this document, no.

23 Q. Oh, okay. You just knew it existed?

24 A. I knew it existed, yes, yes.

25 Q. Okay. The second page, Bates 309, indicates


693

1 that "Drilling & Completions - Beyond the Best Common

2 Process," dated June 2008. Do you see that small print

3 in the bottom?

4 A. Yes.

5 Q. Okay.

6 A. I do.

7 Q. All right. And Barbara Yilmaz you said was --

8 A. Is the -- she's -- official title is the

9 Technical Vice President for Drilling and

10 Completions --

11 Q. Okay.

12 A. -- TVP, in essence, the functional Head of

13 Global Drilling.

14 Q. Okay. And if you just quickly look at her

15 letter on 309, "Dear Colleagues," and then she goes on,

16 she says that this is the third edition of this

17 handbook. "Our mission in Drilling and Completions is

18 to" delivery -- "deliver industry leading wells that

19 maximize the recovery of BP's global asset base.

20 Beyond the Best remains a key component of the strategy

21 since its development in 2001."

22 So this is a document that had been in place

23 prior to -- not this particular document, let me back

24 up -- this Best Common Process Handbook had been in

25 place prior to Texas City, correct?


694

1 A. Right.

2 Q. And -- but this edition came out in '08, so

3 this postdates Texas City; is that right?

4 A. This had nothing to do with a refinery. This

5 is about how to drill wells more effectively on an

6 ongoing basis.

7 Q. I understand, but this is post Texas City,

8 correct?

9 A. Yes, yes, it is.

10 Q. Okay. If you'd look at Bates 315, please.

11 Now, you had mentioned that it wasn't your

12 understanding that this document was mandatory, but I'd

13 like to draw your attention to the second paragraph on

14 this page: "Due to its extreme importance, its use is

15 mandatory," referring to this document, Beyond the Best

16 Common Process, "stressing rigour and consistency.

17 Common processes address both the design and execution

18 of well programmes through cross-discipline application

19 of four components." Do you see that?

20 A. I do.

21 Q. So it was -- does that change your

22 understanding as to whether this document is, in fact,

23 mandatory or not?

24 A. You know, I -- I have to confess, I --

25 certainly we had at the time eight common processes,


695

1 and certainly some of the others were not mandatory, so

2 obviously, what's written here suggests that this

3 document is mandatory.

4 Q. Okay. You don't have any reason to believe

5 it's not?

6 A. No.

7 Q. Okay. In the last paragraph on that page, it

8 says: "Since the conception of" Beyond the Best Common

9 Process "in 2000 we have learned new lessons and

10 identified better practices. This updated publication

11 captures those lessons and best practices." Do you see

12 that?

13 A. I do.

14 Q. Do you know if any of the lessons learned from

15 Texas City were in any way incorporated into this

16 document?

17 A. I don't know.

18 Q. Would you expect that they would have been?

19 A. I think there were other processes that were

20 focused on Process Safety that the lessons from Texas

21 City were incorporated into.

22 Q. And what would those have been?

23 A. As I said, the Control of Work and Integrity

24 Management Standards.

25 Q. Okay.


696

1 A. Which were the two key Process Safety tools to

2 improve Process Safety performance across the company.

3 Q. And you consider Risk Management part of

4 Process Safety?

5 A. I do.

6 Q. So if this document contains a section -- and

7 we'll look at it -- called "Risk Management," then this

8 document will also inherently pertains to Process

9 Safety, right?

10 A. In --


12 A. Inasmuch as Risk Management is part of Process

13 Safety, that's correct.

14 Q. (By Ms. Hertz) Okay. And Risk Management is

15 not something that is necessarily different in concept

16 from a facility such as Texas City to deepwater

17 drilling, is it?


19 A. Certainly, there are some risks that are

20 common, such as the containment of hydrocarbons.

21 Q. (By Ms. Hertz) And there certainly were

22 lessons learned from Texas City that BP applied or

23 attempted to apply --

24 A. Correct.

25 Q. -- to deepwater drilling; is that right?


697

1 A. Correct.

2 Q. Okay.

3 A. Such as layers of protection analysis.

4 Q. Okay.

5 A. Which --

6 Q. And others, right?

7 A. And -- and, yeah, Integrity Management

8 Standards and that sort of thing.

9 Q. Okay. I'm going to ask you to jump, please,

10 to 361, Bates 361.


12 MS. HERTZ: Yes.


14 Q. (By Ms. Hertz) And this is a page entitled

15 "Element 5 - Risk Management," and I'd like to draw

16 your attention to the bottom of that page under "Risk

17 Management Process." It says, "The Risk Management

18 Process has four main, cyclical steps (identify,

19 assess, respond, control) the outputs of which are

20 recorded in a database known as a Risk Register. The

21 cycle is not a once-per-well or even a once-per-stage-

22 gate process. It is a continuous loop by which risks

23 are captured and worked throughout the well

24 life-cycle..."

25 And do you see that?


698

1 A. I do.

2 Q. Does that comport with your understanding

3 that --

4 A. It is --

5 Q. -- of --

6 A. -- it does.

7 Q. -- let -- let me just finish my question for

8 the record --

9 A. Sorry.

10 Q. -- that's okay.

11 Does that comport with your understanding that

12 a Risk Register is, in fact, an evergreen --

13 A. Yeah, a continuous --

14 Q. -- process document, continuous document?

15 A. Indeed.

16 Q. And that risks need to be continually

17 identified --

18 A. Assessed and managed.

19 Q. Exactly. Thank you.

20 Next page, under "Risk Management Roles and

21 Responsibilities," it says, "It is important that the

22 Project Manager set" his or her "expectations"

23 arouse -- "around" misk -- "risk management early,

24 clearly and concisely. This is the primary purpose of

25 the Risk Management Plan. Day-to-day responsibility


699

1 (not accountability) for running the risk process may

2 be delegated to a Risk Champion."

3 So at least with respect to that paragraph, it

4 does talk about day-to-day responsibility for risk

5 process, doesn't it?

6 A. It does.

7 Q. And it --


9 Q. (By Ms. Hertz) -- and it is something that

10 needs to be done every day, right?

11 A. Certainly the assessment of risk should be

12 done on an ongoing basis.

13 Q. On a day-to-day basis as operations --

14 A. M-h'm.

15 Q. -- continue, correct?

16 A. Yes.

17 Q. Okay. Do you have any understanding who would

18 be the, quote/unquote, Project Manager on -- in

19 deepwater drilling? Is that the Well's Team Manager?

20 A. I --

21 Q. I'm sorry the Well's Team Leader?

22 A. I don't know. I don't know.

23 Q. Okay. Do you know what a Risk Champion is?

24 A. Well, it says here, "(typically an

25 office-based member of the engineering team)."


700

1 Q. Had you ever heard the term "Risk Champion"?

2 A. No, I hadn't.

3 Q. You never heard that?

4 A. No.

5 Q. So you wouldn't know, then, what their

6 responsibilities are?

7 A. Well, it says here what their responsibilities

8 are.

9 Q. Other than what you see there.

10 A. Probably not.

11 Q. Okay. Let's turn to the next page, Bates 363.

12 All right. If you look at "Project Manager" on that

13 page, it says, "(typically" Well's Team Leader).

14 Do you see that?

15 A. It does, yes.

16 Q. You don't have any reason to believe that

17 that's not the case, do you?

18 A. No, that seems --

19 Q. Okay.

20 A. -- only reasonable.

21 Q. And it says -- next to the Well's Team Leader

22 it says, "Single Point" of "Accountability, Owns risk

23 process, Assigns risk process, Monitors overall risk

24 exposure," and "Monitors response progress."

25 Do you see that?


701

1 A. I do.

2 Q. Okay. And as I read it, those are some of the

3 roles and responsibilities of your Project Manager,

4 typically the Well's Team Leader. Is that how you read

5 it?

6 A. It is.

7 Q. Okay. And those are obviously extraordinarily

8 important tasks in connection with Risk Management --

9 MR. GODFREY: Objection as --

10 Q. (By Ms. Hertz) -- isn't that right?

11 MR. GODFREY: -- objection as to form.

12 A. It would certainly appear that way, yes.

13 Q. (By Ms. Hertz) Okay. And, again, as -- as you

14 stated, Risk Management is something that needs to be

15 done on an ongoing -- needs to be monitored on an

16 ongoing basis, correct?

17 A. Correct.

18 Q. And mitigated, correct, as --

19 A. Correct.

20 Q. -- necessary.

21 A. Correct.

22 Q. Okay. All right. Let's go to Bates 365,

23 please. All right. This doc -- page is entitled "Risk

24 Register," and it says, "The risk register captures all

25 the outputs of...identify and assess steps. The


702

1 response and control steps may be recorded in the

2 register...in a separate action..."

3 Do you see that?

4 A. I do.

5 Q. And then below it says, "Two Risk Register

6 tools in particular are recommended for use in"

7 drilling and completions. And there you are with the

8 "BP RAT - An intranet-based tool designed to meet the

9 needs of BP's Major Projects."

10 And as we saw earlier, there's a requirement

11 in the Gulf of Mexico that all risks be implemented --

12 or, excuse me, input into the BP RAT, correct?


14 Q. (By Ms. Hertz) You recall --

15 A. Yes --

16 Q. -- that?

17 A. -- I think that's what you said is.

18 Q. I think that's what we read, right --

19 A. Yes.

20 Q. -- in the prior document?

21 A. Yes.

22 Q. Okay. All right. Let's go to Tab 6. This

23 has previously been marked as Exhibit 93. And it's the

24 "Drilling and Well Operations Practice" for E&P. And

25 I'd like to know first if you've ever seen this


703

1 document before.


3 Q. Okay. Were you aware of its -- its existence?

4 A. Yes, I was aware of its existence.

5 Q. Okay. What did you understand it to be?

6 A. It's to set out the operating practice for

7 drilling wells.

8 Q. Okay.

9 A. In E&P.

10 Q. Okay. And was this the type of process or

11 system that you were talking about that was in place in

12 the Gulf of Mexico in April that you had believed would

13 mitigate the risks involved with deepwater drilling?

14 A. It was certainly one of the pieces of process

15 that were in place to mitigate risks in the

16 deepwater --

17 Q. Okay.

18 A. -- correct.

19 Q. Let's go to Bates 263, please -- why am I

20 doing that -- just to point out that this is dated

21 October 2008. It's issue 1, and I'll just represent to

22 you that the gentlemen on the Well's Team have

23 indicated that this is the version that they were

24 operating under when they were working on Macondo.

25 All right. 276, please, Bates 276. Under


704

1 "1.3 Application," it states, "This practice applies to

2 all drilling and wells operations comprising well

3 construction" --

4 A. Sorry. I'm on the wrong page.

5 Q. I'm sorry.

6 A. Apologies.

7 Q. It's all right.

8 MR. WEBB: He's got the right page.

9 A. Apologies.

10 Q. (By Ms. Hertz) "This practice applies to all

11 drilling and well operations comprising well

12 construction, drilling, testing, completion, workover,

13 well operations and intervention activities related to

14 wells performed under the control or supervision of BP,

15 or on behalf of BP as the operator."

16 You see that?

17 A. I do.

18 Q. So is it your understanding that this was, in

19 fact, a document that governed the drilling of wells in

20 the Gulf of Mexico in April of 2010?

21 A. That was my understanding.

22

23

24

25


705

1

2

3

4 Q. Okay. And what do you understand that

5 sentence to mean?

6 A. It says what it -- is what it says.

7 Q. That you shall follow this procedure --

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25


706

1

2

3

4 Q. Now, if, in fact, there was no documented and

5 auditable Risk Management process in place on the

6 Macondo Well, that would have been a violation of BP

7 Policy without a written exception; isn't that --

8 MR. GODFREY: Object to the --

9 Q. (By Ms. Hertz) -- correct?


11 MR. GODFREY: -- form of the question.

12 A. Well, I -- I'm not aware whether there was or

13 wasn't, so if there wasn't, it would certainly not be

14 consistent with this document, would it.

15 Q. (By Ms. Hertz) Or BP Policy, correct?

16 A. Well, this is BP Policy.

17 Q. All right. And let's look at 292, Bates 292,

18

19

20

21

22 Do you see that?

23 A. I do.

24 Q. If that was not done, that would have been a

25 violation of BP's Policy as well, correct?


707


2 A. If it was not done, it would not be consistent

3 with this Policy, correct.

4 Q. (By Ms. Hertz) Okay. And I could walk you

5 through lots of those examples, but I don't want to

6 take your time up with that. So generally, if -- if --

7 if -- if the requirements of this document are not

8 followed, that's a violation --

9 A. It's not consistent --

10 Q. -- of this BP Policy?

11 A. -- with this Policy.

12 MR. WEBB: Well, wait, I -- I --

13 Q. (By Ms. Hertz) It's not --

14 MR. WEBB: -- object to the form of the

15 question.

16 Go ahead answer.

17 A. It's not consistent with this Policy.

18 Q. (By Ms. Hertz) All right. Thank you.

19 Are you familiar with the Traction reporting

20 system?

21 A. Yes.

22 Q. What do you understand that to be?

23 A. It's a database to record all safety-related

24 incidents --

25 Q. Okay.


708

1 A. -- in BP.

2 Q. On Page Bates 308, if you want to look at it,

3 it says: "A Well Control Incident Report shall be

4 completed and documented within the Traction reporting

5 system following any Well Control Incident."

6 What do you understand the term "Well Control

7 Incident" to mean?

8 A. A Well Control Incident is a well control

9 incident where -- where, at least for a period of time,

10 the well is not under control.

11 Q. Okay. Would -- would a kick be considered a

12 well control event in your mind?

13 A. In most situations, probably, yeah.

14 Q. Okay. So if there was a kick at the Macondo

15 Well and it wasn't recorded in Traction, ever, would

16 that be a violation of BP policy?



19 question.

20 A. There's an expectation that all safety-related

21 incidents are recorded in Traction.

22 Q. (By Ms. Hertz) Well, it's not just an

23 expectation, right? It's a requirement --


25 A. There's a -- there's --


709

1 Q. (By Ms. Hertz) -- without a dispensation?

2 A. There's a re --

3 Q. 10.2?

4 A. 2.10 you mean, no. 10 -- which page are you

5 on?

6 Q. Oh, I'm sorry, excuse me, 15.2.12. I

7 apologize.

8 A. Okay. (Reviewing document.) That's what it

9 says, yes.

10 Q. So it's a requirement?

11 A. Yes.

12 Q. Okay. And you would expect --

13 A. You would expect that if there had been a

14 kick, provided it was designated a Well Control

15 Incident, then it would be reported.

16 Q. In Traction?

17 A. In Traction.

18 Q. Okay. Tab 7, please?

19 MS. HERTZ: What are we going to mark

20 this? This will be Exhibit 6067.


22 Q. (By Ms. Hertz) Have you ever seen this

23 document before?


25 Q. It appears to be a BP Wells Operation Group


710

1 Practice dated November 18, 2008. Is that what you

2 see?

3 A. It is.

4 Q. All right. If you turn to Bates 730, the

5 second line says: "All Well Operations activity shall

6 conform to Engineering Technical Practice GP-1035 -

7 Well Operations."

8 That appears to be a mandatory requirement,

9 doesn't it?

10 A. It certainly says "shall."

11 Q. And "shall" is -- appears to be mandatory,

12 right?


14 A. It is what it says there, "shall."

15 Q. (By Ms. Hertz) Well, "shall" is not "should,"

16 right? Can we agree on that?

17 A. Yeah, "shall" is -- is not "should."

18 Q. Okay.

19 (Laughter.)

20 Q. (By Ms. Hertz) All right. All right. Let's

21 go to Bates 738, and under 7.2.1, "Minimum

22 Requirements," do you see that?

23 A. I do.

24

25


711

1

2

3

4

5

6

7

8

9

10

11 Q. What do you understand "critical operational

12 tasks" to be --

13 A. I don't know.

14 Q. -- in drilling?

15 A. I don't know what the definition of that is

16 for drilling.

17 Q. Okay. Well, I can represent to you that

18 everyone on the Macondo Well Team who's testified who's

19 been asked considers the negative pressure test to be a

20 critical operational task, all the way from the

21 Engineering Team Leader to the Well Site Leaders, and

22 that the negative pressure test is -- and the reason

23 it's critical is because it's the last clear chance to

24 ensure well integrity has been achieved before

25 temporary abandonment. So with that --


712

1 A. It's part of the process to assure well

2 integrity has been achieved.

3 Q. It's the last test, though?

4 A. It's the last test. It's the last test. It's

5 not the exclusive test --

6 Q. No, no, that's not what I said.

7 A. -- or -- or anything else --

8 Q. No.

9 A. -- that implies that it's the only thing that

10 you use.

11 Q. No, no. And let me back up.

12 So what the folks on the Wells Team had said

13 it's the last clear chance to test the integrity of the

14 well.

15 A. I have no reason to --

16 Q. Do you have any reason to --

17 A. I apologize.

18 Q. -- disagree with that?

19 A. I have no reason to disagree with the views of

20 the Well Team. They are far more qualified than I am

21 to make that judgment.

22 Q. Based on that representation, and the

23 testimony of the Wells Team, and this procedure --

24 excuse me, this minimum requirement set forth in the

25 DWOP, 7.2.1, would you have expected there to be a


713

1 written procedure for how to conduct and interpret a

2 negative pressure test at BP?


4 A. I don't know is my honest answer. Well, the

5 only reason I say that is because with the benefit of

6 hindsight, which is a wonderful thing, it turns out

7 that no one has got written procedures for conducting

8 negative pressure tests, whether should have they done.

9 With the benefit of the hindsight, the answer is

10 probably "Yes."

11 Q. (By Ms. Hertz) Do you know for a fact that no

12 one has negative -- written --

13 A. I -- I don't --

14 Q. -- negative pressure tests, or is that what

15 you have been told?

16 A. I have been -- I -- I don't know for a fact.

17 I haven't done my own independent research, so --

18 Q. Okay. So back to my question, there certainly

19 would be no downside --

20 A. There would certainly be --

21 Q. -- from having --

22 A. -- no downside --

23 MR. WEBB: Let me --

24 THE WITNESS: I apologize.

25 MR. WEBB: Tony, you keep interrupting


714

1 her question which means --

2 THE WITNESS: Okay. Sorry.

3 MR. WEBB: -- we're getting an incomplete

4 transcript. And so we're going to just ask you to

5 listen to her question, then go ahead and answer.


7 Q. (By Ms. Hertz) Okay. So there certainly would

8 have been no downside to having a written negative test

9 procedure and instructions on interpretation of that

10 procedure in as far as the Wells Team has deemed this a

11 critical activity?


13 question.


15 Q. (By Ms. Hertz) Right?

16 A. There would have been --


18 A. -- no downside.



21 A. I believe that is what the Bly Report

22 concluded and made as a recommendation.

23 Q. (By Ms. Hertz) Well, let -- let me just ask

24 you if you're aware of something. Do you know that BP

25 has strict guidelines, written guidelines barring


715

1 employees from carrying a cup of coffee without a lid

2 or walking down a staircase without holding a handrail?

3 Are you aware of that?

4 A. We certainly have guidelines to prevent people

5 doing that sort of thing, yeah.

6 Q. Okay. So you have written guidelines not to

7 walk down a stairwell without holding on to the

8 handrail, but no written guidelines for a negative

9 pressure test?


11 question.


13 That's false.

14 MS. HERTZ: I haven't even asked one yet.

15 MR. GODFREY: You just stated it on the

16 record. I thought that was a question.

17 MS. HERTZ: That was not yet a question,

18 and don't accuse me of saying anything false.

19 MR. WEBB: You didn't.

20 MR. GODFREY: Well, you just said that BP

21 had no guidelines, nothing in writing about a negative

22 pressure test. That is not accurate.

23 MR. HERTZ: Well, let me restate the

24 question then.

25 MR. GODFREY: Fair enough.


716

1 Q. (By Ms. Hertz) Isn't it the fact that BP has a

2 written guideline directing its employees not to walk

3 down stairwells without a hand on a handrail, and the

4 fact that does -- did not on April 20, 2010, have a

5 written procedure for how to conduct and how to

6 interpret a negative pressure test seem like the focus

7 is more -- is on personal safety versus Process Safety?



10 A. That can be your interpretation. I don't

11 believe it was the case.

12 Q. (By Ms. Hertz) You don't believe what was the

13 case?

14 A. That our focus was on personal safety versus

15 Process Safety.

16 Q. Okay. Did you attend BP's Operations Academy

17 program at MIT?

18 A. I did.

19 Q. All right. And why?

20 A. Because I wanted to set an example to the

21 leadership of BP that the -- the operational safety --

22 focus on operational safety, the roll-out of the

23 Operating Management System, and Process Safety were

24 all important.

25 Q. All right. The Process Safety lessons taught


717

1 at the Academy include, "Critical procedures should be

2 formalized and carried out with rigor."


4 A. I do.

5 Q. "It is essential to maintain multiple

6 safeguards against an accident."


8 A. We can short-circuit this, if you want to. I

9 agree with everything that was taught at the Academy,

10 because it was a program that I was instrumental in --

11 Q. Let me just run through my little points,

12 though, if you don't mind.

13 Is it dangerous to change operational plans on

14 the fly?


16 A. Yes.

17 Q. (By Ms. Hertz) I'm going restate that

18 question.

19 The process safety lessons taught at the

20 Academy include the fact that it is dangerous to change

21 operating plans on the fly. Do you agree with that?

22 A. I agree with all of the suggestions at the

23 operations Academy, all of the -- the long list of

24 things that you're about --

25 Q. It's not that long.


718

1 A. -- to go through --

2 Q. Just let me get through it.

3 A. -- I completely agree with.

4 Q. All right. So you agree that anomalies --

5 A. There should be no ambiguity as to whether I

6 do or do not agree --

7 Q. Are --

8 A. -- in what was being taught at the operations

9 Academy.

10 Q. Okay.

11 A. I cert -- I was instrumental in setting up

12 that program.

13 Q. Okay.

14 A. And I absolutely subscribe to everything

15 that --

16 Q. Okay.

17 A. -- they taught.

18 Q. Three more. Do you agree that anomalies need

19 to be clearly resolved?

20 A. Of course.

21 Q. Do you agree that small incidents are warning

22 signs that conditions are ripe for a disaster?

23 A. They are.

24 Q. "A long stretch without a serious accident

25 breeds complacency because people forget to be afraid."


719


2 A. That is correct, as well.

3 Q. Okay.


5 Q. (By Ms. Hertz) All right. And -- and also is

6 it dangerous to change operating procedures on the fly?

7 A. It is.

8 MS. HERTZ: All right. We'll go off.








16 Q. (By Ms. Hertz) I -- I ask you please to turn

17 to Tab 13, which is an article from "The Washington

18 Post," dated June 27th, 2010, headed -- entitled

19 "Trouble at the tiller." This is Exhibit 6068.

20 And if you would turn to the second page of

21 the document, it states in the -- about fourth

22 paragraph down, quote, "The top of the organization

23 doesn't listen hard enough to what the bottom of the

24 organization is saying," and it indicates that you

25 wrote that in a memo in 2006.


720

1 Do you -- do you agree with that statement as

2 a general matter?

3 A. I didn't write it in a memo. I did say it in

4 a Town Hall meeting, which was then written by an

5 employee into a memo, and at the time it was a serious

6 concern that I had, that -- and a lot of what occurred

7 in BP in the subsequent three or four years was a real

8 focus on engaging the operational people and ensuring

9 that the right decisions were taken.

10 Q. So it's important then, and it was something

11 that you strived to implement --

12 A. It was.

13 Q. -- at BP?

14 A. It was.

15 Q. If you'll turn to Tab 14, we've got an E-mail

16 from Tony Emmerson to Bob Kaluza, dated April 8th,

17 2010. Do you know who Bob Kaluza is? Have you --

18 Robert Kaluza? Have you heard that name?

19 A. I believe he was one of the Well Site Leaders.

20 Q. Okay. And this is attaching a TH, or

21 Thunderhorse, Pulse Check, which was apparently a

22 survey taken of the individuals on the Thunderhorse rig

23 in March of 2010.

24 MR. GODFREY: Are -- do you want to mark

25 this as an exhibit, Counsel?


721

1 MS. HERTZ: Yes. 6069. Thank you.


3 MR. WEBB: You said 6069?

4 MS. HERTZ: Yes.


6 Q. (By Ms. Hertz) You -- you haven't seen this

7 document, have you?

8 A. I haven't, no.

9 Q. Okay. Thunderhorse was one of BP's rigs?

10 A. It was -- it was one of -- it was a BP

11 production facility, not a -- not a drilling rig.

12 Q. Okay. Now, if you turn to Bates 468, the page

13 is entitled "Common Themes (Perceived Gaps) from Face

14 to Face Breakout Session."

15 What do you understand a gap to be?

16 A. Probably the same as what you understand a gap

17 to be, some -- something that -- something that needs

18 to be filled.

19 Q. Okay. So -- so something that needs to be

20 fixed or filled?

21 A. Yeah.

22 Q. All right. And these appear to be -- and your

23 reading is probably the same of mine -- as mine, that

24 these perceived gaps were indicated by folks on the rig

25 in the Pulse Check.


722

1 And I was just wondering, given the importance

2 of Management listening to folks at the bottom and,

3 thus, surveys like this, which I --

4 A. M-h'm.

5 Q. -- assume are designed to --

6 A. M-h'm.

7 Q. -- help the folks higher --

8 A. M-h'm.

9 Q. -- up understand what the operational people

10 are thinking, did anyone from the Gulf of Mexico ever

11 tell you about any of these -- any perceived gaps or

12 problems that resulted from surveys taken on the rigs?

13 A. They didn't tell me, but they would have told

14 people who could have taken action to do something

15 about it. And I think it's in -- interesting to see

16 the context of this -- these comments, which were part

17 of the Pulse Survey. "Do you understand the process of

18 how to report an unsafe condition?" 96 percent said

19 "Yes."

20 "When you report an unsafe" position --

21 "condition, do you believe it is addressed in a

22 reasonable time?" 97 percent said "Yes."

23 Q. I appreciate that, but that doesn't really

24 answer my question, so --

25 A. Well, it's just important to have --


723

1 Q. -- let me just ask you a couple of things. If

2 anybody ever brought to your attention --

3 A. M-h'm.

4 Q. -- the belief that Management places a higher

5 priority on production compared to safety, and an

6 example of -- and that's an example of BP breaking its

7 own safety rules?

8 A. Sorry. Where are you referring to?

9 Q. Page 468. I'm -- I'm looking at the "Gaps,"

10 the "Perceived Gaps." I'm just wondering if anybody

11 ever brought that to your attention.

12 A. Where -- where are you referring to in this

13 page?

14 Q. Under "Miscellaneous," "Hurricane Ida

15 Response - Decision to not shut-in production was

16 viewed as management placing a higher priority on

17 production compared to safety and an example of BP

18 breaking its own safety rules."

19 Did anybody ever bring that to your attention?

20 A. They didn't.

21 Q. Okay. Did anybody ever tell you that folks on

22 the Thunderhorse rig believed that requirement and

23 procedure changes were causing confusion and

24 frustration?

25 A. Where are you referring to now?


724

1 Q. Under "COW Management," "Requirement change

2 constantly from one hitch to the other. This is

3 causing confusion and frustration."

4 Did anybody ever bring that to your attention?

5 A. They didn't.

6 Q. Okay. If you turn to the next page, if you

7 want to follow along, under "Leadership" -- "Leadership

8 Style," it says -- or excuse me. Did anyone ever tell

9 you that there was a general feeling that -- of being

10 fired if you stop a job, get hurt, or question your --

11 A. Where -- where --

12 Q. -- Supervisor?

13 A. Where does it say that?

14 So that is one comment at the back of a

15 survey, where at the front of the survey --

16 Q. Mr. Hayward, your --

17 A. -- it says --

18 Q. -- your counsel can get you to talk about

19 that. I -- and --

20 A. Well --

21 Q. And I understand that. I'm just asking if

22 anybody ever told you that --

23 A. They didn't.

24 Q. -- comment, with or without respect to the --

25 the document, because I know you've never seen it.


725

1 A. But, seemingly, you're taking sentences out of

2 context.

3 Q. Well, they're in the section called "Gap" --

4 "Perceived Gaps," and I'm simply asking if anybody

5 communicated to you that there were these perceived

6 gaps?

7 A. They did not.

8 Q. Okay. But you said it was your belief or

9 expectation that these concerns would have been

10 elevated to somebody and that some -- they would have

11 been addressed or -- or some action would have been

12 taken; is that correct?


14 Q. Okay. And if you turn to the next tab, 15,

15 this is Robert Kaluza's performance review from 2009.

16 MR. GODFREY: Is there an exhibit number

17 for this?

18 MS. HERTZ: 6070.


20 Q. (By Ms. Hertz) And if you'll turn to Bates

21

22

23

24

25


726

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19 Q. Okay. Now, I will represent to you that

20 Mr. Kaluza was the Well Site Leader on the Thunderhorse

21 when the --

22 A. M-h'm.

23 Q. -- Safety Pulse was taken on that Thunderhorse

24 rig in March of 2010, and it was under his watch, then,

25 that certain people on the crew felt a fear of being


727

1 fired --

2 A. I think we need to be -- back up a minute

3 here.

4 Q. Sure.

5 A. As I understand it, Kaluza was a Well Site

6 Leader. Thunderhorse is a production facility. And I

7 don't think you can take a survey of a production

8 facility and apply it in a narrow way to the area that

9 Kaluza may have been supervising. I may be wrong.

10 I --

11 Q. Even if it has to do with safety?

12 A. Kaluza had a very narrow area of supervision

13 on the -- on the Thunderhorse facility.

14 Q. You know that for a fact?

15 A. Because he's a driller. So he's not a

16 producer. Most of the people on the drilling facil --

17 on the Thunderhorse facility are involved in

18

19

20 which was a narrow drilling operation, but I don't

21 think you can link Mr. Kaluza to a survey of

22 Thunderhorse.


24 Q. (By Ms. Hertz) Well, all right. I don't know

25 what you're talking about. Okay.


728

1 My understanding is that Mr. Kaluza was on the

2 rig not during production, but during drilling.

3 A. No, but this is -- I don't want to be

4 difficult.

5 Q. Is there one Thunderhorse or two?

6 A. There's one Thunderhorse. It's an enormous

7 facility. It has very significant production

8 operations, where most of the people work. As part of

9 that facility, there is a small drilling operation

10 where Mr. Kaluza was.

11 Q. Ah. Okay. I see what you're saying.

12 A. The survey was across the whole --

13 Q. Okay.

14 A. -- production facility, so, you know, it's not

15 reasonable to link Kaluza to what was going on at

16 Thunderhorse.

17 Q. I understand. Thank you very much for that

18 clarification.

19 Okay. Nonetheless -- then let's put the --

20 the Pulse Check aside. Nonetheless, looking at

21 Mr. Kaluza's Performance Report, and we note that there

22 are a number of issues re: safety, are you aware that

23 he was put onto the DEEPWATER HORIZON four days before

24 the Mon -- Macondo Well blew out?

25 A. I -- I wasn't, no. I --


729

1 Q. You weren't aware of that?

2 A. Huh-uh, no.

3 Q. And that this had been referred to, as you

4 previously mentioned, a "nightmare well" and the "well

5 from hell"?

6 A. Well, I didn't mention that.


8 question.

9 Q. (By Ms. Hertz) Oh, you --

10 A. I didn't --

11 Q. You mentioned that you -- that an Engineer had

12 referred to it as that; is that correct?


14 Q. Okay. And are you aware that Mr. Kaluza was

15 an individual who did not stop the job to resolve the

16 anomaly of 1400 psi on the drill pipe, that we all now

17 know about?


19 A. I don't know who was involved in that decision

20 because I wasn't there. Reading the Bly Report, I

21 don't believe there's a reference to the individual.

22 Q. (By Ms. Hertz) So you have no understanding as

23 to whether Mr. Kaluza or Mr. Vidrine was the Well Site

24 Leader on tour at the time the well blew?

25 A. I -- I -- I don't recall. If I did know, I


730

1 don't know now.

2 Q. Okay.

3 A. I don't remember.

4 Q. All right. All right. Tab 17. This is going

5 to be Exhibit 6071.


7 Q. (By Ms. Hertz) This is a document from Steven

8 Ruehle, an E-mail dated January 11, 2010 to a number of

9 individuals, entitled "Process Safety 2010 Plan," and

10 attached to it is a PowerPoint entitled "Process Safety

11 Plan 2010." And it's dated January 12th, 2010. Do you

12 see that?

13 A. I do.

14 Q. All right. I'm going to ask you to turn to

15 the seventh page of the PowerPoint. It is not

16 numbered, but it's entitled "Process Safety, 2010 Plan

17 (Major Hazard Awareness)."

18 And the "Problem Statement" under that states:

19 "As we have started to more deeply investigate process

20 safety incidents," it become -- it's become apparent

21 that process safety major hazards and risks are not

22 fully understood by engineering or line operating

23 personnel. Insufficient awareness is leading to missed

24 signals that precede incidents, and responses after

25 incidents; both of which increases the potential for,


731

1 and severity of, process safety related incidents." Do

2 you see that?

3 A. I do.

4 Q. If, in fact, that's true, do you consider that

5 to be a serious problem?


7 question.

8 A. I think it's difficult to determine whether

9 it's a seri -- how serious the problem is on the basis

10 of that statement alone. I'd like to know a lot more

11 about it before I drew a conclusion.

12 But what it is pointing is that people are

13 endeavoring to continuously improve, which is what you

14 always want people to do. I can't make a judgment

15 based on that statement.

16 Q. (By Ms. Hertz) Did anybody ever bring this

17 issue of the problems in Process Safety in the Gulf of

18 Mexico to your attention?

19 A. No.

20 Q. All right. And as the CEO who was focusing

21 like a laser on safety, wouldn't you have expected to

22 have known about these deficiencies in Process Safety,

23 especially when they had led to a, quote, "number of

24 serious and potentially serious process safety

25 incidents"?


732


2 A. Well, that -- certainly, the -- any incidents

3 would have been reviewed at the Group Operations Risk

4 Committee. So in that -- in that context, I may have

5 become aware of them, because everything that occurred

6 in -- in the matter of Process Safety incidents in the

7 company were documented and recorded in something which

8 we referred to as the Orange Book. It was a sort of

9 database of everything that was happening. And that

10 was -- the trends and the incidents that occurred

11 across the company were -- were reviewed at the GORC in

12 that way.

13 Q. (By Ms. Hertz) And was it your understanding

14 that Process Safety incidents were going down? In

15 fact, I think you said that in an article, right?

16 A. They were going down --

17 Q. They were going down --

18 All right. Last page.

19 A. -- across the company.

20 Q. Okay. Let's look at the ninth page, please,

21 two pages back.

22 MR. GODFREY: The same exhibit?

23 MS. HERTZ: Yes.

24 Q. (By Ms. Hertz) "Process Safety Incidents"

25 across the Gulf of Mexico. I understand that you've


733

1 stated that Process --

2 A. Sorry. Which page are we --

3 Q. The ninth. So two more past where you were.

4 A. Okay.

5 Q. Entitled "Process Safety Incidents." Now,

6 according to this page, it indicates that Process

7 Safety incidents, in fact, in the Gulf of Mexico went

8 up in 2009 from previous years; isn't that correct?

9 A. It -- it would appear that there was a small

10 increase in this -- in this particular area.

11 Q. In the Gulf of Mexico, correct?

12 A. In the Gulf of Mexico.

13 Q. An increase in Process Safety accidents; is

14 that correct?


16 A. There -- an increase --


18 A. -- an increase in Process Safety incidents,

19 which may or may not have been accidents.

20 Q. (By Ms. Hertz) All right. We'll call it

21 incidents. There was an increase in Process Safety

22 incidents in 2009 in the Gulf of Mexico, correct?


24 Q. Okay.

25 MS. HERTZ: I have nothing further.


734


2 p.m., ending Tape 17.


4 MR. BECK: All right. Let's go.


6 1:49 p.m. Beginning Tape 18.

7 EXAMINATION

8 QUESTIONS BY MR. BECK:

9 Q. Dr. Hayward, my name is David Beck, and I

10 represent Cameron.

11 A. Yes.

12 Q. And I'm sure you know who Cameron is --

13 A. I certainly do.

14 Q. -- do you not?

15 A. I do.

16 Q. I don't have a lot of questions. That's one

17 of the advantages of going toward -- till -- toward the

18 end of the questioning, but the bad news is I have

19 some.

20 So what I'd like to do is to go through about

21 a handful of subjects with you. And I -- I'm going to

22 ask you to do the same thing for me that you did for

23 some of the other lawyers, and that is, if I ask you

24 something, because I clumsily ask it, and you don't

25 understand what I'm asking you, will you stop me and


735

1 say, "Please repeat the question." Will you do that?

2 A. I will.

3 Q. All right. Now, you do not hold yourself out

4 as a BOP expert, do you?

5 A. I certainly do not.

6 Q. And as a Geologist, I'm sure that, in fact,

7 you are not a BOP expert?

8 A. I'm not a BOP expert.

9 Q. Okay. Now, is it true that no one from

10 Cameron has ever told you that a BOP, blowout

11 preventer, during its lifetime would never fail

12 regardless of the circumstances in which it was asked

13 to function?

14 A. No one -- excuse me. No one from Cameron has

15 ever said that to me.

16 Q. And, in fact, you know there are other blowout

17 preventer manufacturers in the industry, do you not?

18 A. There are, indeed.

19 Q. And would it be equally true that no other BOP

20 manufacturer, if you will, has ever made such a

21 statement to you?

22 A. Not to me, no.

23 Q. And furthermore, is it also true that no one

24 at BP has ever made such a statement like that to you?

25 A. That blowout preventers can never fail?


736

1 Q. That's correct.


3 Q. Now, you have testified before the United

4 States Congress on June 17, 2000 [sic], correct?

5 A. Correct.

6 Q. And during your testimony, as I'm sure you

7 remember, you referred to the blowout preventer on the

8 DEEPWATER HORIZON as the ultimate fail-safe mechanism.


10 A. Yes, I do.

11 Q. Your answer's "Yes"?

12 A. I do, yes.

13 Q. And is -- is that a phrase that you came up

14 with on your own?

15 A. I honestly can't recall where the phrase came

16 from.

17 Q. You don't know where the phrase came from?

18 A. I don't where the phrase came from.

19 Q. Okay. As you've used it, did you mean the

20 word "ultimate" to mean final, the final fail-safe

21 mechanism, if you will?

22 A. Yes.

23 Q. All right. Now, just so -- and you understand

24 that the ladies and gentlemen of the jury, assuming we

25 have a jury, or the Judge is going to see and hear your


737

1 testimony given here on Monday and today?

2 A. I do.

3 Q. You understand that's a definite possibility?

4 A. Yeah, I do.

5 Q. Okay.

6 A. Indeed, I do.

7 Q. Now, I want to ask you some questions with

8 respect to during the period you were Chief Executive

9 Officer of BP. Okay? So that's the time frame we're

10 talking about.

11 A. M-h'm.

12 Q. While you were Chief Executive Officer of BP,

13 was it BP's intention to rely upon this mechanical

14 device, the BOP, as BP's last line of defense in the

15 end -- in the event of a potential blowout?


17 A. I think before the accident on April the 20th

18 I -- I had never considered the details of a drilling

19 operation and a blowout preventer in the -- in the

20 sense that you're describing it today. What would I --

21 what I would say is based on my 30 years in the

22 industry that I think it was acknowledged that the

23 blowout preventer was the last line of defense, and in

24 the event that a well was out of control, the blowout

25 preventer would be operated.


738

1 Q. (By Mr. Beck) M-H'm.

2 A. And it was designed to close the well. That

3 was -- that has been the design basis of a blowout

4 preventer since they were created 50 or 60 years ago.

5 MR. BECK: I object to the answer as

6 unresponsive.

7 Q. (By Mr. Beck) My question, though, is: Was it

8 BP's intention to rely upon the blowout preventer as

9 this last line of defense that you just described?



12 A. I never considered it in that sense. So I

13 can't answer the question.

14 Q. (By Mr. Beck) Well, what sense did you

15 consider it?

16 A. I considered it to be the -- the ultimate

17 piece of equipment in the event that a blowout was

18 occurring.

19 Q. It's the last line of defense?

20 A. I mean, you -- if you -- if you want to use

21 those words, you can use them. I -- I -- I haven't

22 used them, and I wouldn't use -- I hadn't -- certainly

23 hadn't used them ahead of the -- the accident.

24 Q. All right. Well, let's use --

25 A. I hadn't talked about blowout preventers. I


739

1 apologize.

2 I hadn't talked about blowout preventers --

3 well, I hadn't talked about blowout preventers at all,

4 frankly.

5 Q. Now, let me use your words, then. Would you

6 agree that if a blowout preventer is the -- as you

7 described it, the ultimate fail-safe mechanism, would

8 you agree that it would be imprudent for BP to do

9 anything to diminish its effectiveness?


11 A. Certainly if -- if anything had been done to

12 diminish its effectiveness, that -- that would be

13 imprudent.

14 Q. (By Mr. Beck) And would you also agree that it

15 would be imprudent for BP to do anything to diminish

16 the blowout preventer's ability to function under

17 appropriate circumstances?


19 A. I agree that it would be imprudent to --

20 Q. (By Mr. Beck) All right. And would you also

21 agree that BP should do whatever it can to make certain

22 that what it considers to be the ultimate fail-safe

23 mechanism is effective and properly used?

24 A. I would agree with that.

25 Q. And that BP should take whatever steps it


740

1 reasonably can to make certain that the BOP is and

2 remains effective?

3 A. Yes --


5 A. -- I agree with that, as well.

6 Q. (By Mr. Beck) And during the time you were

7 CEO, that's something you agreed with, correct?

8 A. Well, hang on. During the time I was CEO,

9 I -- not at one point did I have any conversations

10 about blowout preventers.

11 Q. I'm not -- not asking you about conversations

12 about blowout preventers. I'm simply asking you about

13 in your capacity, in your position as CEO of BP during

14 the time period you served in that role, do you agree

15 that BP should do whatever it takes to make certain

16 that a blowout preventer which you considered to be the

17 ultimate fail-safe mechanism is effective and properly

18 used?

19 A. I agree.



22 Answer the question, then, Tony.

23 A. I agree that BP should make every endeavor to

24 ensure that whatever -- however you described it --

25 Q. (By Mr. Beck) Okay.


741

1 A. -- most certainly the blowout preventer was

2 operating effectively.

3 Q. And that do you also agree that your company,

4 when you were with the company as Chief Executive

5 Officer, should do nothing to increase the risk that a

6 blowout preventer would not do what it was supposed to

7 do?



10 Q. (By Mr. Beck) All right. Let me hand you what

11 has been marked as Exhibit 731.

12 (Tendering.)


14 Q. (By Mr. Beck) And this Exhibit 731 is a

15 document dated October 11, 2004, is it not?

16 A. It is.

17 Q. And it is on Transocean stationery, and it is

18 addressed to BP America Production Company, correct?

19 A. It is.

20 Q. Were you part of the Senior Management of BP

21 in 2004?

22 A. I was.

23 Q. And you will see where it says the subject,

24 it's a Drilling Contract, is it not, that's referenced?

25 A Drilling Contract is referenced?


742


2 Yes.

3 Q. And you see that it refers to a December 9,

4 1998 contract between R&B Falcon Drilling Company and a

5 company called Vastar Resources, Inc., right?

6 A. It does.

7 Q. And so that the Judge and perhaps the jury who

8 may see this will understand, Vastar Resources was a

9 company that you-all bought or acquired, right?


11 Q. And was Vastar Resources, Inc., acquired

12 during the time you were with Senior Management at BP?

13 A. It was.

14 Q. And so, essentially, in layman's terms, once

15 you acquired or took over Vastar Resources Inc., BP

16 stepped into the shoes of Vastar?


18 Q. And if I -- I want to refer you to the third

19 paragraph of this letter. And this is a Letter

20 Agreement, is it not?

21 A. That's what it said it is.

22 Q. And it pertains to the conversion of a VBR to

23 a test ram. Do you see that?

24 A. I do.

25 Q. And a VBR is a variable bore ram, correct?


743

1 A. I believe that's the case.

2 Q. And that is a part of a blowout preventer, is

3 it not?

4 A. Yes, it is.

5 Q. And in the third paragraph in the first

6 sentence, it says, quote: "Company acknowledges that

7 the Conversion will reduce the built-in redundancy of

8 the BOP, thereby potentially increasing Contractor's

9 risk profile and corresponding cost structure," end of

10 quote.

11 Is that what this letter states?

12 A. It does.

13 Q. Now, increasing the contractor's risk profile

14 means, does it not, that you are increasing the risk,

15 in this case, that R&B Falcon Company has with respect

16 to the BOP, does it not?

17 MR. GODFREY: Objection -- I'll withdraw

18 the objection.

19 A. That's what I would imagine it -- it is

20 referring to based on this letter.

21 Q. (By Mr. Beck) And I take it from what you told

22 us earlier about just general information you had with

23 respect to blowout preventers you know that one of the

24 features which is commonly known with respect to

25 blowout preventers is what is called "redundancy"?


744

1 A. Correct.

2 Q. In other words, you -- you have the blowout

3 preventer that can react to a certain situation. In

4 the event there's a problem, you have a backup system

5 called a "redundant system," correct?

6 A. I'm not certain it's a redundant system.

7 There are elements of redundancy I think is how I would

8 describe it. It's not a complete and separate system.

9 Q. Fair enough. And -- and -- and I think -- I

10 think you're absolutely accurate in that respect.

11 What is happening here is that the

12 redundant -- built-in redundancy of the BOP is being

13 reduced, correct?

14 A. That appears to be what this letter

15 determines.

16 Q. And -- and as a result of this built-in

17 redundancy of the blowout preventer being reduced, it

18 is increasing the risk profile of R&B Falcon Drilling

19 Company, which was a predecessor to a Transocean

20 entity, correct?

21 A. That's what the letter says.

22 Q. And are you aware of what the purpose of a

23 variable bore ram in a blowout preventer is?

24 A. No.

25 Q. So you, at least as you sit here today, don't


745

1 have any idea of the significance or the effect of

2 reducing the built-in redundancy of the BOP in this

3 regard?

4 A. In -- the answer is -- to that is "No." I do

5 not -- I do not -- I am not -- I am not -- not able to

6 judge the extent to which redundancy has been reduced

7 or risk has been increased by what's written here.

8 Q. But you will see that as a result of

9 increasing the risk for the contractor, that Vastar,

10 your predecessor, or BP's predecessor, is actually

11 agreeing to reimburse the contractor for any problems

12 that occur with respect to the MMS requiring certain

13 activities to be done --


15 Q. (By Mr. Beck) -- correct?

16 A. I'd have to honestly read it, because I

17 haven't seen it before.

18 Q. That's fine.

19 A. After one -- (reviewing document).

20 What they're -- what it appears to be saying is if

21 there's a require -- if there is any mechanical reason

22 or the MMS requires the variable bore ram is to be

23 replaced, then the contractor will bear the cost.

24 Q. Yeah.

25 A. That's the -- what I understand this to say.


746

1 Q. And I -- I think you understand it correctly.

2 In other words, if the MMS requires the contractor to

3 do such things as pulling the BOP out of the water, and

4 by the way, that involves substantial expense, doesn't

5 it?

6 A. It does, yeah.

7 Q. "We're going to pay for it"?

8 A. Yes.

9 Q. BP is going to pay for it, right?

10 A. Yes.

11 Q. Now, do you know who it was who actually

12 requested that one of these variable bore rams be

13 converted to a test ram?

14 A. I don't.

15 Q. Do you know whether anybody at your company

16 believed that converting a variable bore ram to a test

17 ram was, in fact, financially beneficial to BP?

18 A. I don't. It -- it would imply in this letter

19 that it was not.

20 Q. And that's because of the indemnity?

21 A. Because of the additional -- the indemnity on

22 the additional cost that could be incurred if there was

23 a mechanical reason to change it or if the -- the

24 Regulator required us to do --

25 Q. Well, if --


747

1 A. -- something with it.

2 Q. -- if someone who has personal knowledge of

3 this transaction says that it was done at BP's request

4 because BP believed it was to its advantage, you would

5 not dispute that?

6 MR. WEBB: Well, I'm going to object to

7 the form of the question. Answer it.

8 A. I --

9 Q. (By Mr. Beck) What's your answer?

10 A. I clearly have no basis to agree or disagree.

11 Q. All right. In your capacity as CEO, during

12 the time period you served in that capacity, did you

13 believe that it was important for BP to select the best

14 available technology as this ultimate fail-safe

15 mechanism?

16 A. I did. I -- I believed it was important for

17 us to select the best available technology full stop.

18 Q. All right. And this is consistent with what

19 you said earlier, where you said that BP should do

20 whatever it takes to make certain that the BOP is

21 effective, and it's safe, and it provides the best

22 mechanism to prevent a potential blowout?


24 Q. All right. Now, you testified this morning

25 that BP didn't design the blowout preventer on the


748

1 DEEPWATER HORIZON. Do you remember that?

2 A. (Nodding.)

3 Q. Don't you just love it when a lawyer starts

4 out with that kind of a question?

5 A. I -- I believe it's accurate. I don't think

6 we designed the blowout preventer.

7 Q. Now, if the evidence in this case shows that

8 Vastar, the company you quire -- acquired and

9 purchased, actually specified the BOP configuration,

10 then would you agree that at least one of your

11 predecessor companies had an involvement in the design

12 of the BOP on the DEEPWATER HORIZON?



15 A. We can have a very convoluted debate about

16 what design is and what design isn't. When I said

17 "design," I meant the engineering design behind the

18 fundamentals of a blowout preventer.

19 Q. (By Mr. Beck) Well --

20 A. What you've --

21 Q. Excuse me. Go ahead.

22 A. What you've illustrated is that there was

23 clearly a -- an involvement of Vastar in determining

24 which -- which of the various configurations that are

25 available for a blowout preventer was deployed.


749

1 Q. All right. Well, let me hand you, just to

2 kind of help us in this discussion here --


4 MR. BECK: And just for the record, there

5 apparently, Rick, have been multiple copies of this

6 produced, and so the Bates numbers are different on

7 these different copies that have been produced, so I

8 just want to kind of alert you to that.

9 MR. WEBB: Are you putting an exhibit

10 number on this, or is there already one on --

11 MR. BECK: Yes. It's Exhibit 1356. It's

12 already an exhibit.

13 MR. WEBB: (Nodding.)

14 MR. GODFREY: The writing on the

15 left-hand side looks like it's not on the original.

16 MR. BECK: Yeah, the writing up on the

17 right-hand corning is my handwriting.

18 MR. GODFREY: And then -- and then the

19 writing on the left-hand side, not the initials, but

20 the arrows, and that's added after the fact, too, and

21 that's added during the course of litigation?

22 MR. BECK: I think that's right, and I'll

23 agree to redact it if that's the case.


25 MR. BECK: Okay?


750

1 MR. GODFREY: You want to read the Bates

2 stamp numbers in so it's --

3 MR. NEATH: Yes.

4 MR. GODFREY: -- just as -- 21461

5 to 21545. Oh, well, it looks like there's --

6 MR. BECK: No.

7 MR. GODFREY: This is not a complete

8 document, I guess.

9 MR. BECK: It's not a com -- I mean --


11 MR. BECK: -- it -- it has multiple

12 amendments.

13 MR. GODFREY: So this is a couple of

14 selected pages from a longer document?

15 MR. BECK: That's correct, and -- and

16 I'll try to go through this with the witness.

17 MR. GODFREY: Okay. But this has been

18 marked this way as 1356?

19 MR. BECK: Correct.



22 MR. BECK: The full document is 1356.

23 MR. GODFREY: All right. Well, then we

24 ought to give this a new number then, because it's --

25 it's -- if it's less than the full document, I don't


751

1 want --

2 MR. BECK: Why don't we call it 1356A.

3 MR. GODFREY: That will be fine. I just

4 don't want someone thinking the witness saw the full

5 document --

6 MR. BECK: That's fine.

7 MR. GODFREY: -- when it's just --

8 MR. BECK: We'll call it 1356A.


10 THE COURT REPORTER: That's a document we

11 need.


13 (Exhibit No. 1356A marked.)

14 Q. (By Mr. Beck) Okay. All right. Dr. Hayward,

15 you will see that this document that is marked as

16 Exhibit 1356A is a Drilling -- or at least excerpts of

17 a Drilling Contract for a semisubmersible drilling unit

18 between -- the agreement's between Vastar and R&B

19 Falcon. Do you see that?

20 A. Yes.

21 Q. And if I could direct your attention to the

22 page ending in the Bates Nos. 1464, and the "RECITALS,"

23 and -- and specifically the second full paragraph

24 starting out, "Whereas this CONTRACT and the attached

25 exhibits establishes the terms and conditions contained


752

1 in this document entitled 'DRILLING CONTRACT' and the

2 attached exhibits." Do you see that?

3 A. M-h'm, I do.

4 Q. And then you see the third exhibit is Exhibit

5 B-2, called "MATERIAL EQUIPMENT LIST"?

6 A. I do.

7 Q. So this document establishes the terms and

8 conditions between what was formerly Vastar and what

9 was formerly R&B Falcon?

10 A. M-h'm.

11 Q. Is your answer "Yes"?

12 A. Yes. Sorry.

13 Q. Okay.

14 A. My answer is "Yes."

15 Q. Now, if we can turn to the page beginning --

16 or ending in 1507, and at the top it says "Exhibit B-2,

17 MATERIAL EQUIPMENT LIST"?

18 A. Yep.

19 Q. And Section E pertains to "WELL CONTROL/SUBSEA

20 EQUIPMENT." Do you see that, sir?

21 A. I do.

22 Q. And then if you go over, and -- and

23 specifically if you look at E2, it talks about the

24 "Primary BOP Stack." Do you see that?

25 A. I do.


753

1 Q. And then, if you go over to the page ending in

2 Bates Nos. 1537, you see it says, "Primary BOP Stack

3 from top to bottom." Do you see that?

4 A. I see that.

5 Q. And you see that there are a number of items

6 on here in which the party acquiring the BOP and having

7 the BOP built is saying, "Yes, we want this," "No, we

8 don't want this." Do you see that?

9 A. I do.

10 Q. And, for example, you have the parties to this

11 agreement, and the parties requesting that this be

12 built even specifying such things as the bore size,

13 correct?

14 A. I do. Could -- could I just ask a point of

15 clarification?

16 Q. Sure.

17 A. It's a -- was this a contract to specify the

18 construction of a rig, or to enter into a contract to

19 use a rig and its associated equipment? I'm just not

20 clear what this contract is for. Was it --

21 Q. Well, I only know what the contract says.

22 This is a Drilling Contract between Vastar and R&B

23 Falcon, and this is one of the attachments to the

24 contract.

25 A. Because the Drilling Con --


754

1 Q. Cameron is not a party to this.

2 A. No. The Drilling Contract would normally be

3 with -- to engage a drilling rig that was already

4 constructed. So I'm -- I'm -- what I'm not clear about

5 is whether this contract refers to construction or, you

6 know, putting in place a long-term contract for

7 utilization of a piece of equipment already built.

8 Q. Well, I -- I -- I can't answer your question

9 for you. My question to you, though, is, does this

10 document, Exhibit E-2, which is part of the material

11 equipment list, specifically go through very precise

12 terms of the primary BOP stack?

13 A. It specifies the sort of BOP that was --

14 Q. Right.

15 A. -- was required.

16 Q. And it's --

17 A. I -- I -- I don't believe it's a -- a design

18 basis for a new BOP.

19 Q. Well, whether it is --

20 A. It's specifying --

21 Q. -- or not is for somebody to decide. But my

22 point is that each of these items on here -- or excuse

23 me, strike that.

24 Some of these items on here are very specific,

25 are they not?


755

1 A. They are. Some of these --

2 Q. For example, the -- the --

3 A. Some of them are specific.

4 Q. -- the bore size specifies the inches,

5 correct?

6 A. Sorry. Where are you now, please? Sorry.

7 Q. The page ending in 1537.

8 A. (Reviewing document.) Yep.

9 Q. The working pressure, the psi working pressure

10 is specified --

11 A. Correct.

12 Q. -- is it not?

13 A. Correct.

14 Q. And then if you look at the next page, under

15 the "RAM TYPE PREVENTERS," specifically talks about the

16 bore size, correct?

17 A. It does.

18 Q. The working pressure, correct?

19 A. It does.

20 Q. The stack configuration, correct?

21 A. It is, that's correct.

22 Q. And then when you look at the ram locks, blind

23 shear rams, the number, and the number specified is

24 one, one set of --

25 A. M-h'm.


756

1 Q. -- blind shear rams, correct?

2 A. Yeah.

3 Q. And I think you've testified earlier that --

4 well, let me just ask you, just to make sure I'm right.

5 Do you know when the first time BP specified it wanted

6 two blind shear rams --

7 A. I don't.

8 Q. -- sets of blind shear rams --

9 A. I don't.

10 Q. -- on any of its rigs?

11 A. I don't. I don't, no.

12 Q. And then we go to E.2.4, "STACK

13 CONFIGURATION," again, very specific, right?

14 A. Yes.

15 Q. And without going through each of these, it

16 even goes through the annular type preventer, correct?

17 A. It doesn't actually have any description of an

18 annular type preventer.

19 Q. Look at Page 1539.

20 A. I am. And it says "Size," not applicable.

21 Q. Size inch 18 and three-quarter inches.

22 A. I'm sorry. I --

23 Q. Do you see that?

24 A. Sorry. I must be looking at a different --

25 Ah.


757

1 Q. Correct?

2 A. I was looking at E.2.5. You're looking at

3 E.3.2.

4 Q. Correct.

5 A. I apologize.

6 Q. And that is correct, is it not?

7 A. Yes.

8 Q. Quantity, two of them, right? Correct?

9 A. Correct.

10 Q. Working pressure, 10,000 psi?

11 A. That's right. Correct.

12 Q. And did you notice in here that in some

13 instances, it is specified that the product or a part

14 of the product need not even be Cameron?

15 A. No. It says equivalent -- Cameron or

16 equivalent.

17 Q. Right. So --

18 A. So I interpret it to say --

19 Q. Pardon me?

20 A. I interpret this document to be the

21 specification of the piece of equipment the -- the

22 contractor wished to employ. It's not a design

23 specification for the piece of equipment.

24 Q. Well, would you --

25 MR. BECK: And object to the answer as


758

1 unresponsive. There wasn't even a question on the

2 floor.

3 Q. (By Mr. Beck) But my question is: Would you

4 at least agree, Dr. Hayward, that your predecessor

5 company that you acquired while you were part of the

6 senior leadership was at least involved in specifically

7 specifying the -- the type of BOP preventer it wanted

8 and some of the component parts?

9 A. I -- I would.


11 MR. BECK: I don't understand. I'm

12 sorry, my colleague says that I referred to this --

13 referred to the letter as 731. It's 7031.

14 MR. ROBERTS: What was that? What was

15 the reference?

16 MR. BECK: It was the first document I

17 referenced, the conversion of the VBR to the test ram.

18 It's 7031. I think erroneously said 731.

19 MR. ROBERTS: Thank you.

20 Q. (By Mr. Beck) You also testified before

21 Congress that the BOP failed, quote, "when it was

22 activated," end of quote, on the drilling rig.

23 Do you remember saying that?

24 A. I don't remember saying that.

25 Q. All right.


759

1 A. I'm sure I did if you have a record of it.

2 Q. Okay.

3 A. I'm not going to dispute that.

4 Q. And -- and you're welcome to look at your

5 testimony --

6 A. No, I'm sure --

7 Q. -- if you'd like.

8 A. I'm sure that's the case.

9 Q. You've told us you read the Bly Report,

10 correct?

11 A. Correct.

12 Q. And you agree with it?

13 A. I did.

14 Q. Had no reason to disagree with it?

15 A. I don't have basis to disagree with it.

16 Q. Okay. Now, in fact, doesn't the Bly Report

17 say that the well sealed after the BOP was activated?

18 A. "The well sealed after the BOP was activated"?

19 Q. And let me refresh your recollection. This is

20 an excerpt from Exhibit 1, which is the Bly Report.

21 It's just too big to mark other copies of it.

22 A. M-h'm.

23 Q. And I specifically want to refer you to --

24 A. Ah, okay.

25 Q. -- to Section 3.5 --


760

1 A. Yep.

2 Q. -- which, for the record, is Page 123 of the

3 Bly Report. The first sentence --

4 A. Yeah.

5 Q. -- reads --

6 A. That's -- I've -- you jogged my memory. I

7 didn't understand what you meant when you said "seal."

8 Q. Okay.

9 A. The BOP sealed around the drill pipe.

10 Q. Right. It says, quote: "The INVESTIGATION

11 TEAM believes that the BOP was closed (but did not

12 fully seal) around the drill pipe at approximately

13 21:" --

14 A. Yeah.

15 Q. "42 hours and that the BOP fully sealed around

16 the drill pipe at approximately 21:47 hours."

17 Correct?

18 A. That's what it says, yeah.

19 Q. All right. And you have no reason to disagree

20 with that?

21 A. I don't.

22 Q. Now, do you know a man by the name of

23 Fereidoun Abbassian?

24 A. I do not.

25 Q. Fereidoun Abbassian was an appointed to lead


761

1 BP's Blowout Preventer Investigation Team, and he has

2 testified that he was actually in the Head Office in

3 London as an Executive Assistant in 2003. Would it be

4 in the same building you were?

5 A. For part of the time, that's correct.

6 Q. But you -- you've never met him?

7 A. I don't -- if I have, I don't recall.

8 Q. Okay. Well, he -- he is a Ph.D. in

9 Engineering. He's still with BP.

10 A. M-h'm.

11 Q. And he testified under oath within the last

12 few months that there was no indication of any flow out

13 of the drill pipe at 2147, which I think you will agree

14 was consistent with what the Bly Report says, correct?

15 A. Yeah, that's right.

16 Q. And you would have no reason to disagree with

17 what Dr. Abbassian testified?

18 A. I have no basis to agree or disagree with

19 Dr. Abbassian.

20 Q. All right.

21 A. I'm certainly -- if that's what he said, then

22 that's what he believes and is --

23 Q. Okay. All right. And -- and so based on what

24 we know today, after the blow -- the Bly Investigation,

25 the Bly Report, what PhDs like Dr. Abbassian have


762

1 testified to under oath, would you agree that the

2 statement that you had made to Congress that the well

3 failed to seal when activated is incorrect?


5 question.

6 A. I think what I was referring to is that

7 despite the fact that the blowout preventer was

8 activated and it may well have sealed around the drill

9 pipe, it clearly did not seal the well. There was

10 still hydrocarbons flowing through -- from the well

11 into the rig and ultimately into the seabed.

12 Q. (By Mr. Beck) But you don't know why it didn't

13 seal the well?

14 A. I don't know why it didn't seal the well.

15 Q. All right.

16 A. But it is evident that it had not sealed the

17 well.

18 Q. Well, if you were making the same statement --

19 if you were testifying before Congress today, would you

20 still make the statement that whenever the BOP was

21 first activated, it failed to seal the well?

22 A. It failed seal the well, yes.

23 Q. No, sir, that's not my question. My question

24 is: If you were testifying today before the United

25 States Congress, would you still testify that when the


763

1 BOP was activated, it failed to seal the well?


3 question.

4 A. Well, I'm sorry, I must be missing something.

5 I don't understand the question.

6 Q. (By Mr. Beck) All right.

7 A. Because as far as I -- I can -- I understand,

8 the BOP did fail to seal the well.

9 Q. Well, if Dr. Abbassian has testified under

10 oath that the blowout preventer did, in fact, seal the

11 well, you've told us you have no basis to disagree with

12 that, correct?

13 MR. WEBB: Well, he said he didn't agree

14 with it. That he's what he just testified.

15 A. Can I --

16 MR. BECK: I understand.

17 A. I just need to -- I'm sorry, I'm not trying to

18 be difficult. I'm just trying to understand what you

19 mean by sealing the well, given that hydrocarbons

20 continue to flow to surface. My -- my definition of

21 sealing the well is you prevent hydrocarbons flowing to

22 surface, prevent hydrocarbons flowing through the

23 blowout preventer.

24 Q. (By Mr. Beck) Well, my definition of sealing

25 the well is no flow. Okay?


764

1 A. (Indicating.)

2 Q. And my question to you is, if Dr. Abbassian

3 has testified that there was no flow out of the drill

4 pipe at 2147, no flow, would you still tell Congress --

5 A. If --

6 Q. -- if you were testifying today --

7 A. Well --

8 Q. -- that when the BOP was activated, it failed

9 to seal the well?


11 question.

12 A. I -- my un -- I'm completely confused now by

13 my understanding of what occurred in this accident,

14 frankly, because does that mean that Dr. Abbassian does

15 not agree with the findings of the Bly Report?

16 Q. (By Mr. Beck) Well, do you know, for example,

17 whether or not the flow was through the annulus?

18 A. All I know is the findings of the Bly Report

19 which is --

20 Q. What do you recall?

21 A. -- which was that the -- the findings of the

22 Bly Report was that the flow was up the production

23 casing and through the blowout preventer and likely

24 through the drill pipe that was across the blowout

25 preventer.


765

1 Q. And that --

2 A. That's my understanding, and I have no -- I

3 have no basis to make any other understanding. And I

4 haven't seen Dr. Abbassian's Report, and I've not seen

5 any analysis of the blowout preventer, so I -- I can't

6 make an informed judgment.

7 Q. All right.

8 A. And I can't -- certainly can't make a decision

9 based on with respect -- so I can't make a decision

10 based on this conversation about whether I agree or

11 disagree with what I said in Congress --

12 Q. Fair --

13 A. -- because it was based on what I understood

14 at the time and what I understood to be the case until

15 you brought all this up in the last five minutes.

16 Q. All right. Fair enough. Fair enough. Let's

17 move on to another subject.

18 To kind of close it out, you don't know

19 anything other than what's in the Bly Report, with

20 respect to this --

21 A. Well, that is the basis --


23 A. I'm sorry, apologies.

24 Q. You don't know anything with respect to what

25 happened or why it happened other than what you've read


766

1 in the Bly Report?

2 A. The basis of my knowledge is the Bly Report.

3 Q. All right. Now, there were a few documents

4 that I want to show you -- and by the way, you told

5 us -- by -- did you ever read the Presidential

6 Commission Report?

7 A. I didn't -- I didn't read it in detail. I

8 read the press reports at the time. I asked my PA to

9 print it, and I skimmed it, but I did not read it.

10 Q. And you were asked earlier about the Chief

11 Counsel's Report, Chief Counsel to the National

12 Committee on the BP Deepwater Horizon Oil Spill and

13 Offshore Drilling?

14 A. I haven't read the Chief Counsel's Report.

15 Q. Did you -- has anybody ever advised you or did

16 you read a statement by the Chief Counsel, and I quote,

17 "Hydrocarbons had entered the riser well before the

18 crew attempted to activate the BP, and even a perfectly

19 functioning BOP could not have prevented the explosions

20 that killed 11 men on April 20th."

21 Had you ever seen that statement before?

22 A. I -- I think I saw it referred to in the

23 press.

24 Q. And do you agree with that?

25 A. I don't have the basis for agreeing with it,


767

1 because I wasn't part of the investigation. I don't

2 know.

3 Q. All right. You were asked about a number of

4 documents on Monday, and time does not allow me to go

5 into a lot of them. But I want to hit a couple of

6 them, and then I want to ask you about another

7 document.

8 A. M-h'm.

9 Q. With respect to your testimony about blowout

10 preventers, I'm sure you haven't had the opportunity to

11 read BP's Well Control Manual. Is that --

12 A. I'm afraid I haven't.

13 Q. Okay. It is a multivolume set of documents --

14 A. M-h'm.

15 Q. -- okay? Volume 2 is entitled "Fundamentals

16 of Well Control." And I'm not going to ask you,

17 mercifully, about a -- a lot of these pages in the

18 document, but I do want to just refer you to something

19 in the document. And specifically, I want to refer you

20 to --

21 MR. BECK: And by the way, this is

22 Exhibit 2390 for the record.

23 Q. (By Mr. Beck) And if you would look -- it's

24 toward the end, Doctor, it's the pages ending 0797.

25 MR. GODFREY: 7 -- what was the last one?


768

1 MR. BECK: 0797.

2 Q. (By Mr. Beck) Do you have that page?

3 A. I do.

4 Q. BP's own Well Control Manual recognizes, does

5 it not, that over time, over the history of a blowout

6 preventer, that there can be instances and

7 circumstances where it will fail, correct?

8 A. You are asking me to confirm that it says it

9 here or --

10 Q. Yes, sir.

11 A. Yeah, I would --

12 Q. And look at Paragraph 1 entitled "General" on

13 the page "Fundamentals of Well Control," Paragraph 1?

14 A. All right. Paragraph -- one second. Okay.

15 Q. All right. You see where BP's own Well

16 Control Manual specifically recognizes what it believes

17 are common causes --

18 A. M-h'm.

19 Q. -- of failure?

20 A. I do.

21 Q. Correct?

22 So this is an indication, is it not, that BP's

23 own Well Control Manual recognizes that there can, in

24 fact, over time be instances where a BOP could fail?



769

1 question.

2 A. It does.

3 Q. (By Mr. Beck) All right. And without going

4 into them, such things as "Casing wear," correct?

5 A. Correct.

6 Q. "Wellhead or BOP connections working loose

7 through vibration"?

8 A. Correct.

9 Q. "Deterioration of seals in valves and BOPs"?

10 A. Correct.

11 Q. "Leaks and faults occurring in control

12 system"? Is that correct?

13 A. That's -- right.

14 Q. Let me show you what was previously marked as

15 Exhibit 6032.

16 MR. GODFREY: Are we done with 2390?

17 MR. BECK: Yes.


19 Q. (By Mr. Beck) And this was a document that was

20 marked earlier, Doctor.

21 MR. BECK: Is that in one of these

22 notebooks here?

23 THE COURT REPORTER: What's the number,

24 David?

25 MR. BECK: 6032.


770

1 THE COURT REPORTER: (Tendering.)

2 THE WITNESS: Thank you. Tab num -- Tab

3 number?


5 THE WITNESS: 32.

6 Q. (By Mr. Beck) It's entitled "RB FALCON

7 DEEPWATER HORIZON BOP" --

8 A. M-h'm.

9 Q. -- "ASSURANCE ANALYSIS."

10 A. Yeah.

11 Q. You see that?

12 A. I do.

13 Q. And I have a couple of questions to ask you

14 about this document. And by the way, this was issued

15 in March of 2001, was it not?

16 A. Yes.

17 Q. I refer you to page ending in Bates number

18 3050. I think down in the left corner it says,

19 "Issue" --

20 A. Yep.

21 Q. -- "Date"?

22 A. Yep.

23 Q. Is that correct --

24 A. Correct.

25 Q. -- March 2001?


771

1 If you will just jump to the page ending in

2 53052, please, sir.

3 MR. GODFREY: 52?

4 MR. BECK: Correct.

5 A. Yep.

6 Q. (By Mr. Beck) This is the "EXECUTIVE SUMMARY"

7 and this was what is called an interect -- "Integrated

8 Project," correct?

9 A. It's referred to as "Integrated Project Team,"

10 yes.

11 Q. And it was intended "...to provide a high

12 level of confidence that the BO system on the Deepwater

13 Horizon is a reliable and safe system," right?

14 A. That -- that's correct.

15 Q. And in -- in -- involved in this effort was,

16 among others, BP, correct?

17 A. Correct.

18 Q. Cameron, right?

19 A. Correct.

20 Q. And you had other members of industry that

21 participated, right?

22 A. Correct.

23 Q. And then if you'll look at the second -- or

24 the third bullet point, it talked about "A risk

25 assessment" of focusing on reliability being completed,


772

1 right?

2 A. Correct.

3 Q. And then it talked about "Engineering and

4 operations personnel from RB Falcon, BP, Cameron, TSF

5 and West identified 260 failure modes that could

6 require pulling of the BOP or" the "LMRP," right?

7 A. Yes.

8 Q. And it talked about the -- the -- the type of

9 malfunctions that were identified during this Project;

10 is that correct?

11 A. Correct.

12 Q. Would it be safe to say that at least BP was

13 aware that these type of failure modes can, in fact,

14 occur with respect to a blowout preventer?


16 A. I guess what they're identifying is potential

17 failure modes.

18 Q. (By Mr. Beck) Right.

19 A. And to identify that these issues are focused

20 on.

21 Q. All right. And --

22 A. In the course of its utilization.

23 Q. And these are potential failure modes that BP,

24 among others, would be aware of?



773


2 Q. (By Mr. Beck) All right. As well as other

3 members of the industry, right?

4 A. Correct.

5 Q. And the purpose of this Study was to identify

6 hazards with respect to blowout preventers, right?

7 A. I believe so, yes.

8 Q. Okay. Let me show you --


10 MR. BECK: Let's do this.

11 Q. (By Mr. Beck) Let me hand you a -- a new

12 document.

13 MR. BECK: And it's on one of the CDs,

14 for the record.

15 Is there another one? Dan, I think we're

16 short one.

17 MR. WEBB: I'll look over his shoulder.

18 MR. BECK: Okay.

19 MR. WEBB: But is that one for him or is

20 it in this binder here?

21 MR. BECK: It's -- it's going to be in --

22 it's going to be -- I just handed him one. Here we go.


24 MR. BECK: I apologize --

25 MR. WEBB: No problem.


774

1 MR. BECK: -- we just didn't have time to

2 get it made.

3 MR. WEBB: That's okay.


5 MR. BECK: What's the number?


7 MR. WEBB: All right. The witness has

8 Exhibit 6072 in front of him.

9 Q. (By Mr. Beck) Exhibit 6072 is a Report dated

10 May 12, 2009, entitled "Blow-out Prevention Equipment

11 Reliability Joint Industry Project," correct?

12 A. Correct.

13 Q. And this was done by West Engineering, right?

14 A. Yes.

15 Q. And are you familiar with West Engineering?

16 A. I'm not.

17 Q. West Engineering -- or do you know whether

18 West Engineering has done any projects for BP?

19 A. I -- I'm sure they have.

20 Q. This Project was intended, was it not, to

21 examine the historical reliability of subsea well

22 control systems in the Gulf of Mexico?

23 A. I don't know what this study was --

24 Q. Well --

25 A. -- designed to do, because I haven't seen it


775

1 to say --

2 Q. Look specifically --

3 A. This?

4 Q. -- on the page ending in 164.

5 A. Okay.

6 Q. And do you see where it says, "The Blowout

7 Preventer Reliability study was conducted to examine

8 the historical reliability of subsea well control

9 systems operating in the Gulf of Mexico under the

10 jurisdiction of the Mineral Management Service,"

11 correct?

12 A. Yeah. It says the Study was -- "The goal of

13 the study was to understand BOP reliability and the

14 extent that testing impacts that reliability."

15 Q. Where -- where does it say "testing"?

16 A. It says it in the second sentence.

17 Q. Okay. Well, let -- let me -- just -- the

18 first sentence says what the purpose is, correct? And

19 that's to examine the historical reliability of subsea

20 well control systems operating in the Gulf of Mexico,

21 under the jurisdiction of the Mineral Management

22 Service.

23 A. And it then goes on -- that's correct. And it

24 then goes on to say, "The goal of the study was to

25 understand" --


776

1 Q. All right.

2 A. -- "BOP reliability and the extent that

3 testing impacts that reliability."

4 Q. And the information upon which the Study in --

5 is based, incorporated data from 238 subsea wells in

6 the Gulf of Mexico, right?

7 A. Correct.

8 Q. And that involved, I think it was at least 37

9 different semi --

10 A. Yes.

11 Q. -- submersible or drillship units during the

12 2004-2006 period, right?


14 Q. Okay. Now, refer to the page ending in Bates

15 number 0200. This reflects, does it not, that during

16 the period of the Study, which was a three-year period,

17 from January 1, 2004, through December 31, 2006, there

18 were a number of control system failures identified,

19 right?

20 A. It says 89 failures.

21 Q. And then if you look in the second par --

22 A. In the initial BOP test for the first time the

23 BOP was landed.

24 Q. And then if you look in the second paragraph,

25 it says, "...39 were identified as control system


777

1 failures," correct?

2 A. Correct.

3 Q. And then "The next largest equipment category

4 of failures to the controls system failures was ram and

5 annular failures..." right?

6 A. (Reviewing document.) I'm just reading here.

7 Correct.

8 Q. And then the next category, most common, were

9 valve failures, right?

10 A. Of which there were two.

11 Q. Is that correct?

12 A. Correct.

13 Q. And the data included in this Study,

14 Dr. Hayward, were for a number -- from a number of

15 industry sources, right?

16 A. M-h'm, well, I -- I don't know, but I -- I

17 imagine that's the case.

18 Q. And would you also believe that the -- this

19 Report was disseminated in the industry?

20 A. I would expect that it was disseminated in the

21 industry.

22 Q. And would you also expect that the results

23 would have been made known to the industry?

24 A. I would expect that they were made known to

25 the industry.


778

1 Q. All right. So in looking at the last three

2 documents, which is BP's own Well Control Manual, which

3 is Exhibit 2390, the R&B FALCON BOP ASSURANCE ANALYSIS

4 in March of 2001, marked as Exhibit 6032, and then also

5 what we've just marked as Exhibit 6072, this Blow-out

6 Prevention Equipment Reliability Joint Industry

7 Project, it shows, does it not, that at least during

8 about a nine-year span, there are at least three

9 studies that have been done to identify potential

10 problems with BOPs?


12 question.

13 A. I think the -- you know, I haven't had a

14 chance to read what this study actually does. What

15 it -- what it's identifying is failures that occur

16 on -- let me just read it again -- immediately on

17 landing the BOP.

18 So has it identified failures, yes.


20 A. And --

21 Q. And that's all I'm asking, is it -- that there

22 are at least three studies, if you will --

23 A. So this is --


25 A. Apologies.


779

1 Q. There are three studies, if you will, from

2 2000 through 2009 that identify potential problems with

3 BOPs, correct?

4 A. I think --



7 A. I think what this says was failures were

8 identified which occurred on the initial -- the initial

9 BOP test.


11 A. I.e., when it was being tested, to assure

12 it's -- it was going to operate or the first time the

13 BOP was put in the water at the beginning of the well.

14 And what people are doing is testing the reliability of

15 it before they start using it.

16 So I -- I just want to be clear, that's what

17 this Report is.

18 Q. Well, your own Well Control Manual isn't

19 limited to BOPs simply --

20 A. Of course, but this --

21 Q. -- this -- beginning?

22 A. Of course. But this Report is about failure

23 at initial deployment --

24 Q. Well, let me --

25 A. -- on the first test on when the BOP was first


780

1 put in the water.

2 Q. Well, let me come at it this way: Of the

3 documents you have seen just during this deposition,

4 would you agree that there have been many instances

5 where someone in the industry or a consultant hired on

6 behalf of the industry have identified potential

7 problems with BOPs or potential common causes of BOP

8 failures?


10 question.

11 A. I would agree that there have been problems

12 identified with BOPs and common causes around those

13 problems.

14 Q. (By Mr. Beck) All right. And that was known

15 to the industry, correct?

16 A. I believe that was known to the industry

17 because --

18 Q. Okay.

19 A. -- you told me, and I'm sure you're right,

20 that this was widely circulated.

21 Q. Now, since the DEEPWATER HORIZON occurrence,

22 you have seen many documents related to that

23 occurrence, have you not?

24 A. Yes, I have.

25 Q. And of all the documents that you have seen,


781

1 have you seen any Cameron document that says that a BOP

2 would never fail during its lifetime regardless of the

3 circumstances in which it was asked to function?

4 A. I haven't seen any Cameron doc -- documents

5 full stop.

6 Q. Have you seen any Cameron document that refers

7 to its product as the ultimate fail-safe mechanism?

8 A. I haven't seen any Cameron documents full

9 stop.

10 THE COURT REPORTER: Microphone,

11 Mr. Beck.

12 Q. (By Mr. Beck) Let me change subjects, and I'm

13 almost finished.

14 I want to talk to you a little bit about

15 OMS --

16 A. M-h'm.

17 Q. -- the Operations Management System.

18 A. Okay.

19 Q. I think you've told us earlier that OMS was

20 the cornerstone of achieving safe, reliable, and

21 responsible operations in all of BP's activities,

22 correct?


24 Q. And you also told us that OMS focused on

25 Process Safety?


782

1 A. It did.

2 Q. Now, you testified this morning that while you

3 were CEO, "We focused extensively on Process Safety."

4 And that's a true statement?


6 Q. Now, on April 20, 2010, BP was in the third

7 year of a five-year implementation of OMS, correct?


9 Q. So that as of the time of the DEEPWATER

10 HORIZON incident, you were three years into the

11 implementation of OMS, correct?

12 A. Correct.

13 Q. Now, is it true that the risk of a deepwater

14 blowout was one of the highest risks for BP --

15 A. That's true.

16 Q. -- in its business?


18 Q. And was it also true that the risk of a

19 deepwater blowout in the Gulf of Mexico was a very

20 serious and a high risk for the company?


22 Q. Do you recall offhand what the revenues

23 produced for the company by wells in the Gulf of Mexico

24 were?

25 MR. WEBB: For when? Any given year


783

1 or --

2 MR. BECK: Just -- just general.

3 A. I think it would be best just to talk about

4 barrels of production because revenue depends on the

5 price --

6 Q. Of course. Of course.

7 A. A lot of oil.

8 Q. A lot of oil?

9 A. (Nodding.)

10 Q. So, again, so that the Judge and perhaps the

11 jury might know, the revenues that your wells that you

12 owned or operated in the Gulf of Mexico produced for

13 the company were very significant, were they not?

14 A. They were.

15 Q. Now, who was it in BP that made the decision

16 that OMS was going to be implemented over five years?

17 A. It's not a decision. It's the reality of the

18 time it takes to design, build, and then implement

19 change processes in a very large organization.

20 Q. And who was it who concluded that that was all

21 going to take five years?

22 A. It's not a conclusion. It's a fact. It's not

23 physically possible to do it any faster. So it's not

24 a -- it's not a predetermined conclusion or a --

25 determined by a person. It's a consequence of the time


784

1 it takes to implement a program.

2 Q. Is it your testimony that BP could not have

3 done that in less than five years?

4 A. I think it's very difficult to conceive how it

5 could have been done in a shorter period of time.

6 Q. No, sir, I didn't ask you if it was very

7 difficult. Is it your testimony that it was impossible

8 for BP to fully implement OMS in less than five years?


10 question.

11 A. I don't know whether it was impossible.

12 Q. (By Mr. Beck) Well, weren't you the one that

13 was in charge of this whole process?

14 A. I was.

15 Q. Was there any --

16 A. And --

17 Q. Excuse me.

18 A. Apologies.

19 Q. Was there any financial impediment to BP

20 implementing this process in less than five years?

21 A. There was no financial impediment. It's not

22 about financial. It's about how do you actually go

23 about putting in place new systems and processes in an

24 organization of a hundred thousand people. Un -- and,

25 unfortunately, that takes time.


785

1 Q. Any other reason why OMS was not fully

2 implemented in less than five years, other than what

3 you just said?

4 A. No.

5 Q. Can you tell us who it was that decided the

6 order in which OMS was going to be implemented?

7 A. What we were doing was transitioning from an

8 existing Process Safety Management System to a new one,

9 and the process was to assess what we had, measure

10 against OMS, and figure out the most appropriate way

11 was minimizing the risk to the operation of

12 transitioning from one to another. So that -- those

13 decisions were taken by the experts accountable for

14 putting in place OMS.

15 Q. Who?

16 A. So the --

17 Q. Who -- go ahead. Who?

18 A. So it was -- the overall implementation of OMS

19 across the company was under the guidance of Mark Bly.

20 Q. Mark Bly?

21 A. The -- the -- the person who designed much of

22 the system was a gentleman called John Sieg, who we

23 recruited from DuPont.

24 Q. I'm sorry, could you say that again?

25 A. John Sieg, who we recruited from DuPont.


786

1 Q. How do you spell that last name?

2 A. S-i-e-g.

3 Q. (Nodding.)

4 A. And the decision to proceed was a -- an

5 agreement between some combination of the Safety and

6 Operations function and the business unit concerned.

7 Q. And did you ever meet with Mark Bly or John

8 Sieg about the implementation, the rate of the

9 implementation, how it was going to be implemented?

10 A. We discussed it on a monthly basis.

11 Q. And were you the ultimate decisionmaker?

12 A. I wasn't the ultimate decisionmaker, because I

13 didn't have the knowledge to make the decision. What I

14 listened to was where the experts concluded was -- you

15 know, what was the right pace to go and ensured that

16 the resources that were necessary to make the

17 implementation happened were available.

18 Q. And the experts were Mark Bly, who was in

19 charge of implementation, correct?

20 A. Mark Bly.

21 Q. Did I say John?

22 A. You did.

23 Q. I'm sorry, Mark Bly. I apologize.

24 And then John Sieg, S-i-e-g?

25 A. Correct.


787

1 Q. He was the expert in charge of what?

2 A. The design of the OMS system.

3 Q. And who was it that was the expert in charge

4 of deciding the order in which it was implemented?

5 Would that be Mark Bly?

6 A. Well, it wasn't the case of order. It was a

7 case of at what point was a business unit or operating

8 entity sufficiently well-prepared to proceed with the

9 implementation.

10 Q. Um --

11 A. So there was multiple implementa -- multiple

12 parallel implementation going on over a three-year

13 period.

14 Q. How long did it take BP to actually begin

15 implementation?

16 A. I can't remember the precise date, but I --

17 I -- I think the first implementation occurred probably

18 in the Fall of 2007, early 2008. I can't recall,

19 honestly.

20 THE COURT REPORTER: One minute.

21 A. The cause of that.

22 Q. (By Mr. Beck) The fall of 2007, 2008?

23 A. (Nodding.)

24 Q. Is that correct?

25 A. Yeah.


788

1 MR. BECK: Okay. Why don't we change the

2 tape. I've just got a few more minutes, and I'm done.



5 2:48 p.m. Ending Tape 18.




9 Q. (By Mr. Beck) Dr. Hayward, as of April 20,

10 2010, what part of OMS was implemented?

11 A. We were in the middle of companywide

12 implementation, so a lot of the -- in fact, all of

13 the -- if I can call it the superstructure was in

14 place. We had completed implementation at the

15 operating level in around 80 percent, I think, of the

16 operations and were -- in the case of the Gulf of

17 Mexico, I -- I think my recollection is we had begun

18 that process in the Fall of 2009. And we, in fact,

19 were on target to complete implementation by the end of

20 2010, which would, in fact, have been in three years,

21 not five.

22 Q. The -- and just see if I understand what

23 you're -- you're saying. When you say that the OMS was

24 implemented 80 percent at the operating level, the

25 operating level would include what?


789

1 A. The -- the operations down through to the

2 front line. So all of the -- you know, the

3 superstructure was complete, and in -- I think it was

4 80 percent of the operations that had gone through all

5 the way down to the front line operations.

6 Q. All right. When you say the "superstructure,"

7 you're talking about the plan?

8 A. The -- the -- yeah, the -- the -- well, not --

9 not only the plan, but the systems and processes would

10 make -- that would make a plan become alive.

11 Q. All right. And then you said that you were on

12 target to implement OMS in the Gulf of Mexico in 2009?

13 A. I -- my recollection is that we began the

14 process of cutover to OMS in the Fall of 2009.

15 Q. And --

16 A. That's my recollection.

17 Q. And your recollection also is that you would

18 have completed that implementation in the Gulf of

19 Mexico by the end of 2010?


21 Q. In -- in -- in other parts of the world, at

22 the operating level, was OMS fully implemented?

23 A. In some places, yes.

24 Q. What places?

25 A. A relatively large number. Colombia, Egypt, I


790

1 think, all of our refineries in the United States, our

2 refineries in Europe and places like Australia. I'm

3 not -- I can't remember exactly the -- the list, but --

4 but we -- we had made a lot of progress.

5 Q. Were any other areas begun in 2009 other than

6 the Gulf of Mexico Operating --

7 A. Yes, they were.

8 Q. -- Division? And what areas were those?

9 A. I can't recall, but we can certainly find out.

10 Q. All right. And, again, just so we're clear,

11 who was it who made the decision to begin

12 implementation of the process in 2009 in the Gulf of

13 Mexico?

14 A. I -- I don't know who was actually involved in

15 the decision to begin the process, but I can imagine

16 that it was the Business Unit Leader of the Gulf of

17 Mexico, along with Mark Bly and people in his

18 organization.

19 Q. And who was the Business Unit Leader?

20 A. A gentleman called James Dupree.

21 Q. James Dupree?

22 A. Correct.

23 Q. Where is he located?

24 A. In Houston.

25 Q. Do you recall his title or position?


791

1 A. Strategic Performance Unit Leader.

2 THE COURT REPORTER: Dupree?

3 THE WITNESS: Dupree.

4 Q. (By Mr. Beck) All right. And what other areas

5 would not have had OMS fully implemented until the end

6 of 2010, other than the Gulf of Mexico?

7 A. I can't remember the list, but, you know, we

8 have a list that's in many of these reports, that --

9 that document -- if you refer to the thing called the

10 Orange Book, it's very clear which areas are complete,

11 which areas are in -- in transition. And I think by

12 the time we're talking about, everywhere was in

13 transition. I don't think there was anywhere that had

14 not started the process.

15 Q. All right. And just again so I'm clear, when

16 you're implementing OMS, do you do it by well site at a

17 time? Do you do it by group? I mean, how -- how --

18 how do you specifically do it?

19 A. You do it by operating activity. So

20 Drilling -- Drilling, broadly. Production Operations,

21 broadly. And then within Production Operations, at an

22 indepen -- individual production facility. But I

23 believe that Drilling would have been done as Drilling,

24 not rig by rig.

25 Q. All right. It would have been done across the


792

1 board simultaneously?

2 A. Yeah, essentially.

3 Q. And you testified earlier that this was -- one

4 of the ways it was implemented, that it was determined

5 when the Business Unit was sufficiently prepared. Who

6 determined when the Business Unit was sufficiently

7 prepared to implement OMS?

8 A. That was a -- as I said earlier, a combination

9 of the Safety and Operations Team, led by -- Safety and

10 Operations Team, led by Mark Bly, and the Business Unit

11 Team.

12 Q. All right. I want to ask you two questions,

13 and I'm going to ask you to assume something for me. I

14 know you're not going to agree with the assumption, so

15 I'll alert you to that right now, okay? But I want to

16 ask you anyway.

17 MR. GODFREY: Should I preemptively

18 object?

19 MR. BECK: No.

20 Q. (By Mr. Beck) And -- and my question is this:

21 If OMS had been implemented over a three-year period

22 instead of a five-year period, wouldn't there have been

23 a better chance of avoiding the April 20, 2010

24 incident?



793

1 question.


3 A. The answer is I don't know. I don't know.

4 Q. (By Mr. Beck) There is certainly --

5 A. Do you think -- excuse me. Do you think I

6 haven't thought about that? Of course, I have. But

7 do -- can I sit here today and say one way or the

8 other? The answer is I can't.

9 Q. If it had been implemented by April 20, 2010,

10 by Drilling, which would have included the Gulf of

11 Mexico, would you agree that at least there's the

12 potential, Dr. Hayward, that this terrible catastrophe

13 would have been averted?



16 question.

17 A. There's lots of assumptions in your question.

18 Q. (By Mr. Beck) (Nodding.)

19 A. There -- on the basis of your assumptions, it

20 is potentially possible that it may have been avoided.

21 There are many other things that potentially possibly

22 may have prevented the accident.

23 Q. Not -- not -- and, again, I'm not saying

24 they're -- they're not. But -- but -- but -- but,

25 again, to get back to my two questions: If OMS had


794

1 been implemented in the Gulf of Mexico before April 20,

2 2010, is there not the potential for having avoided

3 this terrible catastrophe?



6 A. There is possible potential --


8 A. -- undoubtedly.

9 Q. All right. And, similarly, if OMS had been

10 implemented during a three-year period instead of a

11 five-year period, there was at least the potential that

12 the April 20, 2010 incident could have been avoided?



15 question.

16 A. There's potential for all sorts of things in a

17 theoretical world, which is the one we're talking

18 about.

19 Q. (By Mr. Beck) So would you agree --

20 A. It wasn't the real world. It was a

21 theoretical world.

22 Q. All right. So would you agree, then, that at

23 least there's the potential?




795

1 A. There's a potential for anything in a

2 theoretical world.

3 Q. (By Mr. Beck) All right. By the way, just so

4 I'm clear, ha -- have you had any conversations with

5 anybody at Cameron related to the DEEPWATER HORIZON?

6 A. I've never had any conversations with anyone

7 at Cameron.

8 Q. And you consider Cameron to be well-respected

9 in the industry?

10 A. I consider them to be very well-respected in

11 the industry.

12 Q. And then my last question to you: If the

13 Judge or Jury who decides this case determines that the

14 safety culture at BP on April 20, 2010 was either poor

15 or not what it should have been, who would have been

16 responsible for that?


18 question.


20 A. I'll cross that bridge when I come to it.

21 Q. (By Mr. Beck) I'm not sure I understand your

22 answer.

23 A. That's another -- completely --

24 Q. I'm asking the question now.

25 A. -- theoretical question.


796

1 Q. Well, there -- you know there's going to be a

2 Judge and/or Jury who's going decide this case. You

3 understand that?

4 A. That's one possible outcome.

5 Q. Okay. And --

6 A. There are, I believe, others.

7 Q. And you know that some of the positions that

8 BP has taken in this case are, in fact, disputed?

9 A. I do.

10 Q. And you understand that even though you may

11 testify a certain way, others may disagree with your

12 testimony -- legitimately so. You understand that?

13 A. I do.

14 Q. And so I'll ask my question again, that if

15 whoever decides this case determines that the safety

16 culture at BP was not what it should have been on April

17 20, 2010, my question to you is: Who would have been

18 responsible for that?

19 MR. WEBB: And I object --


21 MR. WEBB: -- to the form of the

22 question.

23 A. It would depend on what it is they find with

24 respect to the safety culture. If they find that there

25 was no leadership from the top, no systems and


797

1 processes being implemented, no people being put in the

2 right place, no people being recruited from the

3 external world, then I would take that responsibility.

4 I don't believe that was the case.

5 MR. BECK: That's all I have. Thank you

6 very much, sir.





11 MR. GODFREY: Are we ready to go back on

12 the record.

13 THE VIDEOGRAPHER: All set? On the

14 record at 3:15 p.m., beginning Tape 20.

15 MR. ROBERTS: I just want to make sure

16 I've got a clarification. Weatherford yesterday

17 donated its time to BP and today, as I understand it,

18 has ceded all of its time to BP. We are all operating

19 under an obligation to report any formal or informal

20 cooperation agreements or standdown agreements, so I

21 don't want any -- another MOEX issue to come up. So

22 I'm -- I'm proceeding as if there is still adversity

23 and there are no agreements between Weatherford and BP.

24 And I do appreciate your hospitality, and I

25 don't mean anything against you professionally. I just


798

1 want to get that on the record and -- and get your

2 agreement that that is the situation.

3 MR. GODFREY: If you are asking me

4 whether or not BP and Weatherford have, what?

5 MR. ROBERTS: Whether you have any formal

6 or informal standdown agreement, cooperation agreement,

7 time arrangement, or deal.

8 MR. GODFREY: Well, what we have is I've

9 asked Weatherford, as a matter of professional courtesy

10 several weeks ago, whether they would cede me 45

11 minutes, and they agreed. That's --

12 MR. ROBERTS: I have no -- no objection

13 to that as long as there is --


15 MR. ROBERTS: -- no overriding agreement,

16 deal, standdown arrangement, or anything else in the

17 works. The -- the MOEX thing kind of surprised all of

18 us, and I applaud you for working that out. But as

19 long as -- as there's true adversity amongst the

20 parties, then the working arrangement and time

21 allocation stands.

22 MR. GODFREY: I'll make two observations.

23 One, two weeks ago or three weeks ago, Weatherford sued

24 my client. Two, that stand -- that complaint still

25 stands. And, three, there is no Settlement Agreement


799

1 that has been reached between Weatherford and BP, at

2 least as far as I know.

3 MR. ROBERTS: I -- I -- I -- I didn't ask

4 about a Settlement Agreement. What I'm asking about is

5 a formal or informal standdown arrangement.

6 MR. GODFREY: Well, I'm sorry, Steve.

7 I'm not going to comment further. I'm very well aware

8 of the informal agreements among Halliburton,

9 Transocean, and the PSC to blame BP in this, because

10 I've seen it repeatedly of every deposition.

11 MR. ROBERTS: I -- I -- I'd --

12 MR. GODFREY: I don't think I need --

13 MR. ROBERTS: -- be glad to disclose

14 anything. I don't have an agreement with anyone.

15 MR. GODFREY: Well, I'm going to proceed

16 with the deposition the way I want to proceed.

17 MR. GODWIN: Rick, we -- you know, we --

18 we didn't need that sidebar remark about Halliburton.

19 We have defended the depositions to the best of our

20 ability, without trying to attack anyone. So I would

21 just ask you respectfully, save your self-serving

22 remarks for somebody that cares, because I don't care

23 to hear them.

24 MR. GODFREY: I'd like to proceed with

25 the deposition. I've been very --


800

1 MR. WEBB: So would the witness.

2 MR. GODFREY: -- cautious and -- and

3 patient with everyone else here.

4 MR. ROBERTS: But let me raise my

5 objection. If it turns out that there is some formal

6 or informal standdown, then I'm going to move to strike

7 the deposition.

8 MR. GODFREY: You don't have a --

9 MR. ROBERTS: Your portion of it.

10 MR. GODFREY: Well, I'm sorry,

11 Mr. Roberts, but that's not something that I think is

12 provided for by the Rules. I'm going to proceed. I

13 have the agreement that I've reached with Mr. Lemoine.

14 I've told you that Mr. Lemoine's client has sued my

15 client. I've told you that as far as I know, we have

16 no Settlement Agreement with them, and I think I'm not

17 obligated to go any further than that.

18 MR. ROBERTS: Okay. We'll work that out

19 on another day. And I appreciate the hospitality; I

20 didn't mean to indicate otherwise.

21 THE COURT REPORTER: Dan, your phone.


23 EXAMINATION

24 QUESTIONS BY MR. GODFREY:

25 Q. Dr. Hayward, good afternoon.


801

1 A. Good afternoon.

2 Q. As you know, I'm Rick Godfrey. I represent

3 the company. You're here with your personal counsel,

4 Mr. Webb, right?

5 A. Correct.

6 Q. I think I misspoke yesterday when I said I

7 wanted to confer with you one time as my client,

8 because for much of last Summer, you and I spent some

9 time together, as you recall.

10 A. We did, indeed.

11 Q. So we've known each other for some time.

12 Where do you live, sir?

13 A. I live in Sevenoaks, south of London.

14 Q. Are you married?

15 A. I am.

16 Q. What's your wife do?

17 A. She's working with a couple of non-Government

18 organizations, one a think tank, and another, I guess

19 you'd call it a charity in the U.S.

20 Q. Do you have children?

21 A. I have a son of 20 who's at University,

22 finished his last second-year exam yesterday, and a --

23 a daughter of 16, who is -- as I'm going through this,

24 is doing French and Physics exams. So I probably got

25 the better part of the -- of the deal today.


802

1 Q. Of which country are you a citizen, sir?

2 A. I'm a citizen of the U.K.

3 Q. United Kingdom?

4 A. Correct.

5 Q. What is your educational background?

6 A. I have a B.S.C. in Geology from the University

7 of Birmingham and a Ph.D. in Geology from the

8 University of Edinburgh.

9 Q. The -- I -- I think I have a layman's

10 understanding of what a Geologist does, but what --

11 what does a Geologist in the petroleum industry do?

12 What --

13 A. Tells drillers where to drill.

14 Q. I see. Is that what you did the first couple

15 of years in your job?

16 A. For the first almost ten years, I was -- I was

17 trying to identify which basins were going to have

18 hydrocarbons in them or trying to determine within a

19 basin where was the best place to drill to find

20 hydrocarbons.

21 Q. And what, just in a few minutes, if you could,

22 tell us from the time you started working for BP or a

23 Heritage B key -- BP company, through today, what your

24 jobs basically entailed.

25 A. I began my career as a rig Geologist in the


803

1 North Sea, working a week offshore and a week in the

2 office over a couple of years. And then I moved to

3 Paris and then China for a couple of years and then

4 back to Scotland. And then I had a brief period in

5 London for about a year, as we discussed on Monday, in

6 the role of an Executive Assistant.

7 And then after that, I went to Colombia for

8 about four years, where my daughter was born, and then

9 to Venezuela. And then I returned to London in '97,

10 held a couple of roles in Exploration and Production,

11 and then became the Group Treasurer in 2000, the CEO of

12 Exploration and Production in 2003, and the Group CEO

13 in 2007.

14 Q. Are you appearing here voluntarily today?

15 A. I am.

16 Q. Are you currently a private citizen; that is,

17 someone not working for BP or BP PLC?


19 Q. All right. Let's -- I'd like to begin by

20 discussing with you the oil spill response. And I'll

21 discuss subsea containment secondly, but I'd like to

22 get your perspective on the oil spill response; that

23 is, from the time you learned that there had been an

24 explosion on the rig, to the -- whatever you did or did

25 not do with respect to responding to the spill, okay?


804

1 A. (Nodding.)

2 Q. You testified on Monday that you learned of

3 the rig explosion in the early morning of April 21st,

4 London time. Do you recall that?


6 Q. And after you learned of the explosion, when

7 did you decide to go to Houston?

8 A. I decided to go to Houston about two days

9 later, after the rig -- as the rig was sinking, in

10 fact.

11 Q. And when you went to Houston, for what purpose

12 did you go to Houston after -- you know, two days

13 later?

14 A. To -- to lead the response to what -- what was

15 clear at that time was going to be a very serious -- a

16 seri -- a serious accident, or had been a serious

17 accident.

18 Q. In general terms, when you first went to

19 Houston, what -- what did you do in terms of either

20 organizing or to lead the response?

21 A. Well, really, two things. One, to ensure that

22 we had launched the -- to the best of our ability, the

23 maximum surface response to the spill, to make certain

24 that everyone understood that no resources were to be

25 spared, the full power and resources of BP were at the


805

1 disposal of those responding.

2 And then secondly, to -- with the -- with the

3 Subsea Technical Team, to conceive a plan of

4 intervention to plug the well.

5 Q. All right. Turn to -- I've handed you a

6 notebook, I think you have before you. Turn to Tab 1,

7 please. Do you have that?

8 A. I do.

9 MR. GODFREY: And, Kym, what's the next

10 exhibit number that we'll apply to this?




14 Q. (By Mr. Godfrey) Placed before you,

15 Dr. Hayward, is Exhibit 6073, which is a press release

16 dated April the 22nd, 2010, entitled "BP INITIATES

17 RESPONSE TO GULF OF MEXICO OIL SPILL." Do you see

18 that?

19 A. I do.

20 Q. Have you seen this document before?

21 A. I certainly saw it at the time that it was put

22 out, I'm sure.

23 Q. Looking at this document, does this document

24 refresh your recollection as to the nature of what BP's

25 response had been to the spill as of April 22nd, 2010,


806

1 which is the day that the -- the rig tragically sank

2 and two days after this -- this accident, this

3 casualty? What was the nature -- if you can summarize

4 BP's response as of April 22nd, 2010, in terms of the

5 oil spill?

6 A. By that time we had mobilized a flotilla of

7 vessels, 32 spill response vessels, including large

8 storage barges, skimming capacity of 170,000 barrels a

9 day. Storage capacity offshore of 120,000 barrels a

10 day, with a further 175 on its way. The supply of more

11 than a hundred-thousand gallons of dispersant and --

12 and four aircraft to -- to -- to deploy. We had on --

13 on location 500,000 feet of boom, and it was expected

14 to increase to a million feet of boom by the end of the

15 day.

16 Q. Now, the -- the Transocean rig, the DEEPWATER

17 HORIZON, it had diesel fuel on it, right?

18 A. It did.

19 Q. Did Transocean mount any type of oil pollution

20 response, to your knowledge?

21 A. Not to my knowledge, no.

22 Q. All right. Let's go to the next document

23 which is in the book. It's Tab 2, please.

24 MR. GODFREY: And, Kym, we'd like to mark

25 this as Exhibit 6074.


807

1 THE COURT REPORTER: (Nodding.)


3 Q. (By Mr. Godfrey) Do you have that,

4 Dr. Hayward?

5 A. I do.

6 Q. This document is dated April 25th, 2010, and,

7 again, it -- it summarizes -- if you take a look at it,

8 it summarizes the then state of the BP response to the

9 oil spill. Do you see that?

10 A. I do.

11 Q. First of all, the second page of the document

12 refers to the Marine Spill Response Corporation. Are

13 you familiar with that corporation?

14 A. I am.

15 Q. What is the Marine Spill Response Corporation?

16 A. It's the not-for-profit organization that was

17 established by the oil industry post EXXON VALDEZ to

18 deal with oil spills at sea, in the marine environment.

19 Q. Is BP the only company that uses the Oil Spill

20 Response Corporation?

21 A. The entire industry uses the Oil Spill

22 Response Corporation, and all of our major peers and

23 competitors are partners in the Oil Spill Response

24 Cor -- Corporation.

25 Q. Now, it refers here in this document which


808

1 we've marked as Exhibit 6074 that -- it quotes the CEO

2 and President of the Marine Spill Response Corporation

3 of saying that it had worked for many years with BP on

4 drills and exercises. Do you see that?


6 Q. Can you give us a general sense of the types

7 of drills and exercises, if you know, that BP had

8 worked on previous to this -- this tragedy on April 20

9 and 22nd, with the Oil Spill Response Corporation --

10 Marine Spill Response Corporation?

11 A. We, on regular -- on a regular occurrence,

12 mounted both desktop and actual physical response

13 practices, in essence, whereby we would deploy the --

14 the equipment in -- in -- in essential training

15 exercises.

16 Q. If you turn to the first page of Exhibit 6074,

17 which is Tab 2 in the notebook, can you summarize for

18 us, for the Judge or Jury, if there's ever a Jury in

19 the case, what was the nature or scope of BP's response

20 to the oil spill as of April 25th, 2010, five days

21 after the -- the explosion and three days after the

22 sinking of the rig?

23 A. In the -- in the subsea, we were assisting

24 Transocean on the blowout preventer. We were preparing

25 to drill relief wells, was -- the first drilling rig


809

1 was moving into position, and the second drilling rig

2 was -- was on its way. And we had a very significant

3 response on the surface, 30 stoo -- 32 spill response

4 vessels, skimmers, tugs, barges, and recovery vessels,

5 five aircraft, and 100,000 gallons of dispersant, which

6 at the time was a third of the world's available

7 dispersant.

8 Q. It refers here in the last paragraph, on the

9 first page of Exhibit 6074, to Houma, Louisiana, with

10 field operations of about 500 people. What is that

11 referring to, if you know?

12 A. The surface response was coordinated out of a

13 number of centers. Robert was the basis for the

14 Unified Command. Houma was the operational base

15 essentially for Louisiana. There was one in -- in

16 Mobile for Alabama, and Pensacola, ultimately, for

17 Florida. And this is the 500 people that have been

18 assembled in Houma to coordinate the oil spill

19 response.

20 Q. Turn to Tab 3, please, sir.

21 MR. GODFREY: Kym, we'll mark this, if

22 it's agreeable to you, as Exhibit 6075.


24 Q. (By Mr. Godfrey) This is a document dated May

25 the 5th, 2010, "Update on Gulf of Mexico Oil Spill


810

1 Response." I assume you've seen this document before,

2 sir?

3 A. Yeah. I saw it at the time it was released,

4 I'm pretty certain.

5 Q. All right. So it refers here on May 5th, 2010

6 to something which I think you discussed earlier this

7 morning. I don't recall whether it was with Attorney

8 General Strange or with the counsel for The state of

9 Louisiana, Mr. Kanner -- the 25 million block grants to

10 each of the States of Louisiana, Alabama, Mississippi,

11 and Florida. Do you see that?

12 A. I do.

13 Q. What's the background -- or what was the

14 reason for why BP gave $25 million in block grants to

15 each of the States of Louisiana, Alabama, Mississippi,

16 and Florida on or before May the 5th, 2010?

17 A. The -- the foundation stone to the oil

18 still -- oil spill response for any of the States was

19 something that was referred to as Area Contingency

20 Plan. And we wanted to be absolutely certain that

21 resources -- that is to say, financial resources --

22 were not in any way getting in the way of the rapid and

23 effective deployment of the Area Contingency Plans.

24 Q. Did -- as of this date, did Transocean, the

25 owner of the drilling rig DEEPWATER HORIZON -- had it


811

1 given the States of Louisiana, Alabama, Mississippi, or

2 Florida any money whatsoever to assist them in response

3 to the spill?

4 A. As of this date, BP was unique in responding

5 in any shape or form, and certainly --

6 Q. As --

7 A. -- in terms of providing grants to States.

8 Q. As of the time that you left BP as the CEO of

9 BP PLC, had you heard of Transocean giving any money of

10 any type to the people of the State of Louisiana or

11 Alabama, Mississippi, or Florida or to the Governments

12 of those States, for that matter?


14 Q. All right. What about Anadarko? Had they

15 given any money, as a co-owner -- or co-operator of the

16 well, I should say, 25 percent co-operator -- or

17 co-owner of the well. Had Anadarko given any money, as

18 of the time you left as CEO from BP PLC, to any of the

19 States of the Gulf Coast?

20 MS. HERTZ: Object to the form.

21 A. To my knowledge, Anadarko had not given any

22 money.

23 Q. (By Mr. Godfrey) Turn to Page -- Tab No. 4,

24 please --

25 MR. GODFREY: -- which, Kym, we'll mark


812

1 as Exhibit 6076, if that's agreeable.


3 Q. (By Mr. Godfrey) This is a document dated May

4 the 6th, 2010. Do you have that, sir?

5 A. I do.

6 Q. I assume you saw this on or about the date of

7 May 6th, 2010?

8 A. Correct.

9 Q. As of May 6th, 2010, does -- does Document

10 6076 -- does it summarize the -- the general nature of

11 BP's response to the -- to the oil spill?

12 A. Yes. Particularly, I think, in terms of

13 people.

14 Q. All right. Can you --

15 A. This says more than 11,000 people have

16 volunteered and more than 4,000 have already received

17 training.

18 Q. All right. Can you summarize with this

19 document, or based on your recollection as refreshed by

20 this doculet -- document, what the state of BP's

21 response had been as of May 6th, 2010 to the oil spill

22 in the Gulf of Mexico?

23 A. We had thrown everything at the response. We

24 had over 10,000 people, of which nearly half had been

25 trained. We had deployed boom to protect over a


813

1 hundred miles of shoreline. And on this day, it says

2 here -- I clearly would not remember this, but we had

3 carried out 12 flights over the spill and delivered

4 4 -- 34,000 gallons of dispersant, in addition to

5 conducting in situ burning of oil on the surface.

6 Q. Did, to your knowledge, Anadarko ever deploy

7 boom or pay for -- let's just strike that.

8 What -- tell us what "boom" is, just so we're

9 clear on the record.

10 A. "Boom" is floating plastic baffles which are

11 used to prevent oil from contacting the shore in the

12 near-shore environment.

13 Q. To your knowledge or the best of your

14 knowledge, did Anadarko ever deploy bloom to try to --

15 booms to try to protect the environment from the oil

16 spill?

17 MS. HERTZ: Object to form.

18 A. No.

19 Q. (By Mr. Godfrey) Did Transocean ever deploy

20 booms to try to protect the environment or the

21 shoreline from the oil spill?

22 A. They did not.

23 Q. Turn to Tab 5, please --

24 MR. GODFREY: -- which we'll mark, Kym,

25 as Exhibit 6077.


814


2 Q. (By Mr. Godfrey) This is dated July the 28th,

3 2010, it's another two-page document ending in Bates

4 stamp Nos. 445 and 446.

5 Do you recall -- if -- if you would take a

6 moment to look at this document, sir, and refresh your

7 recollection, and I'll have some questions about the

8 total commitment that BP made in its actions up through

9 July the 28th, okay?

10 A. (Nodding.)

11 Q. Now, on July the 28th, the oil was no longer

12 flowing out of the Macondo Well. Is that -- is that

13 your understanding?

14 A. That's correct. That's correct.

15 Q. As of the end of the oil flowing out of the

16 Macondo Well in July 2010, what steps or what had been

17 the nature of BP's response to cleaning the spill?

18 A. We had deployed almost 4 million feet of boom,

19 we had 7,000 boats and 125 aircraft in the sky, and

20 4,700 people engaged in cleanup operations.

21 Q. How much oil had you recovered from the water?

22 A. We had recovered almost 35 million gallons of

23 oil and water, using skimmers. And they captured

24 826,000 barrels of oil. We'd estimated that we'd

25 succeeded in burning off at the surface around


815

1 11 million gallons.

2 Q. Now, it refers in Document 6077, Exhibit 6077,

3 to compensating residents and businesses for losses.

4 Do you see that?

5 A. I do.

6 Q. And as of this time, July the 28th, 2010,

7 approximately how much had BP spent to compensate

8 individuals and businesses for claimed losses resulting

9 from the spill?

10 A. We had disbursed $256 million to more than

11 125,000 people. We established a claims structure with

12 37 field offices, 17 of them had foreign language

13 capability to recognize the large number of,

14 Vietnamese-speaking in particular, fishermen. And --

15 Q. How many people were working to pay claims

16 that were being made to BP under the --

17 A. There were --

18 Q. -- Oil Pollution Act?

19 A. I'm sorry. There were 1,550 people working on

20 pay claims, process claims in this facility.

21 Q. And turn to the next page, sir. I'd like to

22 ask you about these, these other comments about

23 supporting the Gulf Region, if I could. It says, on

24 the second page of Exhibit 6077, that the 555 million

25 in grants have been given by BP to Louisiana,


816

1 Mississippi, Alabama, and Florida.

2 Do you see that?


4 Q. Actually, it says the Governments of those

5 States.

6 A. (Nodding.)

7 Q. What were the nature of the grants that were

8 given by BP that total $555 million as of July

9 the 28th, 2010, from BP to those four State

10 Governments?

11 A. There was a $25 million grant as I -- as we've

12 discussed to implement the Area Contingency Plans, and

13 we added a further $25 million in the case of Florida

14 given their length of the shoreline. We had made

15 $70 million available for state tourism and promotion,

16 and we had set up a $360 million escrow account for the

17 construction of berms in Louisiana.

18 Q. Is that for the barrier islands?


20 Q. What about it then has another section here,

21 this document which is marked as Exhibit 6077,

22 referring to restoring the environment.

23 Do you see that?

24 A. I do.

25 Q. What does that refer to, sir?


817

1 A. We had established a research fund to study

2 the impact of the -- the spill and the response to the

3 spill and were already taking very comprehensive

4 samples. It says here three and a half thousand, 3,600

5 water samples analyzed with 300 water testing stations

6 along the Gulf Coast.

7 Q. As far as you know, has any other corporation

8 ever mounted such a response as quickly or as -- with

9 the size of the massivity of the resources to an oil

10 spill or to an environmental event that B -- than BP?

11 A. I don't think any other corporation has

12 mounted a response of the scale and int -- and

13 intensity that BP mounted last Summer.

14 Q. Did BP set up a compensation fund for persons

15 who had claims, legitimate claims under Federal law?

16 A. We established a compensation fund. We made

17 very early -- said early on that we would not stand

18 behind the hundred million dollar cap.

19 Q. Is that the OPA cap you're referring to?

20 A. The OPA cap.

21 And in the course of the Summer, we

22 transitioned that fund to an independent ind -- an --

23 an -- an individual who was independent to administer

24 the fund.

25 Q. Who was that?


818

1 DEFENSE COUNSEL: Object to form.

2 A. That was --

3 Q. (By Mr. Godfrey) Who was that individual?

4 A. That was Ken Feinberg.

5 Q. Did -- and what was the size of the

6 compensation fund that BP established last Summer, in

7 the Summer of 2010?

8 A. The -- the fund that we finally agreed to

9 establish was $20 billion.

10 Q. When you say "you finally agreed to establish

11 the fund," with whom did BP agree to establish the $20

12 billion fund?

13 A. We -- we agreed to the -- the fund with the

14 White House, with President Obama and his

15 Administration.

16 Q. I see. Has, to your knowledge, Transocean

17 established a compensation fund?


19 Q. Has Transocean, to your knowledge, spent any

20 money to clean up the environment, the pollution?


22 Q. To your knowledge, has Transocean spent any

23 money to prevent the oil from spreading in the Gulf?


25 Q. To your knowledge, has Anadarko spent any


819

1 money to prevent the oil from spreading in the Gulf?


3 Q. To your knowledge, has Anadarko set up a

4 compensation fund for persons claiming losses under

5 OPA?

6 MS. HERTZ: Objection, form.


8 Q. (By Mr. Godfrey) Has Halliburton set up a

9 compensation fund for people claiming losses under OPA?


11 A. Not to -- not to my knowledge.

12 Q. (By Mr. Godfrey) Do you know whether or not

13 Halliburton spent any money to clean up or restore the

14 environment of the Gulf?



17 Q. (By Mr. Godfrey) Now, the United States

18 Government, it spent a certain amount of money in

19 connection with the oil spill as far as you know,

20 right?

21 A. Correct.

22 Q. Did the United States Government -- strike

23 that.

24 Do you know whether or not the United States

25 Government billed BP for its oil spill response costs?


820

1 A. BP was billed for all of the Coast Guard

2 response to the oil spill and all of the other agency

3 responses to the oil spill.

4 Q. Do you know whether or not, based on your

5 knowledge, whether or not BP paid or reimbursed the

6 United States Government for its response costs?

7 A. To my knowledge, they did.

8 Q. Thank you.

9 A. To my belief.

10 Q. Let's -- let's change topics then.

11 We've discussed part of what BP did, which was

12 the response to the spill. Now, let's discuss the

13 subsea containment efforts.

14 A. M-h'm.

15 Q. Just, basically, what is a "subsea containment

16 effort"?

17 A. It was the interventions that we were making

18 on the well to try and stop flow through -- stop the

19 flow of the oil into the Gulf prior to having the

20 relief valves in place, and those interventions --

21 those containment efforts took various forms.

22 Q. Were you involved, at least in a general sense

23 or some -- strike that.

24 What was your involvement, generally speaking,

25 in the intervention efforts, the subsea containment


821

1 efforts?

2 A. Well, my involvement was in determining, I

3 suppose, the strategy of the intervention. So we

4 agreed very early on, in the first two or three days,

5 the way we would approach it is to pursue multiple

6 potential options to intervene in parallel, to engineer

7 them, to resource them, and to make them available in

8 the fastest possible time, and to deploy them in the

9 time sequence which was driven by their availability.

10 So the easiest engineering options were those

11 that were conducted first, and the more complex, more

12 difficult engineering options were those would clearly

13 take a longer time and were deployed later.

14 Q. What was the first intervention option, if you

15 recall?

16 A. The first intervention option was something

17 called a cofferdam which had been used successfully --

18 successfully by BP and the industry following Hurricane

19 Katrina and -- and later Rita to contain leaking wells

20 in shallow water, in water depths up to about 300 feet.

21 Q. Prior to the cofferdam, do you know whether or

22 not there were any efforts to activate the BOP using

23 ROVs?

24 A. There was a period of over two weeks where

25 efforts were made to activate the BOPs using ROVs.


822

1 Q. And what two -- two-week period was that, if

2 you recall, Dr. Hayward?

3 A. It was from immediately following the

4 accident. I think there are ROVs in the water whilst

5 the rig was still on fire on the surface. And then

6 they were -- once, obviously, when -- when the rig

7 sank, it was clearly a lot of turbulence in the water.

8 It became impossible to see anything, so we couldn't

9 use the ROVs for probably 12 hours. And soon as the

10 turbulence cleared, then the ROVs were on location,

11 working on the BOP, trying to get the BOP to close.

12 Q. And what was the -- how -- how -- can you

13 describe just briefly how the ROVs were trying to get

14 the BOP to close and for what purpose?

15 A. They were latching on to various valves on the

16 BOP to use hydraulic pressure to pump on the valves and

17 try and get one or other of the rams in the BOP to

18 shut.

19 Q. And why was the attempt being made to get one

20 or other of the rams in the BOPs to shut?

21 A. Because the well --

22 MR. BECK: Object to form.


24 A. The well was evidently flowing, and,

25 therefore, it meant that the BOP had not sealed the


823

1 well.

2 Q. (By Mr. Godfrey) What was the purpose, if you

3 know, of the ROV intervention with the BOP?

4 A. It was to close the BOP, to the seal the well.

5 Q. And if the ROV intervention with the BOP had

6 been successful, what would the result have been with

7 respect to the flowing well?

8 A. It would have shut the well in. It would have

9 stop flowing.

10 Q. Would it have stopped the oil spill?

11 A. It would have stopped the oil spill.

12 Q. Was there any discussion at any point in time

13 about drilling relief wells?

14 A. The relief wells were -- the first relief well

15 was initiated within a couple of days of the -- the

16 accident, and the second relief well was initiated

17 within a couple of weeks of the accident.

18 Q. And were these -- describe briefly, if you

19 can, how -- what it is to drill a relief well. What

20 does that mean --

21 A. It's to drill --

22 Q. -- in layman's term?

23 A. Is to drill a well to -- to intersect the well

24 that was leaking the while it was blowing out in such a

25 way that you can plug the well and seal it off. So, in


824

1 essence, we had a -- if can you imagine a well in the

2 middle, two relief wells targeting it from either side.

3 Q. During this period of time -- that is, between

4 April 22nd and the time cofferdam was -- was used or

5 implemented -- were you dealing at all with anyone from

6 the United States Government?

7 A. I was dealing some days every hour with

8 someone from the United States Government. My

9 principal contact after the first four or five days was

10 Thad Allen, who was ultimately appointed as the

11 incident -- Incident Commander for the -- for the

12 accident and the response, and he and I talked many

13 times most days.

14 Q. What was the role of the Incident Commander in

15 the subsea containment efforts that BP was engaged in?

16 A. He was the ultimate decisionmaker. We would

17 recommend to the Commander the interventions that we

18 were intending to make, and he -- we needed his

19 approval before we could go ahead.

20 Q. Cofferdam -- did the cofferdam work?

21 A. The cofferdam didn't work. It was -- it

22 wasn't a surprise it didn't work. It was, of course, a

23 great shame that it didn't, but it was accepted by many

24 people, not everyone but many -- many people, including

25 myself, thought that the likelihood of success was low,


825

1 but it was worth trying because it was -- it was

2 available and could be deployed.

3 Q. Approximately when did cofferdam not work?

4 About what date?

5 A. To my recollection, it was sometime in the

6 early, middle part of the 9th.

7 Q. What was -- I'm sorry.

8 A. It was the 8th or 9th of May, I think,

9 something like that. I'm not sure.

10 Q. Do you know some -- what -- what's something

11 called a RIT insertion tool is?

12 A. That's something called the riser insertion

13 tool, which was designed to be inserted into the riser.

14 The configuration on the seabed was a -- a wellhead

15 with a 5,000 feet of riser trawled around the seafloor

16 like a piece of spaghetti, and the oil was leaking from

17 the end of the riser. And we designed something that

18 we could stick into the end of the riser in an attempt

19 to produce the oil and gas to surface.

20 Q. Was that -- was the RIT used?

21 A. It was used for a period of several weeks.

22 I --

23 Q. Was it able to stop the well from flowing?

24 A. It was able to produce oil and gas to surface

25 in variable volumes.


826

1 Q. After the riser insertion tool, what was the

2 next attempt that BP engaged in, if you recall, to shut

3 the well in?

4 A. The next effort was something that we referred

5 to as a top hat, which is -- was simply like an

6 inverted cup, really, that was put over the -- the leak

7 and allowed us to produce oil and gas to surface. And

8 if I remember, we -- we designed and built around ten

9 of those various dimensions, shapes, and sizes.

10 Ultimately I think only used one of them.

11 Q. Was the top hat able to stop the oil from

12 flowing or just collect some of the oil coming out of

13 the pipe?

14 A. It was not able to -- it was neither able nor

15 designed to stop the well from flowing. It was

16 designed to contain -- produce oil to surface to the

17 greatest extent possible.

18 Q. Who was designing or working on all these --

19 these -- the riser insertion tool and the cofferdam and

20 the top hat, who -- who was working on these things in

21 Houston?

22 A. It was a -- a Multidiscipline Engineering Team

23 lead by BP with input from various contractors, various

24 others from -- from engineering and science input. And

25 it was being engineered and built on a sort of 24-hour


827

1 basis.

2 Q. What was top kill or -- and junk shot?

3 A. The top kill and then junk shot was an attempt

4 to stop the flow of the well by pumping heavy mud at

5 high rates into the well to stop the flow. When that

6 was not successful, what we tried to do was to bridge

7 the flow through the blowout preventer by pumping

8 various materials, which the drillers refer to as

9 "junk," into the blowout preventer to try and create an

10 impediment to the flow path of the hydrocarbons. If we

11 could do that, then we would have a reduced flow rate,

12 and we could perhaps use the top kill to kill the well.

13 Q. Did junk shot or top kill work to kill the

14 well?

15 A. I'm afraid they didn't.

16 Q. What was the reaction among the Engineering

17 Team down in Houston when they -- the -- were you --

18 first of all, were you in Houston at the time --

19 A. I was.

20 Q. -- of the top kill and junk shot?

21 A. When we did the top kill, it was -- it was

22 analogous to a moon shot. There was a -- it was a

23 control room with a very similar set of displays and

24 screens. A large number of Engineers intensely focused

25 on executing the operation. And when it became evident


828

1 that it had failed, many of them were in tears,

2 actually. It was a very emotional time.

3 Q. When you say "a moon shot," have you by any

4 chance seen the movie Apollo 13?

5 A. I have.

6 Q. The Crisis Command Center, when you compare

7 that to the what I think -- many people in the United

8 States have seen the movie -- what it was -- what it

9 was like compared to the Crisis Command Center for the

10 NASA event in 1970 or '69 versus the event last Summer

11 in Houston?

12 A. It was very analogous in terms of the -- the

13 structure, the display, the intensity of the effort,

14 the commitment of people. I think I wasn't, of course,

15 part of the -- I only saw the film, but if the film was

16 an accurate -- accurate portrayal, then what was going

17 on on the third floor in West Lake in Houston was very

18 comparable to what was shown in the Apollo 13 movie.

19 Q. How many Engineers came to Houston to try

20 to -- try to work on this shutting in the well?

21 A. We had a team of more than a thousand

22 Engineers and Scientists from -- from BP, from across

23 the industry, and from all of the major science and

24 engineering institutes in the United States.

25 Q. When you say from "across the industry," did


829

1 you have Engineers there from Exxon?

2 A. I think we had Engineers from Exxon, from

3 Chevron, from Shell, from Conoco, from Total, from many

4 of our major contractors.

5 Q. Did anyone from Exxon say, "Hey, we've got

6 we've got a -- we've got a cofferdam or a top hat or a

7 riser insertion tool. Just borrow ours"?

8 A. They didn't, because, of course, they didn't

9 have them.

10 Q. Did Exxon have any equipment available to

11 offer to BP for any price that would have shut this

12 well in before BP shut it in?


14 MR. ROBERTS: Objection to form.

15 A. They did not.

16 Q. (By Mr. Godfrey) How do you know that?

17 A. Because we asked them.

18 Q. Did Shell or Chevron or ConocoPhillips have

19 any equipment of any type available for any price to

20 shut well in before BP did it?


22 A. There was no one in the industry who had

23 anything that we hadn't already acquired.

24 Q. (By Mr. Godfrey) Did you ask them?

25 A. We asked them.


830

1 Q. How was the well eventually shut in, sir?

2 A. The well was eventually shut in with a --

3 something that we refer to as a capping stack, which is

4 a -- in essence, a very large valve that was designed

5 and engineered and -- and built and machined, was

6 lowered onto the wellhead once it had been cleared of

7 the debris, and it had a valving system on it that

8 allowed us to progressively shut separate valves and

9 ultimately to stop the flow.

10 Q. Once the flow was stopped using the capping

11 stack, were there any discussions with anyone about

12 whether that was something that should have been done?

13 A. There was a very intense dialogue ongoing

14 between BP and the Government in the buildup to putting

15 the capping stack on the well and for probably two or

16 three weeks after the capping stack was put in place.

17 There -- there was a strongly held view in

18 Government -- in the Government in the -- amongst

19 the -- some of their technical people that closing the

20 capping stack would cause the well casing to fail, and

21 we would get a breach of the well in the subsurface.

22 BP's view of that was that we could measure

23 very clearly what was going on in the well. If there

24 was any indication of that, we would know it from our

25 measurement, and we'd be able to take the appropriate


831

1 action. The --

2 MR. ROBERTS: Objection, for --

3 A. The --

4 MR. ROBERTS: Whoops.

5 A. -- the outcome, of course, was that the well

6 did have integrity. It became clear within 24 hours of

7 putting the capping stack on that -- certainly to the

8 BP Engineers, that the well had integrity. We had what

9 is referred to as a pressure buildup chart, which

10 followed a completely normal pressure buildup

11 trajectory. And it was clear to BP that the well had

12 integrity, the casing had integrity, and that there was

13 no breach or flow into the subsurface.

14 It took us some time to convince the

15 Government that that was the case.


17 Q. (By Mr. Godfrey) What was the Government's

18 position as expressed to you with respect to the use of

19 the capping stack?

20 A. The Government didn't want us to put the

21 capping stack on in the first instance and then wanted

22 us to remove it shortly after we put it on.

23 Q. After the well stopped flowing, did the

24 Government of the United States ask you to consider

25 removing the capping stack to let the oil flow back


832

1 into the Gulf?

2 A. They did.

3 Q. And what did you say?

4 A. I said I thought we had sufficient data to

5 give us comfort that that was not -- there was not an

6 issue with the well and that we should keep the capping

7 stack on. And at the end of the day, the view of the

8 BP Team and myself prevailed.

9 Q. One more question: You referred to all these

10 vessels on the surface. Do you recall that?

11 A. I do.

12 Q. How many vessels were around relief wells that

13 were being drilled and on the surface in the immediate

14 vicinity, do you know?

15 A. There was of the order of 20 or 30 in very

16 close proximity. It was, perhaps, akin to -- I heard

17 someone describe it as a -- a sea of skyscrapers, all

18 floating around and being held in position and not

19 interfering with each other. It was a very complex

20 operation to manage the simultaneous operations on the

21 surface.

22 Q. Had anyone seen that before? Have you ever

23 seen that before?

24 A. I don't think it had ever been done in the

25 industry.


833

1 Q. Okay. Let's change topics. I'd like to

2 discuss a few -- a few topics -- a few questions about

3 flow rate.

4 Do you recall being asked some questions last

5 Monday by Mr. Underhill from the United States about

6 flow rate estimates? Do you recall that?

7 A. I do.

8 Q. And do you recall saying in answer to one of

9 his questions that there was no credible way at the

10 time to measure flow rate, do you recall that?

11 A. I do.

12 Q. Can you explain what you meant by that, that

13 there's no credible way during --

14 A. What --

15 Q. -- the crisis to measure flow rate?

16 A. Well, what I meant was that to measure flow

17 rate you either need a -- a -- a dial, a measurement of

18 the flow, or you need some engineering-based assessment

19 of flow. What -- what we had was a videotape of a

20 plume of oil and gas emerging from the end of a riser

21 with no way of calibrating how much was oil and how

22 much was gas. We had no way of knowing what the --

23 what the real flow path was from the reservoir through

24 three and a half miles of casing, through a damaged

25 blowout preventer, and then along 5,000 feet of riser


834

1 to the end of the riser. And we weren't -- we -- we

2 had no real knowledge of what the -- what reservoir

3 section was actually flowing. So if you took all of

4 those things together, it was very difficult to come up

5 with any form of credible estimate as to what the flow

6 rate was.

7 And -- and as I think I said on Monday, I

8 wasn't focused on the flow rate because it wasn't

9 changing anything that we did with respect to the

10 surface response or the subsea response.

11 Q. Do you also re -- remember being asked some

12 questions by Mr. Sterbcow about top kill?

13 A. I do.

14 Q. And do you recall being asked whether the

15 failure of the top kill operations showed that the well

16 was flowing more than 18,000 barrels at the time, and

17 you -- do you recall that question?

18 A. I do. And that was certainly one of the

19 reasons it could have failed. It wasn't the re -- the

20 view favored by the Government Scientists working with

21 us. The favorite reason for the failure of the top

22 kill was that the casing was damaged, and we had pumped

23 mud into the well, and then out of the casing into the

24 formation.

25 So, you know, whilst it -- it could have been


835

1 an indication of flow rate, it could also have been an

2 indication of many other things. And, as I say, the --

3 the view that was most favored by the Government

4 Scientists was that it was a -- the casing was -- was

5 broke, breached.

6 Q. I'm going to switch topics again. I'm going

7 to ask you a few questions following up with some

8 questions that Mr. Godwin asked you earlier today.

9 Do you recall Mr. Godwin stating to you his

10 view of what BP Engineer Greg Walz had testified to

11 earlier?

12 A. I can barely recall it, I'm afraid.

13 Q. That's fair enough. It's been a long two

14 days, I understand.

15 First, have you ever seen the Halliburton

16 written Job Recommendations sent on the night of April

17 the 18th, 2010 to BP's Engineers about pouring this

18 cement job?

19 A. I --

20 MR. GODWIN: Objection to form.

21 A. I have seen none of the Halliburton Reports.

22 Q. (By Mr. Godfrey) Have you seen any post-Job

23 Reports sent on April 20, April 23rd, or May 3rd from

24 Halliburton about the success of the cement job that

25 was poured?


836

1 A. I have not.

2 Q. If Halliburton had an Engineer or Engineers

3 who thought that the cement job that they were pouring

4 was dangerous, did -- would you, as the CEO of BP,

5 expect them to call a halt and not pour the cement?


7 A. I would certainly hope that they would,

8 particularly given that there were clearly Halliburton

9 people involved in running the operation.

10 Q. (By Mr. Godfrey) You mean on the rig?

11 A. On the rig.

12 Q. Okay. You don't think Halliburton Engineers

13 would knowingly endanger their own people on the rig,

14 do you?


16 A. I don't believe they would knowingly endanger

17 either their own people or other people.

18 Q. (By Mr. Godfrey) Okay. Let's talk about

19 safety. You became CEO when?

20 A. In 2000 -- early 2007.

21 Q. All right. I'd like you to turn to Tab 7,

22 please, which is a document we've given Exhibit

23 No. 6078 to.

24 MR. GODFREY: Kym? Thank you.

25 THE COURT REPORTER: 6078?


837

1 MR. GODFREY: Yes.



4 Q. (By Mr. Godfrey) It's entitled "BP

5 Sustainability Review." It's dated March 2009. Do you

6 have that?

7 A. I do.

8 Q. What is a Sustainability Review, if you know?

9 A. It's the nonfinancial report on BP, which --

10 which is produced every year, so it covers Safety,

11 Environment, Government affairs, expectations of

12 society, all of the nonfinancial reporting that a

13 company is doing in the 21st Century.

14 Q. And does B -- has BP produced -- or did BP

15 produce a Sustainability Review each of the three years

16 that you were CEO?

17 A. They did.

18 Q. All right. And did the Sustainabil -- what

19 were -- what were you reporting in the Sustainability

20 Review? What was the purpose of it?

21 A. It was to report on our environmental

22 performance, our health performance, our safety

23 performance, our societal performance, what we were

24 doing with respect to community relations, what we were

25 doing with respect to developing our own people.


838

1 It's -- it's all of the things that you need to do to

2 be a successful company that goes above and beyond

3 financial reporting.

4 Q. If you turn to the page that's Bates-stamped

5 No. 50 -- 570, it's the third page in, please. You see

6 the first question which says, "With so much of your

7 focus on improving BP's performance, does this mean

8 that the environment and your other sustainability

9 commitments to shareholders are less important?"

10 Do you see that question?

11 A. I do.

12 Q. And what was your answer with respect to

13 safety, if you can find it in that answer?

14 A. Well, I first mentioned safety when I say we

15 measure our performance not only with financial

16 notices, but also with data on safety, the environments

17 and employees.

18 Q. What -- what was the next sentence of your

19 answer?

20 A. "This reflects my top three priorities as

21 chief executive: safety, people and performance."

22 Q. And when you came Chief Executive, did you --

23 in light of those three priorities, what did you do to

24 focus on safety, if you recall?

25 A. I did an enormous amount, actually. Firstly,


839

1 of course, I made it clear it was -- it was the

2 priority, and it set the agenda. But over and above

3 that, we created management processes at the top of the

4 company, to measure and monitor and intervene in our

5 safety performance.

6 The Group Operating Risk Committee was one

7 such system. We began the implementation of the

8 Operating Management System, which we've talked at

9 length about in this deposition. We created new

10 standards for -- to govern the integrity of our

11 operations, new standards to govern the control of work

12 in our operations, so-called Integrity Management

13 Standard and Control of Work Standard.

14 We recruited extensively into our operations

15 to ensure that we had the right people with the right

16 skills doing the right things. We recruited

17 extensively into the Safety Leadership of the company

18 from places which had a reputation for good safety,

19 such as the nuclear industry such as DuPont, and areas

20 of the petrochemical industry.

21 Q. Who did you recruit from the nuclear industry?

22 A. We recruited the Head of Engineering of BP

23 now, a guy called John Baxter, who had, prior to

24 joining BP to set the engineering standards, had run

25 the Dounreay Nuclear Plant in Northern England.


840

1 Q. And the Group Operations Risk Committee that

2 you created, what is that?

3 A. It was the Committee that reviewed on a pretty

4 well monthly basis the safety performance of BP. In

5 much the same way as I would have a business review, we

6 had a review of safety with each one of the Chief

7 Executives of the different businesses.

8 So the Group Operations Risk Committee

9 comprised myself, the Head of E&P, Exploration &

10 Production, the Head of Refining and Marketing, the

11 Head of our Alternative Energy business, plus the right

12 sort of functional skills and capabilities. So Mark

13 Bly, the Head of Safety and Operations attended, John

14 Baxter, the Head of Engineering attended, and often

15 John Sieg, the man who was given the task of

16 implementing the Operating Management System across BP.

17 Q. And did John Sieg -- was he the person you

18 recruited from DuPont?


20 Q. What was the forward agenda?

21 A. The forward agenda was the agenda that I

22 created for BP. When I became the CEO, it had three

23 components. The first component was safe reliable

24 operations. The second component was people, having

25 the right people, the right skills in the right place.


841

1 And the third component was performance, ensuring that

2 we had good business performance.

3 Q. Now, several times you referred to on Monday

4 and then again a minute or so ago about recruiting

5 people. But you also were asked a number of questions

6 about whether or not you cut costs. Do you recall

7 that?

8 A. Yes.

9 Q. And several times you attempted to explain in

10 answers that you were cutting costs and cutting staff

11 above the operational level. Do you recall that?


13 Q. What do you mean when you're saying you're

14 cutting staff above the operational level?

15 A. We were cutting layers of management,

16 management in various Head Offices and Corporate

17 Centers around the world. So at the same time as we

18 were doing that, we were adding to the operations

19 staff. We recruited thousands of Engineers into the

20 operations at the same time as we reduced and

21 streamlined the -- the Head Office and the sort of

22 management oversight functions.

23 Q. What's SEEAC?

24 A. SEEAC is the Safety Environment Ethics

25 Assurance Committee. It's --


842

1 Q. Do you participate in SEEAC?

2 A. It's a Subcommittee of the main Board, and I

3 attended every SEEAC as -- not as a member of the

4 SEEAC, but as a participant in the meeting.

5 THE COURT REPORTER: Five minutes.

6 MR. GODFREY: Five minutes left total, or

7 five minutes left before the tape change?

8 THE WITNESS: Must be tape change.

9 THE COURT REPORTER: Five minutes before

10 the tape change.


12 THE VIDEOGRAPHER: You've got 20 minutes

13 left.

14 MR. GODFREY: Okay. I was going to say,

15 that's the fastest hour and 15 I've ever had.

16 Q. (By Mr. Godfrey) How many times a year does

17 SEEAC meet, if you recall, during the time that you

18 were CEO?

19 A. It was -- on a typical year, it would be

20 probably six times, that sort of number.

21 Q. I see. Do you know a man named Dwayne Wilson?

22 A. I do.

23 Q. Who is Dwayne Wilson?

24 A. He was the independent expert that we

25 appointed following the recommendation of the Baker


843

1 Panel.

2 Q. An independent expert to do what with --

3 A. To --

4 Q. -- respect to BP?

5 A. -- oversee the implementation of new --

6 oversee implementation of a renewed focus on safety in

7 our U.S. refineries. So he was, in essence, to oversee

8 the implementation of the Baker Panel recommendations

9 in our U.S. refineries.

10 Q. How often did the GORC meet a year?

11 A. The GORC met around once a month.

12 Q. And what was the purpose of the GORC meetings?

13 A. The GORC meetings was to review the safety

14 performance, to review the progress we were making with

15 respect to implementation of OMS, to review the audits

16 that -- that the Safety Audit Group had conducted to

17 assess safety perfor -- performance broadly and in

18 detail, and to make interventions as necessary.

19 Q. Did you just have meetings with Business

20 Managers, or did you ever go out into the field?

21 A. I spent as much time as I sensibly could in

22 the operations. I would try and visit an operation at

23 least once a month. Typically I'd spend a day in the

24 operation and perhaps spend an hour with the Plant

25 Manager before visiting the plant, spend five or six


844

1 hours walking the plant, talking to the Operators,

2 understanding what their concerns were, understanding

3 how they were doing with their work systems and other

4 safety-related issues.

5 And then at the end of the -- at the end of

6 that time, I -- I'd sit with the Plant Manager and his

7 Team to review what it was I found. I tried to do that

8 at least once a month.

9 Q. What were the Engineering Technical Practices,

10 if you know?

11 A. They were the standards by which any

12 engineering activity in BP was required to take place.

13 Q. Was that a focus of yours in respect to

14 safety?

15 A. It was a focus of mine. It was under the

16 leadership of John Baxter, the person we'd recruited

17 from the nuclear industry. He was tasked to put in

18 place the right set of engineering standards across

19 BP's operations.

20 Q. You mentioned earlier today when you were --

21 in questioning Town Hall meetings. Did you have Town

22 Hall meetings ever devoted to safety?

23 A. I had Town Hall meetings in -- in some se --

24 some senses they -- some cases they were entirely

25 devoted to safety. In other cases, safety was a part


845

1 of the Town Hall agenda. It was always the first part

2 of the Town Hall agenda, if there were other things to

3 discuss.

4 MR. GODFREY: Would this be a convenient

5 time, Kym, to -- to stop?

6 THE COURT REPORTER: (Coughing) Sure,

7 before I die.

8 MR. GODFREY: Okay. We don't want that

9 to happen.

10 MR. WEBB: We want to avoid that.




14 MR. GODFREY: Ready. We're ready to

15 start, please. Thank you.



18 Q. (By Mr. Godfrey) Dr. Hayward, could you turn

19 to Tab No. 9 in the notebook I've placed before you,

20 please.

21 Do you have that, sir?

22 A. I do.

23 Q. What you have before you in Tab 9 is a copy of

24 Exhibit 6002 that was used with you the another day.

25 Do you see that?


846


2 Q. Now, the other day you were asked about one or

3 two pages in this document.


5 A. I do.

6 Q. Let's take a look at Page 3 of Exhibit 6002.

7 Do you recall being asked any questions by counsel for

8 the Plaintiffs the other day about Page 3?

9 A. I was not.

10 Q. What does Page 3 reflect in Exhibit 6002,

11 which is entitled, "Leading from the top," sir?

12 A. It shows BP's improving safety performance

13 over the last 20 years.

14 Q. I see. Including the last several years?

15 A. Including the last several years.

16 Q. Page 4, what is that title of Exhibit --

17 Page 4 of Exhibit 6002, what is that entitled?

18 A. H'm, actually it's entitled, "BP'S HSSE

19 performance."

20 Q. And what does that show, sir?

21 A. It shows recordable injuries falling over

22 time, the number of oil spills falling over time, the

23 number of fatalities falling over time, and the number

24 of major incidents falling over time.

25 Q. And, of course, the one tragic exception here


847

1 was 2005 where there's the Texas City, right?

2 A. Right.

3 Q. Go to Page 7 in Exhibit -- by the way, were

4 you asked any questions the other day by Plaintiffs'

5 counsel about Page 4?

6 A. I wasn't.

7 Q. Go to Page 7, please, of Exhibit 2000 -- 6002.

8 What is on Page 7 of this document? What's the title,

9 first of all, of Page 7? What's the title of it?

10 A. It's "Strategic model" for -- for safety and

11 risk.

12 Q. That's for BP?

13 A. For BP.

14 Q. And then, finally, sir, go to the last page,

15 the conclusion page, the summary page of Exhibit 6002,

16 which is Page 11.

17 Do you have that?

18 A. I do.

19 Q. Can you tell us what the summary points were

20 of this document and just read them into the record for

21 us, the first several of them, on Page 11 of

22 Exhibit 6002?

23 A. It's "...about getting the" basic -- "basics

24 right, consistently." It's "not just occupational

25 safety but also process safety." Delivering --


848

1 deliver -- pardon -- "developing and maintaining

2 integrated and consistently delivered systems and

3 processes which underpin learning and sharing; ensuring

4 risks are owned and managed locally, in a sustainable

5 way; developing well-trained, competent people and

6 teams who have Pride in what they do; creating and

7 sustaining a world class operating culture, supported

8 by a few clear and well-understood values and

9 behaviours and an environment of continuous performance

10 improvement... And most of all, it's about leadership."

11 Q. That's the entirety of what appears on that

12 Page 11, the summary of Exhibit 2000 -- 6002, right?


14 Q. Is there anything on that page about cutting

15 costs?

16 A. There's nothing about costs on this page.

17 Q. It's all about safety, right?

18 A. It is.

19 Q. Okay. If you turn, sir, to page -- to Tab

20 No. 14, do you have that, sir?

21 A. I do.

22 Q. Do you recognize Tab 14 as Exhibit 6018 marked

23 the other day?

24 A. I do.

25 Q. Now, Tab 14 is marked and shown to you as how


849

1 many pages in length, sir?

2 A. It's two or three with the cover.

3 Q. Right. Turn to Tab 15, which I'd like to mark

4 for the record as 6018A.

5 (Exhibit No. 6018A marked.)

6 Q. (By Mr. Godfrey) Have you seen this document

7 before, sir?

8 A. I haven't.

9 Q. Okay. Is the cover page or the second page of

10 Tab thousand -- strike that.

11 Is the first color page, Page 2 of Exhibit

12 6018, the same as 6018A?

13 A. It is.

14 Q. Go to Page 21 of Exhibit 6018 and compare that

15 to Page 21 of 6018-A. Are they the same?

16 A. They are.

17 Q. Go to the last page of Exhibit 6018 as shown

18 to you, which is marked as Page 25 of Exhibit 6018A.


20 A. I do.

21 Q. Is 6018 that you were shown the complete

22 document, or is it 6018A which is the complete

23 document?

24 A. 6018A is the complete document, and the first

25 document is three slides or three viewgraphs from a


850

1 53-page pack.

2 Q. All right. So let's look at 6018A, the

3 complete document. Turn to Page 17, please.

4 Do you have that?

5 A. I do, at 17.

6 Q. Yeah, 17. It says, "2010 Collective

7 Priorities Continued"?

8 A. It does.

9 Q. And what does it say with respect to

10 implementing OMS?

11 A. It says, "Implement OMS, close gaps 1Q."

12 Q. 1Q of 2010?

13 A. Yep.

14 Q. Turn to page to 20 of the document, please,

15 6018A. What's the title of Page 20?

16 A. "Drilling excellence, driving" -- "driving

17 consistency through standardization."

18 Q. Does it say anything on Page 20 about cutting

19 costs?

20 A. It says nothing about costs. It says about

21 equipment standardization, Engineering procedures

22 guides, and operating Engineering guidelines.

23 Q. I see. To understand the document, that is

24 Exhibits 6018 and 6018A, can you look at a couple of

25 pages, or should you read the entire document for


851

1 context?

2 A. I think it's important that you read the

3 entire document for context.

4 Q. Take a look at Page 38 of Exhibit 6018A. Do

5 you have that?

6 A. I do.

7 Q. It says at the top, "No. 1 in the Gulf of

8 Mexico." Do you see that?

9 A. I do.

10 Q. And what are some of the objectives listed on

11 the No. 1 in the Gulf of Mexico?

12 A. Top quartile HSE performance, largest

13 producer, well objectives are clearly achieved, rely --

14 reliability of wells, productivity of wells.

15 Q. And what is the big bullet at the top? Does

16 it say, "It's not just days or 10,000K or days

17 completion"?

18 A. It does.

19 Q. It refers to things like top quartile HSSE

20 performance and reliability, among other things, right?

21 A. It does.

22 Q. Okay. Turn to Tab 16, please, in the

23 notebook. Do you have Tab 16?

24 A. I do.

25 Q. All right. This is entitled, "Gulf of


852

1 Mexico... Drilling and Completions, The Way We Work"?

2 A. It is.

3 Q. Do you recall the suggestion made on Monday

4 that on April 1st, 2009, as reflected in 6019, BP had a

5 plan to have HSSE Managers out on the rigs in the Gulf

6 of Mexico. Do you recall that?

7 A. I do.

8 Q. And then do you recall the reference to your

9 speech at the Annual General Meeting a week or so

10 later, which is found in Tab 11, April 16th, 2009.

11 Do you see that?

12 A. I do.

13 Q. All right. Do you recall a suggestion made

14 that after your speech, that's when BP decided to get

15 rid of the HSSE Managers to cut costs? Do you recall

16 that suggestion?

17 A. I recall that suggestion.

18 Q. When was the plan to have HSSE Managers

19 issued, which is reflected in Exhibit 6019, was it

20 issued and approved after your speech or before your

21 speech?

22 A. It was issued and approved after my speech.

23 Q. All right. Let's take a look at Tab No. 17,

24 please. This is Exhibit 6020, marked the other day.



853

1 A. I do.

2 Q. Now, this is the organizational change that

3 you had not seen the other day with respect to the HSSE

4 organization in the Gulf. Do you recall that?


6 Q. And looking at the first two bullet points,

7 does that explain, at least as far as you can tell, the

8 reasons for why there was a change with respect to HSSE

9 Managers out on the rigs?

10 A. It seems a very credible basis for the change.

11 It says: "D&C has reached the place in our HSSE

12 journey where the Drilling Contractors must take full

13 responsibility for HSSE on their rigs, while BP retains

14 accountability" for "verification. There are currently

15 duplicate HSSE roles on the MODU rigs and triple

16 redundant HSSE" role -- "roles on BP owned

17 facilities..."

18 Q. Turn to the second page of the Exhibit 6020,

19 please. Was it your understanding, after reviewing

20 this document, that -- well, what was your

21 understanding with respect to HSSE advisors? Would

22 there still be HSSE advisors by BP out on the rigs?

23 A. It says on the first two bullets here that

24 there will be full-time Field HSSE Advisors.

25 Q. Okay. The final document, since I'm running


854

1 out of time, turn to Tab 18. It's Exhibit 1351. Do

2 you recall being shown this the other day?

3 A. I do.

4 Q. Do you recall being shown on the second page,

5 which is Bates stamp No. 6378 toward the bottom, where

6 someone from Transocean, someone unidentified person,

7 was complaining that it would be nice to have a BP HSSE

8 advisor onboard?

9 A. I do.

10 Q. First of all, you've never seen this document

11 prior to being shown it the other day, right?

12 A. I had not.

13 Q. All right. So before we get to the comments

14 on the page, the second page, let's get to the first

15 comments, the very first paragraph of comments on the

16 first page.

17 Do you see that?

18 A. I do.

19 Q. The first question was, quote: "How do you

20 think our senior management visits could be more

21 effective? Duration, frequency, structured meetings?

22 What is it the guys would like to hear/see" --

23 A. "Visit" --

24 Q. -- "when the VIP's visit?"

25 Do you see that?


855

1 A. It says: "Visits are fine as long as they

2 have substance. Too many times are doom and

3 gloom...talking about all the incidents we are having

4 throughout the fleet."

5 Q. Do you understand, looking at this --

6 MR. ROBERTS: Objection to form to the

7 question and the answer.

8 Q. (By Mr. Godfrey) Do you understand, looking at

9 this document, that the first complaint by this

10 unidentified Transocean was that they didn't like to

11 have safety visits talking about other safety incidents

12 in the fleet?

13 A. That is what --


15 A. That is what this seems to imply.

16 Q. (By Mr. Godfrey) All right. Let's take a look

17 at second question on the first page that you weren't

18 shown the other day. Do you see where it says, quote:

19 "Audits have become overwhelming. With a TOI audit one

20 week and BP doing the exact same audit the next week"?

21 Do you see that?


23 A. Yes.

24 Q. (By Mr. Godfrey) Do you see where it says:

25 "Weekly BP HSE visits" during -- "doing their audits"?


856


2 A. I do.

3 Q. (By Mr. Godfrey) So the person that you were

4 shown that was complaining about the BP HSE Rep no

5 longer being onboard 24/7, someone is complaining --

6 maybe it's the same person, maybe someone not -- that

7 there are too many gloom-and-doom meetings about safety

8 incidents and that there are too many safety audits.

9 Is that how you understand this?

10 A. That's what this --



13 A. That is what this document says.

14 Q. (By Mr. Godfrey) All right.

15 MR. GODFREY: How many more minutes do I

16 have?

17 THE VIDEOGRAPHER: (Indicating.)

18 MR. GODFREY: Three? Well, that's not

19 very much time.

20 Q. (By Mr. Godfrey) Dr. Hayward, I have a lot

21 more questions I could ask you, but I'm unfortunately

22 limited by the amount of time allotted. So I'd like

23 to, if I could, turn to Tab 13, which is the BP

24 Sustainability Report for the Year 2009. And the very

25 first -- not the very first cover page, but the page --


857

1 and this is dated April 15th, 2010, the very first

2 printed page has on the top "A Systemic Approach,"

3 right?

4 A. It does.

5 Q. Can you read, please, what you wrote in that

6 page? And I think that will take our three minutes,

7 which is all I have time for, unfortunately.

8 A. "BP constantly seeks to improve its safety

9 performance through the procedures, process, and

10 training programs that we implement in pursuit of our

11 goal of no accidents, no harm to people, and no damage

12 to the environment. Our commitment to safe, reliable,

13 and responsible operations starts with the Group Chief

14 Executive, Tony Hayward, and his leadership Team, a

15 commitment that filters down through the organization

16 is regularly communicated to all staff. Safety

17 performance is a regular focus of the Group Chief

18 Executive's formal communications such as BP quarterly

19 results, and in less formal communications such as his

20 regular town halls with BP staff. BP's leadership has

21 continued to reinforce the importance of safety when

22 undertaking regular site visits to BP facilities around

23 the world and from all parts of the business. I'm

24 proud of BP's 2009 safety performance. It reflects a

25 sustained effort across all of our operations over many


858

1 years."

2 Q. During the time that you were CEO of BP, PLC,

3 did you do your level, utmost best to focus on safety

4 and to focus the organization on safety?

5 A. I did.

6 Q. Did you ever make a decision, from your

7 perspective, where you were cutting costs at the

8 expense of safety?

9 A. I did not.

10 Q. When you said the other day that you'd hired

11 thousands of Engineers, for what purpose did you hire

12 thousands of Engineers?

13 A. To make our operations safer and more

14 reliable.

15 Q. Is that the reason why you hired John Baxter?

16 A. That's the reason I hired John Baxter. That's

17 the reason I hired John Sieg. That's the reasons those

18 beneath me hired many thousands of other people into

19 our operations over that period of time.

20 MR. GODFREY: Dr. Hayward, you've been

21 very patient with us. I know it's a long process, and

22 I very much appreciate your willingness to come

23 voluntarily before us to give your testimony.

24 I -- I have many more questions, but my time

25 is not -- is up, so I thank you very much, sir.


859





5 MR. CUNNINGHAM: I'm ready.



8 REDIRECT EXAMINATION

9 QUESTIONS BY MR. CUNNINGHAM:

10 Q. Dr. Hayward, you've briefly described the

11 Apollo Crisis Command Center, do you recall that?

12 A. I -- yeah, but I briefly described the Houston

13 Crisis Center.

14 Q. Okay. Is that -- is that the correct

15 terminology for it --


17 Q. -- the Houston Crisis Center?

18 A. Correct.

19 Q. Located in Houston, obviously?

20 A. In West Lake Houston, yeah.

21 Q. Okay. Would you describe the room, what it

22 consisted of and what was--

23 A. Well --

24 Q. -- in it?

25 A. It -- it con -- has many rooms to it. There


860

1 were -- it -- it covers many thousands of square feet,

2 I don't know exactly how many, on one level. And there

3 were rooms set up for oversight of the ROV Operations.

4 There was a room set up for Simultaneous Operations.

5 There was a room set up for the Drilling Operations.

6 There was a room set up for the Containment Operations,

7 a sort of engineering design of the Containment

8 Operations. There was a separate room for the Top Kill

9 Operation. It was -- you know, there were -- at the

10 peak, there were almost a thousand Engineers and

11 scientists, operating in that Center.

12 Q. I think what I heard you describe was the --

13 the room set up for Drilling Operations for the relief

14 well. What -- what did that consist of?

15 A. It was where the relief wells were -- were

16 being planned from.

17 Q. Is it where monitoring of the relief wells was

18 conducted?

19 A. There was some monitoring of the relief wells

20 going on there, I believe, yes.

21 Q. Well, if you could describe the room itself.

22 Is -- is it a room with a lot of Engineers and a lot of

23 monitors?

24 A. It's a room with Engineers and monitors, yeah.

25 Q. Okay. 24-hour operation?


861

1 A. It was a -- a 24-hour operation, by

2 definition.

3 Q. And it was compared, for those of us who have

4 never seen such a room, to what we might have seen in

5 the Apollo Crisis Command Center, that type of room --

6 A. Absolutely --

7 Q. -- correct?

8 A. Yes.

9 Q. All right. And this is what was set up after

10 the blowout to monitor the drilling operations of the

11 relief wells --

12 A. Well --

13 Q. -- to try to stop --

14 A. -- it was --

15 Q. -- the flow of oil, correct?

16 A. It wasn't set up to monitor the drilling

17 operations. It was set up to monitor all of the

18 intervention activity that was taking place.

19 Q. Well, the po --

20 A. There was a room that had Drilling. There was

21 another room that had Simultaneous Operations, all of

22 that sort of thing.

23 Q. Right. But I'm talking about the one that was

24 set up to monitor drilling. You've described that

25 accurately thus far, haven't you?


862

1 A. What was your -- what do -- how do you believe

2 I described it?

3 Q. I thought you described it as a room full of

4 Engineers and monitors, or with Engineers and

5 monitors --

6 A. I --

7 Q. -- that operated a 24-hour day it -- a day --

8 24 hours a day to monitor the Drilling Operations.

9 A. I had a room of Drilling Engineers and

10 monitors.

11 Q. All right. And the room you're describing was

12 set up after the blowout?

13 A. It was set up --

14 Q. -- right?

15 A. -- as part of the crisis response.

16 Q. All right. I want to talk about the Command

17 Center for Drilling that you had set up to prevent a

18 blowout in the Gulf of Mexico for a minute, all right?

19 Tell us where that room was located.

20 A. I'm not aware that --


22 A. I'm not aware where that room was, I'm afraid.

23 I don't know what was in place prior to the accident.

24 I was only in Houston post the accident.

25 Q. (By Mr. Cunningham) Have you ever been in any


863

1 room that you could characterize as a Command Center,

2 used for the purpose of monitoring offshore drilling to

3 prevent the very kind of blowout we had --

4 A. A --

5 Q. -- on the 20th?

6 A. There are drilling -- drilling centers that

7 provide oversight of Drilling Operations.

8 Q. I'm talking about the oversight of the

9 Drilling Operations on the Macondo Well. Have you ever

10 been in that room?

11 A. No, I have not.

12 Q. Have you ever seen that room?

13 A. I have not.

14 Q. Do you know that it has been decide --

15 described as about the size of a closet?


17 A. I was not aware of that.

18 Q. (By Mr. Cunningham) Not aware of that? Do you

19 know that it was closed on weekends?

20 A. As I said, I haven't been to it, and I'm not

21 aware of it.

22 Q. You've described deepwater drilling as similar

23 to or comparable to exploring out of -- outer space,

24 haven't you?

25 A. I've made that analogy --


864

1 Q. All right.

2 A. -- yes.

3 Q. And so BP, the Apollo Crisis Center that it

4 had for monitoring the outer space that was being

5 explored at the time of the Macondo incident, was the

6 size of a closet and was closed on weekends.


8 Q. (By Mr. Cunningham) You didn't know that?


10 A. I wasn't aware of the Drilling Operations.

11 Q. (By Mr. Cunningham) We've talked a good deal

12 about BP, and I want to be sure that there's no

13 question about what exactly we're referring to when we

14 use the term "BP." This is Tab 7 from the previous CD.


16 MR. GODFREY: Has it -- has this been

17 marked 6079?

18 MR. CUNNINGHAM: No. I'm just marking

19 it.

20 MR. GODFREY: Okay. Fine.

21 Q. (By Mr. Cunningham) I will hand you Exhibit

22 6079. Just for purposes of clarity, if you'll turn to

23 the page marked 2 at the bottom left. Do you have

24 that?

25 A. I do.


865

1 Q. These are "Miscellaneous terms," and below

2 that it says, "In this document, unless the context

3 otherwise requires, the following terms shall have the

4 meaning set out below."

5 Do you see that?

6 A. I do.

7 Q. And does it define "BP, BP Group or the

8 group," any of those three terms, as "BP p.l.c. and its

9 subsidiaries"?


11 Q. All right. And then on the right, does it

12 define "Subsidiary" as follows: An entity that is

13 controlled by the BP group. Control is the power to

14 govern the financial and operating policies of an

15 entity so as to obtain the benefits from its

16 activities."

17 Is that how a subsidiary is defined?


19 Q. All right. And is that an accurate

20 definition?

21 A. I'm sure it is an accurate --

22 Q. So it's a --

23 A. -- definition.

24 Q. -- BP document, isn't it?

25 A. I -- I wasn't the author of it, but it -- I'm


866

1 sure it's an accurate definition.

2 Q. Now, you mentioned in your earlier testimony

3 that the Bly Investigation had concluded that there

4 were eight causes of the -- of the blowout, correct?


6 Q. And you said, "We" -- and I think I will --

7 I -- I'm quoting you correctly, you can correct me if

8 I'm not -- "We had responsibility for part of one of

9 them." Is that what you said?

10 A. In terms of the direct cause, I think that's

11 correct.

12 Q. All right. What part of that "one" did BP

13 have responsibility for? Half? A third? Two-thirds?


15 Q. (By Mr. Cunningham) How much?

16 A. The cause that I was referring to, as I'm

17 certain you're aware, was the interpretation of the

18 negative pressure test. And my understanding is that

19 there were three people involved in that decision, two

20 from Transocean and one from BP.

21 Q. Okay. So you were referring to a one-third

22 responsibility for one of the eight causes of the

23 blowout?

24 A. I didn't --



867




4 A. -- I wasn't referring --


6 A. -- to that at all. I said it was BP was

7 involved in that decision with two other people.

8 Q. (By Mr. Cunningham) What --

9 A. That doesn't imply a third -- the world

10 generally doesn't work like that --

11 Q. All right. Well, what --

12 A. -- it is --

13 Q. -- what --

14 A. -- it is not divided by fractions.

15 Q. -- what part of the one of the eight that you

16 said BP had responsibility for, what part of it?

17 A. Part of it. We were involved in that

18 decision.

19 Q. Half of it?

20 A. A part of it. We were involved --

21 Q. Just a part of it.

22 A. We --

23 Q. You can't -- you can't say whether it was a

24 half, a third, two-thirds or --

25 A. I can --


868

1 Q. -- what it was?

2 A. -- say we were clearly party to that decision.

3 Q. All right. Well, however you break it up,

4 that means that you believe and BP believes that 96, 97

5 percent of the causes of the blowout somebody else is

6 responsible for; is that right?


8 question.

9 A. Based on the Report, the people taking

10 decisions around the individual causes of the Reports,

11 there was direct BP involvement in the negative

12 pressure test. There was not direct -- direct BP

13 involvement in the design of the cement or the pumping

14 of the cement. There -- there wasn't direct BP

15 involvement in the well control procedures. There

16 wasn't direct BP involvement in monitoring the mud

17 system.

18 MR. GODWIN: Object -- object to form.

19 A. That -- that is the point I was making.

20 Q. (By Mr. Cunningham) So out of the eight causes

21 of the blowout, if you had responsibility for part of

22 one of them, you had responsibility for 5 percent or

23 less of what caused the blowout, correct?

24 A. That's not --



869

1 question.

2 Q. (By Mr. Cunningham) Is my math wrong?

3 A. Yeah, I think so.

4 Q. All right. Well, do --

5 A. It's not --

6 Q. -- do it --

7 A. -- I -- I -- I'm afraid --

8 Q. -- you do the math. You've got a Ph.D. You

9 probably --

10 A. Well, I --

11 Q. -- could a lot quicker than --


13 question.

14 A. I -- I don't do maths on that sort of

15 analysis, I'm afraid. It's not what maths is designed

16 to do.

17 Q. (By Mr. Cunningham) Well, you're the one that

18 said -- not me, you're the one that said "We had

19 responsibility for part of one of the eight causes."

20 And I'm trying to determine what part of the total

21 causes you accept responsibility for at BP. Is it 5

22 percent, 10 percent, 2 percent, 1 percent? What is it?

23 MR. WEBB: Objection. Asked and --

24 A. Well, I --

25 MR. WEBB: -- answered.


870

1 A. -- don't have an answer to that question.

2 Q. (By Mr. Cunningham) You -- you mean, you don't

3 want to answer --

4 A. No --

5 Q. -- the question?

6 A. -- I don't have --


8 A. -- an answer.

9 MR. WEBB: -- asked and answered --

10 Q. (By Mr. Cunningham) You don't have an answer?

11 MR. WEBB: -- four times.

12 Q. (By Mr. Cunningham) Why do you not have an

13 answer?

14 A. Because I don't know how to calculate that

15 metric. I don't know what -- on what basis you would

16 calculate that metric.

17 Q. You also testified earlier that you and the

18 top leadership at BP did not monitor Drilling

19 Operations because BP drills hundreds of wells every

20 year. Did I hear that correctly?

21 A. What --


23 A. -- what I said was that I did not receive

24 daily or weekly reports of drilling operations, because

25 it's not what a Chief Executive does.


871

1 Q. (By Mr. Cunningham) All right. So you -- you

2 did say that you and the top leadership did not monitor

3 Drilling Operations, because BP drills hundreds of

4 wells every year?

5 A. That's not what I said. I said --

6 Q. So you do monitor drilling operations?


8 A. What I said was that we -- I nor my immediate

9 Team monitored Drilling Operations on a week-to-week

10 basis, in terms of individual wells being drilled.

11 Q. (By Mr. Cunningham) Well, do you monitor --

12 monitor it on a month-to-month basis, in terms of

13 individual wells being drilled?

14 A. Not in terms of individual wells, no.

15 Q. And is that because there are hundreds of

16 wells being drilled every year, as you testified to

17 earlier?


19 Q. Sir, excuse me?


21 Q. All right. Now, there are wells and there are

22 deepwater wells, correct?


24 Q. And the -- they're two different things,

25 aren't they?


872

1 A. Well, I think there's a transition between

2 wells and deepwater wells, because there are deepwater

3 wells and deepwater wells.

4 Q. Well, you described deepwater drilling as

5 being comparable to outer space exploration, we've --

6 you've agreed that you have in the past described that,

7 haven't you?

8 A. I've described deepwater exploration as akin

9 to outer --

10 Q. All right.

11 A. -- space exploration.

12 Q. And --

13 A. And it involves more than just drilling.

14 Q. Is there or is there not a big difference

15 between shallow wells and deepwater wells --

16 A. There is.

17 Q. -- in terms of drilling?

18 A. (Nodding.)

19 Q. All right. What number of deepwater wells

20 were being drilled on April the 20th of 2010?

21 A. I don't know.

22 Q. Give me your best judgment.

23 A. I don't know. Tens, I would imagine, but I

24 don't --

25 Q. Tens?


873

1 A. I would imagine tens globally.

2 Q. And -- and would that be like 30 or 20 or 50

3 or --

4 A. Well, of --

5 Q. -- 60 or 80?

6 A. Probably 20, I would --

7 Q. All right.

8 A. -- I would think.

9 Q. Well, what -- what is Hodoa?

10 A. I don't know.

11 Q. Fragata?

12 A. I don't know. I think that's an exploration

13 prospect.

14 Q. Moccasin?

15 A. I think Hodoa is what -- is that right?

16 Q. Is that the way you pronounce, Hodoa,

17 H-o-d-o-a?

18 A. That's right.

19 Q. For -- is -- is that a well?

20 A. That's a --

21 Q. Fragata?

22 A. Yeah, it's either a well or an exploration

23 prospect.

24 Q. Moccasin?

25 A. Don't know.


874

1 Q. Tucker?

2 A. Tucker is a -- was a well and is now a

3 discovery.

4 Q. All right. Can -- can you testify under oath

5 today that there were more than five deepwater wells

6 being drilled on April 20th of 2010?

7 A. Globally or --

8 Q. Globally.


10 Q. And even within the context of drilling

11 deepwater wells, there are wells that are higher risk

12 and wells that are lower risk, aren't there?


14 Q. And what determines whether they may be higher

15 or lower risk?

16 A. An assessment of pressure and temperature.

17 Q. Is that in the layman's language whether

18 they're in a state being drilled in a stable formation

19 or an unstable formation?

20 A. No. It's about the pressure and

21 temperature --

22 Q. All right.

23 A. -- that you expect to encounter.

24 Q. And what determines pressure and temperature?

25 A. Depth and geological formation.


875

1 Q. All right. In terms of geological formation,

2 where does the Gulf of Mexico geological formation fit

3 in the scale of high risk versus low risk?

4 A. It's higher risk.

5 Q. It's higher risk. How many deepwater wells

6 were being drilled on April 20th in high risk areas?

7 A. Probably only two or three.

8 Q. Two or three. What would be the two or three

9 other than Macondo?

10 A. At the time we -- we may have been drilling in

11 Angola. I'm not certain. We may have been drilling in

12 Egypt.

13 Q. All right. You may and you may not have?

14 A. I can't recall exactly, but I'm -- I'm

15 referring to areas where the deepwater drilling was

16 high pressure and high temperature.

17 Q. All right. In any event, the number would be

18 somewhere between one and three?

19 A. One and five, probably.

20 Q. And do I understand that BP has the same level

21 of Executive Management oversight for low risk wells as

22 it did on April 20th, 2010 for the higher risk

23 deepwater wells that were being drilled?

24 A. I think what's -- what is the case is that the

25 executive oversight at my level did not distinguish


876

1 between different sets of wells.

2 Q. Right.

3 A. That wasn't what I was doing.

4 Q. Right. The exec --

5 A. Someone in the company was, but it wasn't me.

6 Q. The executive oversight was no different for a

7 shallow well being drilled on land than it was for a

8 higher risk deepwater drill -- well being drilled in

9 the Gulf of Mexico, was it?

10 A. That is --



13 MR. WEBB: -- to the form of the

14 question.

15 A. That is --

16 Q. (By Mr. Cunningham) Was it?

17 A. That is not what I said. I said that I didn't

18 have a role in executive oversight of drilling.

19 Q. Well, that's what I'm talking about. Did you

20 have a different role in executive oversight of

21 drilling in a high risk well in the Gulf of Mexico than

22 whatever you had for a shallow low risk well on land?

23 A. I had no oversight in either.

24 Q. And that's the reason you knew nothing about

25 the day-to-day risk level at the DEEPWATER HORIZON on


877

1 April the 20th, correct?


3 Q. Because that's what the policy was. That --

4 that's the way BP --

5 A. That's --

6 Q. -- operated, correct?

7 A. That's not what CEOs do. I'm sorry, but it's

8 not.

9 Q. Well, one thing you did do as a CEO was you

10 made sure you knew when the Macondo hit pay dirt,

11 didn't you?

12 A. I didn't make -- sir, I was made aware when

13 the well was a discovery.

14 Q. So were you accidentally made aware, or were

15 you made aware because it was the policy at BP that

16 when you hit gold, when you hit pay dirt, you tell the

17 CEO?

18 A. No. I was made aware during a normal course

19 of business. Some -- some time after it was evident

20 that they had made a discovery.

21 Q. So --

22 A. So it would be a couple of weeks.

23 Q. -- within the normal course of business, the

24 CEO did know when the well struck pay sands, true?

25 A. The CEO was made aware of a discovery, if


878

1 there had been one, in the normal course of business.

2 Q. But there was no policy for the CEO or top

3 level Executive Management to be aware if a well was

4 experiencing hazard drilling conditions, correct?

5 A. There was no basis for me to be involved in

6 day-to-day drilling operations on a well in the

7 deepwater Gulf of Mexico. I have neither the skills

8 nor capabilities to do that.

9 Q. Mr. Godwin was questioning you, and I think I

10 understood you to say that Mark Bly was chosen to lead

11 the investigation because he could be objective by

12 virtue of the fact that he did not have accountability

13 for the DEEPWATER HORIZON. Did I hear that correctly

14 or not?

15 A. I -- I -- I chose Mark because I believed he

16 was the best qualified person in BP to lead the

17 investigation, and he was outside of the line with

18 respect to that operation. He -- he sat in a function

19 with no line accountability. His role was to develop

20 standards and systems and processes and to help in

21 their implementation.

22 Q. Okay. He was chosen because he was the most

23 qualified person and because he was outside of the line

24 of accountability with respect to the DEEPWATER

25 HORIZON, correct?


879


2 Q. Who was the highest level Executive

3 responsible to you for Process Safety?

4 A. Mark Bly.

5 Q. Mark Bly. And he reported directly to you in

6 his capacity as having responsibility for the

7 implementation of OMS and for being responsible for

8 Process Safety, didn't he?


10 Q. And as we discussed earlier, Process Safety

11 deals with major accidents, preventing major accidents,

12 correct?

13 A. Correct.

14 Q. Major accidents just like the one that

15 occurred on the DEEPWATER HORIZON, correct?

16 A. The DEEPWATER HORIZON was a major accident by

17 anyone's definition.

18 Q. And it's the type of accident that Process

19 Safety Principles are implemented to try to prevent;

20 isn't that true?


22 Q. So what -- what you did, then, is you

23 appointed the highest level Executive next in line to

24 you who was responsible for preventing exactly what

25 happened, a major disaster. You -- you appointed that


880

1 person to investigate this major disaster, didn't you?


3 question.

4 Q. (By Mr. Cunningham) Didn't you?


6 A. That's not correct, because --

7 Q. (By Mr. Cunningham) You didn't?

8 A. No, because he's not accountable for the

9 implementation. The line is accountable for the

10 implementation.

11 Q. You --

12 A. He sets the standards. Mark is not

13 accountable for the im -- implementation at the

14 operating level.

15 Q. Didn't you testify earlier that he was

16 accountable for OMS and the implementation of OMS

17 throughout BP?

18 A. He was accountable for overseeing, but he was

19 not accountable for the implementation at the operating

20 level on a day-to-day basis.

21 Q. He was accountable for overseeing the

22 implementation of OMS. You've testified to that,

23 haven't you?

24 A. Correct.

25 Q. That's correct. So you appoint him to conduct


881

1 the investigation, and then the two of you exclude from

2 the investigation one of the three standard elements of

3 a BP investigation, and that is systemic causes, or

4 root causes, which are Management-related causes; isn't

5 that true?



8 MR. WEBB: Objection, asked and

9 answered --

10 A. We've discussed --

11 MR. WEBB: -- three times.

12 A. We've discussed previously the terms in

13 reference of the investigation. They're the terms --

14 Q. (By Mr. Cunningham) All right.

15 A. -- we reference in investigation. They are --

16 it is what it is.

17 Q. And they excluded investigation of systemic

18 causes, didn't it?

19 A. In terms of the reference --


21 A. -- to determine the cause of the accident,

22 that's what the Report did.

23 Q. (By Mr. Cunningham) So the investigation by

24 definition would not investigate you or Mark Bly, true?

25 MR. WEBB: Objection to the form of


882

1 question.

2 A. The investigation was designed to determine

3 the cause of the accident.

4 Q. (By Mr. Cunningham) The investigation by the

5 exclusion of systemic causes which are

6 Management-related causes excluded investigation of you

7 and Mark Bly, didn't it?


9 A. It was designed to investigate the cause of

10 the accident. That's what it did.


12 Q. (By Mr. Cunningham) And since -- since the

13 investigation Mr. Bly conducted, he's been promoted,

14 hasn't he?

15 A. I believe he's still doing the same job.

16 Q. So you don't believe he's been promoted?

17 A. I believe he's doing the same job. He may

18 have a different title. He's still doing the same job.

19 I think he's -- remains the Head of Safety and

20 Operations.

21 Q. Well, when you -- when you look at the

22 Executive Management structure -- and this is Tab 53 in

23 the earlier CD that was handed out.


25 MR. CUNNINGHAM: Here, give me that one,


883

1 and I'll give you this one. It's been marked. It's

2 Exhibit 6080.

3 MR. GODFREY: Can I take the time to see

4 what you're talking about?

5 MR. CUNNINGHAM: I'm sorry.

6 MR. GODFREY: No, that's all right. I'll

7 just take -- I've probably seen it, and I just want to

8 see what it looked like.

9 All right. I know what this is. Got it.

10 Thank you.

11 Q. (By Mr. Cunningham) This shows the Executive

12 Management at BP, correct?

13 A. Yes.

14 Q. And at the top we see Mr. Dudley --

15 A. Correct.

16 Q. -- right?

17 And then the second face on the page is Mark

18 Bly, isn't it?

19 A. That's right.

20 Q. And if you had disclosed to Congress that you,

21 in fact, did not do a complete full investigation that

22 covered everything and instead had told them that you

23 excluded systemic causes and that the man you had

24 appointed to head the investigation was responsible for

25 Process Safety, which includes systemic causes, you --


884

1 you know what the reaction would have been, don't you?


3 MR. WEBB: Form.

4 A. The Congress was fully aware of the

5 investigation. We had shared the extent of our

6 investigation with the Oil and Gas Oversight Committee

7 ahead of my testimony. They were fully aware of our

8 investigation --

9 Q. (By Mr. Cunningham) Did you --

10 A. -- and the extent of it.

11 Q. Did you tell the Congress that Mark Bly was

12 responsible for the implementation of Process Safety

13 within OMS, as well as OMS itself, and that you were

14 appointing him to investigate the accident and you were

15 excluding any investigation of you and him as part of

16 that?


18 Q. (By Mr. Cunningham) Did you tell them that?

19 A. I was never asked that question.

20 Q. You were never asked. Okay.

21 A. Well, the rules are you answer the questions,

22 right?

23 Q. Well, the rules are you tell the truth, the

24 whole truth, and nothing but the truth. You understood

25 that, didn't you?


885


2 question.

3 A. Well --


5 MR. WEBB: Move on.

6 A. In answer to questions.

7 Q. (By Mr. Cunningham) You understood that,

8 right?

9 A. I certainly do.

10 Q. All right. Now, you testified also earlier

11 that you were not fired; is that correct?

12 A. I testified that I -- in discussion with the

13 Board, we came to a mutual agreement that it would --

14 it was in the best interests of BP that I leave the

15 company.

16 Q. All right. You decided -- you -- you decided

17 it was best for BP to have a new face in the Gulf, I

18 think you said, or in the U.S.?

19 A. A new face --

20 Q. Is that right?

21 A. -- in America. That's correct.

22 Q. So you resigned of your own accord, then?

23 A. It was a mutual agreement between myself and

24 the Board. I think the Board probably felt the same,

25 so --


886

1 Q. Well, did you resign of your own accord, or

2 were you told, "Resign, or you're going to be fired"?



5 A. It was a mutual agreement.

6 Q. (By Mr. Cunningham) That isn't -- that -- that

7 isn't what I'm asking you.

8 A. I'm telling you what the --

9 Q. Were you told that if you did not resign, you

10 would be fired?


12 A. I'm telling you what happened. It was a

13 mutual agreement, so the issue of firing or resigning

14 never came up. We agreed --

15 Q. (By Mr. Cunningham) Okay. So then, you were

16 not told that, is the answer, correct?

17 A. Correct.


19 Q. (By Mr. Cunningham) Correct.

20 And with respect to any accountability for

21 what happened on April the 20th of 2010, the Board did

22 not hold you accountable and discharge you; is that

23 correct?




887

1 A. You'll have to ask the Board what they

2 concluded, but as I said, we agreed that I should -- it

3 was in the best interests of BP that I should leave,

4 and there was no other discussion.

5 Q. (By Mr. Cunningham) Did the Board hold you

6 accountable for what happened on April the 20th of

7 2010?


9 A. I was never told that was the case.

10 Q. (By Mr. Cunningham) All right. Did the Board

11 ever sanction you in any way for what happened on April

12 20th?

13 A. I -- I left my post in the middle of Jul -- at

14 the end of July.

15 Q. Did the Board ever sanction you between April

16 the 20th and the time you left your post?

17 A. They didn't.

18 Q. Did they ever reprimand you?

19 A. They did not.

20 Q. Did they ever penalize you?

21 A. They did not.

22 Q. Did they ever privately, to you, criticize you

23 for what happened on April 20th?


25 A. They did not.


888

1 Q. (By Mr. Cunningham) Did they ever publicly

2 criticize you for what happened on April 20th?


4 Q. Was there any top-level Executive Management

5 person at BP who was sanctioned for what happened on

6 April 20th?

7 A. What is top-level Management?

8 Q. The top five.


10 Q. Was any top-level Executive Management person

11 reprimanded for what happened on April 20th?


13 Q. Fired. Anybody fired for what happened on

14 April 20, in the top Management?


16 Q. Anybody penalized?


18 Q. Anybody privately criticized in the top

19 Management?

20 A. I don't know, if it was private, do I?

21 Q. Publicly.


23 Q. Do you use a computer?

24 A. I do.

25 Q. A laptop or a desktop, or both?


889

1 A. Laptop.

2 Q. You use a BlackBerry?

3 A. I do.

4 Q. Have you for the last few years used both a

5 laptop and a BlackBerry?

6 A. I have.

7 Q. How about a -- an iPhone or an iPad or some

8 other kind of --

9 A. I used -- in -- in my time at BP, I used a

10 BlackBerry and a laptop.

11 Q. And did you use these devices like most

12 everybody does, fairly frequently?

13 A. Fairly frequently.

14 Q. We've been provided with your custodial file,

15 Dr. Hayward, and it consisted of 71 E-mails, seven

16 before April the 20th and 64 after April the 20th.

17 A. M-h'm.

18 Q. I suspect that a lot of people in this room in

19 the last day or two have gotten far more E-mails than

20 that while they've been sitting in this deposition.

21 You had dozens and dozens and dozens and

22 dozens of other E-mails beyond that number of 71,

23 didn't you?


25 A. Are those E-mails received or sent?


890

1 Q. (By Mr. Cunningham) Either one.

2 A. I'm certain I had more received, for sure.

3 Q. You communicated with other Executives within

4 BP, didn't you?

5 A. Very rarely using E-mail. Very rarely.

6 Q. Why not?

7 A. I don't like using it as -- as -- as a form of

8 communication. I prefer to talk to them, so I can --

9 Q. You don't --

10 A. -- phone them.

11 Q. So you -- you use the telephone when you

12 communicate with other Executives?

13 A. I do.

14 Q. Even the ones in the U.S.?

15 A. I do.

16 Q. Did you communicate with Board Members by

17 E-mail?

18 A. Only in formal communications.

19 Q. Well, then --

20 A. Formal updates.

21 Q. Well, then, who did you communicate with by

22 E-mail?

23 A. Person -- I don't use E-mail very much going

24 out. I receive a lot of E-mail. I don't use it -- I

25 used it very little, in my time as the CEO, to send


891

1 E-mails.

2 Q. So you'd get E-mails, but you sent very few of

3 them. Is that what your --


5 Q. -- testimony is?

6 A. That's true.

7 Q. You have a cell phone, I take it, that you

8 use?

9 A. I do.

10 Q. Is that --

11 A. It's a BlackBerry.

12 Q. Your BlackBerry is your principal phone that

13 you use?

14 A. It's my only phone.

15 Q. It's your what?

16 A. It's my only phone.

17 Q. And so for communication purposes, most of

18 your communication took place on a BlackBerry; is that

19 right?


21 Q. What was the number of that BlackBerry?

22 A. The number.

23 Q. Yeah.

24

25 Q. And who is your account with, what server?


892

1 A. My account is with -- I believe it was with

2 Vodafone. It was a BP account, and I think it was with

3 Vodafone.

4 Q. Did you also have a different phone that you

5 used for personal business?

6 A. No.

7 Q. You said, I -- I believe earlier, that you had

8 one E-mail account and that was at BP, correct?


10 Q. And that -- is that "[email protected]"?


12 Q. You had no personal E-mail account?

13 A. No.

14 Q. And you testified to that earlier, right?

15 A. I did.

16 Q. Well, then, whose E-mail address is

17 "Haywar" -- "[email protected]"?

18 A. It was a -- it was an account I never used.

19 Nothing in it. You can go and look.

20

21

22

23

24

25


893

1 Q. Is that your testimony?

2 A. I set it up, and I've never used it.

3 Q. Set it up and never used it. Well, why did

4 you set it up?

5 A. I thought I might, but I just never did. I

6 could never -- I could remember -- never remember the

7 E-mail.

8 Q. You could never what?

9 A. I could never remember the E-mail address.

10 Q. You couldn't remember the E-mail address?

11 A. That's right. You can look -- you can go and

12 look at it. There's nothing in it. I don't -- it may

13 not even be extant anymore. I don't know.

14 Q. Well, why did you testify that you never had

15 an -- an -- an E-mail address --

16 A. Because it was never act -- sorry.

17 Q. -- when you had one?

18 A. It was never activated.

19 Q. Nobody asked you whether it was activated.

20 A. Well, I'm --

21 Q. Why did you testify under oath twice?

22 A. I'm sorry, but I never used it, so it -- as

23 far as I was concerned, it was not relevant because it

24 was never used.

25 Q. So you think you can answer a question saying


894

1 you don't have an account because you didn't think it

2 was relevant? You -- you think that's okay?

3 A. It was never used. So it was -- it was, in

4 essence, not an account. There wasn't an E-mail ever

5 sent from it.

6 Q. There was an exhibit offered earlier, a

7 "Forbes" article. I don't know the number of the

8 exhibit, but you may have it over there somewhere. Do

9 you remember that?

10 A. I remember you showing it to me, yeah.

11 Q. I didn't show it to you. I think the --

12 A. Or someone else showing me --

13 Q. -- gentleman from Transocean showed it to you.

14 MR. CUNNINGHAM: Do y'all -- do you have

15 it?

16 MR. GODFREY: Oh, this is one --

17 Q. (By Mr. Cunningham) All right. Well, I can't

18 give you the number, but --

19 MR. GODFREY: What is it --

20 MR. CUNNINGHAM: I don't know the number,

21 but it's a "Forbes" article.

22 MR. GODFREY: Okay. Hold on. Let me see

23 if we can find it.

24 MR. CUNNINGHAM: Steve, you got the

25 number?


895

1 MR. ROBERTS: Yeah. The "Forbes" article

2 is 6061.

3 MR. GODFREY: 6061? Is this it?


5 Q. (By Mr. Cunningham) I'd ask you to take a look

6 at Page 2 of that. And this is a document that's in

7 your own words. It's a Q&A with you, correct?


9 A. I believe so, yeah.

10 Q. (By Mr. Cunningham) All right. On Page 2,

11 second paragraph, first sentence says this: "Do I feel

12 that anything I've done, I would have done

13 differently," question mark. "Not at all," period.

14 And I think you were referring -- or

15 responding to a question about the response effort

16 there; is that correct?

17 A. I -- I think it was actually a -- a question

18 about what I'd done in the prior three years, actually.

19 Q. Oh, was it?

20 A. I think so.

21 Q. Okay.

22 A. I think so.

23 Q. Well, then --

24 A. That's what I interpreted --

25 Q. -- that was going to be my next question.


896

1 With respect to what you did in the three years leading

2 up to the blowout on April the 20th of 2010, would this

3 question and this answer still be yours today?

4 A. I've thought a lot about that, and -- and I --

5 I had done everything that I could do as a human being,

6 as a person, to implement changes to Process Safety, to

7 introduce new people, new systems, new processes. I

8 don't know what else I could have done.

9 Q. So the question today, "Do I feel that

10 anything I've done, I would have done differently," the

11 answer today would still be, "Not at all," correct?

12 MR. WEBB: Objection, asked and answered.



15 A. I feel that I did everything that I could --

16 Q. (By Mr. Cunningham) Would the answer --

17 A. -- as a person.

18 Q. Would the answer to the question, "Do I feel

19 that anything I've done, I would have done

20 differently" -- would the answer to that question today

21 still be, quote, "Not at all" --


23 Q. (By Mr. Cunningham) -- period, end quote?

24 MR. WEBB: -- asked and answered three

25 times.


897

1 A. I can't put my finger on what I would have

2 done differently.

3 MR. CUNNINGHAM: That's all the questions

4 I have.




8 (Proceedings on the stenographic record only:)


10 Well, first, I appreciate everyone's patience

11 for the last two days, during the depositions, and I

12 think it went about as well as could be expected, so I

13 appreciate that very much.

14 There is a continuing issue, and I think this

15 deposition illustrates that I think Mr. Langan has made

16 clear that with a number of BP witnesses, we feel that

17 the time allocations are not fair.

18 But what happened today was -- you know, I've

19 previously, when I've talked to Mr. Lemoine of

20 Weatherford, and he agreed to graciously cede his time

21 with the condition that they could yank it if they saw

22 something they didn't like, and I just wanted to do

23 that. And as you saw, I felt I could use more time.

24 But with respect to Anadarko and MOEX, my

25 understanding had not been that MOEX had ceded its


898

1 time. And so the reason I asked counsel about that,

2 was I wanted to run down who, given that resolution has

3 been reached, at least in part, between BP and MOEX.

4 So there is a time difference between the West

5 Coast in the United States and London, so Mr. Brock and

6 Mr. Neath sent an inquiry, after what was said on the

7 record. And I thought we should put on the record now

8 what our understanding is and the basis for it.

9 Mr. Brock will do that, since he had the

10 communications, I didn't.

11 But I do think this is subject to further

12 communication that, Your Honor, when you return to the

13 United States, although we welcome you here in London

14 as much as you'd like to come, when you return to the

15 United States, I think that we need to have a little

16 further clarity about this issue, particularly where,

17 you know, I went and I was prepared to show the

18 documents, i.e., E-mails between Mr. Lemoine and myself

19 that I had at the time, although his partner was here,

20 so he was able to confirm it, anyway.

21 But it leaves us in a bit of an awkward

22 position, particularly when we're away from the quick

23 call. And just as a matter of personal approach, I

24 don't like controversies like this, so I like to try to

25 work them out in advance, and if the Court rules for


899

1 me, great. If it rules against me, well, then I move

2 forward and I don't think about it.

3 But if Mr. Brock could put on the record what

4 our understanding is, and the basis for it, I think

5 that's important, because I do think that this is a

6 matter for further discussion with respect to time

7 allocations, particularly the Senior BP witnesses,

8 where the likelihood that there will ever be a former

9 CEO is unlikely that he'll ever be in the United States

10 to testify, and short time allocations, I think, really

11 are prejudicial, and I think that particularly when

12 it's sixteen hours one way and one hour the other way.

13 So, Mr. Brock, if you could be kind enough to

14 put on the record what we've learned since.

15 MR. BROCK: All right. So Mike Brock for

16 BP.

17 I think, Your Honor, what we would ask for, in

18 depositions going forward, is that if a Party claims to

19 have been ceded time from a Party who is not present at

20 the deposition, that they should have some verification

21 that that time has been ceded by the Party that is not

22 present.

23 We asked for that verification today. It was

24 not forthcoming. We proceeded on the representation of

25 counsel.


900

1 Members of our Team have inquired of MOEX's

2 present counsel as to whether they ceded time to

3 Anadarko for this deposition.

4 Tom Campbell of Pillsbury has responded that

5 he did not cede that time for this deposition. There

6 was reference to Kathy McCollum having possibly been

7 the person that did that. Tom checked with Kathy to

8 see if she'd ceded time to Anadarko for the Tony

9 Hayward deposition. And our information, at this

10 point, is that she says she did not.

11 So I think what we would like to say to the

12 Court, at this point, is that there could be further

13 clarification of this, and we understand that, but the

14 information that we have at this point is that time was

15 not given to Anadarko from MOEX, and if that holds to

16 be the case, as we believe from what we know now, we'll

17 file an appropriate Motion to Strike portions of their

18 exam.


20 MS. HERTZ: Your Honor, may I just say --

21 MAGISTRATE SHUSHAN: Yes, please.

22 MS. HERTZ: I just want to make a

23 representation on the record that I simply conveyed

24 what I was told, and I didn't have a writing. It

25 wasn't that it wasn't forthcoming. It's I didn't have


901

1 one, and I was proceeding with the information I have.

2 And that's all I can tell you right now.


4 MS. HERTZ: There was no false

5 representations. I just wanted you to know that, and

6 certainly not --

7 MAGISTRATE SHUSHAN: And I'm not

8 suggesting, and nor do I have the impression that

9 counsel for BP are suggesting that, so --

10 MR. GODFREY: Let me confirm that, Your

11 Honor. I think this is where -- the importance of the

12 communications here. I took the time to have an

13 E-mail, but then Mike's partner was here, anyway, so I

14 knew it, and I spoke with him privately.

15 I just think, that given the potential

16 importance of depositions, and our concerns about the

17 time allocation, anyway, I was surprised. We were

18 surprised. That had not been our understanding, and

19 when you're an eight hours time difference from the

20 West Coast, learning that at 11:00 a.m. London time

21 does not allow us to do any check. And that goes all

22 the way around, so I'm not suggesting that, but what I

23 am suggesting is a need for clarity.

24 MAGISTRATE SHUSHAN: I agreed with that,

25 and in addition, it has occurred to me that the


902

1 informal agreement that the Defendants had been working

2 under might require some tweaking because of the

3 settlement with MOEX. So that is something that had

4 occurred to me. And I think maybe tomorrow morning,

5 off the record, we might be able to sit down and talk

6 about what my thinking is, because I would like to work

7 it out on a longer term basis, so that you don't have

8 the problem.

9 I do think that the amount of time you had

10 today was tight. You did a really good job with it,

11 but I will agree it was tight, and so it's something

12 that I do think we should talk about.

13 MR. GODFREY: But at 16 to 1, I may be

14 fast, but I'm not that fast.

15 MAGISTRATE SHUSHAN: I'm with you.


17 MAGISTRATE SHUSHAN: I do think that if,

18 indeed, somebody has the idea that time has been ceded,

19 but the person that is the person ceding has not

20 attended the deposition and can't confirm it, I do

21 think it would be a good idea if we get it in writing.

22 MR. GODFREY: All right. Well, thank

23 you. And that's all we had, and now we're off the

24 record.

25 (Deposition concluded at 5:30 p.m.)


903

1 CHANGES AND SIGNATURE

2 WITNESS NAME: ANTHONY HAYWARD

3 DATE OF DEPOSITION: JUNE 8, 2011

4 PAGE LINE CHANGE REASON

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904

1

2 I, ANTHONY HAYWARD, have read the foregoing3 deposition and hereby affix my signature that same is4 true and correct, except as noted on the attached5 Amendment Sheet.6

7

ANTHONY HAYWARD8

9

THE STATE OF )10

COUNTY OF )11

12 Before me, , on

this day personally appeared ANTHONY HAYWARD, known to13 me (or proved to me on the oath of

or through )14 to be the person whose name is subscribed to the

foregoing instrument and executed the same for the15 purposes and consideration therein expressed.

GIVEN UNDER my hand and seal of office this16 day of , 2011.17

18

Notary Public in and for19 The State of20

21

22

23

24

25


905

1 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA




) MAG. JUDGE SHUSHAN678 REPORTER'S CERTIFICATION

TO THE ORAL AND VIDEOTAPED DEPOSITION OF9 ANTHONY HAYWARD

JUNE 8, 201110 VOLUME 21112

I, Emanuel A. Fontana, Jr., Certified Shorthand13 Reporter in and for the State of Texas, hereby certify

to the following:14

That the witness, ANTHONY HAYWARD, was duly sworn15 by the officer and that the transcript of the oral

deposition is a true record of the testimony given by16 the witness;17 That the deposition transcript was submitted on

, 2011, to the witness or to18 Attorney , for the witness to

examine, sign, and return to Worldwide Court Reporters,19 Inc., by , 2011.20 That the amount of time used by each party at the

deposition is as follows:21

Mr. Strange - 18 Minutes22 Mr. Kanner - 1 Hour, 6 Minutes

Mr. Roberts - 59 Minutes23 Mr. Godwin - 59 Minutes

Ms. Hertz - 1 Hour, 15 Minutes24 Mr. Beck - 1 Hour, 13 Minutes

Mr. Godfrey - 1 Hour, 11 Minutes25 Mr. Cunningham - 37 Minutes


906

1 I further certify that I am neither counsel for,

related to, nor employed by any of the parties in the2 action in which this proceeding was taken, and

further that I am not financially or otherwise3 interested in the outcome of the action.4 SUBSCRIBED AND SWORN to by me on this 8th day of

June, 2011.5

6

7 ____________________________

Emanuel A. Fontana, Jr., RPR8 Texas CSR No. 1232

Expiration Date: 12/31/129 Worldwide Court Reporters

Firm Registration No. 22310 3000 Weslayan, Suite 235

Houston, Texas 7702711 (713) 572-200012

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Documents

Hayward Deposition - June 2011