United States Department of the Interior

BUREAU OF SAFETY AND ENVIRONMENTAL EN FORCEM ENT

Gu lf of Mex ic o OCS Region New O rleans District 990 N . Corporate Drive, Suite I 00 New Orleans, LA 70123 -3392

October 12, 2011

Mr. James Dupree BP Exploration and Production Inc. 200 Westlake Park Blvd., WL 4-2017 Houston, Texas 77079 Dear Mr. Dupree: On September 14, 2011 , after an extensive investigation, the Joint Investigation Team (JIT) of the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE), now the Bureau of Safety and Environmental Enforcement (BSEE), and the United States Coast Guard issued its Report of Investigation into the explosion and fire onboard the Mobile Offshore Drilling Unit Deepwater Horizon that occurred on April20, 2010. Volume II of that Report addresses the causes of the blowout and identifies several violations of applicable regulations. These violations occurred while BP and its contractors conducted drilling and temporary abandonment operations at Lease OCS-G 32306, Well No. 1, Mississippi Canyon Block 252 (the Macondo well). The BSEE New Orleans District has reviewed the findings of the JIT and other documentation and has concluded that violations occurred that warrant an enforcement code S (facility shut in). We accordingly hereby issue this Notification oflncidents ofNoncompliance to BP for violating the following regulations: 30 CFR 250.107(a)(l) - BP failed to protect health, safety, property, and the environment by failing to perform all operations in a safe and workmanlike manner. Specifically, BP failed to do the following: Share information with its contractors when BP knew about the risk associated with the production casing cement job (see Volume II ofthe JIT Report at pages 43, 46, 70, 110-111); Ensure an adequate barrier to hydrocarbon flow after cementing the production casing (see Volume II ofthe JIT Report at pages 53-60, 69-70); Detect the influx of hydrocarbons until the hydrocarbons were above the BOP stack (see Volume II of the JIT Report at pages 71, 99-103, 109-112); and Correctly interpret the negative test (see Volume II of the JIT Report at pages 8897, 109, 111). 30 CFR 250.300 - BP did not take measures to prevent unauthorized discharge of pollutants into offshore waters. Specifically, BP did not take the following measures:

2 Share information with its contractors when BP knew about the risk associated with the production casing cement job (see Volume II of the JIT Report at pages 43, 46, 70, 110-111); Ensure an adequate barrier to hydrocarbon flow after cementing the production casing (see Volume II of the JIT Report at pages 53-60, 69-70); Detect the influx of hydrocarbons until the hydrocarbons were above the BOP stack (see Volume II of the JIT Report at pages 71, 99-103, 109-112); and Correctly interpret the negative test (see Volume II of the JIT Report at pages 8897, 109, 111).

30 CFR 250.401(a)- BP failed to take necessary precautions to keep the well under control at all times. Specifically, BP failed to take the following precautions: Share information with its contractors when BP knew about the risk associated with the production casing cement job (see Volume II of the JIT Report at pages 43, 46, 70, 110-111); Ensure an adequate barrier to hydrocarbon flow after cementing the production casing (see Volume II of the JIT Report at pages 53-60, 69-70); Detect the influx of hydrocarbons until the hydrocarbons were above the BOP stack (see Volume II ofthe JIT Report at pages 71, 99-103, 109-112); and Correctly interpret the negative test (see Volume II of the JIT Report at pages 8897, 109, 111). 30 CFR 250.420(a)(l) and (2)- BP did not cement the well in a manner that would properly control formation pressures and fluids and prevent the direct or indirect release of fluids from any stratum through the well bore into offshore waters. The blowout was caused, at least in part, by a combination of contamination, over-displacement, and/or nitrogen breakout in the shoe cement. These conditions, in turn, were caused or exacerbated by BP's failure to ensure an adequate barrier after cementing the production casing. (See Volume II ofthe JIT Report at pages 53-74) 30 CFR 250.427 - BP failed to conduct an accurate pressure integrity test. Specifically, BP's formation integrity test result for the 9 7/8-inch liner shoe of 16.0 ppg was not consistent with expected pressures and could not properly be considered a reliable test result. Nevertheless, BP chose not to retest the shoe and, instead, decided to drill ahead. (See Volume II ofthe JIT Report at pages 28-31) 30 CFR 250.446(a) - BP failed to maintain the Deepwater Horizon BOP system in accordance with API RP 53 section 18.10.3. The Panel found no evidence that BP had subjected the variable bore rams to a major inspection (as defined in API RP 53) at any time since installation in 2000. (See Volume II of the JIT Report at pages 146-151, 167170)

30 CFR 250.1721(a)- BP failed to obtain approval of the Temporary Abandonment procedure actually used at the Macondo well. Specifically, the April16, 2010, approved Temporary Abandonment procedure consisted of one negative test with seawater displaced to the BOP and another negative test when the mud was displaced with seawater down to 3300 feet BML. Actual operations conducted by BP went straight to displacing the mud with seawater to 3300 feet and conducting a negative test. BP omitted doing the first negative test with mud being displaced with seawater to the BOP stack as approved in the Temporary Abandonment procedure. Consequently, BP used a Temporary Abandonment procedure for which it had not received approval. (See Volume II of the JIT Report at pages 26, 88-9 1, 111-112)

This list of violations may be supplemented as additional evidence is reviewed. You are hereby ordered to submit a letter acknowledging receipt of this Notification within 14 days. Because no corrective action is now possible to remedy these violations, no additional action on your part is presently required. You have the right to appeal this Notification in accordance with 30 CFR Part 290. You must file your appeal with the New Orleans District Office, the office issuing this notification. If you have any questions about this letter, please contact me at (504) 734-6742. Sincerely,

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David J. Trocquet New Orleans District Manager