2nd UPDATE: Lawmakers Cite Warning Signs Before Rig Explosion

A deepwater BP Plc (BP, BP.LN) oil well had failed gas-leak tests hours before a surge of gas sent an oil rig into flames, but company officials reviewing the data concluded that additional tests justified proceeding with operations, according to a lawmaker leading a probe into the Gulf of Mexico disaster.

The new details emerged at a U.S. House Energy and Commerce Committee hearing as BP scrambled to contain a mile-deep leak that followed the explosion on the oil rig that BP was leasing from Transocean Ltd. (RIG). BP had contracted Halliburton Co. (HAL) to cement a pipe into a well bored into the Gulf of Mexico sea floor, and was using a safety device made by Cameron International Corp. (CAM).

On top of the pressure-test warning signs, a safety device, known as a blowout preventer, "had been modified in unexpected ways," including one change that was "potentially significant," according to another lawmaker, Rep. Bart Stupak (D, Mich.). BP has been unable to activate the blowout preventer and is instead drilling relief wells to shut off the oil leak, a process that the company says will take three months.

"The more I learn about this accident, the more concerned I become," said Rep. Henry Waxman (D, Calif.), the chairman of the committee, which has collected 100,000 pages of documents. "This catastrophe appears to have been caused by a calamitous series of equipment and operational failures."

On the irregular pressure tests, "negative" pressure tests, which involve reducing pressure inside the well to check for gas leaks, were conducted after the cement had time to set, according to Waxman. Waxman said his information was based in part on an interview with a BP official.

Initial tests failed, suggesting that an influx of gas might be causing pressure to mount inside a well hole bored into the sea floor, Waxman said. Transocean and BP personnel engaged in "an internal debate" over how to proceed, and at 8 p.m. officials determined that additional results justified ending the test and proceeding with well operations, according to Waxman.

Shortly before 10 p.m., operations resumed and gas "surged from the well" up a pipeline and "the rig exploded in a fireball," Waxman said.

Republicans, longtime allies of the oil industry, began to waver in their support for offshore drilling. After being told that blowout preventers aren't designed for all disaster situations, Rep. Joe Barton (R, Texas) said that "I would think that your blowout preventer, your technology, your casing, should be designed to handle" a catastrophic release of pressure.

"If my assumption is wrong, then we have to reassess the entire OCS drilling program," Barton said. The Gulf of Mexico, a part of the nation's Outer Continental Shelf, accounts for 30% of U.S. domestic oil production.

Company executives, who had spent Tuesday dodging blame at U.S. Senate hearings, found new reasons to point fingers on Wednesday.

Halliburton's chief safety officer, Tim Probert, repeated assertions that the only way to fully test the quality of Halliburton's cement work would have been to conduct a final evaluation involving a "cement bonding log," which wasn't done.

But Lamar McKay, the head of BP Plc's U.S. unit, said that such tests are only used "when there is an indication of a problem" and said that the "better way" to test cementing work is through positive and negative pressure tests.

-By Siobhan Hughes, Dow Jones Newswires; 202-862-6654; siobhan.hughes@dowjones.com

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