UPDATE 1-BP had warning signs before Gulf blast-US panel

* Tests before explosion showed ‘fundamental mistake’

* BP, Transocean to testify in Congress on Thursday

(Adds Transocean response, paragraph 7)

WASHINGTON, May 25 (BestGrowthStock) – BP Plc (BP.L: ) told
congressional investigators on Tuesday that pressure tests on a
drill pipe showed a fundamental mistake hours before the deadly
explosion that caused the Gulf of Mexico oil leak, a memo
released by two congressmen showed.

The memo by Representatives Henry Waxman and Bart Stupak,
who were briefed by BP about the progress of its internal
investigation, also said problems were found in equipment meant
to provide fail-safe protection against a blow out.

A BP investigator indicated to the lawmakers that the
fundamental mistake may have been made because heavy pressure
on the drill line of 1,400 pounds per square inch (98 kg per
square cm) was an “indicator of a very large abnormality.”

The memo did not indicate who made decisions after the
problem was found. BP and Transocean (RIGS.N: ), the owner and
operator of the rig, had supervisors on the rig when it
exploded.

About two hours before the explosion that killed 11 workers
and caused the leak that is still gushing oil, the rig team was
satisfied a test on another line was successful, the BP
investigator said.

BP would not comment on the memo.

A Transocean spokesman blamed BP for the disaster, saying,
“A well is constructed and completed the same way a house is
built — at the direction of the owner and the architect. And
in this case, that’s BP.”

The congressional memo said BP data showed there were
numerous problems with production equipment. Nearly five hours
before the explosion, an unexpected loss of fluid was observed
in the well’s riser pipe. That suggests “there were leaks in
the annual preventer,” a rubber gasket in the blowout
preventer, the memo said.

Waxman and Stupak chair the House Energy and Commerce
Committee’s investigative subcommittee, which has reviewed over
105,000 pages of internal documents from BP, rig owner
Transocean Ltd, Halliburton Co (HAL.N: ), and blowout preventer
manufacturer Cameron (CAM.N: ).

The memo said the BP investigation has also raised concerns
about the maintenance history, modification, and inspection of
the blowout preventer.

Officials from BP and Transocean are scheduled to testify
before congressional panels on Thursday.

According to BP, there also were three warning signs of
problems with unwanted flow in the well starting 51 minutes
before the explosion. About 18 minutes before the explosion
abnormal pressure leaks of the fluids known as mud meant to
keep oil and gas capped were observed and the pump was shut
down.

“The data suggests that the crew may have attempted
mechanical interventions at that point to control the pressure,
but soon after, the flow out and pressure increased
dramatically and the explosion took place,” the memo said.

Stock Market Report

(Reporting by Timothy Gardner, editing by Philip Barbara
and Bill Trott)

UPDATE 1-BP had warning signs before Gulf blast-US panel