Oil Executives Face Congress Today, Blame Each Other for Spill

May 11, 2010

Big oil goes under the spotlight Tuesday when U.S. lawmakers grill top executives on a drilling rig explosion and oil spill that threatens an environmental catastrophe in the Gulf of Mexico.

The hearings come during a desperate race against time to stem the oil gushing from a well ruptured after an explosion last month that killed 11 workers, sank the rig and set in motion the unfolding economic and ecological disaster.

Delays in containing the leaking well increase the chances it could become the worst U.S. oil spill ever, surpassing the 1989 Exxon Valdez accident in Alaska.

BP planned to try again to contain the oil surging deep from the Gulf of Mexico, this time with a far smaller but hopefully more effective funnel than it tried previously in a failed bid to stem the flow, which is estimated at 5,000 barrels (210,000 gallons) of oil a day.

Lamar McKay, president of BP America Inc., Steven Newman, president of Transocean Ltd and Tim Probert, a senior executive at Halliburton Co., will face questioning before two Senate committees.

Based on written testimony, the executives will blame one another’s companies for the rig explosion and failure to control the oil slick threatening to devastate wildlife, fisheries, shipping and tourism along the Gulf Coast.

Their companies face intense political pressure in the aftermath of the explosion that sank Transocean’s Deepwater Horizon rig as it was finishing a well for BP.

Halliburton joins BP and Transocean because it provided a variety of services on the rig and was involved in cementing the well to stabilize its walls and plug it.

Transocean’s prepared testimony for the hearings at the Senate Energy and Natural Resources Committee, which begin at 10 a.m. and the Environment and Public Works Committee, whose hearing starts at 2:30 p.m. pins the explosion on the failure of the cementing to plug the underwater well.

BP directs blame for the blowout at Transocean, the rig’s owner and overseer of the operation of the blowout preventer, a stack of pipes and valves designed to close off the flow of oil in case of a sudden pressure change.

BP’s stock was down about 1.5 percent in early London trading. Company shares have fallen more 15 percent since the rig blast on April 20, wiping about $30 billion from its market value.


“The one thing we know with certainty is that … there was a sudden, catastrophic failure of the cement, the casing or both,” according to Newman’s prepared remarks.

Transocean’s Newman also said the rig blew three days after the drilling was completed and the well had been sealed with cement. The workers above never knew what hit them.

“It is also clear that the drill crew had very little (if any) time to react,” Newman said. “The explosions were almost instantaneous.”

With attempts to contain the oil spill unsuccessful so far, some lawmakers have questioned the adequacy of the companies’ response to the accident.

David Nagel, executive vice president for BP America, on Monday defended his company’s response to the accident.

“In terms of the spill response: that was mobilized right away,” Nagel told reporters at a press briefing in Washington. He said the failure of Transocean’s blowout preventer was what “turned this incident into a really tragic situation.”

“This was the last step in a series of safety steps to control the situation … and it was expected to work,” Nagel said.

The Obama administration, lawmakers and environmental groups have said new regulations will likely be needed to improve safety at deepwater wells.

The executives in their testimony did not offer recommendations on how to protect workers from such explosions in the future or how to better prevent and control oil spills in the Gulf’s very deep waters.

Lawmakers in the House and the Senate have also introduced legislation that would raise the amount of money BP would be responsible to dole out for economic losses caused by the spill to $10 billion, from $75 million under current law.

The oil spill casts a great deal of uncertainty on the fate of the Senate compromise climate bill set to be released this week. Some coastal state Democrats have threatened to oppose the legislation, which is expected to include measures promoting offshore drilling in new areas.

The executives will return to Capitol Hill Wednesday, when they will testify about the oil spill before a House Energy and Commerce subcommittee.

BP now aims to deploy a small “top hat” dome over the leak after its effort over the weekend to cover it with a huge metal box was stymied by a buildup of crystallized gas hydrates.

The new plan is to have an oil-barrel-sized container at the leak site, a mile down from the water’s surface, by around Thursday. Oil would then be siphoned up to a tanker.

(Additional reporting by Timothy Gardner, Patricia Zengerle and Ayesha Rascoe in Washington; Writing by Ed Stoddard; Editing by Eric Walsh and Peter Cooney)

Topics Legislation Energy Oil Gas

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