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Gulf oil spill: Companies' fingerpointing falls flat

May 11, 2010 | 12:44 pm

The Alphonse and Gaston routine of executives from the three companies involved in the explosion of the giant Deepwater Horizon drilling rig in the Gulf of Mexico failed to impress members of the Senate Energy & Natural Resources Committee on Tuesday, but it was a carefully crafted and politically polished performance.

"I feel the case for the defense is being built here this morning," said Sen. Maria Cantwell (D-Wash.), who criticized the "too cozy relationship" between the companies and government regulators. Saying that "much more oversight" is needed Cantwell  pressed BP America Chairman Lamar McKay as to whether the company would pay for as much as $14 billion in estimated cleanup costs and liability claims.

After a slight hesitation, McKay responded, "We will pay all legitimate claims, yes."

The hearing, with a second one planned by another Senate committee later in the day, marked the first public questioning by members of Congress of executives of BP, which owned the exploratory well and was overall operator; Swiss-based Transocean Ltd., which owned the drilling rig and key well safety equipment, and Halliburton Inc., which worked on sealing the well for future oil production.

Arriving for the hearing, the executives had been met by protesters holding signs saying "Boycott BP" and "BP Kills," while six young women wore T-shirts with the words, "Energy shouldn't cost lives." Black tears were inked onto their faces.

McKay, Steven Newman, president of Transocean Ltd, and Tim Probert, a senior executive of Halliburton Co., raised their right hands to testify under oath and sat in a row as they testified and fielded questions, each one effectively blaming another for the explosion and failure to control the spill.

McKay told senators that BP is determined "to do all we humanly can to stop the leak, contain the spill, and to minimize the damage suffered by the environment and the people of the Gulf Coast." Explaining the accident, he focused on a crucial safety device, the 450-ton blowout protector, that was supposed to shut off oil flow on the ocean floor in the event of a well blowout but "failed to operate." "That was to be the fail-safe in case of an accident," he said.

But McKay pointedly noted that BP did not own the rig and that its contractor Transocean, owner and operator of the drilling rig, had "responsibility for the safety of drilling operations." Of the 126 people on the Deepwater Horizon rig when it was engulfed in flames, only seven were BP employees, he added. 

But Transocean's Newman had no intention of accepting that explanation--and instead bounced the ball back to BP. "Offshore oil and gas production projects begin and end with the operator, in this case BP," he said. It was BP that prepared the drilling plan and BP that gave the go-ahead to fill the well pipe with sea water before a final cement cap was installed, he noted.

Moreover, Newman said that there is "no reason to believe" its blowout protector didn't work and that it might have been clogged by debris shooting up the well. The explosion, believed likely to have originated from upward surging methane gas within the well, came three days after the drilling process was essentially completed, said Newman, also passing the blame onto Halliburton, the giant oil services company that was responsible for cementing and plugging the oil well until it was ready for production.

While the investigation into the cause of the oil rig explosion continues, "the one thing we do know is that on the evening of April 20 there was a sudden, catastrophic failure of the cement, the casing, or both," Newman said.

Halliburton’s Probert fended off Newman's accusations, saying that his company's work was done "in accordance with accepted industry practice" and BP’s plans. "Halliburton is confident that the cementing work ... was completed in accordance with the requirements of the well construction plan," he told the committee.

Sen. Robert Menendez (D-N.J.) noted that the hearing was being held in the same room as hearings into the sinking of the Titanic. "At that time we had a ship supposedly so technologically advanced that it could not sink. And here we have a rig that the industry has told us so many times is so technologically advanced it supposedly could not spill."

He also expressed concern about the uncertainty over when the leak would be plugged. "What I see is a company not prepared to address a worst-case scenario, but a company that is flailing around trying whatever they think of next to try to deal with the worst-case scenario," he said. "I get the sense you're making things up as you go along."

BP and Transocean are conducting separate investigations into what went wrong. The hearings are expected to lead to legislation, such as a bill that would greatly increase industry’s liability for spills. And  Sen. Cantwell noted that the spill underscores the urgency of developing cleaner energy sources. "What I've learned from this situation is I think it's time for us to diversify off of oil," she said.

--Richard Simon and Margot Roosevelt