Oil Executives Pass the Buck for Gulf Spill

     WASHINGTON (CN) – Three weeks after an explosion on the Deepwater Horizon killed 11 crew members and set off a catastrophic oil spill in the Gulf of Mexico, executives from BP, Transocean and Halliburton lined up before a Senate committee Tuesday, volleying blame for the spill. “I don’t get the sense that you were truly prepared,” Sen. Robert Menendez told BP America Chairman Lamar McKay. “I get the sense you’re making things up as you go along. Is this going to be a liability chase?”

     In front of two groups of protestors — one holding signs that said “Spill Baby Spill” and “BP Kills,” and another wearing black T-shirts that read “Energy Should Not Cost Lives” — oil and drilling executives insisted that they were in full compliance with safety regulations and were following normal operating procedures at the time of the explosion.
     “We are a responsible party,” McKay told members of the Senate Committee on Energy & Natural Resources. “Let me be clear: It’s inappropriate to draw any conclusions before all the facts are known,” McKay said. “We know that we will be judged for our response in this crisis.”
     Under the 1990 Oil Pollution Act, BP is liable for up to $75 million in cleanup costs unless it is found to be grossly negligent, in which case the cap would be rendered invalid. Democratic Sen. Mary Landrieu of Louisiana asked what the company would do even if it were not found grossly negligent. Would it pay more than the $75 million?
     “We have been very clear. We are going to pay all legitimate claims,” McKay said, adding that the company expects costs to surpass the $75 million cap. “We think we are going to exceed that, and that is irrelevant. …We’re going to pay the claims” McKay said.
     “Every legitimate claim?” Sen. Maria Cantwell, D-Wash., asked, citing reports that put the total number at $14 billion.
     “I’m saying we will pay all legitimate claims, yes,” McKay said. “We want be very direct and responsive. We mean it.” McKay said BP was closing on 1,000 claims as of Monday, mostly involving fisherman put out of work by the spill.
     But the BP primary was still eager to shift blame to the executive sitting to his left, Transocean CEO Steven Newman. Transocean, the world’s largest offshore drilling contractor, was running the rig at the time of the explosion. Nine of the 11 people killed in the explosion were Transocean employees.
     “We hired Transocean to drill the well,” McKay said.
     Newman shot back, “All offshore oil and gas production projects begin and end with the operator,” he said, without naming BP.
     Newman rejected claims that the blowout preventer caused the incident. “That simply makes no sense,” Newman said in his written testimony. “The blowout preventers were clearly not the root cause of the explosion. Our most important task is to understand why a cased and cemented wellbore suddenly and catastrophically failed.”
     “As the lease operator and well owner, that falls on BP,” Newman said, explaining that BP determined “where and how a well is to be drilled, cased, cemented and completed.”
     Tim Probert, chief environmental officer at Halliburton, also deflected blame on behalf of the company, saying Halliburton was “contractually bound” to do whatever BP said. Halliburton was in the final phases of cementing the well when the explosion occurred.
     Senators criticized the companies for not having adequate spill response measures in place before the incident. Sen. Jeff Sessions, R-Ala., complained that BP didn’t begin building the cofferdam until the spill, losing days in the cleanup.
     “We are dealing with fluids and a depth of water that hasn’t been dealt with before,” McKay said. “One hundred and sixty companies are working on this.”
     So far, attempts to stop or contain the leak have failed, including activating the blowout preventer and putting a cofferdam in place. Responders are drilling the first of two relief wells that will intercept and permanently secure the well, but the process could take up to three months, and an approach that would inject material into the blowout preventer to stop the flow of oil is projected to take weeks.
     All three companies have launched internal investigations into the incident.
     Committee ranking member Sen. Lisa Murkowski, R-Alaska, decried the blame game. “We are all in this together,” she said, adding that the country’s energy policy would change because of the spill.
     Cantwell, who noted that the last time she was in the hearing room was to examine the causes of the explosion of the Challenger, said this tragedy also amounted to system failures.
     “There is too cozy a relationship with [Minerals Management Service] and the industry,” she said.
     The Obama administration announced Tuesday that it would split the MMS, which currently collects royalties from oil and gas leases while acting as the industry’s regulator.
     Sen. Ron Wyden, D-Ore., said the oil spill was no surprise.
     “This fits a pattern of serious accidents at BP,” he said.
     “I believe our operating system in the Gulf of Mexico is as good as anyone,” McKay said, arguing that nothing points to deficiencies in BP’s operating and management systems.
     “I acknowledge we have issues and we have areas of the company that we have to change,” McKay said.
     Wyden, appearing agitated, pounced on the statement and asked Wyden to specify the areas.
     McKay said BP had been engaged in a “rigorous” overhaul of its operation management systems since Tony Hayward took over as global CEO in 2007 and started changing the company’s culture.
     “The culture of this company is that there has been one accident after another,” Wyden said.
     “I believe we are changing this company,” McKay responded. “It’s being changed to its core.”
     Menendez, a Democrat from New Mexico, asked why BP represented to the Department of Interior that it was ready for the worst-case scenario, when it seems to be “jumping action to action” to address the crisis.
     “What I see is a company that is flailing around trying to do whatever they think of next to deal with worst-case scenario,” Menendez told McKay.
     “We’ve made it clear that we are going to deal with the people and communities directly,” McKay said.
     Cantwell suggested that the executives’ blame shifting served as a warm-up for pending litigation. “I definitely feel like the case for defense is being made here this morning,” she said.

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