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Oil executives trade blame in Senate grilling

Lawmakers accuse the firms of giving false assurances on their operations' safety.

May 12, 2010|Richard Simon and Jim Tankersley

WASHINGTON — As thousands of gallons of oil continued to spew daily from a damaged well in the Gulf of Mexico, grim-faced industry executives came under attack Tuesday on Capitol Hill from senators who accused them of trying to shift blame to one another and of making pre-drilling safety assurances that proved disastrously off-base.

In back-to-back hearings, senators accused BP, which owns the well, of misrepresenting the blowout preventers placed atop wells as fail-safe and of telling regulators that the drilling would have "no adverse impacts" on the environment.

"We can't have a world where people say one thing before they get a permit and then just act like they never said it," Sen. Barbara Boxer (D-Calif.) told Lamar McKay, chairman and president of BP America. "You said we won't have a problem."

"We obviously did not expect a situation like this," McKay said.

The BP executive also told senators that the company was 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."

But he said that Transocean Ltd., owner and operator of the drilling rig, had "responsibility for the safety of drilling operations."

Steven Newman, Transocean's president and chief executive, seemed to point a finger at yet another contractor. Although the investigation of the cause is ongoing, he told the senators that "there was a sudden, catastrophic failure of the cement, the casing or both."

An executive with Halliburton, which did the cementing, subtly reminded senators that it was operating under BP's plan for the well. Halliburton's work was done "in accordance with accepted industry practice" and BP's plans, said Tim Probert, president of the firm's global business lines.

"Halliburton is confident that the cementing work ... was completed in accordance with the requirements of the well construction plan," he said.

"Had the B.O.P. [blowout preventer] functioned properly, this tragedy wouldn't have taken place," he later told a committee headed by Boxer.

The back-and-forth drew the ire of several senators -- one of whom accused the executives of doing a "Texas two-step" to avoid liability, and two who are considered industry allies.

"I hear one message, and the message is 'Don't blame me,' " Sen. John Barrasso (R-Wyo.) said. "Well, shifting this blame does not get us very far."

Sen. Lisa Murkowski of Alaska, the energy committee's top Republican, said, "I would suggest to all three of you that we are in this together, because this incident is affecting, will have impact on the development of our energy policy for this country."

Sen. Benjamin Cardin (D-Md.) grilled McKay about industry representations that the blowout preventers were designed to never fail when, he said, they have failed more than a dozen times.

"Isn't it accurate that industry touted these blowout preventers as fail-safe?" Cardin asked.

"Obviously this is an unprecedented accident, and it's going to be reviewed in every way it can possibly be reviewed," McKay said.

The growing pressure to increase scrutiny of drilling companies also appeared to be behind Interior Secretary Ken Salazar's announcement Tuesday that he would split the Minerals Management Service, the agency that regulates offshore drilling, into two departments: one to lease federal land and water for drilling and collect royalties and the other to inspect drilling operations and enforce safety and environmental regulations.

Critics have blamed the dual role of the agency for a lack of oversight of the industry, and they say its regulations and risk assessments have not kept pace with rapidly evolving drilling technologies. In addition, a scathing report by Interior's inspector general in 2008 described agency employees who received gifts "with prodigious frequency" from the oil companies they were supposed to be regulating.

Interior officials say Salazar has the authority to split the agency without congressional approval. But Salazar said he would ask Congress to authorize other changes, including making the head of the service a presidential appointee requiring Senate confirmation.

Meanwhile, a BP official in the gulf said a new containment box had arrived and was being lowered into the water. It is expected to be in place by Thursday, the company said.

A much larger structure failed to cap the leaking wellhead last week when gas and oil mixed with cold seawater formed slushy hydrate crystals that rendered it unusable. BP says the new box, because it is smaller, will allow heat from the oil to build up more quickly and prevent hydrates from forming, allowing the oil and gas to flow up a pipe to a waiting ship.

The oil slick continued moving toward southern and eastern Louisiana on Tuesday, nudged along by southeasterly winds. More than 4 million gallons of oil have been spilled since the Deepwater Horizon rig exploded April 20, and the figure is growing at a rate of 210,000 gallons a day.

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