At the first Capitol Hill hearing on the Deepwater Horizon rig oil spill, top executives with BP America Inc., Transocean Ltd. and Halliburton defended their individual company’s actions and pointed fingers elsewhere.
In his testimony before the Senate Energy and Natural Resources Committee, BP America President Lamar McKay often reminded the panel that the Deepwater Horizon rig was owned and operated by Transocean, not BP. BP leased the rig from Transocean. One of the key questions to be asked is “why did Transocean’s blowout preventer [BOP] — the key fail-safe mechanism — fail to shut in the well,” he said.
Transocean President Steven Newman hinted that the fault may be with Halliburton, a major oilfield service company, which provided cementing services on the doomed rig that now lies at the bottom of the Gulf of Mexico. “The well had been sealed with casing and cement. For that reason, the only thing we do know is that on the evening of April 20th there was a sudden catastrophic failure of the cement, casing or both. Without a failure of one of those elements, the explosion [would] not have occurred,” he said.
But Tim Probert, president of global business lines and chief health, safety and environmental officer for Halliburton, defended his company’s actions. While “we should not be making a rush to judgment,” there are a “few things [that] can be said with some certainty. The casing shoe was cemented some 20 hours prior to the incident, and had the BOP functioned as expected this catastrophe may well not have occurred,” he said.
In line with regulations of the Minerals Management Service and at the direction of BP, “a positive pressure test was…conducted to demonstrate the integrity of the production casing string. The results of the positive test were reviewed by the well owner [BP] and a decision was made to proceed with the well program,” Probert noted, adding the explosion prevented Halliburton workers from setting the final cement plug.
Sen. Lisa Murkowski of Alaska, the ranking Republican on the committee, chastised the executives for trying to shift the blame. “There’s going to be plenty of time for blame,” she said, but now is the time to find out what happened. “To all three of you. we are…in this together.”
While Halliburton defended itself, Elmer Danenberger, former chief of the Offshore Regulatory Program at the Minerals Management Service (MMS), said he believes that cementing may have “possibly played a significant role” in the disaster. It, along with BOP components, may require more standards, he noted.
Senators were unsuccessful in trying to get McKay to say that BP will pay more than what it is required under current law if the economic damages from the spill exceed the capped amount. Under current law, BP’s liability for economic damages from the oil spill is capped at $75 million — unless reckless actions by BP were responsible for the spill. If that turns out to be the case, BP’s liability would not be capped.
Democratic senators have introduced legislation to raise the capped amount to $10 billion and make it retroactive to apply to the BP spill. “I have not had a chance to look at any legislative proposals,” McKay said when asked about the bill.
“As a responsible party under the Oil Pollution Act, we will carry out our responsibilities to mitigate the environmental and economic impact of this incident,” McKay told the Senate energy panel.
Senators also blasted McKay for what they saw as a not-well-thought-out response to the massive oil spill (see Daily GPI, May 11). “What I see is a company that’s not prepared to address a worst-cast scenario,” said Sen. Robert Menendez (D-NJ). He noted that BP appears to be “jumping from [one] action to another…I get the sense that you’re making things up as you go along.”
Sen. Jeff Sessions (R-AL) pressed BP as to why copper containment systems hadn’t been built and ready to go prior to the oil spill. “I think it’s difficult to predict [when] a copper dam would have been needed,” McKay said.
Spill response efforts heretofore have dealt with spills at the surface; they’ve never dealt with oil spewing at 5,000 feet below the surface, he noted. As a result of the Deepwater Horizon accident, the industry will need to focus on “how to make subsea intervention better,” McKay said.
Former MMS official Danenberger told the committee that he believes the “well will be killed” before the relief well is completed, which is estimated to take 90 days.
He also expressed support for creating a “truly independent safety and pollution prevention regulator that’s separate from the [MMS’] resource management and royalty collection function,” as Interior Secretary Ken Salazar announced Tuesday (see related story). “I think that concept may merit further attention.”
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