May 12th, 2010
08:35 AM ET
13 years ago

Capitol Hill hearings into oil spill continues

Washington (CNN) - Executives from BP, Transocean and Halliburton are back in the hot seat Wednesday as a House Energy and Commerce subcommittee questions them about the Gulf Coast oil spill.

The three companies have primarily blamed each other for the accident last month that left 11 workers dead and oil still spewing into the Gulf.

BP, the well's owner and lead operator of the project, has sought to turn attention to Transocean, which had a contract to drill the well for BP using its Deepwater Horizon drill rig.

"Transocean, as owner and operator of the Deepwater Horizon drilling rig, had responsibility for the safety of drilling operations," Lamar McKay, chairman and president of BP America, told the Senate Energy and Natural Resources Committee on Tuesday.

In particular, McKay drew attention to the valve that was supposed to shut off the well in case of an accident. The valve, known as a blowout preventer (BOP), is owned by Transocean.

"Clearly, the BOP remains a critical piece of equipment throughout all operations to ensure well control," said McKay.

In written testimony before the hearing, Transocean said the blowout preventer performed fine in tests just a week before the accident.

While it's still unclear why the blowout preventer did not work, Transocean chief executive Steven Newman said the preventer is not the ultimate cause of the accident. He says that there must have been a failure of the well's cementing or the casing that holds the wells in place.

Either way, Transocean said it's the responsibility of the well's owner to set all specifications for the drilling process.

"All offshore oil and gas production projects begin and end with the operator ... in this case, BP," Newman said.

Newman took a slightly more conciliatory tone during his testimony, but still sought to shift the focus away from the blowout preventer and to the well itself.

"Here was a sudden, catastrophic failure of the cement, the casing, or both," he said. "Without a failure of one of those elements, the explosion could not have occurred."

The well's cementing was done by Halliburton. But Halliburton's chief safety and environmental officer, Tim Probert, said responsibility lay with either Transocean or BP.

"The casing shoe was cemented some 20 hours prior to the tragic incident," said Probert. "Had the BOP functioned as expected, this catastrophe may well not have occurred."

During the cementing of the well, Halliburton simply followed BP's instructions, he said.

Senators were not impressed with the blame game.

"Shifting the blame does not get us very far," said Republican Sen. John Barrasso of Wyoming. "And it does not change America's need for energy."

Several senators focused on the blowout preventer, and why it didn't work.

"Should we go forward with deep-water drilling when we know these blow out preventers may not function?" asked Sen. Mary Landrieu, a Democrat from Louisiana, whose state has been severely affected by the spill.

Elmer Danenberger, former head of the Minerals Management Service, the federal agency that regulates offshore drilling, said the blowout preventers usually work.

But in some cases, such as thick sections where two joints come together, the preventers won't cut through the pipe, which is necessary to pinch it shut and stop leaks.

Senators wanted to know why there weren't more shears on the blowout preventer in case one shear hit a thick spot on the pipe. They also asked why other backup systems were not in place.

"That was going to be in place, but apparently it never happened," Danenberger answered.

It has been speculated that additional shears might make the devices too heavy for older drill rigs to carry.

Minerals Management Service has come under fire as the story of the spill has unfolded. The agency has to balance competing priorities: slowing drilling to ensure safety while also generating royalties for the U.S. government.

On Tuesday, the Obama administration announced plans to split the agency in two to avoid conflicting interests.

MMS has also been accused of being too close to the oil industry - especially after news broke last year that some of its members were partying with and receiving gifts from oil executives.

"You've all seen the records of the sex parties, the pot parties," Democratic Sen. Bill Nelson of Florida told a Senate Environment and Public Works panel in the afternoon. "MMS clearly needs to get cleaned up."

Under federal law, BP, as the lead project operator, is responsible for all clean-up costs associated with the spill. On Monday, BP said it has spent $350 million so far.

But damages caused by closure of fishing grounds, shipping lanes and tourist spots could exceed the cleanup costs, and it's unclear which party will pay those or how much they'll add up to.

Under current law, BP may only be liable for the first $75 million of claims that are expected to run into the billions.

BP has said it will pay all "legitimate claims" when it comes to compensating people for economic loss.

At Tuesday's hearing, BP's McKay said the company expects to spend more than $75 million on compensating people for the spill.

But under questioning from Democractic Sen. Maria Cantwell of Washington, the extent of the commitment wasn't clear.

"So you'll pay for lost fishing opportunities?" asked Cantwell.

"All legitimate claims," responded McKay.

"And lost tourism revenue?" asked the senator.

"All legitimate claims," McKay answered again.

"And how about lost tax revenues to towns and parishes?" asked Cantwell.

"Question mark," said McKay.

"And damages sustained to Louisiana's brand?"

"I really don't know," said McKay.

While the subcontractors are thought to have some legal indemnification from BP and the federal government, lawyers say they could still be open to lawsuits from fisherman and others affected by the spill.

Ultimately, experts have said total costs could range from $2 billion to $14 billion or higher, depending on when the leaking well is closed and where the oil washes ashore.

Filed under: Energy
soundoff (14 Responses)
  1. Liz the First

    I hope they bring out how many other oil rigs have burned very shortly after Halliburton working on them. this is highly relevant. i hope this disaster wakes up the people in this country to the fact that we must look to cleaner renewable energy sources. we're destroying our home in our mad pursuit of fossil fuel. even nuclear is a much better alternative.

    May 12, 2010 08:52 am at 8:52 am |
  2. jim

    Banks, Auto, Oil ...

    What would expect from free capitalism?? Wonderful isn't??

    And our government has these sessions with Banks, Auto & Oil – for what? It's a joke, right?? Sure seems that way.

    Why doesn't the government create an agency called "US Department of Free Capitalism Disasters"? We more or less have that anyway with all these Banks, Auto and Oil appearing before congress over the last two years, with the defendants only throwing BS at our silly government and the US people – and what does our government do? Not much. So lets create the "US Department of Free Capitalism Disasters" and make the BS formal.

    Again, what do you expect? We are free !!!

    May 12, 2010 09:00 am at 9:00 am |
  3. Monrob

    I cannot believe these oil execs; oh, yes I can.

    May 12, 2010 09:02 am at 9:02 am |
  4. Sensible Cape Coral FL

    Let's not forget that for eight years the country was led by two oil men.

    May 12, 2010 09:04 am at 9:04 am |
  5. S.B. Stein E.B. NJ

    Well, this is just plain silly. All of these companies share in the blame. They need to be working harder to make sure that everything is cleaned up, the businesses and people working and living in the area are compensated as well as having a research team study the ongoing and lingering effects of their disaster.

    If the reports that I have heard are correct as how they treated the survivors, then all of these groups need to have some new ethical training because they show none.

    May 12, 2010 09:26 am at 9:26 am |
  6. Ben in Texas

    The top executives from these criminal companies should be cooling their heels in jail. This "accident" is only an accident in the same way that vehicular homicide can be accidental. When a drunk driver kills someone "accidentally", he still goes to jail. If corporations are going to be people, as the Extreme Court asserts, then their representatives need to suffer the same real-world fate as a person would for the damages they have caused individually.

    Charge these drunken-with-power executives with felonies and send them to jail.

    May 12, 2010 09:30 am at 9:30 am |
  7. Dean

    Our government sucks. Time to quit talking and do something. There were gov ernment pkans in place for this type of emergency. Why haven't they been put into action?

    May 12, 2010 10:07 am at 10:07 am |
  8. Brink

    Stop wasting time and money. Just give these three clowns some rain slickers and rubber boots and send them out to help with the clean up.

    May 12, 2010 10:09 am at 10:09 am |
  9. teena

    So here is a concept–how about ALL THREE share in the costs of the spill since they can not agree on which ONE is to blame!

    May 12, 2010 10:12 am at 10:12 am |
  10. g ontario

    all these company head quarters are off shore do not pay taxs in the united states foriegn companies and should be banned from the gulf they care less about america

    May 12, 2010 10:17 am at 10:17 am |
  11. No Incumbents 2010

    BP = Biggest Polluter
    BP = Bad Planning
    BP = Broken Pipe

    May 12, 2010 10:25 am at 10:25 am |
  12. Annie, Atlanta

    As I heard Ed Schultz put it last night, we're watching these execs getting questioned by the same people whose pockets they line. And to top it off, they've stacked the judicial system in some of the gulf states so they can operate business as usual. It's time to get the corporations out of DC, and stop them from buying judges, or its only going to go well for them. Not so much for the rest of us.

    May 12, 2010 10:25 am at 10:25 am |
  13. j

    I say sue them jointly, exact fines collectively, get the money, then let them work out the details among themselves.

    May 12, 2010 10:41 am at 10:41 am |
  14. Pay the piper

    This is the biggest man-made disaster in modern history.
    It's being down-played. The devastion is in-calcuable.
    The oil mogul's want to slide out of this just like Goldman Sachs did.
    Its time to pay the piper BP. Even if it Bankrupts you. You buy your ticket and you take your chances.

    if the U.S. government fails in realizing this direct accountability.

    The U.S. government is the failure.

    May 12, 2010 10:52 am at 10:52 am |