Top House Democrats blasted major oil companies on Tuesday for having oil spill response plans that are virtually identical to BP’s, including two that list a phone number for the same long-dead expert.
“It could be said that BP is the one bad apple in the bunch,” said Rep. Bart Stupak (D-Mich.) at a hearing of the House Energy and Commerce Committee’s subcommittee on energy and environment. “But unfortunately they appear to have plenty of company. Exxon and the other oil companies are just as unprepared to respond to a major oil spill in the Gulf as BP.”
Five top executives from the major oil companies — Exxon Mobil, Chevron, BP, Shell Oil, and ConocoPhillips — sat silently as lawmakers expressed outrage in their opening statements about the disastrous April 20 BP oil spill in the Gulf of Mexico.
Later, pressed by committee chairman Henry A. Waxman (D-Calif.), the chief executives distanced themselves from BP’s decisions on the ill-fated well.
“We would not have drilled the well the way they did,” said Rex W. Tillerson, chairman and chief executive of Exxon Mobil.
Tillerson, questioned by Stupak on the adequacy of the companies’ spill response plans, later acknowledged that “we are not well equipped” for major oil spills. He added that “there will be impacts” from spills. “We never represented anything other than that.”
The hearing unfolded hours before President Obama was scheduled to use his first Oval Office address to call for a new national energy strategy in response to the BP spill. On Monday, Waxman and Stupak, chairman of the panel’s subcommittee on oversight and investigations, released a letter to BP chief executive Tony Hayward that said the oil giant “repeatedly chose risky procedures in order to reduce costs and save time, and made minimal efforts to contain the added risk.”
In one instance, four days before the explosion, a BP drilling engineer sent an e-mail to a colleague noting that engineers had not taken all the usual steps to center the steel pipe in the drill hole, a standard procedure designed to ensure that the pipe would be properly cemented in place. “[W]ho cares, it’s done, end of story, will probably be fine and we’ll get a good cement job,” the engineer wrote.
In London, Fitch Ratings agency on Tuesday downgraded BP’s long-term issuer default rating and senior unsecured rating to BBB from AA, sending the oil company’s shares to a new low. The ratings company said it was concerned by U.S. government reports that the volume of the spill was significantly larger than previously indicated, and by calls from U.S. officials for BP to pay billions of dollars into an escrow account to guarantee payment of cleanup costs.
BP has lost 45 percent of its value since the explosion at the Deepwater Horizon rig in the Gulf of Mexico that killed 11 workers and set off the worst oil spill in history.
At Tuesday’s hearing, Rep. Edward J. Markey (D-Mass.), chairman of the energy and environment subcommittee, complained that the five biggest oil companies have “virtually identical” response plans. “The covers of the response plans are different colors, but the content is 90 percent identical.”
Waxman said that the “cookie cutter” plans relied on the same single contractor, the same stockpile of dispersant and same top kill and “junk shot” strategies for stopping a leaking well. Markey said that three companies, like BP, include references to protecting walruses which, Markey noted, “have not called the Gulf of Mexico home for 3 million years.”
Republicans on the committee also lamented the “tragedy” in the Gulf of Mexico, but unlike the Democrats they aimed some of their criticism at Obama. Rep. Steve Scalise (R-La.) complained about the “incompetent response to this disaster” and said that Obama had given too much cleanup authority to BP and behaved like “a spectator in the stands.”
In prepared testimony, Chevron chief executive John S. Watson said that any one of its employees and contractors has the authority to stop work on a rig if he sees anything unsafe. And he stressed the importance of continuing offshore drilling and cited the industry’s “strong record for safety and environmental protection.” But he did not speak to the company’s spill response plan.
Exxon’s Tillerson submitted prepared testimony to the committee that called the BP explosion “a dramatic departure from the industry norm in deepwater drilling.” Tillerson, in his testimony, demanded a critical review to “know if the levels of risk taken went beyond industry norms.”
Invoking the lessons his company learned after the 1989 Exxon Valdez tanker spill, Tillerson said the accident was both a “low point” and a “turning point” in the company’s history that prompted full-scale reviews.
A thorough understanding of what occurred in the BP disaster would involve looking at the “drill well design and operating procedures, and the execution of the drilling plans,” Tillerson said, ticking off several areas already being criticized by an array of congressional investigations as well as federal and state officials.
In his statement, Tillerson did not directly criticize BP. But he spoke of industry experience with proper well designs, safety redundancies, proper inspections, tests and drills. With that focus, he said, “tragic incidents like the one in the Gulf of Mexico today should not occur.”
Under aggressive questioning from Markey, Tillerson conceded that the inclusion of walrus protection in a response plan written for the Gulf of Mexico was “an embarrassment,” but he said it was part of “a larger marine response plan.”
Asked why the plan included the telephone number of a dead expert, Tillerson said that the expert’s research was still valid. James Mulva, chief executive of ConocoPhillips, said the plans need to updated more frequently.
Tuesday’s hearing was originally called to look at “Drilling Down on America’s Energy Future,” but the current gulf disaster and response, and the decisions that led to it, were at the forefront as the hearing opened.
Chevron Chairman and chief executive John S. Watson, in his written testimony, called the continuing disaster a “humbling” experience for the industry while also saying “responsible deepwater development” must continue.
Echoing that sentiment, Shell President Marvin E. Odum said in his testimony that “in the context of this tragedy, we acknowledge the reasons for the president’s decision to pause deepwater drilling,” but said the Obama administration’s six-month moratorium on that drilling ” is not without consequence” citing lost jobs, wages and spending.
White House spokesman Robert Gibbs appeared on several morning news shows Tuesday to discuss the administration’s response to the crisis, which will be the topic of Obama’s 8 p.m. Oval Office address.
Gibbs said on CBS’s “The Early Show” that “the president will either legally compel [BP] or come to an agreement with BP to get out of the claims process [and] give that to an independent entity, so that the people that have been damaged can get the money that they deserve quickly.”
He said Obama, who will meet with the head of BP’s board on Wednesday, will use his Oval Office address to “outline a plan moving forward to deal with the oil that’s leaked, to . . . make sure that something like this never happens again.”
Obama also plans “to discuss with the American people our approach towards reducing our dependence on oil and other fossil fuels,” Gibbs said.
