The Tonka Report

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BP Executives Tell Congressional Panel Oil Disaster An Aberration

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June 15, 2010: John M. Broder / The New York Times – June 15, 2010

WASHINGTON — The chief executives of the world’s largest oil companies faced a Congressional panel of inquisitors on Tuesday and tried to cast the BP spill as a rare event that their companies were not likely to repeat. In their remarks, the executives said that continued offshore exploration and drilling were essential to American oil and gas supplies and to the health of their industry.

In a moment of Capitol Hill drama reminiscent of the grilling of tobacco industry executives in 1994, the oil company officials were summoned by the House Energy and Commerce Committee to justify offshore drilling and explain how their safety practices differed from BP’s. Rex W. Tillerson, chairman of Exxon Mobil, testified that if companies follow proper well design, drilling, maintenance and training procedures accidents like Deepwater Horizon explosion on April 20 “should not occur,” implying that BP had failed to do so.

John S. Watson, chief executive of Chevron, also pointed an implicit finger at BP, saying that every Chevron employee and contractor has the authority to stop work immediately if they see anything unsafe. Congressional investigators charge that BP went ahead with risky procedures even after repeated warnings from company workers and contract employees on the ill-fated rig. “Our internal review confirmed what our regular audits have told us,” Mr. Watson testified. “Chevron’s deepwater drilling and well control practices are safe and environmentally sound.”

Lamar McKay, the president of BP America, would not say whether the company would place funds in an escrow account to handle future claims for economic and ecological damages, as many in Congress and the administration are demanding. “I cannot commit today one way or another to a fund,” Mr. McKay said in response to a question from Representative Fred Upton, Republican of Michigan. “We have said we’ll honor all legitimate claims and the full company stands behind that.” President Obama is expected to raise the matter of an escrow fund when he meets with top BP executives at the White House on Wednesday.

Mr. McKay, did, however, issue a plea for forbearance from Congressional and executive branch officials, saying: “America’s economy, security and standard of living today significantly depend upon domestic oil and gas production. Reducing our energy production, absent a concurrent reduction in consumption, would shift additional jobs and dollars offshore and place millions of additional barrels per day into tanker ships that must traverse the world’s oceans.”

The executives appeared before the energy and environment subcommittee of the House Energy and Commerce Committee, chaired by Representative Edward J. Markey, Democrat of Massachusetts. He questioned the oil company representatives not only about safety procedures but about emergency planning, the use of dispersants and differences in regulations in other countries.

Representative Henry A. Waxman, the California Democrat who is chairman of the House committee, focused on the spill response plans of the five companies. They were prepared by an outside contractor and are virtually identical, Mr. Waxman said. Each of the plans addresses a worst-case spill. BP’s plan says it can handle a spill of 250,000 barrels a day; Chevron and Shell say they can handle 200,000 barrels a day. The current estimate for the BP spill is about 30,000 barrels a day, and it is clear that the company’s plan was not adequate to deal with it. Mr. Waxman said it is clear that the plans are “just paper exercises.” “BP failed miserably when confronted with a real leak,” Mr. Waxman said, “and Exxon Mobil and the other companies would do no better.”

Mr. Markey prepared a series of questions about industry spending on research and alternative energy, and plans to expand offshore operations to the Atlantic, Pacific and Arctic coasts. “Now the other companies here today will contend that this was an isolated incident. They will say a similar disaster could never happen to them,” Mr. Markey said as the hearing opened. “And yet it is this kind of Blind Faith — which is ironically the name of an actual rig in the Gulf — that has led to this kind of disaster.”

Mr. Markey added: “In preparation for this hearing, the committee reviewed the oil spill safety response plans for all of the companies here today. What we found was that these five companies have response plans that are virtually identical. The plans cite identical response capabilities and tout identical ineffective equipment. In some cases, they use the exact same words. We found that all of these companies, not just BP, made the exact same assurances.”

Like BP, Mr. Markey said, three other companies include references to protecting walruses, which have not called the Gulf of Mexico home for three million years. “Two other plans are such dead ringers for BP’s that they list a phone number for the same long-dead expert,” he said.

Mr. Tillerson expressed confidence that his company’s procedures would prevent an accident like the Deepwater Horizon blowout. But he admitted that if it were to happen, his company was no better prepared to deal with the consequences than BP. “The point is we have to take every step to prevent these things from happening, because when they happen we are not well equipped to prevent any and all damage,” Mr. Tillerson said. “There will be damage. There is no response capability that will ensure that you won’t have an impact.”

The Tonka Report Editor’s Note: Meanwhile the Gulf of Mexico is fast becoming a killing field as Obama gives his teleprompter speech to the world tonight, written and brought to you by the best money can buy – BP and Goldman Sachs! – SJH 

Link to original article below…

http://www.nytimes.com/2010/06/16/business/16oil.html

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