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Obama Wants Reform on ‘Cozy Relationship’ Between Oil Companies, Regulators

May 14, 2010 at 12:00 AM EST
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President Obama called for an overhaul of how the government handles oil drilling approval, as estimates of the gulf oil leak's magnitude continue to climb. Jeffrey Brown talks to U.S. Coast Guard Commandant Admiral Thad Allen about the ongoing crisis in the Gulf of Mexico.
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JEFFREY BROWN: BP engineers aimed to start siphoning oil tonight from the blown-out well in the Gulf of Mexico, while, in Washington, President Obama had harsh words for the companies involved and government regulators.

As oil continued spewing unabated into the Gulf of Mexico for the 25th day, President Obama underscored the urgency to stopping the leak.

U.S. PRESIDENT BARACK OBAMA: I saw firsthand the anger and frustration felt by our neighbors in the Gulf. And let me tell you, it is an anger and frustration that I share as president.

JEFFREY BROWN: He said there was blame to go around, and focused part of his criticism on the government agency charged with issuing permits to drill for oil.

BARACK OBAMA: For too long, for a decade or more, there’s been a cozy relationship between the oil companies and the federal agency that permits them to drill. It seems as if permits were too often issued based on little more than assurances of safety from the oil companies.

That cannot and will not happen anymore. To borrow an old phrase, we will trust, but we will verify.

JEFFREY BROWN: New information was revealed today about the work of the federal agency in question, the Minerals Management Service, or MMS. “

The New York Times reported that MMS gave approval to dozens of companies to drill without first getting required environmental protection permits. And The Washington Post acquired a May 2009 letter from an MMS whistle-blower. He cautioned that a separate BP rig in the Gulf posed a — quote — “threat of serious, immediate, potentially irreparable, and catastrophic harm to the marine ecosystem.”

Today, the president said the regulatory system needed a — quote — “top-to-bottom review.” He also chastised oil executives, who, earlier this week, blamed each other for the rig’s deadly explosion.

BARACK OBAMA: I did not appreciate what I considered to be a ridiculous spectacle during the congressional hearings into this matter. You had executives of BP and Transocean and Halliburton falling over each other to point the finger of blame at somebody else.

The American people could not have been impressed with that display, and I certainly wasn’t.

JEFFREY BROWN: Meanwhile, there were new questions about just how much oil is spilling into the Gulf. Early on, BP gave estimates of about 5,000 barrels a day. That’s 210,000 gallons.

This morning, BP’s chief operating officer told ABC News he stood by that number, but that a precise number is impossible to obtain.

DOUG SUTTLES, COO, Global Exploration, BP: Ourselves and people from NOAA and others believe that something around 5,000 — it’s actually barrels a day — is the best estimate. We actually think that that’s probably a reasonable number, but we know it’s highly uncertain.

JEFFREY BROWN: But scientists and engineers have told the NewsHour the number could be many times higher.

Ian MacDonald is an oceanographer at Florida State University.

IAN MACDONALD, oceanographer, Florida State University: There are two ways to estimate this. One is to look at the spread of the spill on the ocean, and the other is to look at the escaping oil on the seafloor.

Until BP released that little snip of video the other day, we had no idea of how big the spill was, the release is, on the seafloor. Now we have two different ways of looking at that. I think that the actual spill rate is at least five times greater than the official spill rate of 5,000 barrels per day.

JEFFREY BROWN: Scientists caution it’s impossible to know for sure without knowing the proportion of gas, water and oil coming out of the pipe, as well as the size of the rupture. Estimates now vary from 200,000 gallons to as much as 4.2 million gallons a day pouring from the undersea well.

A week ago, the NewsHour created a ticker on our Web site to show how much crude has spilled into the Gulf, depending on which estimate is selected.

On the water’s surface, the slick now covers an area of more than 3,500 square miles. Late today, federal regulators approved the use of undersea chemical dispersants to break up some of the oil at the wellhead, after testing the technique weeks ago.

And, a short time ago, I spoke with Admiral Thad Allen, the commandant of the U.S. Coast Guard. He’s overseeing the federal response on the oil spill, and spoke to us from Biloxi, Mississippi.

Admiral Allen, thanks for joining us.

What can you tell us about the latest efforts to contain the oil? Are there any signs of progress today?

ADMIRAL THAD ALLEN, U.S. coast guard commandant: Well, let me first talk about the measures we are taking to mitigate the leaks that are currently in progress. That involves three things.

One is the installation of the top hat device, which will collect the oil and pipe it to the surface, with proper treatment of the pipes and the oil, so it will not have hydrates form, like we did with the earlier submersible that we put on it.

Second, we will be attempting to drill directly into the marine riser pipe and evacuate the oil. And the third will be the application of subsea dispersants on the discharge itself. That requires us to agree on some protocols before we finally move ahead with that.

JEFFREY BROWN: So, are we days, weeks, months from some kind of resolution? What do you think right now?

ADMIRAL THAD ALLEN: Well, the original plan was to drill a relief well, relieve the pressure, and then cap the existing well. That will take until some time in August to do. In the meantime, we have to mitigate the leaks and stop the leaks, so we don’t have to deal with the oil on the surface. And that is what is going on right now.

JEFFREY BROWN: Without wanting to diminish the difficulties here, it looks, from the outside, as though little planning went into what would happen in the event of a catastrophic spill. BP has said it’s sort of making this up as they go along, I think. Does it look that way to you?

ADMIRAL THAD ALLEN: Well, I would separate it into two parts. One is dealing with the spill on the surface. And we have taken every measure to deal with what is potentially a catastrophic spill and has been from the start.

The second is the consequences of the failure of the blowout preventer and the issues associated with that. And it’s going to take some long-term forensics to find that out. But that was intended to be a failsafe device, and obviously was not.

JEFFREY BROWN: When I talked to you several weeks ago, just days into this spill, you agreed that, even though you intended to hold BP and others accountable, the company was, for all practical purposes, your working partner.

Now, today, the president sounded very frustrated with that partner. What do you think? Are they holding up their end of the deal?

ADMIRAL THAD ALLEN: Well, we have been relentless with British Petroleum regarding their responsibility as a responsible party, but we have also conducted extensive oversight.

I visited their Houston headquarters. Secretary Salazar has been there, Secretary Chu from the Department of Energy. We have augmented their staff with engineers from our national laboratories and Coast Guard engineers.

I would say that we’re relentless in our oversight. We are communicating directly with them. I talked to CEO Tony Hayward today. And we understand that they’re responsible, but we’re accountable for the oversight. And we certainly intend to do that.

JEFFREY BROWN: What about the new questions about the volume of oil leaking into the Gulf? BP said again today that it still believes 5,000 barrels a day is in the ballpark. We have talked to scientists who think it’s much greater than that.

Should we assume now that the figures we have been hearing for the past several weeks might be very far off?

ADMIRAL THAD ALLEN: Well, they could be, but I would — I would just caution that we’re dealing with estimates regarding a discharge where there’s no human access, and the only information we have are two-dimensional pictures from ROVs sending video back.

Whether 1,000 barrels, 5,000 barrels or 10,000 or 20,000 barrels, we have always planned from the start that this could be a catastrophic spill. And we have not been limited by what we thought the discharge was. We are preparing for a worst-case catastrophic discharge.

So, while they settle in on the right numbers, that has not prohibited the response, which is ongoing.

JEFFREY BROWN: But isn’t it important to be accurate about what is happening? I mean, how do you know if what you’re doing is working if you’re not exactly sure how much is spewing into the water?

ADMIRAL THAD ALLEN: Well, you’re raising a good point. And we have got a whole bunch of people working on that right now. We understand that getting information at that depth is very, very difficult.

We’re collecting information on what we think has been on the top of the water and what we have been able to do with in situ burning, skimming, and dispersants, and we’re coming up with what I would call an oil budget. And we have had a team working on that. But trying to reconcile all those factors is difficult.

And if we’re going to make a supposition on exactly what is out there and what has been removed, I want to make sure we know that as accurately as possible, because, as you’ve seen, when you change the numbers, it raises credibility issues. So, we’re working very hard on that.

JEFFREY BROWN: Well, just one more thing on that: Do you think BP or anyone has been underplaying the size and impact of the spill so far, in order to downplay potential damage?

ADMIRAL THAD ALLEN: Nothing leads me to believe that that’s happened. I think we have had a very difficult time getting information, only because this thing is happening at 5,000 feet.

The amount of turbidity and mud that was raised by the sinking of that unit and the riser settling at the bottom made it almost impossible to do surveillance for 24 to 36 hours afterwards. And this has been a slow process of discovery.

But, as we have gotten more information, we refined our estimates, refined our strategies. And I think that has more to do with it than anything else.

JEFFREY BROWN: Now, the president also today blasted what he called the cozy relationship between the oil companies and the Minerals Management Service, the federal agency that gives permits to drill. Were you aware of this relationship? How well known was it how these things work, how permits were given and what was going on?

ADMIRAL THAD ALLEN: I would have to defer to the Minerals Management Service and the Department of the Interior. We have our own regulatory relationship with the industry, but it has more to do with the floating units that are above, while MMS deals with the pipeline itself and the management of the wellhead with the — with the industry there. That’s beyond my — my realm of regulatory responsibility.

JEFFREY BROWN: But, as one of the regulators there, what does it look like to you? Does it look like there was a too-cozy relationship?

ADMIRAL THAD ALLEN: I think the facts need to be established through the Marine board of investigation that’s been convened, is under way right now in New Orleans. And that is — that is a joint Department of Interior-Homeland Security Marine board of investigation that was convened both by Secretary Salazar and Secretary Napolitano.

We are committed to getting all the facts on the table associated with this event and making them transparent to the public. And I think that will tell us.

JEFFREY BROWN: All right, so what’s next? What happens in the next few hours or 24 hours, Admiral?

ADMIRAL THAD ALLEN: In the next 24 hours to, I would say, out to 96, and one week, it will be, sequentially, the top hat attempt to collect oil and transport it to the surface — surface, the attempt to put a pipeline directly into the marine riser, and, then, if we get approval to move forward, the dispersant application at the seafloor.

Following that three things: the top kill, or the blowing of refuse and particles into the blowout preventer, so that it clogs it up, reduces the pressure, so they can actually fill it and stop the leak; and, then, potentially, after that, the severing of the marine riser and putting a valve in at the top that would actually close the leak; or put another blowout preventer on top of it — those three things, the top kill, a closure valve, or another blowout preventer.

And they’re all prepared to do that somewhere around the 18th, which is next week.

JEFFREY BROWN: All right. Admiral Thad Allen, speaking to us from Biloxi, Mississippi, thanks for joining us again.

ADMIRAL THAD ALLEN: My pleasure. Thank you.