The Rundown is covering Thursday’s congressional subcommittee hearing on the oil leak (View complete coverage.), featuring testimony by BP CEO Tony Hayward. We’ll offer updates (all times ET) and insights from the NewsHour news desk, as well as comments and reaction from three analysts:
- Byron King, energy analyst at Agora Financial
- Lisa Margonelli, director of the New America Foundation’s Energy Policy Initiative
- Jeremy Symons, senior vice president for conservation and education at the National Wildlife Federation
Updated: 5:51 p.m.
While our liveblogging of today’s hearing is done, we’ll have excerpts at the top of the NewsHour broadcast. Be sure to tune in.
Updated: 5:47 p.m.
Rep. Barton has now fully retracted his apology to BP, and he’s now apologizing for using the term “shakedown” earlier in the day.
Updated: 5:39 p.m.
Stupak closes the hearing in much the same way he called it back to order earlier in the afternoon. He again takes Hayward to task, saying that he thought he’d be better prepared and expressing frustration with the multiple times he answered that he was not involved in key decisions. Stupak says that the “evasiveness of [Hayward’s] answers” only served to increase the frustration, not decrease the frustration, of members of congress and the American people.”
Updated: 5:35 p.m.
LISA MARGONELLI: A long frustrating day of what is called “testimony” mainly because of the circumstances of the discussion, not because of the content. Oil executives are by their nature cold fish in public. They are at the top of an industry that’s hated even in good times. And Congress has only to gain by making him look colder and more stupid. (I hear 83 percent of Americans believe Obama hasn’t been hard enough on the oil industry. That’s not surprising. Our blood lust for oil companies is a bottomless pit.) The theater of this hearing is to show that we’re not “being easy” on BP.
But the hearing is an opportunity to probe deeper. For example, BP’s low cost of discovery of oil ($1.40 per barrel) was partly because of the company’s “entreprenurial” culture, which also accounts for why the CEO and other chief executives had so little apparent oversight of the Macondo well. (Hayward has uttered 65 “I don’t knows,” according to Rep. Welch) I hear a lot of questions about centralizers and drilling mud and other technicalities without trying to get Hayward to comment on the culture, the high degree of autonomy among crews and projects. Again and again he says the decisions were up to the discretion of the company man on the rig. Rep. Ed Markey called the hearings a “blinding, scalding indictment” of BP’s safety culture. But it’s also an indictment of the difficulty policy makers and regulators have wrapping their heads around the risks of deepwater drilling and how an organization might deal with them. I’d like to see the congressional committee feature someone who works with nuclear submarines for the Navy on this panel. The Navy has special policies for high risk operations, creating a culture that rewards people for speaking up. I think it’s hard for Congresspeople, who live within a specific political risk culture, to effectively question an industry that is dealing with another level of multiple physical risks.
Oh! Rep. Scalise finally asked if the casing is cracked underground. That’s the beginning of the line of questioning that needs to happen. Hayward says he doesn’t know because they haven’t seen inside the well. The reps should pursue this. They should ask how he accounts for the behavior of the well. But instead they’ve switched away to other issues.
Updated: 5:30 p.m.
Rep. DeGette of Colorado asked Hayward whether he believes that BP should pay claims related to the Gulf residents’ potential long-term health costs due to the spill, in addition to economic damages. Hayward responded that BP had set up the $20 billion fund, and would pay all of the claims deemed legitimate by the fund’s independent adjudicators. DeGette asked: “So the only way it will be paid is if it comes through that fund?” Hayward responded: “$20 billion is a very large fund to pay claims.” He also added that he believed that if the health claims were direct consequences of the spill, the adjudicator would find in favor of paying them.
Updated: 5:07 p.m. Rep. Markey of Massachusetts brought up another issue simmering on the back burner for BP — a controversy over documentation for another of the company’s Gulf oil rigs, the Atlantis. A former employee has said he was fired for making a whistleblower claim that the Atlantis rig began operating without receiving proper final engineering approval. BP has said it investigated the claims and found they were “without substance.”
“I believe [the issue] has been fully resolved,” Hayward told Markey. “I do not think that is the case,” Markey responded.
Updated: 4:50 p.m.
Stupak asks Hayward — as he wrote earlier in a WSJ opinion piece — that he thinks blow-out preventers should be the ultimate failsafe for deepwater wells.
Stupak points out document that shows BP engineers saying there were 260 types of ways a BOP might not work. Hayward said he is not familiar with the document and said BOPs are designed to be the ultimate failsafe.
Updated: 4:46 p.m.
BYRON KING: Rep. Scalise beat up Tony Hayward over BP “not showing a sense of urgency.” From what I’ve observed over the past two months, that’s accurate. A big part of it, though, is that this is so unprecedented — a deepwater blowout of a super-well — that it’s just plain hard to wrap your brain around the scope of it. Later on Hayward said “We [BP] have initiated the largest oil spill response in the history of the world.” And Rep. Capps notes that the US government has done the same — largest all-government effort ever to battle a major pollution event. To Rep. Gonzalez, Hayward said he never believed that a deepwater blowout would occur. It gets back to that faith in the blowout preventer. Is that another way of saying that, with the blowout preventer on top, you can cut corners below? Those blowout preventers have their role… but a false sense of security ought not to be the number-one factor. It’s like saying that because the aircraft industry can build airplanes with ejection seats, we should tolerate having bad pilots.
Updated 4:28 p.m.
Barton said his comments from the morning — blasted by Vice President Biden as “outrageous” — had been “misconstrued.” From the New York Times:
Barton concluded by saying “I want the record to be absolutely clear, that I think BP is responsible for this accident, should be held responsible and should in every way do everything possible to make good on the consequences that have resulted from this accident. And if anything I said this morning has been misconstrued in an opposite effect, I want to apologize for that misconstrue — misconstruction.”
Updated 4:25 p.m.
Chairman Stupak said that concludes the first round of questions from the committee, and that several members have follow-up questions for a “quick second round” of questioning.
Updated 4:16 p.m.
Rep. Inslee of Washington contrasts Hayward’s salary with the amount of money that BP spends on research and development toward safer deepwater drilling. That R&D budget is $10 million, Inslee says — .003 percent of revenues. Hayward says his compensation was $6 million last year.
“Do you think BP ought to make a bigger investment in safe drilling technology?” Inslee asks. Hayward responds: “The answer to that is yes” and says the company plans to do that.
Updated 4:03 p.m.
Lois Capps, D-Calif., calls the $20 billion escrow fund “a good first step.” She asks Hayward about BP’s pledge of $500 million for a 10-year Gulf of Mexico Research Initiative “to improve understanding of the impacts of and ways to mitigate oil and gas pollution.”
Hayward said that the research they collect “won’t be BP’s data. It will be scientists’.” He clarifies that the scientists’ names will be attached to their work.
Asked about the Exxon CEO’s comments that his company was not prepared for a deepwater oil leak, Hayward said there are “many missings in being able to response to incident of this type,” adding that there’s much to be learned from this incident.
Updated 3:53 p.m.
Rep. Steve Scalise, R-La., gave the local perspective and a bit of political theater, holding up a picture of an oiled pelican that he said he keeps on his desk as a reminder of “what we’re up against.”
He also questioned Hayward about why BP and the federal government haven’t moved faster to approve and fund local authorities’ plans, such as building miles of sand berms to protect fragile coastline.
Gov. Bobby Jindal and other officials have asked the government to approve the berms, but experts are divided over whether the berms would work or simply wash away and waste valuable resources.
Updated 3:43 p.m.
Asked if anyone on his staff briefed him about a warning from Halliburton, Hayward replied: “No, prior to the incident.”
More on that warning from The Wall Street Journal:
In an April 18 report to BP, Halliburton warned that if BP didn’t use more centering devices, the well would likely have “a SEVERE gas flow problem.” Still, BP decided to install fewer of the devices than Halliburton recommended–six instead of 21.
BP said it’s still investigating how cementing was done. Halliburton said that it followed BP’s instructions, and that while some “were not consistent with industry best practices,” they were “within acceptable industry standards.”
Hayward said of BP’s actions: “I have seen no instances of reckless behavior.”
He said no employees have been fired “so far,” saying that as the investigations draw conclusions, “we’ll take necessary action.”
Updated 3:32 p.m.
Rep. Welch of Vermont referenced the Baker Report, a 2007 report (by a panel led by former Secretary of State James Baker) that catalogued the safety failings that led to a deadly refinery fire at a BP plant in Texas in 2005.
You can read the full report here, on BP’s Web site.
Hayward responded that he was “very” familiar with the report, and that BP used it as the basis of a “systematic change” in safety procedures after 2007.
Updated 3:26 p.m.
BYRON KING: When discussing the blowout preventer, Hayward finally showed some passion.
The blowout preventer “was the failsafe mechanism.”
Yes, that’s the problem.
The BP folks — and this might be common across the deepwater industry — have this attitude, that if all else fails, the blowout preventer will kick in and solve the problem.
I have to confess that I always believed in the technical capabilities of blowout preventers. If you see them built, they’re like battleship armor.
It gets to that point, though, that you have to question every assumption, especially when your entire company and its solvency are on the line.
Updated 3:08 p.m.
Rep. Ross of Arkansas asks Hayward what will happen to the relief wells after they are used to plug up the leak? Will they be shut down, or kept open to produce oil and profit? Hayward responds that the relief wells will be shut down after the situation is resolved.
Ross also asks Hayward why BP didn’t drill the relief wells concurrently with the production well. Hayward answers that the blowout preventer was considered a “failsafe mechanism” to stop a potential spill. “This clearly was not the case,” Hayward says.
Updated 3:06 p.m.
BYRON KING: Tony Hayward says that he is not routinely briefed on the progress of deep water wells, even the exploration wells. I’m astonished at that. Deepwater wells are super costly — $100 million and more for an exploration well, as was the case with the Macondo well that blew out. For comparison, the discovery well at Tupi, Brazil, drilled by Petrobras, cost $240 million. These kinds of capital expenditures are high-level, board-level decisions. So the CEO at BP isn’t getting a brief on the daily or weekly progress of the deep wells in deep water? What, exactly, does Tony Hayward spend his days doing?
Updated 3:04 p.m.
LISA MARGONELLI: Hayward is just terrible at this! Mike Doyle just asked about the feasibility of drilling relief wells while drilling exploration wells. The honest answer, as stated by other oil execs the day before yesterday, was that drilling extra wells increases the risks, and the costs. But Hayward is simply playing the whipped dog in a curiously aloof and snooty way. This is not going down well. It really bothers me that the representatives are simply reacting to this without pressing for an explanation of what exactly is going on in the hole, and why the amount of spilled oil has increased so greatly and what that implies for actually stopping the flow.
Updated 3 p.m.
Mike Doyle, D-Pa., tells Hayward running an oil company is much different than other industries since workers’ lives and the environment are always at risk.
He expresses disappointment that so many critical decisions were delegated and that Hayward cannot tell him who made the “decision with enormous consequences” to use the long-string (see 12:50 p.m. update) device.
Hayward is asked if BP is trying anything other than drilling relief wells — a process that is expected to take several months — to try to kill the well after the failed top-kill method.
“I’m afraid there are no other options,” Hayward said, adding that the pressure readings on the well have left them no other options. He reiterates that BP is ramping up oil collection efforts over the coming month as relief wells continue to be drilled.
Updated 2:50 p.m.
Rep. Diana DeGette of Colorado pursued an aggressive line of questioning, repeatedly asking Hayward to look at the binder next to him with copies of internal BP e-mails obtained by the committee’s investigation. Those e-mails included an April memo that said the Macondo well had been a “nightmare well” and an e-mail from a BP staff member that said, after concerns were raised about the way the pipe was cemented “Who cares, it’s done, end of story, we’ll probably be fine and get a good cement job.”
DeGette repeatedly asked Hayward when he had learned of these memos, and he said he had learned of them from the committee’s investigation.
“I think that e-mail is a cause of concern, I would like to understand the context in which it was sent,” Hayward said, adding that if the ongoing investigation finds that there were problems with people putting costs ahead of safety in drilling the well, then appropriate actions will be taken.
Updated 2:42 p.m.
Referring to Barton’s earlier categorization of the $20 billion escrow fund for victims as a “shakedown” or “slush fund,” Rep. Bruce Braley, D-Iowa, repeatedly asks if Hayward feels shaken down or that a slush fund was created — even pointing out differences between the King’s and American English and defining U.S. views of a shakedown.
Hayward said the fund — announced Wednesday after BP officials were part of meetings at the White House — was intended to be “a way forward.”
Asked by Braley whether he thought the creation of the fund was not only in the best interest of the people affected by the oil leak but also in the best interest of BP’s business, Hayward replied, “We would like to resolve this issue,” adding “The fund is a signal of our commitment to do right, to ensure individuals, fishermen, charter boat captains, small hotel owners, everyone who is impacted is kept whole.”
Braley presses him again, eventually getting Hayward to say, “I certainly didn’t think it was a slush fund.” He never spoke directly to whether he thought it was a shakedown.
Updated 2:30 p.m.
Rep. Ed Markey, D-Mass., asks Hayward to disclose ingredients for the tens of thousands of gallons of heavy drilling mud that were used in the unsuccessful top-kill attempt. Hayward agrees, saying he believes the mud was water-based with “no toxicity whatsover.”
He also agrees to turn over all data BP is collecting on chemicals, oil and methane in the operation, saying they are “published as we make them on a variety of websites.”
Markey also pressed Hayward on the existence of underwater oil plumes, which he said scientists now agree exist. He asked if BP was willing to admit the existence of the plumes. “There are concentrations beneath the water of .5 parts per million of oil in the water column,” Hayward said. “I’m going to take that as a no,” Markey said.
Updated 2:23 p.m.
Rep. Blackburn presses Hayward on what the chain of command is for making decisions when there is a difference of opinion on a safety procedure at BP, and who makes the final decision. She asks Hayward to submit in writing to the committee that chain of command.
Updated: 2:11 p.m.
Stupak reconvenes the hearing by dressing down Hayward, telling him that committee members have told him they are “frustrated with your lack of candor” and that his testimony has had “little substance and many claims of not knowing or not being part of” key decisions about the rig’s safety.
The chair said that BP was given another week to prepare him for the hearing and that he was sent a 14-page letter outlining five issues he should have been prepared to address, but he did not speak substantively about those issues so far.
Stupak says he hopes Hayward will reconsider his approach to be “more forthcoming” and “less evasive.” The CEO is not given a chance to respond before questions resumes.
Updated: 2:07 p.m.
BYRON KING: Hayward’s testimony is not exactly England’s finest hour. Indeed, it’s far more Gallipoli than Trafalgar.
I’m entirely sympathetic to the fact that Hayward is the CEO, top dog, ensconced in his office in London. He has to deal with that vision-thing, and chart the corporate strategy for a giant, global energy firm. On occasion, Tony even descends from the tower to visit the facilities, and shake hands with the staff.
So no. Tony doesn’t design wells in the Gulf of Mexico. He doesn’t read the daily drilling logs (maybe he should, actually). He doesn’t get into the weeds with nuts and bolts decisions over liners and tie-backs.
But wow, Tony really should’ve been better prepared for the questions. I’m stunned at his lack of knowledge, if not evasiveness. Tony started his career as a well-site geologist, and now it’s as if he never heard of some of the common oilfield techniques about which he’s being questioned.
That machine-gun line of questions from Rep. Dingell was just too much. “Was it to save time or money?” asked Dingell. “I can’t answer that question,” replied Hayward. Really? Huh, really? You kidding me?
He’s also dis-respecting the Congress, and the American people. C’mon. We deserve some honesty.
BP has already agreed to fork over $20 billion, and much more. BP is a wreck, and it’ll take YEARS — and new management from top to bottom — to fix it.
So now, just tell the truth. It’s all going to come out eventually, sooner or later. Just lay it all out now. If BP people screwed up, then they screwed up. Admit it. Americans will forgive mistakes. Even big mistakes. They won’t forgive mendaciousness.
Update: 1:30 p.m.
As expected, BP had few friends in the room today as Hayward offered contrite remarks on the scope of the spill while promising continued resources to stop the oil flow, clean up the Gulf and assess what happened. Asked what conclusions BP had reached about the causes of the Deepwater Horizon accident, Hayward said: “Our investigation is ongoing.” Hayward also says he feels a “great sense of responsibility” for the spill and said that BP’s commitment to safety is part of the reason “why I am so devastated with this accident.”
On the NewsHour Wednesday, BP Managing Director Bob Dudley detailed BP’s compensation response and the investigation, saying: “I think this is a very complicated accident that happened with a series of decisions that were made and equipment failures that have led to this catastrophic combination of things that led not only to a rig burning, but then, second, an oil spill — that it’s a combination of accidents here.”
Update: 1:09 p.m.
JEREMY SYMONS: After 3 hours and a second adjournment, this is my final submission:
You can boil the Hayward hearing to date down to 3 things:
(1) Rep. Barton stole the show by saying “I’m ashamed of what happened at the White House… I think it’s tragic that private corporation should be subjected to a $20 billion shakedown.” Rep. Barton’s defense of BP is a political blunder that turns the spotlight back on Congress, which has done Big Oil’s bidding for too long. Americans want action and clean energy, but Republicans have allowed a do-nothing apologist for the oil industry to run their energy agenda. It’s hard to steal the oil gaffe prize from Tony Hayward, but Barton pulled it off with ease.
(2) Tony Hayward has a rich vocabulary for saying “I won’t answer your question,” including “I can’t recall,” “I don’t know,” “I haven’t drawn any conclusions,” and “our investigation is not complete.” It’s like watching two months of Hayward press conferences over again in slow motion. Painful.
(3) The most revealing part of this hearing may be the protestor who risked arrest to shout that Hayward should be sent to jail. Even as heavy oil laps ashore in the Gulf, the tide of public anger has washed ashore in Washington.
Update: 1:05 p.m.
LISA MARGONELLI: Sullivan pursues Hayward on BP’s OSHA violation record–apparently 760 violations in the time that CITGO had two. Hayward comes across poorly. No Oprah moments where he suddenly bursts into tears here.
But as the questions progress without satisfaction, the accusations become recursive, reflecting back on the U.S. government culture that allowed one company to have so many more OSHA violations than its competitors. I’d say this is government working against the free market — why should some companies be allowed to violate safety regulations with impunity, while their competitors, who self-police better and invest more in safety get no reward other than an unblemished record? Seems to me that regulators have a responsibility to enforce — not because they’re against the free market, but because it’s their role in keeping competition fair.
The most forceful part of Obama’s Oval Office speech regarded the importance of regulation. In my opinion, the rebirth of regulation, and its role in markets, and by extension a new definition of environmental risks and their role in economic growth will be one of the grand results of this debacle.
Update: 12:59 p.m.
Rep. Sullivan brings up BP’s record of safety problems in 2005 and 2006, and asks whether the company has changed its ways. “We have worked hard to improve our safety record since then,” Hayward says. Sullivan asks whether they were using the new safety procedures aboard the Deepwater Horizon well. “To my best knowledge they absolutely were,” Hayward says.
Then, Rep. Dingell uses his questioning time to ask Hayward whether each decision made aboard the rig, from using fewer centralizers to not doing a cement bond log, was made to save money. Hayward answers many of the questions by saying that he was not involved in that decision-making process and so can’t answer the question. Dingell asks for all those answers to be submitted into the record.
Rep. Stupak then announces that the session will recess until 2 p.m. for a vote. As Stupak gavels the hearing out of session, Burgess again calls for testimony by MMS officials, saying Hayward isn’t prepared to answer some of the subcommittee’s questions. Stupak said there will be at least two more hearings as part of the investigation and that all parties will be heard from, adding “MMS isn’t going to help Mr. hayward answer these questions.”
Update: 12:53 p.m.
The Associated Press has compiled how much the oil and gas industry have contributed to campaigns of members of the House Energy and Commerce Committee involved in today’s hearing.
Update: 12:50 p.m.
Rep. Henry A. Waxman, D-Calif., asks Hayward about BP’s decision to use a cheaper “long-string” device — a pipe that runs all the way from the floor of the sea to the bottom of the well, as the The Wall Street Journal explains — as the final piece of pipe for the oil well:
In an internal BP email from March 30, a BP drilling engineer in Houston told colleagues that this option “saves a good deal of time/money.”
But it also created a direct pathway for gas and oil to rise up the backside of the well, a point recognized by a BP internal review from a few days before the well blowout released by the congressional panel.
The other option–a so-called liner tieback–would have taken several days longer and cost more, but would have made the well more secure by adding new barriers to prevent gas from flowing unchecked toward the surface, according to the BP review. The fact that BP chose the cheaper option was first reported by the Journal.
Using a liner would have cost an additional $7 million to $10 million, according to a BP estimate.
While the liner option was costlier, internal BP documents suggest it was the safer choice. “Primary cement job has slightly higher chance” of setting correctly with a liner, notes a BP document from mid-April.
After BP chose the long string, it made other time-saving choices that made the well more dangerous, Mr. Waxman and Mr. Stupak claim in their letter.
Hayward said he was not involved with the decision, but that it was approved by the federal Minerals Management Service and that it was “not an usual design in the Gulf of Mexico.”
Hayward repeatedly tells Waxman he doesn’t want to speculate on what might have gone wrong until all the investigations are completed. Waxman tells Hayward the committee is doing an investigation and accuses him of “kicking the can down the road.”
Update: 12:46 p.m.
BYRON KING: Wow, the Hayward preparation is rapidly cratering under close questioning. He has fallen back to that “I didn’t know what was happening” line of answers. OK, so he’s the CEO, working at his office in London. He’s got people at BP America who are supposed to deal with designing and drilling the wells. Yeah, not every general knows what every platoon leader is doing. But Hayward should have gotten much smarter for this hearing. He should have become the world’s expert on at least this one well… He knew that the Congress people were going to question him on minute technical details.
Update: 12:38 p.m.
LISA MARGONELLI: What was the point of Joe Barton’s “apology” to Hayward for the so-called “shakedown” from the US government to create the escrow account? After all, once the deal was struck BP’s stock rose by more than 9 percent. The escrow account is a device that serves the needs of Gulf residents, the US government, BP, and obviously their shareholders. In fact, BP couldn’t have designed a better distancing device — the escrow account is a political Blowout Preventer that takes compensation out of the company’s hands. It also puts the decision to stop paying out shareholder dividends on the shoulders of the US government rather than company management. I don’t understand what audience Barton is playing to? BP’s shareholders? The market seems to see this as a benefit.
Representative Burgess’s point that the structure of the fund could be troubled is more on point. Also his point that the MMS needs to be held accountable for accepting the miserable identical oil spill response plans (complete with walruses) is a good one.
Update: 12:35 p.m.
Rep. Burgess of Texas uses his questioning to press Hayward on how much he knew about the specific safety and drilling decisions made on the Deepwater Horizon rig leading up to the explosion.
“With all due respect sir, we drill hundreds of wells every year,” Hayward says. “I know,” Burgess responds, “that’s what’s scaring me.”
Update: 12:29 p.m.
Stupak asks Hayward who should be held accountable in this disaster. Hayward responds that BP has seen systematic changes in the three years he’s been CEO, saying “I’m not denying there’s more to do.” Stupak asks Hayward if he expects to remain CEO of BP, to which he replies that he’s focused on stopping the leak and cleaning up the oil that’s in the Gulf.
Update: 12:24 p.m.
“Safe, reliable operations are our No. 1 priority,” Hayward said.
Update: 12:18 p.m.
Stupak calls the hearing back to order and begins the questioning of Hayward. “You blew it,” he said, accusing BP of cutting corners to save money and time. He asks: “Did you manage the risk properly?”
Update: 12:14 p.m.
BYRON KING: In Tony Hayward’s opening statement, he said the blowout and oil spill “never should have happened.” That, of course, covers a multitude of sins. The rest of the statement was well-prepared — “well-coached,” as we used to say when I practiced law — and delivered in that charming British accent. Although… He’s already ducking, with that “We’ve appointed a commission to investigate” line of testimony. Gee, really? We need to get into the guts of the issue… BP designed and drilled a deepwater well that blew out. In some respects, it wasn’t even all that technically challenging of a well, just on the face of things. 5,000 feet of water? Hey, people are drilling at 10,000 and 12,000 feet.18,000 foot well? Hey, people are drilling 40,000 foot wells. Then again, down that hole they sure found a direct pathway to the deep, dark forces of the earth. Here is the central question. Who, in the BP hierarchy, had authority to make what decisions, and based on what criteria? On the rig, you want people making decisions based on safety and technical functionality. You don’t want people on the rig making decisions based on their desire to look good by saving money. Save money wherever you want, just not on the drilling rig and NEVER down-hole.
Update: 11:52 a.m.
JEREMY SYMONS: Byron King hits the nail on the head when he points out that successful companies treat safety as a value, not a priority. There are disturbing similarities here between the BP Deepwater Horizon disaster and the Massey Energy Upper Big Branch mine in West Virginia. Rep. Sutton calls it a “culture of carelessness,” but it’s actually an incentive system that rewards employees who cut corners to trim money in the short-term with little regard to safety and long-term risks.
Update: 11:42 a.m.
White House Press Secretary Robert Gibbs just released a statement regarding Rep. Joe Barton’s apology to Hayward (see 10:15 a.m. update):
“What is shameful is that Joe Barton seems to have more concern for big corporations that caused this disaster than the fishermen, small business owners and communities whose lives have been devastated by the destruction. Congressman Barton may think that a fund to compensate these Americans is a ‘tragedy’, but most Americans know that the real tragedy is what the men and women of the Gulf Coast are going through right now. Members from both parties should repudiate his comments.”
Update: 11:39 a.m.
Tony Hayward began his prepared remarks with an apology to the families of the victims who died in the rig explosion, and to all of the people of the Gulf region.
He mentions the $20 billion victims compensation fund that BP agreed to fund yesterday. “We said all along that we would pay these costs, and now the American people can be confident that our word is good.”
He then gives an overview of BP’s efforts to stop the leak — including the relief wells now being dug — and to clean up the oil.
He ends by saying: “I give my pledge as the leader of BP that we will not rest until we make this right. We’re a strong company, and no resources will be spared.”
Read the full text of his prepared testimony.
After Hayward’s testimony, the committee took a break for a House vote. The hearing will resume at noon.
Update: 11:30 a.m.
BYRON KING: Back in 2007, I had a lot of hopes for Tony Hayward. BP under the previous CEO, Lord Browne, was way behind the power curve. I thought that Hayward could wrestle this mess under control.
BP’s issues are legacies of the roll-up approach to growth in the 1990s. BP acquired Sohio (Standard of Ohio), Amoco (Standard of Indiana) and Arco (Atlantic Richfield), and never really rationalized the management. The company was just so Balkanized. It was full of stove-pipes, and legacies of the past.
Tony’s job was to bring it all together, in a way that Lord Browne never did. From my observation, there was some improvement at BP … but obviously not enough.
BP has some really smart people working for it. I’ve met them. I’ve heard really good BP people give excellent presentations at industry conferences. But somehow, the sum of the parts just didn’t add up.
Update: 11:27 a.m.
As Hayward begins his testimony, a woman with black smudges on her hands and face yells multiple times: “You need to be charged with a crime!” She is eventually escorted from the room and Stupak reminds members of the audience to be respectful.
Hayward says he does not wish to have a legal representative with him, but he has a drilling engineer with him to help with technical issues.
Update 11:26 a.m.
LISA MARGONELLI: Roughly an hour in and still in the wind up of preliminary statements. I love the kitchen sink aspect of the American political id these things offer. Joe Barton apologizes for the White House “shakedown” of BP for the creation of the escrow account. Another representative tells Hayward he needs to restore not only the Gulf but American faith in the free market. The representative from Alabama takes the opportunity to say that cigarettes are America’s worst environmental disaster. I’m not sure whether he’s trying to minimize the spill or maximize the cigarette — but there’s a random emotional quality to these statements. What’s important to Americans is to demonstrate feeling — and Hayward was clearly coached for his presentation, and now we have a parallel display from our own representatives from all over the map.
I find this whole discussion frustrating. There is a big unasked question here — how is it that a well that was producing, apparently, 8,000 barrels a day has ramped up to produce as much as 60,000 barrels a day? This is not a trivial question — if something has happened deep within the well, and as Senator Nelson suggested last week, oil is coming out of the cracked ground, rather than the well head — then closing this spill will be even more difficult than we now understand. Congress needs to ask more questions about what BP’s best guess is about what is going on with the well, and the spill. I hope they ask that question.
Update: 11:25 a.m.
More criticism for BP’s actions, both in the past and in the specific case of the well. Rep. Welch of Vermont says “BP has one of the worst safety records in the world,” and goes through a list of BP safety violations and fines over the past several years. “For 59 days, BP has told the American people this was an aberration […] Mr. Hayward, it’s not an aberration, for BP this is business as usual,” he says.
Then, Rep. Green of Texas says that the committee has identified five precautions that the company could have taken to avoid the Deepwater Horizon explosion. “I added up the hours these precautionary actions would have taken, it’s three to four days. For an extra three days’ of work, men’s lives would have been saved.”
Update: 11:20 a.m.
BYRON KING: Georgia Rep. Gingrey wants to hear from the Department of Interior people, the Minerals Management Service. Damn right!
I want to hear the testimony of the MMS guy whose civil service-protected job it is (was?) to review those cookie-cutter “cleanup plans” from the oil companies. Did the references to protecting the walruses in the Gulf of Mexico cause him to wonder if anything was amiss?
Sure, those oil response plans are thick notebooks, with lots of reading. But it’s only a lot of reading if you do it.
Update: 11:09 a.m.
JEREMY SYMONS: Rep. Doyle has hit on the underlying issue of this hearing — BP’s “avoidance” of the tough questions, which is a generous way of putting it. To date, BP misled regulators and lied about their response capabilities. BP covered up the size of the spill (internal documents show they knew from the beginning it could be more than ten times as bad as they revealed). They have denied the existence of toxic clouds of oil under the water, even when government and independent research vessels have found such clouds extending tens of miles. They have dragged their feet on disclosing the scientific data they are collecting. Whistleblowers working for BP have told the press that they are under orders to hide dead dolphins and other wildlife from the press. Despite their lack of transparency, BP remains in control of the boats, contractors, and other elements of the response that can shed light on what is really happening in the Gulf. As much as getting to the answers of what happened in the past, this hearing will also set the tone of whether BP will continue its efforts to dodge the tough issues moving forward.
Update: 11:07 a.m.
Rep. Gingrey, R-Ga. wants the Minerals Management Service to testify. “Deep ocean drilling is not new…we’ve been doing it for decades,” he says. “I’ve heard some say it’s the lax oversight in the last administration [that led to this]. But why did it happen a year and half into this administration? We need to hear from our own Department of the Interior, and the Mineral Management Service. […] We also need answers from the administration, so we can demand accountability.”
Update: 10:58 a.m.
In his opening statement, Rep. Braley, D-Iowa, plays video of earlier testimony from two widows whose husbands died on the Deepwater Horizon rig.
“This tragedy will not be in vain” if it saves the lives of other men and women working on oil wells, one says.
Update: 10:53 a.m.
BYRON KING: Watching the opening statements, there’s reference to BP’s Tony Hayward taking over as CEO in 2007, and wanting to make safety a “priority.”
I hate that term. Priority? Hey, priorities change. Rust-control is a priority this month. Contributing to the United Way is a priority next month.
No. Safety has to be a value!
Values don’t change.
I’ve seen oil companies and mining companies that really live that idea. I’m very angry to learn that BP has confused the terms, from the top down.
Update: 10:44 a.m.
Rep. Sullivan, R-Okla., is the first to bring up energy and climate legislation. In his opening statement he says that the Obama administration and their allies in Congress are “more focused on the politics of putting the oil and gas industry out of business” and passing cap-and-trade legislation than on finding a solution to the problem.
In his opening statement, Rep. Dingell, D-Mich., throws some of Hayward’s widely publicized early statements on the spill back at the CEO.
“The comments of our witness today reveal little sorrow for the events that have occurred,” Dingell says, bringing up Hayward’s comments that the gulf is a very big ocean and that the environmental impact of the disaster is likely to be very very modest. “I wonder if he is willing to stand on that statement today?,” Dingell says.
Update: 10:32 a.m.
JEREMY SYMONS: Rep. Barton, Republican from Texas, says he is “ashamed” of the “shakedown” of BP yesterday when President Obama persuaded BP to agree to agree to the $20 billion fund to repay damages. It’s far more likely most Americans are ashamed of Congress for failing to hold oil companies accountable, than they are of President Obama for doing what is right. The escrow fund commitment is a bright spot for BP in an otherwise abysmal performance running up to, and responding to, the blowout. Rep. Barton was in Congress when the $75 million liability cap was put in place, and has taken $1.4 million over his congressional career in campaign contributions from the oil and gas industry, according to the Center for Responsive Politics. Is it any wonder Congress has protected the oil industry over the years rather than steer America to a cleaner energy future?
Update: 10:30 a.m.
Rep. Stupak, D-Mich., ends his opening statement with a reference to the last night’s gaffe by Carl-Henry Svanberg, the Swedish chairman of BP, who said told reporters that BP cares about the “small people.”
“We are not small people,” Stupak said in his statement, saying Americans deserve answers.
Update: 10:23 a.m.
BYRON KING: A wise old federal judge once told me that “You may not win your case on oral argument. But you can sure as hell stand in front of a panel of judges and lose it.”
I sure hope that BP’s lawyers have gotten it into CEO Tony Hayward’s head what’s at stake in front of the congressional panel, and the national TV cameras. The company is in play. This hearing with Tony Hayward is going to be quite a spectacle. He’s the man in the spotlight, and there’s national outrage at the BP well blowout and gushing oil spill.
People want answers, and there are a lot of quite damning facts already in the public record. Indeed, Rep. Waxman’s letter to BP the other day listed a series of super-technical issues concerning missed calls on well pressure readings, not enough “spacers” in the casing, and much more. This could get very arcane in a hurry, although I actually trust the Congress-people to stick to broad themes. They know — as the political animals that they are — that their audience is not Tony Hayward, but it’s the American people who are watching. And the American people are not going to spend much time worrying about the technicalities of how a cement bond log works.
Still, Tony Hayward is going to have to do quite a juggling act. He’ll have the big-picture issues to handle, about how to cap the well, clean up the oil, and pay off millions of affected people.
Best approach… Just tell the truth. No stonewalling. Beware the finger-pointing. Avoid the dodge of saying, “It’s still under investigation.” Yeah, we know. You’re investigating. OK, so we don’t have the blowout preventer topside, so we can tear it down and figure out what really didn’t work. But we do know — from the Coast Guard hearings — that the BP company man told the Transocean and Halliburton guys to do it his way, not their way. And then the well blew up.
There have been NTSB hearings over airplane crashes, where they bring in the surviving pilot. They say, “Why did the airplane crash?” The pilot says, “I screwed up.” Case closed.
Could it happen here? Let’s watch and wait.
Update: 10:15 a.m.
Rep. Henry Waxman, D-Calif., opens the hearing with a tough statement directed toward Hayward. He says that after reviewing tens of thousands of documents and other e-mails, the committee could find “no evidence that you paid attention to the risks BP was taking,” and that other BP officials seemed “oblivious” to what was happening at the well. He also ties the oil spill to other corporate malfeasance, saying that the same kinds of actions led to the Wall Street Collapse. Read the full statement here.
Rep. Barton, R-Texas, gives the next statement — and a measure of support for Hayward. He focuses on the $20 billion victims fund that BP agreed to fund Wednesday at a White House meeting. “I’m ashamed of what happened at the White House,” Barton said. “I think it’s tragic that private corporation should be subjected to a $20 billion shakedown.”