In Waxman, BP execs face a master interrogator at Gulf oil spill hearing

For Rep. Henry Waxman (D) of California, Thursday’s hearing with BP chief executive officer Tony Hayward offers an opportunity to do that which he does best – ask tough questions.

Best known for his 1994 hearings exposing the tobacco industry's claims that nicotine is not addictive, Representative Waxman was thwarted in confronting Big Oil during Republican control in the Bush years. Now, Congress's top watchdog is laying the groundwork for historic hearings that he hopes will change the political climate for energy legislation on Capitol Hill.

In an era when congressional hearings often do little more than vet competing views, Waxman questions corporate witnesses the old-fashioned way – with massive documentation. As chairman of the House Energy and Commerce Committee, Waxman released a 14-page letter to the BP chief executive Monday, laying out the results of the panel's initial investigation.

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“Time after time, it appears that BP made decisions that increased the risk of a blowout to save the company time or expense," he wrote. "If this is what happened, BPs carelessness and complacency have inflicted a heavy toll on the Gulf, its inhabitants, and the workers on the rig."

The hearings will focus on decisions made by BP just days before the Deepwater Horizon explosion on issues ranging from well design to a missed check on the integrity of the cement seal on the morning of the April 20 blowout.

By mid-April, BP had dismissed multiple warnings of “severe gas flow problems” on the Deepwater Horizon rig, according to the Waxman letter. Contractor Halliburton had recommended using 21 centralizers in installing a final section of steel tubing in the well. BP opted for six. "It will take 10 hours to install them.... I do not like this," said a BP official involved in the decision in an April 16 e-mail obtained by the committee. Another BP official recognized the risks but commented: "who cares, it's done, end of story, will probably be fine."

Blowout all about money?

In testimony under oath, BP CEO Hayward will have an opportunity to put such communications in context. Meanwhile, Waxman and committee staff are laying out their own context for the events leading up to the blowout.

One key factor is the cost of further delay. BP had anticipated that drilling the Macondo well would take 51 days and cost about $96 million. An initial rig used to drill the well was damaged in a hurricane and replaced with the Deepwater Horizon. But the well took longer than planned to complete, and the Deepwater Horizon rig had been due at a new location.

By the morning of the blowout, the rig was 43 days late, costing BP as much as $21 million in leasing fees alone. Such costs "may have set the context for the series of decisions that BP made in the days and hours before the blowout," Waxman wrote.

At a White House meeting on Wednesday, Hayward agreed to fund a $20 billion compensation fund to pay claims for damages for the Gulf oil spill. To meet this obligation, BP announced that it will suspend dividends for the year.

“This $20 billion will provide substantial assurance that the claims people and businesses have will be honored,” said President Obama in a statement after the meeting. “It’s also important to emphasize this is not a cap. The people of the Gulf have my commitment that BP will meet its obligations to them.”

The independent escrow account will be managed by Kenneth Feinberg, who managed the compensation fund for families of victims of the 9/11 attacks.

In advance of Thursday's hearings, BP released excerpts of Hayward's prepared statement: “I fully grasp the terrible reality of the situation,” he is expected to say. "I understand people want a simple answer about why this happened and who is to blame. The truth, however, is that this is a complex accident, caused by an unprecedented combination of failures."

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