Top executives from BP America, Halliburton, and Transocean offered their first public assessment Tuesday into what might have caused the BP oil spill in the Gulf of Mexico, deflecting blame from their own firms even as estimates of legal liability for the fiasco soar into the billions of dollars.
In testimony under oath before a Senate panel, each of the three executives defended his company’s actions and its workmanship concerning the Deepwater Horizon rig, which exploded and sank April 20, causing crude oil to spew into the Gulf from 5,000 feet below the water’s surface. The hearing of the Senate and Energy Resources Committee was the first congressional examination of the possible causes of the spill.
BP America CEO Lamar McKay testified that the rig's last line of defense – its blowout preventer, or BOP, a massive steel cap with "ram" valves designed to cut off any flow of oil should a blowout occur – failed to operate, and that this was likely a major cause of the spill.
But Steven Newman, CEO of Transocean, which owned the rig and was drilling under contract for BP, said it was a mistake to blame his company's blowout preventer, as it was only the last line of defense. Before the blowout preventer failed, other failures, such as in the cementing process, may have occurred.
Cementing operations, among the final stages of finishing a well, fill critical gaps between the pipe and surrounding rock. A cement plug placed inside the well was to be the final step. Cementing operations were the responsibility of Haliburton, Mr. Newman noted.
Tim Probert, Halliburton's chief health, safety and environmental officer, said the company, a contractor, performed its operations to the exact specifications of BP, whose engineers designed the well.
Until an investigation re-creates a timeline and a log of activities leading up to the disaster, "we should not be making a rush to judgment," Mr. Probert told senators. "However, two things can be said with some certainty. The casing shear was cemented some 20 hours prior to the tragic incident, and, had the BOP functioned as expected, this catastrophe may well not have occurred."
Frustration among senators
"There's this transference of liability, or finger pointing," Senator Murkowski said. "There's going to be plenty of time to figure out who is to blame, who is at fault. You suggested, Mr. McKay, that as owner operator of the Deep Horizon rig that Transocean, you're transferring [blame]. Mr. Newman, you're saying it's not the blowout preventer at all.... Then Mr. Probert takes it back around to the well owner here at BP.
“I would suggest to all three of you that we are all in this together, because this incident will have impact on development of energy policy for this country…. If we can't continue to operate and convince people we can perform safely ... then not only will BP not be out there, but the Transoceans won't be there to drill the rigs and Haliburtons won't be there to provide the cementing."
Senator Menendez said the Deepwater Horizon spill was an all-too-familiar story.
"We're sitting in very same hearing room where the hearings were held to investigate the sinking of the Titanic," Menendez said. "At that time, we had a ship supposedly so technologically advanced that it could not sink. And here we have a rig the industry has told us so many times is so technologically advanced it supposedly could not spill. Unfortunately, … both technological marvels ended in tragedy."
He noted that BP, in its exploration plan for the lease sale, claimed that it had "the capability to respond to a worst-case discharge."
"What I see is a company not prepared to address a worst-case scenario, but a company that is flailing around, trying whatever they think of next.... You all seem to be jumping from action to action – that we all hope and pray can work – but that doesn't give me a sense of a plan that was ready to work in a worst-case scenario."
Concern about MMS oversight
The industry executives weren't the only ones to catch an earful from the senators. So did Elmer Danenberger, who until January served as chief of the offshore regulatory program at the US Minerals Management Service (MMS) and who was at MMS when the agency granted BP permission to drill at the Deep Horizons site.
In contextual testimony, Mr. Danenberger asked the senators to consider "whether we should streamline the outer continental shelf regulatory regime ... since the less complicated the authority and the regime, the more effective." He conceded, however, that there "probably needs to be a better program" for testing the rams on blowout preventers.
Asked to evaluate the industry's response to the spill, Mr. Danenberger said, "I really have a hard time finding a lot of fault."
But some senators seemed unimpressed, suggesting much deeper problems with MMS oversight of the oil industry and deep-water drilling.
“You spent decades as the lead federal agency in this area," said Sen. Ron Wyden (D) of Oregon. "The agency allowed rigs like Deepwater Horizon to drill, with near certainty that blowouts would occur, without adequate backup devices. Why?"
"They were required to have a backup actuation system – which in this case was the remotely operated vehicle," Danenberger said. "The backup worked – it did its job – it's just [that] the stack was either damaged or unable to perform its function."
Senator Wyden, citing a glowing MMS study showing a reduction of blowouts in offshore drilling operations, said, "How can one can conclude that MMS is doing its job? When you're saying [there’s an] absence of problems ... that's a signal from the lead federal agency that people don't really have to sweat it in this area.... I don't think that's what a lead federal safety agency ought to be doing."
Soon after the hearing concluded Tuesday, Secretary of Interior Ken Salazar announced a major restructuring of the MMS. The MMS's investigation, inspection, and enforcement operations will be separated and made independent from the agency's leasing, revenue collection, and permitting functions. The MMS collects oil and gas revenues for US taxpayers as well as enforces regulations pertaining to offshore energy operators.