[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]



 
 DRILLING DOWN ON AMERICA'S ENERGY FUTURE: SAFETY, SECURITY, AND CLEAN 
                                 ENERGY
=======================================================================


                                HEARING

                               BEFORE THE

               SUBCOMMITTEE ON ENERGY AND ENVIRONMENTQ04

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE

                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 15, 2010

                               __________

                           Serial No. 111-134


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov




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                    COMMITTEE ON ENERGY AND COMMERCE

                 HENRY A. WAXMAN, California, Chairman
JOHN D. DINGELL, Michigan            JOE BARTON, Texas
  Chairman Emeritus                    Ranking Member
EDWARD J. MARKEY, Massachusetts      RALPH M. HALL, Texas
RICK BOUCHER, Virginia               FRED UPTON, Michigan
FRANK PALLONE, Jr., New Jersey       CLIFF STEARNS, Florida
BART GORDON, Tennessee               NATHAN DEAL, Georgia
BOBBY L. RUSH, Illinois              ED WHITFIELD, Kentucky
ANNA G. ESHOO, California            JOHN SHIMKUS, Illinois
BART STUPAK, Michigan                JOHN B. SHADEGG, Arizona
ELIOT L. ENGEL, New York             ROY BLUNT, Missouri
GENE GREEN, Texas                    STEVE BUYER, Indiana
DIANA DeGETTE, Colorado              GEORGE RADANOVICH, California
  Vice Chairman                      JOSEPH R. PITTS, Pennsylvania
LOIS CAPPS, California               MARY BONO MACK, California
MICHAEL F. DOYLE, Pennsylvania       GREG WALDEN, Oregon
JANE HARMAN, California              LEE TERRY, Nebraska
TOM ALLEN, Maine                     MIKE ROGERS, Michigan
JANICE D. SCHAKOWSKY, Illinois       SUE WILKINS MYRICK, North Carolina
CHARLES A. GONZALEZ, Texas           JOHN SULLIVAN, Oklahoma
JAY INSLEE, Washington               TIM MURPHY, Pennsylvania
TAMMY BALDWIN, Wisconsin             MICHAEL C. BURGESS, Texas
MIKE ROSS, Arkansas                  MARSHA BLACKBURN, Tennessee
ANTHONY D. WEINER, New York          PHIL GINGREY, Georgia
JIM MATHESON, Utah                   STEVE SCALISE, Louisiana
G.K. BUTTERFIELD, North Carolina
CHARLIE MELANCON, Louisiana
JOHN BARROW, Georgia
BARON P. HILL, Indiana
DORIS O. MATSUI, California
DONNA M. CHRISTENSEN, Virgin 
    Islands
KATHY CASTOR, Florida
JOHN P. SARBANES, Maryland
CHRISTOPHER S. MURPHY, Connecticut
ZACHARY T. SPACE, Ohio
JERRY McNERNEY, California
BETTY SUTTON, Ohio
BRUCE L. BRALEY, Iowa
PETER WELCH, Vermont
                 Subcommittee on Energy and Environment

               EDWARD J. MARKEY, Massachusetts, Chairman
MICHAEL F. DOYLE, Pennsylvania       RALPH M. HALL, Texas
JAY INSLEE, Washington               FRED UPTON, Michigan
G.K. BUTTERFIELD, North Carolina     ED WHITFIELD, Kentucky
CHARLIE MELANCON, Louisiana          JOHN SHIMKUS, Illinois
BARON P. HILL, Indiana               JOHN B. SHADEGG, Arizona
DORIS O. MATSUI, California          STEVE BUYER, Indiana
JERRY McNERNEY, California           GREG WALDEN, Oregon
PETER WELCH, Vermont                 SUE WILKINS MYRICK, North Carolina
JOHN D. DINGELL, Michigan            JOHN SULLIVAN, Oklahoma
RICK BOUCHER, Virginia               MICHAEL C. BURGESS, Texas
FRANK PALLONE, Jr., New Jersey
ELIOT ENGEL, New York
GENE GREEN, Texas
LOIS CAPPS, Calfornia
JANE HARMAN, California
CHARLES A. GONZALEZ, Texas
TAMMY BALDWIN, Wisconsin
MIKE ROSS, Arkansas
JIM MATHESON, Utah
JOHN BARROW, Georgia
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Edward J. Markey, a Representative in Congress from the 
  Commonwealth of Massachusetts, opening statement...............     1
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................     3
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................     4
Hon. Joe Barton, a Representative in Congress from the State of 
  Texas, opening statement.......................................     6
    Prepared statement...........................................     9
Hon. Bart Stupak, a Representative in Congress from the State of 
  Michigan, opening statement....................................    11
Hon. Michael C. Burgess, a Representative in Congress from the 
  State of Texas, opening statement..............................    12
Hon. John D. Dingell, a Representative in Congress from the State 
  of Michigan, prepared statement................................    15
Hon. Michael F. Doyle, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................    17
Hon. Parker Griffith, a Representative in Congress from the State 
  of Alabama, opening statement..................................    18
Hon. Jay Inslee, a Representative in Congress from the State of 
  Washington, opening statement..................................    19
Hon. Ralph M. Hall, a Representative in Congress from the State 
  of Texas, prepared statement...................................    21
Hon. Doris O. Matsui, a Representative in Congress from the State 
  of California, opening statement...............................    24
Hon. Mary Bono Mack, a Representative in Congress from the State 
  of California, opening statement...............................    24
Hon. Jerry McNerney, a Representative in Congress from the State 
  of California, opening statement...............................    25
Hon. Cliff Stearns, a Representative in Congress from the State 
  of Florida, opening statement..................................    26
Hon. Gene Green, a Representative in Congress from the State of 
  Texas, opening statement.......................................    26
Hon. Roy Blunt, a Representative in Congress from the State of 
  Missouri, opening statement....................................    27
    Prepared statement...........................................    29
Hon. Lois Capps, a Representative in Congress from the State of 
  California, opening statement..................................    31
Hon. Joseph R. Pitts, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................    31
Hon. Jane Harman, a Representative in Congress from the State of 
  California, opening statement..................................    32
Hon. Steve Scalise, a Representative in Congress from the State 
  of Louisiana, opening statement................................    33
Hon. Tammy Baldwin, a Representative in Congress from the State 
  of Wisconsin, opening statement................................    34
Hon. Mike Ross, a Representative in Congress from the State of 
  Arkansas, opening statement....................................    35
Hon. Peter Welch, a Representative in Congress from the State of 
  Vermont, opening statement.....................................    35
Hon. Jim Matheson, a Representative in Congress from the State of 
  Utah, opening statement........................................    36
Hon. G.K. Butterfield, a Representative in Congress from the 
  State of North Carolina, opening statement.....................    37
Hon. Charles A. Gonzalez, a Representative in Congress from the 
  State of Texas, opening statement..............................    38

                               Witnesses

Rex W. Tillerson, Chairman and Chief Executive Officer, Exxon 
  Mobil..........................................................    39
    Prepared statement...........................................    42
    Answers to submitted questions...............................   140
John S. Watson, Chairman and Chief Executive Officer, Chevron....    45
    Prepared statement...........................................    47
    Answers to submitted questions...............................   144
James J. Mulva, Chairman and Chief Executive Officer, 
  ConocoPhillips.................................................    52
    Prepared statement...........................................    54
    Answers to submitted questions...............................   156
Marvin Odum, Director of Upstream Americans and President, Shell 
  Oil Co.........................................................    58
    Prepared statement...........................................    60
    Answers to submitted questions...............................   158
Lamar McKay, Chairman and President, BP America, Inc.............    66
    Prepared statement...........................................    68

                           Submitted material

Letter to the editor by Tony Barr, President of Samson Oil & Gas 
  Company, Wall Street Journal, submitted by Mr. Shadegg.........   132
Letter from a panel named in a report dated May 27, 2010, by the 
  Secretary of Interior, submitted by Mr. Scalise................   134


 DRILLING DOWN ON AMERICA'S ENERGY FUTURE: SAFETY, SECURITY, AND CLEAN 
                                 ENERGY

                              ----------                              


                         TUESDAY, JUNE 15, 2010

                  House of Representatives,
            Subcommittee on Energy and Environment,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:36 a.m., in 
Room 2123, Rayburn House Office Building, Hon. Edward J. Markey 
[chairman of the subcommittee] presiding.
    Present: Representatives Markey, Doyle, Inslee, 
Butterfield, Matsui, McNerney, Welch, Dingell, Engel, Green, 
Capps, Harman, Gonzalez, Baldwin, Ross, Matheson, Barrow, 
Waxman [ex officio], Upton, Hall, Stearns, Whitfield, Shimkus, 
Shadegg, Blunt, Pitts, Bono Mack, Sullivan, Burgess, Scalise, 
Griffith, and Barton [ex officio].
    Also Present: Representatives Stupak, Jackson Lee, Weiner, 
DeGette, and Cao.
    Staff Present: Phil Barnett, Staff Director; Kristin 
Amerling, Chief Counsel; Bruce Wolpe, Senior Advisor; Greg 
Dotson, Chief Counsel, Energy and Environment; Alexandra Teitz, 
Senior Counsel; Jackie Cohen, Counsel; Michal Freedhoff, 
Counsel; Alex Barron, Professional Staff Member, Melissa 
Cheatham, Professional Staff Member; Caitlin Haberman, Special 
Assistant; Peter Kethcham-Colwill, Special Assistant; Dave 
Leviss, Chief Oversight Counsel; Meredith Fuchs, Chief 
Investigative Counsel; Scott Schloegel, Investigator; Karen 
Lightfoot, Communications Director, Senior Policy Advisor; 
Elizabeth Letter, Special Assistant; Earley Green, Chief Clerk; 
Jen Berenholz, Deputy Clerk; Mitchell Smiley, Special 
Assistant; Mary Neumayr, Minority Counsel, Oversight/Energy; 
Aaron Cutler, Minority Counsel, Energy and Oversight; Andrea 
Spring, Minority Professional Staff Member, E&E and Garrett 
Golding, Minority Legislative Analyst, Energy/EHM/Telecom.

OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN 
        CONGRESS FROM THE COMMONWEALTH OF MASSACHUSETTS

    Mr. Markey. The committee will come to order. Fifty-seven 
days ago, in the dead of night, the worst environmental 
nightmare in U.S. history began. On a screen here and in homes 
across the country, we now see the live video of tens of 
thousands of barrels of oil billowing into the Gulf of Mexico 
every day. For years the oil industry swore this could never 
happen. We were told the technology had advanced, that offshore 
drilling was safe. BP said they didn't think the rig would 
sink; it did. They said they could handle a Exxon Valdez-size 
spill every day; they couldn't. BP says the spill was 1,000 
barrels per day; it wasn't and they knew it.
    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, 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.
    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 all of these companies, not just BP, made the 
exact same assurances. The covers of the five response plans 
are different colors, but the content is 90 percent identical. 
Like BP, three other companies include references to protecting 
walruses, which have not called the Gulf of Mexico home for 3 
million years. Two other plans are such dead ringers for BP's 
that they list a phone number for the same long-dead expert. 
The American people deserve oil safety plans that are ironclad 
and not boilerplate.
    We now know the oil industry and the government agency 
tasked with regulating them determined that there was a zero 
chance that this kind of undersea disaster could ever happen. 
When you believe that there is zero chance of a disaster 
happening, you do zero disaster planning. And the oil industry 
has invested zero time and money into developing safety and 
response efforts.
    The oil companies before us today amassed nearly $289 
billion in profits over the last 3 years. They spent $39 
billion to explore for new oil and gas. Yet the average 
investment in research and development for safety, accident 
prevention, and spill response was a paltry $20 million per 
year, less than one-tenth of 1 percent of their profits.
    The oil companies may think it is fine to produce carbon 
copies of their safety plans, but the American people expect 
and deserve more. It is time to expect more from the oil 
industry and that needs to start today.
    First, Congress must ensure that there is unlimited 
liability for oil spills by oil companies. While we try to cap 
this well, we must lift the cap on oil industry liability.
    Second, Congress must also enact wide-ranging safety 
reforms for offshore drilling. If oil companies are going to 
pursue ultra-deep drilling, we must ensure that it is ultra-
safe and that companies can respond ultra-fast.
    Third, the free ride is over. Oil companies need to pay 
their fair share to drill on public land. Right now, every 
single one of the companies here today, and dozens of others, 
are drilling for free in the Gulf of Mexico on leases that will 
cost American taxpayers more than $50 billion in lost 
royalties.
    And fourth, we must ensure that new technologies are 
developed for capping wells, boosting safety, and cleaning up 
spills.
    I will soon introduce the Oil SOS Act to ensure we have 
21st century technologies in place for 21st century drilling 
risks.
    And finally, America must move to a safer, clean energy 
future so that we don't have to rely as much on oil to power 
our cars and our economy.
    The American people deserve answers from the oil industry 
and I look forward to the testimony of our witnesses.
     I would like now to recognize my distinguished colleague 
from Michigan, the ranking member of the subcommittee, the 
gentleman again from Michigan Mr. Upton.

   OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Upton. Thank you, Mr. Chairman. I thank you for calling 
this very important hearing. What happened on the Deepwater 
Horizon rig was truly a national tragedy. The loss of life was 
heartbreaking and the environmental and economic damage that 
worsens by the day is gut-wrenching. As I said many times 
before, it needs to be made crystal clear to all involved, the 
polluter will pay. The American taxpayer should not and will 
not be on the hook for the cost of this accident, both economic 
and environmental. Nor should consumers be punished with tax 
increases passed in the name of the BP spill. They will only 
serve to add cost to hardworking Americans and further weaken 
our economy.
    We now have the opportunity to look BP America in the eye 
and demand that they fulfill their responsibility for the 
disaster in the gulf, and an important step is the creation of 
an escrow account that ensures American taxpayers are not left 
holding the tab.
    In the wake of this tragedy we must work together to find 
solutions that will protect consumers, taxpayers, and our 
national security. The cleanup has been too slow, way too slow 
and too indecisive. We want answers and we want them all. We 
have to work to ensure a disaster like this never happens 
again.
    When that rig exploded and there are millions of gallons of 
oil leaking into the Gulf of Mexico, our economy and our 
national posture is indeed weakened. I am aware that each 
witness today was given a lengthy list of questions to answer 
in advance of the hearing. Many of these questions are 
constructive and relate to the problem at hand--questions about 
rig safety, about worst-case scenarios if there is another rig 
explosion and questions about chemical dispersants--legitimate 
and constructive questions that will help us forge a solution-
oriented policy.
    I am, however, disheartened to learn that a few of the 
questions have nothing to do with the disaster that we are 
trying to solve and serve the sole purpose of scoring political 
points and trying to advance an unrelated policy agenda that 
will raise taxes, eliminate American jobs, and leave consumers 
already struggling in this down economy with higher energy 
costs.
    Some of those questions are: How much is your company 
invested in the deployment of renewable alternative energy? 
What steps do you believe that the U.S. Government and private 
industry should take to reduce the threat posed by climate 
change? Does your company support an economy-wide cap on 
greenhouse gas emissions that includes transportation fuels? 
Would your company be able to pass any of the cost of 
purchasing emission allowances to its customers?
    Frankly, I would prefer to bring up the cap-and-trade bill 
again on the House floor because I am convinced that this year 
it would fail rather than pass by the seven-vote margin that it 
did last summer, but that is not the issue at hand. Instead of 
taking time to talk about cap-and-tax or cap-and-trade, let's 
figure out how to cap the well. We are not here to discuss 
climate change but, rather, what each of our witnesses think 
went wrong on the Horizon rig and what policy change can be 
made to ensure that it never happens again. Let us not forget 
what is on the line here: jobs, the environment, our economy, 
and national security.
    Three years ago when BP was caught increasing the discharge 
into Lake Michigan, I joined with the Great Lakes Caucus and 
our colleagues on both sides of the aisle across the Great 
Lakes to beat back the attempt to increase pollution in our 
lake. We didn't take a partisan posture, we worked together to 
solve the problem. We need similar bipartisanship here today.
    The Gulf of Mexico accounts for almost a third of U.S. oil 
production. If we eliminate that supply, the dependency on 
foreign oil will indeed go up. Saudi Arabia will be happy, Hugo 
Chavez, Ahmadinejad. They will be popping champagne perhaps, 
but the American consumer will be remembering the good old days 
when gas was only $4 a gallon.
    The team of engineers tapped by Secretary Salazar to 
examine what went wrong on the Horizon rig recently, quote, 
``We believe the blowout was caused by a complex and highly 
improbable chain of human errors coupled with several equipment 
failures, and was preventable. The petroleum industry will 
learn from this. It can and will do better. We should not be 
satisfied until there are no deaths and no environmental 
impacts offshore, ever. However, we must understand with any 
human endeavor there will always be risks.''
    Let's learn from this awful mistake, fix the problem, clean 
up the gulf, and move forward to fixing our ailing economy and 
create private sector jobs. I yield back my time.
    Mr. Markey. I thank the gentleman.
    The chair recognizes the chairman of the full committee, 
the gentleman from California Mr. Waxman.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Waxman. Chairman Markey, thank you for holding this 
hearing and for your tenacious work on this issue. You have 
been a true champion for transparency and accountability, and 
your efforts have kept Congress and the administration and the 
American people informed about the environmental disaster 
unfolding in the gulf.
    Yesterday Chairman Stupak and I released a letter 
describing a series of questionable decisions made by BP in the 
days before the blowout. Time after time, BP appears to have 
taken shortcuts that increased the risks of catastrophic 
blowout. One of the central questions for today's hearing is 
whether the other oil companies are any better prepared than 
BP.
    Last week, after receiving a request from Representative 
Weiner, the committee asked each of the five major oil 
companies for their oil spill response plans. On paper they are 
very impressive, each document is more than 500 pages long. And 
if I might, I will hold up the document that is the contingency 
plan. But what they show is that ExxonMobil, Chevron, 
ConocoPhillips and Shell are no better prepared to deal with a 
major oil spill than BP.
    The same company, The Response Group, wrote the five plans 
and describes them as cookie-cutter plans. Much of the text is 
identical. Four of the plans discuss how to protect walruses, 
but there are no walruses in the Gulf of Mexico.
    We analyzed two key parts of the plans: the provisions for 
stopping a subsea blowout, like the one that is spewing oil 
across the gulf, and their worst-case scenarios. We found that 
none of the five oil companies has an adequate response plan.
    It is instructive to compare ExxonMobil's plan for 
controlling a subsea blowout with BP's plan. Here is what BP 
says in its plan: In the event the spill source cannot be 
controlled by the facility operator or remotely with a safety 
system, BP will activate the oil spill response plan and 
assemble a team of technical experts to respond to the 
situation.''
    And here is what ExxonMobil says, and you can see the text 
on the screen. ``In the event the spill source cannot be 
controlled by the facility operator or remotely with a safety 
system, ExxonMobil will activate the oil spill response and 
assemble a team of technical experts to respond to the 
situation.'' The plans are identical.
    And so are the plans for Chevron and ConocoPhillips. Shell 
did not give us a well-controlled contingency plan, but it says 
Shell would use the same strategies of top kills and junk shots 
that have already failed.
    Each of the five oil spill response plans also includes a 
section on responding to worst-case scenario involving an 
offshore exploratory well. On paper these plans look 
reassuring. BP's plan says it can handle a spill of 250,000 
barrels per day. Both Chevron and Shell state they can handle 
over 200,000 barrels per day, and Exxon says it can handle over 
150,000 barrels per day. That is far more oil than is currently 
leaking into the gulf of BP's well.
    But when you look at the details, it becomes evident these 
plans are just paper exercisers. BP failed miserably when 
confronted with a real leak, and one can only wonder whether 
ExxonMobil and the other companies would do any better.
    BP's plan says it contracted with the Marine spill Response 
Corporation to provide equipment for a spill response. All the 
other companies rely on the same contractor. BP's plan says 
another contractor will organize its oil spill removal. 
Chevron, Shell, and ExxonMobil use the same contractor. BP's 
plan relies on 22,000 gallons of dispersant stored in Kiln, 
Mississippi. Well, so do ExxonMobil and the other companies.
    I could go on, but I think you get my point. These are 
cookie-cutter plans. ExxonMobil, Chevron, ConocoPhillips and 
Shell are as unprepared as BP was and that is a serious 
problem. In their testimony and responses to questions the 
companies say they are different than BP, but when you examine 
their actual oil spill response plans and compare them to BP, 
it is hard to share their confidence.
    At this hearing Congress needs Congress needs to review the 
evidence and pass new laws and put teeth into our regulatory 
system, but we cannot stop there. Our national energy policy is 
broken. We are addicted to oil and this addiction is fouling 
our beaches, polluting our atmosphere, and undermining our 
national security.
    Thank you, Mr. Chairman.
    Mr. Markey. We thank the chairman.
    The chair recognizes the ranking member of the full 
committee, the gentleman from Texas Mr. Barton.

   OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Barton. Thank you, Chairman Markey, and I appreciate 
you and Chairman Waxman holding this hearing to bring our major 
oil company executives before us, and, in doing so, fore the 
American people.
    I have a prepared statement I will submit for the record, I 
am going to speak extemporaneously. I have listened with 
interest to the opening statement of Chairman Markey and 
Chairman Waxman, I want to say that in terms of doing the 
investigation I commend the majority staff, especially on the 
Oversight and Investigation Subcommittee that Mr. Stupak holds. 
We are getting the facts assembled and putting them out in an 
open and transparent fashion so that the American people can 
understand, to the extent it is possible to understand, exactly 
what happened.
    It is no question that the British Petroleum Oil Company 
who is the owner and chief operator of the rig that had the 
accident is responsible for the accident. It is also, as Mr. 
Waxman has pointed out, the responsibility of our major oil 
companies to have adequate contingency plans when things go 
wrong. So I am not trying to whitewash the private sector in 
terms of their responsibility for causing this problem, but I 
want to point out something that has not yet been pointed out. 
The five people most concerned about solving the problem are 
probably sitting before us today. ExxonMobil, Chevron, 
ConocoPhillips, Shell Oil and BP America have huge interests in 
getting it right and preventing it from ever being wrong again.
    If you add the market caps of those five companies, they 
could not equal the market cap of some of the oil companies 
that are owned by sovereign nations such as Saudi Arabia, 
Venezuela, and Republic of Mexico.
    So I would stipulate, Mr. Chairman, that while our major 
oil companies have caused this--at least British Petroleum is 
the cause of this particular problem--I will also stipulate 
that the gentlemen before us are a big part of the solution. If 
the President of the United States has got a better idea of how 
to solve this problem right now, he can pick up the phone and 
tell BP exactly what to do.
    It is a Federal issue in terms of the mitigation plan, in 
terms of the cleanup plan. And if there is anybody from 
President Obama on down who really knows the solution, they can 
stop that oil from spilling right now, by golly. All they have 
to do is pick up the phone and tell them what to do. And the 
fact that they are not is not simply because the laws of nature 
and the laws of physics don't respond to 30-second sound bytes. 
You have to know exactly what to do and you have got to have 
the engineering and technology to be able to do it.
    America needs the energy that is beneath the Gulf of Mexico 
and in the Outer Continental Shelf. Thirty percent of our oil 
and gas is coming from the OCS right now, and 80 percent of 
that is coming from what are called deep rigs. We have a 
depletion rate of existing production in this country, Mr. 
Chairman, of 30 to 40 percent. That means that of the 8 million 
barrels of oil and gas that we are producing per day, of oil we 
are producing per day, next year we will only be able to 
produce 5-\1/2\ to 6 million. You have to replace that energy.
    Since we have drilled millions of wells on shore since 1896 
or since the 1870s in Pennsylvania, the fact of the matter is 
that you are going to find significant oil reserves in the 
Continental United States that are going to be in the Outer 
Continental Shelf, so we need that energy.
    Now, I agree with Chairman Waxman that having a 500-page 
document that is a cookie-cutter approach to what to do when 
you have a problem is not an answer. It is not an answer. You 
can't have a contingency plan that says cross your fingers and 
hope a blowout preventer works. And that was the contingency 
plan.
    We haven't had a major accident in the OCS in 50 years. 
Everybody had decided that these blowout preventers were so 
good and so effective that all you had to do was push that 
magic button, if all else failed, and it would work. Well, they 
pushed the magic button on the BP rig and it didn't work.
    So Chairman Waxman is right. We need more than a cookie-
cutter contingency plan. But where I disagree, or I think I 
disagree, with Chairman Waxman and Chairman Markey is the 
gentlemen before us have the wherewithal and the expertise, and 
they certainly have the incentive to put that plan together.
    Now, I don't know what the answers are. Maybe we need a 
full-time safety inspector on these rigs. Maybe we need a real-
time data center somewhere that all the drilling information 
goes to a central data point where there is somebody in charge 
of safety that looks at it. It does appear that if people had 
been looking for the problem that we now know happened, the 
data was there to tell them what to do. But they weren't 
looking for that. This rig was 40 days behind schedule and 
millions of dollars over schedule, and there was a lot of 
pressure to finish the job. And there was nobody on that rig 
whose job was to make sure that they made the safe decision.
    And so when you start making decision after decision after 
decision that is not in and of itself a bad decision, but, 
cumulatively, minimized safety, eventually you reach a critical 
mass and you have an accident that happened. So our job, Mr. 
Chairman, as the watch dogs for the American people is to, one, 
get the facts on the table; two listen to people who have 
possible solutions; three, if there is a Federal issue and a 
Federal role, let's do it. But when you take a patient to the 
emergency room, the solution is not normally to kill the 
patient. The solution is to stabilize the patient, determine 
what needs to be done to save the patient, and then implement 
that strategy.
    And I will stipulate, Mr. Chairman, America needs the 
energy beneath the Outer Continental Shelf off the coast of the 
United States of America. And the five men before us who 
represent five of largest privately owned oil companies in the 
world, while they are part of the problem, they are a big part 
of the solution.
    Thank you, Mr. Chairman.
    Mr. Markey. We thank the gentleman from Texas.
    [The prepared statement of Mr. Barton follows:]
    [GRAPHIC] [TIFF OMITTED] 77911A.001
    
    [GRAPHIC] [TIFF OMITTED] 77911A.002
    
    Mr. Markey. The chair now recognizes the chairman of the 
Oversight and Investigations Committee, the gentleman from 
Michigan Mr. Stupak.

  OPENING STATEMENT OF HON. BART STUPAK, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Stupak. Thank you, Mr. Chairman, and thank you to Mr. 
Waxman for holding this important hearing and for your 
leadership on the gulf oil spill.
    On the Oversight and Investigation Subcommittee we have 
been investigating the actions of BP. This hearing is important 
because it provides the committee a chance to examine the 
practices of the other major oil companies. It could be said 
that BP is the one bad apple in the bunch. But, unfortunately, 
they appear to have plenty of company, Exxon and other oil 
companies are just as unprepared to respond to a major oil 
spill in the gulf as BP.
    I have been examining the oil spill response plan of 
ExxonMobil, the largest oil company in the United States. This 
document, as Mr. Waxman showed us, is over 500 pages long. In 
many respects it is virtually indistinguishable from BP's 
response plan and response plans of the other major oil 
companies.
    At this time, Mr. Chairman, I would ask unanimous consent 
that the response plans of major oil companies be made part of 
the record.
    Mr. Markey. Without objection, so ordered.
    [The information is available at http://
democrats.energycommerce.house.gov/index.php?q=hearing/hearing-
on-drilling-down-on-america-s-energy-future-safety-security-
and-clean-energy.]
    Mr. Stupak. Thank you.
    There is one major difference between ExxonMobil's plan and 
the other response plans, the section dealing with the media. 
BP, Shell, ConocoPhillips and Chevron have plans with short 
media relations sections. ExxonMobil has an entire 40-page 
appendix devoted to how to respond to the press.
    The media section in the ExxonMobil plan directs public 
affairs personnel to, as you can see on display, maintain on-
camera skill proficiency. It also explains that communications 
which convey care and concern for the situation and provide 
relevant, factual information are an integral part of the 
ExxonMobil's emergency response. It sets up a four-tiered 
system who can respond to media inquiries. The highest level, 
category D, dictates special treatment for questions about 
global warming and the Exxon Valdez.
    The ExxonMobil plan contains 13 predrafted press releases 
for almost any occasion--give it a minute here--there is a 
fully drafted press release for an accident involving an 
ExxonMobil facility. If the injury occurs off site, there is a 
separate press release for that. Six of the stockpiled press 
releases are ready to express they deeply regret an outcome, 
while two or more press releases stand ready that ExxonMobil is 
deeply saddened.
    The media section also contains a topic guide with talking 
points on over 65 issues. In five different places the plan 
directs the public affairs agents to say, ``We comply with all 
applicable laws and regulations and apply reasonable standards 
where laws and regulations do not exist.'' But if the public 
affairs officer is asked about criminal charges, the plan 
instructs them to say, ``We believe that there are no grounds 
for such charges. This was clearly an accident and we are 
working to respond to the immediate needs of the incident.''
    That talking point is ready to go before a hypothetical 
incident even occurs, before ExxonMobil could have any idea 
whether it was actually an accident or if there are any grounds 
for criminal charges. In short, ExxonMobil had meticulously 
anticipated virtually every conversation that the company might 
need to have with the media in the days following an oil spill 
in the Gulf of Mexico.
    My problem is that ExxonMobil has given far less attention 
to actually controlling the spill. While ExxonMobil has 40 
pages on its media response strategy, its plans for resources 
protection is only 5 pages long and its plan for oil removal is 
just 9 pages long.
    We have all seen the horrible images of pelicans and other 
wildlife coated in oil from the recent spill. ExxonMobil's plan 
appears to be more concerned about public perception than 
wildlife protection, given the fact that their media plan is 
five times longer than the plan for protecting wildlife. And 
the canned, predrafted, deeply saddened press release rings 
hollow with the loss of the 11 people who died on the Deepwater 
Horizon rig.
    ExxonMobil's plan is a perfect metaphor for what is going 
wrong in the gulf today. The oil company response plans are 
great for public relations. They allow the oil company to do 
the same. We have this 500-page plan that shows they are 
prepared for any contingency, but these plans are virtually 
worthless when a spill actually occurs. And that is exactly the 
kind of misplaced priorities that have led to this disaster.
    I yield back the balance of my time.
    Mr. Markey. I thank the gentleman.
    The chair now recognizes the ranking member of the 
Oversight and Investigation Subcommittee, the gentleman from 
Texas, Mr. Burgess.

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE 
              IN CONGRESS FROM THE STATE OF TEXAS

    Mr. Burgess. I thank the chairman, and I do have to wonder 
what any of us expect to achieve with this hearing today. I 
know what the folks at home are saying and thinking. They want 
the flow of that well stopped, they want it stopped today. But 
it continues to leak and I don't think anyone sitting here 
behind the dais or the witness table today is going to tell us 
how to turn that flow off today.
    The majority did not call this hearing to talk about 
meaningful solutions, shutting off the flow in the gulf today, 
because this situation really presents itself too great an 
opportunity to give some Members the impetus for passing even 
more regulations. And likely there will also be the opportunity 
to increase energy taxes that Americans will pay into the 
foreseeable future under the guise of clean energy or climate 
change legislation.
    The President's chief of staff, Rahm Emanuel, spelled out 
the Democratic strategy for national energy policy best when he 
announced, ``You never want to let a serious crisis go to 
waste,'' and this is a serious crisis.
    But in some ways, Mr. Chairman, this committee undermines 
its own credibility when it capitalizes on a tragedy--eleven 
lives were lost--when we capitalize on a tragedy to push 
forward the political agenda. I hope the majority members prove 
me wrong, and I hope that during this period the members of 
this committee will have a laser-like focus on trying to 
discern how we stop this leak, because that is really all that 
matters right now. That is all that matters to the fishermen, 
to the shrimpers and individuals whose families and livelihoods 
have been put on hold while this well continues to spill into 
the Gulf of Mexico. Not how much we spend in the future on 
solar and wind technology, both of which I support. Not how 
much we invest in nuclear technology, as clean as that may be. 
And certainly not how much this Congress intends to cripple the 
American economy even further than it already has with job-
killing legislation.
    We have had those debates, we are going to have those 
debates in the future. But today, today let's keep the focus 
where it belongs. And it is pretty simple: Plug the well, stop 
the spill, clean the gulf.
    So Mr. Chairman, I will respectfully request, I know you 
submitted a list of questions that you want the witnesses to 
answer, I will ask them to include in their opening remarks 
what ideas they have that will stop the leak, because that is 
really the question that we want answered today. If this 
hearing is not about stopping the leak, then why are we here? 
In the alternative, if the witnesses today really don't have an 
answer to that question, then respectfully one might suggest 
this committee postpone the hearing until we have the witnesses 
in front of us who can answer that question.
    Finally, I believe the majority is looking at drafting 
legislation in response to the spill, and I am concerned that 
this tragedy will leave Congress to do what it so often does 
and rush into writing legislation and with really no thought to 
what the consequences down the road will be.
    A week ago the Committee on Oversight and Investigations 
had a subcommittee field hearing in Louisiana and we heard 
testimony--and it was pretty tough testimony--from two of the 
widows, two women who lost husbands on the Deepwater Horizon. 
Both widows stated unequivocally that they believed the current 
regulatory requirements for offshore drilling are more than 
sufficient to keep the men and women working on the offshore 
rigs safe.
    The question then becomes whether the regulations are being 
properly enforced. Mrs. Natalie Rushto told our committee, 
``After all of the safety schools, meetings, fire drills and 
safety regulations, I just knew he was safe. We need to focus 
on making safety the most important priority; not to focus on 
making more safety regulations, but on ways to effectively 
implement and use the ones already in place.''
    Mrs. Courtney Kemp, followed with her statement, ``I am not 
here today to suggest that Congress implement more safety 
regulations, but rather to encourage you to hold companies 
accountable for safety regulations that are already in place 
and merely neglected.'' And Ms. Kemp went on to say, Offshore 
drilling accounts for 75 to 80 percent of all of the jobs in 
her little town in Louisiana. She said that less offshore 
drilling would devastate the local economies of not only 
coastal Louisiana, but also the economies of our Gulf Coast 
communities who rely on offshore drilling and oil rig jobs.
    Every job on the rig is responsible for four to five jobs 
on shore. When all of this is said and done, we need to find 
out why the agencies, why our Federal agencies, charged with 
enforcing safety regulations, appeared to feel as if that job 
was unimportant. We need to find out why they were asleep at 
the switch, and certainly we need to hold any party accountable 
at the Federal level that skirted safety measures. But first we 
must stop the leak.
    Mr. Chairman, I yield back the balance of my time.
    Mr. Markey. We thank the chairman.
    Mr. Markey. The chair recognizes the chairman emeritus of 
the committee, the gentleman from Michigan, Mr. Dingell.
    Mr. Dingell. Mr. Chairman, I thank you, I commend you for 
holding this hearing. I have a splendid statement which I am 
sure everyone will enjoy reading, and in order to save time of 
the committee I ask unanimous consent to insert it into the 
record.
    Mr. Markey. Without objection, so ordered.
    The gentleman's time has expired.
    [The prepared statement of Mr. Dingell follows:]
    [GRAPHIC] [TIFF OMITTED] 77911A.003
    
    [GRAPHIC] [TIFF OMITTED] 77911A.004
    
    Mr. Markey. The Chair recognizes the gentleman from 
Pennsylvania, Mr. Doyle.

OPENING STATEMENT OF HON. MICHAEL F. DOYLE, A REPRESENTATIVE IN 
         CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

    Mr. Doyle. Mr. Chairman, thank you for convening this 
hearing today to examine the impacts of our Nation's dependence 
on oil and the safety of drilling operations.
    We are 57 days into this environmental and economic tragedy 
and the response effort is ongoing. We have learned that this 
gulf oil spill is the largest in U.S. history. New estimates 
show that, unlike BP's previous claim of 5,000 barrels leaking 
into the gulf each day, it is more likely like 40,000 barrels 
are leaking into the gulf each day. But no one really knows.
    As such, President Obama has issued a moratorium on all 33 
of the Deepwater drilling rigs in the Gulf of Mexico for 6 
months, or until the completion of the Presidential Commission 
investigating the spill.
    The National Oceanic and Atmospheric Administration has 
told us about the inability of the administration to handle an 
additional concurrent oil spill at this time. And as hurricane 
season begins with conditions ripe with potential for 
disastrous storms, I believe the administration is taking the 
proper steps to avoid an even more catastrophic event. In fact, 
recent events all over the country merit the need for a serious 
review of safety practices in the entire oil and gas industry.
    Just this weekend, Chevron spilled 500 barrels of oil into 
a stream in Utah and in the last few weeks the Marcellus Shale 
has seen two different blowouts of natural gas wells, one in 
West Virginia and one in my home State of Pennsylvania. In the 
blowout in Pennsylvania the blowout preventer failed, allowing 
natural gas and fracking fluid to spew from the gushing well 
for over 16 hours, while the crew with the skills to cap it had 
to be flown in from Texas. Once they arrived, it only took them 
an hour to cap the well.
    In West Virginia the gas explosion caused seven workers to 
be injured, and flames burned for days before it was brought 
under control.
    Our growing energy demands require that we will continue to 
use natural resources under our land and sea. But there is 
simply no reason we should continue to extract our natural 
resources in a hegemonic and voracious style. The oil 
reservoirs in the Gulf of Mexico aren't going anywhere. The 
natural gas in the Marcellus Shale isn't going anywhere. I 
think it is time we take a step back and explore how to do this 
better and safer and more efficiently.
    With that, Mr. Chairman, I yield back my time.
    Mr. Markey. We thank the gentleman.
    The chair recognizes the gentleman from Illinois, Mr. 
Shimkus.
    Mr. Shimkus. Mr. Chairman, just a question. If we waive 
opening statements, will we get additional minutes for 
questions?
    Mr. Markey. That is correct.
    Mr. Shimkus. I waive my opening statement, Mr. Chairman.
    Mr. Markey. The gentleman waives his opening statement. The 
chair recognizes the gentleman from Arizona, Mr. Shadegg.
    Mr. Shadegg. Mr. Chairman, I similarly will waive my 
opening statement.
    Mr. Markey. The gentleman waives his opening statement. The 
chair recognizes the gentleman from Missouri, Mr. Blunt.
    Mr. Sullivan.
    Mr. Sullivan. I waive my opening statement too.
    Mr. Markey. The chair recognizes the gentleman from 
Alabama, Mr. Griffith.

OPENING STATEMENT OF HON. PARKER GRIFFITH, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF ALABAMA

    Mr. Griffith. I would like to thank the chairman and 
ranking member for calling this important hearing today and the 
witnesses for taking time to come before our subcommittee to 
discuss drilling in our current and future energy portfolio.
    Our number one priority must be stopping the flow of oil, 
that is certainly obvious. It is the job of this Congress to do 
whatever we can to aid the unified command in reaching this 
goal. This is a time of engineering in action, it is not a time 
to hastily put together knee-jerk energy policy that will 
jeopardize our energy and economic security in the future.
    It is imperative that this committee remember the United 
States is part of the global energy economy, and therefore all 
policies discussed must take into consideration that we are 
only 4 percent of the world's population. If we enact policies 
of drive drilling out of U.S. waters, these companies will not 
cease to drill but we will cease to be able to ensure that oil 
and gas production is done in a safe and an environmentally 
friendly manner.
    As we await the outcome of many investigations taking 
place, it is vital that we learn lessons from this incident to 
keep our workers and environment safe while continuing to 
produce our valuable oil and gas resources.
    The moratorium put in place by this administration does not 
reflect the President's previous view, and this knee-jerk 
reaction to create a moratorium is simply a political 
expression, embryonic in nature, which has no place in a 
situation this serious.
    There are still many questions to be answered about what 
happened on Deepwater Horizon; however, I think we must also 
question the Federal response. Government cannot facilitate a 
quick, effective response, and this event has been yet another 
example of that.
    To echo some of my colleagues, I think we must take a long, 
hard look at the Federal response while also looking at the 
response of BP. This disjointed effort has not aided in helping 
to contain any of the spill.
    Thank you. Thank you for coming today, and I look forward 
to your testimony. I yield back, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired.
    The chair recognizes the gentleman from Washington State, 
Mr. Inslee.

   OPENING STATEMENT OF HON. JAY INSLEE, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF WASHINGTON

    Mr. Inslee. Thank you, Mr. Chair. Today's hearing is 
entitled ``Drilling Down on America's Energy Future: Safety, 
Security, and Clean Energy,'' and we have the five leaders of 
this industry, and I'm very interested in what they are going 
to say in three respects.
    One, I think we need to ask, Has the industry really shown 
accountability to make sure that the leaders are accountable 
for safety? So I will be interested in finding out how many 
people at British Petroleum have lost their jobs to date as a 
result of the most horrific environmental catastrophe in 
American history. I will be interested in that number.
    Number two, we will be interested in the numbers from the 
leaders of the industry, what they are investing in an effort 
to develop technologies that can reduce the risk of offshore 
drilling. The numbers we have seen in our questions to the 
witnesses so far are really quite astounding in how small they 
are. They all are less than one-tenth of 1 percent of their 
profits have been invested in technology to try to reduce the 
risk of this type of disaster. That is less than 1 one-
hundredth of a percent of their gross revenues. It is stunning 
to me if that is the fact, but we'd like to ask the leaders, if 
that is the case, why they have exposed the country to this 
type of risk with such reduced investment.
    And third, it is appropriate to ask about the investment of 
the industry in clean energy. And the reason is that--and all 
of the leaders today will admit this--every single oil well we 
have ever drilled is an invisible oil spill, because every 
single well we drill results in putting carbon dioxide in the 
air, which goes into the atmosphere, which goes into solution 
in the oceans, and have made the oceans 30 percent more acidic 
than they are today. They will be so acidic by the time my 
grandchild leaves the planet, we wouldn't have coral reefs 
anywhere on the planet. Every single oil well is an oil spill.
    So we would be interested in knowing what these leaders are 
bringing to the table in an effort to reduce our dependence on 
fossil fuels, in an effort to find clean energy to prevent this 
kind of environmental disaster. Unfortunately, it won't be the 
numbers we are looking for. Hopefully, we will inspire some 
changes. Thank you.
    Mr. Markey. The gentleman's time has expired.
    The chair recognizes the gentleman from Kentucky, Mr. 
Whitfield.
    Mr. Whitfield. I waive.
    Mr. Markey. The chair recognizes the chairman from Texas, 
Mr. Hall.
    Mr. Hall. Mr. Chairman, I can look back a lot better than I 
can look forward. And when I looked back, I looked at two 
entities that ought to be looked to. There have been 
suggestions that the Federal Government ought to play a more 
prominent role in this disaster, such as taking over the 
process of capping the well.
    Well, there are two things you'd look at there. One is the 
financial statements of the two entities: The United States of 
America or British Petroleum. And I find British Petroleum in a 
lot better shape than the United States of America.
    It is theirs. I think that initially we should have turned 
it over to the British to cap their well, and after they cap 
their well, we'll them how much they owe everybody else. I 
don't think this President knows any more about capping a well 
or going out and counting those birds or picking up little 
parts of the waste than they do about the Olympics. And I 
resent the fact he's trying to blame some of this on Bush. When 
Bush, on 9/11--I don't recollect him ever accusing Clinton.
    I yield back my time.
    Mr. Markey. The gentleman's time has expired.
    [The prepared statement of Mr. Hall follows:]
    [GRAPHIC] [TIFF OMITTED] 77911A.005
    
    [GRAPHIC] [TIFF OMITTED] 77911A.006
    
    [GRAPHIC] [TIFF OMITTED] 77911A.007
    
    Mr. Markey. The chair recognizes the gentlelady from 
California, Ms. Matsui.

OPENING STATEMENT OF HON. DORIS O. MATSUI, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Matsui. Thank you, Mr. Chairman, for calling today's 
hearing. I would also like to thank the witnesses for appearing 
before us today. The families of those who lost their lives or 
had their livelihoods severely impacted by this disaster of 
unprecedented proportions deserve our unconditional support.
    Now, as we continue to seek answers from BP and others 
about the cause of the accident, we must hold those responsible 
accountable. The first priority of BP must be to stop the leak 
from continuing to spread and ensure the cleanup efforts are 
carried out to protect our costal communities and the families 
whose livelihoods depend on it. And it is incumbent on all of 
us to make certain that this never happens again.
    The unfortunate part about this, Mr. Chairman, is that we 
have been here before. I remember more than 40 years ago when 
Union Oil's platform A exploded off the coast of my home State. 
My concern is that today could be like 1969 all over again and 
that we are setting ourselves up for another 4 decades of more 
of the same.
    So the question I have today is: What has changed? What can 
the oil companies tell us today to assure us that this story is 
not simply repeating itself? Because what the gulf region and 
the American people do not want to hear now are the same 
excuses that were employed decades ago about oil being our 
largest and most reliable energy option.
    In fact, the BP oil spill underscores the need to look 
beyond oil production and consumption and invest in cleaner 
alternatives that would create jobs and save our environment 
from harm. If I learned anything from this disaster, it is that 
we must continue to explore clean-tech alternatives to big oil. 
Today's hearing is a step in that direction.
    Thank you, Mr. Chairman, and I yield back the balance of my 
time.
    Mr. Markey. Great. The gentlelady's time has expired,.
    The chair recognizes the gentlelady from California, Mrs. 
Bono Mack.

 OPENING STATEMENT OF HON. MARY BONO MACK, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mrs. Bono Mack. Thank you, Mr. Chairman. I thank you for 
yielding this time and I welcome the opportunity to hear from 
the witnesses today about our energy security and the ongoing 
oil spill operations in the gulf.
    The companies represented by the witnesses at the table are 
at the forefront of energy resources development and growth, 
and your insights will be very important for how to ensure a 
spill of the current magnitude never happens again.
    As we just heard from my other colleague from California, 
many of us in California and Southern California certainly 
still recall the oil spill in Santa Barbara from 1969.
    To get a sense of the magnitude of what we are facing, 
administration scientists, as of yesterday, were estimating 
that BP's well could be spewing as much as four times that oil 
every day as we spilled during the entire Santa Barbara 
disaster. American lives have already been tragically lost and 
we have yet to fully understand the environmental and economic 
impact, so there is significant work ahead.
    Our priority today and for the days ahead, as we have all 
said, must be to completely stop the leak. I hope our witnesses 
are willing to offer whatever assistance they can to ensure 
that this is our focus. I'm fairly certain it is what the 
American people want.
    As we sit here today, nearly 2 months have passed since the 
original Deepwater Horizon explosion. What have we seen in the 
interim? A number of charges against BP that still deserve 
answers; a new government committee set up across agencies that 
are slow and crucial in critical response decision making; and, 
most importantly, the livelihoods of so many gulf residents are 
being severely threatened.
    I will be interested to learn about the technologies that 
these companies have invested in to help protect against any 
future spill.
    Mr. Chairman, we as a Nation ought to be devoting all of 
our resources to this disaster as the echoes of the Santa 
Barbara spill still haunt us decades later and as years of 
failed energy policy do as well. How this crisis is managed or 
mismanaged matters. We do not know the long-term consequences 
yet from the spill, but the devastation to the environment and 
the economy will be long-lasting and have national 
implications.
    I appreciate our witnesses being here and yield back the 
balance of my time. Thank you.
    Mr. Markey. Thank the gentlelady.
    The chair recognizes the gentleman from California, Mr. 
McNerney.

 OPENING STATEMENT OF HON. JERRY MCNERNEY, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. McNerney. Thank you, Mr. Chairman, for today's hearing. 
I want to welcome the panelists here this morning. The 
explosion of the Deepwater Horizon and resulting oil gush is a 
tragedy with terrible human consequences. Our thoughts and 
prayers are with the families of the victims and hardworking 
Americans whose livelihoods and ways of life are threatened.
    Americans are shocked and saddened by what occurred, but 
their outrage is because there is no real plan to respond to a 
crisis of this magnitude. The technology that was supposed to 
fail safe, failed badly. How could companies like BP have 
invested so many millions of dollars of technology for 
deepwater drilling, but failed to develop effective 
technologies to prevent this kind of gush? I want to know today 
what steps the industry is taking to ensure that the 
technologies designed to be fail-safe work as promised and what 
investments the industry is making in technologies that would 
allow for a far more effective response to the disaster.
    However, the real solution is to deliberately reduce our 
consumption of petroleum fuels so the demand for oil is 
technically manageable. I believe that this can be done in a 
way that improves our national economy. And I want to know what 
the executives sitting here in front of me today are going to 
do to achieve this goal.
    Thank you, Mr. Chairman. I yield back.
    Mr. Markey. I thank the gentleman.
    The chair recognizes the gentleman from Florida, Mr. 
Stearns.

 OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF FLORIDA

    Mr. Stearns. Good morning. Thank you, Mr. Chairman, and 
thank you for having this hearing, together with Ranking Member 
Upton.
    The title of the hearing is ``Drilling Down on America's 
Energy Future: Safety, curity, and Clean Energy.'' I'm not sure 
the title really is appropriate as well as listening to some of 
these opening statements. The bottom line is all of us are 
frustrated here in Congress as well as, obviously, the Gulf 
Coast residents. We don't understand why BP didn't act more 
quickly.
    I asked CEO Lamar McKay the question of how many barrels 
are coming out per day. He said 5,000. Then I read to him from 
his own report that he could handle up to 300,000 barrels a 
day, 10 miles off the shore. So the question to him is, Why 
can't you handle 5,000?
    Well, obviously the 5,000 wasn't correct, at least many of 
us don't think it was correct. We now have an oil spill that is 
seven times the Exxon Valdez, and yet there is no end in sight 
at this point.
    So the purpose of this hearing is to ask these executives--
these are the people who are making the top salaries in the 
world. To get to their spot they have unusual acumen, 
foresight, energy business awareness, and obviously have a lot 
of corporate political savvy to get where they are. They 
wouldn't be here today, Mr. Chairman.
    So the question is? Can each one of you in your heart of 
hearts say to us that America is protected with all the oil 
rigs you have out there? We have almost 3,800 in the gulf. Can 
you tell us today that we will be safe, that America will be 
safe? And do you have backup, worst-case scenarios.
    Mr. McKay said he did, but he didn't. He didn't even tell 
us the right 5,000 barrels a day. Obviously, it was not that. 
So we need to hear from you, under oath, that you can in a 
worst-case scenario protect America's shores.
    Thank you, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired.
    The chair recognizes the gentleman from Texas, Mr. Green.

   OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Green. Thank you, Mr. Chairman, for holding the 
hearing, and I want to welcome our panelists today.
    States along the Gulf Coast are in the midst of dealing 
with this tragedy, and my thoughts and prayers go out to the 
families and the communities affected by this accident. For 
those of us who represent an energy-producing area, it is like 
a loss in the family, and I think we need to remember that.
    While we anxiously await a positive outcome on efforts to 
contain the spill, we also are beginning the process of 
thoroughly evaluating the answers to many questions we have on 
what went wrong and how to hold responsible parties 
accountable.
    As we consider how to approach these issues, legislatively, 
it is critical that we allow the facts that come to light and 
allow for thoughtful deliberation, for making permanent, 
statutory, sweeping changes that would end up taking us further 
from our goals of safe, responsible development of our natural 
resources. Quickly moving forward with legislative proposals 
would have profound effects, and possibly negative 
consequences, for America's production potential is not the 
path that Congress should take to rush to do anything just to 
be doing something.
    While I understand there is public leeriness at deepwater 
production, I want to note there is still a majority of 
American people who support Outer Continental Shelf drilling. I 
encourage the administration to quickly develop and implement 
any necessary changes in the safety and procedural standards 
for deepwater drilling--and shallow water, by the way--because 
of the loss of jobs and domestic production. We will see if 
this full 6-month deepwater drilling moratorium is the last 
thing, if it continues; that is the last thing our recovering 
economy needs, or our Nation's energy needs. It is also 
estimated 120,000 jobs could be lost as a result of this 
moratorium.
    Finally, I look forward to hearing what our panel plans to 
do to restore America's public trust in the oil and gas 
industry. There is a great record in the Gulf of Mexico, it has 
been said. The last time I can remember was the well in the 
Gulf of Mexico, actually in the Bay of Campeche in 1979. We 
have a good record. We need to find out why it didn't work and 
almost everything went wrong with Horizon, and why it is 
working in lots of other wells that have been drilled.
    Our country needs a strong, steady, domestic supply of oil 
and gas, and natural gas. And as we transition alternative 
energy supplies, let's not forget that, as we legislate this 
response in the accident. I look forward to your testimony, 
again.
    Mr. Chairman, I yield back the balance of my time.
    Mr. Markey. I thank the gentleman.
    The chair recognizes the gentleman from Missouri, Mr. 
Blunt.

   OPENING STATEMENT OF HON. ROY BLUNT, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MISSOURI

    Mr. Blunt. Thank you, Mr. Chairman, and thank you for 
holding this hearing. I have a prepared statement I will put in 
the record.
    Let me summarize that a little bit, first, by saying that I 
am glad to have these five individuals here who, as Mr. Barton 
said, have so much at stake and so much potential to be part of 
this solution.
    I am hopeful that we can use this hearing today to 
understand better why our government and British Petroleum 
could have possibly been so poorly prepared for this disaster. 
Certainly people in the fishing industry, the tourism industry 
want answers to this problem; and there is plenty of blame to 
go around. I don't think the administration or the government 
agency heads have done everything they should have done, from 
being prepared, to prevention, to the response.
    Incredibly, 7 weeks after the Deepwater Horizon explosion, 
we are still lacking resources and containment. The booms, the 
skimmers, the things that should have been readily available 
are still not, apparently, there in the ways we need them to 
go. Weeks ago--and weeks now--I introduced legislation that 
would require ready access to the things necessary to contain a 
problem if a problem developed in the Gulf.
    We are learning more and more every day about the failings 
of both the industry and the government and the regulators 
leading up to the incident. However, our main focus today and 
in the next few weeks needs to be to do what we can to stop 
this problem and then to study the problem and see that it 
doesn't occur again.
    I am convinced that we can protect both our environment and 
our economy. As we continue in our pursuit of more independence 
from foreign oil, Congress and the administration should work 
to ensure that we can produce domestic oil and gas in an 
environmentally sound manner.
    I am afraid that the moratorium that the administration 
announced against the wishes of Secretary Salazar's own 
technical advisers will cost thousands of jobs and ultimately 
harm consumers.
    It is obvious we need to hear from the panelists today. I 
am grateful they are here. It is also obvious that members of 
the this committee want to speak and are speaking and are 
concerned that this not happen again and we be better prepared 
to take advantage of our resources not become the victim of our 
resources.
    I yield back.
    [The prepared statement of Mr. Blunt follows:]
    [GRAPHIC] [TIFF OMITTED] 77911A.008
    
    [GRAPHIC] [TIFF OMITTED] 77911A.009
    
    Mr. Markey. I thank the gentleman.
    The chair recognizes the gentlewoman from California, Mrs. 
Capps.

   OPENING STATEMENT OF HON. LOIS CAPPS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mrs. Capps. Thank you, Mr. Chairman. I look forward to the 
testimony of our witnesses today.
    BP's Deepwater Horizon oil spill in the Gulf is an 
environmental disaster that has already created and still 
threatens profound human and economic harm. We all must do 
everything possible to clean up the damage from this incident 
and prevent future ones like it.
    This morning, our subcommittee needs to hear from BP, how 
this spill occurred and how it is going to make the people of 
the Gulf whole. And, more broadly, we need to hear from the oil 
companies in general about how they are going to prevent spills 
in the future.
    Unfortunately, we can't stop drilling overnight; and these 
companies have the responsibility to do everything in their 
power to prevent future tragedies. Having seen the 1969 oil 
spill firsthand, I can tell you that spill response technology 
has hardly advanced in the past 40 years.
    Finally, we need to hear from each witness and their 
companies whether or not they are going to play a constructive 
role in transitioning our economy away from drilling and onto 
clean energy sources. The record to date is not impressive. 
They need to transition away from fossil fuels for the sake of 
our national security, our economy, and the environment. This 
could not be more apparent than it is today.
    Passing comprehensive energy and climate legislation is 
just what America needs to do to help grow our economy and to 
create jobs. Taxpayers don't need status quo energy policies 
that send billions overseas to hostile governments. We need a 
safer, a cleaner, and a more economical approach to energy 
development, one that shifts us away from oil eventually and 
toward renewable sources that can't destroy our coast lines.
    Every day we delay, our economy grows weaker, our enemies 
grows stronger, and the planet becomes more polluted. It is 
time for real solutions that protect rather than endanger our 
coastal communities, our livelihoods, our way of life.
    I hope we can enact bipartisan climate and energy 
legislation this year, Mr. Chairman. I have pledged to work 
with you to achieve this very important goal.
    Mr. Markey. The gentlewoman's time has expired.
    The chair recognizes is the gentleman from Pennsylvania, 
Mr. Pitts.

OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN 
         CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

    Mr. Pitts. Thank you, Mr. Chairman. Thank you for holding 
this hearing on America's energy future.
    The BP oil spill is a tragic event in the history of our 
country, not only in lives that have been lost but an unknown 
amount of oil has been leaked into the ocean, causing horrible 
effects, some of which we know now, some of which will take 
years to discover.
    First and foremost, the leakage of oil must be stopped. I 
think we all know this, but it bears repeating, and I hope our 
witnesses will tell us what they think must be done to stop the 
leak.
    Once this is done, it is imperative that we thoroughly 
understand what happened aboard Deepwater Horizon before, 
during, and after the explosion. We must know what caused this 
horrific event so that it never happens again.
    In the wake of this event, questions have not only arisen 
regarding the cause of the explosion and the leak but also 
regarding the appropriateness of response from BP and the 
administration. I find it unfathomable that the President is 
just now meeting with top BP executives.
    In addition, it seems to me that the entire Federal 
response has been not only disjointed but confusing and 
frustrating for those on the ground trying to bring relief. The 
moratorium announced last week is just another example of poor 
judgment without regard to the economic livelihood of the Gulf 
Coast region and millions of Americans who buy gas every day 
for their vehicles.
    As I have said, this is a tragic event. We need to make 
sure due diligence is done in investigating the causes and the 
appropriateness of the response in the aftermath. However, we 
need to make sure the response of this body and the 
administration is prudent, one that still encourages our 
country's energy security and independence.
    I look forward to hearing from our witnesses today, and I 
yield back.
    Mr. Markey. The gentleman's time has expired.
    The chair recognizes the gentlewoman from California, Ms. 
Harman.

  OPENING STATEMENT OF HON. JANE HARMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Harman. Thank you, Mr. Chairman, and welcome to our 
witnesses.
    I have long argued and, so have others, that we must move 
away from dependence on foreign oil. We know the national 
security pitfalls of that dependence. We see that played out 
every single day in what's going on in the Middle East.
    But we also now clearly see that there are environmental 
and economic pitfalls with our ongoing dependence on domestic 
oil. Many of the Californians on this panel, including me, 
staunchly opposed drilling offshore California, and I want to 
applaud our President for making clear that that will not 
happen.
    But it is also clear, as our witnesses know, that 
California has an addiction to one driver per car and that 
there are, therefore, many refineries located throughout the 
State, four or five in my district alone. El Segundo, for 
example, is named for the second Chevron refinery in the State. 
And so all of you sitting here looking at us are saying, well, 
hey, if you are not fixing this problem, why are you blaming it 
all on us?
    I just want to be point out the obvious that some other 
members have also addressed, which is that all the companies 
before us have, in 2009, yearly profits amounting to more than 
$64 billion. You paid $37 billion in dividends to your 
shareholders, you invested more than $9.5 billion in 
exploration, but you invested far less in renewable and 
alternative energy.
    You are energy companies, and so my urging would be why not 
invest in energy products and energy technologies that are far 
safer, that will wean us from our dependence on oil, that will 
keep your profit level up for your shareholders but that 
obviously will make America safer.
    Finally, let me just mention that our constituents are very 
smart. One of them approached me in San Pedro, California, the 
other day and said, why don't we require energy companies that 
are drilling, especially deep wells, to drill a relief well 
alongside the original well? If it was drilled at the same 
time, it would be there if a catastrophe happened.
    Thank you, Mr. Chairman.
    Mr. Markey. We thank the gentlelady.
    The chair recognizes the gentleman from Louisiana, Mr. 
Scalise.

 OPENING STATEMENT OF HON. STEVE SCALISE, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF LOUISIANA

    Mr. Scalise. Thank you, Mr. Chairman.
    I spent last Friday on Grand Isle assessing the damage and 
talking to local leaders who say they are still spending more 
time fighting the Federal Government and BP than they are 
fighting the oil. That is unacceptable yet indicative of a 
serious lack of leadership and coordination coming from BP and 
the Obama administration.
    First and foremost, our focus, BP's focus, and the 
President's focus needs to be on plugging the well and using 
every resource available to protect our fragile marsh and 
seafood beds from being further inundated by the oil. BP, as 
the responsible party, needs to be held accountable; and I 
intend to do everything in my power to make sure that BP pays 
for the full cost of this disaster.
    But in order to improve the inadequate Federal response, we 
need a clear chain of command that holds people accountable. 
The Oil Pollution Act of 1990 states the President shall ensure 
immediate and effective removal of a discharge. On numerous 
occasions the President has said that from day one he has been 
on the ground and in charge, but if that's the case, where was 
the President when State and local officials waited nearly a 
month for approval on a plan to construct sand berms to protect 
our valuable marsh and prevent at least a dozen pelicans from 
dying? And why do boats continue to sit idle at the docks when 
our fishermen are constantly having to seek BP's approval to 
get boom or clean up our beaches?
    The delay of the sand berm plan is a prime example of the 
incompetent response to this disaster. While the administration 
drags their feet in Washington, millions of barrels of oil 
invade our wetlands, killing scores of wildlife and devastating 
Louisiana's fisheries.
    Quick action and leadership could have effectively limited 
the scope of this disaster. Instead, the President responded by 
making excuses and shifting blame. Frankly, I and people 
throughout Louisiana have had enough and are sick and tired of 
the excuses that we continue to be given by the President and 
BP.
    Instead of leading like the Commander in Chief, the 
President continues to act like a spectator in the stands. To 
add insult to injury, the President has now imposed a 6-month 
ban on deepwater drilling. Make no mistake, implementing this 
ban is like taking a jackhammer to the bedrock of the Louisiana 
economy. This devastating ban will cost my State alone at least 
40,000 jobs and will leave our Nation more dependent on Middle 
Eastern oils, countries that don't like us.
    We must figure out what went wrong to prevent this type of 
disaster from happening again in the future, but the President 
is now exploiting our disaster as a political opportunity to 
advance his radical agenda that will kill more American jobs. 
We need answers and we need leadership by the President. 
Unfortunately, we have neither, and Louisiana's people and 
wildlife are paying the price.
    Thank you, Mr. Chairman. I yield back.
    Mr. Markey. The gentleman's time has expired.
    The chair recognizes the gentlelady from Wisconsin, Ms. 
Baldwin.

 OPENING STATEMENT OF HON. TAMMY BALDWIN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF WISCONSIN

    Ms. Baldwin. Thank you, Mr. Chairman, and thank you for 
holding this hearing today and calling this panel of witnesses 
before us.
    The catastrophe in the Gulf has shed new light on the 
operations of the oil industry, the safety and security 
measures that they have in place, the disaster plans they 
maintain, and their efforts to move us away from our dependence 
upon oil and towards developing and promoting the use of 
renewable energy sources.
    As has been noted, the companies that are represented 
before us today have produced record profits in recent years. 
Last year's aggregate profits for the five companies 
represented here today amount to $64 billion. Unfortunately, 
what appears to be missing amongst the dollar signs is 
corporate responsibility, an obligation to operate in an 
environmentally and socially responsible manner, to provide 
safe working environments, to be good neighbors, and to reduce 
environment impacts.
    Generally, companies claim that stewardship is part of 
their philosophy. I think each of the companies represented 
here today have made that representation. Yet what we are 
beginning to find as this committee and its other subcommittees 
investigate this disaster is that, rather than corporate 
responsibility, we may have before us a culture of corporate 
irresponsibility.
    We know the results of letting companies operate under weak 
regulation. They begin to believe that they are above the law, 
they ignore warning signs, they shortcut proper procedures, 
they fail to properly plan for a disaster, and they put profits 
above all else.
    You know a lot of what I am observing in this sector could 
just as well have been said about what we saw on Wall Street 
with the financial collapse in the last couple of years.
    Mr. Chairman, government and industry all have a role to 
play in preventing future environmental and economic disasters; 
and, as lawmakers, we have a responsibility to our 
constituents, our Nation, to those who have lost jobs, pensions 
and health care, those who have lost their lives, to put an end 
to this recklessness and to hold bad actors accountable.
    I look forward to hearing from our witnesses about the role 
they see their companies and the government playing in ensuring 
future disasters are prevented.
    I yield back the balance of my time.
    Mr. Markey. I thank the gentlelady.
    The chair recognizes the gentleman from Arkansas, Mr. Ross.

   OPENING STATEMENT OF HON. MIKE ROSS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ARKANSAS

    Mr. Ross. Thank you, Mr. Chairman, for holding today's 
hearing to discuss the safety and security of current offshore 
drilling practices and the future of energy production in our 
Nation. In the wake of the worst oil spill in our Nation's 
history, we must now learn from this disaster and reevaluate 
our operating methods andexamine how oil will be a part of 
America's future energy policy.
    As oil prices and oil company profits have increased 
dramatically over the last decade, so has our Nation's 
dependence on foreign oil, with the U.S. importing 
approximately 52 percent of the oil it consumed last year. 
While I believe that our policies must be broad enough to 
create energy from a variety of domestic sources, including 
domestic oil and natural gas, I also recognize the importance 
of thoughtful investments in biofuels, nuclear, hydropower, 
wind, solar, and clean coal technology.
    On day 57 of this disaster, with no end in sight, I am 
hopeful that the five companies testifying today can inform us 
of what went wrong, how this tragedy could have been prevented, 
and how the American people can have assurance that this will 
never happen again. I believe the administration and our 
government must do more to hold these companies accountable for 
their drilling practices and ensure the most advanced 
technologies and safety procedures are in place.
    Once again, Mr. Chairman, thank you for holding this 
hearing; and I look forward to today's discussion.
    Mr. Markey. We thank the gentleman.
    The chair recognizes the gentleman from Vermont, Mr. Welch.

  OPENING STATEMENT OF HON. PETER WELCH, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF VERMONT

    Mr. Welch. It is absolutely outrageous that we are here 
today. What happened in the Gulf was something that BP assured 
us would never, ever happen. That it did happen, in fact, was 
foreseeable and inevitable. And why was that? Because, at every 
turn, reckless disregard of safety procedures, corner cutting, 
and decisions that were made for money, not safety.
    Mr. Chairman, I want to take this opportunity to address 
the current crisis. As BP debates whether to issue a second 
quarter dividend on their annual $10 billion dividend, we have 
people in the Gulf Coast who need compensation. Responsible 
companies pay their obligations. Then they pay dividends.
    Many in Congress have joined me in my call on BP to direct 
dividend funds to an escrow account to be available to deal 
with the heartache and the destruction of livelihoods in the 
Gulf Coast. BP has affirmed its intention to make good on its 
obligations. Now we ask that BP take financial steps consistent 
with its assurances.
    President Obama and 54 Members of the U.S. Senate have 
called for the establishment of an independently administered 
$20 billion escrow fund that would be available to cover 
cleanup costs. Mr. McKay, I further call on BP to deposit 
dividend funds into this escrow account so that the citizens of 
the Gulf and the taxpayers of this country can be assured that 
your company will meet its obligations.
    I yield back the balance of my time.
    Mr. Markey. We thank the gentleman.
    The chair recognizes the gentleman from Utah, Mr. Matheson.

  OPENING STATEMENT OF HON. JIM MATHESON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF UTAH

    Mr. Matheson. Thank you, Mr. Chairman, for holding this 
hearing.
    I know that for each witness here your testimony highlights 
the way in which your company does business and how, and also 
we are going to hear from BP how it conducted itself leading up 
to the Deepwater Horizon explosion on April 20. You each will 
discuss your safety record and lessons learned from past 
disasters.
    I think it is fair to say that none of your companies are 
immune from criticism, and accidents can strike at any place at 
any time, despite the safety measures that you will be touting 
today. As has been mentioned already, on Friday night, a 
Chevron pipeline began leaking in Salt Lake City and before 
being shut off early Saturday morning had already leaked 
somewhere around 33,000 gallons of oil down Red Butte Creek in 
northern Salt Lake City, which leads into the Jordan River 
which empties into the Great Salt Lake.
    The Great Salt Lake is one of the most important estuaries 
for migrating birds in the Northwest. Fortunately, current 
information indicates that oil has not hit the Great Salt Lake. 
Further, it is fortunate that the drinking water supply is 
protected; and, by most accounts, the oil has been contained.
    Now while 33,000 gallons is a pittance when compared to the 
magnitude of the spill in the Gulf and the impact on my city's 
economy will not be anywhere near what it is for the Gulf Coast 
residents, it further highlights for me the importance of 
Federal Government oversight of our energy infrastructure.
    This particular Chevron pipeline was last inspected in 
2008. We need to find out what the results were of that 
inspection and if anything in that inspection gave any 
indication of the potential of this problem that occurred this 
past weekend.
    Right now, the purported cause of this spill is that a 
branch fell during a heavy windstorm, created an electric arc, 
which hit a metal fence post that was driven into the ground 
just inches from the pipeline.
    It raises some questions. Why was the fence post within 
inches of the pipeline? When the electricity arced through that 
fence post, it burned a hole in the pipeline.
    That is the latest explanation of what happened. We need to 
get answers to that.
    The last thing we needed answers to is that, apparently, 
the monitoring equipment on the pipeline failed to indicate 
there was a leak and the first time Chevron was aware of the 
leak was when the Salt Lake City Fire Department called them 
the next day.
    So we need to find out, number one, what was the result of 
the inspection in 2008; number two, why was a fence post 
drilled within inches of the pipeline; number three, why did 
the monitoring equipment fail in terms of why the leak 
happened? I am kind of working the Department of 
Transportation, the EPA in looking at these issues to find out 
why this happened and, lastly, how we define what clean is in 
terms of the cleanup.
    I would acknowledge Chevron has taken responsibility. 
Chevron has indicated it will pay for the cleanup in Salt Lake. 
I appreciate that aggressive position they have taken to try to 
reach out to the residents of Salt Lake City.
    Mr. Chairman, I am glad you bear with me. I know this 
hearing is more about the BP situation in the Gulf, but I 
thought the incident of the past weekend was worth mentioning 
in this hearing to show that issues about energy, 
infrastructure, and safety can touch anywhere along the supply 
chain. It is important we keep that in mind.
    I will yield back.
    Mr. Markey. We thank the gentleman.
    The chair recognizes the gentleman from North Carolina, Mr. 
Butterfield.

OPENING STATEMENT OF HON. G.K. BUTTERFIELD, A REPRESENTATIVE IN 
           CONGRESS FROM THE STATE OF NORTH CAROLINA

    Mr. Butterfield. Thank you very much, Mr. Chairman.
    I think we are all saying the same thing. You should have 
done more to prevent this unthinkable disaster. Even though 
some may suggest that my home State of North Carolina is not in 
harm's way, the fact is that we may be. We are not only angry 
about this spill but we are scared to death that our coastal 
area will be affected.
    Over the past 30 years, the oil industry has used some of 
the world's most advanced technologies to drill in deeper 
waters. The broad ingenuity that allowed them to drill miles 
under the ocean's floor has outpaced commitment to safety, and 
that is unacceptable.
    BP ignored a very simple rule. If you can't plug the hole, 
don't drill the well.
    What concerns me, Mr. Chairman, is whether BP's mistakes 
are unique to them or are indicative of industry-wide 
practices. Regardless, we must now ensure that adequate safety 
practices and cleanup plans are firmly in place. It was assumed 
that this type of disaster would never happen, but it did.
    I hope this tragic event illustrates the need for action. 
Many of us on this side of the aisle have advocated a 
fundamental overhaul to our energy policy, stressing a broad 
portfolio of energy sources and energy efficiency. This 
overhaul can be market driven if we apply a real cost to carbon 
and its effect on our economy and our quality of life and our 
environment.
    This disaster demonstrates that we cannot delay in enacting 
comprehensive energy and climate change legislation to diminish 
our dependence on oil both foreign and domestic.
    Today's hearing will provide unambiguous answers, I hope, 
on what to expect in the days, weeks, and years to come. For 
millions of people who face this nightmare, we must demand 
transparency and a clear assessment of the future.
    I thank the witnesses for being with us today and let me 
join my good friend Mr. Welch in requesting BP to consent to an 
escrow fund that will provide a modest revenue for those who 
have been harmed. I say to the witnesses today, put it on the 
table. We must know it all.
    Thank you. I yield back.
    Mr. Markey. We thank the gentleman.
    The chair recognizes the gentleman from Texas, Mr. 
Gonzalez.

OPENING STATEMENT OF HON. CHARLES A. GONZALEZ, A REPRESENTATIVE 
              IN CONGRESS FROM THE STATE OF TEXAS

    Mr. Gonzalez. Thank you very much, Mr. Chairman. I will be 
very brief.
    I usually don't make opening statements, but I think I can 
read the minds of the witnesses, Mr. Chairman. I think they are 
all saying all these individuals are stating the obvious and 
the political, and you are absolutely right. But I think when 
we get into the questioning it will be a whole different world.
    As far as the political view, to be real honest with you, 
all those that are blaming the President for not meeting the BP 
CEO immediately, had the President done that I assure you 
today's statements would have been what was the President 
thinking meeting with the BP executives at the outset without 
first visiting the areas or first meeting with the Coast Guard 
and first responders. That's what would have happened.
    What I am hoping that we are going to achieve today is to 
hear from these witnesses what are the energy needs of America, 
how are transportation fuels, obviously based on oil, and what 
we are going to do moving forward, the difference between deep 
and shallow water exploration and drilling and how we meet the 
immediate needs of our public, our constituents, our citizens 
of this country, and the fact that meeting those needs in the 
interim, as we transition to something different, can be done 
in a responsible fashion. We can meet the needs and act 
responsibly and that they are not mutually exclusive.
    Thank you very much. I yield back.
    Mr. Markey. We thank the gentleman from Texas.
    That completes the period for opening statements from all 
of the members of the subcommittee. The chair does not see any 
other members.
    Before we go to the witnesses, I will first make a 
unanimous consent that Chairman Stupak and Representatives 
Blackburn, Castor, DeGette, Weiner, and Jackson Lee be 
permitted to question witnesses following questions by members 
of the subcommittee.
    Without objection. The chair hears no objection from any of 
the members of the subcommittee, so it is so ordered.
    It is the policy to swear you in before you testify. So I 
would ask each of you to please rise and raise your right hand.
    [Witnesses sworn.]
    Mr. Markey. Let the record reflect that each of the 
witnesses responded in the affirmative.

 STATEMENTS OF REX W. TILLERSON, CHAIRMAN AND CHIEF EXECUTIVE 
    OFFICER, EXXONMOBIL; JOHN S. WATSON, CHAIRMAN AND CHIEF 
EXECUTIVE OFFICER, CHEVRON; JAMES J. MULVA, CHAIRMAN AND CHIEF 
  EXECUTIVE OFFICER, CONOCOPHILLIPS; MARVIN ODUM, DIRECTOR OF 
  UPSTREAM AMERICANS AND PRESIDENT, SHELL OIL CO.; AND LAMAR 
        MCKAY, CHAIRMAN AND PRESIDENT, BP AMERICA, INC.

    Mr. Markey. Now we turn to our first witness, Mr. Rex 
Tillerson.
    Mr. Tillerson is the Chairman and the Chief Executive 
Officer of the ExxonMobil Corporation. He is also a member of 
the Business Roundtable and the American Petroleum Institute.
    We welcome you, Mr. Tillerson. Please begin when you are 
ready.

                 STATEMENT OF REX W. TILLERSON

    Mr. Tillerson. Thank you, Chairman Markey, Ranking Member 
Upton, members of the subcommittee.
    Of the many issues on the energy agenda, none is more 
pressing than the accident and the spill unfolding in the Gulf 
of Mexico. As someone who has spent his entire career in the 
energy industry, it truly is deeply saddening to see the loss 
of life, the damage to environmentally sensitive areas, the 
effect on the economic livelihoods, and the loss of the public 
trust in the energy industry that has resulted. Clearly, this 
incident and the response will have important consequences for 
the environment, for the citizens and businesses of the Gulf 
Coast, and for our Nation's energy policy.
    It is essential that we understand the events that led to 
this unprecedented accident and take corresponding steps to 
reduce the likelihood of a similar event ever occurring again. 
An expert, impartial, and thorough approach to understanding 
what happened is crucial, because this incident represents a 
dramatic departure from the industry norm in deepwater 
drilling. Understanding the facts surrounding this incident is 
critical to informing the long-term policy and the operational 
response.
    We are eager to learn what occurred at this well that did 
not occur at the other 14,000 deepwater wells that have been 
successfully drilled around the world. It is critical we 
understand exactly what happened in this case, both the drill 
well design and operating procedures and the execution of the 
drilling plans, which led to such severe consequences. We need 
to know if the level of risk taken went beyond the industry 
norms.
    Based on the industry's extensive experience, what we do 
know is when you properly design wells for the range of risk 
anticipated, follow established procedures, build in layers of 
redundancy, properly inspect and maintain equipment, train 
operators, conduct tests and drills and focus on safe 
operations and risk management, tragic incidents like the one 
we are witnessing in the Gulf of Mexico today should not occur.
    For many, current events bring back memories of the 1989 
Exxon Valdez tanker spill. That accident was the low point in 
Exxon Mobil's history, but it also was a turning point. In the 
aftermath, we launched a full-scale, top-to-bottom review of 
our operations and implemented far-reaching actions that today 
guide every action we make on a daily basis. An overriding 
commitment to safety excellence is embedded in everything we 
do, with a daily commitment by our employees and our 
contractors to a culture that ``nobody gets hurt''.
    In the early 1990s, we began development of our Operations 
Integrity Management System, or OIMS, a rigorous regime of 11 
separate elements that measures and mitigates safety, security, 
health, and environmental risk.
    It is significant that the first element of OIMS is 
management leadership and accountability. This management 
system applies to every operation we undertake. It is our 
common global language for safety and accountability, and when 
we do have incidents we seek to learn from them so that we 
continuously improve our performance in the system. It is a 
system which requires internal and external assessment of each 
business unit's progress towards complying with all of the 11 
elements.
    With respect to drilling, ExxonMobil has drilled almost 
8,000 wells worldwide over the last 10 years. Of these, 262 
have been in deepwater, including 35 in the Gulf of Mexico.
    The standards and requirements that operate within OIMS 
dictate our approach to drilling, as they do for all of our 
other operations. We have documented standards for equipment 
and well design. We utilize proprietary technology to predict 
pressures and model resource flow, and we carefully analyze 
that information to both understand and reduce the risk. We 
ensure everyone onboard the rig, contractors included, know 
their roles and responsibilities and that all operations must 
be in compliance with ExxonMobil's expectations and standards, 
and we test this knowledge through regular drills and 
exercises.
    Sticking through this system has required us to make some 
difficult decisions. We do not proceed with operations if we 
cannot do so safely.
    The American people have shown their support for deepwater 
drilling, but they expect it to be done safely and in an 
environmentally sensitive way.
    They have supported it because they understand it is 
important. In the Gulf of Mexico, it accounts for about 24 
percent of U.S. oil production. Oil and gas activity in the 
Gulf, including deepwater drilling, accounts for approximately 
170,000 direct and indirect jobs. Worldwide, deepwater 
production is estimated to equal, in a few years, the entire 
production of Saudi Arabia, and it is a vital part of an 
industry that supports more than 9 million full- and part-time 
American jobs and adds $1 trillion to our gross domestic 
product.
    These facts show how critical it is that all industry 
participants have the trust of the American people. We can 
secure this trust if we take the time to learn what happened 
and develop our response appropriately to ensure that every 
participant acts responsibly, learns the right lessons, and 
upholds the high standards.
    The American people deserve nothing less.
    Thank you.
    [The prepared statement of Mr. Tillerson follows:]
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    Mr. Markey. Thank you, Mr. Tillerson.
    Our next witness is Mr. John Watson. Mr. Watson is the 
Chairman and Chief Executive Officer of the Chevron 
Corporation. He is a Director and member of the Executive 
Committee of the American Petroleum Institute as well as a 
member of the National Petroleum Council.
    We welcome you, Mr. Watson.

                  STATEMENT OF JOHN S. WATSON

    Mr. Watson. Thank you, Mr. Chairman and Ranking Member 
Upton. My name is John Watson, and I do lead Chevron.
    As we meet today, the tragedy in the Gulf of Mexico does 
continue to unfold. Our thoughts are with the families who lost 
loved ones, workers who were injured, and communities that are 
dealing with the economic and ecological damage.
    For Chevron, this tragedy is very personal. Our employees 
knew people who died on the Deepwater Horizon. More than 13,000 
Chevron employees live and work in the Gulf region. We have a 
very personal stake in operating safely because it is our home, 
too. For our industry, this is a humbling experience. The 
American people expect that the energy we need will be produced 
safely and reliably, and that did not happen here.
    This morning, I will focus my comments on what Chevron did 
immediately following the accident and why I believe deepwater 
development can be done safely.
    After the Deepwater Horizon accident, Chevron provided its 
full support to the response. We deployed experts to assist BP 
and advise the Coast Guard on marine transportation planning. 
We have also been working with communities and organizations 
across the Gulf region.
    We helped to lead the Joint Industry Task Force, which made 
recommendations to the Department of the Interior to raise 
industry standards to an even higher level. A majority of these 
standards are already embedded in Chevron's operations.
    Within hours, Chevron held safety stand-downs on our rigs 
around the world to review drilling processes and procedures. 
We examined our blowout contingency plans and scrutinized our 
drilling and completion policies.
    We also stress the responsibility that every single Chevron 
employee and contractor has, and that's the authority to stop 
work immediately if they see anything unsafe. At Chevron, we 
reward people who exercise this authority.
    At Chevron, one goal overrides all others, making sure 
everyone goes home safe every day. We have multiple systems to 
prevent a tragedy like the Deepwater Horizon. Our drilling 
policies and procedures are rigorous, we require continuous 
training, we certify our drilling personnel to ensure they are 
qualified to manage unusual circumstances, and we verify that 
contractors have the skills to execute well control.
    Our internal review confirmed what our regular audits have 
told us. Chevron's deepwater drilling and well control 
practices are safe and environmentally sound.
    Since our first year of deepwater exploration in 1987, 
Chevron has successfully drilled 375 deepwater wells around the 
world. But we know that we can always learn and improve, so we 
welcome any new standards and safeguards that improve safety 
and prevent future accidents.
    To that end, we must act quickly to implement the 
recommendations made by the Joint Industry Task Force to ensure 
that all companies are made with the same high standards of 
safety and reliability. Chevron will accept any new standard 
and adopt new standards that it doesn't already apply.
    We must also expedite the work of two new industry task 
forces, one focused on subsidy well control and the other on 
spill response and cleanup. We also are committed to work with 
the President's independent commission, and we will contribute 
to improve safety in every way that we can.
    Now we must restore the country's confidence in deepwater 
drilling. I believe the independent investigation will show 
that this tragedy was, indeed, preventable. This is not a 
trade-off of energy for safety. I strongly believe that 
responsible deepwater development must continue. America needs 
the energy, and we can produce that energy safely.
    Our Nation would lose more than it has already lost if this 
accident becomes the basis for reversing the many benefits of 
offshore development. Today, production in the Gulf of Mexico 
accounts for 15 percent of our natural gas, 27 percent of our 
domestic oil supply. The Gulf of Mexico production is also a 
foundation of local economies, providing significant jobs, 
economic development, and revenue.
    The Deepwater Horizon tragedy reinforces that all companies 
must operate with the same high standards of safety and 
reliability. It is clear that failure to do so does have dire 
consequences.
    Mr. Chairman, we must learn from this accident; and we must 
make sure it never happen again. My commitment to you is that 
Chevron will do everything in its power to see that it doesn't.
    Thank you.
    [The prepared statement of Mr. Watson follows:]
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    Mr. Markey. Thank you, Mr. Watson.
    Our next witness is Mr. James Mulva. Mr. Mulva is the 
Chairman and Chief Executive Officer of the ConocoPhillips 
Company. He is also a member of the National Petroleum Council 
and has served as the chairman of the American Petroleum 
Institute.
    We welcome you, Mr. Mulva. Whenever you feel comfortable, 
please begin.

                  STATEMENT OF JAMES J. MULVA

    Mr. Mulva. Thank you, Chairman Markey, ranking member 
Upton, and committee members. Thank you for the opportunity to 
appear before you this morning.
    All of us at ConocoPhillips extend our condolences to the 
loved ones and friends of the 11 workers lost on Deepwater 
Horizon. Our thoughts and prayers are also with those injured 
or who have been impacted by this spill.
    The Deepwater Horizon incident is a matter of national 
urgency. As Americans, we have a long history of joining 
together in times of need and then working to find solutions 
that are in our national interest.
    So in that spirit and in support of the people along the 
Gulf Coast whose lives and livelihoods have been affected, 
ConocoPhillips is providing manpower, materials, and resources 
to responders and the emergency personnel there. We will do so 
until the spill is contained and affected areas have been 
restored.
    We are not in a position to know about what went wrong at 
the Deepwater Horizon. The companies involved and the 
regulators certainly will do that. But, as an industry, we must 
commit ourselves to learning lessons from this tragedy and 
ensuring that nothing like Deepwater Horizon ever happens 
again.
    So any necessary changes undertaken by Congress, the 
executive branch, and industry should be one element of a 
broader national energy policy. That's a policy that recognizes 
that we have a robust oil and gas industry that generates vital 
U.S. jobs as well as substantial State and Federal revenue from 
tax and royalty payments, one that guarantees the security of 
the energy that drives our national economic well-being. Also, 
a policy that assures the safe, environmentally responsible 
production of all forms of energy along with its wise use. 
These are essential to a healthy and to a growing economy.
    Another key element of a comprehensive energy policy should 
be Federal action to address global climate change. As you are 
aware, ConocoPhillips supports passage of a comprehensive 
Federal law establishing a clear and transparent price for 
carbon. A Federal legislative framework, at a minimum, must 
provide a program to manage transportation emissions, one that 
protects consumers while encouraging investment in lower carbon 
technologies.
    It also must address the energy intensive and trade exposed 
nature of our domestic refineries.
    It must create new legislative mechanisms specifically for 
regulating greenhouse gas emissions. This would be in place of 
the Clean Air, Clean Water, and Endangered Species Acts and 
other Federal and State programs.
    It must recognize the essential role of natural gas in 
achieving a lower carbon energy future.
    Lastly, in order to achieve our national energy goals, U.S. 
energy policy must create, supply diversity, promote 
technological innovation, encourage energy efficiency, and 
environmental stewardship.
    Today, our country is working toward an energy future 
featuring a broad portfolio of energy sources; and these will 
include renewable sources and cleaner fossil fuels, broader 
conservation, and new, more efficient energy technologies. Each 
of those approaches will provide a part of the long-term 
solution.
    As a Nation, we are on our way, we will get there, but it 
is going to take us some time. Until then, we must fulfill 
America's pressing energy needs, in short providing fuel that 
enables people to travel to work and back, moves goods around 
the world, powers the lighting, heat, electricity, and 
machinery in which our homes, factories, and hospitals depend, 
and provides the fuel and fertilizer that enables us to feed a 
growing population.
    In doing this, even with strong growth and renewable 
sources, carbon fuels must keep carrying the energy load far 
into the future.
    Fortunately, we have natural gas. It is one of the most 
important domestic resources available for use by our country 
in reaching its climate and energy security objectives. It is 
clean, it is affordable, it is reliable, abundant, and 
available here at home.
    We believe that through a national spirit of shared 
commitment to a mutually beneficial outcome, America can 
achieve its energy goals. As a company, ConocoPhillips is 
committed to doing so.
    So thank you very much for do this opportunity. I look 
forward to responding to questions that you may have.
    [The prepared statement of Mr. Mulva follows:]
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    Mr. Markey. Thank you, Mr. Mulva.
    Our next witness is Mr. Marvin Odum. Mr. Odum is the 
President of the Shell Oil Company. He is also on the board of 
the American Petroleum Institute.
    We welcome you, Mr. Odum. Please begin when you are ready.

                    STATEMENT OF MARVIN ODUM

    Mr. Odum. Thank you, Chairman Markey, Ranking Member Upton, 
and members of the committee.
    I am Marvin Odum, President of Shell Oil Company; and I 
would like to begin by acknowledging the continuing situation 
in the Gulf of Mexico, which is on the minds of every American. 
All of us at Shell are deeply saddened by the Deepwater Horizon 
explosion and the aftermath, the terrible tragedy for the 
families of those who lost their lives or were injured. Many of 
our employees and customers live along the Gulf Coast and feel 
that pain firsthand.
    But getting to the root cause of this incident is critical. 
Like you, we want to know what went wrong with this well and 
the execution of this well design.
    As the investigation findings are available, Shell will 
incorporate any findings into our operations worldwide. Since 
the beginning, Shell has made experts, equipment, and 
facilities available to BP and the responders, including our 
Robert Training Center outside of New Orleans as a site for 
unified command.
    We took immediate steps to reinforce the safety of our 
operations globally, including a review of operating practices, 
testing frequencies, and training protocols. We remain 
confident in our expertise and procedures, and that comes from 
focus on five critical and integrated areas to ensure safe well 
design and drilling in the deepwater. Those are our global 
standards, our rigorous training and certification of the 
engineers, a safety case approach with our contractors to 
identify the risk and mitigate those risks, ensuring robust and 
multiple barriers in our wells, and 24/7 remote monitoring by 
skilled professionals who provide immediate support on critical 
issues such as well pressure changes.
    As safety and environmental protection are and always will 
be Shell's top priorities, we welcome the recommendations 
outlined in Secretary Salazar's May 27 report to the President 
and the June 8th notice to leaseholders. Many of these elements 
that were included were already aligned with our global 
practices, and we will work to incorporate all of them.
    In the context of this tragedy, we acknowledge the reasons 
for the President's decision to halt deepwater drilling, but it 
is not without consequences, thousands of jobs lost and 
billions in lost wages and spending, and not only in the Gulf 
Coast but also in places like Alaska.
    This brings me to the topic that you asked us to speak 
about today, America's energy future. At Shell, we believe that 
population and economic growth will drive global energy demands 
to potentially double to today's use by 2050, even with strong 
efficiency gains. Energy supply from all sources--oil and gas, 
nuclear, renewable, and others--will struggle to keep up with 
this demand. Environmental stresses will grow, making the 
transition to lower carbon economies even more urgent.
    With this as a backdrop, it is clear the world needs a more 
sustainable energy system. Alternative and renewable energies 
could be 30 percent of the new energy mix by 2050.
    The scale and the massive infrastructure of the global 
energy system does mean that change takes time. At Shell, we 
believe our industry can best contribute by making more energy 
available, by reducing emissions, and by increasing our lower 
carbon energy share while generating jobs and doing so safely 
and responsibly.
    Natural gas is not a renewable, but it is abundant in the 
U.S. and a lower CO2 energy source. Increased 
natural gas for electricity is by far the quickest route and 
least expensive route to cleaner air. Within a couple of years, 
Shell will be producing more gas than oil and much of that in 
North America.
    Biofuels are also one of the best opportunities for 
reducing CO2 from transportation for at least the 
next 20 years.
    Shell is the world's largest supplier of renewable blend 
fuels, and we are investing in lowest CO2 biofuels 
made from sugar cane ethanol through a $12 billion joint 
venture proposed for Brazil.
    Investments in technologies such as these are creating 
jobs. One out of every $5 spent in the U.S. supporting new 
energy jobs comes from investments made by our industry, which 
already supports more than 9.2 million American jobs. We need 
to retain these jobs and create new ones to fuel the economy of 
the future.
    Society, government, and business must all do their part. 
Absence of a robust energy policy has been a disadvantage to 
this Nation. Shell supports legislating a solution to energy 
and climate issues as a means to create a secure U.S. energy 
future, to reduce dependence on imported oil, and to decrease 
greenhouse gas emissions.
    Now this requires setting a price for carbon. But shying 
away from oil and gas development during the transition is not 
the answer. Oil and gas development is too important to the 
U.S. energy supplies and our economy to not safely and 
responsibly move forward. Shell stands ready and able with 
skilled people and state-of-the-art technology to continue 
meeting America's needs.
    Thank you for your time, and I look forward to addressing 
your questions.
    [The prepared statement of Mr. Odum follows:]
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    Mr. Markey. Thank you, Mr. Odum.
    Our final witness is Mr. Lamar McKay. Mr. McKay is the 
President and Chairman of BP America.
    Mr. McKay, please begin when you are ready.

                    STATEMENT OF LAMAR MCKAY

    Mr. McKay. Thank you.
    Chairman Markey, Ranking Member Upton, members of the 
committee, my name is Lamar McKay; and I am Chairman and 
President of BP America.
    Before addressing the main topic of today's hearing, I 
would like to reiterate the profound sorrow and regret that all 
of us at BP feel for the loss of life and the oil spill 
resulting from the Deepwater Horizon explosion and fire.
    This is very personal both to me and to BP. I am from 
Mississippi. I grew up in Mississippi. I spent summers on the 
Gulf Coast. Most of my family is in New Orleans, and I have 
most of my relatives and friends along the Gulf Coast.
    The Gulf Coast States have hosted BP and BP's heritage 
companies for decades. Thousands of our employees, contractors, 
and their families call the Gulf Coast States home. This 
horrendous accident, which killed 11 workers and injured 17 
others, has profoundly touched all of us. There has been 
tremendous shock that such an accident could have happened and 
great sorrow for the lives lost and the injuries sustained.
    I would like to make one thing very clear: BP will not rest 
until the well is under control and we discover what happened 
and why in order to ensure that it never happens again. As a 
responsible party under the Oil Pollution Act of 1990, we will 
carry out our responsibilities to mitigate the environmental 
and economic impact of this accident. In fact, BP is going 
beyond obligations under OPA to agree to pay all legitimate 
claims for economic damages resulting from the spill.
    While it is difficult to divert from the here and now, we 
cannot lose sight of the need to help shape the country's 
future energy and climate policy.
    BP is committed to working with Congress and with a broad 
cross-section of energy producers, energy consumers, and other 
stakeholders to address the challenges of climate change in the 
context of increasing U.S. energy demand. We appreciate the 
opportunity to share our views on energy and climate policy, as 
well as the chance to discuss the major role of natural gas 
that it can play in speeding emission reductions in the power 
sector, delivering the greatest reductions at the lowest cost 
for consumers using technology that is available today.
    BP advocates and has advocated for quite a time an all-of-
the-above approach to tackling climate change, enhancing U.S. 
energy security and meeting the Nation's growing need for 
energy. We do support policies that encourage conservation, 
energy efficiency, and greater production of domestic energy, 
including alternatives, oil and gas and nuclear. Our views on 
climate policy flow from the fact that a ton of carbon is a ton 
of carbon, whether it comes out of a tailpipe or a smokestack 
and the belief that every ton should be treated the same.
    We support a national climate policy that creates a level 
playing field for all forms of energy that produce carbon 
emissions.
    We favor an economy-wide price for carbon based on fair and 
equitable action based across all sectors. Market-based 
solutions like a cap-and-trade or a linked fee are the best 
solutions to manage greenhouse gas emissions. Applied 
nationally, these would achieve maximum environmental 
effectiveness at reducing emissions, treat all energy consumers 
equitably, and facilitate investment in sustaining and creating 
jobs. We have long supported transitional incentives for 
alternatives to assist their development and accelerate their 
market entry.
    Additionally, we think natural gas holds great promise in 
becoming a larger component of the U.S. energy pool and can 
provide a critical down payment at delivering upon our carbon 
reduction goals.
    I would like to conclude by noting that, while BP is in the 
midst of a crisis right now and we are prepared to be judged by 
our response to that crisis, we cannot lose sight of the 
future.
    Thank you, and I look forward to your questions.
    [The prepared statement of Mr. McKay follows:]
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    Mr. Markey. Thank you, Mr. McKay.
    That completes the opening statements of our witnesses. We 
will now turn to questions by the subcommittee members. The 
chair will recognize himself.
    As I mentioned in my opening statement, the Gulf of Mexico 
response plans for ExxonMobil, Chevron, ConocoPhillips, and 
Shell are virtually identical to BP's and just as deficient. As 
you can see by looking at the covers of these five plans on the 
screen and over my head, the pictures are the same for each 
plan. All that is changed is the color of the cover of the plan 
from each of the companies seated at the table.
    Mr. Tillerson, like BP, on page 11-6 of your plan, Exxon 
Mobil's Gulf of Mexico oil spill response plan lists walruses 
under sensitive biological and human resources. As I am sure 
you know, there aren't any walruses in the Gulf of Mexico; and 
there have not been for 3 million years. How can ExxonMobil 
have walruses in their response plan for the Gulf of Mexico?
    Mr. Tillerson. Congressman Markey, those response plans 
incorporate a number of broad-based studies, marine mammal 
studies, many of which are part of the EIS and EIA statements 
that are put together by the MMS; and much of the response plan 
and what is contained in it is prescribed by regulation, 
including the models that are used to project different 
scenarios for oil spills; and many of the statements and 
representations that are in the plans----
    Mr. Markey. These are regional oil spill response plans. 
How can walruses be in a response plan for the Gulf of Mexico? 
This is a regional response plan----
    Mr. Tillerson. I understand your question.
    Mr. Markey [continuing]. That the company has put together.
    Mr. Tillerson. And it's unfortunate that walruses were 
included, and it is an embarrassment that they were included, 
but that is part of a larger marine mammal study that is used 
in preparing regional response plans.
    Mr. Markey. Mr. Mulva, your plan as well includes walruses. 
Mr. Watson, your plan has them on page 11-6. How do you respond 
to having walruses in your plan?
    Mr. Watson. I would respond in a similar fashion. The plan 
was put together in response to guidelines from the Minerals 
Management Service.
    Mr. Markey. Do you agree that it is an embarrassment to 
have walruses in a response plan for the Gulf of Mexico?
    Mr. Watson. Certainly for the Gulf of Mexico it is not 
appropriate.
    Mr. Markey. Mr. Mulva, do you agree it is inappropriate to 
have it in a plan for the Gulf of Mexico?
    Mr. Mulva. I agree it is not appropriate to have include it 
for that region.
    Mr. Markey. In your response plan, Mr. Tillerson, as well 
as some of the other plans, including ConocoPhillips, there is 
a Dr. Lutz who is referred to as an expert, a technical support 
person. Mr. Lutz died in 2005, 4 years before the plan was 
actually filed. How, Mr. Tillerson, can you justify in a 
response plan having a person who has been dead for 4 years? Is 
that also an embarrassment?
    Mr. Tillerson. Well, it is. But let me point out that Dr. 
Lutz is part of the University of Miami's Marine Mammal 
Research Division which has been an important resource for 
preparation of these plans for years. The fact that Dr. Lutz 
died in 2005 does not mean his work and the importance of his 
work died with him. There are many other individuals identified 
in the plan for contact and we need expertise----
    Mr. Markey. I appreciate that. It is 2010. It is 2010.
    Mr. Tillerson. Those numbers are all valid that are in the 
plan.
    Mr. Markey. It just seems to me that when you include Dr. 
Lutz's phone number in your plan for a response that you have 
not taken this responsibility seriously.
    Mr. Mulva, the same is true for you. Is it an embarrassment 
to ConocoPhillips to have that as part of your plan?
    Mr. Mulva. Well, the plans need to be updated more 
frequently. What's important is the institution. That's who we 
refer to for support. Obviously, it is embarrassing, but we 
really look towards the institution and not necessarily the 
individual.
    Mr. Markey. It just seems to me that, for each of your 
companies, the only technology you seem to be relying upon is a 
Xerox marine to put together your response plans, that there 
wasn't enough effort put together to ensure that in the Gulf, 
if a catastrophe occurred, that you would be able to respond.
    And you, Mr. McKay, in the first week, your company 
developed a document that showed that your range of 
possibilities for an accident was 1,000 to 14,000 barrels per 
day, and yet your company continually, in the first week, low-
balled the number and said that it was only 1,000 barrels per 
day.
    You are now estimating that it could be upwards of 40,000 
barrels per day and you are today capturing 15,000 barrels per 
day of oil from that gusher. Are you ready to apologize to the 
American people for getting that number so wrong, having been 
so incompetent or deceptive to the American people that proper 
preparations were not put in place because of BP's low-balling 
of the actual amount of oil that was going into the Gulf of 
Mexico.
    Mr. McKay. First, just to be clear, those were united--
sorry, Unified Area Command estimates. They came from the 5,000 
barrels a day, was an estimate done on April 26th by NOAA. Our 
input into that on the 27th, which was after that, was a range 
of 1- to 14,000 barrels per day. And our estimate, best 
estimate was above 5,000 barrels per day. But the unified 
command estimate was 5,000 barrels a day. We stuck with that. 
Information has been gathered as things have moved along, as 
we've gathered oil.
    Mr. Markey. This document that I have is BP Confidential in 
the first week. It says 1,000 to 14,000, this is BP 
Confidential.
    Mr. McKay. Right.
    Mr. Markey. The onus, the burden, the responsibility, is on 
your shoulders. You had the technology. You were able through 
your expertise to make this determination. And I do believe 
that it is either deliberate deception or gross incompetence, 
because ultimately the amount of boom, skimmers, cleanup of the 
beaches and marshes, and rescue of birds and turtles, the 
capacity which you needed in order to capture the oil coming 
out of that spill, testing for the health of the workers, it 
was all dependent upon how large the spill was.
    Are you ready to apologize for getting that number so 
grossly wrong that the capacity of Federal and State 
governments to put in place a response was delayed because you 
did not do the job?
    Mr. McKay. I will just reiterate what Commandant Allen 
said, is that those were not BP estimates, those were Unified 
Area Command estimates. We did provide----
    Mr. Markey. They were your cameras at the bottom of the 
ocean.
    Mr. McKay. That's true.
    Mr. Markey. You got it wrong, Mr. McKay. Your company got 
it wrong. BP got it wrong.
    Mr. McKay. We have provided every bit of data we've got 
into the Unified Area Command with government scientists and 
government MMS, NOAA, Coast Guard to help them understand what 
data we have.
    Mr. Markey. On the day, Mr. McKay, that you are ready to 
apologize----
    Mr. McKay. What's that?
    Mr. Markey. On the day that you are ready to apologize, 
that is the day that we can begin to move forward and put 
together the kinds of plans that make sure this never happens 
again. It was BP's spill, but it was America's ocean.
    Mr. McKay. We----
    Mr. Markey. We need you to admit that you knew or should 
have known very early on that this was not a spill of 1,000 or 
5,000 barrels per day. They were your cameras, your technology, 
your expertise that the American people were relying upon, and 
you got it completely wrong, either in order to limit your 
liability or out of incompetence. But the ultimate impact on 
this region of the country is profound and will last for a 
generation.
    Please, one final chance; apologize for getting that number 
wrong.
    Mr. McKay. We are sorry for everything the Gulf Coast is 
going through; we are sorry for that and the spill. What I can 
say is we have provided every bit of data and information we 
have to the unified command, to the government, to every 
scientist that's working on this full time, and from that day 
you're talking about. So we do not have the technology to 
measure that. That is still under evaluation.
    Mr. Markey. I continue to believe that BP is still more 
interested in its liability than it is in the livability of the 
gulf, and this hearing is just one further indication of that.
    My time has expired. Let me turn and recognize the 
gentleman from Michigan, Mr. Upton.
    Mr. Upton. Thank you. Mr. McKay, you indicated BP is 
looking to pay all legitimate damages. Are you willing to put 
into an escrow account enough money to pay for such damages as 
might be expected?
    Mr. McKay. Well, we've been very, very clear from day one 
that we, as a responsible party under OPA 90, we are going to 
be responsible and living up to the responsibilities of OPA 90. 
I cannot comment on whether there will be a fund set aside or 
not. We've made it clear that the company stands behind these 
commitments. We have a strong balance sheet and we have a 
strong company. We intend to stand behind those.
    I cannot commit today, one way or the other, whether a fund 
would serve that in furtherance.
    Mr. Upton. So that's a ``no'' at this point.
    Mr. McKay. I can't comment yes or no.
    Mr. Upton. I thought the buck stops there.
    Mr. McKay. We've--what we've said, we will honor all 
legitimate claims; and the full company stands behind that.
    Mr. Upton. Have you asked the Federal Government for any 
help that you've not received?
    Mr. McKay. Not that I know of.
    Mr. Upton. What grade would you give the administration in 
its efforts to stop the spill?
    Mr. McKay. We've been cooperating in every way we know how 
with the administration and----
    Mr. Upton. A, B, C, D?
    Mr. McKay. I can't give a grade. This has been a unified 
command that we've been a participant in with many government 
agencies. Industry, we've got 150 companies working on this. I 
can't comment on a grade of individual components of that.
    Mr. Upton. Of your counterparts that are at the table, have 
any of them--are you working with any of them to try to stop 
the leak?
    Mr. McKay. Yes, all of these companies have been 
tremendously supportive and helping us.
    Mr. Upton. Question for all of you, as you do drills--
drilling across the world, which country has the toughest 
regulations that enforce those regulations and what--and if 
that country gets an A, where would you put the U.S. with the 
enforcement by the MMS? Mr. Tillerson.
    Mr. Tillerson. Well, I think the United States and the 
North Sea countries have the most mature regulatory structure 
around offshore drilling activities, because that's where it 
has taken place the longest. I can tell you those standards 
didn't get taken to countries that have not established a 
regulatory structure. And the same standards are applied 
everywhere.
    Mr. Upton. So the same standards are in the gulf as they 
are in the North Sea?
    Mr. Tillerson. By and large they are the same. For 
ExxonMobil we take what we believe to be the best practice, the 
best, and then apply that globally, because it really doesn't 
matter where you are. If you have a well-controlled incident, 
you need to use the best you have everywhere in deepwater 
drilling. It is not an area where you make some distinction, 
I'm going to cut a corner in this country because I can.
    Mr. Upton. Well, I know in the North Sea when they had the 
accident, I think it was back in 1988, and 100-some folks--180 
as I recall----
    Mr. Tillerson. Piper Alpha.
    Mr. Upton. Right. The changes were made in essence to split 
the MMS, or split the enforcement agency, similar to what the 
administration is now proposing in the MMS. So that is a better 
system than what we have in the United States, right?
    Mr. Tillerson. I don't know the structure is as important 
as the competency and the process by which the oversight 
occurs.
    Mr. Upton. Mr. Watson.
    Mr. Watson. I'm not sure I can grade all the differences 
across the jurisdiction.
    Mr. Upton. I just want to know what model should we be 
looking at with the enforcement.
    Mr. Watson. We start with the regulations in each country 
and then we apply our standards on top of those regulations, 
and they are very similar. The application of our processes and 
procedures are very similar in all the countries. Where there 
are particular requirements in a particular country, we of 
course comply with those. Our view is certainly that the U.K. 
And the U.S. have very high standards.
    Mr. Upton. Mr. Mulva.
    Mr. Mulva. The greatest part of our experience and 
operation has been in the North Sea, particularly Norway and 
the United Kingdom. And Norway and the United Kingdom, 
especially developed some of the best practices that are 
applicable and used around the world. So it is based on our 
experience for many--several decades, those best practices and 
oversight review have been applied and used in the industry and 
other places in the world. So I would say that they rank right 
up at the top in terms of the capability and development of 
practices.
    Mr. Upton. Mr. Odum.
    Mr. Odum. Similar answer in that I think the U.S. does have 
one of the most comprehensive set of recommendations for the 
industry in the world. There are--you can find other areas 
where a particular regulation may be more stringent than what 
you see in the U.S. The important part for us as a company is 
going back to what I called in my testimony our global 
standards; how we do things everywhere. Those often exceed the 
regulations in any country.
    Mr. Upton. Mr. McKay.
    Mr. McKay. Yes, I would agree with that. The standards are 
similar in many places, with some specific differences, but the 
U.S. has a strong set of standards.
    I would add a comment that I think learning what we are 
learning through this will augment some of those standards and 
would be helpful. 
    Mr. Markey. The gentleman from Michigan's time has expired.
    The chair recognizes the chair of the full committee, the 
gentleman from California, Mr. Waxman.
    Mr. Waxman. Yesterday, Chairman Stupak and I sent a letter 
to Tony Hayward, the CEO of BP, and the letter raised questions 
about the design and the safety decisions made by BP at its 
Macondo well. The letter describes a series of decisions that 
BP made that seemed to increase the risk of catastrophic 
blowout. I'd like to ask each of you whether you think mistakes 
were made by BP. Mr. Tillerson.
    Mr. Tillerson. Well, in reviewing the letter that you both 
sent, it appears clear to me that a number of design standards 
were--that I would consider to be the industry norm were not 
followed.
    Mr. Waxman. Let me go through this, if I could, quickly. 
You think that they made mistakes. The answer that you would 
give would be ``yes.''
    Mr. Tillerson. We would not have drilled the well the way 
they did.
    Mr. Waxman. How about you, Mr. Watson?
    Mr. Watson. We just had a chance to take a look at your 
letter. It is quite lengthy, of course, with a number of 
detailed comments. Our experts are taking a look at it. I've 
read it myself. And from what I have seen it is consistent with 
what the Joint Industry Task Force found that there--we have an 
opportunity to raise the bar, if you will, on standards in the 
industry. And it certainly appears from your letter that not 
all standards that we would recommend or that we would employ 
were in place.
    Mr. Waxman. Do any of you disagree with the statement that 
BP made mistakes?
    Mr. Odum. It is not a disagreement, it is just confirmation 
that--don't have all the information, but from the information 
that was in your letter and what we know about the well, a 
similar statement that it's not a well that we would have 
drilled with that mechanical setup, and there are operational 
concerns.
    Mr. Waxman. Mr. Watson, you're quoted in the Wall Street 
Journal saying this incident was preventable. What mistakes did 
BP make that you would not have made?
    Mr. Watson. First, we would say that as we look at this 
incident, we need to let the investigation run its course. What 
we have done is, since the first days of this investigation and 
this accident, we've participated in the Joint Industry Task 
Force where the industry----
    Mr. Waxman. You made the statement. You were quoted as 
saying this incident was preventable.
    Mr. Watson. Yes.
    Mr. Waxman. What would you have done differently to prevent 
the disaster that we have now encountered?
    Mr. Watson. There are several areas that appear, based on 
the information we have seen in the Joint Industry Task Force, 
based on the information we've been able to gather, that 
suggests the practices that we would not put in place were 
employed here.
    Mr. Waxman. Specifically?
    Mr. Watson. For example, the casing design and mechanical 
barriers that were put in place appear to be different than 
what we would use.
    Mr. Waxman. Geren McKett, head of Chevron's exploration and 
production unit, said in the Wall Street Journal that Chevron 
uses a safer well design. Can you tell us why the Chevron well 
design is safer than BP's?
    Mr. Watson. It is the two characteristics that I commented 
there, on top of what we think are effective procedures and 
other authorities that we have in place that would have 
prevented this incident.
    Mr. Waxman. Well, in the well design, BP had a choice of 
two primary options. It could lower a full stream of casing 
from the top of the wellhead to the bottom of the wellhead, or 
it could hang--could hang a liner from the lower end of the 
casing already in the well and install a tie-back on top of the 
liner. BP plan review recommended against the full string of 
casing because it would create an open annulus to the wellhead 
and make the seal assembly of the wellhead the only barrier to 
gas flow if the cement job failed.
    Would you have chosen the other option and do you choose 
the other option in your wells?
    Mr. Watson. We would not have run a full string.
    Mr. Waxman. You would not have. OK.
    Mr. Tillerson, you made a similar claim today. You 
testified that, ``What we do know is that when you properly 
design wells from the range of risk anticipated, follow 
established procedures, build in layers of redundancy, properly 
inspect and maintain equipment, train operators, conduct tests 
and drills, and focus on safe operations in risk management, 
tragic incidents like the one in the Gulf of Mexico today 
should not occur.
    Mr. Tillerson, you've said that this blowout would not have 
happened if ExxonMobil had been drilling the well. Tell us what 
you would have done differently, and please be specific.
    Mr. Tillerson. Well, it would have been a different well 
design. We would have run a liner, a tie-back liner, we would 
have used a different cement formulation, we would have tested 
for cement integrity before we circulated the kill-weight mud 
out, we would have had the locking seal ring at the casing 
hanger before proceeding.
    And leading up to all of that, though, there was clearly--
and this is just based on what has publicly been made 
available--there were clearly a lot of indications or problems 
with this well going on for some period of time leading up to 
the final loss of control. And why those--why--how those were 
dealt with and why they weren't dealt with differently I don't 
know. And we don't have all the information, so I want to echo 
what Mr. Watson said there. We do--are very interested, as I 
said in my remarks, want to see the full investigation because 
we want to understand was there something else people were 
looking at that caused them to make the decisions they made as 
opposed to making the decisions that almost any of our drilling 
operations people would have made differently that led to the 
ultimate loss of the well.
    Mr. Waxman. Thank you. My time is running out. Let me make 
just make a statement, Mr. Chairman. I would feel more 
confident in these assurances if I didn't realize that each of 
the oil spill response plans from the companies are virtually 
identical to BP's.
    You say you would have done things differently. I would 
think, certainly in retrospect, that's a statement you would 
certainly make. I hope that's true, but the record does not 
support that the other companies here today have been more 
prepared than BP, and their plans were the same.
    So I thank you for your testimony. We've got to learn from 
this experience and move on, but we really have to learn that 
these things have to be thought out and the plans should not 
just be cookie-cutter plans. Thank you, Mr. Chairman.
    Mr. Markey. The chairman's time has expired. The chair 
recognizes the ranking member of the full committee, the 
gentleman from Texas, Mr. Barton.
    Mr. Barton. Thank you, Mr. Chairman. The stakes are a lot 
higher and the consequences are much more dire, but this 
reminds me a little bit of a Monday morning call-in radio talk 
show after the Redskins have blown another one. Everybody has 
an idea of what should have been done and now that they know 
what was done, and it wasn't done properly, they are much 
smarter than the coach on the field and the quarterback on the 
field at the time.
    So it is very easy to second-guess and to point out the 
problems. There is kind of good news, bad news. The bad news is 
that I agree with Chairman Waxman. Judgment calls were made 
that now that we're--now that we know what happened, that those 
were the improper judgments. That's bad. That's bad. But the 
good news is--and this is what our industry CEOs are saying, I 
think, is that it is preventable.
    I don't know what this task force is going to recommend 
that Mr. Tillerson has alluded to, but if the recommendation is 
that best practices on these deep wells ought to have these 
double sleeves, I think we could put that into a regulation if 
we need to. If the best practice is you ought to put the lock-
out collar on the well before you do the final cementing job, I 
think that is something that can be done. If the best practice 
is that we ought to really focus on degassing the mud before 
you recirculate it and do that final stage, when this accident 
occurred, I think we'll go along with that. These are not huge, 
technically complex; we just don't know how to solve that 
particular problem. So that's the good news.
    Now my first question is to the CEO of British Petroleum or 
the President of British Petroleum USA. Has the Federal 
Government suggested, told, asked, that you do anything that 
you just flat said no to? In other words, have they proposed 
some solutions that you've turned down? In hindsight, if you 
had just done what you were told to do, that the well wouldn't 
continue to be leaking?
    Mr. McKay. No, I don't know of any solutions that have been 
proposed that we haven't--haven't done.
    Mr. Barton. And it is BP's responsibility for the well. I 
mean you are the owner of the well, but in terms of mitigation, 
in terms of cleanup on the beaches, did BP tell the President 
of the United States that we shouldn't let the Louisiana people 
go out and do those sand berms?
    Mr. McKay. What we--no, what we've always said is what 
we're trying to do is work through unified command, and 
decisions for operational matters like that go through unified 
command. They did go through unified command, and we agreed 
once we were--that was a unified command decision to go 
forward.
    Mr. Barton. Are any of you gentlemen here because you were 
subpoenaed?
    Mr. McKay. No.
    Mr. Barton. You're all here voluntarily. You've chosen as 
free citizens to come and answer any question that any member 
of this subcommittee has; isn't that correct? In terms of BP, 
this television camera that's showing the oil, isn't that your 
television camera?
    Mr. McKay. That's--that's the remote operated vehicle 
cameras that are contracted.
    Mr. Barton. But you're providing it----
    Mr. McKay. Right.
    Mr. Barton [continuing]. Voluntarily. I think at Chairman 
Markey's suggestion or request, but you haven't been told by 
Federal law you have to do that?
    Mr. McKay. No. We agreed with Department of Interior, MMS, 
Coast Guard and others to supply right off the bat, but we have 
responded to requests to open that up to the public and other 
congressional Members.
    Mr. Barton. Now I want to ask this question to ExxonMobil 
and to Chevron. If we were to maintain the so-called temporary 
moratorium in the deep OCS, how does that affect your decision 
on how to get the energy that America needs to America? Do you 
just sit on your hands and hope that the moratorium goes away, 
or look for that energy somewhere else, or perhaps even import 
it from somewhere else?
    Mr. Tillerson. Well, we will redirect our human resources, 
the technical talent, to other parts of the world where we are 
allowed to work, and we will redirect the rigs and the 
equipment elsewhere. The stuff is too expensive to just let sit 
around.
    Mr. Barton. What does it cost per day?
    Mr. Tillerson. The spread rate on a typical deepwater well 
is about a million dollars a day.
    Mr. Barton. Mr. Chevron, do you echo what Mr. Exxon just 
said?
    Mr. Watson. Yes, we have three deepwater rigs right now, 
two of which were operating at the time of the incident, an 
additional one that came in, and the costs are similar to what 
Mr. Tillerson mentioned. And we will redeploy people and 
redeploy rigs if we are unable to put them into service.
    Mr. Barton. Now, I am told that the Chinese oil companies 
are drilling off the coast of Cuba, which means they are 
drilling off the coast of Florida. Do any of you gentlemen have 
reason to believe the Chinese oil companies are safer and more 
concerned about safety and the environmental protection than 
U.S. oil companies? Anybody?
    Mr. Watson. I can't speak for those companies. I'm sure 
they are committed to safe operations.
    Mr. Barton. Have they done anything more innovative than 
the United States oil companies have? Have they led the way in 
any area that you're aware of?
    Mr. Watson. I'm not aware of that.
    Mr. Barton. OK. Last question. We've heard a lot in the 
scientific community about new ideas to--once you have an oil 
spill, to insert natural organisms that biodegrade and turn it 
into non-harmful substances. Would any of you care to comment 
on--we want to prevent the spill. If we can't prevent it, we 
want to stop it. But if you have one, is there hope that 
someday we'll have organisms that biodegrade the oil very 
quickly so it doesn't harm the economy--the environment? 
Anybody?
    Mr. Tillerson. I would only comment, Congressman Barton, 
that in effect that's part of what the dispersant action does 
is to reduce the oil to very small droplets within the natural 
microorganisms that exist in the marine environment are able to 
break that down more quickly. There has been a lot of 
discussion about the dispersants, but the dispersants have been 
tested and are actually less toxic than detergent soap which 
you would flush down your sink every day.
    Mr. Barton. I want to thank Chairman Markey for his 
discretion in letting me go over. And let's work together to 
stop the spill, figure out a way to prevent it in the future, 
and keep our industry and environment safe and growing. Thank 
you, Mr. Chairman.
    Mr. Markey. Thank the gentleman. The chair recognizes the 
gentleman from Michigan, the chairman emeritus of the 
committee, Mr. Dingell.
    Mr. Dingell. Thank you, Mr. Chairman.
    Gentlemen, yes or no, each if you please. You have seen--
well, this document which is the Department of Interior's 
increased safety measures for energy development in the Outer 
Continental Shelf. Do any of you have any objections to the 
recommendations contained therein?
    Mr. Tillerson. Congressman Dingell, I've looked at the 
document and the task force that John Watson has referred to 
had significant input to the DOI's consideration. As I've 
looked at specifics of what's in there, there are some areas 
where I am concerned that they may be actually introducing more 
risk in their effort to improve the safe operation. They may 
actually be increasing the risk in some areas.
    So we want to have a thorough discussion with them and 
others around what risk are we trying to mitigate and is this 
actually going to accomplish that, or in effect are we 
increasing risk in the operation. And again that--I think it is 
a very good document, it is a very good start. Most of it we 
would strongly support. A lot of it we're already doing. So it 
is not going to be a difficult compliance issue for us, but 
there are some areas in there that I do have some concerns 
about.
    Mr. Dingell. Does that, gentlemen, generally address your 
feelings? Each?
    Mr. Watson. Yes.
    Mr. Dingell. Thank you. I note--and this would be of 
concern here, I think, to Mr. McKay--the Deepwater Horizon 
blowout preventer contained a single set of blind shear rams. 
These blind shear rams were supposed to cut through the pipe in 
the case of emergency and stop the flow of oil and gas into the 
water. The blind shear rams obviously failed to carry out that 
function.
    Do you support the idea that we should have double or 
redundant blind shear rams?
    Mr. McKay. We have--we have recommended that the design of 
blowout preventers should be evaluated based on what we learned 
here and potentially additional redundancy, yes.
    Mr. Dingell. Now, again if you please, Mr. McKay, how many 
vessels do you have down there in the area of the spill to 
collect the oil that is retrieved? Do you have one, do you have 
several? Do you have more on the road? Are you going to run out 
of capacity to receive the oil that you are retrieving?
    Mr. McKay. We have two, as of today, receiving oil. But we 
have several that are being outfitted to arrive on location in 
the next couple of weeks, two more. And then we have an 
additional two on the way that should be outfitted and 
functional potentially by mid-July. Obviously, that's not 
counting skimmers and other vessels picking up oil that's on 
the surface, but in terms of taking production off the well, 
we'll have up to roughly six that would take direct production 
in the very near future.
    Mr. Dingell. I note you are, however, burning or were 
burning some of the retrieved oil for want of space or capacity 
to handle it. Is that still going on?
    Mr. McKay. The offshore burning occurs when there is enough 
oil in an area to boom and burn and when weather conditions 
permit. That's under the Unified Area Command. We will have a 
vessel called the Helix 4000 on location, and working, 
hopefully today, that will be burning oil that is produced up 
to that vessel.
    Mr. Dingell. Now, gentlemen, you are supposed, I believe, 
to have a plan to address spills or catastrophic events. I'm 
assuming that each of you do. What is the date--well, first of 
all, is that plan for the whole of your operation or is it for 
item by item or specific site by specific site? Starting with 
Mr. Tillerson.
    Mr. Tillerson. There's a gulf regional plan and then with 
each well, when we permit the well, there would be a plan to 
support that well's activities and operations. I think the 
aspect of the plan, the cookie-cutter characterization should 
not come as much as a surprise, because the industry has relied 
upon sharing of resources, boats, booms, skimmer equipment. And 
working with the Coast Guard and Federal agencies, what we 
really should have is a unified plan, because it doesn't matter 
whose well has the problem; when it has the problem, we need to 
be able to respond with everything we have available. So those 
plans look the same because in fact they call upon the same 
resources to respond.
    Mr. Dingell. Now, gentlemen, would each of you submit the 
date of those plans so that we could know--you don't have to do 
it now, I'll ask that be inserted in the record.
    Now, I am troubled here that everybody is blaming the 
administration for the events that are going on down in the 
gulf area. I am curious. What is the practice, if you please, 
starting, Mr. Tillerson, with you; does the Federal Government 
take over when there's a spill and cleanup or is that the 
responsibility of the operator?
    Mr. Tillerson. Well, the Coast Guard has command of the 
incident after you have the spill. The responsible party then 
works in the unified command structure with the Coast Guard on 
the spill response. So the Coast Guard does ultimately make 
final decisions on your actions. Your actions have to be 
approved by the Coast Guard, but it is very much done, 
obviously, in a joint fashion. And the Coast Guard makes 
determination of when certain cleanup activities should be 
undertaken, how they should be undertaken, and when you should 
stop.
    Mr. Dingell. Now, Mr. McKay, do you agree with that 
statement?
    Mr. McKay. I do. The incident commander is the Coast Guard, 
and final decisions are by the Coast Guard under that incident 
command structure. But I also agree with the statement that 
much of this is collaborative in terms of decision making, but 
the final decisions for deployment or resources is with the 
command----
    Mr. Dingell. If you please, Mr. McKay, in the case of the 
event we're discussing here, has the Coast Guard made any 
recommendations with which BP did not agree?
    Mr. McKay. I think--no, I don't think there have been any 
recommendations that BP did not agree. The decisions have been 
effectively worked together for the uniformed structure and the 
major decisions have occurred under that structure and with our 
support.
    Mr. Dingell. Was there any--has there been any conflict 
between the administration and BP with regard to the cleanup 
that has been going forward?
    Mr. McKay. On spill response within the unified command 
structure, there have been debates about deployment, and when, 
and where, and how, and that's part of the command structure. 
But I think all the major decisions that have been made have 
been supported by BP.
    Mr. Dingell. Now, is it your view that the government 
should take over the cleanup, or is it your view that that 
should remain as it is now, or should it be the principal and 
sole responsibility of the operator or the holder of the lease?
    Mr. McKay. I think overall, the command structure and the 
way the National Contingency Plan as well as the Gulf of Mexico 
plans work is effective. I think this actually--I understand 
everyone's frustration with how long this is taking, but the 
spill response has actually been pretty effective in terms of 
dealing with it on the water. It is unfortunate we can't get it 
stopped at the source right now. We're doing everything we can 
to do that. But I think the command structure has actually been 
functional, and the spill response plans have been leaned upon 
and have been the foundation of that.
    Mr. Dingell. Now, in one recommendation that the Secretary 
has made, he recommends that there be the finalization of a 
rule that would require the operators of drilling wells to 
develop robust safety and environmental management systems for 
offshore drilling operations. In 2009 when this was first 
proposed, the Offshore Operators Committee and the American 
Petroleum Institute raised concerns about--I believe, 
gentlemen, you are all members of both bodies. Would you 
support--is there anyone at the table who would not support the 
finalization of that rule?
    I notice, Mr. Tillerson, you have got the same problem I 
do. I'm not coming through very well, I'm afraid.
    Mr. Watson. Just want to be clear what you're referring to, 
Congressman.
    Mr. Dingell. Would you support the finalization of that 
rule, sir?
    Mr. Tillerson. I'm not sure I'm clear on exactly what rule 
you're referring to, Congressman.
    Mr. Dingell. Well, the Secretary, one of his 
recommendations is that the finalization of the rules required 
drilling--rather, operators of drilling wells to develop robust 
safety and environmental management systems for offshore 
drilling operations.
    My question to you gentlemen of the panel is: Would you 
support such recommendation? That's known as the SEMS rule.
    Mr. Tillerson. I'd have to go back and look at the 
specifics, Congressman, quite frankly. I don't remember enough 
of the details. I'm sure--we were concerned with it.
    Mr. Dingell. Would you each, gentlemen, please submit your 
comments on that point to the committee as to whether you would 
support that or not.
    Mr. Chairman, I thank you for your courtesy and, gentlemen, 
thank you for your kindness.
    Mr. Markey. I thank the gentlemen. The chair recognizes the 
gentleman from Texas, Mr. Burgess.
    Mr. Burgess. Thank you, Mr. Chairman. Let me just go back 
to a question I posed--to a rhetorical question I posed in my 
opening statement. Everyone in the panel before us, with the 
exception of Mr. McKay, let me just ask you a question. Is 
there any idea that you have at this point that would stop that 
leak from occurring in the Gulf of Mexico? Is there something 
you could share with us this morning that has not been done or 
tried that will bring a conclusion, a rapid conclusion to this? 
We know BP doesn't have that idea; do any of the rest of you?
    Mr. Watson. We provide our experts to assist, Congressman, 
and I'm not aware of any ideas beyond those have been employed 
or that we've----
    Mr. Burgess. No ideas have suggested that haven't been 
taken up. Now, again, with everyone, with the exception of Mr. 
McKay, we know that BP has not been to the White House to talk 
to the President. Have any of the rest of you had conversations 
with the White House about the management of this situation in 
the gulf?
    Mr. Tillerson? That's an affirmative answer?
    Mr. Tillerson. I've had very brief conversations.
    Mr. Burgess. With the President himself or with his 
advisors?
    Mr. Tillerson. Both.
    Mr. Burgess. Any of the rest of the gentlemen?
    Mr. Watson. I've had a very brief conversation, but not 
with the President.
    Mr. Burgess. Let me ask you a question. A week ago we went 
down to the gulf and had testimony on a field hearing on 
Oversight and Investigations. We heard from two of the ladies 
who lost husbands on the rig. Mr. McKay, you were present at 
our first hearing on Oversight and Investigations, I didn't get 
a bit of information that day from yourself, Transocean, 
Halliburton, and the blowup protector manufacturer was here. I 
learned a lot more from those two ladies talking about e-mails 
they'd had with their husbands, phone calls they had with their 
husbands, discussions they had with their husbands back home 
when they came home for visits. And it seemed to be there was a 
lot of concern about things that were happening on the rig.
    Now, I've never walked on a deepwater rig. Have any of you 
worked on a rig?
    Mr. Tillerson. Not a deepwater rig, but I worked on rigs 
earlier in my career.
    Mr. Burgess. Well, let me just ask you a question. Is that 
unusual? I mean, I go home and complain about Mr. Markey a lot, 
but is this unusual to have that level of anxiety that these 
gentlemen were sharing with their wives about the safety 
conditions on an offshore rig?
    Mr. Tillerson. Well, Congressman, I have--I haven't looked 
at their testimony in detail so I can't comment directly to 
that. What--as I commented, there were certainly some things 
going on with this well in the days and hours prior to the loss 
of control that we're interested to understand, and it is 
incomplete at this point. So I can't really say.
    Now, what I would say, that well control is part of 
drilling; that's what drilling operations are about. You are 
trying to drill into the forces of Mother Nature and hold that 
back in a controlled fashion until you can then secure it. And 
so it is common to be dealing with well control issue on a 
well--in a routine manner.
    And the reason you have the well design, and the layers of 
redundancy, and all the safety equipment and the training, is 
so you can deal with those. It is not uncommon to take a gas 
kick in a well and have to circulate that kick out in a 
controlled fashion and restabilize the well to continue your 
operation. To do that you have to have good well bore 
integrity, and good equipment, and people that know what they 
are doing.
    And that's why in my testimony I said when you have those 
things, you can deal with well control issues and maintain the 
integrity of the well and not lose control of the well and have 
what's happened out there.
    Mr. Burgess. Have any of you ever ceased operations on a 
well because it was difficult to control?
    Mr. Tillerson. Yes.
    Mr. Burgess. Or you didn't feel like you had control?
    Mr. Tillerson. Yes.
    Mr. Burgess. The answer is yes? So that does happen.
    Mr. Watson. Certainly----
    Mr. Burgess. Who would generally make that call? Would it 
be--in the case here, would it be Transocean or would it be BP, 
the owner of the platform or the driller?
    Mr. Tillerson. Well, we as the owner of the well or the 
operation would make that decision, and depending on what the 
severity of the issue was and what was at stake, it would be 
made by a line manager somewhere in the drilling organization. 
But there has been at least one instance that came all the way 
to my level.
    Mr. Burgess. Mr. Mulva, let me ask you a question, because 
in your testimony you talked about natural gas and the use of 
natural gas as one of those bridge fields to the future. And 
yet we can extract a lot of natural gas on land where it is not 
an issue with drilling a mile down in the gulf, but we also 
have issues of where that drilling is occurring because now it 
is occurring closer and closer to civilization, and sometimes 
right on top of civilization.
    Mr. Tillerson mentioned the loss of the public trust with 
the energy industry. What are you doing to create the best 
practices so that people on land who are nearby to the gas 
drilling operations can have the comfort that their safety is 
protected, that they are not being exposed to benzene and 
hexane, that the fracking fluid is not going to contaminate 
their water wells? How are you taking a leadership role in the 
industry to be certain that those things are being handled 
appropriately?
    Mr. Mulva. We have a great deal of experience as a company 
and as an industry and we share those practices, but it all 
goes back fundamentally to how you plan and design and execute 
and drill those wells. Also, it is most important how you 
develop the infrastructure so as you develop the gas and you 
bring it to the marketplace, that that's done through the 
infrastructure and pipelines in a way that's very secure and 
safe.
    We really feel that by doing this in a proper way, meaning 
the plan and design, and we have many, many decades of 
experience, that this can be done. And there is nothing really 
that unique from a technological point of view of our ability 
as an industry to develop the gas resources, whether you call 
them nonconventional or conventional resources that can be 
developed in North America. It is a tremendous resource. Our 
country is blessed with natural gas. It is not just a 
transition fuel, it is an integral part of the energy supply 
that we're going to need for our society and for our economy.
    Mr. Burgess. I may have some additional questions for you 
on that issue, and I would appreciate you working with our 
office so that we can be confident of those best practices; 
because I will just tell you, in my neighborhoods you may not--
it may not be as secure as you think.
    I yield back, Mr. Chairman.
    Mr. Markey. We thank the gentleman.
    The chair recognizes the chairman of the Oversight and 
Investigations Subcommittee, the gentleman from Michigan, Mr. 
Stupak.
    Mr. Stupak. Thank you, Mr. Chairman.
    Mr. Waxman and I sent that letter yesterday and Mr. 
Tillerson responded a little bit to it. And we talked about the 
five areas where we feel BP should have done things differently 
to get control of this well. In fact, they used the word 
``nightmare well'' in one of the e-mails that we looked at and 
put in our report.
    I was struck, Mr. Tillerson, you indicated in your 
testimony, based on the industry's extent of experience, you 
state that what we do know is that when you properly design 
wells with the range of risk anticipated, follow the 
established procedures, build in layers of redundancy, properly 
inspect and maintain equipment, train operators, conduct tests 
and drills, and focus on safe operations and risk management, 
tragic incidents like the one we're witnessing in the gulf 
today should not occur.
    And I mention that because in today's Post, the exact same 
words are there, exactly the same as your testimony, but it is 
attributed to Kenneth P. Cohen, ExxonMobil's vice president of 
public and government affairs.
    And in my opening statement I mentioned how in your 500-
page response, 40 is on press, and that you all stay on script. 
I have got to compliment you, you're all on script, you're 
using the same words. Those are problems with the well, as Mr. 
Waxman pointed out in his testimony.
    So what about--are you all on script that if it wasn't BP 
but one of you, one of your companies, if that was you and the 
blowout happened on April 20th, if you had received a call that 
there was a subsea blowout at your well instead of BP's, would 
you have been prepared to stop the leak and prevent oil from 
reaching the sensitive coastal areas?
    So would your company have been ready, Mr. Tillerson?
    Mr. Tillerson. We would have been ready to implement our 
oil spill response plan.
    Mr. Stupak. That's the 9-page plan, right?
    Mr. Tillerson. That's the 500-page plan you referred to.
    Mr. Stupak. OK. There's only 9 on oil removal, 40 on media, 
9 on oil removal. So that 9 pages would have been able to 
prevent the oil from hitting the gulf shores?
    Mr. Tillerson. The 9-page plan would have done what the 9-
page plan says it is intended to do. And it says ``to the 
maximum extent practicable.''
    Mr. Stupak. How about you, Mr. Watson?
    Mr. Watson. I would say, Congressman, that our emphasis is 
on prevention of that spill. You were talking about----
    Mr. Stupak. Sure, but let's say this. You got the call, 
your well just blew, what would you have done?
    Mr. Watson. Before the incident?
    Mr. Stupak. Yes.
    Mr. Watson. We would have exercised a stop-work authority. 
We have rigorous stop-work authority, not only written down, 
but we use stop-work authority.
    Mr. Stupak. But your well blew up, so what would you do?
    Mr. Watson. We would activate our spill response plan.
    Mr. Stupak. That's about 5 pages I think in your proposal, 
right? To remove the oil?
    See my concern is, Mr. Tillerson, Mr. Mulva, Chevron and 
Shell's worst-case scenario is 200,000 barrels per day in their 
response plan. Exxon Mobil's is 166 barrels per day. That's a 
lot more than what's currently leaking out into the gulf. So on 
paper, these plans-- and you are all going to rely on these 
plans--might seem reassuring, but reality shows you can't 
prevent the oil from reaching the gulf shores.
    So Mr. Tillerson, ExxonMobil states in its response to the 
prehearing questions that ExxonMobil is prepared to meet all 
the commitments in its permits, including those involving the 
worst-case scenario. So do you stand by that statement?
    Mr. Tillerson. I do, because the permit does not guarantee 
that the oil will not get to the shore, nor does it guarantee 
that it will all be contained.
    Mr. Stupak. We're at, what? At most, 40,000 barrels today?
    Mr. Tillerson. I don't know.
    Mr. Stupak. Forty thousand, I think is what we've been 
saying for the record. So ExxonMobil's worst-case scenario is 
over 160,000 barrels per day. So how can you say that you would 
be able to control a spill that's four times bigger than the 
current spill, using the same plan BP has, with the same 
contractor BP's using?
    Mr. Tillerson. As I said, Congressman, we would use the 
response capability to the maximum extent practicable and in 
the models that we provide as part of the permitting which are 
in conformance with what the regulatory bodies require----
    Mr. Stupak. Your plan is written by the same contractor 
that BP's is. BP relied on Marine Spill Response Corporation to 
provide response equipment, and so does your plan. So if you 
can't handle 40,000, how will you handle 166,000 per day as you 
indicate?
    Mr. Tillerson. The answer to that is when these things 
happen, we are not well equipped to deal with them.
    Mr. Stupak. So when these things happen, these worst-case 
scenarios, we can't handle them, correct?
    Mr. Tillerson. We are not well equipped to handle them. 
There will be impacts as we are seeing. And we've never 
represented anything different than that. That's why the 
emphasis is always on preventing these things from occurring, 
because when they happen, we're not very well equipped to deal 
with them. And that's just a fact of the enormity of what we're 
dealing with.
    Mr. Stupak. But they do happen.
    Mr. Tillerson. It just happened.
    Mr. Stupak. And in an answer to Mr. Waxman, you said yep, 
it's cookie-cutter plans, and we call upon the same resources. 
The resources for BP are not enough, so no matter which one of 
the oil companies here before us had the blowout, the resources 
are not enough to prevent what we're seeing day after day in 
the gulf, not only the loss of 11 people, but we're on, what, 
day 56 or 57 of oil washing up on shores. There is no other 
plan. There is no way to stop what's happening until we finally 
cap this well, correct?
    Mr. Tillerson. That is correct.
    Mr. Stupak. But for the grace of God there goes I, right? 
It's BP this time; it could be Exxon Mobil tomorrow, it could 
be Chevron tomorrow.
    Mr. Tillerson. Not if we follow our practices and 
procedures it won't be.
    Mr. Stupak. But if it does, we can't handle it--we can't 
handle the spill. This worst-case scenario is pie in the sky, 
and oil in our water and on our shores.
    Mr. Tillerson. It is a scenario that the MMS and Coast 
Guard require us to calculate using their methodologies. That's 
why it is in there. I see your point, and I think that's all 
that matters, is the point is we have to take every step to 
prevent these things from happening, because when they happen 
it is a fact that we're not well equipped to prevent any and 
all damage. There will be damage occur.
    Mr. Stupak. We satisfied the application, but in reality we 
can't respond to a worst-case scenario.
    Mr. Tillerson. We are responding, a response is underway, 
it is having some effect as if there were no response. But 
there is no response capability that will guarantee you will 
never have an impact. It does not exist and it will probably 
never exist.
    Mr. Stupak. Nor do you have the ability to respond to the 
worst-case scenario. If we can't handle 40,000, how can we 
handle 166,000?
    Mr. Markey. The gentleman's time has expired. The chair 
recognizes the gentleman from Illinois, Mr. Shimkus.
    Mr. Shimkus. Thank you, Mr. Chairman. I'm handling the tack 
a little bit different. I have 3,000 Facebook followers. I 
posed a question, I'm going to get a chance to visit with you 
all today.
    I have 22 questions and responses. We chose five of them, 
and I will kind of weave them into some of the things we have 
already heard in question and answer and in the testimony.
    The first one is from Randy from Greenville. He says, What 
will be the impact on the U.S. economy by stopping offshore 
drilling?
    If I were to answer him saying that the moratorium is 
idling 33 rigs which affect 46,500 direct jobs, 330 million in 
lost wages, and if it goes for a 6-month moratorium, that would 
be about $10 billion to the Federal Treasury. Would that be--
would that be numbers that would sound correct? I know some of 
you have actual drilling rigs, but I'm seeing some nodding.
    The second question is, We haven't heard anything directly 
from the workers on the rig that saw what happened. That's why 
I was talking to my good friend Mr. Scalise.
    Brian from St. Louis says, I want them answering questions 
in front of congressional panels. I've heard nothing but the 
story that some methane gas came up through the line.
    Now, I know at the field hearing last week, they did have 
the widows, and Mr. Scalise mentioned the compelling testimony. 
I think during that testimony also, the widow said we need to 
be drilling. And I think what we're learning is there is lost 
livelihood on the coast because of the environmental disaster. 
We need to be careful not to compound that loss of jobs and an 
economy by shutting down operations right now. So that's my 
response to Brian.
    Another Brian from Ettersville says, What types of 
regulations would have prevented another tragic incident like 
this from occurring? Also, what do you suggest we do regarding 
forming emergency response teams for disastrous magnitude?
    My friend Michael Doyle mentioned how long it took to get a 
response team to Pennsylvania. I would ask that in this 
emergency best-practices thing that we're reviewing, that we 
start the industry talking about a consortium of emergency 
response team that we can mobilize.
    Obviously, this is bigger than anything we would have 
projected. I think Mr. Stupak was also highlighting that even 
in the emergency response plans, we are projecting billions of 
barrels. This is something that we had been overwhelmed. So 
part of that planning I would suggest that we do in forming an 
emergency response team. Hopefully this will never happen 
again, but it would be nice to have if we're in that venue.
    Doug Oyster from Collinsville, my home town of 
Colllinsville, says--talks about--we have a ConocoPhillips 
refinery locally in my area, I'm very proud of it. He mentions 
a refinery fire but it was contained. He says, What risk do we 
face on land-based facilities as well?
    And I think what the story that's not told, and Joe 
Barton's mentioned this a couple of times, that you're in the 
deepwater because that's where major oil finds are. And I have 
marginal oil production in southern Illinois and it is about a 
barrel a day. We still produce, we're the tenth leading State, 
but it is not very much and we're proud of what we get out of 
the ground.
    But Mr. Mulva, since I've been to the refinery there 
numerous times, one thing that is important if we're talking 
about all of the above energy strategy, I'll talk climate--I'll 
fight this climate debate another day--but we can agree on 
North America energy independence. And what your refinery is 
doing in the St. Louis metropolitan area is bringing tar sands 
oil down through a pipeline that can be refined in the Midwest 
so that we will be less dependent on imported crude oil, and we 
may not have to be in places that are tough. So that's a shout-
out.
    I've also talked to this committee numerous times about 
coal to liquid technologies, using the Fisher Tropsche 
techniques. That would be another way to displace our reliance 
on imported crude oil. And so that expansion for this heavy 
Canadian sand crude oil--right now, there are 2,500--at the 
peak. There were 4,000 construction jobs on an average of 
$67,000 salary per year, I think 10 different unions building. 
That's the importance of the fossil fuel sector in this 
country. They are good paying, big number jobs. I've always 
used your refinery there and the Prairie State Coal Firepower 
plant we're building in this economy to have still on site, in 
addition to 2,500 jobs. That's energy security. That's not 
including the 750 full-time jobs that are there.
    So energy security is part of this debate and we're in the 
deepwater. The vast majority of time we're doing it 
successfully. We need a low-cost energy to make us competitive 
in the world today.
    I hear from--Michelle from Staunton says, How much money 
are they spending on technology to put safety measures in 
place?
    Let me ask this question so I get at least one response 
instead of my filibuster. A second blowout preventer in 
deepwater application, what would that cost? Go ahead, Mr. 
Tillerson, on down.
    Mr. Tillerson. I would have to ask my experts. It would not 
represent a huge additional cost for the daily spread rate. And 
I think the real question that we want to look at is when you 
do that, do you change in some way the safe operation of the 
mechanisms you have, which have worked very well for 14,000 
wells? So we just want to be careful that we understand--it is 
not really a cost issue.
    Mr. Shimkus. Yes. And I think I have been told $15 million, 
but we've been told that this is a requirement in other places 
around the world and in some operations, so that might be 
something that the panel might want to consider.
    Can anyone address this debate about lifting the cap? 
Helpful, harmful, for current operations and future operations? 
Don't be shy.
    Mr. Mulva. Given the situation that we are facing an 
unprecedented event that we never expected would take place. 
So, obviously, given the situation, I think it's appropriate 
for us to take a look at the cap, what it should be. It most 
likely needs to be raised. In doing so, I think the industry 
should come forth, the States and Federal Government should 
come forth and make a good judgment, informed decision on what 
that cap should be. But we've obviously faced an unprecedented 
situation, and it needs to be evaluated and changed.
    Mr. Watson. I would just comment that it is a combination 
of financial capacity, general funds that would be made 
available from industry contributions, insurance. In total, 
that can realize an effective system for ensuring that there 
are funds available or responding to an incident like this.
    Mr. Shimkus. Thank you, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired. The chair 
recognizes the gentleman from Pennsylvania, Mr. Doyle.
    Mr. Doyle. Thank you, Mr. Chairman.
    Would you gentlemen all agree that Americans' confidence in 
the ability of the oil industry to go deepwater safely has been 
shaken by this event? Would you all agree with that statement? 
And it is in all of your best interests to restore the 
confidence so that--because we want this resource, but this 
price is way too high of a price to pay for it, what we're 
seeing right now.
    Let me ask you a question. I get asked this a lot, Mr. 
Tillerson. I think you basically made the statement that, hey, 
we need to stop this before it happens because once it happens, 
we really don't have a good way to stop what's going on here, 
right?
    A lot of people have suggested this idea of why isn't it 
required that we drill a relief well at the same time we're 
drilling the main well. So that if this situation that is 
occurring right now, if that relief well was already drilled 
and sitting there, that we would have been able to cap this 
well certainly a lot quicker than we're doing right now.
    I would like to hear from each one of you whether or not 
you think it's a good idea to require that a relief well be 
drilled simultaneously with the main well as a condition for 
future drilling.
    Mr. Tillerson. Well, I would say you just doubled your 
risk. This is an exploration well, so it means you are drilling 
in an area that has not previously been drilled before. If you 
look at the history of well control problems and blowouts, most 
of them have occurred on the way down to the objective, not 
once they have reached the objective. They are caused by 
shallow gas hazards. They are caused by unknown pour pressures 
on the way down to the objective. So if you have two wells 
going down at the same time, it just means you have now 
increased your risk of having a problem on both of them. I 
don't think it's a viable nor necessarily a good risk 
management option to consider.
    Mr. Doyle. Next.
    Mr. Watson. We favor redundancies in the well design and 
how we drill our wells. We don't think that a relief well will 
reduce the risk, and we don't advocate it.
    Mr. Mulva. Given we feel that time will show that this 
incident and accident, tragic accident, certainly could have 
been preventable, what we have found is that the response to 
such an unprecedented situation is inadequate. The question 
really is, what could we or should we be doing to improve our 
response? Because the only certainty that we see today is a 
relief well.
    I think that where you need to spend a fair degree of time 
and money and resources is on technology so as to improve our 
capability on the sea bed to contain and capture out-of-control 
well.
    Second, I think technology-wise we are going to have to do 
a much better job of when oil gets on the water to contain it 
in a smaller area and have more capability to handle it.
    And third is I think we also need to learn from this 
incident and situation a far more effective, efficient approach 
with respect to oversight and regulation.
    Mr. Doyle. Thank you.
    Mr. Odum. I generally agree with the comments that have 
been made. I think, just to go back to one point, though, the 
real opportunity is the redundancy, meaning the multiple 
barriers, the way a well is drilled or is it well designed. 
Those need to be testable, verified, in-place barriers. That's 
the opportunity.
    Mr. Doyle. Mr. McKay.
    Mr. McKay. Yes. I generally agree and I think learned quite 
a bit about sub-sea intervention capability that can be 
developed going forward.
    Mr. Doyle. Yes. Mr. McKay, I appreciate your response. It 
just seems to me that the only solution left to us at this 
point seems to be to get that relief well down there, that a 
lot of people were asking the question why isn't one there in 
the first place. And it just seems to me that I read it would 
cost $100 million to drill a relief well. I am sure BP wishes 
they spent that $100 million before they drilled this one.
    It just seems to me that right now I don't understand a 
better answer of how we stop this when it happens than to get a 
relief well down there, and the thought that it takes 2 months 
or 3 months to do that while all the oil comes out of the 
ground just seems incredible to me.
    Let me ask in the time I have remaining that, in 2000, the 
Minerals Management Service proposed a rule to implement best 
cementing practices for offshore drilling operations. We know 
now that cementing was a factor in what went wrong here and 
that MMS was concerned that operators were using unregulated 
cementing procedures.
    In light of the recent events that we see here, I would 
like to ask each one of our witnesses if they think cementing 
should finally be regulated, if there should be a standard for 
it.
    Mr. Tillerson. Well, I think, as is footnoted in Chairman 
Waxman and Congressman Stupak's letter, the API already has a 
number of standards and recommended practices for cement and 
cementing operations; and I think, had those been followed, at 
least that element in this case might have been eliminated.
    Mr. Doyle. But it's a voluntary standard, is it not? I 
mean, there's no penalty for not following it.
    Mr. Tillerson. Well, I guess that's right, other than if 
you want to live with that risk.
    Mr. Doyle. I see.
    Mr. Tillerson. It's a risk--I guess it's a risk management 
decision.
    Mr. Doyle. Yes, I guess it sort of gets down--I see my time 
has expired, Mr. Chairman--as to whether or not we just have 
voluntary best practices that we count on you guys to implement 
or whether we make sure they are implemented.
    Mr. Chairman----
    Mr. Tillerson. Well, and whether you can keep your 
regulations up with the technology.
    Mr. Doyle. Yes. Thank you.
    Mr. Markey. The gentleman's time has expired.
    The chair recognizes the gentleman from Arizona, Mr. 
Shadegg.
    Mr. Shadegg. Thank you, Mr. Chairman; and I thank you 
gentlemen for being here.
    I think every single American wants, first and foremost, to 
see the flow stopped and to see the area cleaned up. 
Unfortunately, I am afraid that many simply want to exploit 
this as a crisis, recognizing that you should never let a good 
crisis go to waste, as Mr. Rahm Emanuel said, rather than to 
deal with it and learn from it.
    I want to begin by asking each of you to respond to this 
question. Specifically, the question is, is there more that you 
could do or your company could do or are there assets that you 
have, whether it's booms or ships or whatever, that you could 
deploy to assist in either stopping the current flow or 
cleaning up the current flow? Just yes or no or a brief 
explanation.
    Mr. Tillerson--I would just like to ask the four: 
Tillerson, Watson, Mulva, and Odum.
    Mr. Tillerson. No, we have made everything available we 
have.
    Mr. Watson. No, I am not aware of any resource we haven't 
made any available.
    Mr. Mulva. All made available. It doesn't mean that 
everything we have offered has been used, but it has all been 
made available, yes.
    Mr. Shadegg. My next question is, were you asked to make 
that available by the President or were you asked to make that 
available by BP? On what basis did you make that available?
    Mr. Tillerson. Well, we made certain equipment and 
facilities available immediately after the incident occurred. 
That's just part of our industry mutualized response. We then 
were contacted subsequent to that, at least I was, by Admiral 
Allen, requesting specific needs that they had and just wanted 
to know if, you know, there were--you know, if we had any other 
way that we could help them with those needs.
    Mr. Shadegg. Mr. Watson.
    Mr. Watson. A similar response in that we made equipment 
available, and then I did receive a call from Tony Hayward on 
some specific individuals.
    Mr. Shadegg. Let me cut this short. Was anybody contacted 
by the President or by anybody in the White House?
    There's been a lot of focus today on what you do today 
after the spill occurs, and yet it seems to me that everything 
I can read about this indicates that what went wrong went wrong 
before the spill occurred. Indeed, there was a lengthy op-ed 
placed in the Wall Street Journal by Mr. Hayward, I believe, on 
May 25. And last Friday, on June 11, the President of Samson 
Oil & Gas Company, Mr. Terry Barr, wrote a letter to the 
editor, which the Wall Street Journal published. In it, he said 
this oil disaster was about human, not system, failures; and he 
cites a series of red flags having to do with the incorrect 
cementing job and other things, all based on the testimony by 
BP before this committee earlier this year where BP came in and 
was asked about what it did and what tests it performed, the, I 
guess, inadequate shoe, the failure to get a top plug.
    I would like to know if each of you have kind of indicated 
that this is not the real well you would have drilled or you 
would not have drilled in this fashion. Have any of you 
happened to read this letter to the editor?
    Mr. Watson. I have seen it.
    Mr. Shadegg. Anybody else seen it?
    Mr. McKay. Yes.
    Mr. Shadegg. Mr. Odum, you saw it.
    Mr. Odum. Yes, I have seen it.
    Mr. Shadegg. Mr. Mulva, you have seen it. Mr. Tillerson, 
you have not seen it.
    Of the three of you that did see it and read it, would you 
agree with it that specifically it cites a number of red flags 
that should have been indicators that safety procedures or 
different procedures should have been followed going forward?
    Mr. Watson. I haven't said that I have evaluated it and the 
merits of it, but the basic content is consistent with some of 
the concerns that have been cited elsewhere.
    Mr. Shadegg. Mr. Mulva.
    Mr. Mulva. In drilling these types of wells, we look at how 
the well was drilled; and based on publicly available 
information, we wouldn't have drilled the well that way.
    We feel that it's most important to have two barriers to 
contain or control the hydrocarbons verified and tested by 
pressure to verify those two barriers exist. And in those two 
barriers, the blowout preventer is not one of the two barriers.
    Mr. Shadegg. Fair enough.
    Mr. Odum. Referring to the letter, the piece that is 
consistent from my point of view is, yes, systems are extremely 
important. They have to be right, well designed and so forth.
    The other critical element is the human side of that. So, 
you know, our philosophy is we focus on that culture, a safety 
culture, a culture that stops work if something doesn't look or 
feel right that anybody on the site--doesn't matter if it is a 
Shell employee or not--can stop that work. That culture is 
critical.
    Mr. Shadegg. Mr. Chairman, I would like to put this in the 
record, unanimous consent.
    Mr. Markey. Without objection, the letter the gentleman 
from Arizona is referring to will be included in the record.
    [The information appears at the conclusion of the hearing.]
    Mr. Shadegg. I believe you are all aware that the President 
has instituted a 6-month moratorium on deepwater drilling, that 
apparently that even on shallow water drilling there is at 
least a stoppage based on new procedures that are supposed to 
come out very quickly. That moratorium was based on a report 
requested by the Interior Secretary called The Increased Safety 
Measures for Energy Development on the Outer Continental Shelf. 
And I assume you have all seen that report. It was held up by 
Mr. Dingell earlier. Is that correct?
    You are all aware that seven of the scientists who worked 
on that report have now written a letter that it was modified 
after they either wrote it or reviewed its content and that 
they do not--let me quote. Those seven scientists have said, we 
do not--we believe the report--or unmodified report does not 
justify the moratorium as written and the moratorium as changed 
will not--or as actually implemented will not contribute 
measurably to increase safety, will have immediate and long-
term economic arguments. And they say an argument can be made 
that changes made in the wording in the report are 
counterproductive to long-term safety.
    Have you reviewed their concern to the Secretary of the 
Interior, any of you?
    Mr. Watson. I have not.
    Mr. Shadegg. Well, let's talk about some of the things it 
says.
    It says, point blank, we do not agree that a 6-month 
blanket moratorium--we do not agree with the 6-month blanket 
moratorium on deepwater drilling. It says a blanket moratorium 
is not the answer. It will not measurably reduce risk. It will 
have a lasting impact on the Nation's economy which may be 
greater than that of the oil spill.
    They seem to be pretty upset----
    Mr. Watson. I am sorry. Could you just refer--I have seen 
those recommendations.
    Mr. Shadegg. They seem to be pretty upset that their report 
was altered, apparently, by the Secretary of Interior after 
they signed off on it and then sent to the President.
    I would like to know how many jobs will be lost if the 
moratorium is overly broad and what the consumer impact will be 
if the moratorium is overly broad. And do you think the 
moratorium is needed or do you think it's, as apparently these 
scientists think, it is overly broad? Mr. Tillerson.
    Mr. Tillerson. Well, I understand, you know, the motivation 
for the moratorium and the desire to have in effect a stand-
down to ensure that the ongoing operations are being carried 
out safely.
    Now, Department of Interior Secretary Salazar did 
immediately order a reinspection of every deepwater drilling 
rig and activity out there. Those inspections were carried out. 
In fact, some of them were carried out twice, and there were no 
deficiencies of concern that were identified. So, in my view, I 
think the moratorium was unnecessary in terms of the extent and 
the length of it. And so I would--you know, I would hope that 
that could be revisited very quickly.
    Mr. Shadegg. Mr. Watson.
    Mr. Markey. The gentleman's time----
    Mr. Shadegg. If the other three gentlemen could just 
quickly say whether they agree or disagree.
    Mr. Watson. I would agree.
    Mr. Markey. Thank you, sir.
    Mr. Mulva.
    Mr. Mulva. With respect to the moratorium----
    Mr. Markey. The gentleman just needs a yes or no.
    I apologize to the gentleman. The gentleman's time has 
expired.
    The chair recognizes the gentleman from Washington State, 
Mr. Inslee.
    Mr. Inslee. Thank you.
    I think what is so disturbing, at least to me, in this 
investigation is that this was not simple human--one human 
failure of running through a stop sign. It was going through 
one stop sign after another. No batteries in the blowout 
preventer, hydraulic leak not fixed, failure to do a cement 
log, not having adequate centralizers when their own personnel 
recognized they didn't have enough of it.
    We get an e-mail from someone who said, but who cares, it's 
done. End of story. We will probably finally get a good cement 
job.
    I mean, if airline industries were operated the way this 
particular situation was, no one would fly an airplane. And the 
whole industry now, I think, needs to think seriously about 
what we do about this.
    One of the things is the corporate culture, and I think 
there's a serious question about the corporate culture here 
with British Petroleum, whether or not it really rewards and 
insists on safety performance.
    Mr. McKay, how many people have lost their jobs as a result 
of this disaster of British Petroleum?
    Mr. McKay. I don't know of any yet that have lost their 
jobs. There are, I think, a couple of people who have been 
placed on administrative leave as the investigations are 
conducted, but I don't know of any yet.
    Mr. Inslee. Do you think that that will happen over time?
    Mr. McKay. It's hard to speculate, but I assure you that if 
the investigation showed that people made mistakes they 
shouldn't have made, that could very well occur, yes.
    Mr. Inslee. Well, we will be watching; and certainly in the 
U.S. Navy they would have a culture that would respond to this 
adequately. I would just tell you my constituents are not 
impressed with the response yet from British Petroleum in this 
regard.
    Second, we want to ask about whether or not the industry 
has made appropriate investments in improving safety of 
offshore. We are going deeper and deeper in the water, 
extraordinarily deep as our oil supplies dwindle and the risks 
increase. I think everybody acknowledges that. So the question 
is, what is the industry investing to try to determine that?
    British Petroleum--we asked these questions to the five 
companies here. British Petroleum responded that they had spent 
$10 million in 1 year in research for offshore safety and 
technology investments. How much did British Petroleum pay its 
CEO last year in relationship to that $10 million you spent on 
trying to come up with safety offshore drilling techniques?
    Mr. McKay. I don't know his exact pay.
    Mr. Inslee. Well, the published report suggests that he was 
paid about $36.5 million, three times more--you paid your CEO 
three times more than you spent in your entire research budget 
to determine how to reduce the risk of catastrophic failure in 
the offshore oil fields. Do you think that is an appropriate 
prioritization for a company in your business?
    Mr. McKay. I can't comment on his salary. I actually don't 
think that's a correct number, so could we get back to you on 
his salary?
    Mr. Inslee. Thank you.
    Just so you know you are not alone on this, Conoco spent 
.008 percent of its profit on trying to improve offshore 
technology. Exxon spent .08 percent, British Petroleum spent 
.06 percent. Those are not huge numbers.
    And I think it's pretty apparent, given this risk and given 
the increasing risk of going deeper in water, we encourage the 
industry to start making more serious investments to try to 
prevent these situations from taking place.
    The third thing I want to ask the industry about is about 
the investments you all are making in an attempt to prevent 
invisible oil spills; and I will just ask you very quickly, 
does everyone agree that every single oil well you drill and 
that we use ends up in the invisible oil spill because we burn 
it, it makes carbon dioxide. The carbon dioxide goes into the 
oceans, the oceans are now more being more acidic because of 
the carbon dioxide, and they are 30 percent more acidic than 
pre-industrial times because of the carbon dioxide that comes 
from burning fossil fuels.
    Obviously, you are not responsible for all of that. But, 
very quickly, can you all just say yes or no if you agree with 
that.
    Let's start with Mr. McKay. Very quickly.
    Mr. McKay. I would not agree with that characterization.
    Mr. Odum. It's not a yes or no question, I don't think. I 
do see the link between oil production and CO2.
    Mr. Mulva. I don't agree.
    Mr. Watson. There are emissions associated with our 
operations and our product.
    Mr. Tillerson. It's a scientific debate, so I am not sure 
we can answer yes or no.
    Mr. Inslee. Well, actually, it's not a scientific debate. 
We have had a lot of hearings on this, and there is no 
scientific debate about this. Carbon dioxide makes the oceans 
more acidic. And your joint investment as percentages of your 
gross revenues for energy sources that won't put carbon dioxide 
in the air are ConocoPhillips .03 percent of revenues; Exxon .1 
percent; Chevron .31 percent; Shell.26 percent; British 
Petroleum, which at one time was meant to be called Beyond 
Petroleum .09 percent.
    Now I have got to ask you, to me, those investments--and we 
appreciate any investment you make--but isn't it clear that at 
that level of investment, we will not be able to solve this 
problem of pollution in the oceans caused by carbon dioxide? 
Would everybody agree with that?
    We will start with Mr. McKay.
    Mr. McKay. The changeover and the transition to alternative 
energy will take quite a while and a tremendous amount of 
investment.
    Mr. Inslee. Well, let me ask me ask this question. Does 
everybody agree we have got to up our investment in clean 
energy technologies if we are going to solve this problem of 
carbon dioxide acidifying the oceans?
    We will start--let's start with on the other side of the 
table.
    Mr. Markey. Please make it yes or no.
    Mr. Tillerson. These are not--these issues are too 
important and too complex to be reduced to yes or no answers. 
And so I--you know, I am just not going to go there with you. 
This is too important to have a yes or no conversation.
    Mr. Inslee. We will appreciate your written response. We 
will look forward to that if you can provide it. Is that OK? 
Thank you very much. I appreciate that.
    Mr. Markey. The gentleman's time has expired.
    The chair recognizes the gentleman from Missouri, Mr. 
Blunt.
    Mr. Blunt. I thank the chairman.
    Mr. McKay, on the issue of cleanup, I think your company 
has said that they are going to be fully responsible for 
whatever the cost of the cleanup; is that right?
    Mr. McKay. That is correct.
    Mr. Blunt. What about economic damages?
    Mr. McKay. Yes. We have said that we would honor all 
legitimate claims. That's right.
    Mr. Blunt. So the current cap, which actually I have 
introduced legislation, would retroactively impact that cap, 
but you are not concerned by--you are not going to use the 
limit of the current civil damages cap at all. You have pledged 
to take--to respond to all legitimate claims for damages?
    Mr. McKay. That's right. We have said that we will ignore 
that cap, and that cap is irrelevant for this particular 
matter.
    Mr. Blunt. And the cash reserves of the company suggest 
that you would be able to do that?
    Mr. McKay. We believe so.
    Mr. Blunt. What are the cash reserves of the company right 
now?
    Mr. McKay. I don't know the cash reserves of the company 
right now.
    Mr. Blunt. Do you have cash on hand? I mean, give me a--is 
there a cash number of available cash that you could turn to?
    Mr. McKay. I can get back to you on that. I don't know that 
offhand.
    Mr. Blunt. All right. I would like to see that.
    And what about the payment of dividend with this kind of 
exposure out there? Has the company revisited the dividend 
issue at all, I think a $2 billion dividend? With this kind of 
unknown exposure, does that seem like something that the 
company should be doing right now?
    Mr. McKay. Our chairman has said publicly that we will--our 
priority is the Gulf Coast and making things right on the Gulf 
Coast, and then we will have to balance the other components of 
dividend investment, balance sheet.
    Mr. Blunt. As the chairman said, are the dividends going to 
be paid or not?
    Mr. McKay. That decision has not been made yet.
    Mr. Blunt. Has not been made yet. So that's still something 
the company can look at it as it looks at the overall financial 
cost of the cleanup and the civil damages; is that right?
    Mr. McKay. Yes. The second quarter dividend decision has 
not been made yet.
    Mr. Blunt. How many U.S. employees does British Petroleum 
have?
    Mr. McKay. About 23,000.
    Mr. Blunt. What percentage of your overall workforce, 
employee workforce, would that be? Are there more U.S. 
employees of British Petroleum than any other country?
    Mr. McKay. Yes, by quite a bit.
    Mr. Blunt. By quite a bit?
    Mr. McKay. Probably by triple.
    Mr. Blunt. My mike here or not--it was one of my phones, I 
guess, too close to the mike.
    On this issue of the relief well, Mr. Tillerson, I think 
you said that it would double the risk of the problem, and I 
heard the person that asked the question still say he didn't 
understand why we wouldn't be doing this. Why would you want to 
double the risk--and maybe you can't answer that since you said 
you would double the risk. How would this again--let me ask 
this one more time. Why would that double the risk potential 
rather than provide more secure, more safety to the situation?
    Mr. Tillerson. Well, whatever risk exposure you are trying 
to manage with the exploration well would be the same risk 
exposure you would be having to manage with the relief well.
    Mr. Blunt. And does any country require a relief well right 
now?
    Mr. Tillerson. No, not one drilled concurrent with the 
exploratory well.
    Mr. Blunt. All right. I am puzzled. I think I understand 
why you double the risk. I also understand when you have got a 
problem how you try to get to the source and relieve the 
pressure. I guess that's what the current British Petroleum 
relief well would do. But I don't understand why anybody thinks 
that doubling the cost of drilling a well would have any 
positive impact--and you don't believe any other country 
requires a relief well being drilled at the same time?
    Mr. Tillerson. I know, at least in the countries where we 
operate, no one does.
    Mr. Blunt. How long--Mr. Watson, how long do you think 
these platforms can set in the Gulf right now that are not 
being used? At some point, do you have to make a decision that 
even though the well is partially drilled--are they going to 
allow the partially drilled wells to be completed or what's 
your sense of this moratorium idea?
    Mr. Watson. If you are referring to the rigs that we have 
idle, we have not yet moved these rigs out of the country. But 
the industry--and we will respond if it appears that the 
moratorium is going to extend indefinitely or if it's not clear 
when we can put these rigs back in service.
    They can set for a long time, but the market for deepwater 
rigs is robust right now. Deepwater wells are being drilled all 
over the world, and developments are taking place around the 
world, and there is demand for these rigs.
    Mr. Blunt. I assume if you move these out, it takes some 
time to move them; and it takes some time to decide whether you 
would ever move them back or not. Would that be a reasonable 
assumption?
    Mr. Watson. Certainly there are mobilization costs. There 
are contracts that have to be arranged. There are partner 
arrangements in the new country or area where it will be 
drilled. And once it's drilled those same impediments are in 
place to moving them back.
    So it would be an issue for development in the Gulf of 
Mexico if we were to lose those rigs. Ultimately, they can 
return, but in many cases they will be put in service 
elsewhere.
    Mr. Blunt. Thank you, Mr. Chairman.
    Mr. McNerney [presiding]. Thank you.
    The chairman recognizes himself for the next 5 minutes.
    First of all, I would just like to thank you all for 
coming. I am sure there are places you would rather be this 
morning.
    Mr. Watson, looking ahead, I am familiar with some of the 
investments that Chevron has made in geothermal and biofuels. 
Do you see that becoming a significant portion of your bottom 
line and, if so, how soon?
    Mr. Watson. Right now, 85 percent of the world's energy 
comes from fossil fuels; and renewables represent a small 
portion of that. Similarly, for our company, although we are 
the largest renewables producer amongst these companies and 
other oil companies, thanks to our geothermal operations, I 
think it will be a long time before all forms of alternate 
energy represent a significant portion of our bottom line.
    Now, we do have an energy conservation company that's in 
place. We do have our geothermal business. We are doing 
research in biofuels. And I would be delighted to make 
additional, profitable investments in those businesses if they 
would become economic.
    Mr. McNerney. Well, I certainly recommend that you follow 
that path.
    Mr. Tillerson, in your testimony you state that an 
impartial review of events in the Gulf is essential to 
understand what happened and to prevent its reoccurrence. Given 
that, do you think that the oil industry's failure to 
adequately prepare for a disaster in the Gulf requires enhanced 
oversight of the industry?
    Mr. Tillerson. Well, I think, again, the emphasis is on 
prevention. If you don't have the blowout, if you don't have 
the loss of well control, if you don't have the spill 
catastrophe to have to deal with. Having said that, I think 
clearly there are going to be a lot of things to learn from now 
from what has been an actual spill of this magnitude, which 
previously we only had models to try to help us understand 
that.
    Mr. McNerney. Well, the oversight would have to include 
prevention to make sure that the business that's done in the 
Gulf and in deepwater has adequate safeguards built into it and 
that those safeguards are followed, that the regulations are 
followed. It seems to me that that's a good, a fair question. 
Do we need government oversight or are the companies going to 
be able to police themselves at the current level?
    Mr. Tillerson. Well, and I think you need both. There are 
industry standards and recommended practices that have been put 
in place; and when those are followed, most of these problems 
are avoided.
    Having said that, there's also a proper role for regulatory 
oversight; and the Department of Interior has undertaken an 
exercise to look for areas where they could enhance the 
oversight of the industry's practices. And I think the 
President's commission, which is now being formed to look at 
this entire incident, both from the standpoint--it should look 
both at prevention and response--and I hope ultimately out of 
that commission we will know.
    Mr. McNerney. So we can work cooperatively with the 
industry to find the right set of rules and regulations and how 
to make sure that they are properly implemented?
    Mr. Tillerson. Yes, sir.
    Mr. McNerney. Mr. McKay, it seems that all the steps to 
contain the gush seem to have been ineffective or even made the 
situation worse. As we watch oil gushing out on those videos, 
the fail-safe device appears to me in the videos to be breaking 
apart and oil coming from different parts of the device itself. 
Is there corrosion involved in this equipment or what am I 
seeing that makes me think that that device is coming apart and 
failing in different ways?
    Mr. McKay. What you are seeing on the videos is that we had 
to cut the top off of the riser that was damaged and put a cap 
on top of this lower marine riser package that sits on top of 
the blowout preventer.
    Mr. McNerney. Right. And that seems to have made oil gush 
out from below.
    Mr. McKay. That's because the capacity of our system right 
now, to take it up through the riser, is lower than the total 
rate of the well; and that's why you see it coming out from 
around the bottom of that cap. Today--and I haven't gotten an 
update yet--but today we should have a secondary system 
producing off of that blowout preventer which may relieve some 
of that that is coming out.
    Mr. McNerney. So you are saying oil is not coming out from 
inside the device itself?
    Mr. McKay. No, it's the lower marine riser package that 
sits on top of the blowout preventer.
    Mr. McNerney. It just seems that there's--that the device 
was incapable of withstanding the kind of pressure that would 
be needed from the top to stop it, you know, when it was coming 
apart. Maybe concrete was coming out or something like that. 
That's not what I had seen on the video.
    Mr. McKay. No, no.
    Mr. McNerney. All right. I yield back.
    Mr. Sullivan, the gentleman from Oklahoma.
    Mr. Sullivan. Thank you, Mr. Chairman. I appreciate 
everyone coming today.
    My first question will be for Mr. McKay. Who is in the room 
making the decisions on how to stop this well right now?
    Mr. McKay. We have a crisis center in Houston, and we have 
about 500 people working there, and that includes BP personnel, 
industry personnel, Coast Guard, Navy, Department of Interior, 
MMS, NOAA, USGS. I mean, it's a unified command system in 
Houston around source control.
    Mr. Sullivan. Is it different than it was a month ago, 
today?
    Mr. McKay. It's probably got some different participants in 
the crisis response room or area. There are teams working on 
flow measurement that are there that are incremental versus a 
month ago. But, in general, the structure is about the same.
    Mr. Sullivan. Do you think it's working?
    Mr. McKay. I think it is. I think what's maybe not 
understood by the American public is that we have had parallel 
efforts going on all the time to increase capacity redundancy 
and options around killing or containing this well; and those 
have been worked on from day one, many of them, and some of 
them take longer than others.
    So, yes, I think it is working. I mean, it's unfortunate 
that we can't put it out; and the frustration is unbelievably 
high with everybody. But I think everything that can be done is 
being done.
    Mr. Sullivan. Thank you.
    Mr. Tillerson, in your testimony, you stated that 
ExxonMobil has drilled almost 8,000 wells--which I thought was 
interesting--worldwide over the past 10 years and that, of 
these, 262 have been in deepwater, including 35 in the Gulf of 
Mexico. Can you discuss what measures your company has taken 
that have resulted in nearly 8,000 wells being drilled over the 
past decade without a blowout?
    Mr. Tillerson. Well, I mentioned broadly in my opening 
statement that what we know is if you design the well properly 
and there are good industry standards and recommended practices 
that are published, if you develop good operating procedures, 
you train the people, you conduct drills, and you use multiple 
layers of redundancy--and it's not just redundancy in 
equipment, but it's redundancy in people, eyes and people that 
are looking at this well as it's being drilled.
    So that when you are seeing certain things occur in the 
well that either you don't anticipate or they are telling you 
that the well is not going according to plan, that you then 
adjust and manage the change. And a part of our system is a 
very specific management of change of process that, when 
something is not going to plan, there is a process by which you 
must go through to deal with that change, and that includes 
involving peer reviews and multiple layers of people looking at 
that to ensure that we really are about to do the correct thing 
to maintain the well control and the well integrity.
    Mr. Sullivan. Did anybody--during Hurricane Katrina or 
Rita, did anybody experience any problems?
    Mr. Watson. We were extensively impacted during the 
hurricanes and, in fact, learned a great deal from those 
hurricanes and have incorporated those learnings into our 
response and other capabilities.
    Mr. Sullivan. As regard to leaking, any spills?
    Mr. Watson. There were impacts from toppled platforms. So, 
yes.
    Mr. Sullivan. Well, also--this is to everybody--can each of 
you go into the negative impacts of a deepwater moratorium on 
U.S. energy production and domestic energy security? How would 
it affect energy exploration in the Outer Continental Shelf? 
Where will your rigs go? Could it be foreign waters? And, also, 
could you explain how we are going to need oil for decades to 
come, even though we are exploring other technologies of 
energy?
    Mr. Odum. I think there's a lot in that question, of 
course. But the fact that we are going to need oil for decades 
to come is probably the best place to start, and it's simply 
the scale and the size and the affordability of the energy 
system overall and understanding what technology, what 
investment, what government policy and other elements are 
required to shift that over time. You look at that and you 
understand the elements of that and you know it will be decades 
that we will be using oil and gas.
    I think we have addressed to some degree the economic 
impacts of what will happen to the rigs. But, clearly, these 
are big, expensive pieces of equipment. Each one, you know, 
probably has an employment surrounding each one of these 
deepwater rigs, it could be up to a thousand people. That piece 
of equipment needs to find a home where it's working and 
generating revenue, and that's what those pieces of equipment 
will do as soon as they can work that out.
    Mr. Sullivan. Anybody else?
    Mr. Mulva, in your testimony, you state that the business 
of offshore exploration will and must continue and that we can 
do it safely and responsibly. Can you elaborate on that?
    Mr. Mulva. I believe the industry has proven that it can be 
done safely and reliably. From the responses to the questions 
here this morning, I believe that the tragedy that has taken 
place, there are certain lessons to be learned and that most of 
us sitting here today would have, by our practices and policy, 
would have drilled the well and handled it differently.
    If we look at what this means for natural resources, these 
are indigenous resources for our country, and it's very 
important for energy security that we develop our own 
resources. We can do these in a way that's safe and an 
environmentally responsive way. Obviously, through the 
incident, we have learned that a response to an incident like 
this is not adequate. We will have to make the changes to do so 
appropriately.
    But developing our own indigenous resources is so important 
because it gives us energy security, provides investment, and 
it provides jobs and financial resources to the States, 
communities, and the Federal Government.
    Mr. Sullivan. Thank you very much. I yield back.
    Mr. Markey [presiding]. The gentleman's time has expired.
    The chair recognizes the gentleman from Texas, Mr. Green.
    Mr. Green. Thank you, Mr. Chairman.
    Following up a substantial line of questioning, I heard the 
analogy that no one would fly an airplane if we flew an 
airplane like we drill wells. I would say it is the reverse. 
After 9/11, we didn't shut down for 60--you know, 6 months 
flying on airplanes to find out what happened. Even when 
there's a terrible airplane crash and a tragedy, we 
investigate, we come up with findings and fix it; and that's 
what I am hoping we will be able to do.
    I guess my frustration, coming from an oil and gas area, is 
that anytime we have a tragedy like this in the energy 
industry, it hurts the areas where I come from. I have 
literally thousands of constituents who work in the energy 
industry, oil and gas. I have refineries. I have chemical 
plants. We still produce in our area, plus we have a lot of 
constituents who work offshore.
    So every time a short circuit decision is made, you impact 
not just the employees of your company and their families, you 
impact the whole industry; and that's what's frustrating 
sitting here today.
    One of the questions--and having been to Norway and, 
actually, I know, with the chairman of the committee we were 
there and the standards they have--it's interesting I think the 
last leasing opening, bid opening in the Gulf of Mexico, 
Statoil from Norway, actually was the biggest bidder on the 
Gulf of Mexico.
    And I have asked for many years the difference in 
production, particularly a Norwegian oil company in the Gulf of 
Mexico, is compared to Norway off their shore; and that leads 
up to the question of should we encourage the Department of 
Interior, Minerals Management, to actually regulate in using 
API's cementing requirements. Would that be something that we 
should do? Because I know it's a voluntary--I know all of your 
members of the American Petroleum Institute, but it's 
voluntary. Is that something we should do? Although the 
cementing is one problem we have here--and there's lots of 
other ones and those of us who have spent a lot of time looking 
at it--just to answer that question, should we actually make 
that a regulatory requirement with the API? If it is done as a 
voluntary?
    Mr. Tillerson. Congressman Green, I responded earlier, a 
short answer to that question, I think the challenge is 
certainly those standards, I think, have been well designed and 
they have all the industry input around being a best practice. 
That could be made a regulatory requirement.
    I think the thing that everyone needs to appreciate is, in 
exploration drilling in particular and in certain situations, 
you want to be able to formulate that cement so that it is fit 
for the purpose that you are using it. And so I think as long 
as the regulation were written to accommodate the fact that you 
want to have the best cementing integrity you can have in that 
well so it serves its purpose, and if conditions change there's 
not an overly onerous procedure by which you can have a 
formulation that might have moved outside of that regulation 
because new capabilities have been developed. That would be the 
only concern I would have around it.
    Mr. Green. Well, and my concern is we have a 6-month 
moratorium on deepwater. The impact on the industries and the 
people who make a living in the Gulf of Mexico is pretty 
dramatic.
    I would hope that 6 months would be the maximum, and we 
could get some standards in place both for you to follow but 
also for the American people to have some comfort in the 
Federal Government responding to a disaster that cost 11 lives 
and we still haven't counted up the cost.
    So would it be better to look at what Norway already does 
in their offshore production? Because I know the testimony 
earlier you said that they have the strictest offshore 
standards in the world. Would that be better to actually look 
at what Norway does?
    Of course, in the Gulf of Mexico, we are not dealing with 
cold water. And having been to Norway and understand the 
difference in the high north and what we have in the Gulf of 
Mexico. But, you know, maybe we ought to look at the toughest 
standards in the world to produce in the Gulf of Mexico.
    The reason is that Statoil is getting ready to start 
producing because they leased it, and I don't want them to 
lease in the Gulf of Mexico for less standards than what they 
have to lease off their own country.
    Should we look at what Norway is doing and the success they 
have had?
    Mr. Odum. If I could just comment on that.
    I think, first of all, I just want to make the statement 
that the industry benefits as a whole from a good solid set of 
recommendations; and I think you would find all of us 
supportive on getting that in place.
    So to the earlier comment of making sure the appropriate 
flexibility to ensure safety is included in those regulations, 
what you have already seen as a result of this incident is a 
joint industry task force that got together, including members 
of API, to say here is a set of recommendations that we would 
make. There could be regulatory changes, but we think it would 
make this operation better, safer, more appropriate. So the 
answer to your question, I believe, is yes.
    Now, as we go into those joint industry task forces and 
develop those recommendations, we bring elements like what's 
done in Norway and what's done in other parts of the world. We 
bring that knowledge into that conversation.
    Mr. Green. Mr. Chairman, I have one more question, if I 
could.
    BP, I guess I get frustrated because I have constituents 
who work at the Texas City Refinery, and I know you have heard 
it. It's just frustrating. It seems like oftentimes at BP 
there's been expediency--in this case particularly, what we 
know now and we will know more as we go--as compared to safety.
    And we found that out in the Texas City Refinery in the 
loss of 15 lives that there were decisions made not to fund the 
safety issue. And actually there was a neighbor of mine who 
lost his life there at Texas City that lived in Baytown.
    So I would hope that the problems, whether it be with the 
pipeline in Alaska or any refinery, whether it be in the 
Midwest or Texas City, Texas, it's close to our district, that 
BP would look at the safety more so than trying to move that 
rig to another production site.
    Mr. Chairman, thank you.
    Mr. Markey. The gentleman's time has expired.
    The chair recognizes the gentleman from Alabama, Mr. 
Griffith.
    Mr. Griffith. Thank you, Mr. Chairman.
    Some of the child-like, accusatory, mean-spirited, petulant 
questioning demonstrates a couple of things in this hearing. 
One is that it is very, very difficult to resist demagoging 
this tragedy, and that's unfortunate. The second thing it 
demonstrates is that there is really not a lack of natural gas 
here on Capitol Hill. So some of you have been subjected to 
some things that I think are disrespectful.
    I do think it's interesting that some were stunned to find 
out that your disaster responses were similar, almost word for 
word. You would be surprised to find that an airline disaster 
plan is similar from company to company. You would be surprised 
to find that chest pain in an ER is similar all over the United 
States in how we handle it, and disaster responses to 
hurricanes and tornados are absolutely word for word from 
municipality to municipality. So that should not have surprised 
anyone, even though it did.
    With that, I have a question for Mr. Watson. You mentioned 
something earlier about your company had a stop work policy. 
What exactly is that?
    Mr. Watson. A stop work authority is really the authority 
that's vested with each individual employee and contractor to 
stop work if they see any unsafe condition that jeopardizes 
health, environment, or safety.
    I think the important part of the policy that we have in 
place isn't that it's written down, because I think many 
companies have it written down. It's important that it's 
exercised and when it's exercised that the follow-up to that by 
management is appropriate.
    I was in Australia a couple weeks ago when we recognized 
the contractor who exercised stop work authority in a lifting 
operation. So we routinely recognize people and reward people 
for using stop work authority.
    If there are adverse consequences for employees that 
advocate stop work authority it ceases to become very 
effective, so we work very hard not to send unintended messages 
after it is exercised.
    Mr. Griffith. Thank you.
    Mr. McKay, the possibility that there's a different 
structure or make-up of the surface oil versus the subsurface 
oil, what procedures are being done by the unified command to 
determine how best to handle one versus the other?
    Mr. McKay. It's two pieces. Well, one, obviously, we are 
trying to contain or stop and then, since that hasn't been 
successful, contain as much oil subsurface as possible and get 
that to the surface and can deal with it. The oil that's coming 
out, we are using sub-sea dispersant, which will disburse the 
oil into tiny droplets and speed biodegradation. The oil that 
gets to the surface is being dealt with with skimmers and 
burning and other techniques to try to fight it as far offshore 
as possible.
    I would say that the monitoring programs and the 
measurement programs around subsurface oil and dispersant is 
extensive. It has shown that the oil concentrations are very 
low. That's both the data we are conducting on the unified 
command as well as independent NOAA data. That's going to be 
tracked diligently for a long, long time to make sure we 
understand what's happening and the natural resources damage 
assessment that will go into--that's being studied now, that 
sets the--effectively, the restoration plans to damage will key 
on some of that as well. So that's under way.
    Mr. Griffith. Thank you.
    One more question, Mr. McKay. The Deepwater Horizon was 
commissioned in what year?
    Mr. McKay. I think 2000. I think 2000.
    Mr. Griffith. And it has had a record of drilling, how 
many--been involved in drilling how many wells?
    Mr. McKay. Over 100 deepwater wells.
    I am sorry. Probably not--no, that's a wrong number. I will 
have to get back to you on that.
    Mr. Griffith. This is probably not a structure that was 
flawed or brand new or we were unfamiliar with?
    Mr. McKay. No. The Transocean rig had been working with us 
since it was commissioned and has been a good rig and operated 
difficult wells quite well.
    Mr. Griffith. So it could drill successfully 70 plus wells.
    Mr. McKay. It has drilled a lot of wells.
    I just would also like to make one comment. We also have a 
stop work program, as has been mentioned, and I believe our 
contractors do as well. And that is a fundamental, important 
piece of safety management on a rig or an operation like this.
    Mr. Griffith. I yield back my time, Mr. Chairman.
    Mr. Markey. The chair recognizes the gentlelady from 
California, Mrs. Capps.
    Mrs. Capps. Thank you, Mr. Chairman.
    Mr. McKay, last year, you testified before the Natural 
Resource Committee. It must seem like ages ago. It was before 
this bill. This is what you had to say about the role of 
technology and the oil and gas industry, and I quote:
    The energy industry isn't usually classified as a high-tech 
business, but it truly is. This technology has been 
instrumental in protecting the environment. Today's offshore 
oil drilling technology bears about as much resemblance to what 
was available in the 1960s as a rotary dial telephone does to 
an iPhone.
    That was a very interesting comparison. Let's look at it to 
get the picture of the contrast.
    First, we have a picture of a rotary dial phone and then an 
iPhone. Clearly there's a difference in technology, and we 
certainly all benefit from those remarkable advances.
    Now another picture, a picture I am very familiar with, a 
picture of the boom used in the Santa Barbara spill in 1969. 
That was about the era of the rotary telephone. Now here is a 
picture of the boom used in the Gulf today, 40 years later.
    Do you see a big difference between the boom technologies 
used in these two pictures?
    Mr. McKay. I don't see a big change in boom technology. 
There have been tremendous changes in technology in how a boom 
is deployed and how satellite imagery helps to deploy resources 
into the best possible places.
    Mrs. Capps. Yes, they do have satellite imagery now, but 
that was the era of the rotary telephone. We now live in the 
era of the iPhone, and it looks a lot on the shoreline of the 
Gulf as it looked to me in Santa Barbara in 1969. The two 
cleanup booms, however they are deployed, they look and act 
pretty much the same, would you agree?
    Mr. McKay. That's true, although there are absorbent----
    Mrs. Capps. Let me show you another set of pictures.
    Here is a picture of workers cleaning up the oil in Santa 
Barbara in 1969. Now let's look at a picture of a worker 
mopping up with his own two hands--bare hands, I should add--
oil that had reached the Gulf shore. Again, I don't see a lot 
of difference in technology between the cleanup in Santa 
Barbara and the cleanup now under way in the Gulf. In fact, I 
don't see much difference at all, booms, workers mopping up by 
hand thousands of barrels of spilled oil.
    So, Mr. McKay, I get that the industry spends a lot of time 
and effort on exploration and extraction and lobbying. But my 
problem is that you don't seem to have spent very much on 
accident prevention or on--and you seem to have made few, if 
any, real developments in oil spill cleanup. We are talking 
about 40 years later.
    So here's my question: What's BP's plan to contain the 
inevitable accidents from your offshore rigs, the rest of them 
that are operating out there, the rest of them that are 
drilling in even harsher and even more difficult conditions? 
What is it going to look like 10, 20, 40 years from now when 
there's another huge spill to see booms being lined up in 
defense for our coast? Is that what we are going to see then? 
Will we still be relying on thousands of cleanup workers 
mopping up beaches by hand? Will that be considered state-of-
the-art cleanup technology and response like it is today and 
like it was 40 years ago?
    Mr. McKay. Well, we have talked a lot about prevention 
today, so I won't go into that. But in terms of spill response, 
I think one area that we will learn from this incident is the 
ability to do more subsidy intervention----
    Mrs. Capps. Well, OK, but I am talking about the oil that 
comes to the surface.
    Because let me switch to a May 12 Oversight and 
Investigations Subcommittee and a Transocean document, and I 
quote from that document: The recovery rate of oil under the 
best circumstances rarely exceeds 15 percent.
    That's 15 percent of all the oil that reaches the surface 
of the water. It's not a very impressive rate of recovery.
    More disturbing is the fact that the rest of the proposed 
techniques are not particularly effective either. For example, 
Chevron's--BP's response plan that the chairman held up earlier 
cautioned that some marsh cleanup techniques destroy, quote, 
destroy much wildlife and destroy marsh areas.
    And here is Shell's oil spill response plan describing an 
approach that stands out from the rest. Section 13 of the Shell 
plan states that oil will accumulate on places like sand bars 
and barrier islands. The plan states that this can be--and 
again I quote--very helpful and cost-effective as a way of 
collecting the oil.
    So, Mr. Odum, my final question, does Shell really believe 
that it is ``very helpful'' when oil washes up on barrier 
islands?
    Mr. Odum. Clearly not, and I think the statement is simply 
meant to go to the fact in terms of an ability to stop further 
encroachment and cleanup, that that's what's intended by the 
statement.
    Mrs. Capps. Do you have any other information? If I had 
time, I would ask each of you. Is this the state of affairs for 
cleanup today on oil spills?
    Mr. Odum. I do think your--the answer is, yes, you are 
seeing the deployment of the technology today to respond to 
this spill.
    Mrs. Capps. That's the best we can do.
    Thank you. I yield back.
    Mr. Markey. The gentlelady's time has expired.
    The chair recognizes the gentleman from Florida, Mr. 
Stearns.
    Mr. Stearns. Mr. Chairman, thank you.
    In 2008, Exxon abandoned, after spending $180 million, a 
well called the Blackbeard West, and this occurred when the 
well's pressure increased to a point that Exxon could not 
justify the risk of a blowout and decided to put the safety of 
those workers on the drilling rig and the environment before 
corporate profits. Perhaps this is what BP should have done.
    My question is for each of you, except Mr. McKay, just 
answer yes or no. Knowing what we know today, in hindsight, 
about the inconsistent well pressure test readings, would you 
have proceeded with withdrawing the drilling fluid from the 
well?
    Mr. Tillerson, just yes or no.
    Mr. Tillerson. No.
    Mr. Stearns. Mr. Watson, just yes or no.
    Mr. Watson. I don't--I can't answer yes or no until we see 
the full investigation of this report.
    Mr. Stearns. So you would continue drilling? There's only a 
yes or no here. I am just asking you, knowing what we do, in 
hindsight, about the inconsistent well pressure test readings, 
would you have proceeded with withdrawing the drilling fluid 
from the well? Just yes or no?
    Mr. Watson. Based on the information we have seen, no.
    Mr. Markey. Mr. Mulva.
    Mr. Mulva. No.
    Mr. Stearns. Mr. Odum.
    Mr. Odum. No.
    Mr. Stearns. OK. Let me ask the four of you again. In 
retrospect now, are there safety measures that your company 
could have taken to prevent this incident.
    Mr. Tillerson, just yes or no?
    Mr. Tillerson. We haven't had the incident.
    Mr. Stearns. No, but I mean, in retrospect, knowing what BP 
did, could you have suggested safety measures that would have 
prevented this incident?
    Mr. Tillerson. They are in the industry standards. They are 
already there.
    Mr. Stearns. OK, so they are already there and you are 
saying BP did not follow?
    Mr. Tillerson. At least that's what's been reported.
    Mr. Stearns. So, in your opinion, there are, and the 
standards are there, and BP didn't follow them.
    Mr. Watson.
    Mr. Watson. Based on the information we have seen, yes.
    Mr. Stearns. Mr. Mulva.
    Mr. Mulva. Yes.
    Mr. Stearns. Mr. Odum.
    Mr. Odum. Based on the information, yes.
    Mr. Stearns. OK. I think, Mr. Chairman, I think the 
majority of opinion is that BP acted recklessly and should be 
held accountable for all the economic and environmental damages 
that have occurred.
    Now, Mr. McKay, on May 12, you testified when I asked you 
the question based upon the worst-case scenario, you could 
handle up to 300,000 barrels a day at 10 miles from the shore. 
So I asked you what was the rate at that moment on May 12, and 
you said it was 5,000 barrels a day. Do you still stand by that 
5,000 barrels a day that you gave me on May 12?
    Mr. McKay. Well, obviously, that was not right on that day, 
but that was the unified command estimate.
    Mr. Stearns. But you also testified this morning that your 
estimate went up to 14,000 barrels a day. Back on May 12, you 
said internally BP was talking about 14,000 barrels a day; is 
that correct?
    Mr. McKay. Not exactly. I said we had a range of 1 to 14 
that would transfer to the unified command.
    Mr. Stearns. Did you tell the unified command that you 
thought it could be as high as 14,000?
    Mr. McKay. Yes, absolutely.
    Mr. Stearns. So they went--all of you went with 5,000.
    Mr. McKay. They chose 5,000.
    Mr. Stearns. How many barrels of oil per day are currently 
flowing from the ruptured well?
    Mr. McKay. We don't know the latest estimate from the flow 
rate technical group, which is a government group. We are not 
in it. It's 20 to 40,000.
    Mr. Stearns. OK. How many barrels per day is the top cap 
recovering?
    Mr. McKay. 15.5, 15,500.
    Mr. Stearns. OK, in this case, in retrospect, do you think 
that because you gave such a low ball that impacted the 
response team because they thought it was so low?
    Mr. McKay. No, I don't; and Admiral Allen has answered this 
question directly. The response has been geared towards a much 
higher number. We provided every bit of data we can provide as 
fast as we get it to unified command.
    Mr. Stearns. So how did the estimate go from 5,000 up to, 
what, 40,000? Even your 14,000 that you estimated May 12 now is 
40,000. How did it get from your estimate high of 14 to 40,000 
today?
    Mr. McKay. Well, the flow rate technical group, which is a 
government group----
    Mr. Stearns. No, I am asking about BP's estimate.
    Mr. McKay. We haven't done an estimate since the one, the 
14.
    Mr. Stearns. So you are saying that your corporation has 
not even attempted to find out technically how much?
    Mr. McKay. No. We have given our data to the flow rate 
technical group, which is under direction of unified area 
command. Their estimate as of a week or week and a half ago was 
12 to 19,000. In the last few days, it has gone 20 to 40.
    Mr. Stearns. Mr. Chairman, I just think that BP has low-
balled this figure, and I think--you know what, Mr. McKay? When 
the buck stops here, means, you know, that you take full 
responsibility.
    Now Mr. Markey asked you for an apology. I really think in 
light of the performance that you as a CEO and what has 
occurred, I really think that you should be resigning as 
chairman of BP America. I mean, it's really outrageous that you 
sit here and tell us that you are going to punt to the unified 
command when we have had 11 people killed, we have had a huge 
environmental damage, and you are still sitting here as the CEO 
of BP.
    Frankly, I would call for your resignation. I am calling 
for it today. I am not asking for an apology. I am asking for 
you to resign.
    Thank you, Mr. Chairman.
    Mr. Welch [presiding]. I thank the gentleman from Florida.
    The chair recognizes himself for 5 minutes.
    One of the questions that this whole tragedy raises is BP 
America's energy policy; and it's time, I think, for Congress 
to call the question, does America's energy policy work? Is 
America's current energy policy sustainable?
    The United States, as you know, consumes 25 percent of the 
world's oil. We have 2 percent of the proven reserves. 
Americans, our businesses and our consumers, spent nearly $900 
billion last year, most of that going to countries that are not 
our friends.
    The current policy that we have works well for some, 
including the shareholders of the companies represented here 
today. What you do you do very well, run very efficient 
operations with some tragic exceptions. But profits increased 
among your five companies from $28 billion in 2002 to $64 
billion in 2009, and that's after your companies paid dividends 
that shareholders appreciated of $37 billion. And Exxon, I 
believe, Mr. Tillerson, has repurchased stock in the value of 
almost $20 billion.
    But the question for Congress--and I am going to ask you to 
comment on this--is whether we are at a point where taxpayers 
are being well served when taxpayers are continuing to provide 
subsidies for a business-as-usual energy policy that's based on 
a carbon energy 19th century approach versus a clean and 
renewable energy fuel policy of the 21st century that we need.
    And the question really is, should taxpayers in the United 
States continue to provide billions of dollars to subsidies to 
an industry, the oil industry, that's mature, to an oil 
industry that's extremely profitable, into an industry that's 
based on a carbon-based fuel? Or is it time, finally, for the 
taxpayer incentives that are being steered to the oil industry 
to be redirected to efforts to develop a 21st century clean 
energy economy?
    Mr. Tillerson, my understanding, just on a specific tax 
provision, is that section 199 of the domestic manufacturing 
deduction provides a tax rate deduction for oil and gas 
companies. Repealing that would ship $17.3 billion from oil 
companies; and it could be directed to clean energy efforts, 
which your company engages in, to some extent. Would you 
support the repeal and redirection of that?
    Mr. Tillerson. No, Congressman, I would not. Section 199 
tax was put in place to preserve and protect manufacturing jobs 
in the United States.
    Mr. Welch. All right.
    Mr. Tillerson. I am not sure how to explain to a refinery 
worker why his job isn't any more or less important than an 
autoworker's job.
    Mr. Welch. This is not about whose jobs is important. The 
jobs that are important are the folks that are down there in 
the Gulf Coast and are losing their jobs because of this 
catastrophe that just happened. This is about whether taxpayer 
subsidies are going to help Americans get jobs and an energy 
policy for the future.
    Mr. Watson of Chevron, I'll ask you. My understanding is 
the Tax Code right now provides oil and gas companies to 
expense intangible drilling costs. That cost taxpayers $7.8 
billion over 10 years. Do you support continuing that or would 
you support repealing it or redirecting it to clean energy 
efforts.
    Mr. Watson. I support continuing it, and I don't consider 
it a subsidy. I consider it similar to many other provisions in 
the Tax Code that dictate the timing of the deduction.
    Mr. Welch. Well, you know, I have one question. I believe 
in tax incentives, but I question whether they should go to 
mature industries and industries that are profitable. They've 
managed to get their sea legs. And your industry enjoyed 
profits of $68 billion, hard work of a lot of people. But do we 
need in America to be starting to use taxpayer money, which is 
what these subsidies are, to help us move to a clean energy 
economy that is sustainable and does not have the risk of these 
catastrophes that are causing people their lives and their 
livelihoods.
    Mr. Marvin, do you have a view on this?
    Mr. Odum. I do, and I think--if I go back to where you 
started, I think it is time for Congress to take a 
comprehensive review of energy supply to this country. I think 
part of that would be then, in addition to all the alternatives 
and renewables that I talked about in my opening statement, I 
think it would recognize the importance of oil and gas.
    Mr. Welch. OK, thank you.
    My last question. Mr. McKay, there was a report by the U.S. 
Chamber of Commerce, Mr. Donohue, who said last week that he 
believed that the taxpayer should help BP pay for the cost of 
this spill. BP official testimony is you're going to bear the 
burden on this. Do you repudiate the suggestion by the United 
States Chamber of Commerce that the taxpayer participate in the 
cost of this cleanup?
    Mr. McKay. We're going to pay for all costs, all costs of 
the cleanup.
    Mr. Welch. Thank you.
    The chair recognizes Mr. Whitfield.
    Mr. Whitfield. Thank you, Mr. Chairman, and thank you all 
very much for being with us today.
    As I've listened to the hearing and your testimony today 
and articles that I've read in the paper, whether or not they 
are truthful or not, I don't know. But there are reasons to 
believe that there were advance warnings given about problems 
with this particular well; and I say that because of all of 
these things that I've heard, the testimony here, articles I've 
read, the letter from the chairman of the committee, and when 
you think that it is alleged that a BP employee said that this 
is a nightmare well, there were concerns expressed by well 
design, the number of centralizers, the cement process and so 
forth.
    So I would ask you, Mr. McKay, as the President of U.S. BP, 
were you aware of any of these concerns or problems that 
existed with this well prior to it blowing?
    Mr. McKay. No, I was not.
    Mr. Whitfield. And are you aware of anyone on your staff 
that may have been--had knowledge of this?
    Mr. McKay. I think what the investigations will determine 
is the interplay between data that was known, decisions that 
were made, the processes that were followed on the rig and in 
the equipment that worked or not. So that's part of the 
investigation. These are big questions. They are important 
questions.
    Mr. Whitfield. From your own personal knowledge, you're not 
aware of any of that?
    Mr. McKay. No, no.
    Mr. Whitfield. Now when you consider all the steps that 
have been taken to try to stop the flow of this oil--the coffer 
dams, the tie kills, the dispersants, the relief wells, all of 
these things--and all of you are experts in this field, and we 
value your views. And if all of these efforts that are being 
made do not work, is there any way that any of you could guess 
as to how long this oil might flow? Do any of you have any 
ideas on how long this could go on?
    Mr. McKay. Could I just say that the relief wells that are 
under way will be--first of all, we're going to try to contain 
as much as we possibly can; and that's going to increase in 
capacity, redundancy, and resiliency for hurricanes in the next 
few--3 weeks, 4 weeks. The first relief well should be down by 
mid-August, and that should permanently secure this well.
    Mr. Whitfield. So if the relief well works then mid-August, 
that should be the end----
    Mr. McKay. And we have redundancy with a second relief 
well. Should we need it, we could sidetrack both of those wells 
for other attempts, but we believe that we will get it mid-
August.
    Mr. Whitfield. Because I was reading an article about a 
well referred to as IXTOC 1, which I think was back in 1978 or 
'79, which was in the Gulf; and evidently in that well the oil 
flowed from June of '78 to March of '79. Are any of you 
familiar with the history of that particular well blowing in 
the Gulf? Are you aware of the facts of that?
    Mr. McKay. I don't have depth of knowledge, but I 
understand that that was a well in Mexican waters in the Gulf 
of Mexico. It did go for about 9 months. I believe it was a 
jack up--a jack up, and the rig collapsed partially on top of 
the blowout preventer.
    Mr. Whitfield. It was not a deepwater well?
    Mr. McKay. No.
    Mr. Whitfield. OK, but I understand that that well--there 
was 3.3 million barrels of oil.
    Mr. McKay. That's what's reported.
    Mr. Whitfield. I yield back the balance of my--one other 
question, one other question.
    I think I know the answer to this, because I think you have 
indicated that you had a policy that any individual or 
contractor would have the authority to stop the action on the 
well; is that correct?
    Mr. McKay. That is correct.
    Mr. Upton. Would the gentleman yield?
    Mr. Whitfield. Yes.
    Mr. Upton. Mr. McKay, you said that anyone on the rig had 
that authority. Is there anything that you disagree with in the 
conclusion in the letter that was sent to--that the oversight 
subcommittee did that they sent to Mr. Hayward just yesterday 
talking about the lack of a lock-down sleeve, the failure to 
circulate drilling mud, no cement bond log, and two few 
centralizers? Do you quibble with any of the findings in this 
letter?
    Mr. McKay. Yes, I've not been able to go through that 
letter yet, but what I would say is we identified for the O&I 
subcommittee some of these issues and in our investigation, and 
what we said is those all have to be evaluated. And I believe 
the investigations will get to put this chronology together 
such that we can understand.
    Mr. Upton. Let me say if the findings in this letter are 
accurate, how many folks on the rig had the authority to 
actually stop the work? Everyone? Anyone?
    Mr. McKay. I was speculating on Transocean, OK? But we had 
seven people on the rig. Two or three were trainees. So we had 
four or five people on the rig.
    Mr. Upton. So did all--so you only had four or five folks 
on the rig that had the stop work authority?
    Mr. McKay. Those are the sum total of BP employees on that 
rig.
    Mr. Upton. But all of them had the authority to say stop.
    Mr. McKay. Every BP employee has that authority. That's 
right.
    Mr. Upton. And did any of them say stop?
    Mr. McKay. I don't know. I don't know.
    Mr. Upton. I'm led to believe that there was at least one 
BP supervisor who is taking the fifth. I don't know if that's 
accurate or not. Is that accurate?
    Mr. McKay. I don't think it is perfectly accurate. I think 
when they asked him to have a hearing last month--I believe, 
this is--maybe I shouldn't even say this, but I think his 
attorney advised he wasn't ready, and they could reschedule. 
And I don't know what his situation----
    Mr. Upton. Do you know whether he actually said stop?
    Mr. McKay. I don't know that.
    Mr. Upton. I yield back.
    Mr. Whitfield. Mr. Chairman, I yield my 27 seconds to the 
gentlemen from Texas.
    Mr. Burgess. Mr. McKay, a question I just have to ask you, 
any good interventional radiologist can put a catheter in 
places that are hard to get to and do kill shots and inflate 
balloons. Has anyone in your engineering staff looked at the 
concept of putting something down this stem riser and inflating 
a heavy duty balloon just to give you a short period of time to 
put some cement and heavy weight mud on top of it to kill this 
thing off?
    Mr. McKay. Yes, but we have drill pipe that's inside the 
blowout preventer, and it is crimped. And there's a torturous 
path in the blowout preventer, it would appear, very torturous. 
That was the purpose of junk shot, was to try to clog up the 
blowout.
    Mr. Burgess. But you couldn't stop the flow of stuff coming 
up. But if you inflated something that rapidly put some 
compression on the flow below, then you would have a chance to 
get something on top of it to try to get it stopped.
    At this point, almost anything is worth a shot. You had 
Mike Huckabee on TV the other night. He had a litany of people 
coming in who wanted to do things to help.
    This is one of the things that's frustrating us. Mr. Markey 
is making us watch this thing 24 hours a day on our computer 
screen savers, and people are coming up with ideas, and there 
is no place for them to go to get the ideas vetted and tried.
    I yield back. Thank you, Mr. Chairman.
    Mr. Markey [presiding]. The gentleman from Kentucky's time 
has expired.
    The chair recognizes the gentleman from Texas, Mr. 
Gonzalez.
    Mr. Gonzalez. Thank you very much, Mr. Chairman.
    Mr. McKay, it is obvious that your colleagues in the 
industry are saying that what BP did in the way of drilling 
would not have been the same procedure they would have 
followed. I believe that's what they--to the person--to the 
witness have said. Why would--it seems like all of you are on 
the same page when it comes to how you contain and clean up, 
but you're not on the same page when it comes to on how to 
drill.
    And then your whole theory today is--not BP's--is that we 
would have done it differently. It would have never have 
happened. So I would have loved to have seen the same 
uniformity in adopting the more safe manner so this would never 
happen. There is a whole lot more to this story, obviously; and 
it will develop.
    Mr. McKay, why would all these individuals have a taken 
different route in the way they would have drilled?
    Mr. McKay. Well, I can't speak for them.
    What I can say is part of what these investigations will 
determine is what were the procedures that were used, the 
design of the well, the procedures that were used to execute 
the well and the equipment on the rig and how did it perform 
and how did decisionmaking and data flow. I think then those 
will be the design and things like that will be compared to 
industry norm, and we'll see if that's outside of normal or 
not.
    And then, undoubtedly, in an accident of this type and 
severity there will be a combination, I believe--this is 
speculative--of decisionmaking processes and equipment that 
interplay to allow this to happen.
    So I think these questions about what's normal, what's not 
normal, what's unusual, what's not unusual, that's going to 
come out in the investigations. And, to my knowledge, the well 
design is not an unusual design for the Gulf of Mexico.
    Mr. Gonzalez. I realize you have Transocean doing the work, 
and you've got Halliburton that's basically going to cap after 
the hole is drilled and so on, and I'm sure it will be an 
interesting situation when it is all said and done. Because I 
know you're the responsible party under certain statute. But 
when it is all said and done I'm sure that you will be seeking 
some indemnification from others.
    I'm going to ask the other witnesses--just yes or no; this 
is somewhat rhetorical--can you guarantee to the American 
public and our constituents that any of your drilling 
operations are free from a similar accident as Deepwater 
Horizon? And just yes or no, 100 percent assurance, 100 
percent.
    Mr. Tillerson. Congressman, I'm not sure we know all, all 
of the aspects of the Deepwater Horizon incident yet.
    Mr. Gonzalez. No, I understand that, but----
    Mr. Tillerson. What we can assure you is that the designs 
and the procedures and the processes we have in place, when 
carried out, would prevent this from happening.
    Mr. Gonzalez. Mr. Tillerson--and here is where I'm going to 
lead the witnesses--you cannot give 100 percent assurance of 
anything in our lives. And I think the American public want to 
hear you guys just come out and say, yup, there's risk. Gee, 
surprise.
    Mr. Tillerson. There is risk. There are no guarantees in 
life.
    Mr. Gonzalez. That's all I want to know. Yes or no, can you 
give me 100 percent so I can go back home----
    Mr. Tillerson. No, I cannot.
    Mr. Watson. I believe Chevron operations are safe.
    Mr. Gonzalez. One hundred percent certain. This is a simple 
question, and if you guys were in the courtroom, you know there 
would be a judge saying yes or no, and it's a simple question.
    Mr. Tillerson. I believe our operations are safe. We're 
drilling deepwater----
    Mr. Gonzalez. One hundred percent, I can go back and say 
that your operation, no matter where it is, in the Gulf or 
elsewhere, is 100 percent safe, that this could never, never 
replicate itself.
    Mr. Watson. I believe our operations are safe.
    Mr. Gonzalez. One hundred percent, that's what makes it so 
hard to the American public, gentlemen, for us to go out there 
and tell them something that they know can't possibly be true. 
Because it doesn't apply in any other aspect of life or 
business.
    I'm a proponent of offshore drilling. I've had this debate 
with Mrs. Capps since the day I got here. You all are not 
making me look good.
    Can I just go--100 percent. Come on, you guys. I mean, 
seriously, how can you say yes? But if you want to say yes, say 
yes. We can all go back, Mr. Chairman, and tell them we had 
witnesses from leaders in the industry that can actually tell 
us they are 100 percent sure this would never happen again.
    Mr. Watson. Congressman, I indicated that we have effective 
procedures. I didn't----
    Mr. Gonzalez. No, sir, it's fine. You're saying--to me, 
that's 100 percent. I'm gratified.
    Mr. Mulva. No, nothing is 100 percent failsafe.
    Mr. Odum. Not 100 percent safe. It's what we focus on every 
day, though.
    Mr. Gonzalez. The reason I'm for exploration domestically 
is because we depend on more than 60 percent of our oil from 
foreign sources, which is a national security threat. But we 
can do it safely--I started off in opening statement that we 
can explore and produce and do it in a safe way that they are 
not mutually exclusive.
    In this country, we have more than a third of all cars and 
light trucks in the world. By 2020, we probably still will be 
selling 62 to 70 percent of our cars fueled somehow--operated 
in part by a fossil fueled engine. That's why it is so 
important. But we have an obligation to this country to say 
that we're going to do it in a safe manner. That's all we're 
trying to do here.
    You are the guys that are the experts. You have the 
resources, the assets, and the knowledge. You are going to have 
us decide for you, if, in fact, you don't really get engaged, 
until we can go back to the American public and tell them with 
a straight face that we are doing everything that is humanly 
possible to make it safe and if there is an accident that we 
can clean it up.
    Thank you very much, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired.
    The chair recognizes the gentleman from Louisiana, Mr. 
Scalise.
    Mr. Scalise. Thank you, Mr. Chairman.
    Mr. McKay, I first want to take issue with the statement 
you made earlier when you said the spill response has been 
pretty effective. I just spent Friday on the ground in Grand 
Isle, which, as you know, is one of the epicenters of the 
disaster that's coming into not only the beaches but the marsh. 
They are trying right now to put a plan together to protect 
Barataria Bay, which is an area where they are starting to get 
oil behind the boom into some of these fragile marshes and 
ecosystems.
    We don't want to sit back and wait until the oil comes in 
to clean it up, and in some cases you may not be able to clean 
it up for years. We want to be proactive, and we have been 
submitting plans. In fact, 75 percent of the plans submitted by 
our Governor to have the sand barriers in place have not been 
approved. So when you hear local officials saying they are 
spending more time fighting BP and the Federal government than 
fighting the oil, that's not what I would classify as pretty 
effective. So please go back and redouble efforts and do 
everything you can to work with our local leaders who have 
plans and are being blocked by BP and the Federal Government 
from getting those plans implemented.
    That's when it will be effective, when everything is moving 
by the speed of light. It takes right now at least 5 days in 
some cases to get answers on questions. That's unacceptable. So 
I would appreciate it if you'd look at that.
    I want to ask you about the relief well. Are you using the 
same method to drill the relief well as you used for the 
original Horizon well?
    Mr. McKay. Well, the design of the relief well is very, 
very similar to the original well.
    Mr. Scalise. Clearly, that well failed. It was a miserable 
failure. You had 11 people die. Are you still using that same 
method or have you changed the method of drilling?
    Mr. McKay. That design has been reviewed over and over with 
the MMS. The failure of the original well I think is going to 
be a complicated set of decisions, equipment, and processes. 
The relief well, I believe, is safe.
    Mr. Scalise. Well, let me ask you, the last time you 
testified I had asked you about disagreements on the rig. In 
fact, I had given you a report that you said you hadn't read at 
the time--now you've had some time to read it--where there was 
a disagreement reported in the media between the head of 
operations on the rig for BP versus the head of operations for 
Transocean. Did that disagreement occur? Were there 
disagreements?
    Mr. McKay. I believe in the Marine board hearing a couple 
weeks ago that individual from Transocean said that did not 
occur, that actual individual.
    Mr. Scalise. OK. So we'll see more, because more reports 
continue to come out that contradict that, but we'll see.
    I want to go down the line with the rest of the panelists, 
starting with Mr. Tillerson. How deep in the OCS do you 
currently drill? What's your deepest well?
    Mr. Tillerson. I assume you're talking about water depth?
    Mr. Scalise. Yes.
    Mr. Tillerson. We've drilled up to 8,700 feet deep.
    Mr. Scalise. Eighty-seven. Of course, the Horizon was 
5,000. So you're 8,700. Any incidents there? Any blowouts?
    Mr. Tillerson. No.
    Mr. Scalise. Mr. Watson.
    Mr. Watson. I'll have to check on the exact depth.
    Mr. Scalise. Deeper than 5,000.
    Mr. Watson. Yes.
    Mr. Scalise. Mr. Mulva.
    Mr. Mulva. Deeper than 5,000.
    Mr. Scalise. Mr. Odum.
    Mr. Odum. Deepest approach which is 10,000.
    Mr. Scalise. Ten thousand. No incidents? No blowouts?
    So as we look at all of these other reports that are coming 
out, you look at the reaction, it still boggles the mind that, 
with the exception, I think, of one of you, that the President 
hasn't talked to those of you who are drilling in deeper water 
and doing it in a safe and effective way with safety as a top 
priority.
    Who actually reviews and approves those regional response 
plans that we heard about earlier, Mr. Tillerson?
    Mr. Tillerson. Well, those would be developed--you're 
talking about internally.
    Mr. Scalise. When you all submit those, who do you submit 
them to for approval?
    Mr. Tillerson. Well, they go to the MMS.
    Mr. Scalise. Well, MMS signs off on them.
    Mr. Watson. MMS.
    Mr. Mulva. Yes.
    Mr. Odum. Same.
    Mr. McKay. Yes, MMS.
    Mr. Scalise. Now if MMS, who is the Federal regulator, 
signs off on these plans that by the chairman's own admission 
are flawed, why isn't MMS at this table? We have yet to have a 
hearing with the Federal regulator who had an equal role in 
this disaster. Four of you had absolutely nothing to do with 
this disaster, and you're here giving your time to testify. Yet 
the Federal regulator who is directly responsible for approving 
these plans, who actually sits there and approves the plan, who 
approved the inspection, the blowout preventer, has still not 
testified before this committee.
    I think there is no excuse for that. If we're serious about 
getting to the bottom of this instead of playing politics, we 
would have the Federal regulator here where we can talk to them 
about real things that they did to approve these plans that 
failed us; and that still hasn't happened.
    Finally, I want to get to the Secretary of Interior's 
report that came out that actually led to this ban on drilling. 
And we had a copy from the majority of scientists on the 
President's own commission that they were using--the Secretary 
of Interior was using as his basis for banning drilling, 
actually wrote a letter and came out and said, ``We believe the 
report does not justify the moratorium as written. Indeed, an 
argument can be made that the changes made in the wording are 
counterproductive to long-term safety. The Secretary should be 
free to recommend whatever he thinks is correct, but he should 
not be free to use our names to justify his political 
decisions.
    A majority of the members of that commission that the 
Secretary of Interior and the President are hiding behind for 
the 6-month ban.
    Again, the President's got to stop playing politics and 
putting politics over science and actually focus on his job 
under the Oil Pollution Act which should be directing the 
response.
    Mr. McKay, your job should be paying the bills; the 
President's should be the quarterback on the field. Our local 
leaders shouldn't have to go to you to get approval to protect 
the marsh. That's something the President should be directing 
you to do. That still isn't happening. That's something that 
needs to change.
    I would like to ask unanimous consent to submit this for 
the record, this letter from a majority of those members of the 
Department of Interior's panel.
    Mr. Markey. Without objection, it will be included in the 
record.
    [The information appears at the conclusion of the hearing.]
    Mr. Scalise. Thank you, and I yield back.
    Mr. Markey. The gentleman's time has expired.
    For the record, we have had testifying before the committee 
the Department of the Interior, NOAA, EPA, Coast Guard----
    Mr. Scalise. Would the gentleman yield?
    Mr. Markey [continuing]. As well as David Hayes, who is the 
Deputy Secretary of the Department of Interior.
    Mr. Scalise. Would the gentleman yield?
    Mr. Markey. I'm glad to yield.
    Mr. Scalise. The only day that we had actual testimony 
scheduled by the Secretary of MMS was the day that the 
Secretary was conveniently fired. Why haven't we had an 
opportunity to reschedule and have MMS come before our 
committee? They are the ones who signed these reports. They 
signed those plans. They won't give us still the information on 
the blowout preventer test that was done----
    Mr. Markey. You are right that it was the day that that 
person resigned. But, at the same time, the person who did come 
to substitute was someone who is higher in the rankings inside 
the Department of Interior, David Hayes.
    Mr. Scalise. But doesn't work for that agency.
    Mr. Markey. The chair recognizes the member of the 
subcommittee, the gentleman from New York, Mr. Engel.
    Mr. Engel. Thank you very much, Mr. Chairman.
    And let me just say I find it incredible that some people 
want to blame the President. The same people who want smaller 
government and don't want the President to intervene against 
private industry are the same ones who say the President should 
intervene and should somehow do something. I think tonight 
we'll hear the President saying a lot of important things, and 
we will see that he is trying to do a great deal.
    Gentlemen, I want to read some quotes and ask you to 
comment on it, that some of you made.
    Mr. Tillerson in 2006 you said, and I'm quoting, ``Industry 
has developed the technologies and acquired the experience to 
produce these resources safely and with a minimal environmental 
footprint.''
    Mr. Mulva, in 2009, you said, and I quote, ``Our industry, 
our company we believe that we have the capability and the 
experience that we can develop these resources and not in any 
way really compromise safety and environmental performance.''
    In 2005, David O'Reilly, who was then CEO of Chevron, told 
Congress that all of the offshore areas closed to oil drilling 
``can be developed with minimal environmental impact.''
    And, Mr. McKay, in 2009, you told Congress, ``For those who 
continue to question the safety of offshore energy operations, 
I can only point to our record in the Gulf of Mexico.''
    Gentlemen, if we can't believe what you said in those days, 
how can we believe anything you say now and anything you're 
going to say in the future? I mean, we were given assurances 
that everything would be fine. I know that accidents happen, 
but this is one hell of an accident. Why should we trust the 
industry to give us assurances when those assurances apparently 
mean nothing? Anybody have an answer to any of the quotes?
    Mr. Tillerson. Congressman, I stand by my statement with 
respect to Exxon Mobil's performance.
    Mr. Engel. Do you believe that the industry's developed the 
technologies and acquired the experience to produce these 
resources safely and with a minimal environmental footprint?
    Mr. Tillerson. When the standards and the processes and the 
procedures that have been developed by the industry are 
followed, that has been the case.
    Mr. Engel. Well, how can we feel comfortable that the 
processes and technologies will be followed? Obviously, it 
wasn't followed here.
    Mr. Tillerson. You're asking me or someone else?
    Mr. Engel. No, I'm asking you.
    Mr. Tillerson. We didn't have the problem. I can't answer 
that.
    Mr. Engel. Well, let me ask Mr. McKay. Perhaps he can 
answer that.
    Mr. McKay. The tragic accident that has happened here I 
think is going to have a combination of factors which are going 
to be decisional process and equipment. The investigations are 
exceptionally important to understand how that chronology works 
and what caused this accident.
    I do have confidence that we will understand what happened 
here. I do have strong confidence in that. I also believe that 
there will be improvements made because of those learnings such 
that the industry can get back to work. I think that can happen 
pretty quickly.
    Mr. Engel. Mr. McKay, let me ask you this. What really 
infuriates the American people and infuriates me is after the 
accident every single day it seemed that BP was trying another 
technique, another method of trying to plug the hole, and each 
time it failed. It's mind boggling for me or for anyone else to 
understand why there were not safeguards in place, technologies 
in place, modes of operation in place so that if a disaster 
happened you would know immediately what to do.
    Mr. McKay. Unfortunately, this particular incident occurred 
where the lower marine riser package did not disconnect from 
the blowout preventer so we have a package on top of that 
preventer. We had 4,300 feet of riser off the top of that 
kinked, and the access to that to be able to do anything from 
the top from that blowout preventer has been prevented.
    Mr. Engel. But that never occurred to anyone beforehand 
that that might happen?
    Mr. McKay. Not in that way. I don't think anyone could 
predict that. That package is supposed to release from that 
blowout preventer, and it has not.
    Mr. Engel. Well, doesn't this mean that oil drilling is 
inherently risky?
    Mr. McKay. There's risk--as was mentioned a few moments 
ago, there is risk in everything. But I do think the systems 
and the technology that is available to the industry and will 
be improved through the learning here, the resources--the 
important resources here can be developed.
    Mr. Engel. Why do these disasters seem to only happen in 
the U.S.? We had the Exxon Valdez 20 years ago, and now we have 
this. There is drilling all around the world, in the North Sea, 
all over. We don't hear about tragedies like this. Are the oil 
companies in the United States cutting corners?
    Mr. McKay. No, I would say, unfortunately, there are 
tragedies around the world. Probably the worst rig disaster in 
history was in the North Sea. So, unfortunately, these things 
happen around the world; and we have to improve from each and 
every one of them. I think that's what the industry tries to 
do.
    Mr. Engel. So doesn't it prove my point that oil drilling 
is inherently risky? There could always be a disaster?
    Mr. McKay. I don't think always. I think the track record 
overall in the industry is very strong, but we have issues like 
we've had this tragic accident we've got to learn from.
    Mr. Engel. Well, I don't hear anybody saying ``drill baby 
drill'' anymore and for good reason. I think it is absolutely 
ridiculous that this could happen and that there's no response 
that's satisfactory.
    Thank you, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired.
    We now turn and recognize a member of the full committee, 
the gentleman from New York, Mr. Weiner.
    Mr. Weiner. Thank you, Mr. Chairman.
    Mr. McKay, I wonder if we're all on this panel not saying 
essentially the same thing and that is that BP shouldn't be in 
charge of anything in this operation anymore. That Mr. Scalise 
and many on our side have said in different ways there is very 
little credibility that BP has in telling us what's going on. 
The numbers have been wildly underestimated, as Mr. Markey's 
questions earlier pointed out.
    It is pretty clear that you're conflicted when it comes to 
settling claims with people who have been victimized by your 
negligence. You don't want to pay. You want to pay less. They 
want to get more.
    It seems that your control over the access to the media, to 
the location, you're conflicted. You want to portray this in a 
certain way. Members of the media want to try to find out 
whether you're telling them the truth or not. And that even 
people who have expressed frustration with the President 
basically are saying, why do you trust these guys to do 
anything? You should get in there and do it yourself.
    I think that it comes down to this basic notion that was 
reinforced today when the four gentlemen to your right 
basically said that a well-managed company that was doing 
things responsibly wouldn't have had this problem because they 
would have taken the information that Mr. Waxman and Mr. Stupak 
released yesterday. They looked at it and said clearly that 
corners were cut and that there is no credibility in what--in 
even the basic elements of how this thing was done.
    I wonder what you would say to the American people who open 
up the newspaper and say, well, BP says--dot, dot, dot--why any 
of it should be believed. What have you done to establish any 
level of credibility here?
    Even your supporters, even the people who will go to their 
political ends saying ``drill baby drill'', even they are 
saying, hey, the President is responsible because he trusted 
those knuckleheads in BP. I mean, I don't understand why on any 
level going forward you all should be in charge of anything.
    So let's go one by one.
    Why should the claims process be under any control of 
British Petroleum? Why shouldn't we just take the money that is 
going to be paid out in claims in the billions of dollars and 
give it to someone independent of BP to say which claim is 
legitimate and which one is not? Why should BP have it in their 
control at all over what claims they pay?
    Mr. McKay. We have been very clear from the start we're 
going to pay all legitimate claims. So that's point one.
    Point two is we set up a claims network.
    Mr. Weiner. Who do you think should determine who is 
legitimate?
    Mr. McKay. We are following OPA guideline under OPA 90.
    Mr. Weiner. Do you believe that BP is conflicted at all in 
deciding whether or not BP should pay money that BP is going to 
have to pay to victims? Do you think you're conflicted at all?
    Mr. McKay. Not--no, not----
    Mr. Weiner. I think that walks the line actually of being a 
rhetorical question. You're clearly conflicted.
    Let me ask you about access to the media or experts on 
trying to learn what's really going on there. Now there have 
been some reports that in the process of trying to get access 
you had to check--a member of the media would have to check 
with BP whether to get access to the largest environmental 
disaster ever created by BP. Now do you think that you're 
conflicted at all in having any decisionmaking role at all 
about whether BP should be able to give access to an 
environmental disaster created by BP?
    Mr. McKay. Well, I'm not familiar with the protocol for 
access. That goes through unified command. So----
    Mr. Weiner. So under no circumstance should any member of 
the media or any expert who wants to try to get the information 
themselves ever have to call BP to get clearance to do it.
    Mr. McKay. No, I didn't say that. Because they may be 
acting under instructions of unified command. So I--what I'm 
saying is I don't know the protocol for that.
    Mr. Weiner. Well, whether someone somewhere thinks that you 
should have that is not the question I'm trying to get into 
now. What I'm trying to understand is whether under any 
circumstance anywhere in the decision tree should be anyone who 
has been so horrible at making decisions.
    I mean, the one thing we know from this hearing with 
metaphysical certitude is that BP created this problem through 
their own negligence and their own cost cutting, their own 
corner cutting. It is not just someone like me who believes 
that we should be reducing the amount of drilling that we are 
doing. The gentleman to your right, who believes you should be 
doing more of it, and even they say you have done that.
    So the question is, in this entire context, why should the 
American people at any time when it says BP says dot, dot, dot, 
not immediately take up the newspaper and throw it over their 
shoulder because there is no credibility on it? And if we don't 
believe that there's credibility why is there any 
decisionmaking left in your hands?
    And I think, Mr. Chairman, you know, what we have is there 
are opportunities now for us to not remake the same mistake 
over and over again. If we know they are conflicted about being 
truthful with information, any access to the media, access of 
experts to the American people to what's going on there should 
not go through BP. If we know they are conflicted about wanting 
to understate costs--that's the basic element of a corporation. 
They want to take in as much as we can, give out as little as 
they can--why is there any role to play in claims? And then 
becomes why should there be any decisionmaking ability on your 
part at all here?
    And that's one thing my Republican friends who want to 
criticize the administration for not doing enough, maybe we 
agree. Maybe we do need to have BP involved in a heck of a lot 
less anything to do with our environment, anything to do with 
our citizens going forward. Because while you're sitting here 
saying over and over again that we are going to pay all 
legitimate claims, my question is, who determines legitimate? I 
think it should be the American people and not you.
    I yield back, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired.
    By unanimous consent, we're going to recognize two members 
who are not on the committee but who represent the Gulf of 
Mexico. We will begin by recognizing the gentleman from 
Louisiana, Mr. Cao.
    Mr. Cao. Thank you, Mr. Chairman.
    Mr. Chairman, the oil disaster has caused great economic 
impact to my district. Hundreds of businesses have closed, and 
thousands are out of work.
    Mr. Stearns asked Mr. McKay to resign. Well, in the Asian 
culture, we do things differently. During the Samurai days, we 
just give you a knife and ask you to commit Hari Kari. My 
constituents are still debating on what they want me to ask you 
to do.
    But, with that being said, the cleanup process has been a 
disgrace. The claims process has been dismal. And 1 week into 
the oil spill I approached BP about establishing a trust 
account, and I received no response. Now that the President's 
asking you to establish an escrow account, what would be your 
response?
    Mr. McKay. I don't think any decisions have been made on a 
trust account. We've been clear, as I said, that we're going to 
pay all legitimate claims; and the whole company is standing 
behind that. So a decision on whether to do a trust fund or 
account I don't believe has been made yet.
    Mr. Cao. I've been approached by hundreds of constituents 
who said, I am legitimate and BP is saying that I'm not 
legitimate. How do you respond to them?
    Mr. McKay. I don't understand the individual claims. If the 
claims had been submitted, had they been rejected?
    Mr. Cao. Well, they have not been rejected, but they have 
been delayed. And people, when their livelihoods are on the 
line, they cannot afford to be delayed.
    Mr. McKay. I can't answer the question. I know if there are 
issues with claims that we should talk about off-line, I would 
be glad to do that and get our claim experts to come see you 
and try to understand those claims.
    Mr. Cao. Now, I want to ask a question to the panel. 
Because the moratorium is affecting Louisiana in a very 
tremendous way, and I would like to ask you, do you have the 
technology to know exactly where the oil reservoir is? Do you 
have the technology to know that? In other words, do you know 
how deep you have to drill before you tap into an oil 
reservoir?
    Mr. Odum. Let me say to a reasonable high degree of 
accuracy, yes.
    Mr. Cao. What would be reasonable? Ninety, ninety-five 
percent?
    Mr. Odum. I would actually have to get an expert to tell 
you in the Gulf of Mexico how many foot above or below would be 
the range, but it is pretty close.
    Mr. Cao. But, generally, what risk exists if you were to 
drill a well partially? Would there be any risk involving that 
and not tapping into the reservoir? Would there be tremendous 
risk, minimal risk? Is there a risk of having a blowout, as we 
did with the Deepwater Horizon?
    Mr. Tillerson. Congressman, in response to an earlier 
question, I commented that most of the--a lot of the well 
control issues and blowouts have occurred prior to ever 
reaching the objective. Shallow gas hazards, overpressured 
saltwater zones can lead to well control problems. The 
difference is you would not be having a lot of oil spilling out 
of the well, but you would still have a blowout condition. You 
might have natural gas coming out instead. So there is risk. It 
is a risk management process to drill the well to the 
objective.
    Mr. Cao. Now, if I were--in order to I guess address two 
concerns, one, the administration's need to have additional 
time to implement safety procedures and protocol, but, on the 
other hand, I'm facing the prospect of losing thousands of jobs 
in Louisiana because of the moratorium, would allowing 
companies to drill partially and not allowing them to tap into 
the oil reservoir, would that create tremendous risk?
    The reason why I'm looking into this possible solution is 
to, on the one hand, allow the administration the time to do 
all the safety checks but at the same time trying to keep the 
rigs from not going anyplace else. Because there is at this 
present moment a high demand for these rigs; is that correct.
    Mr. Watson. I have seen a proposal by Senator Landrieu to 
allow certain drilling operations take place. And we think it 
is important to put the industry back to work. As we said 
earlier, the industry, through the Joint Industry Task Force, 
has made recommendations and the Department of the Interior has 
made recommendations that can be employed.
    One of the things that I could comment on is, as we raise 
standards, it is important the MMS be adequately staffed to 
approve revised permitting procedures that are being put in 
place.
    Mr. Cao. Thank you. I yield back.
    Mr. Markey. The gentleman's time expired.
    The gentlelady from Texas, Ms. Jackson Lee, is recognized.
    Ms. Jackson Lee. Thank you very much, Mr. Chairman; and 
thank you for your courtesies.
    Some of us, as the chairman indicated, come from the region 
where so many constituents are impacted every single day by the 
conditions that we now face. Reminded that in the Gulf area we 
consider ourselves family. So many of my constituents are, some 
way or another, related to the energy industry.
    The gentlemen that sit before me really have a major 
opportunity that I think has been characterized by my 
colleagues who have questioned you today. There is certainly a 
high degree of mistrust by the American people, although after 
9/11 and the horrific tragedy and terrorist act Americans did 
get back on airplanes and seem to buy into the fact that this 
is part of the American life.
    I think you have a major challenge because you are looked 
upon in a distance. Maybe we know you somewhat in our local 
communities, but most of America has no stake in the energy 
industry. They don't know you.
    Most of the discussion on national energy policy is a 
divided discussion. Your lobbyists appeal to those on the other 
side of the aisle when they think it is appropriate and 
castigate some of us on the other side of aisle.
    So I would like to raise the question of really making the 
decision of national energy policy an American discussion, 
where we're not characterized from region, what political party 
we're from, what ethic background we're from, but we really 
come together and begin to assess how we can restore the faith 
to the American people that this is an industry that is part of 
our national security.
    You have failed. You have patently failed. You don't know 
us, and you don't want to know us.
    And so I'd ask this question very quickly. The main visual 
that is being shown shows the oil in the water. My question 
would be to each individual here, what would be your 
willingness of an investment in an R&D fund that would address 
immediately the question, and long term, of this question of 
oil in the water, the oil in the water now beyond the explosion 
and the tragic loss of life?
    And let me stop for a moment, again having met some of the 
victims' families, to offer again my deepest sympathy, as I did 
during the Texas City incident when some of my constituents 
were working there.
    But what is the investment that you would be willing to 
make on R&D on this question of oil in the water?
    Can I quickly ask Mr. Tillerson and, because my time is 
short, to go down the line in an answer.
    Mr. Tillerson. Well, Congresswoman, there is--we already 
spend money. There are academic studies under way. There are 
government-funded studies under way. And I think something the 
Presidential commission should consider is accumulation of what 
all currently is under way in the area of oil spill research 
and containment and cleanup and see if that's really being 
spent on the right things. And the commission I think can play 
a useful role in accumulating that, in determining whether that 
research needs to be better focused based on what we learned 
from this incident.
    Ms. Jackson Lee. Because my time is short, why don't I just 
say, would you be willing to have a fund set aside for R&D, 
just yes or no?
    Mr. Watson. We are willing to participate, yes.
    Mr. Mulva. Absolutely we are willing to participate.
    Mr. Odum. Yes.
    Mr. McKay. We've announced that we're doing a fund, $500 
million.
    Ms. Jackson Lee. Yes or no as to the willingness of the 
industry to come together and to design expanded and more 
detailed and more technically sophisticated recovery plans. Mr. 
Tillerson, yes or no?
    Mr. Tillerson. I think, based on what we learned from this, 
we will all want to do that.
    Ms. Jackson Lee. Just go down the line.
    Mr. Watson. Yes.
    Mr. Mulva. Yes.
    Mr. McKay. Yes.
    Ms. Jackson Lee. There is a cap on liability; and, of 
course, there are a number of legislative initiatives that are 
moving forward to remove the cap. I want to know whether the 
industry would support the removal of that cap longstanding. 
Mr. McKay.
    Mr. McKay. I haven't looked at all the policy around the 
different bills and ideas, but we have set up for this incident 
for us where that cap is irrelevant.
    Ms. Jackson Lee. May I have all the----
    Mr. Odum. I do think it is time to relook at the whole 
program, don't have a proposal on the cap.
    Mr. Mulva. Yes, I think we should look at considering 
raising it, but we need to do it in a way with informed 
judgment.
    Mr. Watson. We need to look at raising it in a way that 
will make it compatible with the appropriate amount of 
development that the Congress and the administration desires.
    Mr. Tillerson. I think, based on the incident, the whole 
question of the oil spill liability trust fund needs to be 
revisited; and I think we want to understand so what is the 
purpose of that trust fund and therein would give us some 
guidance on how to set that cap.
    Ms. Jackson Lee. Thank you.
    Mr. McKay, just very quickly, there are e-mails in our 
materials that call the well a crazy well, someone else making 
comments about they were nervous. There is a problem with the 
claims process, and I think you have to own up that it does not 
work.
    I'm asking you, Mr. McKay--Mr. Haber will be before the 
committee. Quickly, will you please answer, the establishment 
of a separate claims process, escrow to be able to make 
determinations, I don't think you can make determinations on 
what is legitimate. Oystermen and others and restaurants are 
all in shambles. Would you see to that? Would your company 
consider that, a separate claims process from BP?
    Mr. McKay. What we've said is we're going to get an 
independent mediator to help us, and we're looking at other 
suggestions to improve it. I can't say yes or no.
    Ms. Jackson Lee. Thank you, Mr. Chairman.
    I don't think that will work. I think we're dying in the 
Gulf. Beyond getting back to this issue of the moratorium, you 
have companies and restaurants that are shut down and people 
losing their jobs. You've got to improve the claim system, and 
you need to move now. Thank you.
    Mr. Markey. The gentlelady's time has expired.
    The chair makes a unanimous consent request to allow all 
members of the committee to submit questions for the record.
    Without objection, so ordered.
    This has been a historic hearing, but we are in a historic 
time. This is the single worst environmental disaster in our 
country's history, and the American people want to know how it 
happened, why the response is so inadequate, and what we are 
going to have to do in order to ensure that it never happens 
again. That is why the attention of the American people is 
riveted on this issue and you gentlemen who are the CEOs of the 
largest oil companies in our country.
    Mr. Tillerson said that you are not well equipped to deal 
with these sorts of spills. With all of the billions of dollars 
you make, you apparently can't afford the experts who can tell 
you collectively that walruses and seals don't live in the Gulf 
of Mexico, let alone the experts who can tell you how to 
prevent, respond to, and stop this leak.
    BP holds 37 leases in the Gulf of Mexico on which it drills 
for free, Exxon Mobil has 14, Chevron has 51, Shell has 28, and 
ConocoPhillips has 10. Between you all, that makes 140 leases 
on which you pay zero, not a penny in royalties to the American 
people or to the people of the Gulf for the right to drill for 
oil and reap billions and billions of dollars in profits.
    Yet when you're asked can you stop the massive quantities 
of oil that are now ruining the beaches and marshland, killing 
the wildlife, and devastating the economy, you say no. You say 
you're not well equipped to deal with it, and these 
catastrophic impacts are simply unavoidable. That is 
unacceptable to the people in the Gulf of Mexico. It is 
unacceptable to the people of our country.
    For years, you've gotten a free ride on some of your 
offshore drilling, which amounts to $50 billion in royalties 
not paid over the lifetime of these leases. At the same time, 
when your free ride results in a major disaster, what we have 
seen today is the collective answer that we cannot effectively 
deal with the consequences of a geyser coming from the bottom 
of the ocean.
    It is an embarrassment that your response plans are about 
seals and walruses and contain long-disconnected phone numbers 
for long-deceased experts. It is an embarrassment that of your 
billions of dollars you've spent less than one-tenth of 1 
percent on the development of safer technologies.
    Your industry needs to step up to the plate and recognize 
the need for change. You need to change your emergency 
responses plans. You need to strengthen your safety measures. 
You need to invest more in new safety, response, and 
alternative energy technologies.
    Mr. McKay, you must ensure that there is an independent 
capacity to guarantee that every claim is not going to be 
determined to be legitimate or not by the chief counsel of BP. 
There has to be an independent evaluation to ensure that 
legitimate claims are determined not by your own self-interest 
but by, in fact, an independent arbiter to ensure that these 
people are not harmed beyond that which they already have.
    This disaster is a wake-up call for your industry. You need 
to heed this call. You need to bring to the table the plans 
that ensure that this never happens again, that we never see a 
response like this again; and we are going to be moving 
legislation that will accomplish that goal.
    It would be better, however, if the industry was saying we 
understand now it just can't be voluntary. It has to be 
mandatory. These safety features and these response features, 
they have to be mandatory. We cannot any longer rely upon the 
voluntary. We see what the consequences for the people in the 
Gulf of our country.
    This hearing is adjourned.
    [Whereupon, at 2:24 p.m., the subcommittee was adjourned.]
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