[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
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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
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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:]
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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:]
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[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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[GRAPHIC] [TIFF OMITTED] 77911A.012
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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