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

                  THE ROLE OF BP IN THE DEEPWATER HORIZON

                          EXPLOSION AND OIL SPILL
    =======================================================================

                                    HEARING

                                   BEFORE THE

                  SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE

                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED ELEVENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 JUNE 17, 2010

                                   __________

                               Serial No. 111-137

          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 Oversight and Investigations

                        BART STUPAK, Michigan, Chairman
    BRUCE L. BRALEY, Iowa                GREG WALDEN, Oregon
      Vice Chairman                        Ranking Member
    EDWARD J. MARKEY, Massachusetts      ED WHITFIELD, Kentucky
    DIANA DeGETTE, Colorado              MIKE FERGUSON, New Jersey
    MIKE DOYLE, Pennsylvania             TIM MURPHY, Pennsylvania
    JANICE D. SCHAKOWSKY, Illinois       MICHAEL C. BURGESS, Texas
    MIKE ROSS, Arkansas
    DONNA M. CHRISTENSEN, Virgin
        Islands
    PETER WELCH, Vermont
    GENE GREEN, Texas
    BETTY SUTTON, Ohio
    JOHN D. DINGELL, Michigan (ex
        officio)

                                 C O N T E N T S

                                  ----------
                                                                       Page
    Hon. Henry A. Waxman, a Representative in Congress from the State
      of California, opening statement...............................     2
        Prepared statement...........................................     4
    Hon. Joe Barton, a Representative in Congress from the State of
      Texas, prepared statement......................................     7
        Prepared statement...........................................     9
    Hon. Bart Stupak, a Representative in Congress from the State of
      Michigan, opening statement....................................    14
        Prepared statement...........................................    17
    Hon. Michael C. Burgess, a Representative in Congress from the
      State of Texas, opening statement..............................    19
        Prepared statement...........................................    22
    Hon. Edward J. Markey, a Representative in Congress from the
      Commonwealth of Massachusetts, opening statement...............    28
    Hon. John Sullivan, a Representative in Congress from the State
      of Oklahoma, opening statement.................................    29
    Hon. John D. Dingell, a Representative in Congress from the State
      of Michigan, opening statement.................................    30
    Hon. Marsha Blackburn, a Representative in Congress from the
      State of Tennessee, opening statement..........................    31
    Hon. Bruce L. Braley, a Representative in Congress from the State
      of Iowa, opening statement.....................................    32
    Hon. Phil Gingrey, a Representative in Congress from the State of
      Georgia, opening statement.....................................    33
    Hon. Michael F. Doyle, a Representative in Congress from the
      Commonwealth of Pennsylvania, opening statement................    34
    Hon. Parker Griffith, a Representative in Congress from the State
      of Alabama, opening statement..................................    35
    .................................................................
    Hon. Janice D. Schakowsky, a Representative in Congress from the
      State of Illinois, opening statement...........................    36
    Hon. Robert E. Latta, a Representative in Congress from the State
      of Ohio, opening statement.....................................    37
        Prepared statement...........................................    39
    Hon. Mike Ross, a Representative in Congress from the State of
      Arkansas, opening statement....................................    42
    Hon. Donna M. Christensen, a Representative in Congress from the
      Virgin Islands, opening statement..............................    42
    Hon. Peter Welch, a Representative in Congress from the State of
      Vermont, opening statement.....................................    43
    Hon. Gene Green, a Representative in Congress from the State of
      Texas, opening statement.......................................    44
    Hon. Betty Sutton, a Representative in Congress from the State of
      Ohio, opening statement........................................    45

                                   Witnesses

    Tony Hayward, Chief Executive Officer, BP PLC....................    47
        Prepared statement...........................................    50

                               Submitted Material

    Submission for the record by Mr. Scalise.........................   136
    Letter of June 14, 2010, from the Committee to Mr. Hayward.......   228
    E-mail on BOP problems, dated November, 2009.....................   242
    Transocean abnormality report on BOP, dated November, 2009.......   244
    Transocean letter on BOP modifications, dated October 11, 2004...   247

        THE ROLE OF BP IN THE DEEPWATER HORIZON EXPLOSION AND OIL SPILL

                                  ----------

                            THURSDAY, JUNE 17, 2010

                      House of Representatives,
          Subcommittee on Oversight and Investigations,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 10:02 a.m., in
    Room 2123, Rayburn House Office Building, Hon. Bart Stupak
    [chairman of the subcommittee] presiding.
        Present: Representatives Stupak, Braley, Markey, DeGette,
    Doyle, Schakowsky, Ross, Christensen, Welch, Green, Sutton,
    Dingell (ex officio), Waxman (ex officio), Burgess, Sullivan,
    Blackburn, Gingrey, Latta, and Barton (ex officio).
        Also Present: Representatives Engel, Harman, Capps, Inslee,
    Gonzalez, Weiner, Melancon, Castor, Upton, Stearns, and
    Scalise.
        Staff Present: Phil Barnett, Staff Director; Bruce Wolpe,
    Senior Advisor; Greg Dotson, Chief Counsel, Energy and
    Environment; Michal Freedhoff, Counsel; Robb Cobbs, Policy
    Analyst; Caitlin Haberman, Special Assistant; Peter Kethcham-
    Colwill, Special Assistant; Dave Leviss, Chief Oversight
    Counsel; Meredith Fuchs, Chief Investigative Counsel; Alison
    Cassady, Professional Staff Member; Molly Gaston, Counsel; Ali
    Golden, Professional Staff Member; Jennifer Owens,
    Investigator; Scott Schloegel, Investigator; Ali Neubauer,
    Special Assistant; Derrick Franklin, Detailee; Karen Lightfoot,
    Communications Director, Senior Policy Advisor; Elizabeth
    Letter, Special Assistant; Lindsay Vidal, Special Assistant;
    Earley Green, Chief Clerk; Mitchell Smiley, Special Assistant;
    Alan Slobodin, Chief Minority Counsel; Mary Neumayr, Minority
    Counsel; Peter Spencer, Minority Professional Staff; Kevin
    Kohl, Minority Professional Staff; Garrett Golding, Minority
    Legislative Analyst; and Jeanne Neal, Minority Research
    Analyst.
        Mr. Stupak. This meeting will come to order. We are going
    to ask the press to please clear.
        This hearing of the subcommittee of the Energy and Commerce
    Committee, the Subcommittee on Oversight and Investigations,
    will commence.
        Today we have a hearing titled, ``The Role of BP in the
    Deepwater Horizon Explosion and Oil Spill.''
        We have a number of Members present for this hearing who
    are not members of the subcommittee but are members of the full
    Energy and Commerce Committee. I welcome them, and I note that
    they will be allowed to submit written statements for the
    record but will not deliver verbal opening statements.
        In addition, after all subcommittee members complete their
    questioning, full committee members will be allowed to ask
    questions. Members who are not on the subcommittee or on the
    Energy and Commerce Committee are welcome to observe, but they
    will not be permitted to provide opening statements or ask
    questions, due to time constraints.
        The chairman, ranking member, and chairman emeritus will be
    recognized for 5-minute opening statements. Other members of
    the committee will be recognized for 3-minute opening
    statements.
        I will yield to the chairman of the full committee, Mr.
    Waxman, for the first opening statement.

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

        Mr. Waxman. Thank you very much, Mr. Chairman. Thank you
    for holding this important hearing.
        And, Mr. Hayward, thank you for being here today.
        Yesterday, BP pledged to establish a $20 billion escrow
    account and to suspend its dividend payments for the rest of
    the year. I am sure these were not easy decisions for you, but
    they were the right ones, and I commend you for them.
        Congress has multiple committees examining the gulf oil
    spill. Some are evaluating the impact of the spill. Some are
    working on the reorganization of the regulatory agencies. And
    some, including Chairman Markey's subcommittee, are drafting
    legislation to reform our oil exploration laws.
        You are testifying today before the Oversight and
    Investigation Subcommittee, and this subcommittee has a special
    role: to examine the facts and determine what went wrong and to
    make recommendations to prevent future spills.
        When it is time for questioning, I and other members of the
    subcommittee will ask you about a series of internal BP
    documents. They appear to show that BP repeatedly took
    shortcuts that endangered lives and increased the risks of a
    catastrophic blowout. And I sent you a letter in advance
    indicating that we are going to question you about those
    issues.
        But what is equally important is what is missing from the
    documents. When you became CEO of BP, you promised to focus
    ``like a laser on safe and reliable operations.'' We wanted to
    know what you had done to keep this promise, so we asked what
    e-mails you had received, what documents you had reviewed about
    the Deepwater Horizon rig or the Macondo well before the
    blowout.
        Deepwater drilling is inherently dangerous. As the entire
    country now knows, an uncontrolled blowout can kill rig workers
    and cause an environmental disaster. We wanted to know whether
    you were briefed about the risks and were monitoring the safety
    of the drilling operation.
        We could find no evidence that you paid any attention to
    the tremendous risks BP was taking. We have reviewed 30,000
    pages of documents from BP, including your e-mails. There is
    not a single e-mail or document that shows you paid even the
    slightest attention to the dangers at this well.
        You are the CEO, so we considered the possibility that you
    may have delegated the oversight responsibility to someone
    else. We reviewed the e-mails and briefing documents received
    by Andy Inglis, the chief executive for exploration and
    production, and Doug Suttles, the chief operating officer for
    exploration and production and the person now leading BP's
    response to the spill.
        According to BP, these are the senior officials who were
    responsible for the Macondo well. But they, too, were
    apparently oblivious to what was happening. We can find no
    evidence that either of them received any e-mails or briefings
    about the Deepwater Horizon rig or drilling activities at the
    well.
        BP's corporate complacency is astonishing.
        The drilling engineer for the rig called Macondo a
    ``nightmare well.'' Other BP employees predicted that the
    cement job would fail. Halliburton warned of a ``SEVERE gas
    flow problem.'' These warnings fell on deaf ears.
        BP's corporate attitude may be best summed up in an e-mail
    from its operations drilling engineer who oversaw BP's team of
    drilling engineers. After learning of the risks and BP's
    decision to ignore them, he wrote, quote, ``Who cares, it's
    done, end of story, will probably be fine,'' end quote.
        There is a complete contradiction between BP's words and
    deeds. You were brought in to make safety the top priority of
    BP, but under your leadership, BP has taken the most extreme
    risks. BP cut corner after corner to save a million dollars
    here, a few hours or days there, and now the whole gulf coast
    is paying the price.
        Today's hearing will focus on BP's actions, but we learned
    from our hearing earlier this week that the other oil companies
    are just as unprepared to deal with a massive spill as BP. We
    are seeing in the oil industry the same corporate indifference
    to risk that caused the collapse on Wall Street.
        And that is why reform is so urgently needed. Part of this
    reform must be legislation to put teeth into our regulatory
    system, but part must also be a transition to a clean energy
    economy. We are addicted to oil. This addiction is fouling our
    beaches, polluting our atmosphere, and undermining our national
    security. We can't snap our fingers or transform our energy
    economy overnight, but we need to start down a path to a clean
    energy future.
        Mr. Chairman, I look forward to today's hearing.
        And, Mr. Hayward, I thank you for appearing and cooperating
    with our investigation.
        [The prepared statement of Mr. Waxman follows:]
        [GRAPHIC] [TIFF OMITTED] 77914A.001

        [GRAPHIC] [TIFF OMITTED] 77914A.002

        [GRAPHIC] [TIFF OMITTED] 77914A.003

        Mr. Stupak. Thank you, Mr. Chairman.
        We will next go to the ranking member of the full
    committee, Mr. Barton of Texas. Mr. Burgess and I will do our
    openings after the chair and the ranking.
        Mr. Barton, please.

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

        Mr. Barton. Thank you, Mr. Chairman.
        Thank you, Mr. Hayward, for appearing before us.
        We have kind of a dual track under way, in my opinion. We
    obviously are trying to gather the facts of what happened in
    the oil spill in the Gulf of Mexico a month and a half ago,
    trying to find out the causes of that spill, what can be done
    to prevent it in the future. And we are obviously very
    concerned about the mitigation and the cleanup.
        We have a system in America, built up based on the British
    tradition over 200 years, of due process and fairness, where
    people that do bad things, in this case a corporation that is
    responsible for a bad accident, we want to hold them
    responsible, do what we can to make the liable parties pay for
    the damages.
        Mr. Stupak and Mr. Waxman are doing an excellent job,
    working with Dr. Burgess and myself, in conducting, I think, a
    very fair oversight investigation. We are going to get into a
    number of those issues in this hearing, and we are going to ask
    you some pretty tough questions.
        I am speaking totally for myself. I am not speaking for the
    Republican Party. I am not speaking for anybody in the House of
    Representatives but myself. But I am ashamed of what happened
    in the White House yesterday. I think it is a tragedy of the
    first proportion that a private corporation can be subjected to
    what I would characterize as a shakedown--in this case, a $20
    billion shakedown--with the Attorney General of the United
    States, who is legitimately conducting a criminal investigation
    and has every right to do so to protect the interests of the
    American people, participating in what amounts to a $20 billion
    slush fund that is unprecedented in our Nation's history, that
    has no legal standing, and which sets, I think, a terrible
    precedent for the future.
        If I called you into my office and I had the subcommittee
    chairman, Mr. Stupak, with me, who was legitimately conducting
    an oversight investigation on your company, and said, ``If you
    put so many millions of dollars into a project in my
    congressional district,'' I could go to jail and should go to
    jail.
        Now, there is no question that British Petroleum owns this
    lease. There is no question that BP--I am sorry, it is not
    ``British Petroleum'' anymore--that BP made decisions that
    objective people think compromised safety. There is no question
    that BP is liable for the damages. But we have a due process
    system where we go through hearings, in some cases court cases,
    litigation, and determine what those damages are and when those
    damages should be paid.
        So I am only speaking for myself. I am not speaking for
    anybody else. But I apologize. I do not want to live in a
    country where, any time a citizen or a corporation does
    something that is legitimately wrong, is subject to some sort
    of political pressure that, again, in my words, amounts to a
    shakedown. So I apologize.
        But on this hearing today, I am with Mr. Waxman, with Mr.
    Stupak. There are questions that need to be asked, that are
    legitimate, because we don't want another oil spill of this
    magnitude or of any magnitude in the Gulf of Mexico. And if
    this subcommittee can do things that make it much more
    difficult for this type of an incident to occur in the future,
    then we will have done our work for the American people.
        With that, Mr. Chairman, I yield back.
        [The prepared statement of Mr. Barton follows:]
        [GRAPHIC] [TIFF OMITTED] 77914A.004

        [GRAPHIC] [TIFF OMITTED] 77914A.005

        [GRAPHIC] [TIFF OMITTED] 77914A.006

        [GRAPHIC] [TIFF OMITTED] 77914A.007

        [GRAPHIC] [TIFF OMITTED] 77914A.008

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

        Mr. Stupak. Thank you, Mr. Barton.
        I will do my opening statement now.
        Today is the 59th day of the BP oil spill that has
    devastated much of the Gulf of Mexico. Eleven men lost their
    lives the day the Deepwater Horizon drilling rig exploded, and
    in the 59 days that have followed, countless people have lost
    their livelihood, as the oil spill closes fishing grounds and
    pollutes the shores of the three States.
        This is the third hearing the Oversight and Investigation
    Subcommittee has held and the fifth hearing overall in the
    Energy and Commerce Committee. Our first hearing exposed
    problems discovered with the blowout preventer and several
    other factors that contributed to the disaster. Our second
    hearing was a field hearing in New Orleans where we heard from
    the widows of two men who died in the Deepwater Horizon
    explosion as well as shrimpers and other small-business owners
    who have suffered from the environmental catastrophe that
    followed.
        Our staff has spent weeks combing through hundreds of
    thousands of pages of documents, sitting through more than 50
    hours of briefings by corporate, governmental, and academic
    experts, in an attempt to piece together what went wrong with
    BP exploration of the Macondo well. We have reviewed several
    questionable decisions made by BP in the days and hours leading
    up to the explosion, and what we have learned so far is
    alarming.
        We have learned that, time after time, BP had warning signs
    that this was, as one employee put it, a ``nightmare well.'' BP
    made choices that set safety aside in exchange for cost-cutting
    and time-saving decisions.
        For example: BP disregarded questionable results from
    pressure tests after cementing in the well.
        BP selected the riskier of two options for their well
    design. They could have hung a liner from the lower end of the
    casing already in the well and install a tieback on the top of
    the liner, which would have provided additional barriers to the
    release of hydrocarbons. Instead, they lowered a full string of
    new casing, which took less time and cost less but did not
    provide the same protection against escaping hydrocarbons.
        BP was warned by their cement contractor Halliburton that
    the well could have a ``SEVERE gas flow problem'' if BP lowered
    the final string of casing with only six centralizers instead
    of the 21 Halliburton recommended. BP rejected Halliburton's
    advice to use additional centralizers. In an e-mail on April
    16th, a BP official involved in the decision explained, and I
    quote, ``It will take 10 hours to install them. I do not like
    this,'' end of quote.
        BP chose not to fully circulate the mud in the well from
    the bottom to the top, which was an industry-recommended best
    practice that would have allowed them to test for gas in the
    mud.
        BP chose not to use a casing hanger lockdown sleeve, which
    would have provided extra protection against a blowout from
    below.
        These are just a few of the issues that led to the
    disaster. Once the Deepwater Horizon exploded and sank to the
    bottom of the sea, BP's response to contain the leak and clean
    up the spilled oil was equally as poor. They issued lowball
    estimates of the amount of oil flowing from the well, which may
    have led to a scaled-back response.
        We discovered that BP's oil spill response plan was
    virtually identical to other oil companies' plans. In a hearing
    Tuesday, ExxonMobil CEO Rex Tillerson admitted that once the
    spills occur, he says, quote, ``We are not well-equipped to
    handle them,'' end of quote. All the other oil companies
    testified at Tuesday's hearings that they would not have
    drilled the well as BP did.
        Our witness today, Mr. Tony Hayward, is the chief executive
    officer of BP. Shortly after Mr. Hayward took over as the CEO
    in 2007, he held a town hall meeting with employees in Houston.
    At this meeting, he discussed the need for BP to be leaner,
    with fewer people in decision-making processes.
        This article--and I will ask you put up the Guardian
    article--an article from September 27, 2007, Guardian newspaper
    in London, entitled, ``Hayward Says Oil Company Has Become Too
    Cautious,'' reads, and I quote, ``'Assurance is killing us,'
    Mr. Hayward told U.S. staff, noting that too many people were
    engaged in decision-making, leading to excessive cautiousness,
    something that critics of its safety performance in the U.S.
    might question.''
        Let me put up these other notes from the same meeting. We
    received notes from BP of employees and their note-taking from
    this meeting. The employee notes summarize Mr. Hayward's
    statements as follows: ``I don't think having all these layer
    of assurance reduce risk, and it can actually increase it. The
    best way to reduce risk is to have deep technical competence
    where we need it. Individuals need to be accountable for risk
    and to manage it,'' end of quote.
        I find this cavalier attitude towards assessing risk
    unbelievable, given the fact that, at the time of these
    statements, BP had just been responsible for the largest oil
    leak in Alaska's history on the North Slope, as well as the
    2005 Texas City refinery explosion, which killed 15 workers and
    injured another 170.
        I must ask, Mr. Hayward, whether it was wise to adopt this
    leaner decision-making process with input from fewer people and
    a new approach to managing risk.
        Under the leadership of Bob Malone, the former chairman and
    president of BP America, BP created an independent office of
    the ombudsman, headed by Judge Stanley Sporkin. The ombudsman's
    office was established because line workers reported fearing
    retaliation if they reported safety concerns to management.
        When the current chairman and president, Lamar McKay, took
    over, I met with him, and he suggested that he hoped to improve
    the culture enough to make the ombudsman office unnecessary so
    he could shut it down. I urged him not to eliminate the office
    because it serves a significant role in investigating employee
    complaints.
        I am more concerned now than ever about BP's safety and the
    role they take in assuming risk. I am concerned that the
    corporate culture, from BPCEO Tony Hayward down to chairman and
    president of BP America, Lamar McKay, and Chief Operating
    Officer Doug Suttles, that there is a willingness to cut costs
    and take greater risks.
        I look forward to hearing Mr. Hayward answer the many hard-
    hitting questions that our committee members will ask today. I
    hope we will hear honest, contrite, and substantive answers.
        Mr. Hayward, you owe it to all Americans. We are not
    ``small people,'' but we wish to get our lives back. For the
    Americans who live and work on the gulf coast, it may be years
    before they get their lives back. For the Americans who lost
    their lives on the rig, their families may never get their
    lives back.
        Mr. Hayward, I am sure you will get your life back, and
    with a golden parachute back to England. But we in America are
    left with the terrible consequences of BP's reckless disregard
    for safety.
        I yield back my time and turn to the gentleman from Texas,
    Mr. Burgess, for an opening statement.
        [The prepared statement of Mr. Stupak follows:]
        [GRAPHIC] [TIFF OMITTED] 77914A.009

        [GRAPHIC] [TIFF OMITTED] 77914A.010

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

        Mr. Burgess. Thank you, Chairman Stupak.
        Today does open our third hearing, and a very critical
    hearing, into this subcommittee's ongoing investigation into
    the tragic accident of the Deepwater Horizon explosion and oil
    spill, which continues 24 hours a day to wreak economic and
    environmental havoc on our gulf coast.
        This hearing provides the subcommittee with an important
    opportunity to directly question the man who ultimately leads
    BP, Mr. Tony Hayward, the company's chief executive officer.
    And BP's role has been central to the causes of the incident
    and to the response.
        Over the course of our inquiry to date, committee
    investigators, working in a bipartisan fashion, have conducted
    numerous interviews and briefings and reviewed tens of
    thousands of pages of documents. Our subcommittee staff has
    done an excellent job. And this subcommittee has been focused
    on gathering the facts, rather than rushing to judgment.
        And from this intensive effort, we have begun to identify a
    number of serious questions about BP's decision-making that led
    up to the disaster. Exploring these and related questions today
    will help us identify for Congress and identify for the country
    what went wrong on April 20th and the days thereafter.
        And while we are investigating, a picture of the chain of
    events leading to this incident is emerging. Mr. Chairman, you
    and Chairman Waxman recently outlined some critical questions
    that we hope Mr. Hayward will address. For example, you noted
    the investigation has identified questionable choices by BP
    engineers to use a particular well design over another one that
    would appear to have provided more built-in barriers to an
    uncontrolled gas discharge.
        There was the choice made by BP to move forward with what
    appears to be an inadequate cementing plan and the related
    failure, despite clear warnings to test that the cement was
    properly set and in place. And it appears there may have been a
    rush to move off this well. Whether there may have been
    economic or other time or performance pressures or some
    combination thereof, it is not clear, but that clarity needs to
    emerge today.
        The questions arising from our investigation outline the
    central role that BP's decision-making appears to have had in
    this incident. We need to understand that decision-making, Mr.
    Hayward, what factors influenced it, whether the decisions
    reflected a management and an operational mindset that failed--
    failed to maximize safety in a challenging deep-sea
    environment.
        It is important to note that the picture developing from
    this investigation is not one of technological limits in deep-
    sea drilling. The construction of an 18,000-foot well was not
    pushing the envelope of engineering know-how, so far as we have
    identified. But the picture developing is one of unsafe
    industry practices. Although clear, more focused industry
    standards may be in order going forward, available evidence
    suggests that the use of best industry practices would have
    resulted in more cautious designs and more testing, more
    safeguards, and ultimately no loss of control of the well.
        Rather, and quite clearly, the picture developing from our
    investigation is one of questionable decision-making, decision-
    making by people charged with designing and successfully
    drilling, constructing, and controlling a well that was a mile
    under water. It is a picture composed of a series of choices
    which, taken together, created an oil well particularly
    vulnerable to a blowout and of all the people who may have been
    distracted, unaware, or resistant to recognizing the problems
    around them.
        Documents show that BP was prepared to run a test on the
    quality of the cement job but chose not to. I can't understand
    why, given the history of this particular well, with four
    previous well control incidents in the 2 months prior to April
    20th. The rig personnel appear to have taken their eye off the
    ball.
        BP employees were the key decision-makers. Certainly,
    others--contractors, subcontractors, certainly Federal
    regulators--may have contributed to this incident. The role of
    the Federal Government especially, including the overall
    effectiveness of the response and the efforts to help those
    harmed by the incident, remains a critical piece that, Mr.
    Chairman, we must pursue at the level of this committee. And I
    am still disappointed that we have not done that.
        But it is BP's decision-making about the well design, the
    cementing program, the preparation, the integrity test, or the
    lack thereof, or just the general lack of curiosity as to why
    these would be necessary, the failure to follow best practices,
    that our investigation to date is showing were critical factors
    in this incident.
        But this decision-making is difficult to square with avowed
    priorities of BP's chief executive. Mr. Hayward, in an
    interview before you became chief executive, you described how
    the death of a worker in an operation that you were leading in
    Venezuela shaped your opinions. You said, and I am quoting, ``I
    went to the funeral to pay my respects. At the end of the
    service, his mother came up to me and beat me on the chest.
    'Why did you let it happen?' she asked. It changed the way I
    think about safety. Leaders must make safety of all who work
    for them a priority,'' end quote.
        Mr. Hayward, I respectfully request that you answer this
    question in your opening statement, if not for me, then for the
    two ladies who testified before our committee at the field
    hearing who lost their husbands on the Deepwater Horizon. You
    have been chief executive since 2007. You said safety is your
    number-one priority and you would focus like a laser beam on
    safety.
        As chief executive, one would expect your directives and
    priorities would be carried out by your employees. We have now
    learned from this investigation that BP employees made five
    critical decisions that may have contributed to well failure
    where well safety was traded off. In fact, it was not the
    priority.
        So, today, will you assert before this subcommittee that
    all decisions by BP employees related to the Deepwater Horizon
    reflected your priority--your priority--of safety first?
        Mr. Chairman, the disaster in the Gulf of Mexico shows the
    consequence of a series of unchecked bad decisions. We in
    Congress and the Federal Government must also be mindful of the
    consequences of bad decision-making. At a field hearing last
    week in Chalmette, Louisiana, the subcommittee heard some of
    the administration's decisions are threatening the livelihoods
    of workers and families who depend upon the energy industry. We
    have killed half of their fishing with the Deepwater Horizon
    spill, and it looks like we are going to kill the other half of
    their economy with our moratorium.
        Our hearing today looks at the consequence of bad decisions
    and the lessons learned. May we have the wisdom and humility to
    take some of those lessons and apply them to ourselves.
        And I will yield back the balance of my time.
        [The prepared statement of Mr. Burgess follows:]
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        Mr. Stupak. Thank you, Mr. Burgess.
        I would next like to turn to the chairman of the Energy and
    Environment Subcommittee and chairman of the Select Committee
    on Climate, Mr. Markey, 5 minutes for an opening statement,
    please.

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

        Mr. Markey. Thank you, Mr. Chairman, very much.
        I want to begin by disagreeing in the strongest possible
    terms with what Mr. Barton said in his opening statement.
        Not only is the compensation fund that was created
    yesterday at the White House in an agreement reached between BP
    and President Obama not a slush fund and not a shakedown;
    rather, it was the Government of the United States working to
    protect the most vulnerable citizens that we have in our
    country right now, the residents of the gulf. It is BP's spill,
    but it is America's ocean and it is American citizens who are
    being harmed.
        We cannot wait, as unfortunately so many citizens who were
    victims of the Exxon Valdez spill had to wait years in order to
    see those families compensated. We can't lose sight of the fact
    that the 1984 Bhopal disaster and the lawsuits that were
    related to it were only settled last week. We have to ensure
    that the citizens of the gulf are protected.
        In a hearing which this subcommittee conducted in New
    Orleans last Monday, we heard from a fisherman who brought
    absolutely impeccable records which proved that he and his
    family had made $27,000 last May. And, after examining the
    documents, BP gave the family $5,000.
        The families in the gulf will be crushed financially unless
    this compensation fund is put into place. As each day and week
    and month goes by, the history of these families are going to
    be altered, and permanently altered, unless they are given the
    financial capacity to take care of their loved ones, their
    children, their families.
        That is why this compensation fund is so important. That is
    why it is not a slush fund. That is why it is not a shakedown.
        It is, in fact, President Obama ensuring that a company
    which has despoiled the waters of our Nation is made
    accountable for the harm which is done to our people--a company
    which said for the first week that it was only 1,000 barrels of
    oil per day, when we now know that they knew it was at least
    1,000 to 14,000 barrels; a company which continues to deny that
    there are underwater toxic plumes; a company which has not been
    providing the proper protective gear for the workers in the
    gulf; a company which contended it could respond to a spill of
    250,000 barrels per day.
        No, this is not a shakedown of their company. This is the
    American Government, President Obama ensuring that this company
    is made accountable and sending a signal to all other companies
    that seek to treat ordinary American families in a way that can
    destroy their entire family's history.
        This is, in my opinion, the American Government working at
    its best. This is creating truly the kind of partnership
    between the public and private sector that can make sure that
    innocent victims are not roadkill as a result of corporate
    plans that did not actually factor in the harm that can occur
    to ordinary families.
        So I just could not disagree more strongly. I think that
    this is, in my opinion, one of the most important hearings that
    this Congress will ever have, because it is sending a signal to
    any corporations out there, including the ones that testified
    on Tuesday that all admitted that they had no plans either to
    respond to the harm which could be done in the gulf if one of
    their rigs had the same kind of catastrophic event, that they
    will be made accountable.
        So I thank you, Mr. Chairman, for holding this hearing.
        And I thank you, Mr. Hayward, because yesterday was the day
    where the page began to be turned and we moved to a new era
    where, in fact, your company is made accountable and the
    citizens of the gulf are made whole.
        Thank you, Mr. Chairman.
        Mr. Stupak. Thank you, Mr. Markey.
        I next turn to Mr. Sullivan for an opening statement. Three
    minutes, please, sir.

     OPENING STATEMENT OF HON. JOHN SULLIVAN, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF OKLAHOMA

        Mr. Sullivan. Chairman Stupak, thank you for holding this
    hearing today.
        On April 20, 2010, a fire and explosion occurred on the
    British Petroleum-Deepwater Horizon oil rig in the Gulf of
    Mexico. This terrible disaster resulted in the loss of 11 lives
    and injured many more members of the 126-person crew.
        There is no question that the BP oil spill is a tragedy. In
    fact, it is the worst environmental disaster in our Nation's
    history. I believe we must do everything in our power to cap
    the leak, find out what caused the explosion, and ensure
    nothing like this ever happens again.
        BP must bear the entire financial burden for this disaster,
    and the American taxpayer should not be on the hook for a dime.
        According to the Occupational Safety and Health
    Administration, there is mounting evidence that BP has one of
    the worst safety records of any major oil company operating in
    the United States. To this end, I am looking forward to
    examining with Mr. Hayward whether there is a deficient safety
    culture at BP that led to this disaster and other recent ones,
    including the BP refinery explosion in 2005 in Texas City,
    Texas, and a BP pipeline spill in 2007 which released 200,000
    gallons of oil into the Alaskan wilderness.
        Mr. Hayward, why is BP's record on safety so spotty?
        What is equally as important as our efforts to combat the
    spill is the knee-jerk legislative reaction from this Congress.
    Right now, the administration and their allies in the House are
    more focused on the politics of putting the oil and gas
    industry out of business than on solutions to the problem.
        Instead of working in a bipartisan way to push for rigorous
    safety standards on all offshore rigs, the administration is
    exploiting this disaster to advance this disastrous cap-and-
    trade energy policy, which won't stop the well from leaking
    but, rather, will only serve as a national energy tax on the
    American people, crippling our economy and making the
    unemployment lines longer.
        I believe Congress should work towards implementing
    rigorous safety inspection standards for all offshore rigs, but
    with nearly 30 percent of our Nation's oil and 11 percent of
    our gas reserves located offshore, a ban on offshore drilling
    will only put Americans out of work. And it will send energy
    and gas prices through the roof and increase our reliance on
    foreign, imported oil.
        We still have work to do to uncover exactly what went
    wrong, and many questions remain on the ongoing efforts to
    contain the leak. This tragedy should not be used as an excuse
    to roll back the gains we have made in finding new ways to
    develop our energy resources, as we will need more oil and
    natural gas to meet the crucial needs of our Nation.
        And I yield back the balance of my time.
        Mr. Stupak. Thank you, Mr. Sullivan.
        Next we would like to hear from the chairman emeritus of
    the Energy and Commerce Committee, Mr. Dingell of Michigan, for
    5 minutes, please, sir.

    OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF MICHIGAN

        Mr. Dingell. Mr. Chairman, I commend you for holding this
    important hearing today.
        We sit here on day 59 of the worst environmental disaster
    in the history of this country. Eleven people are dead. The
    already-fragile economy of an entire region is in real danger
    of shattering. We will be feeling the environmental
    consequences for years to come.
        And God Almighty alone knows what the health and
    environmental effects of the containment and cleanup strategies
    will be--millions of gallons of chemical dispersants and
    controlled burns. Sadly, we can't even get a decent estimate of
    the amount of oil and gas that is spewing out into the water.
        BP has been before this committee many times, and rarely
    has it been a pleasant meeting, because invariably they have
    appeared here to defend serious failures on the part of the
    company. The company has a history of cutting corners,
    apparently for the almighty dollar.
        Texas City, they paid there $50 million in criminal fines.
    Alaska's North Slope, which was investigated by this
    subcommittee, where a pipe corroded, allowing 1 million liters
    of oil to spill. In each instance, we were hoping, but the
    assurances given by BP that this would not happen again have
    been, regrettably, untrue.
        In reference to a decision on how to secure the final 1,200
    feet of the well, a single casing, or tieback, a BP engineer
    said, ``Not running the tieback saves a good deal of time and
    money.''
        In reference to installing more centralizers, BP's well
    team leader said, ``It will take 10 hours to install them. I do
    not like this. I am very concerned about using it.'' So, also,
    were we.
        On the same matter, BP's operations drilling engineer said,
    ``Even if the hole is perfectly straight, a straight piece of
    pipe even in tension will not seek the center of the hole
    unless it has something to centralize it.'' And I want you to
    listen to this. ``But who cares? It is done. End of story. It
    will probably be fine''--and note the word ``probably''--``and
    we will get a good cement job. I would rather have to squeeze
    than get stuck. So guard right on the risk-reward occasion.''
        Mr. Chairman, the comments of our witness today reveal
    little sorrow for the events that have occurred. And here he
    said, ``The Gulf of Mexico is a very big ocean. The amount of
    volume of oil and dispersant we are putting in is tiny in
    relation to the total water volume.'' And then, ``The
    environmental impact of the disaster is likely to be very, very
    modest.'' I wonder if he wishes to stand on that statement
    today.
        When Mr. Hayward responded to the claims that cleanup
    workers were becoming ill because of oil fumes and such, he
    said this: ``Food poisoning is clearly a big issue.''
        And, finally, most famously, Mr. Hayward informs us he
    ``wants his life back.''
        Last year, Mr. Hayward enjoyed a splendid 41 percent pay
    raise, even as BP's profits dropped 45 percent. Now, I just
    happen to be a poor Polish lawyer from Detroit, but it seems to
    me that this is a curious response to a drop in profits. It
    makes me wonder what the compensation package of our witness
    will be this year.
        Mr. Chairman, again, I thank you for your diligence and
    hard work on this issue. I look forward to hearing from our
    witnesses today and look forward to working with you on this
    matter. Thank you.
        Mr. Stupak. Thank you, Mr. Chairman.
        Next, Mrs. Blackburn for an opening statement, please.

    OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF TENNESSEE

        Mrs. Blackburn. Thank you, Mr. Chairman. I thank you and
    Ranking Member Burgess for holding the hearing today.
        Mr. Hayward, I thank you for your willingness to testify
    before this committee.
        You know, when news of the BP spill began and information
    about the well started to circulate, it seemed that there were
    problems not only with BP but also with the MMS bureaucracy and
    that maybe the problem lay there, rather than with anything
    that could have gone wrong with BP, that it was there with MMS.
        What we have learned and confirmed is that that is not
    correct, that the problem does lie with BP in what went wrong.
    And while there are many faults with MMS in doing its job on
    inspection and safety oversight, most of the data now points to
    wrong decision-making by BP's management.
        And this is not the first time--and we have talked about
    that in several of our opening statements this morning--it is
    not the first time that you have been before this committee on
    safety problems. And, certainly, as recently as the Texas 2005
    and Alaska 2007 incidents, which revealed insufficient
    protocols in BP's management and safety hierarchy, there was
    this statement from BP that you all would, quote/unquote,
    ``focus like a laser on safety.''
        And it is concerning to us that the appearance is, Mr.
    Hayward, that BP has not learned from previous mistakes. So it
    leaves us asking the questions of you and of BP: Was this
    accident caused by negligence? It was caused by risk-taking?
    Was it caused by cost-cutting measures by BP decision-makers?
        And, unfortunately, for citizens, beaches, and wildlife all
    along the coastal region, they are paying a price for those
    misplaced decisions. BP cannot blame Mother Nature or equipment
    failure or even other subcontractors. Their actions have put at
    risk the livelihood of communities and businesses that depend
    on the gulf not only for seafood and tourism but also energy
    production that this Nation as a whole relies upon.
        In addition, the current administration also shares a
    significant portion of the blame for the oil spill. I mentioned
    MMS earlier. And the MMS officials approved inadequate spill
    response plans, and field inspectors rubber-stamped inspection
    papers submitted by oil companies. This is another area where
    we, as Members of Congress, in doing our due diligence, will
    ask you all and MMS why.
        But what is the most damaging is that the President and
    senior officials knew on day one the blowout preventer was not
    working and knew of the potential spillage. While BP shoulders
    much of the responsibility for this spill, the lack of effort
    by this administration to contain the spill has doomed the
    economy and wildlife of the gulf coast from an oil spill which
    could have been contained.
        And now, recently imposed drilling moratoriums will further
    devastate America's energy production and will destroy hundreds
    of thousands of jobs in the gulf coast region.
        Thank you for being with us today.
        Mr. Chairman, I yield back the balance of my time.
        Mr. Stupak. Thank you.
        We will next turn to the vice chairman of the subcommittee,
    Mr. Braley, for an opening statement. Three minutes, please,
    sir.

    OPENING STATEMENT OF HON. BRUCE L. BRALEY, A REPRESENTATIVE IN
                    CONGRESS FROM THE STATE OF IOWA

        Mr. Braley. Thank you, Mr. Chairman.
        Mr. Hayward, you are not going to get a lecture from me
    today, and you are not going to get an apology either, because
    we are here to get to the bottom of the decision-making process
    that BP followed, and I think, quite frankly, the people who
    live along the affected area of the gulf coast deserve those
    answers from you.
        We were in Chalmette, Louisiana, last week, and we had the
    opportunity to hear from a variety of individuals whose lives
    have been devastated by this oil disaster. And I use the word
    ``disaster'' specifically because I don't think ``spill'' quite
    captures the magnitude of what is going on.
        The American people are frustrated because we were first
    told that this was a 1,000-barrel-per-day release, and then
    about a week later that was updated to 5,000 barrels per day,
    and then at the end of May it was adjusted upward to 15,000 to
    19,000 barrels per day, and then this week we were informed
    that it could be as high as 60,000 barrels per day. That works
    out to 2.5 million gallons a day, 17.5 million gallons per
    week. And over the length of this disaster, it could be up to
    the level of the largest release of oil in the North American
    continent in history, unintended.
        One of the things I think we need to know about today is
    the decisions that your company made and who made them that led
    to this explosion and the subsequent disaster, what your
    company is doing to fix this enormous problem, and about your
    future commitments to all of the affected workers, families,
    and communities who have been devastated by this disaster.
        And I think it would be helpful for you and everybody in
    this hearing room to hear from the two women who testified at
    our hearing in Louisiana last week, because they raised some
    very pointed questions that were directed to your company, sir.
    And they were questions that were raised after they gave
    passionate testimony of wanting the oil and gas business to
    continue in Louisiana and the gulf coast region.
        So I would like to have you listen to their comments in the
    hearing. This is Natalie Roshto.
        [Video played.]
        Mr. Braley. These are now widows with small children to
    take care of, and they are the symbols and the faces of this
    disaster.
        And I look forward to your testimony.
        I yield back the balance of my time.
        Mr. Stupak. Thank you.
        We will next turn to Mr. Gingrey from Georgia for a 3-
    minute opening statement, please.

      OPENING STATEMENT OF HON. PHIL GINGREY, A REPRESENTATIVE IN
                   CONGRESS FROM THE STATE OF GEORGIA

        Mr. Gingrey. Thank you, Mr. Chairman.
        First, I want to again express my sorrow to the families of
    those who lost their lives on April the 20th, 2010.
        Through all the hearings and legislative consideration, we
    must remember those lives and the lives of their families, as
    we just saw, that were forever changed on that fateful April
    day. And we certainly must continue to keep them in our
    thoughts and in our prayers.
        Further, we have an obligation, not only to those families
    but also to everyone affected by the aftermath, to get to the
    bottom of the causes of this accident and the failure to secure
    the situation and stop the devastation wreaked upon the gulf
    coast.
        Mr. Chairman, we have an opportunity in this oversight
    hearing to ask questions that get to the facts of what
    happened. However, today's hearing is incomplete. We can only
    ascertain half of the story today because we do not have anyone
    representing the administration, the Minerals Management
    Service, to discuss their oversight role and their
    responsibility in ensuring that an accident like this didn't
    happen.
        Deep-ocean drilling is not new. In fact, we have been doing
    it for decades in the gulf coast. Why did this happen now? I
    have heard some assert that it was the lax oversight of the
    previous administration that led to this accident. Well, if
    that is the case, why did this not happen during the last
    decade? Why did this occur almost a year and a half into the
    current administration?
        We need to hear from our own Department of Interior and the
    Minerals Management Service. Certainly, Mr. Hayward should be
    prepared to answer for BP's responsibility, but we will also
    need answers from the administration so that we can demand
    accountability and implement prudent reforms to return us to
    safe drilling in our oceans. Because simply saying ``no'' to
    further and new drilling is not a realistic answer.
        I further realize there are some in this administration who
    have a penchant for not letting a crisis go to waste. But for a
    nation dependent on foreign oil, for a nation with unemployment
    hovering at 10 percent, we can't just say we can't do this. We
    can't take our ball and go home, when the consequences mean a
    weaker America. Everyone dependent on foreign fuels are all too
    inclined, it seems, to let jobs leave this country.
        No, Mr. Chairman. We have to understand what happened on
    and leading up to April 20th. We need to answer those questions
    to determine if the rules or the agency oversight were
    insufficient or if this was purely an act of negligence or
    wanton disregard for sound regulations. Now, we can try to
    enact the perfect reform that ensures this never happens again,
    but it will not change the path or the toll upon the lives
    forever changed.
        Mr. Hayward, the responsibility to make these families
    whole falls to you and your company, BP. You have an obligation
    to right this wrong, and not only the public trust but also the
    belief in the free market and entrepreneurship demand it.
        And, Mr. Chairman, I await the opportunity to ask
    questions, with the hope that we will soon discuss these same
    matters with our own administration.
        And I yield back.
        Mr. Stupak. Thank you, Mr. Gingrey.
        Ms. DeGette for an opening statement, 3 minutes, please.
        Ms. DeGette. Mr. Chairman, as this is an investigative
    hearing, I will submit my excellent opening statement for the
    record in order to have more time for questioning the witness.
        Mr. Stupak. Very well.
        [The prepared statement of Ms. DeGette was unavailable at
    the time of printing.]
        Mr. Stupak. Mr. Doyle, opening statement?

    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 so we can begin to understand what went so
    tragically wrong on the Deepwater Horizon.
        We are now 59 days into this environmental and economic
    tragedy, and oil continues to gush into the Gulf of Mexico. The
    estimates for how much oil spills into the gulf each day
    continue to rise, and we still have no way to cap the well in
    the near future. We sit helplessly as we wait for a relief well
    to be completed.
        As the details and facts about Deepwater Horizon come to
    light, it is clear to us all that the decisions made by
    officials at BP reflected bad judgment at best and criminal
    negligence at worst. Through this committee's investigation, we
    have learned that, at nearly every turn, BP cut corners. In
    well design, the number of centralizers they used, whether to
    run a cement bond log, circulating drilling muds and securing
    the wellhead with a lockdown sleeve, BP took the path of least
    resistance.
        On Tuesday, colleagues and competitors from the oil and gas
    industry provided sworn testimony that they believed BP had
    delinquencies in well design and failed to follow the best
    practices of the industry. Now we learn that BP had several
    warnings about the Macondo well, with one of their own
    engineers calling it a ``nightmare well.'' But instead of
    treating the well with caution, it seems that BP's only
    interest was in completing the well quickly and cheaply.
        Many questions still need to be answered. Were BP employees
    on the Deepwater Horizon given orders from BP officials to
    speed up the Macondo well? Were they told to slash costs
    wherever possible? Why would a team onboard the rig that tests
    the cementing of the well be sent home before performing the
    test? Surely if a cement bond log was ever necessary, it would
    be in a ``nightmare well'' situation. But sending the team
    home, BP saved $100,000 and 9 or 10 hours of work.
        Mr. Hayward, I hope you are here today to answer questions
    about the decision made on Deepwater Horizon that led to this
    tragic and deadly blowout. Earlier this week, this committee
    sent you a letter with detailed information about topics we
    would like you to address today. In reviewing your statement
    submitted for today's hearing, I am extremely disappointed in
    your avoidance of the requested topics. I certainly hope that
    you use the opportunity today to answer our questions openly
    and truthfully.
        I know BP has committed to clean up the gulf region, and I
    expect that commitment to be ongoing. I welcome your pledge to
    pay damages through a $20 billion escrow fund. But that is just
    the tip of the iceberg. Rebuilding the public's trust in your
    company and your industry will take years and many serious
    changes in the way you do business.
        When you operate on our land and in our waters, you are
    only there because the public's trust has allowed you to be
    there. You violated that trust in the worst possible way.
        Mr. Hayward, I look forward to your testimony. I look
    forward to your answers to our questions and your ongoing
    efforts to regain America's trust.
        Mr. Chairman, I yield back.
        Mr. Stupak. Thank you, Mr. Doyle.
        Mr. Griffith for an opening statement, 3 minutes, please.

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

        Mr. Griffith. Thank you, Mr. Chairman and Ranking Member,
    for calling this important hearing today and, Mr. Hayward, for
    taking time to come before our subcommittee to discuss what
    happened on the Deepwater Horizon.
        I know that, like us, your number-one priority is stopping
    the flow of oil. Congress and this committee owe it to the
    American people to do whatever we can to aid the unified
    command in reaching this goal. This is a time for engineering
    and action, and I hope you will let us know what we can do in
    Congress to be helpful.
        There are still many questions to be answered about what
    happened on the Deepwater Horizon, and unfortunately we do know
    that, from the documents that we are reviewing, it does not
    look good.
        My hope for our hearing today is that we will be able to
    put political public-relations shenanigans aside and focus on
    understanding why decisions were made and how BP and the
    industry can ensure that they learn from this incident so that
    drilling safely for our valuable resources can continue.
        And I might say this to you: You are never as good as they
    say you are or as bad as they say you are. So this hearing will
    go back and forth.
        The other thing I would like to remind the committee is
    that the greatest environmental disaster in America has been
    cigarettes. Sixty thousand Americans this year will die from
    cigarette-related cancer. So if we are going to talk about the
    environment, let's be sure we don't leave that out. I am a
    cancer specialist, by the way, by training, and I never fail to
    bring that up.
        So the environment is an important concept. We regret the
    loss of life. But there is much that we can do and we will put
    this in perspective. This is not going to be the worst thing
    that has ever happened to America.
        Thank you.
        Mr. Stupak. Ms. Schakowsky, 3 minutes opening statement,
    please.

           OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A
         REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

        Ms. Schakowsky. Thank you, Mr. Chairman.
        At this very moment oil is gushing from the Deepwater
    Horizon blowout at a rate between, we learned, 35,000 and
    60,000 barrels a day, killing animals, destroying fragile
    wetlands, and wiping out entire populations of fish, and along
    with it the jobs of hundreds of thousands of people.
        Most upsetting about this travesty is that it could have
    been avoided. As the ongoing investigation by this committee
    has already discovered, BP executives created an atmosphere
    where safety concerns were ignored in order to ensure that the
    company's already staggering profits this year, approximately
    $93 million a day in the first quarter, continued unabated.
    This appalling disregard for the Gulf Coast and its inhabitants
    is without question one of the most shameful acts by a
    corporation in American history.
        Sadly, the Deepwater Horizon spill is just the most
    significant example of BP's disregard for the environment and
    the well-being of its workers. A report published by the Center
    for Public Integrity found that between June 2007 and February
    2010, BP received a total of 862 citations from the
    Occupational Safety and Health Administration. Of those, a
    staggering 760 were classified as being egregious and willful,
    compared with 8 at the 2 oil companies tied for second place.
        Inexcusably this pattern of behavior continued in the
    spill's aftermath. I hold in my hand a document called
    Voluntary Waiver of Release that BP made unemployed fishermen
    sign before they could be hired for spill cleanup. The waiver
    states, I hereby agree on behalf of myself and my
    representatives to hold harmless and to indemnify and to
    release, waive and forever discharge BP Exploration Production,
    Inc., from all claims and damages that I or my representatives
    may have with regard to my participation in the spill response
    activities.
        I know that you said this was an early misstep and that
    this was just a standard document, but this was a first
    response that you had to people that were hired. And outrage
    does not begin to express my feeling. These are people who are
    unemployed because of the recklessness of BP, forced to take
    jobs cleaning up BP's mess in order to survive, yet to qualify
    for those jobs they had to hold BP harmless for any further
    damages that they may suffer in BP's employ. This from a
    company that made $93 million a day.
        Fortunately, a court trumped your fancy lawyers who wrote
    this document, but still it begs the question, how could you do
    that?
        I am glad that you are here, Mr. Hayward. I expect you to
    explain why your company has operated in such a wholly
    unacceptable manner. In the final analysis, the simple fact
    remains that if BP had thought more about the residents, as
    these widows said, and the workers, as these widows said,
    rather than the already exorbitant profits of its shareholders,
    we would not be here today.
        I yield back.
        Mr. Stupak. Mr. Latta for an opening statement, 3 minutes,
    please.

    OPENING STATEMENT OF HON. ROBERT E. LATTA, A REPRESENTATIVE IN
                    CONGRESS FROM THE STATE OF OHIO

        Mr. Latta. Thank you, Mr. Chairman, Ranking Member Burgess.
    I want to thank you for holding this subcommittee hearing on
    the role of BP in the Deepwater Horizon oil rig explosion and
    the ongoing oil spill in the Gulf of Mexico.
        First and foremost, I also want to extend my heartfelt
    condolences to the families of those who have lost loved ones
    and to those who have been injured. The unprecedented scale of
    the spill and its increasing harmful impact on the gulf economy
    and environment demand a thorough investigation of BP's actions
    and inactions, as well as BP's current and future plans.
        The flow of oil must be stopped. Every day anywhere from
    35,000 to 60,000 barrels are spilling into the gulf, and only
    15,000 barrels a day are being captured. The environmental
    effects on the oil spill are harming shorelines and coastal
    wetlands, fisheries and fishery habitat, as well as marine
    mammals and sea turtles. What is worse, we will not fully know
    the ecological ramifications of the oil spill until years down
    the road. Furthermore, local businesses suffering great losses,
    including jobs and revenues that are dependent on tourism, are
    being threatened.
        The NOAA announced a revised commercial recreation fishing
    closure in the oil-affected portions of the Gulf of Mexico,
    accounting for 33 percent of the Gulf of Mexico's exclusive
    economic zone. As oil continues to flow, this area is sure to
    enlarge, further exasperating the economic damage. A recent
    economic impact study by the American Sportfishing Association
    indicated that the entire Gulf Coast will close to recreational
    fishing from May through August. The region will lose $1.1
    billion in revenue, which supports 2.5 billion in total sales,
    1.3 billion value added, 811.1 million income and 18,785 jobs.
    This potential economic damage is devastating to an area that
    has already suffered greatly from the aftermath of natural
    disasters.
        Americans continue to be frustrated at the lack of
    management and solutions from all parties involved, and I am
    interested to hear more about the coordinated efforts between
    BP and the administration. The economic and environmental
    magnitude of this disaster necessitates a clear understanding
    of what went wrong, and BP needs to be held accountable for the
    disaster.
        I also look forward to having MMS and the Department of
    Interior before this subcommittee to also--for them to answer
    some tough questioning.
        I look forward to hearing Mr. Hayward's testimony, and I
    yield back the remainder of my time. Thank you.
        Mr. Stupak. Thanks, Mr. Latta.
        [The prepared statement of Mr. Latta follows:]
        [GRAPHIC] [TIFF OMITTED] 77914A.017

        [GRAPHIC] [TIFF OMITTED] 77914A.018

        [GRAPHIC] [TIFF OMITTED] 77914A.019

        Mr. Stupak. Mr. Ross, 3 minutes opening statement, please,
    sir.

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

        Mr. Ross. Thank you, Chairman Stupak, for holding today's
    hearing to examine BP's actions and decisions that directly led
    to the tragic explosion and oil spill that continues to gush
    and wreak havoc on the Gulf Coast at a rate up to over 1,700
    gallons per minute. In fact, Mr. Hayward, since this hearing
    began a little over an hour ago, up to 112,847 gallons have
    been dumped into the gulf.
        On day 59 of this environmental and economic disaster, with
    up to 60,000 barrels a day spilling into the gulf, I continue
    to be frustrated and downright angry by BP's response and lack
    of a clear and productive plan to stop the leak or efficiently
    clean up the oil that is destroying the ecosystems that
    surround the gulf.
        Reports have surfaced revealing that in the days and weeks
    before the explosion, BP knowingly made a number of decisions
    that increased the danger of an explosion and spill occurring.
    It seems apparent that BP put profit before safety. Many people
    are dead; millions of gallons of oil continue to spew into the
    gulf. I am hopeful that Mr. Hayward can explain today why these
    decisions were made, how his company's actions led to this
    disaster, and what they are doing to remedy it.
        As oil floats into the marshes and onto the beaches, as
    shrimping vessels sit tied to docks, as restaurants and
    businesses during their peak season remain without tourists and
    customers, and as homeowners see their property values plummet,
    the people and wildlife of the Gulf Coast wait and wonder about
    how extensive the damage to the ecosystem or the economy will
    be.
        This spill is not only affecting the Gulf Coast, the jobs
    and economies of the surrounding States are hurting as well. My
    State of Arkansas borders Louisiana, and many of my
    constituents, people I know in my hometown, work on offshore
    rigs. These jobs are also at risk, and I hope BP will take
    responsibility for all those who are affected by this spill,
    regardless of where they live, and work to help pull them
    through this disaster as well.
        This bill is a wake-up call that must result in better
    government oversight, more advanced technology, stronger
    response plans and improved safety standards not only by BP and
    every oil company in America, but also by our government. Above
    all, this disaster is a learning experience that will help us
    prevent a tragedy like this from ever happening again, and I am
    hopeful this hearing can provide the answers and solutions
    necessary to begin that process.
        Mr. Hayward, I truly hope that you will give us open and
    honest answers today and not those prepared by your legal team.
        With that, Mr. Chairman, I yield back.
        Mr. Stupak. I would next like to call on Mrs. Christensen
    of the Virgin Islands for an opening statement, please.

           OPENING STATEMENT OF HON. DONNA M. CHRISTENSEN, A
           REPRESENTATIVE IN CONGRESS FROM THE VIRGIN ISLANDS

        Mrs. Christensen. Thank you, Mr. Chairman, and thank you
    for holding this important hearing.
        The explosion on the Deepwater platform and the subsequent
    outpouring of hundreds of thousands of gallons of oil into one
    of the most sensitive and important bodies of water in their
    country is indeed a tragic accident which caused 11 deaths,
    many injuries and will have deep, longlasting, debilitating and
    expensive repercussions. The people of this country need to
    know what happened and who is responsible.
        All that has transpired since April 20 says to me that not
    only BP, but no company that is drilling anywhere in our Outer
    Continental Shelf is prepared to deal with a spill at this
    depth. They are all there applying the best efforts, using the
    best available technology, and still 59 days later an end is
    not in sight. This is not acceptable.
        What has also become clear is that while BP repeatedly used
    shortcuts, they were warned not to, which may have turned out
    to have caused the explosion, the deaths, injuries and the
    devastating spill. They are not the only ones at fault. They
    could not have cut some of those corners without the complicity
    of employees at some of the responsible government agencies who
    did not do their job.
        We are all appalled that lives are lost by decisions made
    apparently in the interest of cutting costs, but also by the
    lack of adequate preparation for this worst-case scenario that
    we are facing today.
        The fact that the industry did not ensure that response
    technology kept pace with deeper drilled wells lays blame at
    all of their feet, but we still cannot ignore the decisions
    made by BP, which, if they had been different, 11 people might
    still be alive today.
        We as a Congress, along with our President, who has had
    more than his share of crises that are not of his making, have
    some major challenges and critical decisions ahead. I hope in
    the name of the 11 who died, the many more who were injured,
    the affected families, and those who now depend on OCS
    platforms for their livelihood that this and all of the
    hearings will help us to go beyond a knee-jerk reaction to do
    the right thing for the region and our country; that BP and any
    other responsible party will be held fully accountable and
    responsible; and that the petroleum and natural gas companies
    learn important lessons to ensure this does not happen again.
        I want to thank you, Mr. Hayward, for being here. I look
    forward to your full testimony and the answers to the questions
    we will ask on behalf of the people of the region and on behalf
    of the American people.
        I yield back, Mr. Chairman.
        Mr. Stupak. Thank you.
        Mr. Welch, opening statement, please.

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

        Mr. Welch. Thank you, Mr. Chairman.
        Mr. Hayward, in the 59 days since the Deepwater Horizon
    explosion caused this extraordinary environmental catastrophe
    and economic catastrophe, we have heard time and again from BP
    that this was an aberration. The facts regrettably tell a very
    different story.
        In 2005, when BP's Texas City operation blew up, 15 workers
    lost their lives. In 2006, a BP oil pipeline in Texas ruptured
    and spilled 200,000 gallons of crude oil. In 2007, the year you
    became CEO, the BP Corporation settled a series of criminal
    charges--not civil charges, criminal charges--and paid $370
    million in fines.
        And according to RiskMetrics, independent organization, BP
    has one of the worst health, environment and safety records of
    any company in the world. And in only 1 year, the Occupational
    Safety and Health Administration, OSHA, found more than 700
    violations at BP's Texas City refinery, and BP paid a record
    $87 million in fines.
        An independent review panel charged BP with putting profits
    before safety, and earlier this year a BP refinery in Toledo
    was fined $3 million for willful safety violations, including
    the use of valves similar to those that contributed to the
    Texas City blast.
        And finally, of course, we have the Deepwater Horizon
    catastrophe, and the more evidence that comes in, the more it's
    clear that that event was foreseeable, and it was avoidable.
    After the explosion, the BP said there was no oil leaking. Then
    it said there was 1,000 barrels a day leaking. Then it went to
    5,000 barrels. We are now up to 60,000 barrels.
        For 59 days, Mr. Hayward, BP has told the American people
    that this was an aberration, that it was a singular occurrence,
    and that it wouldn't happen again. Mr. Hayward, it's not an
    aberration. For BP, regretfully, this is business as usual,
    it's deja vu again and again and again.
        And the question I think many of us have is whether a CEO
    who has presided over a company that has incurred $370 million
    in criminal fines; whose company, according to independent
    assessors, has one of the worst records in the world for safety
    and consistently puts money ahead of safety; whose peers,
    including Mr. Tillerson from Exxon Mobil, who testified from
    where you are 2 days ago they never--Exxon never would have
    drilled a well the way it did at BP Deepwater Horizon; and who,
    as CEO, has presided over the destruction of nearly $100
    billion in shareholder value and the suspension of an annual
    $10 billion dividend; does that leader continue to enjoy and
    have a valid claim on the trust and confidence of his
    employees, his shareholders, the public regulators and, most
    importantly, the families and small businesses of the Gulf
    Coast, or is it time, frankly, for that CEO to consider to
    submit his resignation?
        I thank you and yield back.
        Mr. Stupak. Thank you.
        Mr. Green for an opening statement, please.

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

        Mr. Green. Thank you, Mr. Chairman.
        Mr. Hayward, I appreciate your testimony and your being
    here this morning. And most people on this committee know I am
    a big supporter of Outer Continental Shelf drilling and
    domestic energy production. And I understand from your
    testimony and our other hearings we have held and meetings with
    the administration that efforts to cap the well are going as
    expeditiously as possible.
        However, like many of my colleagues here, I am frustrated.
    I am frustrated that it has been almost 2 months, and we still
    have thousands of barrels of crude oil gushing into the Gulf of
    Mexico. I am frustrated by the threat of this disaster's impact
    on our wildlife and coastline. And I am particularly frustrated
    this single incident, one well out of thousands of successful
    wells of this type have been drilled, is threatening my
    constituents' livelihoods and the livelihoods of most of the
    communities on the Gulf Coast, literally from Alabama all the
    way back to Brownsville, Texas.
        This disaster has caused the oil and gas industry in the
    Gulf of Mexico to shut down. Even if the moratorium does not
    last 6 months, it will be too late for many of these folks. But
    these people are not the ones to blame. They are the
    hardworking people with a work ethic like none other that take
    their responsibility on these rigs seriously.
        However, according to the investigation of this
    subcommittee has conducted, it's obvious that several BP
    officials on and off the Deepwater Horizon rig did not take
    their responsibility of this rig seriously. Halliburton and
    many others warned BP officials that the decisions they were
    making were bad ones that could lead to serious trouble. And
    now people were losing their jobs because of a moratorium on
    drilling that could have been prevented if BP had not chosen
    expediency over safety, which brings me to my next point.
        Whether it was the Alaskan pipeline disaster or the Texas
    City refinery fire where 15 people died, time after time it has
    been shown that BP chooses expediency over safety. Yet, Mr.
    Hayward, in your testimony you write that none of us knows why
    it happened. However, this subcommittee has uncovered five
    areas where BP made decisions that increased the risk of a
    blowout to save the company time and expense.
        I added up the hours that these extra precautionary actions
    would have taken, and it comes to about 3 to 4 days. That's
    assuming that many of these actions would not have occurred
    simultaneously, which they know they could have. For an extra 3
    days of work, men's lives would have been saved, and an
    industry record of safe and responsible production in the Outer
    Continental Shelf would still be in place, which brings me to
    my last point.
        In your testimony, Mr. Hayward, you say that this incident
    calls into question whether the oil and gas industry can
    explore for oil and gas in safer and more reliable ways and
    what the appropriate regulatory framework for the industry
    should be. Mr. Hayward, the decisions made by a handful of BP
    individuals called this into question, not this accident, and
    you should take the responsibility for the workers who did
    nothing wrong and are now losing their jobs.
        Mr. Chairman, I yield back my time.
        Mr. Stupak. Thank you, Mr. Green.
        Ms. Sutton for an opening statement, 3 minutes, please.

      OPENING STATEMENT OF HON. BETTY SUTTON, A REPRESENTATIVE IN
                    CONGRESS FROM THE STATE OF OHIO

        Ms. Sutton. Thank you, Chairman Stupak.
        It's been nearly 2 months since the explosion of the
    Deepwater Horizon drilling rig resulted in the deaths of 11
    workers and injured additional workers. Since that time we have
    witnessed the worst environment disaster in our Nation's
    history, a disaster that continues to pour an estimated 60,000
    barrels of oil a day into the Gulf of Mexico, a disaster that
    has led to over 66,000 victims filing claims to receive
    compensation.
        Through this subcommittee's work, several alarming
    decisions by BP have come to light, decisions that were made to
    save money and time. It's unconscionable when companies pay
    more attention to their costs and their profits than to their
    own workers' safety and to our environment.
        At our last hearing one witness from Transocean testified
    that a duplicate blowout preventer system cost roughly $15
    million, a system not used on the Deepwater Horizon rig. BP
    also utilized a more risky option for steel tubing, saving at
    least $7 million. BP also did not fully circulate drilling mud
    or secure casing hangers between pipes of different diameters.
    And critical signals were brushed aside. When standard methods
    were not followed to center the steel pipe in the drill hole,
    one of BP's operations drilling engineers remarked in an e-
    mail, quote, ``Who cares? It's done. End of story.''
        But these cut corners have been anything but the end of the
    story. As the workers and volunteers from around the country
    help clean up the oil from the disaster, many are becoming ill.
    Between April 22 and June 10, 485 of BP's own workers have been
    injured. The Louisiana Department of Health is reporting 109
    illnesses in cleanup workers, and the money and time BP tried
    to save has long been lost as they have already paid $81
    million in claims.
        Mr. Hayward, like many Americans, I feel physically sick
    when I see the clips of the oil gushing in the gulf, witnessing
    the devastation of our waters and our coast and the wildlife,
    thinking about the lives of the workers killed, and hearing and
    seeing the pain in the faces and the hearts of the people, the
    families, the small businesses, the fishermen and others in the
    gulf, all consequences of this catastrophe.
        This culture of carelessness and taking shortcuts to
    maximize profits at the expense of safety, this ``come what
    may, we will cross that bridge when we come to it'' attitude is
    unacceptable. It's outrageous.
        BP must be accountable for the consequences of that
    approach, and we must take actions necessary on behalf of the
    American people to make sure that such a reckless approach will
    be forever abandoned. The risks and costs to our environment
    and to the workers in the Gulf Coast, to the workers throughout
    our economy, are simply too great to allow otherwise.
        I yield back.
        Mr. Stupak. Thank you, Ms. Sutton.
        That concludes the opening statements of all members of our
    subcommittee.
        As I noted in the opening, as I noted in the opening, we
    have members of the full committee here. I would like to
    recognize them. They will be allowed to ask questions by order
    of seniority.
        Mr. Inslee is here, a member of the committee; Ms. Castor
    is here; Mr. Gonzalez; Mrs. Capps; Ms. Harman; Mr. Weiner; Mr.
    Melancon; and Mr. Scalise.
        I would like to comment that Mr. Melancon and Mr. Scalise
    are members of our committee. They also hosted us when we had a
    field hearing, the field hearing in New Orleans a few weeks
    ago, last week. And we had nine Members go down, one of the
    largest field hearings we have ever had. So you can see the
    interest in here.
        I should also note that Ms. Jackson Lee is with us, not a
    member of the committee. She will not be allowed to ask
    questions, but we welcome her, and I know she has sat in on
    previous hearings we have had.
        So let's move on with our first witness. Our first witness
    is Mr. Tony Hayward, who is the chief executive officer of BP
    PLC.
        Mr. Hayward, it's the policy of this subcommittee to take
    all testimony under oath. Please be advised that you have a
    right under the rules of the House to be advised by counsel
    during your testimony. Do you wish to be represented by legal
    counsel?
        Mr. Hayward. I do not.
        Mr. Stupak. OK. The committee also asks if you would have a
    technical person with you so you could consult if we have some
    questions that you want to run it by your technical person. Do
    you have a technical person with you?
        Mr. Hayward. I do.
        Mr. Stupak. Could you state his name and position for the
    record, please?
        Mr. Hayward. Mike Zangy, drilling engineer.
        Mr. Stupak. OK. At any time during the questioning, if you
    want to consult with that individual, please let us know. We
    will give you a moment to do so before you answer, but you
    would be the only one who could answer that question. Is that
    clear?
        Mr. Hayward, I am going to ask you to please rise, raise
    your right hand and take the oath.
        [Witness sworn.]
        Mr. Stupak. Let the record reflect the witness answered in
    the affirmative.
        Mr. Hayward, you are now under oath. We would like to hear
    an opening statement from you. You may submit a longer
    statement, if you will, for the record.
        But if you would, please, begin your opening statement, and
    let me state again, on behalf of all members of the committee,
    we appreciate your willingness to appear here today.

       STATEMENT OF TONY HAYWARD, CHIEF EXECUTIVE OFFICER, BP PLC

        Mr. Hayward. Chairman Waxman, Chairman Stupak, Ranking
    Members Barton----
        Mr. Stupak. If you will suspend, please, sir.
        [Disturbance in hearing room.]
        Mr. Stupak. Before we begin with Mr. Hayward, let me again
    just mention those of you in our audience, emotions run high on
    this issue, but we have a hearing to conduct here. We are going
    to conduct our hearing; it's going to be done with proper
    decorum.
        Mr. Hayward, when you are ready, we are going to start the
    clock over. You may begin.
        Mr. Hayward. Chairman Waxman, Chairman Stupak, Ranking
    Member Barton, Ranking Member Burgess, members of the
    committee, I am Tony Hayward, chief executive of BP.
        The explosion and fire of the Deepwater Horizon and the
    resulting oil spill resulting in the Gulf of Mexico----
        Mr. Stupak. Excuse me, Mr. Hayward. Could I ask you to pull
    that up? Some of the Members are having trouble hearing,
    probably over the clicking of the cameras. But if you could
    just pull it a little closer. Thank you.
        Mr. Hayward. The explosion and fire aboard the Deepwater
    Horizon and the resulting oil spill in the Gulf of Mexico never
    should have happened, and I am deeply sorry that it did. When I
    learned that 11 men had lost their lives, I was personally
    devastated. Three weeks ago I attended a memorial service for
    those men, and it was a shattering moment. I want to offer my
    sincere condolences to their friends and families. I can only
    begin to imagine their sorrow. I understand how serious this
    situation is. It is a tragedy.
        I want to speak directly to the people who live and work in
    the gulf region. I know that this incident has had a profound
    impact on your lives and caused great turmoil, and I deeply
    regret that. I also deeply regret the impact the spill has had
    on the environment, the wildlife, and the ecosystem of the
    gulf.
        I want to acknowledge the questions that you and the public
    are rightly asking. How could this happen? How damaging is the
    spill to the environment? Why is it taking so long to stop the
    flow of oil and gas into the gulf?
        We don't yet have all the answers to these important
    questions, but I hear and understand the concerns, frustrations
    and anger being voiced across the country, and I know that
    these sentiments will continue until the leak is stopped and
    until we prove through our actions that we are doing the right
    thing.
        Yesterday we met with the President of the United States
    and his senior advisers. We discussed how BP could be more
    constructive in the government's desire to bring more comfort
    and assurance to the people of the Gulf Coast beyond the
    activity we have already done. We agreed in that meeting to
    create a $20 billion claims fund to compensate the affected
    parties and pay for the costs to Federal, State and local
    governments of the cleanup and environmental mitigation. We
    said all along that we would pay these costs, and now the
    American people can be confident that our word is good.
        I have been to the Gulf Coast. I have met with fishermen,
    business owners and families. I understand what they are going
    through, and I promised them, as I am promising you, that we
    will make this right. After yesterday's announcement, I hope
    that they feel we are on the right track.
        I am here today because I have a responsibility to the
    American people to do my best to explain what BP has done, is
    doing, and will do in the future to respond to this terrible
    accident.
        First, we are doing everything we can to secure the well
    and in the meantime contain the flow of oil. We are currently
    drilling two relief wells. We believe they represent the
    ultimate solution. We expect this to be complete in August.
        Simultaneously we have been working on parallel strategies
    to minimize or stop the flow of oil. While not all of them have
    met with success, it appears that our latest containment effort
    is now containing about 20,000 barrels a day. By the end of
    June, we expect to have equipment in place to handle between
    40- and 50,000 barrels a day, and, by mid-July, between 60- and
    80,000 barrels a day.
        Second, I have been clear that we will pay all necessary
    cleanup costs. We have mounted what the Coast Guard has
    recognized as the largest spill response in history. We have
    been working hard on the leadership of the unified command to
    stop the oil from coming ashore, and while we are grateful
    these efforts have reduced the impact of the spill, any oil on
    the shore is deeply distressing. We will be vigilant in our
    cleanup.
        Third, as I have made clear from the beginning, we will pay
    all legitimate claims for losses and damages caused by the
    spill. Those are not just words. We have already paid out more
    than $95 million, and we have announced an independent claims
    facility headed by Ken Feinberg to ensure the process is as
    fair, transparent and rapid as possible.
        Fourth, we need to know what went wrong so that we as a
    company and we as an industry can do better. That is why, less
    than 24 hours after the accident, I commissioned a
    nonprivileged investigation. I did it because I wanted to know
    what happened, and I want to share the results.
        Right now it's simply too early to say what caused the
    incident. There is still extensive work to do. A full answer
    must await the outcome of multiple investigations, including
    the Marine Board.
        To sum up, I understand the seriousness of this situation
    and the concerns, frustrations and fears that have been and
    will continue to be voiced. I know that only actions and
    results, not mere words, ultimately can give you the confidence
    you seek.
        I give my pledge, as the leader of BP, that we will not
    rest until we make this right. We are a strong company, and no
    resources will be spared.
        We and the entire industry will learn from this terrible
    event and emerge stronger, smarter and safer. Thank you.
        Mr. Stupak. Thank you, Mr. Hayward.
        [The prepared statement of Mr. Hayward follows:]
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        Mr. Stupak. One of the bad parts about conducting a
    hearing, we get interrupted every now and then by votes, and we
    have three votes pending right now. There's, I think, about 10
    minutes remaining on this vote.
        I would suggest, instead of trying to get into questions,
    we take a break right now. Let's stand in recess for 30
    minutes. Let's come back at noon and continue this hearing. We
    will start with questions from all the Members.
        OK. This committee will be in recess until 12 noon.
        [Recess.]
        Mr. Stupak. The committee will come back to order.
        When we left off, Mr. Hayward had finished his opening
    statement. We would begin with questions. I will begin.
        Mr. Hayward, when we heard about the explosion in the gulf,
    the immediate company that popped into my brain was BP, and
    that's because the last number of years from Texas City where
    people died and 170 people were injured; the North Slope, the
    problems we have had there; and BP's own 2007 report on the
    management accountability project in which it stated there was
    a culture that evolved over the years that seemed to ignore
    risk, tolerate noncompliance and accepted incompetence. So I
    wasn't surprised when we heard about the explosion in the gulf
    and BP was part of it.
        Since then this committee, the oversight and investigations
    committee of the Energy and Commerce Committee, we have
    methodically looked at this issue, and I know you have and your
    company has also. On May 12, we had a hearing in which we
    looked at a number of things that went wrong. On May 25, our
    committee, Chairman Waxman and myself, put out a memo. It was
    based on BP's preliminary report, and I am sure you are
    familiar with that report; are you not, sir?
        Mr. Hayward. I am.
        Mr. Stupak. And then on June 14, Chairman Waxman and I sent
    you a letter, 14 pages, where we talk about the crazy well and
    the nightmare well. Quite frankly, BP blew it. You cut corners
    to save money and time.
        And as the chief executive officer of BP, as I stated in my
    opening, you called for a leaner decisionmaking process. You
    called for fewer people in the decisionmaking process. You
    stated, individuals need to be accountable for risk and to
    manage risk. Therefore, BP's leadership managed their risk in
    this well.
        Did you manage the risk properly?
        Mr. Hayward. Since I have been the CEO of this company, I
    have focused on safe, reliable operations.
        I have set the tone from the top by making it very clear to
    everyone in BP that safe, reliable operations are our number
    one priority. Of course, this is about more than words. Safety
    is about three things. It's about plants, it's about people,
    it's about process. In the last 3 years, we have invested more
    than $14 billion in plant integrity.
        Mr. Stupak. But then what happened here? I mean, the June
    14 letter we put out the other day went through five major
    areas. The head of--the CEOs of the oil companies who were
    before this committee Tuesday all said you did it wrong. They
    never would have done a well this way.
        You made decisions, whether to do a casing or the string
    with the tie-back, which everyone said the tie-back would have
    been safer; the lockdown sleeves; centralizers, instead of
    doing 21 as was recommended, you only do 6. That defies the
    safety emphasis; does it not?
        Mr. Hayward. We launched an investigation, which we have
    shared with yourself, Mr. Chairman, and all of your Members,
    which has identified seven areas. It's identified areas around
    cements, casing, integrity pressure measurements, well control
    procedures, and three areas around the blowout preventer which
    failed to operate. An investigation is ongoing. It's not
    complete.
        Mr. Stupak. Sure. But you are CEO of this company. You said
    you were here to answer the questions of the American people.
    You were an exploration manager, exploration manager with BP.
    You were the director of BP's exploration. You were vice
    president of BP's exploration and production. You hold a Ph.D.
    from the University of Edinburgh.
        Based on our May 12 hearing, the May 25 memo, our June 14
    letter to you, based on all those facts, are you trying to tell
    me you have not reached a conclusion that BP really cut corners
    here?
        Mr. Hayward. I think it's too early to reach conclusions,
    with respect, Mr. Chairman. The investigations are ongoing.
    They have identified seven key areas, and when they complete--
    --
        Mr. Stupak. Every one of those seven key areas, sir, dealt
    with saving time and saving money and accepting the risk. So if
    we use your own words, if you are going to hold BP accountable,
    then we have to manage the risk.
        Should leadership at BP be held accountable here?
        Mr. Hayward. There is no doubt that I have focused on safe,
    reliable operations. We have made major changes in everything
    we do over the last 3 years. We change people----
        Mr. Stupak. What changes have you made since April 20 when
    the BP Deepwater Horizon exploded? What changes were made then?
        Mr. Hayward. Based on what we know so far, we have made
    changes with respect to the testing and evaluation of blowout
    preventers. We have made changes with respect to ensuring that
    people who are likely to be dealing with well control are up to
    date and fully validated for well-control procedures. And as we
    learn more about what happens here, we will continue to make
    changes.
        Mr. Stupak. My time is just about up. I am going to try to
    hold Members quickly to our time because we want to get through
    at least one more round.
        Let me just ask you this: The last 5 years I have been up
    here, your safety record, you have 26 people dead, more than
    170 injured. You have the largest spill ever in Alaska, and you
    now have the largest environmental disaster to hit the United
    States with no end in sight with this disaster.
        Do you believe the U.S. Government should continue to allow
    companies that have poor safety records, poor environmental
    records, to explore minerals or oil exploration in our country?
    Should there be a ban on companies that have miserable safety
    and environmental records?
        Mr. Hayward. In the 3 years that I have been CEO, I have
    focused on improving dramatically our safety and environmental
    performance. At the price of this accident, that has indeed
    been the case, and that is why, amongst all the other reasons,
    I am so devastated by this accident.
        Mr. Stupak. I agree, and under your tenure, you said you
    had the 2007 report that was scathing of BP's culture. We still
    have problems with Alaska. You said you are going to hold
    people accountable. Who are we going to hold accountable here?
        Mr. Hayward. We have engaged in a systemic change at BP
    over the last 3 years. We have begun to change the culture. I
    am not denying that there isn't more to do, but we have made
    dramatic changes in the people we had in our organization, the
    skills and capabilities they have. We have invested heavily
    into that. We have changed significantly the processes that we
    use to manage our operations, and, most importantly perhaps, we
    have made safe, reliable operations the core of the company. It
    is the thing that I talk about every time I talk internally and
    every time I talk externally about BP.
        Mr. Stupak. In your opening statement you said as long as
    you were CEO of BP, these things would occur. Do you expect to
    be CEO of BP much longer?
        Mr. Hayward. At the moment I am focused on the response. I
    think everyone here believes that the highest priority is to
    stop the leak, continue on on the surface and clean it up. That
    is what my focus is.
        Mr. Stupak. Mr. Burgess for questions.
        Mr. Burgess. Thank you, Mr. Chairman.
        The highest priority is stopping the leak. Let me ask, Mr.
    Hayward, is your presence here today in any way interfering
    with that number one task of stopping the leak?
        Mr. Hayward. It is not.
        Mr. Burgess. Thank you.
        Let me just ask you--or let me just make a statement for
    clarification. I am not going to apologize for you. It was,
    after all, BP executives who were on that rig, BP executives
    who ultimately could have made the call to stop operations when
    things became unsafe, and ultimately you are the person at the
    top, and you are responsible.
        We lost 11 men on that rig. Transocean and other companies
    lost 11 men on that rig. I don't feel that apologies are in
    order.
        But, Mr. Chairman, I do have serious questions about the
    setup of this fund that we heard about from the White House
    yesterday. And I hope this committee will stay engaged in the
    oversight of that activity as well. It's still disturbing to me
    that we have not had anyone from the Federal regulatory side.
    We have brought a ton of other people in here and questioned
    them, but really we need Mr. Salazar here. We need whoever the
    minerals management people were who approved that exploration
    plan that BP submitted that was woefully inadequate.
        Shame on you, Mr. Hayward, for submitting it, but shame on
    us for accepting it with simply a rubber stamp.
        Now I have got some questions I do need to ask.
        BP, unfortunately, it's not the first time you have been in
    front of our committee. And in 2006, although you were not CEO
    that year, I pulled the transcript last night and looked
    through it again. The Big Oil spill in Alaska had to do with
    not proper maintenance on the pipelines. And when you came in,
    you said you were going to focus like a laser beam on safety,
    and certainly that had to be welcome news after Texas City,
    after the North Slope accident.
        So what safety briefings do you get as your office's chief
    executive officer, and who provides them to you?
        Mr. Hayward. The basis of management of safety performance
    is through something that we call our group operating risk
    committee. It's a committee that I set up, I chair. It involves
    the heads of all of the business streams, and we meet upon a
    bimonthly basis to review the safety performance across the
    company. That process is mirrored down through the company.
        Mr. Burgess. And what type of safety directives then, or
    what types of directives do you issue in terms of safety as a
    result of those meetings, and perhaps would you be willing to
    share some of that information with the committee as we go
    forward?
        Mr. Hayward. We can certainly share that information with
    the committee. They range from changes to procedures to
    requirements of--to have people where there are issues with
    safety to come and present to us.
        Mr. Burgess. But somebody records minutes during those
    meetings, and then your directives that come as a consequence
    of those briefings are written down and delivered to the
    appropriate managers on the ground?
        Mr. Hayward. There are minutes of those meetings.
        Mr. Burgess. I beg your pardon?
        Mr. Hayward. There are minutes of those meetings.
        Mr. Burgess. Let me ask you this. Mr. Stupak already
    alluded to the fact that should we allow someone who is perhaps
    not following the best practices, drilling practices, continue
    to drill.
        Is there any other well, to your knowledge, in the Gulf of
    Mexico that has been done in the same manner as this well that
    was drilled under the Deepwater Horizon?
        Mr. Hayward. There are many wells in the Gulf of Mexico.
        Mr. Burgess. Are there any other wells where you haven't
    put the proper number of centralizers in?
        Mr. Hayward. There are many wells in the Gulf of Mexico
    that have the same casing design. There are many wells that
    have been drilled where the same cement procedure has been----
        Mr. Burgess. Now, have the Minerals Management Service
    people been there and looked over those with a fine-tooth comb?
        Mr. Hayward. Everything that we do is subject to regulatory
    oversight.
        Mr. Burgess. Are you changing your procedures of those
    wells as a result of things that you have encountered in your
    investigation----
        Mr. Hayward. I apologize, sir. As we learn from our
    investigation, we will make appropriate changes, as I have
    already indicated.
        Mr. Burgess. Are there any of those changes that are
    ongoing right now?
        Mr. Hayward. The ones that I have talked about are ongoing.
        Mr. Burgess. Well, let me ask you this. Now, the question
    came up about centralizers, and someone said that they would
    rather push more cement or squeeze more cement than getting
    something stuck. I am not technically savvy enough to know
    exactly about that, but if that's the statement, and you are
    going to push cement and deal with a fewer number of
    centralizers to hold this thing steady in the center of the
    column, is there any way to find out that, in fact, that cement
    went where you intended it to do, and that rod didn't, in fact,
    get off to one side or the other?
        Mr. Hayward. I wasn't part of the decisionmaking process on
    this well. I have looked at the material----
        Mr. Stupak. Yes. That's not the question I asked you. Was
    there a procedure that could have been followed that would have
    actually given that information?
        Mr. Hayward. I can't answer that question. I am not a
    cement engineer, I am afraid.
        Mr. Burgess. There is, and those people were available, and
    for whatever reason they decided not to do that. Do you think
    that might have made a difference in the ultimate story of the
    Deepwater Horizon?
        Mr. Hayward. I am not prepared to speculate on what may or
    may not have made a difference until such time as the multiple
    investigations that are ongoing are concluded.
        Mr. Burgess. Well, but prior to April 20, when the well
    blew up, were you briefed on the progress of the drilling of
    the Macondo well?
        Mr. Hayward. The only knowledge that I had of the Macondo
    well occurred in April when it was evident to the team drilling
    it that we had made a discovery, and they notified myself that
    we made a discovery.
        That was my only prior involvement in the well.
        Mr. Burgess. Who briefed you? Who briefed you on that
    discovery?
        Mr. Hayward. The person who would have briefed me would
    have been the chief executive of exploration and production.
        Mr. Burgess. Were you privy then to any other information,
    the difficulties that they had had the multiple gas kicks, the
    losing the tools down the hole, the length of time they have
    been over the hole, the decisions to move quickly because we
    had spent too much time over this well?
        Mr. Hayward. I had no prior knowledge.
        Mr. Burgess. Who would have had that information?
        Mr. Hayward. Certainly the drilling team in the Gulf of
    Mexico.
        Mr. Burgess. But you are the CEO of the company. Do you
    have any sort of technical expert who helps you with these
    things who might have been there?
        Mr. Hayward. With respect, sir, we drill hundreds of wells
    a year all over the world.
        Mr. Burgess. Yes, I know. That's what is scaring me right
    now.
        Did you have a technical expert who was advising you there
    on this well, because we have heard from other people that
    there were problems, it was a bad well, it was a dangerous
    well; gas kicks, and the mud was not degasified or whatever the
    procedure was. So did you have a technical expert advising you?
        Mr. Hayward. I had no prior knowledge or involvement in the
    drilling of this well, none whatsoever.
        Mr. Burgess. But who was? If you are the CEO of the
    company, if I were a shareholder of BP, which I am not, but if
    I am, how can I have comfort that the CEO knows what's going on
    as far as safety on the rigs, or is it true it's just all about
    profit?
        Mr. Hayward. There was a drilling team providing oversight
    of this well.
        Mr. Burgess. There was a drilling team.
        Mr. Stupak. We will go to Mr. Waxman.
        Mr. Waxman. Thank you very much, Mr. Chairman.
        Mr. Hayward, when you became CEO 3 years ago, you said that
    safety was going to be your top priority; you would focus on it
    like a laser. Your Website said, safe and reliable operations
    are integral to BP's success.
        I want to ask you whether you think that BP met that
    commitment that you made when you became CEO?
        Mr. Hayward. Since I became CEO, we have made a lot of
    progress. We have made it very clear to everyone in the company
    that safe, reliable----
        Mr. Waxman. Have you met that commitment that you made?
        Mr. Hayward. And we made major changes. We made major
    changes to our----
        Mr. Waxman. You made major changes, but now we see this
    disaster in the gulf. Does that indicate that you didn't keep
    that commitment?
        Mr. Hayward. And one of the reasons that I am so
    distraught.
        Mr. Waxman. Could you answer yes or no? I don't want to
    know whether you are distraught. I want to know whether you
    think you have kept your commitment.
        Mr. Hayward. We have focused like a laser on safe and
    reliable operations, that is fact, every day.
        Mr. Waxman. OK. Well, let me follow up on that. We had a
    hearing earlier this week with CEOs from the other oil
    companies. They were unanimous in their view that you made
    risky decisions that their companies would not have made. And
    in particular they criticize your decision to install a long,
    single string of casing from the top of the well to the bottom
    on April 19, the day before the blowout. They said this well
    design choice provided an unrestricted pathway for gas to
    travel up the well in the annulus space that surrounded the
    casing, and, of course, it blew out the seal.
        How do you respond to their criticism? Did BP make a--a
    fundamental misjudgment in selecting a single string of casing?
        Mr. Hayward. I wasn't involved in any of that
    decisionmaking.
        Mr. Waxman. Well, I want to know your view of it, now that
    you know about it, now that you know what your company did.
    Pursuant to your laser request that they be attuned to safety,
    do you think that that was a mistake?
        Mr. Hayward. The original well design was to run a long
    string. It was approved by the MMS. There was only discussion
    in the course of the drilling of the well whether a long string
    or a 7-inch line that would be most appropriate. That is what I
    understand based on having looked at the documents and listened
    to our investigation team.
        The decision to run a long string, at least in part, was to
    do with the long-term integrity of well.
        Mr. Waxman. But let me be fair to you, because I am asking
    you to look with hindsight as to what happened and the decision
    that was made.
        But your own engineers warned in advance that this was a
    risky approach. And I would like to put on the screen what's
    called a planned review that your engineers prepared in mid-
    April warning against the long string of casing. As you can
    see, your engineers said that if you used a long string of
    casing, that it is unlikely to be a successful cement job. You
    would be unable to fulfill MMS regulations, and there would be
    an open annulus to the wellhead, and I have that on the screen.
        Now, those are serious risks, a failed cement job, a
    violation of MMS safety regulations, an open pathway for gas to
    travel to the top of the well. The same document says that if
    you use the liner and tie-back approach, which is what Exxon
    Mobil and other companies said you should have used, you would
    have avoided or lessened these risks, and here is what the plan
    review said: If you used the liner, there would be less issue
    with landing it shallow. There would be a second barrier to gas
    in the annulus and a higher chance for a successful cement job.
        Now, you said that BP is supposed to be focused like a
    laser on safety. Yet BP apparently overruled the warnings of
    its own engineers and chose the more dangerous option. How can
    you explain that decision by BP? Why were the safety
    recommendations of your own engineers ignored?
        Mr. Hayward. I wasn't involved in any of the
    decisionmaking. It's clear that there was some discussion
    amongst the engineering team, and an engineering judgment was
    taken.
        Mr. Waxman. It's clear to me that you don't want to answer
    our questions, because isn't it true that you have served your
    life in BP? You have only recently become the CEO, but haven't
    you been in this business most of your professional life?
        Mr. Hayward. I have been in this business 28 years.
        Mr. Waxman. Twenty-eight years. So you should have some
    knowledge about these issues. And I sent you a letter in
    advance asking you--we were going to be asking these questions
    and to be prepared to answer it.
        How can you explain this decision where you ignore--not
    you, yourself, but people who work for you who should have
    known that it was your directive to be a laser on safety. How
    could they have ignored these warnings from people right within
    your company?
        Mr. Hayward. There was clearly a discussion between the
    engineering team as to what was the most appropriate course of
    action to take. An engineering judgment was taken that involved
    long-term integrity----
        Mr. Waxman. It was more than an engineering judgment,
    because April 15th there is a document, which is 5 days before
    the blowout, that said that using the safer liner will add an
    additional 7- to $10 million to the completion cost. The same
    document calls it the single string of casing, the best
    economic case for BP.
        And the conclusion I draw from these documents is that BP
    used a more dangerous well design to save $7 million. What do
    you think about that? What is your response?
        Mr. Hayward. I believe that document also highlights that
    the long-term integrity of the well will be best served by a
    long string. The long string is not an unusual well design in
    the Gulf of Mexico. As I understand it----
        Mr. Waxman. Say that again.
        Mr. Hayward. The long string is not an unusual design in
    the Gulf of Mexico.
        Mr. Waxman. As I understand it from Halliburton's witness
    that was interviewed by our staff, that only 2 to 10 percent of
    those wells might use this particular string.
        Now, ExxonMobil and other CEOs said they wouldn't proceed
    this way. It appears to me that BP knowingly risked well
    failure to save a few million dollars. And even drilling 18,000
    feet below the sea, if you make mistakes, the consequences of
    those would be catastrophic and, in fact, it turned out to be
    catastrophic. Don't you feel any sense of responsibility for
    these decisions?
        Mr. Hayward. I feel a great sense of responsibility for the
    accident. We need to allow----
        Mr. Waxman. How about for the decisions that made the
    accident more likely?
        Mr. Hayward. We need to determine what were the critical
    decisions and----
        Mr. Waxman. Did you get my letter and did you review it?
        Mr. Hayward. I have read your letter, Chairman.
        Mr. Waxman. Do you realize in the letter that we asked you
    to be prepared to discuss these issues?
        Mr. Hayward. As I said, I have seen the documents following
    your letter, and I cannot pass judgment on those decisions.
        Mr. Waxman. Even though you have worked 28 years in the oil
    industry, you are the BP CEO, and you said like a laser you are
    going to--safety is the biggest issue and you have people under
    you making these kinds of decisions and now you are reviewing
    them.
        Do you disagree with the conclusion that this was riskier
    to use this particular well lining?
        Mr. Hayward. I am not prepared to draw conclusions about
    this accident until such time as the investigation is
    concluded.
        Mr. Waxman. This is an investigation. That is what this
    committee is doing. It is an investigatory committee. And we
    expect you to cooperate with us. Are you failing to cooperate
    with other investigators as well? Because they are going to
    have a hard time reaching conclusions if you stonewall them,
    which is what we seem to be getting today.
        Mr. Hayward. I am not stonewalling. I simply was not
    involved in the decisionmaking process. I have looked at the
    documents. And until the investigations are complete, both
    yours and others----
        Mr. Waxman. That is somebody else's conclusion. What is
    your conclusion?
        Mr. Hayward. I haven't drawn a conclusion, Mr. Chairman.
        Mr. Waxman. I see. My time has expired and I am just amazed
    at this testimony, Mr. Hayward. You are not taking
    responsibility. You are kicking the can down the road and
    acting as if you had nothing to do with this company and
    nothing to do with its decisions. I find that irresponsible.
        Mr. Stupak. Along those lines, do you disagree with the
    conclusions of Chairman Waxman's June 14th letter, the one Mr.
    Chairman and I sent you? Do you disagree with those five
    conclusions, five areas we hit, the conclusions we reached? Do
    you disagree with it?
        Mr. Hayward. I think there are very legitimate issues for
    concern, Mr. Chairman.
        Mr. Stupak. They are very what?
        Mr. Hayward. Legitimate areas for concern.
        Mr. Stupak. So we reached legitimate conclusions that
    people could then base the decision, cut corners to save money
    and we had this accident, correct?
        Mr. Waxman. It doesn't appear you are very concerned about
    them, are you?
        Mr. Hayward. I am very concerned that we get to the bottom
    of this incident and understand exactly what happens such that
    we can be sure that it never happens again.
        Mr. Waxman. Easy to say.
        Mrs. Blackburn. Mr. Chairman, just a request, please. If
    Mr. Hayward could move the microphone a bit closer. I am having
    difficulty hearing.
        Mr. Stupak. Right. I think we all are. Pull it a little
    closer if you could, please.
        Mr. Sullivan for questions, please. I should note Mr. Upton
    is here from Michigan, a member of the full committee and so is
    Mr. Engle. They want to ask questions, they can at the
    appropriate time. Mr. Sullivan.
        Mr. Sullivan. Thank you, Mr. Chairman.
        Mr. Hayward, according to the Occupational Safety and
    Health Administration, there is mounting evidence that BP is
    one of the worst--has one of the worst safety records of any
    major oil company operating in the United States.
        Is there a deficient safety culture at BP that led to the
    Deepwater Horizon and other disasters like the refinery
    explosion in Texas City, Texas, and the Alaskan oil pipeline
    spill?
        Mr. Hayward. I think we acknowledged in 2005 and 2006 that
    we had serious issues, and as a consequence set out to
    implement systematic change in the culture and safety of BP. I
    set the tone from the top by saying very clearly, safe,
    reliable operations were our number one priority. We have
    invested billions of dollars in the integrity of that plant. We
    have recruited many thousands of engineers and technologists
    into our company, including many from other industries such as
    the nuclear industry and other parts of the chemical and oil
    and gas industry, and we have changed fundamentally our whole
    approach to the management of our operations through the
    implementation of significant changes to our processes.
        Mr. Sullivan. It doesn't seem like that. If you look at the
    reports of what happened on the Deep Horizon, it doesn't look
    like many safety procedures have changed much at all. And, Mr.
    Hayward, do you feel that your safety record compared to other
    major oil companies is comparable?
        Mr. Hayward. As I said, it is clear that we had some
    serious issues to deal with in the 2005-2006 time frame and we
    have worked hard to improve our safety performance since that
    time for it.
        Mr. Sullivan. It doesn't seem to be changing Mr. Hayward;
    your safety performance doesn't. Here are some highlights of
    your safety procedures. BP had 760 safety violations and you
    paid millions of dollars, 373 million in fines to avoid
    criminal prosecution for manipulating the propane markets.
        Also, if you look at other industries, sir--let us take
    some of your competitors, for example. Sunoco--you had 760
    violations in 5 years. Sunoco had 8 safety violations.
    ConocoPhillips had 8 safety violations in the same time you had
    760. Citgo had 2 safety violations at the same time you had
    760. And ExxonMobil had 1 safety violation in the same time
    period you had 760. How in the heck do you explain that?
        Mr. Hayward. As I said, we acknowledged the problems we had
    in 2005 and 2006. The vast number of those things that you
    refer to date from that time period and we have made major
    changes in the company over the last 3 to 4 years.
        Mr. Sullivan. Do you think the changes you made in that
    time period you are talking about when you were CEO--I
    understand why you are saying that--do you think that they were
    using those measures and protocols on the Deepwater Horizon?
        Mr. Hayward. To my best knowledge, they absolutely were.
        Mr. Sullivan. You don't think they short-cut anything on
    the Deepwater Horizon? You are CEO of a major company. Do you,
    in fact, looking back, sir, do you think that they cut corners?
        Mr. Hayward. I believe we should await the results of the
    investigations before we draw conclusions.
        Mr. Sullivan. Sir, you had to have looked at some of the
    results--your internal investigation. Internally, your
    investigation, did it show any kind of breakdown, something
    that you--with your protocols you said you put in place, were
    any of those short-cut?
        Mr. Hayward. The investigation is still ongoing as you
    know. It has identified seven areas: the cement casing, the
    integrity pressure well control procedures, and three failures
    of the blowout preventer. And when the investigation is
    concluded we will make a judgment.
        Mr. Sullivan. I would say that this problem is with your
    organization and your safety and the culture of your company's
    safety culture, and not a culture of our domestic oil and gas
    producers. As we can see, they haven't had the kind of problems
    you have had with cutting corners on safety. They have a lot of
    redundancies, contingency plans. I venture to say that this may
    not have happened if one of these other companies was operating
    that rig. Would you say that would be true?
        Mr. Hayward. I don't think I can make that judgment.
        Mr. Sullivan. Do you think the other companies have
    different or stricter or--stricter guidelines with their safety
    and spend more money on it? Because you probably compare
    yourselves to other companies, I am sure.
        Mr. Hayward. I cannot make that comparison, but I can clear
    what we have done. We have invested billions of dollars, we
    have recruited thousands of people, and we have changed
    significantly our process, systems, and procedures in the
    course of the last 3 years.
        Mr. Sullivan. Well, thank you. I yield back.
        Mr. Stupak. Thank you.
        Before Mr. Dingell begins questions, we have votes on the
    floor again. There is less than 10 minutes remaining. So I am
    going to at least get through Mr. Dingell's questions and then
    we will recess.
        Mr. Dingell.
        Mr. Dingell. Thank you, Mr. Chairman.
        Mr. Hayward, you had two choices, using single casing or
    tieback. The risks are substantial associated with single
    casing, which is what BP chose.
        Please answer yes or no. Can you assure us, under oath,
    that that was not a decision made to save time and money?
        Mr. Hayward. I wasn't part of that decisionmaking process.
    I was not part of that decisionmaking process. So I cannot
    possibly know the basis on which that decision was taken.
        Mr. Dingell. How much money was saved by using the single
    stream casing?
        Mr. Hayward. I believe the documents refer to a sum of I
    think, I think 7- to $10 million, and they also refer to the
    fact that the casing would have longer-term integrity as a long
    stream.
        Mr. Dingell. Please submit that for the record.
        How much time was saved?
        Mr. Hayward. I don't recall the time that was saved. Would
    there have been some time saved?
        Mr. Dingell. Would you submit that for the record, please?
        Now, you had the option of using a number of centralizers
    to keep the casing in the center of the bore hole. Halliburton
    recommended 21. You ultimately chose to use 2. Could you tell
    us under oath that the decision to use 6 centralizers instead
    of the recommended 21 was not made to save time and money?
        Mr. Hayward. I was not involved in that decision, so it is
    impossible for me to answer that question.
        Mr. Dingell. All right. Could you tell us how much money BP
    saved by not using the proper number of centralizers?
        Mr. Hayward. I am afraid I cannot recall that.
        Mr. Dingell. Would you submit that for the record?
        How much time was saved?
        Mr. Hayward. I don't recall that either, I am afraid.
        Mr. Dingell. Please submit that for the record.
        You and BP decided not to conduct a cement bond log, an
    acoustic test to find out whether the cement was bonded to the
    casing and surrounding formations. Despite Mineral Management
    Service regulations, can you state under oath to the committee
    that BP did not decide to--against using the cement bond log to
    save time and money, yes or no?
        Mr. Hayward. My understanding from what I have read--again
    I was not involved in the decisionmaking--is that the team on
    the rig, the transition team, the BP team and the Halliburton
    team, concluded that they had sufficient evidence that the
    cement job was good and therefore decided not to use the cement
    bond log.
        Mr. Dingell. Does that mean yes or no?
        Mr. Hayward. It means I cannot answer your question in that
    form.
        Mr. Dingell. How much would this test have cost BP?
        Mr. Hayward. I cannot recall that number, I am afraid.
        Mr. Dingell. Please submit it for the record.
        How long would the test have taken?
        Mr. Hayward. Probably a number of hours, I believe; but I
    am not certain.
        Mr. Dingell. Please submit that for the record.
        You were supposed to engage in circulating drilling mud on
    the well bottom when the casing is on the bottom and before
    cementing. This is referred to as ``bottoms up.'' Did BP fully
    circulate the mud, yes or no?
        Mr. Hayward. I don't believe the mud was fully circulated.
    The process that the team on the rig were following was in line
    and approved by the MMS.
        Mr. Dingell. Thank you. Can you assure us, under oath
    again, that the decision not to fully circulate the mud was not
    made to save money and time?
        Mr. Hayward. I cannot answer that question because I wasn't
    there.
        Mr. Dingell. Thank you. How much money did avoiding this
    procedure save?
        Mr. Hayward. I am afraid I cannot recall.
        Mr. Dingell. Would you submit it for the record, please?
        How long would the fully circulating of the mud have taken?
        Mr. Hayward. I am afraid I cannot recall that either.
        Mr. Dingell. Would you submit that for the record, please?
        Now, BP made the decision not to install a casing hanger
    lockdown sleeve. Can you assure the committee under oath that
    the decision not to install such lockdown sleeve was not made
    to save time and money?
        Mr. Hayward. That was a decision I was not a party to.
        Mr. Dingell. How much did the installing of the lockdown
    sleeve save BP?
        Mr. Hayward. I don't know.
        Mr. Dingell. How much time did installing the lockdown
    sleeve save?
        Mr. Hayward. I am afraid I don't know that either.
        Mr. Dingell. Now, you have received a letter from the
    chairman of the subcommittee and the full committee asking a
    series of questions. When will the committee have the response
    to that letter?
        Mr. Hayward. You will get it as soon as we can make it
    available to you.
        Mr. Dingell. Now, did BP have an emergency response plan in
    the event of a failure at the well?
        Mr. Hayward. We had a response plan which we have----
        Mr. Dingell. What was the date of that response plan?
        Mr. Hayward. The response plan was approved, as I recall,
    in June of 2009.
        Mr. Dingell. Please submit to us the date of the response
    plan and the number of times which it was updated and who it
    was that did the formulation of the plan. Please inform us for
    the record whether or not that plan was approved by the Mineral
    Management Service and on what date?
        Thank you, Mr. Chairman. I look forward to seeing those
    answers in the record.
        Mr. Stupak. Thank you, Mr. Dingell. To let members know, we
    are going to stand in recess for 1 hour. We have six votes plus
    a motion to recommit. The good news is when we come back--these
    are the last votes of the day--we will be able to finish the
    hearing then.
        Mr. Burgess. Mr. Chairman, Mr. Hayward has brought up a
    point about he followed the procedures of MMS. Once again it is
    so critical that we get the Federal regulatory agencies in this
    committee to ask them questions.
        Mr. Stupak. Mr. Burgess, as you know----
        Mr. Burgess. The fact that we haven't here, after all these
    hearings, is really disturbing to me.
        Mr. Stupak. Reclaiming my time, Mr. Burgess. As you know,
    we have a methodical method we have been using in this
    investigation. We have gone through it very methodically. You
    know we have at least two more hearings. One was scheduled for
    Tuesday, but at your request and my request we moved it back a
    little more. There will be at least two more hearings. We will
    do our job. We will have all parties here before this committee
    at the appropriate time.
        Mr. Burgess. Clearly, Mr. Hayward is not prepared to answer
    the questions and we need to get MMS in here to do that as
    well.
        Mr. Stupak. MMS isn't going to help Mr. Hayward answer the
    questions. Mr. Hayward has to answer the questions himself.
        Mr. Burgess. I would just submit that with the depth----
        Mr. Stupak. We are in recess until 2 o'clock.
        Mr. Burgess. Any one of us could do his job.
        [Recess.]
        Mr. Stupak. The committee will reconvene.
        Mr. Hayward, during the last series of votes, I was
    approached by several members of the committee who are
    extremely frustrated with your lack of candor and your
    inability to answer their questions. We initially wanted to
    have this hearing last week. However, your staff pleaded with
    the committee to give you an additional week so you could be
    adequately prepared for this hearing and we agreed. In addition
    to the extra week, we allowed you to prepare, Chairman Waxman
    and I sent you a 14-page letter outlining five issues you
    should be prepared to address in today's hearing.
        You did not address any of those issues in your opening
    statement. And thus far, you have responded to our questions
    with little substance and many claims of not knowing or not
    being part of the decisionmaking processes.
        You first accepted responsibility for actions to your staff
    in town hall meetings, and yet you have not yet provided us
    with direct answers or taken responsibility thus far today. I
    sincerely hope that you will reconsider your approach to these
    questions. I hope you will be more forthcoming and less evasive
    with your answers for the remainder of this hearing.
        We are done with votes, so we should be able to get through
    the rest of this hearing; and we will probably go a second
    round because members do want to push you on some of these
    issues. You are the CEO. Great experience. You have got a Ph.D.
    You have been head of exploration. You know what is going on.
    We would hope that we would have more candid responses to our
    questions.
        With that, let me turn it to Mrs. Blackburn for questions.
    Five minutes, please.
        Mrs. Blackburn. Thank you, Mr. Chairman. And indeed, Mr.
    Hayward, we are a little bit frustrated with hearing you say
    you were not a party to certain decisions or were not in that
    chain of command or that you can't comment because of ongoing
    investigations. So I am going to try a little different tactic
    because I do want to get some answers and get some items--get
    some of these questions answered.
        I want to go back to the safety issues. I mentioned that in
    my opening statement to you. I am one of those individuals that
    grew up down on the Gulf Coast and then moved away. I am
    familiar with people working offshore, if you will.
        And what I would like to know from you, have you been
    briefed on the safety issues and the safety concerns; and then
    if you were a part of the decisionmaking process on what would
    be considered the best operating practices, were you a part of
    the chain of command, and what is the chain of command for
    dispute resolution when there is a difference about how to
    approach safety?
        Go ahead. I would love your response.
        Mr. Hayward. As I have said, I wasn't involved in the
    decisionmaking on the day----
        Mrs. Blackburn. Let us do this, then. If you were not
    involved in the decisionmaking of how safety is approached on
    these rigs and platforms, would you submit to us in writing for
    the record a description of what that chain of command is and
    what the process is when there is a difference of opinion on
    how you approach rig safety? Would you be willing to submit
    that? And I will ask you and your team to submit that to us for
    the record.
        In addition, since becoming CEO, have you been briefed on
    the significant safety incidents that have occurred in BP's
    explorations, Alaska and production facilities over the past
    year? Have you been briefed?
        Mr. Hayward. I had discussed those issues at the group
    operating risk committee.
        Mrs. Blackburn. As a result of these briefings, did you
    authorize any changes to BP policies and practices for dealing
    with the safety?
        Mr. Hayward. We took actions in Alaska to change both the
    organization and some of the processes.
        Mrs. Blackburn. Thank you. Since the Deepwater Horizon
    incident, have you made changes? And what are those? Will you
    submit those to us for the record?
        Mr. Hayward. We have made changes to our testing procedures
    on BOPs. We have made changes to the intensity with which well-
    site leaders are aware of well control procedures and a variety
    of other interventions that are predicated on what we have
    learned from the incident so far. And as we learn more, we will
    make more changes as we deem appropriate.
        And I would be very happy to submit to you, Congresswoman,
    the changes that we have made.
        Mrs. Blackburn. Thank you. Did you ask other companies for
    help in cleaning up the BP oil spill? Last week for the
    hearing, we had several different companies. Did you all
    approach other companies or other countries and ask for their
    help and their expertise in plugging that leak and in
    participating in the cleanup?
        Mr. Hayward. We sought help from both our immediate peers
    and competitors in the Gulf of Mexico, and globally from around
    the world and across America. There are several hundred
    entities involved in the effort. All of the major operators in
    this country, major operators from elsewhere in the world such
    as Petrobras, many of them major academic institutions in this
    country. Some of the greatest minds in the country are involved
    in trying to deal with this problem.
        Mrs. Blackburn. Did they participate at your invitation or
    the government's invitation?
        Mr. Hayward. They participated, in the first instance, at
    our invitation; and subsequently the Federal authorities
    brought some of the great academic institutions in this country
    to bear.
        Mrs. Blackburn. Are you currently--is BP currently working
    on industry efforts to look at rig safety?
        Mr. Hayward. We have made recommendations to the MMS with
    respect to the things that we have learned so far, particularly
    with respect to blowout preventers. And we will continue, as we
    learn what the realities of this accident are, to make our
    recommendations to the relevant authorities. And I believe that
    in the course of the coming months, the industry will work
    together to determine what is the best way forward.
        Mrs. Blackburn. We hope that you are working together
    because I hope you understand our frustration. You have stated
    before safety would be a priority for BP. And we expect you all
    to take action on lessons learned. And when you tell us that
    you are taking that action and then you return because of what
    has occurred, Mr. Hayward, I cannot even begin to tell you how
    disappointing it is to us that you are saying--and you
    mentioned actions and words in your testimony. But, sir, you
    are giving the rhetoric. What we want to see going forward is
    the action that indeed you have learned these lessons, that BP
    has learned these lessons and that you are going to share these
    best practices with the industry. That would be very helpful.
        Thank you for being before us today. I yield back.
        Mr. Stupak. I thank the gentlelady.
        Mr. Hayward, you indicated that you made recommendations on
    the blowout preventer your company has. Would you provide those
    to this committee?
        Mr. Hayward. We certainly can, Chairman.
        Mr. Stupak. Next I will turn to Mr. Markey for questions,
    please.
        Mr. Markey. Thank you, Mr. Chairman.
        Mr. Hayward, the existence of large clouds or plumes of oil
    suspended deep beneath the ocean surface are of concern because
    the toxic oil and dispersants can poison the aquatic plants and
    animals, and they also consume oxygen, potentially asphyxiating
    marine life.
        On May 30th, you stated that your samples showed no
    evidence of such plumes. On June 7th in a response to my
    letter, BP again denied the plumes existed, citing a BP
    document saying that there is no coherent body of hydrocarbons
    below the surface.
        Even after NOAA Administrator Jane Lubchenco confirmed the
    plumes' existence on June 8th, your COO, Jeff Suttles, went on
    national television and continued to deny their existence.
        These are photographs presented to us on the committee by
    Dr. Samantha Joy of the University of Georgia, who has sampled
    the deep water of the gulf and found such plumes. On the right
    there is a filter with oil clearly present from water from
    within a plume as it passed by.
        Now, it isn't just university scientist data. I have here
    up on the screen as well from EPA's Web site entitled,
    ``Subsurface Plume Detected.'' It was prepared using BP's data.
    There are 17 red dots indicating that your own data shows
    evidence of subsurface plumes. This is your data, Mr. Hayward.
        Are you now once and for all prepared to concede that there
    are plumes or clouds of oil suspended deep beneath the surface
    of the ocean? Yes or no, Mr. Hayward.
        Mr. Hayward. As I understand the data, Chairman, it
    indicates that there are--there is oil in very low
    concentrations, 0.5 parts per million distributed through the
    column. The detailed analysis that NOAA conducted in three
    locations around the spill show that in one location, 0.5 parts
    per million, clearly attributed to this spill.
        Mr. Markey. Are there plumes of oil beneath the ocean's
    surface?
        Mr. Hayward. There are concentrations of oil about 0.5
    parts per million in the water column. Some of it is related to
    this spill. Other samples from been typed to other oil.
        Mr. Markey. So you do not define that as a plume?
        Mr. Hayward. I am not an oceanographic scientist. What we
    know is that there is----
        Mr. Markey. I am going to take it as a continuing ``no''
    from you. And your testimony continues to be at odds against
    all independent scientists. Yesterday at the Energy and
    Commerce Subcommittee on Health, during the hearing the
    director of the National Institute of Occupational Health and
    Safety told me in answer to my question that he has asked BP
    for a roster of all workers multiple times and BP has failed to
    give him that information that is critical to tracking chemical
    exposure.
        Representative Eshoo and I were both outraged at BP's
    failure to take such a straightforward step to protect the
    health of their workers.
        Mr. Hayward, will you commit to immediately provide the
    National Institute of Occupational Health and Safety and the
    Centers for Disease Control with all of the information that
    they need to evaluate health impacts and to protect these
    workers?
        Mr. Hayward. We have endeavored to provide all information
    requests as quickly as possible, and we will endeavor to do
    that as well.
        Mr. Markey. The head of the National Institute of
    Occupational Health and Safety testified yesterday that you are
    not doing that. Will you provide all of the information that
    they have requested of you?
        Mr. Hayward. We are endeavoring to provide all of the
    information requested that we receive, and we will certainly do
    it for that one.
        Mr. Markey. Again, the equivocation in your answer is
    something that is not reassuring to those workers who
    potentially have been exposed to these chemicals in ways that
    can impact on their health. BP has dumped 30,000 gallons of
    drilling mud in the ocean. Drilling mud is often made using
    synthetic oils and other chemicals, and in this case also may
    have used significant quantities of antifreeze which is toxic.
        Mr. Hayward, will you commit to disclosing the ingredients
    of the drilling mud?
        Mr. Hayward. Yes, we will. I believe that all of the mud
    that has gone into the ocean is water-based mud with no
    toxicity whatsoever.
        Mr. Markey. Will you also commit to disclosing all other
    measurements you have made related to chemical, oil, and
    methane concentrations in the water immediately?
        Mr. Hayward. Those are being published, as we make them, on
    a variety of Web sites. And we will continue to do that. And we
    will make them available in whatever form is available to all
    of you.
        Mr. Markey. And you will give us all of the measurements
    which you have made?
        Mr. Hayward. All the measurements we have made have been
    made available and we will continue to do that.
        Mr. Markey. Thank you, Mr. Chairman.
        Mr. Stupak. Thank you. Mr. Gingrey for questions, please.
        Mr. Gingrey. Mr. Hayward, as demonstrated by the number of
    cameras in this room, interest in this hearing is at a fever
    pitch. The anger at BP and the anger at our administration is
    palpable. You just look at the polls. And we members of this
    committee have an obligation to get to the bottom of this to
    address the frustrations of the American people.
        The chief executive of ExxonMobil testified just yesterday
    at the Energy and Environment Subcommittee of this committee
    that, quote, We would not have drilled the well the way they
    did, end of quote.
        In addition, the president of Shell, John S. Watson,
    stated, and I quote, It is not a well that we would have
    drilled in that mechanical setup and there are operational
    concerns, end of quote.
        Mr. Hayward, my profession before Congress was the practice
    of medicine, obstetrics and gynecology. If I had delivered a
    baby that resulted in a bad outcome, a seriously bad outcome,
    and two of my friendly competitors, well-respected peers, said
    that Dr. Gingrey in this instance practiced below the standard
    of care, I would be in a serious world of hurt.
        Reflecting on the fact that two of your major competitors
    admitted that BP drilled the Macondo well in a nonstandard way,
    in retrospect what is your opinion of BP's design plan for the
    Macondo well?
        Mr. Hayward. As I tried to explain, there are clearly some
    issues that our investigation has identified. And when the
    investigation is complete, we will draw the right conclusions.
        Mr. Gingrey. With all due respect, you have had 59 days and
    you are not exactly moving with fever pitch here. Do you
    believe BP was drilling the well following the best safety
    practices you were focused on reinvigorating when you were
    promoted to the position of CEO a couple of years ago?
        Mr. Hayward. I have no reason to conclude that wasn't the
    case. If I found at any point that anyone in BP put cost ahead
    of safety, I would take action.
        Mr. Gingrey. Do you believe that the decisions made
    regarding Deepwater Horizon on and leading up to April the
    20th, such as a decision to use only 6 centralizers instead of
    21, the decision to not run a cement bond log, do you believe
    those decisions reflect the normal decision making process at
    BP, or would you characterize those decisions as an exception
    to normal operating procedures?
        Mr. Hayward. There is nothing I have seen in the evidence
    so far that suggests that anyone put costs ahead of safety. If
    there are, then we will take action.
        Mr. Gingrey. Let me put it this way, Mr. Hayward, in the
    remaining time that I have left. If you had been physically
    present on that rig, along with the 11 men that were killed,
    would you have made the same decisions as were made? Would you
    have approved the decision to use only 6 centimeters, despite
    the recommendation to use 21? Would you have made the decision
    to not run a cement bond log if you had been standing on that
    Deepwater Horizon rig?
        Mr. Hayward. I am not the drilling engineer, so I am not
    actually qualified to make those judgments. Better people than
    I were involved in those decisions in terms of the judgments
    that were taken. And if our investigation determines that at
    any time people put costs ahead of safety, then we will take
    action.
        Mr. Gingrey. With all due respect, Mr. Hayward, I think you
    are copping out. You are the captain of the ship, and it has
    been said by members on both sides of the aisle of this
    committee, we had a President once that said, the buck stops on
    my desk, a very distinguished President. And I think the buck
    stops on your desk. And we are just not getting, I don't think,
    the answers from you that need to be presented to this
    committee in a forthright manner. It is a little frustrating
    for all of us and it seems like your testimony has been way too
    evasive.
        Mr. Chairman, I will yield back at this time.
        Mr. Stupak. Thank you, Mr. Gingrey. Mr. Braley for
    questions, please.
        Mr. Braley. I want to follow up on my friend from
    Oklahoma's questions about the culture of safety at BP, Mr.
    Hayward, because you have stated repeatedly since you took over
    as CEO of BP, that safe reliable operations are a number one
    priority, correct?
        Mr. Hayward. That is correct.
        Mr. Braley. And you have been CEO for the past 3 years,
    correct?
        Mr. Hayward. Correct.
        Mr. Braley. Then explain to us why between June of 2007 and
    February of 2010, the Occupational Health and Safety
    Administration checked 55 oil refineries operating in the U.S.;
    2 of those 55 are owned by BP, and BP's refineries racked up
    760 citations for egregiously willful safety violations
    accounting for 97 percent of the worst and most serious
    violations that OSHA monitors in the workplace. That doesn't
    sound like a culture of safety.
        Mr. Hayward. We acknowledge we had very serious issues in
    2005 and 2006.
        Mr. Braley. I am not talking about 2005 and 2006. I'm
    citing from an OSHA study between June of 2007, on your watch,
    and February of 2010 where OSHA said BP has a systemic safety
    problem. And of those 760 that were classified as egregious and
    willful, it is important to note that that is the worst
    violation that OSHA can identify. And their definition is a
    violation committed with plain indifference to or intentional
    disregard for employee safety and health; 97 percent of all of
    those egregious violations at U.S. refineries on your watch
    were against your company.
        That doesn't sound like a company that, to use your words,
    is committed to safe, reliable operations as your number one
    priority. There is a complete disconnect between your testimony
    and the reality of these OSHA findings; do you understand that?
        Mr. Hayward. I understand what you are saying.
        Mr. Braley. So we also had Mr. Barton earlier make this
    comment about what happened at the White House yesterday. Were
    you there for that conference with the White House?
        Mr. Hayward. I was.
        Mr. Braley. Do you think that BP was shaken down by the
    Obama administration to come up with this $20 billion
    compensation fund?
        Mr. Hayward. We attended the White House at the invitation
    of the government to form a way forward and try and work
    together to deal with the leak, the response to the leak, and
    to make a return of the Gulf Coast to its past. And that is
    what we are going to do.
        Mr. Braley. I realize that we speak the same language, but
    it is not always the same language when we speak English in the
    United States and English in Great Britain. So I want to make
    sure I am clear on this. Here in this country, the word
    ``shaken down'' means somebody in a position of disadvantage is
    forced to do something against their will. Is that how you
    viewed these negotiations at the White House yesterday?
        Mr. Hayward. As I said, we came together to figure out a
    way of working together to resolve what is clearly a very, very
    serious situation.
        Mr. Braley. And the reason you came together, sir, is
    because it was not only in the best interest of the United
    States taxpayers and the citizens of this country, it is also
    in the best interest of BP to try to get this problem solved so
    that it can move forward; isn't that true?
        Mr. Hayward. It is undoubtedly true. We would like to
    resolve this issue, as would everyone else.
        Mr. Braley. When the ranking member referred to this
    compensation fund--which I applaud as a positive step forward--
    as a slush fund, I want you to know that in this country that
    implies a very negative connotation as something illegal, below
    the surface of what is acceptable.
        Did you consider this compensation fund for people who had
    lost their lives, lost their businesses, lost their
    environment, lost their ability to--did you consider that to be
    a slush fund?
        Mr. Hayward. As we said yesterday, the fund is a signal of
    our commitment to do right; to ensure that individuals,
    fishermen, charter boat captain, small hotel owner, everyone
    who has been impacted by this is kept whole. That is what I
    have said from the very beginning of this and that is what we
    intend to do. And as I said in my testimony, I hope people will
    now take--see that we are good for our word.
        Mr. Braley. Can we take that as a ``no'' in response to my
    question, sir, that you did not consider this to be a slush
    fund?
        Mr. Hayward. I certainly didn't think it was a slush fund,
    Congressman.
        Mr. Braley. Thank you. I will yield back.
        Mr. Stupak. Mr. Latta for questions, 5 minutes.
        Mr. Latta. Thank you, Mr. Chairman.
        Thank you for being with us, Mr. Hayward. Earlier in the
    morning, our ranking member, Mr. Burgess, had asked a question
    and you responded by--if I wrote it down here correctly, that
    everything we do is subject to regulatory oversight. And who is
    that when we are talking about regulatory oversight?
        Mr. Hayward. The regulatory oversight of the deepwater
    drilling operations is the Minerals Management Service.
        Mr. Latta. But here in the Federal Government, who would be
    out on the rig for that oversight?
        Mr. Hayward. It is the inspectors of the Mineral Management
    Service, I believe.
        Mr. Latta. I am sure there are records out there. When was
    the last time that the MMS would have been on the rig?
        Mr. Hayward. I am afraid I am not aware of that date. But I
    imagine it was relatively shortly before the incident.
        Mr. Latta. Do you know of any citations that were issued
    during the time they were on the rig?
        Mr. Hayward. I am not aware of any citations, no.
        Mr. Latta. Let me ask this question. I know I have talked
    to quite a few Members from the Gulf Coast and also from these
    reports, and there have been many, many cases out there where
    they are talking about it takes almost 5 days for a turnaround
    time and once it starts--I came from local government. So the
    chain of command out there for local government, the State
    Government and depending what is the chain is out there, but
    they are saying over and over and over it takes about 5 days. A
    lot of times they say they have to go talk to BP.
        And I was just wondering--because knowing that time is of
    the essence out there because of all of these critical matters
    that are happening, why is this, that they say they have to go
    ask BP and this turnaround time takes so long?
        Mr. Hayward. I am afraid I cannot answer that question. I
    don't know.
        Mr. Latta. Could you get that information for us?
        Mr. Hayward. We can, yes, sir.
        Mr. Latta. I guess the next question, you will probably
    have the same response. The question is: Who set the procedure
    up this way that we would have a situation where it would take
    a 5-day turnaround time? Do you have any knowledge of that?
        Mr. Hayward. I am afraid I don't know.
        Mr. Latta. After the disaster occurred, have you had direct
    contact with the White House, and do you have a direct person
    at the White House that you have been dealing with when
    problems arise that you can get things turned around quickly?
        Mr. Hayward. My primary contact through all of this has
    been with Admiral Thad Allen who is the National Incident
    Commander. And he and I talk on a very regular basis.
        Mr. Latta. When you say ``on a very regular basis,'' how
    often would that be?
        Mr. Hayward. Typically once a day, often more than once a
    day.
        Mr. Latta. Again, as the lady from Tennessee, we have a
    kind of frustration level on getting some responses. But with
    that, Mr. Chairman, I am going to yield back.
        Mr. Stupak. Thank you, Mr. Latta. Ms. DeGette for 8
    minutes, please.
        Ms. DeGette. Thank you so much, Mr. Chairman.
        Mr. Hayward, in your initial testimony, you testified that
    BP has drilled hundreds of wells around the world. How many of
    them are deepwater wells?
        Mr. Hayward. I don't know the precise number, but we drill
    a lot of deepwater wells in various parts of the world.
        Ms. DeGette. OK. You don't know how many. Do you think that
    BP wells--irrespective of where they are drilled--should be
    drilled to the highest industry standards?
        Mr. Hayward. I believe that is what we try to do.
        Ms. DeGette. So your answer would be yes?
        Mr. Hayward. Uh-huh.
        Ms. DeGette. As this well was being drilled, were you
    informed as CEO of the company, of the progress of the well?
        Mr. Hayward. I was not.
        Ms. DeGette. You were not.
        Before I continue, I know you had difficulty answering some
    of the technical questions members have asked you, so I know
    you brought a technical expert with you, Mr. Zanghi. Would you
    like us to swear him in so he can help you answer some of my
    technical questions?
        Mr. Hayward. I think that depends on the question.
        Ms. DeGette. Let's see how it goes. Mr. Hayward, you said
    that you received the chairman's June 14th letter to you which
    talked about five decisions that compromised the safety of this
    well: well design, centralizer, cement bond log, mud
    circulation and lockdown sleeve.
        I want to ask you in my question about one of those issues
    and that is the cement bond log. First thing I want you to do,
    if you can take that notebook that is to your left, open it up.
    In the front flap there is a memo which was written from Brian
    Morel to Richard Miller on Wednesday, April 14th. And that memo
    says, This has been an nightmare well, which has everyone all
    over the place.
        Did anybody inform you as CEO of the country--company--in
    April of this year that this was a nightmare well?
        Mr. Hayward. They did not.
        Ms. DeGette. Did you consequently see this memo? Have you
    seen this memo?
        Mr. Hayward. I saw this memo when it was raised by your
    committee.
        Ms. DeGette. And that is the first you ever heard of it?
        Mr. Hayward. That is the first time----
        Ms. DeGette. Is that the first you ever heard it of being a
    nightmare well?
        Mr. Hayward. When I first saw this----
        Ms. DeGette. Now, let us talk for a minute about the
    cementing job because all of the testimony that we have had in
    this committee through our hearings, also in the Natural
    Resources Committee through their hearings, indicates that the
    choices that BP made--and its subcontractors--in order to save
    money led to blind faith in a successful cementing job. Let me
    just walk through it first so that you can understand.
        First of all, BP chose a riskier well design and the
    chairman, Chairman Waxman, talked about this for a moment. The
    best practice would have been to use a liner and a tieback
    which provides four barriers to prevent the flow of dangerous
    hydrocarbons to the wellhead. Instead, BP as the chairman said,
    chose a long-string approach which has only two barriers.
        An internal document of the company warned that this
    approach was not recommended because, quote, cementing
    simulations indicate it is unlikely to be a successful cement
    job. And you can look at Tab 6 of the notebook you have in
    front of you to see that, Mr. Hayward. It says, Cement
    simulations indicate it is unlikely to be a successful cement
    job due to formulation breakdown.
        This is an internal BP confidential document from mid-
    April. Have you seen this document before?
        Mr. Hayward. I saw it as a consequence of the letter that--
    --
        Ms. DeGette. But you did not see it at the time?
        Mr. Hayward. I did not see it at the time.
        Ms. DeGette. But there were BP folks who saw it, correct?
        Mr. Hayward. There were certainly BP people who saw this.
        Ms. DeGette. So the document says there would be a
    potential need to verify with the bond log and perform a
    remedial cement job, but BP chose the riskier approach.
        Secondly, BP chose the riskier centralizer option. Experts
    have told us in testimony to this committee that the best
    practice would have been to use 21 centralizers, but BP only
    used 6. If you take a look at Tab 8, it says on Page 18, it
    says you did this even though your cementer, Halliburton, said
    this would create a, quote, severe risk that the cement job
    would fail. It says based on--it says that it would be a severe
    risk.
        And BP's operations drilling engineer wrote about this
    decision: Who cares, it's done, end of story; will probably be
    fine and get a good cement job.
        Were you aware of that document at the time, Mr. Hayward?
        Mr. Hayward. I was not aware of any of these documents at
    the time.
        Ms. DeGette. When did you learn about that memo?
        Mr. Hayward. That memo was, again, when I was made aware of
    it by your committee.
        Ms. DeGette. But you wouldn't deny that BP employees and
    supervisors were aware of that document at the time, correct?
        Mr. Hayward. There were people in BP who were aware of that
    document.
        Ms. DeGette. Would you say it is the best business
    practices to say, Who cares, it is done, end of story, will
    probably be fine and we will get a good cement job?
        Mr. Hayward. I think that is, you know, a cause for
    concern. I would like to understand the context in which it was
    sent. And as I have said a number of times, if there is any
    evidence that people put costs ahead of safety, then I will
    take action.
        Ms. DeGette. I understand. Let me finish with the cement
    bond.
        Now, BP failed to perform the most effective test that was
    known to determine whether the cement was properly sealed, and
    that is the cement bond log test. There was a contractor,
    Schlumberger, on board, hired to perform this test, but they
    were sent away 11 hours prior to the explosion. This test was
    described by Halliburton's chief safety officer, Tim Porbert,
    as quote: The only test that can really determine the actual
    effectiveness of the bond between the cement sheets, the
    formation and the casing itself.
        Now, the committee has consulted an independent expert who
    said that cement bond loss should always be used. Another
    expert said it is unheard of not to perform this test. He
    called your decision, and I am quoting, horribly negligent.
        So I want to ask you a question. Do you think, as CEO of
    this company, it was a mistake not to conduct the cement bond
    log test?
        Mr. Hayward. That is what our investigation will determine.
    As I----
        Ms. DeGette. So your answer would be, yes, it was a
    mistake, correct?
        Mr. Hayward. I am not able to answer ``yes'' or ``no''
    until the investigation is complete. When we finish----
        Ms. DeGette. Have your lawyers told you not to or what?
        Mr. Hayward. Simply because I wasn't involved. I am sorry.
        Ms. DeGette. OK. But you just said you think that all the
    evidence shows it was a mistake, correct?
        Mr. Hayward. That is not correct. That is not what I said.
        Ms. DeGette. OK. Do you think it was all right not to
    conduct it?
        Mr. Hayward. I think we need to complete the
    investigation----
        Ms. DeGette. OK. Well----
        Mr. Hayward [continuing]. And determine whether running a
    cement bond log or not would have created a major difference to
    what happened here.
        Ms. DeGette. OK. Let me ask you this: Are you aware of the
    fact that it would have cost about $128,000 and taken 9 to 12
    hours to complete the cement bond log test?
        Mr. Hayward. I am aware of that fact, yes.
        Ms. DeGette. Yes. OK.
        OK, I yield back. Thank you, Mr. Chairman.
        Mr. Stupak. Thank you.
        Mr. Doyle for questions, please.
        Mr. Doyle. Thank you, Mr. Chairman.
        Mr. Hayward, in your testimony, you said that some of the
    best minds and the deepest expertise are being brought to bear
    on the oil spill and that it is difficult to imagine the
    gathering of a larger, more technically proficient team in one
    place in peacetime. Now, I know that is meant to reassure us
    that everything possible is being done, but it does make me
    wonder who was making these key decisions before the accident.
        Now, one of these key decisions was which type of pipe to
    insert in the well, a single tube from the top or a two-piece
    liner with a tieback set-up. Now, the second design offers more
    barriers to unintended gas flow. And, on Tuesday, the other oil
    companies that we talked to told us they would have chosen that
    design.
        Looking back, the decision that BP made appears to have had
    serious consequences. Mr. Hayward, were you involved in that
    decision?
        Mr. Hayward. I was not involved in that decision.
        Mr. Doyle. Were you aware of that decision?
        Mr. Hayward. I was not involved or aware of any of the
    decisions around this well as it was being drilled.
        Mr. Doyle. We asked your representatives, who are the
    senior BP executives who are responsible for the Macondo well.
    They told us it was Andy Inglis, the chief executive for
    exploration, and Doug Suttles, the chief operating officer for
    exploration.
        Can you tell me, was Andy Inglis involved in this decision?
        Mr. Hayward. I am afraid I can't answer that question. I
    genuinely don't know. I would be very surprised.
        Mr. Doyle. What about Doug Suttles, was he involved in the
    decision?
        Mr. Hayward. I would also be very surprised if Mr. Suttles
    was involved in any decision.
        Mr. Doyle. So we have reviewed all of their e-mails and
    communications. We find no record that they knew anything about
    this decision. In fact, we find no evidence that they ever
    received briefings on the activities aboard the Deepwater
    Horizon before the explosion. These decisions all seem to have
    been delegated to much lower-ranking officials.
        Well, Mr. Hayward, then, who was the one who made the
    decision to use a single tube of metal from the top of the well
    to the bottom? Who did make that decision?
        Mr. Hayward. I am not sure exactly who made the decision.
    It would have been a decision taken by the drilling
    organization in the Gulf of Mexico. They are the technical
    experts that have the technical knowledge and understanding to
    make decisions of that sort.
        Mr. Doyle. But you can't tell this committee who that
    person was?
        Mr. Hayward. I can't, sitting here today, I am afraid.
        Mr. Doyle. You can get this information to our committee? I
    mean, I think it is pretty amazing that this is the decision
    that had enormous consequences and you can't even tell the
    committee who made the decision on behalf of your company.
        And the reason I am asking you these questions is because
    your industry is different than many. You are not the CEO of a
    department store chain where it is fine to leave decisions
    about running the store to branch managers. You know, if a
    department store middle manager makes a mistake, there are no
    life-or-death consequences.
        What you do is different. You are drilling far below sea
    level into a region that is more like outer space than anything
    else. The consequences of that drilling are huge. If a mistake
    or misjudgment is made, workers on the rig can get killed and
    an environmental catastrophe can be unleashed.
        The best minds in the senior leadership of a company should
    be paying close attention to those risks. But it didn't happen
    here. And now we are all paying the consequences because those
    of you at the top don't seem to have a clue about what was
    going on on this rig.
        Now, I am sitting here thinking I could be a CEO of an oil
    company. I hear it pays a little bit better than being a Member
    of Congress. Because I have watched you in front of this
    committee; you are not able to give us much information on
    anything here.
        I want to ask you one last question while I have some time.
    You told us that you are doing everything possible to stop this
    well from leaking, but it seems to me that what we are left
    with now is waiting for this relief well to be drilled. And
    that is going to happen sometime in August.
        So, you know, today is June 17th. Now, back in 1979, the
    Ixtoc I took over 9 months to cap after drilling several relief
    wells. And that well was only 160 feet down into the ocean,
    while the Macondo well is over 5,000 feet below the surface of
    the ocean.
        Can you tell us today, have you abandoned any other efforts
    to kill this well? Are we at the point now where BP is doing
    nothing until the relief well gets down there? Or are you
    trying some different technology or some other way to kill the
    well, you know, before you get a relief well down there? Is
    there anything else on the horizon?
        Mr. Hayward. I am afraid there are no other options to kill
    this well other than from the well at the base of the
    reservoir. As you are all aware, we tried to kill the well from
    the top, using the Top Kill operation, and the pressures in the
    well are such that it is not possible to do that. So we have to
    rely on the relief wells.
        In the interim, we are continuing to contain as much of the
    oil we can. And that operation is currently containing 20,000
    barrels a day. By the end of this month, we will have the
    ability to contain between 40,000 and 50,000 barrels a day and,
    by the middle of July, between 60,000 and 80,000 barrels a day.
        Mr. Doyle. I will ask you the same question I asked other
    oil executives on Tuesday. Why wouldn't you just drill relief
    wells when you drill the main well, so that if something like
    this happened, instead of us waiting 2, 3 months and watching
    millions of barrels of oil come into the ocean, destroying our
    ecosystem and our way of life on the gulf coast, that you could
    kill that well in a short period of time?
        I understand the extra relief well would cost you a little
    bit more money, but it seems to me, in this case, it would have
    saved you billions of dollars. What are your thoughts on
    drilling relief wells along with main wells?
        Mr. Hayward. I think we will need to look at all of the
    options available to us going forward with respect to deepwater
    exploration.
        Mr. Doyle. I see my time is up, Mr. Chairman. Thank you.
        Mr. Stupak. Thank you, Mr. Doyle.
        Ms. Schakowsky for questions, please.
        Ms. Schakowsky. Thank you, Mr. Chairman.
        I wanted to focus on the mindset of BP when it comes to its
    workers. You said in your opening statement that you were
    personally devastated, you attended a memorial service for
    those men. ``It was a shattering moment. I want to offer my
    sincere condolences to their friends and families. I can only
    imagine their sorrow.''
        Probably not as devastated as the widows that testified
    before our committee. And I asked them: What about BP, what
    kind of contact have you had with BP since the incident--
    letters, phone calls, visits? And Natalie Roshto said, ``Two BP
    men attended James's services, and they never extended a hand,
    a hug, never extended a `we're sorry,' their condolences. The
    only words that came out of their mouth was where they were to
    be seated, and I never saw them after that.''
        I asked, ``What about you, Mrs. Kemp?'' ``Two BP men came
    to Wyatt's services, and one extended his hand. I shook it. He
    told me he was very sorry for my loss. He asked if he could hug
    me; he did. The other gentleman extended his hand, told me who
    he was. And they sent two plants to the service. And that is
    the extent of my conversation or any dealings with BP.''
        That's it. Do you feel that you owe something more to those
    women, just in terms of expressing something and some--and
    more?
        Mr. Hayward. As I said, I am devastated by the accident,
    absolutely devastated. And I feel great sorrow for the people
    who have been impacted by it.
        Ms. Schakowsky. Well, they haven't heard anything.
        Mr. Hayward. The people who were killed in the accident
    were not BP employees. They were employees of Transocean and
    another contractor. And both of them made it very clear that
    they wanted to deal with the families. We have provided support
    to both Transocean and----
        Ms. Schakowsky. I guess I was talking about human beings--
    --
        Mr. Hayward. And we have made it clear that we will provide
    all and every need for the families, but the----
        Ms. Schakowsky. OK, let me ask another question. There were
    BP personnel on the rig, and we read that oil workers from the
    rig were held in seclusion on the open water for up to 2 days
    after the April 20 explosion while attorneys attempted to
    convince them to sign legal documents stating that they were
    unharmed by the incident.
        The men claimed that they were forbidden from having any
    contact with concerned loved ones during that time and were
    told that they would not be able to go home until they signed
    the documents they were presented with. After being awake for
    50 harrowing hours, Stephen Davis caved in and signed the
    papers. He said most of the others did, as well.
        Do you think this is an appropriate way to treat people
    that experience that? And since you are executives, you had
    people on the rig, what was their feeling about that, what is
    your feeling about that?
        Mr. Hayward. I think it is inappropriate, and it was
    nothing to do with BP.
        Ms. Schakowsky. I see. And BP had no comment on it and had
    no opportunity--I mean, did the company know about it? Was
    there any----
        Mr. Hayward. I don't believe we were aware it was taking
    place, but it was certainly nothing to do with BP.
        Ms. Schakowsky. OK. Well, I did mention during my opening
    statement this document that basically says, ``Such voluntary
    effort shall be at my own risk,'' that people were made to
    sign. And there were two court appearances that were needed to
    finally get BP to take responsibility.
        But what I understand is that BP continued to fail to
    provide adequate protective gear to the fishermen. And on May
    16th, OSHA issued a detailed directive on the training
    requirement for specific tasks to responders and stated that
    OSHA had officials monitoring the training and observing the
    cleanup.
        But, according to testimony we heard in Louisiana, still,
    BP failed to provide respirators to the workers exposed to the
    crude oil, and the workers experienced health impacts. The
    workers were afraid to speak up due to the potential to lose
    their jobs. Those fishermen who attempted to wear respirators
    while working were threatened to be fired by BP due to the
    workers using the respirators.
        Do you know anything about that?
        Mr. Hayward. I am not aware of that. What we clearly are
    endeavoring to do is to ensure that anyone involved in the
    response is appropriately provided with whatever safety
    equipment is required.
        Ms. Schakowsky. Endeavoring to provide?
        Mr. Hayward. Well, we----
        Ms. Schakowsky. Are the workers currently provided with
    what they need?
        Mr. Hayward. Absolutely. In every case, we are trying to
    make certain that people do not put----
        Ms. Schakowsky. You are trying to make certain, but is all
    the equipment there and are all these workers protected?
        Mr. Hayward. To my knowledge, yes.
        Ms. Schakowsky. Thank you.
        I yield back.
        Mr. Stupak. Thank you.
        We will next turn to Mr. Ross for questions, please.
        Mr. Ross. Thank you, Mr. Chairman.
        And, Mr. Hayward, since my opening statement, up to 416,666
    gallons of oil have leaked into the gulf. That was about 4
    hours ago.
        In our opening statement 4 hours ago, I asked you to be
    open with us and honest with us in your responses. And,
    instead, it seems as though we are getting statements memorized
    by you and provided by your legal counsel.
        I don't know if BP quite understands how angry the American
    people and the world is at them. I can tell you it is rare that
    you see Democrats and Republicans on this panel agreeing with
    one another, and yet it has been pretty consistent today, with
    a few major exceptions, the level of discontent and anger and
    frustration at BP.
        I also watch this on the news, and it seems to me that BP
    has not been honest with the American people, it has not been
    honest with our government, and it seems as though you are
    trying to hide something.
        Sir, it is hard to hide 2.5 million gallons of oil a day
    pouring into the gulf. We want answers. We want you to be
    honest and open with us. And we want to finally see the kind of
    transparency that you have been talking about.
        I have a few questions for you.
        BP is currently in the process of drilling two relief wells
    to stop the flow of oil that may or may not work, which you
    have said will be finished by August.
        After these relief wells are finished and the leak has been
    stopped, what does BP plan to do with these wells? Do you plan
    to put these wells into production to make a profit off of
    them, or do you plan to shut them down after the situation has
    been resolved?
        Mr. Hayward. They will be shut down after the situation has
    been resolved. The first relief well, we will pump mud down the
    relief well to kill the well, to kill the current well that is
    flowing, and then cement it up.
        Mr. Ross. A recent article in the New York Times reported
    that the cleanup effort thus far has created over 250 tons of
    solid waste and 175,000 gallons of liquid waste that are now
    being carted away from the gulf coast and shipped off to
    landfills.
        BP executives have stated that had this waste, which is
    admittedly hazardous and destructive to our ocean environment,
    is perfectly safe to dump in our Nation's landfills. You have
    polluted our coast and our air with this tragic spill, and now
    you are shipping the waste you collect and dumping it near our
    homes and our water sources.
        I want to know where this waste is going. And are you
    shipping it throughout the country? How can we be sure it has
    been treated and is safe?
        Mr. Hayward. I don't know the details of that, but I can
    assure you that we will do the right thing to ensure that it is
    treated in the proper and appropriate way.
        Mr. Ross. Can you provide me and this committee with a
    response?
        Mr. Hayward. We certainly can.
        Mr. Ross. Let me try this, in the time I have left. This
    has been asked several times, and I don't think we have gotten
    an answer yet.
        We all know about the e-mails from BP employees expressing
    their concerns about the casing procedures, including an April
    15th e-mail from your drilling engineer, Brian Morel, who
    described the well as, quote, ``a nightmare well.''
        How much were the drilling engineers consulted in the
    decision to use the single string casing? Was this a bottom-up
    decision in which the people actually connected to drilling the
    operation had some influence, or did it come from the top down?
        Mr. Hayward. As I understand it from the discussion with
    our investigation team and from the review of the documents,
    there was a discussion taking place amongst the drilling
    engineering team responsible for this well. And that is how the
    decision and the judgments were taken.
        Mr. Ross. So would you call that a bottom-up decision or a
    top-down decision?
        Mr. Hayward. I would say it was a decision taken by the
    right experts with the right technical knowledge to make the
    decision.
        Mr. Ross. In your testimony, you note that you are
    currently drilling two relief wells which will ultimately stem
    the flow of oil.
        In previous testimony from BP and Transocean, we have heard
    that there are numerous redundancies built into all of your
    equipment and in all of your personnel procedures to ensure
    that your company does the very best it can to ensure that
    tragedies like the one we have seen unfold over the past 59
    days don't occur.
        My question is this: Do you view these relief wells as an
    on-off switch? When these wells are complete, are they going to
    stop the flow of oil into our ocean? If so, why didn't you
    predrill emergency relief wells prior to this whole mess? It
    has been asked before; we are still waiting for a good answer.
        Did you do cost-benefit analysis and determine that it was
    cheaper to drill one well, spend years rolling in profits from
    the oil you managed to capture, and then potentially pay a
    massive sum to clean up an inevitable tragedy? Which was it,
    sir?
        Mr. Hayward. We believed that the blowout preventer was the
    ultimate fail-safe mechanism. That clearly was not the case in
    this instance.
        It failed on three separate indications: It failed when it
    was activated on the drilling rig at the time of the incident.
    It failed to operate when the drilling rig separated from the
    blowout preventer, as it should have done. And it failed to
    activate when we had submersible robots at the blowout
    preventer within 24 hours of the incident.
        That was the fail-safe mechanism.
        Mr. Ross. Mr. Chairman, I see I am out of time.
        Mr. Stupak. Thank you, Mr. Ross.
        Mrs. Christensen for questions.
        Mrs. Christensen. Thank you, Mr. Chairman.
        Mr. Hayward, you have pledged $20 billion for a trust fund,
    which I see is a commitment to meet BP's obligation--and not a
    slush fund, just for the record.
        My question is, are health payments such as for any
    illnesses that residents or workers may develop as a result of
    the spill covered in your statement to cover all legitimate
    claims? And what about Federal and local government outlays of
    health and other personnel, are they covered under that?
        Mr. Hayward. Claims of that sort are covered under the
    fund.
        Mrs. Christensen. Thank you.
        Several individuals and organizations have called for more
    people and more expertise to assist in fighting what is
    increasingly being called a war. General Honore calls it World
    War III and calls for it to be fought as such.
        What is not part of the effort that needs to be? What is
    missing? And do you feel that you need more hands, more people
    to effectively fight this so-called war and prevent the oil
    from creating any more damage?
        Mr. Hayward. We have been fighting a battle on three fronts
    since the very beginning: to eliminate the leak, to contain the
    oil on the surface, and to defend the shore.
        And it is now the task now of the incident commander, the
    national incident commander, Thad Allen, to determine what
    further resources are required. It is a conversation that he
    and I have on a regular basis, to try and ensure that we have
    the right resources in the right place at the right time to
    deal with the incident.
        Mrs. Christensen. So, as of your last conversation with
    Admiral Allen, the sense was that you had all that you needed
    and all of the people that you needed?
        Mr. Hayward. We are continuing to work the issue of
    defending the shore, to try and mitigate to the maximum extent
    possible the amount of oil that comes onshore. That is where we
    can still do more to defend the beaches.
        Mrs. Christensen. OK. Thank you for your answer.
        You state in your testimony that the events of 4/20 were
    not foreseen by you. But in light of the several areas of
    concern that have been raised, shouldn't someone have foreseen
    and been able to prevent the explosion?
        For example, I understand that there is supposed to be a
    policy where any one person on a rig can shut it down if they
    perceive a problem. Is this a real policy that is enforced and
    reinforced in training, or is it something just on paper?
    Because that didn't seem to happen in this instance, even
    though some Transocean, some Halliburton, and even BP employees
    reportedly had serious concerns.
        Mr. Hayward. It is a policy that is real. And if anyone at
    any time believes that what they are doing is unsafe, they have
    both the right and the obligation to stop the task.
        Mrs. Christensen. And are you surprised that no one, given
    what we are hearing--and I know the investigation is not
    complete--that no one made that decision to shut the rig down?
        Mr. Hayward. I think, in the light of what we now know, it
    is of course surprising that someone didn't say that they were
    concerned. And I think that is to the heart of the
    investigation, to understand exactly what the events were and
    why there was not a different decision taken with respect to
    the event, particularly in the last 5 or 6 hours on the day of
    the incident.
        Mrs. Christensen. There was a company that was supposed to
    do the--I think it was Schlumberger, that was on the rig at the
    time and left. Now, when we were in New Orleans, we were told
    in the hearing that they left because of concern for safety,
    but other reports said that they left because they were told
    they weren't needed. What is, in your analysis, the correct
    reason?
        Mr. Hayward. I believe it is clear that they left the rig
    because they had completed the task, or the task that they had
    anticipated to do was not required.
        Mrs. Christensen. OK. So, as far as you know, it was not
    that they felt unsafe, as we were told in New Orleans?
        Mr. Hayward. It was nothing to do, I don't believe on the
    basis of anything that I have seen, that it was anything to do
    with safety.
        Mrs. Christensen. OK. My last question: In your testimony,
    you say, and I am quoting, ``BP is a responsible party under
    the Oil Pollution Act,'' and you distinguish that terminology
    from any implication of legal liability, which is still being
    investigated.
        When you say ``a,'' do you think that you are the sole
    responsible party? Or might there be others? And, if so, who?
        Mr. Hayward. The government has named four responsible
    parties. They are BP, Transocean, Mitsui, and Anadarko. They
    have all been named as responsible parties in this incident.
        Mrs. Christensen. The last two were?
        Mr. Hayward. Mitsui, Anadarko, Transocean, and BP.
        Mrs. Christensen. Thank you.
        Thank you, Mr. Chairman. My time is up.
        Mr. Stupak. Thank you, Mrs. Christensen.
        Next for questions would be Mr. Welch. He is not here.
        Next would be Mr. Green for questions, please.
        Mr. Green. Thank you, Mr. Chairman.
        Mr. Hayward, the day before yesterday, Mr. Tillerson from
    ExxonMobil testified Tuesday that, in the aftermath of the
    Exxon Valdez accident, ExxonMobil launched a full-scale, top-
    to-bottom review of their operations and implementing far-
    reaching actions that today guide every operation decision they
    make on a daily basis.
        Have there been any specific reforms that BP has
    implemented following the Alaska pipeline accident and the
    Texas City refinery disaster?
        Mr. Hayward. We have implemented major, major change
    following the incidents in 2006 and 2007. We have implemented
    changes to our people, in terms of the skills and capabilities
    we have. We have implemented changes to the training that they
    get and the expertise that they develop. And we have
    implemented significant changes to all of our operating
    practices, including the implementation of an operating
    management system that covers all of the company's operations.
    It has been a root-and-branch review, from top to bottom.
        Mr. Green. I guess my concern is, having followed both the
    Alaskan pipeline and the Texas City refinery disaster, those
    reforms haven't worked.
        What will be done differently this time? In the last almost
    60 days, has there been some discussion on why the reforms from
    the Texas City and the pipeline, the Alaska pipeline, hasn't
    worked?
        And, again, you know the information our committee has. You
    received a letter 2 days ago on some of the decisions that were
    made literally on the rig by BP's representatives.
        What, going forward from here, will we know 5 years from
    now that we won't have to repeat what we are doing this time?
        Mr. Hayward. That is why I am so determined to get to the
    bottom of this incident, such that we can learn from it and
    make changes to ensure that it doesn't happen again.
        Mr. Green. What has happened with your drilling procedures
    internationally? I know there are different standards for
    different companies. Our committee heard testimony from the
    executive a few days ago that, typically, Norway and the
    Scandinavian countries have the toughest offshore drilling. I
    know BP is active in Norway.
        Is there a significant difference on what you do in the
    Gulf of Mexico as compared to what you do off the coast of
    Norway or even off the coast at Edinburgh or off the coast of
    Great Britain?
        Mr. Hayward. We approach with the same standards globally.
    And the truth is that the rules and regulations, as I
    understand it, in the Gulf of Mexico are higher than they are,
    for example, in the North Sea and the U.K. Sector, in terms of
    the requirements.
        So we will continue to learn from this incident and make
    changes to ensure that it cannot happen again. And it will be
    global.
        Mr. Green. OK.
        Thank you, Mr. Chairman.
        Mr. Stupak. Thank you, Mr. Green. Do you yield back?
        Mr. Green. Yes.
        Mr. Stupak. Mr. Green yields back.
        I next turn to Mr. Barton, ranking member, for questions,
    please.
        Mr. Barton. I thank you, Chairman Stupak. I appreciate the
    opportunity to ask some questions.
        Mr. Hayward, yesterday when we had a hearing in a different
    subcommittee of this full committee, we had four CEOs of other
    oil companies. I think to a person--and I could be wrong about
    this--but I think they all indicated that they either would not
    have drilled this well or at least would not have drilled it
    the way BP drilled it.
        What is your response to that?
        Mr. Hayward. I want to understand exactly what happened
    through our investigation, to compare it with other practices,
    to determine what is the truth. And I can't comment today on
    that.
        Mr. Barton. All right.
        I have had off-camera discussions with a number of experts
    in the drilling processes for the deep Gulf of Mexico, and they
    all say that BP has a different culture. For example, in most
    of the other companies that operate in the deep gulf, there are
    a number of individuals on site that have what is called stop-
    order authority. In other words, if they see something that is
    going on that compromises safety or integrity, they have the
    ability to stop production. But I am told that BP doesn't give
    that authority, that it is further up the chain of command.
        Is that correct? And, if so, is that something that BP may
    consider changing, given what has happened?
        Mr. Hayward. On a drilling operation such as this, anyone
    can stop it--the BP man, the Transocean driller, the Transocean
    tool pusher, the OIM, or the BP on-site leader. It requires
    everyone to agree to continue, and if there is one person who
    does not agree, then they do not. Anyone.
        Mr. Barton. So when I am told that the BP culture in terms
    of this authority is different, I have been told incorrectly?
        Mr. Hayward. I believe that is so, Congressman.
        Mr. Barton. OK.
        In terms of the two relief drills that are currently being
    drilled, are they being drilled using the same procedures as
    this well, or are they being drilled differently? In other
    words, some of the things that weren't used on this well--the
    double casing, things of this sort--are those relief wells
    going to use these enhanced safety procedures?
        Mr. Hayward. There are clearly some areas of concern, as we
    have identified in our investigation--cement casing. And the
    relief wells are being drilled with all of those issues
    absolutely foremost in the procedure.
        Now, clearly, the relief wells are rather different because
    of what they have to do. But all of the things that we have
    learnt, to date, from our investigation have absolutely been
    incorporated into the activity that is taking place with
    respect to the relief wells.
        Mr. Barton. OK.
        Have you either read or been at least given a summary of
    the letter that Chairman Waxman and Chairman Stupak sent
    earlier in the week that lists the five or six outstanding--or
    what they consider, what the staffs consider to be the
    anomalies in this well and the safety concerns? Are you
    familiar with that letter?
        Mr. Hayward. I am familiar with that letter.
        Mr. Barton. OK. Do you agree in general with the concerns
    that are raised there about the lack of, for lack of a better
    term, a safety collar being employed, the number of devices
    that could have stopped the oil and gas venting and escaping up
    the well? Somebody recommended, I think, 21 or 22, and BP made
    a decision to only use six.
        Now that you know what has happened, do you share some of
    the concerns that that letter raises?
        Mr. Hayward. I think I share the concern about the number
    of contributing factors that may have--that have created this
    incident. They are focused on the cement, on the casing, on the
    integrity test, on the well control procedures, and on the
    complete failure of the blowout preventer.
        And they are all areas that I believe we really need to
    understand fully before we draw conclusions about how this
    accident occurred.
        Mr. Barton. My final question is, based on what you now
    know, do you agree with the general conclusion expressed
    yesterday that this was a preventable accident?
        Mr. Hayward. I believe that all accidents are preventable,
    absolutely.
        Mr. Barton. OK.
        Finally, Mr. Chairman, if I may take a small point of
    personal privilege, I want the record to be absolutely clear
    that I think BP is responsible for this accident, should be
    held responsible, and should in every way do everything
    possible to make good on the consequences that have resulted
    from this accident.
        And if anything I said this morning has been misconstrued
    in opposite effect, I want to apologize for that
    misconstruction.
        With that, Mr. Chairman, I yield back.
        Mr. Stupak. Thank you, Mr. Barton.
        Ms. Sutton for questions.
        Ms. Sutton. Thank you, Mr. Chairman.
        Mr. Hayward, this testimony has been fascinating.
        We have heard a lot about your desire to come in and
    improve the safety of operations everywhere in the world,
    something to that effect. And you listed another top priority:
    to conduct BP's business in a way that is in tune with the
    world without damaging the environment.
        Would you agree that BP did not meet those goals on the
    Deepwater Horizon rig?
        Mr. Hayward. I think it is clear that I regret, BP regrets
    what has happened here deeply.
        Ms. Sutton. So, obviously, BP did not meet those goals on
    the Deepwater Horizon rig. But, Mr. Hayward, the concern beyond
    that is there seems to be little evidence about how hard BP
    tried to meet that goal.
        The committee's investigation of the Deepwater Horizon
    disaster identified five key decisions--we have talked about it
    over and over again in this hearing--made by BP officials in
    the days before the explosion. Those decisions had two common
    denominators: They saved time and cut costs, and they each
    increased risk.
        Now, I have heard you say over and over again in the course
    of today's hearings that there is nothing that I have seen in
    evidence so far that BP put costs ahead of safety. And I have
    to tell you how detached that seems. Because we have also
    talked about some of the documents that the committee has
    unearthed, and document after document that indicated that BP
    officials in charge of the Deepwater Horizon were focused on
    saving time and money--for example, the document that says that
    the well design was chosen because it would save $7 million to
    $10 million.
        You are familiar with that document, correct?
        Mr. Hayward. I am familiar with that document.
        Ms. Sutton. OK. And another one says that the reason for
    not using sufficient centralizers is because it would take 10
    hours to install them. You are familiar with that document?
        Mr. Hayward. Yes, I am familiar with that document.
        Ms. Sutton. OK. And you indicated that you weren't familiar
    with any of this happening before the explosion; you only
    learned about it afterwards, right, as the CEO of this company?
        Mr. Hayward. I wasn't familiar with any of the decisions or
    any of the documents surrounding this well prior or during the
    drilling of the well.
        Ms. Sutton. OK. And what is fascinating also is that, when
    you were asked about how these decisions are made within the
    structure of your organization, you referenced this from a
    perspective of, ``As I understand it from our investigation,
    this is how these decisions are made.'' But you are the leader
    of the company. You couldn't even tell us if they were top-down
    or bottom-up decisions. You were just referencing them based on
    an after-the-fact investigation.
        So when we talk about these documents, the documents I just
    referenced--the one that says the well design was chosen
    because it would save $7 million to $10 million and the other
    one that says that the reason for not using sufficient
    centralizers is because it would take 10 hours to install
    them--none of these documents makes a decision to ensure a safe
    environment on the rig or protect the environment from a
    catastrophic oil spill.
        Would you say that that is true, that that doesn't indicate
    a decision being made based on ensuring a safe environment or
    protecting the environment?
        Mr. Hayward. I don't think it is possible to say that,
    based on the documents, out of context.
        Ms. Sutton. And, see, that is why I think there is a real
    detachment here, a real disconnect, as we have heard that word
    used earlier today. It seems to me there was a disconnect prior
    to the explosion, and there remains a disconnect when viewing
    evidence that is very clear and being presented.
        This was a tragic failure. You have talked about your
    commitment to safety and the environment, but when push came to
    shove on the Deepwater Horizon, the company's concern seemed to
    be the bottom line.
        And I guess this is my question to you, Mr. Hayward: Who
    was responsible for the failures on the Deepwater Horizon and
    the terrible set of decisions that led to the tragedy in the
    gulf?
        Mr. Hayward. That is what our investigation will determine,
    and that is what it is going to do. And if there is, at any
    point, evidence to suggest that people put costs ahead of
    safety, then I will take action.
        Ms. Sutton. So, evidence like those documents?
        Mr. Hayward. The evidence from the totality of the
    investigation.
        Ms. Sutton. OK.
        Mr. Hayward, as the leader of the company, don't you have
    to accept the responsibility?
        You talked about the importance of safety and the
    environment, but you presided over a corporate culture where
    safety and risks and risks to the environment were ignored in
    order to save a few days and a few dollars in drilling costs.
        If you are the leader of the company, don't you have to
    take responsibility?
        Mr. Hayward. I am absolutely responsible for the safety and
    reliable operations in BP. That is what I have said all along.
        Ms. Sutton. Thank you, Mr. Chairman. I yield back.
        Mr. Stupak. Thank you, Ms. Sutton.
        Mr. Welch for questions, please.
        Mr. Welch. Thank you, Mr. Chairman.
        Mr. Hayward, is it true that, in 2005, the Texas City
    operation owned by BP blew up, resulting in the loss of lives
    of 15 workers?
        Mr. Hayward. That is true.
        Mr. Welch. And is it true that, in 2006, a BP oil pipeline
    in Alaska ruptured and spilled 200,000 gallons of crude oil?
        Mr. Hayward. That is true.
        Mr. Welch. And is it true that, in 2007, when you took over
    as CEO of BP, the corporation settled a series of criminal, not
    civil, criminal charges and agreed to pay $370 million in
    fines?
        Mr. Hayward. That is correct.
        Mr. Welch. And is it also true that, in 1 year, the
    Occupational Safety and Health Administration, OSHA, found more
    than 700 violations at BP's Texas City refinery and fined BP
    what was then a record fine of $87.4 million? Is that true?
        Mr. Hayward. That is correct.
        Mr. Welch. And is it true that, earlier this year, a BP
    refinery in Toledo, Ohio, was fined $3 million for willful--and
    I emphasize the term in the finding, ``willful''--safety
    violations, including the use of valves similar to those that
    contributed to the Texas City blast?
        Mr. Hayward. That is correct.
        Mr. Welch. And is it true, as well, that the U.S. Chemical
    Safety Board, which did investigation into the Texas City
    refinery, was headed, with the active participation of former
    Secretary of State James Baker--are you familiar with that
    report?
        Mr. Hayward. I am very familiar with that report.
        Mr. Welch. And in that report--which you, I take it, regard
    as credible?
        Mr. Hayward. I believe it is very credible, and it is the
    basis on which we moved forward in 2007.
        Mr. Welch. And that report, and I quote, found that ``BP
    management allowed operators and supervisors to alter, to edit,
    to add, and to remove procedural steps at the Texas City
    refinery without assessing risk.''
        And the Baker panel examined all of BP's U.S. refineries
    and found ``a toleration of serious deviations from safe
    operating practices.''
        Is that an accurate statement of the findings of Mr.
    Baker's report?
        Mr. Hayward. It is an accurate finding. And based on the
    findings of that report and the instances of 2005 and 2006----
        Mr. Welch. And in the case----
        Mr. Hayward. --we implemented a systematic change in how we
    manage safety and a systematic change in the culture of BP.
        Mr. Welch. Well, let me ask you----
        Mr. Hayward. That is something we have done consistently
    over the last 3 years.
        Mr. Welch. Well, did that systematic change that you say
    you implemented as a result of the Baker report account for the
    reason that, at Deepwater Horizon, when faced with the choice
    of a cheaper and quicker casing design or a safer design, BP
    chose the cheaper and quicker casing design? Did you do that on
    the basis of the recommendations of the Baker report?
        Mr. Hayward. As I have said, we need to wait for the
    results of the investigation to conclude. If there is any
    evidence whatsoever that people put costs ahead of safety in
    this incident, then we will take action.
        Mr. Welch. Well, I am not going to ask you what their
    reason was. What I am going to ask you--and, in fact, it is not
    in dispute, that the choice was made to use a cheaper and
    quicker casing design rather than a more expensive design.
        And I will ask you again: There were fewer casing
    centralizers than some folks were recommending. Is that--I will
    leave out motivation, but there was a choice of more casing
    centralizers or fewer casing centralizers. More cost more;
    fewer cost less. Which choice did BP make at Deepwater Horizon?
        Mr. Hayward. The decision taken by the engineering team at
    the time, which was a technical judgment, was to use fewer
    centralizers rather than more. It is not always true that more
    is better.
        Mr. Welch. And BP chose at Deepwater Horizon not to
    circulate drilling mud that would have cleaned out the well. It
    chose a lighter saltwater base for the cementing procedure. Is
    that correct?
        Mr. Hayward. The procedure to displace the mud was a
    procedure that is not uncommon in the industry. It was a
    procedure that was approved by the MMS prior to implementing
    it.
        Mr. Welch. Are you saying you made the right choice in this
    case?
        Mr. Hayward. I am not able to make a judgment as to whether
    the right choices were made.
        Mr. Welch. Well, you are the CEO.
        Mr. Hayward. But I am not, with respect, Congressman, a
    drilling engineer or a technically qualified engineer in these
    matters.
        Mr. Welch. But you are in charge of them.
        Mr. Hayward. That doesn't mean to say I am an expert.
        Mr. Welch. Well, I mean, you know, one of the frustrations
    that I think folks have is, who is in charge? And there was a
    Baker report that said there was a systematic choice being made
    consistently by BP that led to the loss of life, that led to
    pollution, that could be attributed to a decision based on
    saving money, increasing profits, at the expense of safety and,
    as it turns out, unfortunately, human lives.
        You know, I am going to get back to what I asked you
    earlier. I think all of us live in a world where we would
    prefer to have fewer regulations rather than more. We would
    like to rely on trust and faith and our word, rather than
    regulations and checking over your shoulder and all those
    things that I think both sides find annoying.
        But I am going to ask you the question: Does a CEO who has
    presided over a company that has incurred over $370 million in
    fines, whose company was subject to this report by Mr. Baker,
    indicating a choice at the expense of safety, does that person
    who has presided over almost $100 billion in loss of
    shareholder value, in the suspension of a $10 billion annual
    dividend, who has lost the confidence of shareholders and
    regulators and, most importantly, the families and citizens of
    the gulf, does that person enjoy the confidence necessary to
    continue acting as CEO? Or is it time for that CEO to resign?
        Mr. Hayward. I am focused on the response. I am focused on
    trying to eliminate the leak, trying to contain the oil on the
    surface and defend the beaches and to clean up the spill and to
    restore the lives of the people on the gulf coast. That is what
    I intend to do.
        Mr. Welch. OK. I yield back, Mr. Chairman.
        Mr. Stupak. That concludes questions by members of the
    subcommittee. As I indicated earlier, members of the full
    committee will have an opportunity to ask questions if they so
    choose. So we will alternate, and, as I indicated earlier, it
    will be based upon committee seniority.
        So, Mr. Stearns, you would be next, first on the Republican
    side, for questions for 5 minutes, please.
        Mr. Stearns. Thank you, Mr. Stupak, and thank you for
    allowing me to ask these questions.
        Mr. Hayward, I have watched this hearing, and time and time
    again you have indicated this--you have responded with this
    statement: ``I can't give you a legitimate answer to that
    question.'' You have said it over and over again. They have
    asked you for details; you didn't know.
        Did you bring anybody with you who has the detailed
    information that could help you answer a lot of these
    questions? Is there anybody else who can help?
        Mr. Hayward. I have a technical expert with me.
        Mr. Stearns. Because I don't see you go back to that
    technical expert, and you just continue to say, ``I just can't
    answer that question.''
        So my question for you today: Is today Thursday, yes or no?
        Mr. Hayward. It is Thursday.
        Mr. Stearns. OK.
        Next question. The people of Florida, when I talk to them
    and they say there is oil spilling on the coast, would it be
    appropriate to say that is because of BP's reckless behavior,
    yes or no?
        Mr. Hayward. It is a consequence of a big accident.
        Mr. Stearns. No, yes or no? Reckless behavior or not?
        Mr. Hayward. There is no evidence of reckless behavior.
        Mr. Stearns. So you are standing here, you are saying here
    today that BP had no reckless behavior. That is your position,
    yes?
        Mr. Hayward. There is no evidence of reckless behavior.
        Mr. Stearns. No. Yes or no? You are saying BP has had no
    reckless behavior, is what you are saying to us.
        Mr. Hayward. I have seen no evidence of reckless behavior.
        Mr. Stearns. OK. So you are on record saying there has been
    no reckless behavior.
        We had a hearing. Mr. McKay was here. We had the CEOs of
    Exxon, Chevron, ConocoPhillips, and Shell. We asked them the
    question, knowing what we know today about the inconsistent
    well pressure test readings, would you have proceeded with
    withdrawing the drilling fluid from the well? Every one of them
    said no.
        Then the next question was asked to them about safety
    measures. Are there safety measures that your company could
    have taken to prevent this incident? Every one of them said
    yes.
        So you are here this morning saying your company had no
    reckless behavior, yet all your peers, the CEOs of Exxon,
    Chevron, ConocoPhillips, and Shell, all pointed out your
    reckless behavior.
        Later on, Halliburton warned your company that the well
    could have a severe gas flow problem. Were you aware of
    Halliburton's warning, yes or no?
        Mr. Hayward. I was not involved in any of the decisions
    around this time.
        Mr. Stearns. No, I don't want to hear that. I mean, this is
    the same thing you have been saying all day. What I want to
    know is, you, in your position--has anyone on your staff
    briefed you about Halliburton warning your company, we could
    have a severe gas flow problem? Were you ever notified or
    briefed on this? Yes or no?
        Mr. Hayward. No, prior to the incident.
        Mr. Stearns. So you are up at this top echelon and you
    didn't hear--did you hear about the e-mails that occurred?
        Later that day, a BP official involved in the decision, who
    recognized the risks of proceeding with insufficient
    centralizers, threw caution to the wind in an e-mail just 4
    days--4 days--before the disaster, stating, ``Who cares, it's
    done, end of story, will probably be fine.'' Did you know about
    that e-mail?
        Mr. Hayward. I had no prior knowledge of this well prior to
    the incident whatsoever.
        Mr. Stearns. In light of what your four peers have said,
    dealing with safety, dealing with the precautions with the
    pressure test reading, and dealing with Halliburton, don't you
    think there is reckless behavior indication? If what I told you
    is true, do you think BP has reckless behavior?
        Mr. Hayward. I believe all accidents are preventable. The
    investigation will determine how this accident has occurred----
        Mr. Stearns. OK. So you are saying, right now, based upon
    all the information I gave you, you do not think BP had any
    reckless behavior. That is your position this afternoon. Is
    that correct, yes or no?
        Mr. Hayward. That is--I have seen no----
        Mr. Stearns. I want you to say that you don't think BP has
    reckless behavior.
        Mr. Hayward. I have seen no evidence of reckless behavior.
        Mr. Stearns. OK. All right.
        Now, let's say you were on a ship and you ran into New
    Orleans and you spewed all this oil and you killed 11 people.
    Do you think the captain of that ship should be fired?
        Has anyone in BP been fired because of this incident?
    Anybody? Yes or no?
        Mr. Hayward. No, so far.
        Mr. Stearns. No people have been fired.
        So, you are captain of the ship, runs into New Orleans,
    spews all this oil. There is all this damage from Alabama to
    Mississippi, Florida, Louisiana. And no one has been fired?
        Mr. Hayward. Our investigation is ongoing.
        Mr. Stearns. So let's say the investigation goes for 3
    years. Does that mean you wouldn't fire anybody?
        Mr. Hayward. As the investigation draws conclusions, we
    will take the necessary action.
        Mr. Stearns. OK. So, in light of all the environmental
    damage, the human damage, and just the information from your
    peers saying that you were indeed reckless, and these e-mails I
    have told you, you still are going to stonewall us this
    morning, this afternoon. And you are saying basically, we did
    nothing wrong and we are going to wait until the evidence to
    prove whether we did wrong or right; is that correct?
        Mr. Hayward. I believe we should await for the conclusions
    of the various investigations before we make decisions based on
    those conclusions.
        Mr. Stearns. Well, Mr. Chairman, he did answer that today
    is Thursday.
        Mr. Braley [presiding]. The chair now recognizes the
    gentleman from New York, Mr. Engel, for 5 minutes.
        Mr. Engel. Thank you very much, Mr. Chairman.
        Mr. Hayward, I am going to attempt to ask some of the
    questions that my other colleagues have asked but really
    haven't been answered.
        Now, on Tuesday, we had the leaders of ExxonMobil, Chevron,
    Shell, and ConocoPhillips. They all insisted at the hearing on
    Tuesday that they would not have made the mistakes that led to
    the well explosion.
        Are they lying to us, or are you lying to us by telling us
    that you don't know who is responsible and don't know whether
    or not BP did something wrong? They are all saying BP did
    something wrong.
        Mr. Hayward. I believe we need to await the results of the
    multiple investigations before we draw conclusions.
        Mr. Engel. Well, it is----
        Mr. Hayward. I want to get to the bottom of this more than
    anyone. I want to learn the lessons, and I want to ensure that
    we can learn the lessons and that the industry can learn the
    lessons.
        Mr. Engel. Well, I don't understand. It is 61 days, it is 2
    months. I mean, what kind of an investigation are you going to
    conduct? Why, in 2 months, with all this oil spilling into the
    gulf, do we not have at least a preliminary investigation?
        Mr. Hayward. We are conducting a full and comprehensive
    investigation. It involves a team of more than 50 people. We
    have shared the results of that investigation, as they become
    available, with this committee. And we will continue to do
    that.
        Mr. Engel. Well, Mr. Hayward, perhaps your lawyers have
    told you to be really cautious, but it is really an insult for
    you to come to this committee and keep repeating the same
    thing, evade questions, evade answers, and just repeat again
    and again that you were not responsible and that we have to
    wait for an investigation.
        Why didn't you come testify to this committee after the
    investigation if you are not prepared to tell us anything of
    knowledge now?
        Mr. Hayward. With respect, Congressman, I wasn't party to
    any of the decisionmaking around this well in the time it was
    being drilled. And, therefore, I am not in a position to make a
    judgment about whether the decisions taken were the right ones
    or the wrong ones.
        Mr. Engel. Well, but we have all made a judgment because it
    is 60 days and oil is spilling into the gulf. So, obviously,
    decisions were made that were wrong.
        Can't you just admit that? Can't you just say, ``I am
    sorry''? Can't you just admit that decisions were made that
    were wrong, instead of sitting there and telling us you don't
    know and you have to wait for an investigation?
        Mr. Hayward. I am very, very sorry that this accident
    occurred, very sorry. I deeply regret it. I deeply regret it
    for very many reasons. And I do believe that it is right to
    investigate it fully and draw the right conclusions.
        Mr. Engel. What needs to be investigated? What needs to be
    investigated that has not been investigated up till now? And
    how long will it take you?
        Mr. Hayward. I can't answer how long it will take because
    we want to make certain it is complete. But there are clearly--
    --
        Mr. Engel. Well----
        Mr. Hayward [continuing]. Many investigations--excuse me,
    sorry. There are many investigations ongoing. There is our
    investigation, there is a Marine Board investigation, and a
    Presidential commission. And they will undoubtedly draw
    important conclusions for all of them.
        Mr. Engel. But you are the CEO. Shouldn't you not set the
    tone for the investigation? Shouldn't you not say, ``I demand
    that within a month we are going to know what happened''?
        I mean, you are really insulting our intelligence, with all
    due respect, by not giving us any answers and telling us that
    you have to wait for some investigation. I think the rest of
    the world isn't blind. We know what has happened, and we know
    that BP obviously didn't do what it was supposed to do. Only
    you don't know that.
        Mr. Hayward. I believe I have set the right tone. We
    launched the investigation within 24 hours. We have made it
    open and transparent. And we are sharing with everyone the
    results as they come out.
        Mr. Engel. Well, let me ask you this: How many other wells
    has BP in the gulf?
        Mr. Hayward. I don't know the precise number, but it is a
    large number.
        Mr. Engel. Give me a ballpark figure.
        Mr. Hayward. In the area of hundreds.
        Mr. Engel. OK. How can we be assured that the same thing
    won't happen with one of the other wells? How can you give us
    assurances that what happened with this well won't happen again
    to several hundred wells?
        Mr. Hayward. The other wells that I am referring to have
    all been drilled and completed and are secure.
        Mr. Engel. So you are saying, then, all the other wells
    that BP has, that something that happened to this well could
    never happen again in any of those other wells?
        Mr. Hayward. All of the other wells that I am referring to
    are wells that have been completed and are secure.
        Mr. Engel. So is that the same assurance that you had said
    that you were going to, with a laser, make safety a priority?
    Is this the same kind of assurance that you are giving us now?
        Mr. Hayward. I have, throughout my tenure, been very
    explicit about the priority of safety in BP. It is the first
    word I utter every time I talk to any group of people in BP,
    the fact that safe and reliable operations is our number-one
    priority.
        And we have made very significant changes to our processes,
    to our people, and invested very significantly into the
    integrity of our plants and equipment over the last 3 or 4
    years.
        Mr. Engel. Mr. Hayward, let me just say with all due
    respect, I, like everyone else here and everyone else in
    America, is thoroughly disgusted. I think you're stalling. I
    think you're insulting our intelligence. And I really resent
    it.
        Mr. Chairman, I yield back.
        Mr. Stupak [presiding]. A member of the full committee Mr.
    Scalise for questions, please. Five minutes.
        Mr. Scalise. Thank you, Mr. Chairman. I appreciate you
    letting me participate in this.
        Mr. Hayward, this is a picture of an oiled pelican. This is
    our State bird in Louisiana. I'm going to keep this on my desk
    as long as we are battling this as a constant reminder of what
    is at stake. But I want you to keep this in your mind as well
    to recognize that we are not just talking about the loss of
    life, which is tragic, we are not just talking about the oil
    that is still spewing out of that well. We are talking about
    our way of life not just in Louisiana, but all along the Gulf
    Coast that is at stake. I would hope you keep this image in
    your mind as a constant reminder of what is at stake and what
    we are battling on a daily basis.
        Our two priorities right now are, number one, doing
    everything we can to make sure you all cap this well, but also
    to battle as strongly as we can to keep the oil out of our
    marsh and our ecosystem. We don't want to sit back and wait
    until the oil comes in and does possibly irreparable damage. We
    want to be proactive. But we are having problems on the ground
    being proactive because of the delays.
        I still hear--I was on Grand Isle Friday. I hear the
    biggest complaints from our local officials that they are
    spending more of their time fighting BP and the Federal
    Government than they are fighting the oil. This is
    unacceptable. And I know you talk about all the things that you
    all are doing, but it is not enough. We need a more urgent
    sense of response to this disaster. And I want to ask you what
    you are going to do to help speed that up.
        When our local officials tell us when they have basic
    questions they need answers to, it takes at least 5 days. They
    first go to the Coast Guard, then they are sent to BP to get
    approval, and then they go around in circles and they are told
    they are going to get answers, and they never get those
    answers. This is just not an acceptable way to run this
    operation. And so when we hear who is in charge--I want to ask
    you, who is in charge on the ground?
        Mr. Hayward. The National Incident Commander is the person
    in charge of this operation.
        Mr. Scalise. So is the Federal Government telling you what
    to do? Are you telling the Incident Commander what to do? When
    our local officials say we need something approved, do they
    need to get the Incident Commander and your approval? Because
    they are getting runaround in circles right now.
        Mr. Hayward. We are trying, sir. We are not being perfect,
    I acknowledge. We are trying very hard to do better. We are
    operating under the direction of the Federal Government.
        Mr. Scalise. Let me give you an example. When our
    Government came with an idea--and this was over a month ago
    now. He had an idea, Governor Jindal working with the local
    leaders, to have this sand barrier plan. They laid it out. They
    actually made some changes. They worked with scientists and
    with engineers. And then over 3 weeks went by before any
    approval.
        Now, we contacted--our entire delegation signed a letter;
    we tried to get the President engaged in breaking this logjam.
    Still to this day, only 25 percent of that plan has been
    approved. Now, is that you that is not approving the other 75
    percent? Is that the Federal Government that is not approving
    it? Who is not approving the other 75 percent? Because it is
    not approved to this day.
        Mr. Hayward. The approval process flows through----
        Mr. Scalise. Is it you or the Federal Government?
        Mr. Hayward. The ultimate approval----
        Mr. Scalise. Can you tell them no?
        Mr. Hayward. The ultimate approval process is with the
    Government.
        Mr. Scalise. So the Federal Government is the one who
    hasn't approved the other 75 percent?
        Mr. Hayward. I can't speak to the details of the other 75
    percent.
        Mr. Scalise. You don't know about it? We brought this to
    them. I know they submitted it. Our Governor submitted this to
    you and the Incident Commander.
        Mr. Hayward. As you know, we have committed $360 million to
    build a large part of the barrier island as----
        Mr. Scalise. It is not a large part. It is 25 percent of
    the plan. That may seem like a large part to you.
        Let me go to another question that we get asked. They don't
    have any kind of approval of creation of a seafood safety plan.
    Now, is that something that was submitted to you all? Is that
    the Federal Government that is not approving it? Is it BP that
    is not approving it? Because again, our local leaders, they are
    getting run around in a circle, and nobody is held accountable
    when things don't happen.
        What I'm going to present to you is that we don't have time
    for these games to continue to play. We can't have 5 days go by
    before an answer is given to anybody because the oil is coming
    every day.
        And I will just give you an example about the sand barrier
    plan. Now, you say you all have approved a lot of it. There is
    no plan of protection along any part of Grand Isle, and there
    is an area call Barataria Bay. And I would suggest you go look
    it up. About a week and a half ago there was no oil in
    Barataria Bay. That section was scheduled to be covered by the
    barrier plan that still to this day hasn't been approved. Now,
    today there is oil, thick oil, coming into the Barataria Bay.
    So you're not showing the sense of urgency. And whether it is
    you or the Federal Government, we have got oil in Barataria Bay
    when we had a plan a month ago to keep the oil out of Barataria
    Bay.
        So when people are hearing that everything is being done,
    I'm going to tell you, on the ground it is not getting done.
    And I don't know what you need to do differently, but you need
    to go do something differently. And if it is not you that is
    blocking it, you need to tell somebody who is blocking it,
    because it is being blocked. And it is not getting done on the
    ground, and we don't have the luxury of time.
        This shouldn't be happening. We put plans in place to stop
    this from happening, and our plans are not being approved. Now,
    I would love it if our plans were being rejected because there
    were better alternatives that were being offered by somebody,
    that were being approved, but there are no other alternatives.
    All we are being told is no without any other option being
    presented. And what we are saying is if you have got a better
    option, present it. Otherwise approve our plan. But we don't
    have time to waste. Do you understand that?
        Mr. Hayward. I understand your concern and your anger.
        Mr. Scalise. And I hope you make the changes that are
    needed, because we don't have time.
        This is something else. We continue to get--and my office
    gets flooded, I know a lot of others get flooded, with ideas of
    how to stop the oil from coming into the marsh, how to cap the
    well and other things. We have seen basic ideas like putting
    hay in the water, all the way up to the supertankers in Saudi
    Arabia. None of them are getting done on the ground.
        I'm going to give you this database. This is a database of
    ideas with links, with schematics of a number of different
    ideas that should be done that can stop the oil from coming
    into our marsh. But it is not getting done.
        We don't have time to waste. So I'm going to ask you to
    move swiftly on this, and I am going to give you a resolution
    passed by our Senate that asks that you engage our local people
    who have been affected by this. A lot of them aren't even being
    able to be employed in saving the marsh. They want that done.
    And also to speed up the efforts on some of these alternatives
    that are going nowhere. We have got a lot of ocean out there
    that has got oil.
        Mr. Stupak. Time----
        Mr. Scalise. We want you to use every opportunity to fix
    that. So I'm going to give this to you.
        Thank you, Mr. Chairman. I yield back.
        Mr. Stupak. Mrs. Capps for questions, please.
        Mrs. Capps. Thank you, Mr. Chairman.
        Mr. Hayward, your $20 billion of compensation fund is a
    good first step, but it is just the beginning. You're going to
    have to fully compensate everyone who has been affected by this
    disaster. This week BP announced the first installment of a $25
    million fund within a broader $500 million commitment to the
    Gulf of Mexico Research Initiative. Is BP still committed to
    putting the full 500 million, not just the 25- installment, but
    the full 500 million, towards this initiative?
        Mr. Hayward. We are. It is an initiative that will take
    place, we believe, over 10 years.
        Mrs. Capps. When will we see the details of this entire
    program?
        Mr. Hayward. It's being worked by the experts currently. We
    think it is important to have a program that has firm
    scientific foundation.
        Mrs. Capps. Are these your experts, sir?
        Mr. Hayward. No, these are not our experts. These are
    independent scientists from across the United States from some
    of the----
        Mrs. Capps. I would request that you would submit to the
    committee the list of experts that you have that are developing
    this program. I would appreciate that.
        Mr. Hayward. We would be very happy to do that.
        Mrs. Capps. Will there be further scientific investments
    you will make available to the research community, significant
    further investments of dollars?
        Mr. Hayward. Well, we have set up a $500 million initial
    fund, and I think we need to see what the scientists determine.
        Mrs. Capps. I just mention this because your commitment
    pales in comparison to the $1 billion Exxon spent on the Valdez
    spill 20 years ago, which was in quite a bit more remote
    location, and fewer people apparently were impacted by that
    one.
        So you are going to make all the data from this research
    available to the public?
        Mr. Hayward. It would be fully open and transparent. It
    won't be BP's data, it will be the data of the scientists
    involved.
        Mrs. Capps. All right. With their names attached?
        Mr. Hayward. Absolutely.
        Mrs. Capps. I want to switch topics now. The Federal
    Government has developed training classes to provide the
    necessary training for workers and volunteers who are cleaning
    up the oil from your spill, but we continue to see reports that
    BP is not following the training guidelines, endangering
    further the health of these workers now and long into the
    future. Why are we still hearing these kinds of reports from
    the people who are out on the water and on the shoreline?
        Mr. Hayward. We are doing everything we can to train
    everyone involved in this as well and as clearly and as
    properly as we can.
        Mrs. Capps. Are you using the Federal-developed courses?
        Mr. Hayward. We are using OSHA guidelines to establish what
    is the appropriate training.
        Mrs. Capps. Finally, I want to ask you about BP's response
    plan, which was clearly inadequate. This committee learned this
    week that the other major oil companies rely on the same
    response plans that are practically identical to your own. The
    same contractors seem to have written your plan and their
    plans. They hired the same contractors, apparently, as you did.
    And you all appear to have the same technical experts and the
    very same response commitment.
        Now, if this bill had happened to a different oil company,
    do you have any reason to think that they would have responded
    more effectively than BP has?
        Mr. Hayward. I can't really comment on that. All I can say
    is that we have initiated the biggest spill response in the
    history not only of America, but of the world. It involves
    thousands of vessels, 35,000 people. It is the largest activity
    of its kind ever conducted.
        Mrs. Capps. I appreciate that. The Federal Government has--
    this country has also initiated the largest response that we
    have ever initiated on behalf of any kind of a natural disaster
    or manmade disaster in the history of this country as well.
        But finally, back to my original question on that topic.
    Rex Tillerson, the CEO of ExxonMobil, was asked the same
    question that I just asked you. He said that Exxon, his own
    company, is not prepared to deal with a large spill if it
    happens to them. He also said that the response capability to
    prevent the impacts of a spill doesn't exist. Now, bear in
    mind, this is the same response--training manual--response
    manual that your company has. With respect to his own, he says
    the impacts of a spill, the capability does not exist and
    probably never will.
        My question to you, do you agree with Mr. Tillerson about
    this?
        Mr. Hayward. I agree that there are many missings in our
    ability to respond to an incident of this type, and there will
    be many learnings to be had from this incident and how we can
    build better response capability in the future. And as I said,
    we are doing an extraordinary spill response, and I regret that
    it hasn't been more successful so far than any of us want.
        Mrs. Capps. I yield back, Mr. Chairman.
        Mr. Stupak. Thank you, Ms. Capps.
        Mr. Gonzalez for questions, please.
        Mr. Gonzalez. Thank you very much, Mr. Chairman.
        Mr. Hayward, let me ask you, there is a 6-month moratorium
    on deepwater drilling. Do you think that is reasonable under
    the circumstances?
        Mr. Hayward. I think it is important that the lessons from
    this are learned, and that clearly that is a decision for the
    authorities to take, not for me. But it is clearly important.
        Mr. Gonzalez. I'm not asking you to make the decision. I'm
    just asking your opinion. Based on your expertise and your
    position, I would assume you would have an opinion on whether
    that is a prudent thing to be doing.
        Mr. Hayward. I believe it is prudent for the industry to
    take stock of what has happened here before it moves forward.
        Mr. Gonzalez. Well, you know, there are calls to move
    expeditiously to lift that ban after accomplishing whatever is
    supposed to be accomplished in order to give people peace of
    mind that as we drill, we are not going to have recurrence.
        When do you think would be appropriate to consider lifting
    the moratorium?
        Mr. Hayward. I don't think I can make a judgment on that
    today. I think that is something----
        Mr. Gonzalez. What would common sense tell you?
        Mr. Hayward. I think it is understood clearly what happened
    and understood clearly what better response is required in the
    event that something like this ever happened again.
        Mr. Gonzalez. I'm hoping everybody is going to be on that
    same page. It is fundamentally sound.
        Now, we have had other Members that made reference to the
    hearing we had a couple of days ago, and I'm sure you have
    already spoken to Mr. McKay and such. But Shell, Exxon,
    Chevron, ConocoPhillips, they all said--I will tell you this,
    though. When I asked them if they could give me 100 percent
    assurance that nothing like this would happen when they are
    drilling in deep water, they wouldn't give me--what they would
    say is, we do it safely, we do it safely. Human experience is
    that there are no 100 percent assurances about any activity.
    And all I was trying to get is that let us be honest with the
    American people that there is risk, there is risk, there is
    risk. And it is a calculated risk. And if we can provide enough
    assurances that it is a risk worth taking, then we will be out
    there, won't we?
        Well, they wouldn't do that, believe it or not. And I'm
    hoping you won't play that same game. What they did say was it
    never would have happened, because their manner and fashion of
    drilling is different than what you were doing. And I don't
    want to start a big war on you guys, but do you really believe
    that the way they explore and drill in deep water is
    substantially different than what you were doing out there?
        Mr. Hayward. Not to my knowledge.
        Mr. Gonzalez. I tend to agree with you.
        So let's talk about planning. And I think Ms. Capps pointed
    out something that is really important as far as Exxon. What he
    actually said was, we couldn't deal with it if something like
    that happened, which is an incredible statement to make, isn't
    it, the fact that you're willing to expose that kind of risk?
    And if the worst-case scenario did develop, you wouldn't know
    what to do.
        So let's go back to 2003. The Society of Petroleum
    Engineers and the International Association of Drilling
    Contractors reported, quote, ``no blowout has yet occurred in
    ultra deep water, water depths of 5,000 feet or greater. But
    statistics show it is likely to happen. Are we ready to handle
    it?'' Well, we know the answer is no. But at that time they
    said it was likely to happen.
        Have you ever read anything like that in all these years,
    that it was likely to happen?
        Mr. Hayward. I haven't read that answer, I'm afraid.
        Mr. Gonzalez. Did you believe that it was likely to happen?
        Mr. Hayward. I did not believe it was likely to happen. It
    was a risk that was identified as the highest risk by BP across
    the corporation. It was a risk that was identified as the
    highest risk by our exploration and production unit. And we
    believed that the risk mitigant was the so-called failsafe
    mechanism of the blowout preventer.
        Mr. Gonzalez. This blowout preventer, it is the ultimate
    failsafe. And I know that you keep using that term, and it
    comes back somewhat to haunt you. But I'm curious about blowout
    preventers and the difference--and I was noticing my staff, as
    they were getting some information, if you have a surface well,
    you have a 10,000-pound-per-square-inch blowout preventer.
    Shallow water, 10,000 pounds per square inch; deep water,
    15,000 pounds per square inch. Now, I'm not an expert. Why?
    What is the difference as you go into depth? Why a greater
    capacity?
        Mr. Hayward. Because of the pressure of the reservoirs that
    we are drilling.
        Mr. Gonzalez. Which then leads me to--what do you think
    you're dealing with at that depth as far as pounds per square
    inch?
        Mr. Hayward. We know that we are dealing with a reservoir
    with a pressure of around 11--between 11 and 12,000 pounds per
    square inch. And we have a blowout preventer rated to 15,000
    pounds per square inch. I believe that's correct.
        Mr. Gonzalez. I don't know this. Cameron--I don't know that
    it is Cameron that builds these blowout preventers. That is a
    company that someone told me that is--and they are working on a
    20,000-pound-per-square-inch preventer. I mean, you're aware of
    that?
        Mr. Hayward. I am, yes.
        Mr. Gonzalez. And they actually said this: While there is
    much discussion and an ongoing effort to provide guidance for
    equipment greater than 15,000 pounds per square inch, in the
    interest of expediency, it was decided within Cameron to apply
    current design codes and practices. The 20,000-pound-per-
    square-inch EVO blowout preventer was design-tested and
    qualified to API--and I'm not sure what all that means--16A 3rd
    edition, meaning basically, but for the sake of expediency does
    concern me.
        Why were you all looking at 20,000 pounds per square inch
    when you believe what you already have at 15,000 exceeds what
    really is required?
        Mr. Hayward. I think that--I'm not certain, but I think
    that is referring to blowout preventers for reservoirs with
    even greater pressure.
        I do believe that one of the most important things to come
    from this incident is the requirement for the industry to step
    back and redesign the failsafe mechanism it uses to prevent
    accidents of this sort. We need a fundamental redesign of the
    blowout preventer. It is something that BP is going to take a
    very active role in. We have already begun that process with a
    number of academic institutions and a number of contractors in
    the industry.
        Mr. Gonzalez. And I thank the chairman for his patience.
        Mr. Hayward, we usually say better late than never, but not
    this time.
        I yield back.
        Mr. Stupak. Mr. Gonzalez.
        Before Mr. Inslee, we should for the record--recordkeeping,
    Mr. Scalise had submitted a CD and a resolution here from the
    State senate. He will provide copies for the record. So with
    unanimous consent they will be made part of his questioning and
    made part of the record within 10 days. Without objection, so
    ordered.
        [The information appears at the conclusion of the hearing.]
        Mr. Stupak. Mr. Inslee, questions, please.
        Mr. Inslee. Thank you.
        Mr. Hayward, something you said earlier was really quite
    astounding to me. You said that there was no evidence to date
    that there had been any decision made based on costs, that no
    decisions had been made in an effort to reduce costs. And I
    want to go through this because there is something that I think
    is quite pivotal in this investigation.
        The facts are clear that you hired Halliburton to give you
    advice about this. Mr. Gagliano, an expert in the field, did an
    analysis and concluded you needed 21 centralizers to make sure
    that this rig was safe. And just to remove any doubt as to why
    that is important, the American Petroleum Institute recommended
    practice--65 says, quote, if casing is not centralized, it may
    lay near or against the bore hole wall. It is difficult, if not
    impossible, to displace mud effectively from the narrow side of
    the annulus if casing is poorly centralized. This results in
    bypassed mud channels and inability to achieve zonal isolation,
    closed quote.
        So the experts said you need 21. Then if we can put up the
    first slide, a BP employee essentially wrote to that expert and
    said, we have only got six, and we don't have time to deal with
    this problem. Time to British petroleum was money. This rig was
    45 days late. It cost you $500,000 a day. And people's obvious
    attention were about time, which meant money.
        So what happened then? Well, another British Petroleum
    person sent a memo saying, you really need to follow the model
    here. He kicked it up to Mr. Guide.
        If we could have the second slide.
        Mr. Guide came back and said, I don't like the fact this is
    going to take 10 hours to do, even though another British
    Petroleum person had said we are going to fly 15 things in,
    they can be here tomorrow morning. Mr. Guide said, I don't like
    the 10 hours. And it didn't happen. And then the next response
    from British Petroleum--next slide, please--was an e-mail from
    Mr. Cocales sort of reprimanding another BP person, saying,
    even if the hole is perfectly straight, a straight piece of
    pipe even in tension will not seek the perfect center of the
    hole unless it has something to centralize it, meaning you have
    got to have the right centralizers. But he went on to say this:
    But who cares? It is done, end of story, we will probably be
    fine, and we will get a good cement job.
        What happened then--that is not quite the end of the story.
    Mr. Gagliano then ran further computer models, and he
    concluded--the last slide, please--he concluded--and this is
    hard to read, but I will read it. He concluded that this well
    is considered to have a severe--and severe is all capitalized
    in his memo--gas-flow problem.
        Now, it is very clear to me, reading this clear evidence,
    that, in fact, decisions were made because of costs, because
    people didn't want to wait to get the centralizers that was
    needed to safely do this job. So your statement that there is
    no evidence that costs led to shortcuts just doesn't ring true
    with me.
        Isn't it pretty clear that there were cost decisions made
    that had suboptimal at best number of centralizers in placement
    in this well?
        Mr. Hayward. I don't want to be evasive, but I genuinely
    believe that until we have understood all of the things that
    contributed to this accident, it is not easy to say what I
    would say. If there is evidence that costs were put ahead of
    safety, I would be both deeply disturbed, and we would take
    action.
        Mr. Inslee. Sir, let me ask you about that action. We just
    read these e-mails. Everybody in this room knows what happened,
    reading these e-mails. You know what happened in reading these
    e-mails. Are you going to call the employees involved when you
    leave this meeting and say--because you're drilling in places
    all over the world right now; this is an ongoing operation--and
    tell them they have to change their attitude? Are you going to
    take action based on these e-mails today?
        Mr. Hayward. We will take action based on our investigation
    which puts all of this together, and as--as it unveils clear
    conclusions, we will take action on them.
        Mr. Inslee. Let me suggest another action. We asked British
    Petroleum what it spent on research and development regarding
    safer offshore drilling technologies. You gave us the number.
    It was about $10 million a year. That represents 0.0033
    percent, 0.0033 percent of British Petroleum revenues. That
    doesn't sound like an adequate prioritization. How does it
    compare to your compensation?
        Mr. Hayward. In what respect?
        Mr. Inslee. British Petroleum is investing about $10
    million a year in safer drilling technology. How does that $10
    million a year compare to you compensation last year?
        Mr. Hayward. My compensation last year was $6 million.
        Mr. Inslee. Forbes reports it at 33-. There must be some
    misunderstanding then. Is that appropriate? Stock options don't
    count?
        Mr. Hayward. My compensation last year was--is--I think it
    was recorded at $6 million.
        Mr. Inslee. Do you think British Petroleum ought to make a
    larger investment of its significant gross revenues in
    developing safer drilling technology? And do you think you owe
    that to the American people at this point?
        Mr. Hayward. The answer is yes, and we undoubtedly will do
    that on the back of this accident.
        Mr. Inslee. We hope that that will be expeditious and
    successful. Thank you.
        Mr. Stupak. Thank you, Mr. Inslee.
        Mr. Melancon for questions, please.
        Mr. Melancon. Thank you, Mr. Chairman, I appreciate it.
        Mr. Hayward, how many deepwater operations do you have at
    BP around the world that you're operating?
        Mr. Hayward. I don't know the precise number, but it is
    probably in the order of 15 or so.
        Mr. Melancon. Is there--one of the things I have run into,
    and Mr. Scalise alluded to it, we have had in my office over
    600 requests for submissions for products, ideas, concepts,
    ways to cap the wells, et cetera, et cetera. Basically--and, of
    course, because of ethics, we can't and won't go in and make
    anybody meet with anybody. So we just refer them into them. The
    best I can tell is that maybe 3 out of the 600-plus have
    received an e-mail back, thank you for your submission, or, no
    thank you, if anything else.
        There seems to be a closed loop of vendors that you're
    dealing with, which my frustration is that the hole is still
    wide open. And when this accident first occurred, everyone
    said, we are going to take whatever ideas and suggestions,
    whatever--I mean, the cofferdam, the top hat, whatever. But I
    have seen some people that have called me, and we referred them
    in, and they have never heard once from your company. Is this
    just if you're not a vendor with us before this occurred, then
    we are not dealing with you, or are you going to only the
    vendors and allowing them to select who they are going to deal
    with? And my reason for this is because if there are good ideas
    out there, why isn't somebody looking at them?
        Mr. Hayward. We are trying very hard to engage with
    everyone who has a good idea. We have been, quite frankly,
    inundated with hundreds of thousands.
        Mr. Melancon. I know there is a tremendous amount. I know
    that the first one I saw was wrapped--sheets around a cord
    hanging with milk cartons to catch oil. So I understand that.
    Those are easy to go through.
        Let me shift to another gear. Do you believe that this
    administration's moratorium is a result of the tragedy that
    occurred on Deepwater Horizon, the fact that they put it in was
    strictly because of what went wrong in Deepwater?
        Mr. Hayward. I don't know that, but I believe that is the
    case, and I think it is probably the right thing to do until
    such time as we have greater clarity.
        Mr. Melancon. And I agree with that. I don't agree with the
    moratorium because--and as I have expressed to my friends, it
    is really difficult for us in Louisiana to stand in oil and say
    we will take more oil, but it is because of the economy, it is
    because of the jobs we have supported--I have supported--the
    industry. I support the people.
        But it makes sense that BP bear the responsibility of the
    economic hardship associated with this moratorium. I think you
    all put 100 million aside for lost jobs. I'm told that in a
    given month--and I don't know if this is just Louisiana,
    offshore Louisiana or offshore--but it is about 350 million a
    month in wages.
        Are you and your company going to take responsibility and
    make sure that these companies that fold up or these companies
    that have financial hardships, and particularly their employees
    that they are going to start laying off, are going to be
    compensated in some way?
        Mr. Hayward. We made a contribution, having been asked to
    by the government, up to a fund which will be part of the
    funding for that issue.
        Mr. Melancon. Do you think 100 million is adequate? And you
    have been in the oil business for quite a while. Those are
    good-paying jobs; that is why we want to keep them. But do you
    think that contribution is adequate for----
        Mr. Hayward. We made a contribution. We set aside $20
    billion for claims.
        Mr. Melancon. Twenty billion is for everybody else, that is
    businesses and otherwise. I am concerned also with them. Ms.
    Roshto and Ms. Kemp were in Chalmette the other day. Very brave
    women, especially so soon after the deaths of their spouses.
    And at the hearing, Ms. Roshto and Ms. Kemp shared with us
    questions they had for your company. I would like to hear maybe
    your response.
        Ms. Roshto's husband told her about the problems on the
    rig, that the well was losing a lot of mud. That is the sort of
    detail that may not have come to your attention, but it is well
    known among workers on rigs as a sign of a problem. She wants
    to know, and she asked this question at the hearing, why your
    company wasn't working harder to fix the problems on the rig in
    the weeks before the explosion? Why wasn't your company
    prepared for a blowout?
        Mr. Hayward. I think, as I have said all along today, we
    want to understand exactly what happened such that we can take
    the right actions going forward. I'm not aware of what you just
    raised, but the investigation will determine whether or not--
    the multiple investigations will determine----
        Mr. Melancon. Investigations are not going to bring back
    those 11 men to their kids. Not only were these women concerned
    about your company's preparedness, they were also concerned
    about your company's values. They wanted to ensure that rigs
    were kept safe and told us that BP should be held accountable
    for not protecting their husbands.
        Mrs. Kemp asked why money is more important than someone's
    life. And so I guess on behalf of Ms. Kemp, how do you respond
    to that?
        Mr. Hayward. It isn't. It absolutely it is not. As--since I
    have been in this role, it is something I believed in for a
    very long time. The priority of everyone involved in these
    operations is safety. That doesn't come before anything, not
    anything. It is something that I believe personally very
    passionately.
        Mr. Melancon. The women talked about in their testimony--
    I'm sorry, I have gone over my time.
        Mr. Stupak. Finish your question.
        Mr. Melancon. The women talked about in their testimony
    that their husbands worked for the drilling rig company, for
    Transocean, and that they pushed safety, they pushed safety,
    they pushed safety. But in discussions in weeks prior to the
    explosion, their husbands talked about BP waiving; saying, keep
    going, keep doing. And I have heard growing up in south
    Louisiana about the tool pusher or the drilling foreman and the
    company guys getting into fistfights.
        Was there any incidents, to your knowledge, or have you
    discovered that there was a direct order given by BP that says,
    keep going, I don't care what is going on?
        Mr. Hayward. I have not seen any evidence of that
    whatsoever, and I believe that the operation on the rig in the
    days leading up to the incident and in that day was carried out
    because everyone agreed on the rig to move forward.
        Mr. Melancon. Thank you, Mr. Chairman.
        Mr. Stupak. Thank you, Mr. Melancon.
        Ms. Castor for questions, please.
        Ms. Castor. Thank you, Mr. Chairman.
        Mr. Hayward, I would like to start out by expressing the
    anger and frustration of the hardworking people of my home
    State of Florida at the catastrophe BP has rendered upon our
    State and all the small businesses, the fishermen, the mom-and-
    pop hotel owners. We were just coming out of the most severe
    recession of our lifetime that happened in 2007. Things were
    getting a lot better. So this is like a sucker punch to the gut
    to learn that this tragedy is a result of BP elevating profit
    considerations over safety.
        For a decade many in Florida have opposed this drumbeat to
    bring the oil rigs closer to our beaches over time. We haven't
    industrialized our coastline like other States. We rely on
    tourism and clean beaches and clean water, and we really fought
    it off, even in the face of very well-paid lobbying campaigns
    and ad campaigns and with a lot of representations that this is
    safe, this is safe technology, whether it is in deep water or
    in shallow water.
        So, Mr. Hayward, I'm trying to understand how BP was either
    so unprepared for the possibility of a blowout or ignored the
    risks, because according to the Minerals Management Service
    study conducted in 2007, 126 blowouts have occurred at offshore
    drilling facilities on the Outer Continental Shelf since 1971.
    In 1979, a blowout at the Ixtoc oil well in the Gulf of Mexico
    created a disaster that flowed continuously for 290 days. And,
    Mr. Hayward, you have said that the chances of a blowout and
    explosion like the one that sank the Deepwater Horizon rig were
    one in a million, but over the past 40 years, there have been
    126 blowouts in the U.S. waters alone. That is roughly three
    blowouts per year. How could an average of three blowouts every
    single year for the past 40 years not have registered as more
    than a one-in-a-million chance risk for your company?
        Mr. Hayward. With respect, Congresswoman, I think what I
    said was that the integrity rating of the blowout preventer was
    of the order of 10 to the minus 5, 10 to the minus 6. That is
    to say that it was designed to fail between 1 in 100,000 and 1
    in a million times.
        Ms. Castor. And that is an acceptable risk?
        Mr. Hayward. It is the risk that BP and the industry more
    broadly use to assess the failsafe mechanism called the blowout
    preventer.
        Ms. Castor. I know you rely on these blowout preventers,
    and you call them failsafes, but they are not failsafes at all
    in the face of what we have discovered through our committee's
    examination and the statistics here. This committee has
    reviewed BP's regional oil spill response plan for the Gulf of
    Mexico, and not one time in the 582-page plan does BP lay out a
    method for controlling a subsea gusher after a blowout has
    occurred. Your company conducted its planning as if an
    uncontrolled subsea blowout wasn't even a possibility.
        In a recent interview with the Financial Times, you
    admitted, what is undoubtedly true is that we did not have the
    tools you would want in your tool kit. My question to you is
    very simple: Why not? Why weren't you prepared? Why did you
    elevate profits over safety?
        Mr. Hayward. I don't believe we did elevate profits over
    safety. What I was referring to in that article was the very
    complicated engineering problem we were faced with after the
    rig sank attached to its riser. So we had a well, a riser and a
    rig on the floor, and we didn't have the pieces of equipment
    instantly available to cut the riser, to cut off the top of the
    riser and find a way to intervene on the wellhead. And that is
    indeed true.
        Ms. Castor. Mr. Hayward, for years big oil companies and
    your allies have claimed that drilling is safe, and you want to
    come closer to Florida beaches, and you say it is safe, deep or
    shallow, that there are no problems. But on the other hand, we
    have heard over and over again over the last couple of months
    this is complex and this is dangerous, it is dangerous to drill
    miles below the ocean. And BP officials have said it is like
    operating in outer space, and given the difficulties and
    complexities in what we really knew, in what you knew about the
    risks, I can't understand why you all would assume that nothing
    could go wrong.
        So I'm--the doublespeak is rather tiresome. I'm dismayed
    and disheartened by what has happened and the elevation of
    profit over safety. And I can only hope that this disaster will
    motivate us to reassess our priorities and implement a clean
    energy policy for this country.
        Thank you, Mr. Chairman.
        Mr. Stupak. Well, that concludes questions of everybody on
    the committee. Now there is a few more questions. There are a
    couple of Members that have a couple of follow-up questions. So
    we are going to go a quick second round, if we may. So I will
    start with Chairman Waxman, if you would like to begin.
        Mr. Waxman. Thank you very much, Mr. Chairman.
        Mr. Hayward, you said your priority, your top focus, is on
    safety, and you feel very passionate about it. Except for your
    statement to that effect, I see, as you have said over and over
    again today, no evidence of that. You and other senior
    officials seemed oblivious to what was happening on the
    Deepwater Horizon rig. You weren't following the progress of
    the well. You weren't aware of the risks that were being taken.
    In answers to questions you said that your top officials under
    you, Mr. Ingles and Mr. Suttles, you would be surprised if they
    were following the happenings on the rig. You said you couldn't
    answer for them, but you would be surprised if they had been
    following the activities on the drilling rig.
        So who was following the activities on the drilling rig?
    You said there were people there who were the experts in their
    field. I just find it shocking that when the potential
    consequences of a mistake on a deepwater rig are so enormous,
    and you have such a high, passionate commitment to safety, that
    you seem so removed. I think operating in a deepwater
    environment is like operating in outer space, and yet you seem
    to think that all is going to be taken care of in time.
        Now, you said there is a team of the best minds in the
    world working on how to stop the oil spill. When were the best
    minds in your company paying attention before the spill? You
    were oblivious, and so were other senior officials. And I think
    this was a fundamental mistake in management. Let me ask you
    that: Do you think there was a fundamental mistake in
    management not to know?
        Mr. Hayward. I think, as I have said, that we have made it
    very clear that the focus in the company is on safety. What
    management can do is ensure that the right people with the
    right skills are in place, and the right systems and processes
    are in place, and the right priorities are in place, and the
    right investment is available to ensure that the plant that we
    are operating has integrity.
        Mr. Waxman. So you felt confident that the people who were
    making these decisions--and we went through five in our letter
    to you, and many Members asked you about some of these
    decisions--that the right people were making those decisions?
        Mr. Hayward. I believe that the right people were making
    those decisions.
        Mr. Waxman. And you have no evidence that they didn't make
    the right decision. That seems to be your position today; is
    that right?
        Mr. Hayward. I think at this stage in the investigation, it
    is premature to draw conclusions as to what was and what was
    not the right decision.
        Mr. Waxman. So it is premature.
        What investigation or investigations are taking place to
    determine these facts?
        Mr. Hayward. There is the BP investigation, there is the
    Marine Board investigation and the Presidential commission.
        Mr. Waxman. And are you going to be cooperating with all of
    them?
        Mr. Hayward. We are, as we have, Mr. Chairman, cooperated
    with your committee.
        Mr. Waxman. Well, I question how cooperative you have been
    with our committee, because I have heard very little answers to
    the questions from you today to the questions raised by our
    colleagues. You were asked whether BP made a mistake in well
    design. You said you haven't reached a conclusion yet. Mr.
    Dingell asked whether costs were a factor in your decisions,
    and you said you didn't know because you weren't there. When
    Mr. Doyle asked you who made the well design decisions, you
    said you didn't know.
        Our committee is doing an investigation. Now, the reason we
    are doing an investigation is we want to know how this happened
    so that we can make changes in the law and the procedures if we
    are going to allow further drilling. Don't you think you ought
    to be more forthcoming with us?
        Mr. Hayward. We will be as forthcoming as we can be, Mr.
    Chairman.
        Mr. Waxman. Give me the time horizon for your
    investigation. When will you have that completed? You have
    already had 60 days to do it. Is it going on now?
        Mr. Hayward. It is ongoing. And we want to have access to
    all of the evidence before we make final determinations. But as
    we have made very clear----
        Mr. Waxman. Give me your estimate of when that will be
    concluded.
        Mr. Hayward. One of the most important elements in this is
    the blowout preventer. It remains on the seabed, and it needs
    to be examined.
        Mr. Waxman. So we will put that aside. How about the other
    decisions before the explosion about the casing, about the
    centering of the well, about all of the other things that have
    been raised, have you reached any tentative conclusions that
    you can share with us?
        Mr. Hayward. As we shared with you recently, we have
    identified 7 areas, areas of focus in our investigation. And we
    will continue to share our understanding and our thinking with
    you as that develops.
        Mr. Waxman. Mr. Inslee asked you if there was any action
    that appeared--if there was any action to save money, and you
    said there is no evidence of that. I can't believe you said
    there is no evidence of that. There is evidence. You want to
    know more about it, but there is evidence to that effect, isn't
    there?
        Mr. Hayward. There were decisions taken by the people at
    the time, and some of them, sitting here today, appear they may
    have been to deal with money. But it is not clear. The----
        Mr. Waxman. The evidence is not conclusive, but there is
    evidence.
        Mr. Hayward. The decision, for example, to run a long
    string versus a liner was, as it shows in the document that you
    highlighted to me, a decision to do with the long-term
    integrity of the well.
        Mr. Waxman. There is evidence, and evidence may point in a
    certain direction. There may be evidence that points in another
    direction. So you take the evidence and reach a conclusion
    based on the preponderance of the evidence. That is not to say
    there is not evidence, when we have some of these clear
    examples.
        Let me ask you this. You can't give us a time for when this
    investigation is going to be complete, so we are relying on you
    to do your own investigation. Why should we rely on you to do
    your own investigation? I don't think you have a terrific
    record of reliability that should give us comfort to have us
    step back and just wait to get answers from you until you have
    done your own investigation. Why should we rely on that?
        Mr. Hayward. We are clearly not the only people doing an
    investigation. There are many people doing investigations. All
    I have committed is that as our investigation proceeds, we will
    share with you all of our findings and all of the data and all
    of the information.
        Mr. Waxman. Let me just say in conclusion, we delayed this
    hearing today so you could be prepared to answer our questions.
    We sent you our questions in advance, yet you have consistently
    ducked and evaded our questions. There may be some reason you
    think this approach makes sense, but your evasion will make our
    job more difficult. It will impede our understanding of what
    went wrong and will make it harder for us to draft appropriate
    reforms.
        I think that is regrettable and an unfortunate approach for
    you to take to the work of this committee of the United States
    Congress. And I will look forward to seeing what you come up
    with, but we are going to get evidence, and I would like you to
    submit for the record the names of the individuals who made
    those decisions in each of the areas that were under discussion
    in the letter we sent you. Would you be willing to do that.
        Mr. Hayward. We will make that available to you----
        Mr. Waxman. Thank you.
        Mr. Hayward [continuing]. As we have made everything, to my
    knowledge, available to you.
        Mr. Waxman. Maybe they will have some answers they can
    share with us. Thank you very much.
        Thank you, Mr. Chairman.
        Mr. Stupak. Mr. Barton for questions.
        Mr. Barton. Thank you, Chairman Stupak.
        We are about to finish up this hearing. We do appreciate
    your patience in listening to all the various members of the
    subcommittee.
        What one or two recommendations are you prepared to give
    about what we could do to prevent a future accident of this
    type now that you know what you know and you have listened to
    what the Congress knows here today? Are there one or two things
    that you would like to suggest for consideration to prevent an
    accident of this type from happening in the future?
        Mr. Hayward. I believe the most important one is to take
    the failsafe mechanism called the blowout preventer and design
    is such that it is genuinely failsafe. The reality in all
    industrial accidents is that there are always a combination of
    equipment failure and human judgment. And the most important
    thing is to have in place a system that is genuinely failsafe.
    And it is clear, based on our experience of this accident, that
    the current design basis of the blowout preventer being used in
    the deep water, not just in this case, but across the world, is
    not as failsafe as we believed it to be. And I believe that is
    a very important lesson that the industry needs to grasp, along
    with the relevant regulatory agencies.
        Mr. Barton. Much has been made of the complexity and the
    risks associated with drilling these deep wells. Would you care
    to--I have asked some of your subordinates to give us some sort
    of an assessment of the potential size of this particular field
    of this particular well. I have asked the Texas Railroad
    Commission and the Texas Geological Survey what the largest
    onshore oil well in Texas in its history of over 100 years has
    been, and with the exception of the initial discovery at
    Spindletop in 1901, we can't find a record of any well on shore
    in Texas, which has been the number one oil-producing State in
    the country for over 100 years, with the exception of a few
    years where Alaska at Prudhoe Bay, at its peak that flowed at
    50,000 barrels a day. And the latest estimates are that this
    well in this condition could be flowing as much as 50,000
    barrels a day. If you extrapolate that on an annual basis, that
    is over 100 million barrels of oil a year.
        So could you give us some assessment of why BP and other
    companies go to such extraordinary measures to drill in these
    areas? What is it that you think you found or are hoping to
    find beneath the Gulf of Mexico?
        Mr. Hayward. In the instance of this well, we believe that
    the discovery was of the order of 50 million barrels.
        Mr. Barton. Fifty million?
        Mr. Hayward. Fifty million barrels. That is our estimate of
    the discovery--the size of the discovery that this well made.
        Mr. Barton. So at the rate it is flowing, it ought to peter
    out pretty quickly; 50,000 barrels a day is 350,000 barrels a
    week, which is 3.5 million in 10 weeks, which is 35 million in
    100 weeks. So I was told it was on the order of 500 million
    barrels.
        Mr. Hayward. That is not correct, Congressman. This is a
    discovery based on the--clearly on the well and the seismic
    information we had available to us, which is----
        Mr. Barton. So it is just that the extreme pressure--I
    mean, it couldn't flow at this rate in full production?
        Mr. Hayward. That's correct.
        Mr. Barton. Is that a fair statement?
        Mr. Hayward. That's correct.
        Mr. Barton. Would you care to tell us what it would flow
    at, what you expected it to flow at per day?
        Mr. Hayward. I think at a producing well, properly
    completed, we would expect it to be between perhaps 15- and
    25,000 barrels a day.
        Mr. Barton. And lastly, with the moratorium that is
    currently in existence in the Gulf of Mexico for the deep
    areas, the 6-month moratorium, I know you have to do--we want
    you to stop this spill and clean it up, but there are other
    areas that could be explored. What other areas might BP go to
    instead of in the Gulf of Mexico?
        Mr. Hayward. Well, we have deepwater drilling exploration
    and production operations in a large number of locations around
    the world; in West Africa, Brazil, Egypt, to name the three, as
    well as the U.K. in the North Sea.
        Mr. Barton. So you would focus on those areas if this
    moratorium continues?
        Mr. Hayward. We are focused today on the relief well.
        Mr. Barton. I understand that, and you should be. You
    better be.
        Mr. Hayward. I haven't thought, frankly, beyond the relief
    wells in terms of activity in the Gulf of Mexico.
        Mr. Barton. Thank you, Mr. Chairman.
        Mr. Stupak. Thank you, Mr. Barton.
        Mr. Hayward, in the line of questioning throughout the day,
    you have referred to the blowout preventer. Mr. Gonzalez, when
    he asked you questions, and Mr. Barton just asked some
    questions on there. Back on June 4th, you wrote an editorial
    for the Wall Street Journal. In talking about the blowout
    preventer, you stated, we in the industry have long had great
    confidence in the blowout preventer as the ultimate failsafe
    piece of safety equipment, yet on this occasion it failed with
    disastrous consequences. Do you still believe the blowout
    preventer should be considered the ultimate failsafe?
        Mr. Hayward. I believe so. Either a blowout preventer or
    some similar mechanism.
        Mr. Stupak. I'm a little surprised by your comments,
    because the committee received a document--you have the
    document binder right there. You may want to refer to it--that
    evaluated the blowout preventer used on the Deepwater Horizon
    rig. The document was prepared in 2001. It is tab No. 14 right
    there, and we have put it up on the screen.
        In 2001, when Transocean bought the blowout preventer, I
    want to show the executive summary in which BP participated
    with it in this review. And it says, engineering and operations
    personnel identified 260 failure modes.
        Do you see where it says that towards about top third of
    it? OK.
        So BP engineers helped to identify these 260 failure modes.
    So how can you write or how can you testify--but how can you
    write in the Wall Street Journal 2 weeks ago that you thought
    the blowout preventer was the ultimate failsafe when your own
    engineers examined the blowout preventer 9 years ago and found
    260 failure modes in it? How can you ever say it is the
    ultimate failsafe?
        Mr. Hayward. I haven't seen this document previously. I
    apologize for that, but I haven't.
        Mr. Stupak. Well, now knowing there are 260 failsafe modes
    in this blowout preventer that was on Deepwater Horizon, it
    never was the ultimate failsafe, was it?
        Mr. Hayward. The blowout preventer is designed to be the
    ultimate failsafe. That is the design basis. It is the basis
    for which the industry has operated for 30 years in deep water.
        Mr. Stupak. Let me ask you this: As the CEO, why, then, did
    your company change the blowout preventer failsafe method or
    mechanism? For instance, we found other things that showed that
    this blowout preventer was not failsafe. At our first hearing,
    May 12th, I asked in review of it that the blowout preventer
    had been modified in ways which would increase the risk that it
    would blow out, that it wouldn't work. OK? One modification,
    for instance, was to remove the important variable bore ram and
    replaced it with a test ram that made it ineffective in case of
    an emergency.
        At our hearing I asked Mr. McKay, who is the president of
    BP America, about these modifications. He testified under oath,
    he took the oath, and he said he didn't know anything about
    modifications. We have since learned that BP approved
    modifications despite being warned that it would reduce the
    safety of the blowout preventer. I would like to display it
    again. It is tab No. 10 right in your book right there. Here is
    a letter from 2004 from Transocean sent to BP that BP signed
    and acknowledged. And it says, BP acknowledges that the
    conversion--the conversion you asked for--the conversion will
    reduce the built-in redundancy of the BOP, thereby potentially
    increasing the contractor's risk profile.
        So what does that mean, BP, that you reduce the built-in
    redundancy, increase your risk? You asked for modifications
    which limit the redundancy and increase your risk, right? BP
    did.
        Mr. Hayward. Again, I haven't seen this document
    previously. What I do know, there were modifications made to
    the blowout preventer. In particular a test bore ram was added.
    It was not a subtraction. It was an addition to the blowout
    preventer is my understanding.
        Mr. Stupak. But here is our problem. Your territory will
    say this is the ultimate failsafe. We find out it is modified.
    We ask your representative, Mr. McKay; he says no, no. We get
    down to the hearing, we get documents showing, in fact, BP
    asked for it. BP was warned that the ultimate failsafe system,
    the way BP wanted it modified will increase the risk of a
    problem. And that is the one we have here in Deepwater Horizon.
        So how can we write an editorial--you can't have it both
    ways here. How can we write an editorial saying, ``Oh, this is
    the ultimate system''--and even your own engineers said there
    are 260 different ways it can fail. Then you add some more to
    it.
        Mr. Hayward. The----
        Mr. Stupak. Go ahead.
        Mr. Hayward. The blowout preventer is designed to be the
    failsafe mechanism in the drilling industry.
        Mr. Stupak. Correct.
        Mr. Hayward. That has been the case since blowout
    preventers were created.
        Mr. Stupak. But you are the CEO. You have been head of
    exploration, drilling, all this. Does it make sense to you that
    this is the ultimate failsafe system when there are 260
    different ways it can go wrong? Plus, you, your company
    modifies it, which increased the risk of things going wrong?
        Mr. Hayward. The fact is, it is the ultimate failsafe
    mechanism.
        Mr. Stupak. Let me ask you this. OK, this well, you started
    drilling it last fall, the Macondo well, last fall, using the
    different rig, the Marianas. It was harmed, it was damaged in
    the hurricane, so you replaced it with Deepwater Horizon.
        In November of last year, Transocean pulled out the blowout
    preventer from the ocean floor because its shear rams weren't
    working. The lower annular would not close, and the upper
    annular had been stripped through during a well-control event.
        We know that BP was aware of this because Transocean--and,
    again, it is Document No. 12 there in our binder--reflect
    conference calls with BP about the problems with this blowout
    preventer. In addition, Transocean records indicate the
    incidents state that the estimated down time forced by the
    malfunction is a conservative 10 days at $444,111 per day, or
    $4.4 million, as it shows.
        So how can you say blowout preventers are failsafe devices
    when the blowout preventer you are using on the well in
    November had to be removed because of malfunctions?
        Mr. Hayward. Well, of course, the answer is, they are the
    failsafe mechanism, and when problems are identified with them,
    they are rectified. And I believe that is what has taken place.
        Mr. Stupak. You know, you can't have it both ways here.
    This accident occurs. You have a blowout preventer you know had
    260 different errors in it, ways it could go wrong. You modify
    it. You pull it in November of 2009. You see there are all
    kinds of problems. This accident happens. So you write this
    editorial in the Wall Street Journal saying, ``Hey, it ain't
    our fault. It's mechanical.'' You said earlier, an accident is
    because of mechanical failure and human judgment--human error.
        It seems like we have more human error than mechanical,
    because the mechanical safeguard, the ultimate failsafe, really
    wasn't an ultimate failsafe. They can fail in many ways, and
    that is exactly what went wrong here and that is what happened
    on the 20th.Correct?
        Mr. Hayward. What is clear is that the ultimate failsafe
    failed to operate in this case. That is absolutely clear.
        Mr. Stupak. Why would a company like BP, when you are doing
    this deepwater drilling, modify the ultimate failsafe if it is
    supposed to protect the American people and our environment?
    Why would you modify it, increase the risk of problems? You
    knowing it, you sign a document. The contractor warns you not
    to do it, and you still do it. That is the problem we are
    having.
        Mr. Hayward. As I said, the blowout preventer is the
    failsafe mechanism. It is designed to be exactly that.
        Mr. Stupak. Questions, Mr. Burgess?
        Mr. Burgess. Thank you, Mr. Chairman.
        Mr. Hayward, it has been a long day.
        You said earlier, if I recall correctly, that everyone in
    your organization, in the culture of safety, not only had the
    right to curtail operations but the obligation if they saw
    something going on that was not safe. Is that correct?
        Mr. Hayward. That is correct.
        Mr. Burgess. And in response to a question from the other
    side of the dais, and I don't remember who asked it, you also
    made the assertion that the right people were making the
    decisions on the rig. Did I hear that correctly?
        Mr. Hayward. I believe that is the case.
        Mr. Burgess. Who is Donald Vidrine?
        Mr. Hayward. He is the well site leader on--one of the well
    site leaders on the Deepwater Horizon.
        Mr. Burgess. So he was referred to in a Wall Street Journal
    article as the company man or the BP man on the Deepwater
    Horizon the day of the blowout. Is that correct?
        Mr. Hayward. That is correct, yes.
        Mr. Burgess. I don't know if you are familiar with the
    article that was in the Wall Street Journal, and this has been
    several weeks ago, on May 27th, I believe. They talked about a
    skirmish between some of the Transocean folks, the chief
    engineer or chief mechanic on the Deepwater Horizon, and the
    rig's top manager, Jimmy Harrell.
        Are you familiar with that discussion that apparently was
    quite a heated discussion? I think Mr. Gonzalez was actually
    the one that brought it up.
        Mr. Hayward. It is my understanding, Congressman, that that
    account has been contradicted under oath in the Marine Board
    investigation and that there was no debate or skirmish or any
    other heated discussion.
        That is what--I can't recall exactly who it was, but, under
    oath at the Marine Board investigation, I believe it was the
    Transocean tool pusher, testified that there was no either
    heated discussion or debate or anything else.
        Mr. Burgess. Would that would be the tool pusher Miles
    Ezell?
        Mr. Hayward. I believe that is the case, sir.
        Mr. Burgess. It wasn't Dewey Revette, because he died in
    the accident. And he was one of the other witnesses to the
    altercation.
        Well, you know, if this occurred, even if it only partially
    occurred, it just seems like there was enough discussion that
    someone should say, ``Wait, let's not go forward with this
    because at least some of our number feel it is unsafe.'' And,
    again, you said that the men would have the obligation, not
    just the right, to say let's halt; he would have the obligation
    to say, well, let's get everyone on the same page with this.
        Am I wrong to assume that?
        Mr. Hayward. You are not wrong. And I think you can only
    conclude they all believed that it was right to proceed.
        Mr. Burgess. Are we ever going to get a chance to talk to
    Mr. Vidrine? Will BP make him available to our committee?
        Mr. Hayward. If you call him, of course.
        Mr. Burgess. Let me ask you another question. You said in
    response to some information that came up that there was no
    evidence that BP was focusing on the cost of drilling. And,
    yet, March 2010 strategy presentation, you stated, ``We have
    added exploration resources efficiently. Our discovery cost was
    $1.40 per barrel in 2009. This is consistent with our track
    record over the last 5 years of having the lowest discovery
    costs in the industry.''
        Now, certainly, that would be enviable, except, in a
    culture of safety, I mean, I might even spend $1.45 or $1.47,
    instead of just $1.40, if it meant that it was a safe
    procedure.
        So was maintaining the lowest-cost discovery in the
    industry possibly a factor in the decision-making on this well?
        Mr. Hayward. None whatsoever.
        But that metric is created by dividing the volume of
    barrels discovered by the costs. And what it talks to is the
    success of our exploration program and the scale of the volume
    that we have discovered, not anything to do with costs.
        Mr. Burgess. Well, but it does have something to do with
    cost. Now, it has been reported that completion of the Macondo
    well was running behind schedule. Is this accurate?
        Mr. Hayward. I believe it was running behind schedule, that
    is correct.
        Mr. Burgess. How far behind schedule?
        Mr. Hayward. I don't know the precise number.
        Mr. Burgess. What does it cost today to run a rig like
    that?
        Mr. Hayward. That sort of rig, fully built up, the cost is
    probably a million dollars a day or thereabouts.
        Mr. Burgess. So, even a couple of days over is a
    significant cost driver on that $1.40-a-barrel minimal
    discovery cost in the industry.
        Mr. Hayward. Well, with respect, Congressman, the most
    important thing was that actually we had made a discovery, and
    we wanted to secure it in the proper way. And that was going to
    be a far bigger driver of any value that the company was going
    to create than the cost of the operation.
        Mr. Burgess. I don't disagree with that. But, oh, how I
    wish that that had been the case, as we are investing hearing
    after hearing after hearing on this thing case and the darned
    thing is still bubbling down at the bottom of the gulf. That
    doesn't seem to be accurate.
        Is your own investigation looking at the issue of whether
    or not cost drivers were an issue in the problems that were
    created?
        Mr. Hayward. Our investigation is covering everything.
        Mr. Burgess. So it wasn't on your list, but, nevertheless,
    it will be included in your----
        Mr. Hayward. Well, my list is the early findings of the
    investigation in terms of the key areas to focus on--areas
    around cement, casing, the integrity test----
        Mr. Burgess. Got it.
        Mr. Hayward. --well control procedures.
        Mr. Burgess. I got it. We are running out of time here.
        But when you said your investigation was proceeding without
    privilege early on in the hearing today--so it would also cover
    the issues of whether or not cost drivers were an issue in
    creating the problems?
        Mr. Hayward. It will cover everything.
        Mr. Burgess. Thank you, Mr. Chairman.
        You know, I would just echo what Mr. Scalise said earlier.
    We get calls all day or night, faxes come in, people have got
    ideas on how to fix our problem in the gulf. I really wish you
    guys would open up an 800 number and take these things and vet
    them and listen to what people are saying. Americans are
    terribly--we have a lot of ingenuity in America. And people are
    watching that thing that Mr. Markey made everyone's computer
    screen show 24 hours a day. It is driving people crazy to watch
    that thing bubbling in the gulf. People are coming to us with
    solutions. There needs to be a central location. I don't care
    whether it is you, I don't care whether it is Dr. Chu, but
    somebody needs to be vetting these things and, if there is a
    reasonable idea out there, put it to work.
        Thank you, Mr. Chairman.
        Mr. Stupak. Mr. Markey for questions.
        Mr. Markey. Thank you, Mr. Chairman, very much.
        Mr. Hayward, is the most optimistic date for the relief
    well to be completed still August?
        Mr. Hayward. That is our current timetable.
        Mr. Markey. Is August also the earliest date the leak can
    be stopped? Or will it take more time after the relief well is
    complete before the flow of oil is permanently halted?
        Mr. Hayward. The relief well will halt permanently the flow
    of oil.
        Mr. Markey. Mr. Hayward, in 2009, an independent firm that
    BP hired to serve as its ombudsman, headed by former Federal
    Judge Stanley Sporkin, substantiated that BP was violating its
    own policies by not having completed engineering documents
    onboard another BP rig operating in the Gulf of Mexico, the BP
    Atlantis, when it began operating in 2007. One BP official
    warned that the absence of these safety documents could lead to
    catastrophic operator error.
        Let me read to you from an internal BP e-mail. And this
    goes from Barry Duff, BP employee, to other engineers at BP.
    Here is what he said. He said, ``The P&IDs for subsea are not
    complete and have not been approved, are handed over to
    operations. The current procedures are out of date. The risk in
    turning over drawings to the people out on the rig running the
    Atlantis that are not complete are: number one, the operator,
    the BP operator, will assume the drawings are accurate and up
    to date. This could lead to catastrophic operator errors due to
    their assuming the drawing is correct. Turning over incomplete
    drawings to the operator, the BP operator, for their use is a
    fundamental violation of basic document control. Having the
    project document control person turn over drawings that are not
    complete places the onus on her that they are the most current
    version. Currently, there are hundreds, if not thousands, of
    subsea documents that have never been finalized yet the
    facilities have been turned over.''
        Mr. Hayward, BP's managing attorney stated to the
    Associated Press on May 15th of this year that BP has reviewed
    the allegations and found them to be unsubstantiated.
        Mr. Hayward, were all of the engineering documents and
    drawings necessary to operate the Atlantis rig safely and fully
    completed before the Atlantis rig began operating in the Gulf
    of Mexico?
        Mr. Hayward. When this issue emerged, we conducted a full
    investigation and determined that all of the drawings that were
    necessary to start up the operation were available to the
    people starting up the operation at the time the operation
    started up.
        Mr. Markey. Mr. Hayward, Mr. Duff was relieved of his
    duties in the middle of August of 2008. A new person was put in
    charge as a result. His name is Ken Abbott. Ken Abbott has been
    testifying all day in Washington across the street in the
    Natural Resources Committee.
        He is a whistleblower. He got fired 6 months after he
    replaced Mr. Duff because he raised the very same concerns,
    that there was not proper documentation on the BP Atlantis. He
    was fired even though he raised issues that obviously have a
    lot of resemblance to the kind of attention to the safety
    protocols that were part of the BP-Horizon rig.
        Is it part of your policy, Mr. Hayward, to fire employees
    who raise questions about the safety of your rigs?
        Mr. Hayward. No, it is not.
        Mr. Markey. Well, Mr. Hayward, I am afraid that that is
    what happened to Mr. Abbott. Because not only was he fired, but
    2 weeks later they put out--and was told that he was just part
    of a force reduction, but your company then put out an
    advertisement to hire someone to replace him on that job.
        Earlier, you said all of the other BP wells in the Gulf of
    Mexico that had been completed are secure and are safe to
    operate. Do you still stand by that?
        Mr. Hayward. I do.
        Mr. Markey. Now, do you know that Judge Sporkin said that
    it is not true that the documents were completed when he
    substantiated Mr. Abbott's allegations? So how do you account
    for that, that you hire an ombudsman, he is a former Federal
    district court judge, he comes in, he does the evaluation, and
    he substantiates the whistleblower's allegations? How do you in
    any way justify then firing the person who actually brought
    these issues to your attention?
        Mr. Hayward. As I said, the investigation concluded that
    the drawings necessary for start-up were on the Atlantis
    facility. Judge Sporkin, our ombudsman, is investigating the
    issue of unfair dismissal, which is quite appropriate.
        Mr. Markey. Well, I ask for you to provide a copy of the
    investigation which you are conducting, Mr. Hayward, for the
    record.
        Mr. Hayward. We can do that.
        Mr. Markey. OK. We will put that in the record.
        I think, Mr. Hayward, that the only thing worse than one BP
    rig at the bottom of the ocean in the Gulf of Mexico would be
    two BP rigs at the bottom of the ocean.
        I think this is just another example of you running through
    all of the red lights, all of the warnings. Judge Sporkin is
    one of the most respected people in this city. He has
    corroborated the charges that were being made by this now-fired
    employee who was raising safety concerns.
        I am afraid, once again, it is a blistering, scalding
    indictment of the lack of a culture of safety that you had at
    BP. And I just think that it is something that has to end
    before we see another disaster.
        Thank you, Mr. Chairman.
        Mr. Stupak. Thank you.
        Before I go to Mr. Latta, let me ask unanimous consent that
    we have the document binder be entered in the record, provided
    that the committee staff may redact any information that is
    business propriety, relates to privacy concerns, or is law-
    enforcement sensitive.
        Mr. Markey. Mr. Chairman, may I just ask for 30 seconds,
    one additional question?
        Mr. Stupak. Let me finish what I am doing here.
        Mr. Markey. OK.
        Mr. Stupak. Without objection, the documents will be
    entered into the record.
        [The information appears at the conclusion of the hearing.]
        Mr. Markey. May I just ask----
        Mr. Stupak. It has to be really quick, Ed. You never ask a
    30-second question.
        Mr. Markey. Mr. Hayward, will you shut down the BP Atlantis
    until these safety questions have been answered?
        Mr. Hayward. I believe they have been fully resolved,
    Congressman.
        Mr. Markey. I do not think that that is the case.
        Thank you, Mr. Chairman.
        Mr. Stupak. We will take time for Mr. Latta. Mr. Latta for
    questions, please?
        Mr. Latta. Thank you, Mr. Chairman.
        If I could just follow up with some questioning that
    Ranking Member Burgess was on, talking about the schedule.
        My first question is, what is the process that BP
    executives have developed when it comes to schedules,
    especially for the offshore wells in the gulf? Is there a
    schedule? Who makes the schedules?
        Mr. Hayward. The schedule, the drilling program for the--is
    that the----
        Mr. Latta. Right. Who is in charge of the scheduling for
    those?
        Mr. Hayward. The drilling programs are created by the
    engineering team, overseen by the vice president for drilling
    and completions and the business unit leader and, in this case,
    the exploration manager in the Gulf of Mexico.
        Mr. Latta. Now, are you consulted in the development and
    maintenance of those schedules?
        Mr. Hayward. I am sorry?
        Mr. Latta. Are you consulted at all in the development or
    maintenance of those schedules?
        Mr. Hayward. I am not.
        Mr. Latta. Is there a committee higher up that is then
    consulted at BP about those schedules?
        Mr. Hayward. About the schedules of drilling?
        Mr. Latta. Correct.
        Mr. Hayward. There are several groups that would look at
    the schedules of drilling.
        Mr. Latta. Now, I guess in a corporate structure, how high
    up would those committees be or those groups that would be
    looked at that?
        Mr. Hayward. It would be within the Gulf of Mexico business
    unit.
        Mr. Latta. Let me ask this: Would a well of this type,
    being as deep as it is, being as tough as it would be, it
    sounds like, to drill, would that elevate it to a higher
    standing that folks higher up at BP would be consulted on it?
    Or is it just still kept in the gulf with that region right
    there?
        Mr. Hayward. The design and operating practices would be
    signed off at the level of the vice president of drilling and
    completions in the Gulf of Mexico.
        Mr. Latta. OK. So you would never be consulted on that
    then?
        Mr. Hayward. No.
        Mr. Latta. Thank you very much, Mr. Chairman. I yield back.
        Mr. Stupak. Thank you, Mr. Latta.
        Mr. Braley for questions, please.
        Mr. Braley. Mr. Hayward, at the beginning of this hearing,
    I showed you a couple of short video clips from two of the
    women who testified last week at our field hearing in
    Chalmette, Natalie Roshto and Courtney Kemp. And one of the
    questions they posed during that hearing was what they would
    tell to their children about why their fathers died on this
    Deepwater Horizon rig.
        You began your testimony a very long time ago today with
    these words: ``The explosion and fire aboard the Deepwater
    Horizon and the resulting oil spill in the Gulf of Mexico never
    should have happened.''
        What do you think that those two young mothers should tell
    their children about why this happened, based on what you know?
        Mr. Hayward. Based on what I know, that this was a tragic
    accident involving many failure mechanisms. That is the
    reality. That is why this happened.
        Mr. Braley. Is there blame to go around among all of the
    companies that were working on that well site?
        Mr. Hayward. I don't believe now is the time to try and
    apportion blame. I believe now is the time to try and
    understand what happened. And that is what the investigations
    are trying to do.
        Mr. Braley. Well, the reason I am asking that is because,
    during other congressional hearings, there has been finger-
    pointing on. And I assume you have been following what has been
    going on in the hearings and are aware of that.
        Mr. Hayward. As I said, I don't believe that this is the
    time to finger-point or apportion blame. I believe this is a
    time to understand fully what caused this accident such that
    the industry and BP can learn for the future.
        Mr. Braley. Well, I am glad you brought that up, because
    one of the things that BP has been taking responsibility for is
    the cleanup costs and the payment of all legitimate claims. We
    have heard that phrase over and over again.
        And we have also seen press accounts where BP spokespeople
    have said, as the responsible party, we are required to handle
    those claims, and then we will wait until some later date to
    deal with the apportionment of responsibility among the various
    parties.
        Are you aware of that?
        Mr. Hayward. I am.
        Mr. Braley. Well, let's talk briefly about the claims
    process and some of the problems that are currently part of
    that process.
        One of the things we know is that, under the oil pollution
    claims process, a claimant can't file suit until a presentment
    of claim is made. Are you familiar with that process?
        Mr. Hayward. I am not familiar with the details.
        But what I can say is we have set up an independent claims
    facility under Ken Feinberg. He will have the full authority to
    adjudicate on claims. Within that system, there will be an
    opportunity for anyone to appeal to three judges.
        That system does nothing to deny anyone any rights with
    respect to any other claims process. It is simply a way of
    expediting the claims process such that it is fair, efficient,
    and fast.
        Mr. Braley. I want to talk to you about that, because this
    is what I have been hearing from people involved in the
    preliminary claims process with BP. I have been informed that
    BP's position, under their current claims process, is that a
    submission of a claim is not a presentment for the purpose of
    beginning a claims process under the Oil Pollution Act. And the
    reason BP has taken that position is because they do not
    consider it to be for a sum certain if there are future losses
    that have not yet been determined or if there are ongoing
    economic losses with no date certain.
        Are you aware of this process?
        Mr. Hayward. I am aware in general terms of the process.
        Mr. Braley. Well, do you understand the problem that
    creates for somebody with an ongoing economic loss, like Ronnie
    Duplessis, the shrimp boat officer who testified at our hearing
    last week, who is without work because the fishing beds that
    are part of what he does for a living are not available to him?
        Mr. Hayward. We are endeavoring--I believe we have put in
    place a process whereby we pay money and it means nothing about
    future liabilities.
        Mr. Braley. Yes, but my question----
        Mr. Hayward. No one has given away the opportunity to claim
    future liabilities.
        Mr. Braley. I am not implying that. I am talking about a
    process that actually puts money in the hands of people who
    desperately need it because their income source has been
    destroyed by this oil disaster at your rig.
        Do you understand their frustration, when they have gotten
    a check, in the case of Mr. Duplessis, for $5,000, which
    represents a very small amount of the monthly gross income he
    gets from his business, to feed his family?
        Mr. Hayward. I understand fully. I have spoken to many
    people on the gulf coast, to fishermen, to shrimpers, to small
    hotel owners, and I----
        Mr. Braley. Can you understand, then, sir, why they are
    frustrated? If BP is taking the position in this claims
    presentment process that every time they cannot define their
    future economic loss they have to submit another claim as soon
    as that loss becomes defined for a fixed period of time and
    then another claim and another--do you understand how that
    could be frustrating?
        Mr. Hayward. I do, Congressman. And----
        Mr. Braley. So----
        Mr. Hayward [continuing]. In terms of the last weekend--if
    you would just let me finish, please--we have put in place a
    process for small businesses where they can project forward for
    the next month what it is they expect to lose by way of cash
    flow, and we will pay it now.
        I am very conscious of the issue of small businesses who
    have ongoing cash-flow demands. So we are trying very hard to
    ensure that money is paid in advance for commitments for people
    have already taken, rather than in arrears. And that is what we
    will continue to do.
        Mr. Braley. And will that be part of the fund that Judge
    Feinberg is administering?
        Mr. Hayward. That process will be transferred into Ken
    Feinberg's process, and that is the basis on which we will move
    forward.
        Mr. Braley. Thank you.
        Mr. Hayward. And in the course of the last week, we have
    paid out over $15 million to small businesses on that basis.
        Mr. Stupak. Thank you, Mr. Braley.
        Mr. Welch for questions.
        Mr. Welch. Thank you, Mr. Chairman.
        Mr. Hayward, can you point to any single bad decision that
    was made in connection with Deepwater Horizon?
        Mr. Hayward. As I have said often today, I am not prepared
    to point today, with a half-complete investigation, as to what
    was and was not a bad decision.
        There are many components to this accident, to do with, as
    I have said, the casing, how it was run; the cement job, how it
    was conducted; integrity tests that may or may not have been
    well-interpreted. At all stages, everyone on the rig decided
    that the right thing to do was to continue. We need to
    understand how that came about.
        Mr. Welch. I understand that. But, with the benefit of
    hindsight and whatever investigatory work has been done, both
    by you and by others, at this moment, 57 days after this event,
    is there anything you can identify that was done wrong?
        Mr. Hayward. I am not able to draw that conclusion at this
    time.
        Mr. Welch. OK.
        Well, yesterday, Mr. Hayward, I think BP took a very
    constructive step in agreeing to deposit $20 billion in an
    independently administered fund to compensate victims and to
    pay for the cleanup. It was a first step in establishing
    confidence in BP, confidence that BP's words would be matched
    by their deeds.
        But today, regrettably, your appearance here has done a
    good deal, at least for me, to erode that confidence. We know
    you are not an engineer, and we know that you were not on the
    Deepwater Horizon. But your answer 65 times that you don't know
    to questions that were reasonably posed to you on both sides of
    the aisle erodes confidence; it doesn't inspire confidence.
        You know, the question that any company has to ask itself
    is whether it has strict procedures in place to make
    disciplined decisions that give it confidence that, at a
    critical moment, where the lives of its workers and the
    investment of its shareholders is at stake, critical judgment
    will be exercised. And that is the obligation of the CEO.
    However it is you accomplish that ability to hold your workers
    accountable and support them, that is the job of the CEO,
    whether it is a small company or a large company.
        And at that very critical moment when that well was going
    to be capped and decisions had to be made about the ceiling of
    the well, whether to use a cheaper and quicker casing design,
    whether to use more or fewer casing centralizers, whether to
    run a critical cementing test, whether or not to circulate
    drilling mud, it does not appear that anybody was in charge.
        And that is the erosion of confidence, because the lack of
    procedures, the lack of people being in charge, and resorting
    to the least-cost alternative clearly played a major role in
    this catastrophe.
        I yield back.
        Mr. Stupak. Thank you, Mr. Welch.
        Mr. Scalise for questions, please.
        Mr. Scalise. Thank you again, Mr. Chairman.
        Mr. Hayward, going back for a few more of the questions
    that we continue to have, why was a cement bond log not
    performed?
        Mr. Hayward. I don't know why a cement bond log wasn't
    performed. I wasn't there. I didn't take the decision. What I
    understand----
        Mr. Scalise. I know you have to----
        Mr. Hayward. What I understand from discussion with the
    investigation team is that the conclusion reached on the rig by
    BP, Transocean, was that they had a good cement job, that they
    had got returns at the surface, that the right volume had been
    pumped, and they had pressure integrity.
        Mr. Scalise. And they based that on readings of some other
    test that they performed, or----
        Mr. Hayward. On the basis of those three things, they
    determined that they had a good cement job. And it was on that
    basis----
        Mr. Scalise. So there is no BP procedure to perform that
    test. You leave it up to the discretion of the company man on
    the rig or somebody else on the rig?
        Mr. Hayward. There is no requirement to perform a cement
    bond log.
        Mr. Scalise. Are you going to change that policy and make
    it a requirement?
        Mr. Hayward. It is one of the things we need to look at in
    the light of this accident.
        Mr. Scalise. When we talk about, you know, all these
    different ideas--and, like I said, I just gave you some. We get
    lots of them. I tried to filter some out. I don't know if you
    have seen the presentation of people putting hay in the water,
    and the oil comes on to the hay and the water doesn't, and then
    it rolls up and you can clear that away--all kinds of ideas
    like that.
        What is your process for all of these people that are
    submitting ideas, many of which have tremendous merit and then
    none of which we see being used in the water?
        Mr. Hayward. Well, I think, with respect, we have used many
    of the ideas that have been submitted, Congressman.
        We do have a process, and there are thousands, hundreds of
    thousands, actually, of ideas that have been submitted. And we
    have a process to work through them and to utilize them. And we
    have used very many that have been submitted from individuals
    across the United States.
        Mr. Scalise. Well, hopefully we will be able to get some
    more of those implemented. Because, as I said earlier, there is
    not enough that you can do. If you have more ideas, try them
    all, because there is a lot of oil in the gulf. And if
    something works, do more of it. If it doesn't work, you can go
    on to something else.
        Is that structure just BP's structure? Is there some
    unified command----
        Mr. Hayward. It is part of the unified command structure.
        Mr. Scalise. So are there any Federal agencies involved in
    that?
        Mr. Hayward. There is a team of people. So as e-mails and
    suggestions come in, they are forwarded to a team of people,
    and they are evaluated and implemented based on that team of
    people that sits within the unified command structure.
        Mr. Scalise. Well, local people that are affected by this,
    we are still hearing from lots of local people--fishermen that
    can no longer fish; people that have oyster-processing
    companies and now some of those oyster beds are closed so they
    have no oysters to process; boat captains. These are all people
    that don't want to just get some unemployment check. They want
    to work, but they can't work.
        Many of them are frustrated that they are not being engaged
    to work on the cleanup. And they are the ones most vested; they
    are the ones on the ground who want this cleaned up with the
    most urgency. And it seems like many of them are frustrated
    that they are being shut out, and then they are seeing people
    bused in from out of State that come in in the day and then
    they are bused out again at night that just don't have the same
    kind of passion. And it is kind of confusing. Why are they not
    being employed, if they want to work, if they are there on the
    ground?
        Mr. Hayward. We made every effort to use everyone locally
    who wants to participate. We have almost 10,000 Vessels of
    Opportunity--the local fishermen employed in the Vessels of
    Opportunity program. And we have----
        Mr. Scalise. I was notoriously told--and this was reported
    in many media accounts, but I have actually spoken to the
    parish official on the ground who actually did this. Just a few
    weeks ago, there were 50 of those boats, Vessels of
    Opportunity, that were contracted by you that were supposed to
    be putting out boom. Those boats were sitting idle at the dock,
    not putting out boom, as oil was coming into our marsh. And
    this parish official actually went out and they commandeered a
    number of those boats and just went and put it out themselves.
        There is no excuse for that. What kind of method do you all
    have in place? If you are just giving people a check and
    telling them to sit the boat at the dock--we don't need the
    boat at the dock. We need the boat out putting the boom so that
    the oil doesn't get into the marsh.
        And, again, it gets into this sense of urgency. It is not
    just about writing checks. I mean, that is important, but it is
    even more important that the work gets done in a quick time
    frame. And that is not what is happening. There is no quick
    turnaround. And then things like that continue to happen.
        Are you going to change something on the ground to
    emphasize that it is not just about running a PR campaign? We
    have things that have to happen quickly because there just
    isn't the time for days to go by with these kinds of delays.
        Mr. Hayward. Our focus is to continue to improve the
    quality of the response and the engagement of the people in the
    initial area. It has been the biggest challenge, and we
    continue to work it very hard with the incident commander Thad
    Allen and the Coast Guard.
        Mr. Scalise. Let me ask you, is the casing cracked or
    damaged below the sea floor?
        Mr. Hayward. We don't know that, of course, because we
    haven't been able to get into the well.
        Mr. Scalise. There is nothing that you have seen that would
    show that?
        Mr. Hayward. We have no way of knowing that.
        Mr. Scalise. OK. And I know----
        Mr. Stupak. Time, Steve.
        Mr. Scalise. And I apologize.
        Mr. Stupak. Go ahead, one more. Go ahead.
        Mr. Scalise. Mr. McKay was here, testifying at the same
    table you are at, on Tuesday. He said, quote, ``The spill
    response has been pretty effective.'' And I strongly disagreed
    with him in that hearing on Tuesday.
        I would like to know if you agree or disagree with his
    statement that the still response has been pretty effective.
        Mr. Hayward. I think if any oil gets to the shore to impact
    the environment, that it is not possible to declare a spill
    response effective.
        In many dimensions, we have launched, implemented a very,
    very significant effort. It has been recognized, as I said, by
    the Coast Guard as beyond anything anyone has ever achieved in
    the past. But----
        Mr. Scalise. And this disaster is beyond anything ever
    achieved--I just hope to give you that sense of urgency. We
    need the sense of urgency. We can't have days----
        Mr. Stupak. Time has expired.
        Mr. Scalise. Thank you, Mr. Chairman. I yield back.
        Mr. Stupak. There is nothing to yield.
        Ms. DeGette for questions, please.
        Ms. DeGette. Thank you, Mr. Chairman.
        Mr. Hayward, you told both Mr. Dingell and Mr. Scalise that
    the conclusion BP reached was that there was a good cement job,
    there was no requirement to perform the cement bond log test,
    and you would look at whether that needed to be changed in the
    future.
        So my question to you is, are you aware that Halliburton's
    chief safety officer, Tim Probert, told a Senate committee last
    month that a cement bond log test is, quote, ``the only test
    that can really determine the actual effectiveness of the bond
    between the cement sheets, the formation, and the casing
    itself''?
        Do you agree with that statement?
        Mr. Hayward. I am aware of his testimony, and I----
        Ms. DeGette. And do you agree with that testimony?
        Mr. Hayward. I am not qualified to agree or disagree with
    that statement.
        Ms. DeGette. Well, is your technical expert, Mr. Zanghi,
    who is here with you today, qualified to answer that question?
        Mr. Hayward. I can ask him.
        Ms. DeGette. Please.
        Yes?
        Mr. Hayward. Mr. Zanghi is not a cement bond expert.
        Ms. DeGette. I am sorry, I can't hear you. Can you move
    the----
        Mr. Hayward. Mr. Zanghi is not a cementing expert, but he
    is a drilling engineer. And he----
        Ms. DeGette. He is a drilling engineer. And has he had
    experience with cementing as a drilling engineer?
        Mr. Hayward. I am sure he has.
        Ms. DeGette. OK. But yet he doesn't know whether this test
    is the only test that can determine the actual effectiveness?
        Mr. Hayward. The fact is that the team on the rig concluded
    that they had three other mechanisms to determine that they
    had----
        Ms. DeGette. What were those mechanisms?
        Mr. Hayward. It was the volume that had been pumped----
        Ms. DeGette. I am sorry?
        Mr. Hayward. The volume of cement that had been pumped,
    which told they essentially where in the world the cement had
    gone; the returns to the surface--that is to say, the cement
    had return to the surface; and a pressure test that confirmed
    that there was ceiling.
        Ms. DeGette. But also, as I mentioned in my first round of
    questioning, Mr. Hayward, the internal document, tab 6, page 9,
    which I had you refer to, said that, because of the long string
    approach, that you didn't do the other type of approach,
    ``Cementing simulations indicate that it's unlikely to be a
    successful cement job.''
        So was that taken into account, when it was determined that
    the cement was likely to succeed?
        Mr. Hayward. I clearly can't know that because I wasn't
    there, but one would----
        Ms. DeGette. Yes. OK. I----
        Mr. Hayward [continuing]. Assume that the team on the rig--
    --
        Ms. DeGette. I am sorry?
        Mr. Hayward. I would assume that the team on the rig looked
    at the data and determined that they had achieved a successful
    cement job.
        Ms. DeGette. But, now, the team on the scene sent the test
    crew away before the pressure testing was done. So how would
    they have known that the cement was going to hold before they
    even did the pressure testing?
        Mr. Hayward. I can't answer that question.
        Ms. DeGette. Would you mind supplementing your testimony to
    let us now how they would have known that?
        Mr. Hayward. I can't interpret what the people on the rig
    were thinking at the time the decision was made.
        Ms. DeGette. But you could ask them and have them tell us.
    Would you do that, Mr. Hayward?
        Mr. Hayward. We can, certainly, as part of the
    investigation, do that.
        Ms. DeGette. Thank you very much.
        Now, I want to ask you, because previously I asked you how
    many deepwater wells that BP had--or I asked you if you had
    knowledge of this well, and you said no. How many deepwater
    wells has BP drilled since you were CEO of the company, in the
    last 3 or so years?
        Mr. Hayward. I don't know the precise number. It is
    probably on the order of 25 or 30 a year.
        Ms. DeGette. You might be surprised to know, of the
    deepwater wells, that it is a far fewer number than that. But
    you don't know the exact number, correct?
        Mr. Hayward. I don't know the exact number.
        Ms. DeGette. OK.
        I want to just ask you one last question. We have been
    hearing a lot from people, from health care workers and from
    public health folks, about the potential health consequences.
        We have been talking a lot today about the economic losses
    and this fund to reimburse people for economic losses.
        I want to ask you, will BP also commit to paying for the
    long-term health care costs incurred by workers and residents
    of the gulf as a result of this spill?
        Mr. Hayward. We have created a fund of $20 billion to cover
    the claims resulting from----
        Ms. DeGette. Let me ask you again. Let me just ask you
    again. I know there is the fund, and we commend you, and we are
    glad you did that.
        But as part of the reimbursement, is BP committed to
    reimbursing the workers and the residents of the gulf for their
    long-term health care costs incurred as a result of this spill?
    Yes or no?
        Mr. Hayward. If the independent adjudicator determines that
    those are valid claims, they will be paid.
        Ms. DeGette. So the only way you intend to pay those claims
    is if it comes through this fund. Is that your testimony today?
        Mr. Hayward. Twenty billion dollars is a very large sum of
    money to pay claims from.
        Ms. DeGette. I am sorry?
        Mr. Hayward. Twenty billion dollars is a very large fund to
    pay claims from.
        Ms. DeGette. It is a large fund. And is it your view that
    part of what that fund will be used for is to pay people for
    their long-term health care costs incurred as a result of this
    spill?
        Mr. Hayward. That will be a decision for the independent
    adjudicator.
        Ms. DeGette. Well, if they asked you what you thought,
    would you say, yes, the health care costs should be paid for
    from this?
        Mr. Hayward. I think that is something that I will leave
    him to decide. That is why we have appointed an independent
    adjudicator.
        Ms. DeGette. So--see, this--if I may, Mr. Chairman?
        Mr. Stupak. Just another minute.
        Ms. DeGette. Yes. If I may, Mr. Chairman, this is what is
    concerning members of this committee and others about BP's
    response here. Because you had executives who have sat here and
    said that we will pay for all reasonable costs incurred. But
    then when we ask direct questions, for example, about health
    care costs, you evade the questions.
        And all I want to know is, as part of the reimbursement of
    all reasonable costs, health care costs that are incurred by
    workers and residents of the gulf? It is not a difficult
    question, sir.
        Mr. Hayward. I believe that if they are a direct
    consequence of the oil spill, then the independent adjudicator
    will find them to be claims that are legitimate under the fund.
        Ms. DeGette. And would you support that, sir?
        Mr. Hayward. I clearly would. But it is----
        Ms. DeGette. Thank you very much. Thank you very much for
    your coming here.
        Mr. Hayward [continuing]. It is for the independent
    adjudicator to make the decisions. That is what we are trying
    to create.
        Ms. DeGette. Well, just----
        Mr. Stupak. OK, oK, oK. Members are going to have 10
    minutes--excuse me--10 days to submit additional questions if
    they want, oK? Because, I mean, we could go here all night, and
    I am sure people would like to, but that concludes all of our--
    --
        Mr. Burgess. Mr. Chairman, I do want to ask one last
    question on the letter that you and Mr. Waxman----
        Mr. Stupak. The June 14th letter, yes.
        Mr. Burgess [continuing]. The June 14th letter that, Mr.
    Hayward, you indicated that you were briefed on this letter
    from Mr. Waxman and Mr. Stupak; is that correct?
        Mr. Hayward. That is correct.
        Mr. Burgess. Is there any part of this letter that you
    actually dispute? I know you wouldn't really answer Mr.
    Waxman's questions, but are there parts of this letter that you
    actually do not agree with?
        Mr. Hayward. I think it is a statement of your conclusions
    at this time.
        Mr. Burgess. But do you dispute the facts as stated in the
    letter?
        Mr. Hayward. I don't dispute any of the facts, not any of
    the facts. And as I have said all along, I would like to await
    drawing conclusions----
        Mr. Burgess. Yes, I understand.
        Mr. Hayward [continuing]. Until all of the investigations
    are complete.
        Mr. Burgess. If there are facts that you dispute, you would
    provide those to us within this----
        Mr. Hayward. I certainly will.
        Mr. Stupak. I am sorry, but I have to call this to an end,
    because then down on this side they are going to want more
    questions and I will want more questions, and we will be here
    until at least midnight, and we are not going to do that.
        Mr. Burgess. That is why we are the most important
    committee in Congress.
        Mr. Stupak. I agree we are the most important committee in
    Congress, but even important things must come to an end. And
    right now it is coming to an end.
        Mr. Hayward, I want to thank you for being here today. You
    did come voluntarily, and we appreciate that.
        However, I think it is fair to say that Members are
    frustrated because the answers we have heard time and time
    again are phrases like ``I wasn't involved in that decision,''
    ``I don't know,'' ``I can't recall,'' ``we need to wait for the
    results of the investigation.'' And we had really hoped, by
    giving you information and the June 14th letter, you would be
    better prepared to answer our questions.
        I think the evasiveness of your answers only serve to
    increase the frustration, not decrease the frustration, not
    just of Members of Congress but of that of the American people.
        So, I will thank you for being here.
        This is going to conclude our hearing. I want to thank all
    Members for participating.
        The document binder is made part of the record.
        And that concludes our hearing. This meeting of the
    subcommittee is adjourned.
        [Whereupon, at 5:30 p.m., the subcommittee was adjourned.]
        [Material submitted for inclusion in the record follows:]
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