[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.
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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:]
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    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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