[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
THE ROLE OF BP IN THE DEEPWATER HORIZON
EXPLOSION AND OIL SPILL
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
JUNE 17, 2010
__________
Serial No. 111-137
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
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COMMITTEE ON ENERGY AND COMMERCE
HENRY A. WAXMAN, California, Chairman
JOHN D. DINGELL, Michigan JOE BARTON, Texas
Chairman Emeritus Ranking Member
EDWARD J. MARKEY, Massachusetts RALPH M. HALL, Texas
RICK BOUCHER, Virginia FRED UPTON, Michigan
FRANK PALLONE, Jr., New Jersey CLIFF STEARNS, Florida
BART GORDON, Tennessee NATHAN DEAL, Georgia
BOBBY L. RUSH, Illinois ED WHITFIELD, Kentucky
ANNA G. ESHOO, California JOHN SHIMKUS, Illinois
BART STUPAK, Michigan JOHN B. SHADEGG, Arizona
ELIOT L. ENGEL, New York ROY BLUNT, Missouri
GENE GREEN, Texas STEVE BUYER, Indiana
DIANA DeGETTE, Colorado GEORGE RADANOVICH, California
Vice Chairman JOSEPH R. PITTS, Pennsylvania
LOIS CAPPS, California MARY BONO MACK, California
MICHAEL F. DOYLE, Pennsylvania GREG WALDEN, Oregon
JANE HARMAN, California LEE TERRY, Nebraska
TOM ALLEN, Maine MIKE ROGERS, Michigan
JANICE D. SCHAKOWSKY, Illinois SUE WILKINS MYRICK, North Carolina
CHARLES A. GONZALEZ, Texas JOHN SULLIVAN, Oklahoma
JAY INSLEE, Washington TIM MURPHY, Pennsylvania
TAMMY BALDWIN, Wisconsin MICHAEL C. BURGESS, Texas
MIKE ROSS, Arkansas MARSHA BLACKBURN, Tennessee
ANTHONY D. WEINER, New York PHIL GINGREY, Georgia
JIM MATHESON, Utah STEVE SCALISE, Louisiana
G.K. BUTTERFIELD, North Carolina
CHARLIE MELANCON, Louisiana
JOHN BARROW, Georgia
BARON P. HILL, Indiana
DORIS O. MATSUI, California
DONNA M. CHRISTENSEN, Virgin
Islands
KATHY CASTOR, Florida
JOHN P. SARBANES, Maryland
CHRISTOPHER S. MURPHY, Connecticut
ZACHARY T. SPACE, Ohio
JERRY McNERNEY, California
BETTY SUTTON, Ohio
BRUCE L. BRALEY, Iowa
PETER WELCH, Vermont
Subcommittee on Oversight and Investigations
BART STUPAK, Michigan, Chairman
BRUCE L. BRALEY, Iowa GREG WALDEN, Oregon
Vice Chairman Ranking Member
EDWARD J. MARKEY, Massachusetts ED WHITFIELD, Kentucky
DIANA DeGETTE, Colorado MIKE FERGUSON, New Jersey
MIKE DOYLE, Pennsylvania TIM MURPHY, Pennsylvania
JANICE D. SCHAKOWSKY, Illinois MICHAEL C. BURGESS, Texas
MIKE ROSS, Arkansas
DONNA M. CHRISTENSEN, Virgin
Islands
PETER WELCH, Vermont
GENE GREEN, Texas
BETTY SUTTON, Ohio
JOHN D. DINGELL, Michigan (ex
officio)
C O N T E N T S
----------
Page
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 2
Prepared statement........................................... 4
Hon. Joe Barton, a Representative in Congress from the State of
Texas, prepared statement...................................... 7
Prepared statement........................................... 9
Hon. Bart Stupak, a Representative in Congress from the State of
Michigan, opening statement.................................... 14
Prepared statement........................................... 17
Hon. Michael C. Burgess, a Representative in Congress from the
State of Texas, opening statement.............................. 19
Prepared statement........................................... 22
Hon. Edward J. Markey, a Representative in Congress from the
Commonwealth of Massachusetts, opening statement............... 28
Hon. John Sullivan, a Representative in Congress from the State
of Oklahoma, opening statement................................. 29
Hon. John D. Dingell, a Representative in Congress from the State
of Michigan, opening statement................................. 30
Hon. Marsha Blackburn, a Representative in Congress from the
State of Tennessee, opening statement.......................... 31
Hon. Bruce L. Braley, a Representative in Congress from the State
of Iowa, opening statement..................................... 32
Hon. Phil Gingrey, a Representative in Congress from the State of
Georgia, opening statement..................................... 33
Hon. Michael F. Doyle, a Representative in Congress from the
Commonwealth of Pennsylvania, opening statement................ 34
Hon. Parker Griffith, a Representative in Congress from the State
of Alabama, opening statement.................................. 35
.................................................................
Hon. Janice D. Schakowsky, a Representative in Congress from the
State of Illinois, opening statement........................... 36
Hon. Robert E. Latta, a Representative in Congress from the State
of Ohio, opening statement..................................... 37
Prepared statement........................................... 39
Hon. Mike Ross, a Representative in Congress from the State of
Arkansas, opening statement.................................... 42
Hon. Donna M. Christensen, a Representative in Congress from the
Virgin Islands, opening statement.............................. 42
Hon. Peter Welch, a Representative in Congress from the State of
Vermont, opening statement..................................... 43
Hon. Gene Green, a Representative in Congress from the State of
Texas, opening statement....................................... 44
Hon. Betty Sutton, a Representative in Congress from the State of
Ohio, opening statement........................................ 45
Witnesses
Tony Hayward, Chief Executive Officer, BP PLC.................... 47
Prepared statement........................................... 50
Submitted Material
Submission for the record by Mr. Scalise......................... 136
Letter of June 14, 2010, from the Committee to Mr. Hayward....... 228
E-mail on BOP problems, dated November, 2009..................... 242
Transocean abnormality report on BOP, dated November, 2009....... 244
Transocean letter on BOP modifications, dated October 11, 2004... 247
THE ROLE OF BP IN THE DEEPWATER HORIZON EXPLOSION AND OIL SPILL
----------
THURSDAY, JUNE 17, 2010
House of Representatives,
Subcommittee on Oversight and Investigations,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:02 a.m., in
Room 2123, Rayburn House Office Building, Hon. Bart Stupak
[chairman of the subcommittee] presiding.
Present: Representatives Stupak, Braley, Markey, DeGette,
Doyle, Schakowsky, Ross, Christensen, Welch, Green, Sutton,
Dingell (ex officio), Waxman (ex officio), Burgess, Sullivan,
Blackburn, Gingrey, Latta, and Barton (ex officio).
Also Present: Representatives Engel, Harman, Capps, Inslee,
Gonzalez, Weiner, Melancon, Castor, Upton, Stearns, and
Scalise.
Staff Present: Phil Barnett, Staff Director; Bruce Wolpe,
Senior Advisor; Greg Dotson, Chief Counsel, Energy and
Environment; Michal Freedhoff, Counsel; Robb Cobbs, Policy
Analyst; Caitlin Haberman, Special Assistant; Peter Kethcham-
Colwill, Special Assistant; Dave Leviss, Chief Oversight
Counsel; Meredith Fuchs, Chief Investigative Counsel; Alison
Cassady, Professional Staff Member; Molly Gaston, Counsel; Ali
Golden, Professional Staff Member; Jennifer Owens,
Investigator; Scott Schloegel, Investigator; Ali Neubauer,
Special Assistant; Derrick Franklin, Detailee; Karen Lightfoot,
Communications Director, Senior Policy Advisor; Elizabeth
Letter, Special Assistant; Lindsay Vidal, Special Assistant;
Earley Green, Chief Clerk; Mitchell Smiley, Special Assistant;
Alan Slobodin, Chief Minority Counsel; Mary Neumayr, Minority
Counsel; Peter Spencer, Minority Professional Staff; Kevin
Kohl, Minority Professional Staff; Garrett Golding, Minority
Legislative Analyst; and Jeanne Neal, Minority Research
Analyst.
Mr. Stupak. This meeting will come to order. We are going
to ask the press to please clear.
This hearing of the subcommittee of the Energy and Commerce
Committee, the Subcommittee on Oversight and Investigations,
will commence.
Today we have a hearing titled, ``The Role of BP in the
Deepwater Horizon Explosion and Oil Spill.''
We have a number of Members present for this hearing who
are not members of the subcommittee but are members of the full
Energy and Commerce Committee. I welcome them, and I note that
they will be allowed to submit written statements for the
record but will not deliver verbal opening statements.
In addition, after all subcommittee members complete their
questioning, full committee members will be allowed to ask
questions. Members who are not on the subcommittee or on the
Energy and Commerce Committee are welcome to observe, but they
will not be permitted to provide opening statements or ask
questions, due to time constraints.
The chairman, ranking member, and chairman emeritus will be
recognized for 5-minute opening statements. Other members of
the committee will be recognized for 3-minute opening
statements.
I will yield to the chairman of the full committee, Mr.
Waxman, for the first opening statement.
OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Waxman. Thank you very much, Mr. Chairman. Thank you
for holding this important hearing.
And, Mr. Hayward, thank you for being here today.
Yesterday, BP pledged to establish a $20 billion escrow
account and to suspend its dividend payments for the rest of
the year. I am sure these were not easy decisions for you, but
they were the right ones, and I commend you for them.
Congress has multiple committees examining the gulf oil
spill. Some are evaluating the impact of the spill. Some are
working on the reorganization of the regulatory agencies. And
some, including Chairman Markey's subcommittee, are drafting
legislation to reform our oil exploration laws.
You are testifying today before the Oversight and
Investigation Subcommittee, and this subcommittee has a special
role: to examine the facts and determine what went wrong and to
make recommendations to prevent future spills.
When it is time for questioning, I and other members of the
subcommittee will ask you about a series of internal BP
documents. They appear to show that BP repeatedly took
shortcuts that endangered lives and increased the risks of a
catastrophic blowout. And I sent you a letter in advance
indicating that we are going to question you about those
issues.
But what is equally important is what is missing from the
documents. When you became CEO of BP, you promised to focus
``like a laser on safe and reliable operations.'' We wanted to
know what you had done to keep this promise, so we asked what
e-mails you had received, what documents you had reviewed about
the Deepwater Horizon rig or the Macondo well before the
blowout.
Deepwater drilling is inherently dangerous. As the entire
country now knows, an uncontrolled blowout can kill rig workers
and cause an environmental disaster. We wanted to know whether
you were briefed about the risks and were monitoring the safety
of the drilling operation.
We could find no evidence that you paid any attention to
the tremendous risks BP was taking. We have reviewed 30,000
pages of documents from BP, including your e-mails. There is
not a single e-mail or document that shows you paid even the
slightest attention to the dangers at this well.
You are the CEO, so we considered the possibility that you
may have delegated the oversight responsibility to someone
else. We reviewed the e-mails and briefing documents received
by Andy Inglis, the chief executive for exploration and
production, and Doug Suttles, the chief operating officer for
exploration and production and the person now leading BP's
response to the spill.
According to BP, these are the senior officials who were
responsible for the Macondo well. But they, too, were
apparently oblivious to what was happening. We can find no
evidence that either of them received any e-mails or briefings
about the Deepwater Horizon rig or drilling activities at the
well.
BP's corporate complacency is astonishing.
The drilling engineer for the rig called Macondo a
``nightmare well.'' Other BP employees predicted that the
cement job would fail. Halliburton warned of a ``SEVERE gas
flow problem.'' These warnings fell on deaf ears.
BP's corporate attitude may be best summed up in an e-mail
from its operations drilling engineer who oversaw BP's team of
drilling engineers. After learning of the risks and BP's
decision to ignore them, he wrote, quote, ``Who cares, it's
done, end of story, will probably be fine,'' end quote.
There is a complete contradiction between BP's words and
deeds. You were brought in to make safety the top priority of
BP, but under your leadership, BP has taken the most extreme
risks. BP cut corner after corner to save a million dollars
here, a few hours or days there, and now the whole gulf coast
is paying the price.
Today's hearing will focus on BP's actions, but we learned
from our hearing earlier this week that the other oil companies
are just as unprepared to deal with a massive spill as BP. We
are seeing in the oil industry the same corporate indifference
to risk that caused the collapse on Wall Street.
And that is why reform is so urgently needed. Part of this
reform must be legislation to put teeth into our regulatory
system, but part must also be a transition to a clean energy
economy. We are addicted to oil. This addiction is fouling our
beaches, polluting our atmosphere, and undermining our national
security. We can't snap our fingers or transform our energy
economy overnight, but we need to start down a path to a clean
energy future.
Mr. Chairman, I look forward to today's hearing.
And, Mr. Hayward, I thank you for appearing and cooperating
with our investigation.
[The prepared statement of Mr. Waxman follows:]
[GRAPHIC] [TIFF OMITTED] 77914A.001
[GRAPHIC] [TIFF OMITTED] 77914A.002
[GRAPHIC] [TIFF OMITTED] 77914A.003
Mr. Stupak. Thank you, Mr. Chairman.
We will next go to the ranking member of the full
committee, Mr. Barton of Texas. Mr. Burgess and I will do our
openings after the chair and the ranking.
Mr. Barton, please.
OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TEXAS
Mr. Barton. Thank you, Mr. Chairman.
Thank you, Mr. Hayward, for appearing before us.
We have kind of a dual track under way, in my opinion. We
obviously are trying to gather the facts of what happened in
the oil spill in the Gulf of Mexico a month and a half ago,
trying to find out the causes of that spill, what can be done
to prevent it in the future. And we are obviously very
concerned about the mitigation and the cleanup.
We have a system in America, built up based on the British
tradition over 200 years, of due process and fairness, where
people that do bad things, in this case a corporation that is
responsible for a bad accident, we want to hold them
responsible, do what we can to make the liable parties pay for
the damages.
Mr. Stupak and Mr. Waxman are doing an excellent job,
working with Dr. Burgess and myself, in conducting, I think, a
very fair oversight investigation. We are going to get into a
number of those issues in this hearing, and we are going to ask
you some pretty tough questions.
I am speaking totally for myself. I am not speaking for the
Republican Party. I am not speaking for anybody in the House of
Representatives but myself. But I am ashamed of what happened
in the White House yesterday. I think it is a tragedy of the
first proportion that a private corporation can be subjected to
what I would characterize as a shakedown--in this case, a $20
billion shakedown--with the Attorney General of the United
States, who is legitimately conducting a criminal investigation
and has every right to do so to protect the interests of the
American people, participating in what amounts to a $20 billion
slush fund that is unprecedented in our Nation's history, that
has no legal standing, and which sets, I think, a terrible
precedent for the future.
If I called you into my office and I had the subcommittee
chairman, Mr. Stupak, with me, who was legitimately conducting
an oversight investigation on your company, and said, ``If you
put so many millions of dollars into a project in my
congressional district,'' I could go to jail and should go to
jail.
Now, there is no question that British Petroleum owns this
lease. There is no question that BP--I am sorry, it is not
``British Petroleum'' anymore--that BP made decisions that
objective people think compromised safety. There is no question
that BP is liable for the damages. But we have a due process
system where we go through hearings, in some cases court cases,
litigation, and determine what those damages are and when those
damages should be paid.
So I am only speaking for myself. I am not speaking for
anybody else. But I apologize. I do not want to live in a
country where, any time a citizen or a corporation does
something that is legitimately wrong, is subject to some sort
of political pressure that, again, in my words, amounts to a
shakedown. So I apologize.
But on this hearing today, I am with Mr. Waxman, with Mr.
Stupak. There are questions that need to be asked, that are
legitimate, because we don't want another oil spill of this
magnitude or of any magnitude in the Gulf of Mexico. And if
this subcommittee can do things that make it much more
difficult for this type of an incident to occur in the future,
then we will have done our work for the American people.
With that, Mr. Chairman, I yield back.
[The prepared statement of Mr. Barton follows:]
[GRAPHIC] [TIFF OMITTED] 77914A.004
[GRAPHIC] [TIFF OMITTED] 77914A.005
[GRAPHIC] [TIFF OMITTED] 77914A.006
[GRAPHIC] [TIFF OMITTED] 77914A.007
[GRAPHIC] [TIFF OMITTED] 77914A.008
OPENING STATEMENT OF HON. BART STUPAK, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Stupak. Thank you, Mr. Barton.
I will do my opening statement now.
Today is the 59th day of the BP oil spill that has
devastated much of the Gulf of Mexico. Eleven men lost their
lives the day the Deepwater Horizon drilling rig exploded, and
in the 59 days that have followed, countless people have lost
their livelihood, as the oil spill closes fishing grounds and
pollutes the shores of the three States.
This is the third hearing the Oversight and Investigation
Subcommittee has held and the fifth hearing overall in the
Energy and Commerce Committee. Our first hearing exposed
problems discovered with the blowout preventer and several
other factors that contributed to the disaster. Our second
hearing was a field hearing in New Orleans where we heard from
the widows of two men who died in the Deepwater Horizon
explosion as well as shrimpers and other small-business owners
who have suffered from the environmental catastrophe that
followed.
Our staff has spent weeks combing through hundreds of
thousands of pages of documents, sitting through more than 50
hours of briefings by corporate, governmental, and academic
experts, in an attempt to piece together what went wrong with
BP exploration of the Macondo well. We have reviewed several
questionable decisions made by BP in the days and hours leading
up to the explosion, and what we have learned so far is
alarming.
We have learned that, time after time, BP had warning signs
that this was, as one employee put it, a ``nightmare well.'' BP
made choices that set safety aside in exchange for cost-cutting
and time-saving decisions.
For example: BP disregarded questionable results from
pressure tests after cementing in the well.
BP selected the riskier of two options for their well
design. They could have hung a liner from the lower end of the
casing already in the well and install a tieback on the top of
the liner, which would have provided additional barriers to the
release of hydrocarbons. Instead, they lowered a full string of
new casing, which took less time and cost less but did not
provide the same protection against escaping hydrocarbons.
BP was warned by their cement contractor Halliburton that
the well could have a ``SEVERE gas flow problem'' if BP lowered
the final string of casing with only six centralizers instead
of the 21 Halliburton recommended. BP rejected Halliburton's
advice to use additional centralizers. In an e-mail on April
16th, a BP official involved in the decision explained, and I
quote, ``It will take 10 hours to install them. I do not like
this,'' end of quote.
BP chose not to fully circulate the mud in the well from
the bottom to the top, which was an industry-recommended best
practice that would have allowed them to test for gas in the
mud.
BP chose not to use a casing hanger lockdown sleeve, which
would have provided extra protection against a blowout from
below.
These are just a few of the issues that led to the
disaster. Once the Deepwater Horizon exploded and sank to the
bottom of the sea, BP's response to contain the leak and clean
up the spilled oil was equally as poor. They issued lowball
estimates of the amount of oil flowing from the well, which may
have led to a scaled-back response.
We discovered that BP's oil spill response plan was
virtually identical to other oil companies' plans. In a hearing
Tuesday, ExxonMobil CEO Rex Tillerson admitted that once the
spills occur, he says, quote, ``We are not well-equipped to
handle them,'' end of quote. All the other oil companies
testified at Tuesday's hearings that they would not have
drilled the well as BP did.
Our witness today, Mr. Tony Hayward, is the chief executive
officer of BP. Shortly after Mr. Hayward took over as the CEO
in 2007, he held a town hall meeting with employees in Houston.
At this meeting, he discussed the need for BP to be leaner,
with fewer people in decision-making processes.
This article--and I will ask you put up the Guardian
article--an article from September 27, 2007, Guardian newspaper
in London, entitled, ``Hayward Says Oil Company Has Become Too
Cautious,'' reads, and I quote, ``'Assurance is killing us,'
Mr. Hayward told U.S. staff, noting that too many people were
engaged in decision-making, leading to excessive cautiousness,
something that critics of its safety performance in the U.S.
might question.''
Let me put up these other notes from the same meeting. We
received notes from BP of employees and their note-taking from
this meeting. The employee notes summarize Mr. Hayward's
statements as follows: ``I don't think having all these layer
of assurance reduce risk, and it can actually increase it. The
best way to reduce risk is to have deep technical competence
where we need it. Individuals need to be accountable for risk
and to manage it,'' end of quote.
I find this cavalier attitude towards assessing risk
unbelievable, given the fact that, at the time of these
statements, BP had just been responsible for the largest oil
leak in Alaska's history on the North Slope, as well as the
2005 Texas City refinery explosion, which killed 15 workers and
injured another 170.
I must ask, Mr. Hayward, whether it was wise to adopt this
leaner decision-making process with input from fewer people and
a new approach to managing risk.
Under the leadership of Bob Malone, the former chairman and
president of BP America, BP created an independent office of
the ombudsman, headed by Judge Stanley Sporkin. The ombudsman's
office was established because line workers reported fearing
retaliation if they reported safety concerns to management.
When the current chairman and president, Lamar McKay, took
over, I met with him, and he suggested that he hoped to improve
the culture enough to make the ombudsman office unnecessary so
he could shut it down. I urged him not to eliminate the office
because it serves a significant role in investigating employee
complaints.
I am more concerned now than ever about BP's safety and the
role they take in assuming risk. I am concerned that the
corporate culture, from BPCEO Tony Hayward down to chairman and
president of BP America, Lamar McKay, and Chief Operating
Officer Doug Suttles, that there is a willingness to cut costs
and take greater risks.
I look forward to hearing Mr. Hayward answer the many hard-
hitting questions that our committee members will ask today. I
hope we will hear honest, contrite, and substantive answers.
Mr. Hayward, you owe it to all Americans. We are not
``small people,'' but we wish to get our lives back. For the
Americans who live and work on the gulf coast, it may be years
before they get their lives back. For the Americans who lost
their lives on the rig, their families may never get their
lives back.
Mr. Hayward, I am sure you will get your life back, and
with a golden parachute back to England. But we in America are
left with the terrible consequences of BP's reckless disregard
for safety.
I yield back my time and turn to the gentleman from Texas,
Mr. Burgess, for an opening statement.
[The prepared statement of Mr. Stupak follows:]
[GRAPHIC] [TIFF OMITTED] 77914A.009
[GRAPHIC] [TIFF OMITTED] 77914A.010
OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF TEXAS
Mr. Burgess. Thank you, Chairman Stupak.
Today does open our third hearing, and a very critical
hearing, into this subcommittee's ongoing investigation into
the tragic accident of the Deepwater Horizon explosion and oil
spill, which continues 24 hours a day to wreak economic and
environmental havoc on our gulf coast.
This hearing provides the subcommittee with an important
opportunity to directly question the man who ultimately leads
BP, Mr. Tony Hayward, the company's chief executive officer.
And BP's role has been central to the causes of the incident
and to the response.
Over the course of our inquiry to date, committee
investigators, working in a bipartisan fashion, have conducted
numerous interviews and briefings and reviewed tens of
thousands of pages of documents. Our subcommittee staff has
done an excellent job. And this subcommittee has been focused
on gathering the facts, rather than rushing to judgment.
And from this intensive effort, we have begun to identify a
number of serious questions about BP's decision-making that led
up to the disaster. Exploring these and related questions today
will help us identify for Congress and identify for the country
what went wrong on April 20th and the days thereafter.
And while we are investigating, a picture of the chain of
events leading to this incident is emerging. Mr. Chairman, you
and Chairman Waxman recently outlined some critical questions
that we hope Mr. Hayward will address. For example, you noted
the investigation has identified questionable choices by BP
engineers to use a particular well design over another one that
would appear to have provided more built-in barriers to an
uncontrolled gas discharge.
There was the choice made by BP to move forward with what
appears to be an inadequate cementing plan and the related
failure, despite clear warnings to test that the cement was
properly set and in place. And it appears there may have been a
rush to move off this well. Whether there may have been
economic or other time or performance pressures or some
combination thereof, it is not clear, but that clarity needs to
emerge today.
The questions arising from our investigation outline the
central role that BP's decision-making appears to have had in
this incident. We need to understand that decision-making, Mr.
Hayward, what factors influenced it, whether the decisions
reflected a management and an operational mindset that failed--
failed to maximize safety in a challenging deep-sea
environment.
It is important to note that the picture developing from
this investigation is not one of technological limits in deep-
sea drilling. The construction of an 18,000-foot well was not
pushing the envelope of engineering know-how, so far as we have
identified. But the picture developing is one of unsafe
industry practices. Although clear, more focused industry
standards may be in order going forward, available evidence
suggests that the use of best industry practices would have
resulted in more cautious designs and more testing, more
safeguards, and ultimately no loss of control of the well.
Rather, and quite clearly, the picture developing from our
investigation is one of questionable decision-making, decision-
making by people charged with designing and successfully
drilling, constructing, and controlling a well that was a mile
under water. It is a picture composed of a series of choices
which, taken together, created an oil well particularly
vulnerable to a blowout and of all the people who may have been
distracted, unaware, or resistant to recognizing the problems
around them.
Documents show that BP was prepared to run a test on the
quality of the cement job but chose not to. I can't understand
why, given the history of this particular well, with four
previous well control incidents in the 2 months prior to April
20th. The rig personnel appear to have taken their eye off the
ball.
BP employees were the key decision-makers. Certainly,
others--contractors, subcontractors, certainly Federal
regulators--may have contributed to this incident. The role of
the Federal Government especially, including the overall
effectiveness of the response and the efforts to help those
harmed by the incident, remains a critical piece that, Mr.
Chairman, we must pursue at the level of this committee. And I
am still disappointed that we have not done that.
But it is BP's decision-making about the well design, the
cementing program, the preparation, the integrity test, or the
lack thereof, or just the general lack of curiosity as to why
these would be necessary, the failure to follow best practices,
that our investigation to date is showing were critical factors
in this incident.
But this decision-making is difficult to square with avowed
priorities of BP's chief executive. Mr. Hayward, in an
interview before you became chief executive, you described how
the death of a worker in an operation that you were leading in
Venezuela shaped your opinions. You said, and I am quoting, ``I
went to the funeral to pay my respects. At the end of the
service, his mother came up to me and beat me on the chest.
'Why did you let it happen?' she asked. It changed the way I
think about safety. Leaders must make safety of all who work
for them a priority,'' end quote.
Mr. Hayward, I respectfully request that you answer this
question in your opening statement, if not for me, then for the
two ladies who testified before our committee at the field
hearing who lost their husbands on the Deepwater Horizon. You
have been chief executive since 2007. You said safety is your
number-one priority and you would focus like a laser beam on
safety.
As chief executive, one would expect your directives and
priorities would be carried out by your employees. We have now
learned from this investigation that BP employees made five
critical decisions that may have contributed to well failure
where well safety was traded off. In fact, it was not the
priority.
So, today, will you assert before this subcommittee that
all decisions by BP employees related to the Deepwater Horizon
reflected your priority--your priority--of safety first?
Mr. Chairman, the disaster in the Gulf of Mexico shows the
consequence of a series of unchecked bad decisions. We in
Congress and the Federal Government must also be mindful of the
consequences of bad decision-making. At a field hearing last
week in Chalmette, Louisiana, the subcommittee heard some of
the administration's decisions are threatening the livelihoods
of workers and families who depend upon the energy industry. We
have killed half of their fishing with the Deepwater Horizon
spill, and it looks like we are going to kill the other half of
their economy with our moratorium.
Our hearing today looks at the consequence of bad decisions
and the lessons learned. May we have the wisdom and humility to
take some of those lessons and apply them to ourselves.
And I will yield back the balance of my time.
[The prepared statement of Mr. Burgess follows:]
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Mr. Stupak. Thank you, Mr. Burgess.
I would next like to turn to the chairman of the Energy and
Environment Subcommittee and chairman of the Select Committee
on Climate, Mr. Markey, 5 minutes for an opening statement,
please.
OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF MASSACHUSETTS
Mr. Markey. Thank you, Mr. Chairman, very much.
I want to begin by disagreeing in the strongest possible
terms with what Mr. Barton said in his opening statement.
Not only is the compensation fund that was created
yesterday at the White House in an agreement reached between BP
and President Obama not a slush fund and not a shakedown;
rather, it was the Government of the United States working to
protect the most vulnerable citizens that we have in our
country right now, the residents of the gulf. It is BP's spill,
but it is America's ocean and it is American citizens who are
being harmed.
We cannot wait, as unfortunately so many citizens who were
victims of the Exxon Valdez spill had to wait years in order to
see those families compensated. We can't lose sight of the fact
that the 1984 Bhopal disaster and the lawsuits that were
related to it were only settled last week. We have to ensure
that the citizens of the gulf are protected.
In a hearing which this subcommittee conducted in New
Orleans last Monday, we heard from a fisherman who brought
absolutely impeccable records which proved that he and his
family had made $27,000 last May. And, after examining the
documents, BP gave the family $5,000.
The families in the gulf will be crushed financially unless
this compensation fund is put into place. As each day and week
and month goes by, the history of these families are going to
be altered, and permanently altered, unless they are given the
financial capacity to take care of their loved ones, their
children, their families.
That is why this compensation fund is so important. That is
why it is not a slush fund. That is why it is not a shakedown.
It is, in fact, President Obama ensuring that a company
which has despoiled the waters of our Nation is made
accountable for the harm which is done to our people--a company
which said for the first week that it was only 1,000 barrels of
oil per day, when we now know that they knew it was at least
1,000 to 14,000 barrels; a company which continues to deny that
there are underwater toxic plumes; a company which has not been
providing the proper protective gear for the workers in the
gulf; a company which contended it could respond to a spill of
250,000 barrels per day.
No, this is not a shakedown of their company. This is the
American Government, President Obama ensuring that this company
is made accountable and sending a signal to all other companies
that seek to treat ordinary American families in a way that can
destroy their entire family's history.
This is, in my opinion, the American Government working at
its best. This is creating truly the kind of partnership
between the public and private sector that can make sure that
innocent victims are not roadkill as a result of corporate
plans that did not actually factor in the harm that can occur
to ordinary families.
So I just could not disagree more strongly. I think that
this is, in my opinion, one of the most important hearings that
this Congress will ever have, because it is sending a signal to
any corporations out there, including the ones that testified
on Tuesday that all admitted that they had no plans either to
respond to the harm which could be done in the gulf if one of
their rigs had the same kind of catastrophic event, that they
will be made accountable.
So I thank you, Mr. Chairman, for holding this hearing.
And I thank you, Mr. Hayward, because yesterday was the day
where the page began to be turned and we moved to a new era
where, in fact, your company is made accountable and the
citizens of the gulf are made whole.
Thank you, Mr. Chairman.
Mr. Stupak. Thank you, Mr. Markey.
I next turn to Mr. Sullivan for an opening statement. Three
minutes, please, sir.
OPENING STATEMENT OF HON. JOHN SULLIVAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OKLAHOMA
Mr. Sullivan. Chairman Stupak, thank you for holding this
hearing today.
On April 20, 2010, a fire and explosion occurred on the
British Petroleum-Deepwater Horizon oil rig in the Gulf of
Mexico. This terrible disaster resulted in the loss of 11 lives
and injured many more members of the 126-person crew.
There is no question that the BP oil spill is a tragedy. In
fact, it is the worst environmental disaster in our Nation's
history. I believe we must do everything in our power to cap
the leak, find out what caused the explosion, and ensure
nothing like this ever happens again.
BP must bear the entire financial burden for this disaster,
and the American taxpayer should not be on the hook for a dime.
According to the Occupational Safety and Health
Administration, there is mounting evidence that BP has one of
the worst safety records of any major oil company operating in
the United States. To this end, I am looking forward to
examining with Mr. Hayward whether there is a deficient safety
culture at BP that led to this disaster and other recent ones,
including the BP refinery explosion in 2005 in Texas City,
Texas, and a BP pipeline spill in 2007 which released 200,000
gallons of oil into the Alaskan wilderness.
Mr. Hayward, why is BP's record on safety so spotty?
What is equally as important as our efforts to combat the
spill is the knee-jerk legislative reaction from this Congress.
Right now, the administration and their allies in the House are
more focused on the politics of putting the oil and gas
industry out of business than on solutions to the problem.
Instead of working in a bipartisan way to push for rigorous
safety standards on all offshore rigs, the administration is
exploiting this disaster to advance this disastrous cap-and-
trade energy policy, which won't stop the well from leaking
but, rather, will only serve as a national energy tax on the
American people, crippling our economy and making the
unemployment lines longer.
I believe Congress should work towards implementing
rigorous safety inspection standards for all offshore rigs, but
with nearly 30 percent of our Nation's oil and 11 percent of
our gas reserves located offshore, a ban on offshore drilling
will only put Americans out of work. And it will send energy
and gas prices through the roof and increase our reliance on
foreign, imported oil.
We still have work to do to uncover exactly what went
wrong, and many questions remain on the ongoing efforts to
contain the leak. This tragedy should not be used as an excuse
to roll back the gains we have made in finding new ways to
develop our energy resources, as we will need more oil and
natural gas to meet the crucial needs of our Nation.
And I yield back the balance of my time.
Mr. Stupak. Thank you, Mr. Sullivan.
Next we would like to hear from the chairman emeritus of
the Energy and Commerce Committee, Mr. Dingell of Michigan, for
5 minutes, please, sir.
OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Dingell. Mr. Chairman, I commend you for holding this
important hearing today.
We sit here on day 59 of the worst environmental disaster
in the history of this country. Eleven people are dead. The
already-fragile economy of an entire region is in real danger
of shattering. We will be feeling the environmental
consequences for years to come.
And God Almighty alone knows what the health and
environmental effects of the containment and cleanup strategies
will be--millions of gallons of chemical dispersants and
controlled burns. Sadly, we can't even get a decent estimate of
the amount of oil and gas that is spewing out into the water.
BP has been before this committee many times, and rarely
has it been a pleasant meeting, because invariably they have
appeared here to defend serious failures on the part of the
company. The company has a history of cutting corners,
apparently for the almighty dollar.
Texas City, they paid there $50 million in criminal fines.
Alaska's North Slope, which was investigated by this
subcommittee, where a pipe corroded, allowing 1 million liters
of oil to spill. In each instance, we were hoping, but the
assurances given by BP that this would not happen again have
been, regrettably, untrue.
In reference to a decision on how to secure the final 1,200
feet of the well, a single casing, or tieback, a BP engineer
said, ``Not running the tieback saves a good deal of time and
money.''
In reference to installing more centralizers, BP's well
team leader said, ``It will take 10 hours to install them. I do
not like this. I am very concerned about using it.'' So, also,
were we.
On the same matter, BP's operations drilling engineer said,
``Even if the hole is perfectly straight, a straight piece of
pipe even in tension will not seek the center of the hole
unless it has something to centralize it.'' And I want you to
listen to this. ``But who cares? It is done. End of story. It
will probably be fine''--and note the word ``probably''--``and
we will get a good cement job. I would rather have to squeeze
than get stuck. So guard right on the risk-reward occasion.''
Mr. Chairman, the comments of our witness today reveal
little sorrow for the events that have occurred. And here he
said, ``The Gulf of Mexico is a very big ocean. The amount of
volume of oil and dispersant we are putting in is tiny in
relation to the total water volume.'' And then, ``The
environmental impact of the disaster is likely to be very, very
modest.'' I wonder if he wishes to stand on that statement
today.
When Mr. Hayward responded to the claims that cleanup
workers were becoming ill because of oil fumes and such, he
said this: ``Food poisoning is clearly a big issue.''
And, finally, most famously, Mr. Hayward informs us he
``wants his life back.''
Last year, Mr. Hayward enjoyed a splendid 41 percent pay
raise, even as BP's profits dropped 45 percent. Now, I just
happen to be a poor Polish lawyer from Detroit, but it seems to
me that this is a curious response to a drop in profits. It
makes me wonder what the compensation package of our witness
will be this year.
Mr. Chairman, again, I thank you for your diligence and
hard work on this issue. I look forward to hearing from our
witnesses today and look forward to working with you on this
matter. Thank you.
Mr. Stupak. Thank you, Mr. Chairman.
Next, Mrs. Blackburn for an opening statement, please.
OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TENNESSEE
Mrs. Blackburn. Thank you, Mr. Chairman. I thank you and
Ranking Member Burgess for holding the hearing today.
Mr. Hayward, I thank you for your willingness to testify
before this committee.
You know, when news of the BP spill began and information
about the well started to circulate, it seemed that there were
problems not only with BP but also with the MMS bureaucracy and
that maybe the problem lay there, rather than with anything
that could have gone wrong with BP, that it was there with MMS.
What we have learned and confirmed is that that is not
correct, that the problem does lie with BP in what went wrong.
And while there are many faults with MMS in doing its job on
inspection and safety oversight, most of the data now points to
wrong decision-making by BP's management.
And this is not the first time--and we have talked about
that in several of our opening statements this morning--it is
not the first time that you have been before this committee on
safety problems. And, certainly, as recently as the Texas 2005
and Alaska 2007 incidents, which revealed insufficient
protocols in BP's management and safety hierarchy, there was
this statement from BP that you all would, quote/unquote,
``focus like a laser on safety.''
And it is concerning to us that the appearance is, Mr.
Hayward, that BP has not learned from previous mistakes. So it
leaves us asking the questions of you and of BP: Was this
accident caused by negligence? It was caused by risk-taking?
Was it caused by cost-cutting measures by BP decision-makers?
And, unfortunately, for citizens, beaches, and wildlife all
along the coastal region, they are paying a price for those
misplaced decisions. BP cannot blame Mother Nature or equipment
failure or even other subcontractors. Their actions have put at
risk the livelihood of communities and businesses that depend
on the gulf not only for seafood and tourism but also energy
production that this Nation as a whole relies upon.
In addition, the current administration also shares a
significant portion of the blame for the oil spill. I mentioned
MMS earlier. And the MMS officials approved inadequate spill
response plans, and field inspectors rubber-stamped inspection
papers submitted by oil companies. This is another area where
we, as Members of Congress, in doing our due diligence, will
ask you all and MMS why.
But what is the most damaging is that the President and
senior officials knew on day one the blowout preventer was not
working and knew of the potential spillage. While BP shoulders
much of the responsibility for this spill, the lack of effort
by this administration to contain the spill has doomed the
economy and wildlife of the gulf coast from an oil spill which
could have been contained.
And now, recently imposed drilling moratoriums will further
devastate America's energy production and will destroy hundreds
of thousands of jobs in the gulf coast region.
Thank you for being with us today.
Mr. Chairman, I yield back the balance of my time.
Mr. Stupak. Thank you.
We will next turn to the vice chairman of the subcommittee,
Mr. Braley, for an opening statement. Three minutes, please,
sir.
OPENING STATEMENT OF HON. BRUCE L. BRALEY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF IOWA
Mr. Braley. Thank you, Mr. Chairman.
Mr. Hayward, you are not going to get a lecture from me
today, and you are not going to get an apology either, because
we are here to get to the bottom of the decision-making process
that BP followed, and I think, quite frankly, the people who
live along the affected area of the gulf coast deserve those
answers from you.
We were in Chalmette, Louisiana, last week, and we had the
opportunity to hear from a variety of individuals whose lives
have been devastated by this oil disaster. And I use the word
``disaster'' specifically because I don't think ``spill'' quite
captures the magnitude of what is going on.
The American people are frustrated because we were first
told that this was a 1,000-barrel-per-day release, and then
about a week later that was updated to 5,000 barrels per day,
and then at the end of May it was adjusted upward to 15,000 to
19,000 barrels per day, and then this week we were informed
that it could be as high as 60,000 barrels per day. That works
out to 2.5 million gallons a day, 17.5 million gallons per
week. And over the length of this disaster, it could be up to
the level of the largest release of oil in the North American
continent in history, unintended.
One of the things I think we need to know about today is
the decisions that your company made and who made them that led
to this explosion and the subsequent disaster, what your
company is doing to fix this enormous problem, and about your
future commitments to all of the affected workers, families,
and communities who have been devastated by this disaster.
And I think it would be helpful for you and everybody in
this hearing room to hear from the two women who testified at
our hearing in Louisiana last week, because they raised some
very pointed questions that were directed to your company, sir.
And they were questions that were raised after they gave
passionate testimony of wanting the oil and gas business to
continue in Louisiana and the gulf coast region.
So I would like to have you listen to their comments in the
hearing. This is Natalie Roshto.
[Video played.]
Mr. Braley. These are now widows with small children to
take care of, and they are the symbols and the faces of this
disaster.
And I look forward to your testimony.
I yield back the balance of my time.
Mr. Stupak. Thank you.
We will next turn to Mr. Gingrey from Georgia for a 3-
minute opening statement, please.
OPENING STATEMENT OF HON. PHIL GINGREY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF GEORGIA
Mr. Gingrey. Thank you, Mr. Chairman.
First, I want to again express my sorrow to the families of
those who lost their lives on April the 20th, 2010.
Through all the hearings and legislative consideration, we
must remember those lives and the lives of their families, as
we just saw, that were forever changed on that fateful April
day. And we certainly must continue to keep them in our
thoughts and in our prayers.
Further, we have an obligation, not only to those families
but also to everyone affected by the aftermath, to get to the
bottom of the causes of this accident and the failure to secure
the situation and stop the devastation wreaked upon the gulf
coast.
Mr. Chairman, we have an opportunity in this oversight
hearing to ask questions that get to the facts of what
happened. However, today's hearing is incomplete. We can only
ascertain half of the story today because we do not have anyone
representing the administration, the Minerals Management
Service, to discuss their oversight role and their
responsibility in ensuring that an accident like this didn't
happen.
Deep-ocean drilling is not new. In fact, we have been doing
it for decades in the gulf coast. Why did this happen now? I
have heard some assert that it was the lax oversight of the
previous administration that led to this accident. Well, if
that is the case, why did this not happen during the last
decade? Why did this occur almost a year and a half into the
current administration?
We need to hear from our own Department of Interior and the
Minerals Management Service. Certainly, Mr. Hayward should be
prepared to answer for BP's responsibility, but we will also
need answers from the administration so that we can demand
accountability and implement prudent reforms to return us to
safe drilling in our oceans. Because simply saying ``no'' to
further and new drilling is not a realistic answer.
I further realize there are some in this administration who
have a penchant for not letting a crisis go to waste. But for a
nation dependent on foreign oil, for a nation with unemployment
hovering at 10 percent, we can't just say we can't do this. We
can't take our ball and go home, when the consequences mean a
weaker America. Everyone dependent on foreign fuels are all too
inclined, it seems, to let jobs leave this country.
No, Mr. Chairman. We have to understand what happened on
and leading up to April 20th. We need to answer those questions
to determine if the rules or the agency oversight were
insufficient or if this was purely an act of negligence or
wanton disregard for sound regulations. Now, we can try to
enact the perfect reform that ensures this never happens again,
but it will not change the path or the toll upon the lives
forever changed.
Mr. Hayward, the responsibility to make these families
whole falls to you and your company, BP. You have an obligation
to right this wrong, and not only the public trust but also the
belief in the free market and entrepreneurship demand it.
And, Mr. Chairman, I await the opportunity to ask
questions, with the hope that we will soon discuss these same
matters with our own administration.
And I yield back.
Mr. Stupak. Thank you, Mr. Gingrey.
Ms. DeGette for an opening statement, 3 minutes, please.
Ms. DeGette. Mr. Chairman, as this is an investigative
hearing, I will submit my excellent opening statement for the
record in order to have more time for questioning the witness.
Mr. Stupak. Very well.
[The prepared statement of Ms. DeGette was unavailable at
the time of printing.]
Mr. Stupak. Mr. Doyle, opening statement?
OPENING STATEMENT OF HON. MICHAEL F. DOYLE, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA
Mr. Doyle. Mr. Chairman, thank you for convening this
hearing today so we can begin to understand what went so
tragically wrong on the Deepwater Horizon.
We are now 59 days into this environmental and economic
tragedy, and oil continues to gush into the Gulf of Mexico. The
estimates for how much oil spills into the gulf each day
continue to rise, and we still have no way to cap the well in
the near future. We sit helplessly as we wait for a relief well
to be completed.
As the details and facts about Deepwater Horizon come to
light, it is clear to us all that the decisions made by
officials at BP reflected bad judgment at best and criminal
negligence at worst. Through this committee's investigation, we
have learned that, at nearly every turn, BP cut corners. In
well design, the number of centralizers they used, whether to
run a cement bond log, circulating drilling muds and securing
the wellhead with a lockdown sleeve, BP took the path of least
resistance.
On Tuesday, colleagues and competitors from the oil and gas
industry provided sworn testimony that they believed BP had
delinquencies in well design and failed to follow the best
practices of the industry. Now we learn that BP had several
warnings about the Macondo well, with one of their own
engineers calling it a ``nightmare well.'' But instead of
treating the well with caution, it seems that BP's only
interest was in completing the well quickly and cheaply.
Many questions still need to be answered. Were BP employees
on the Deepwater Horizon given orders from BP officials to
speed up the Macondo well? Were they told to slash costs
wherever possible? Why would a team onboard the rig that tests
the cementing of the well be sent home before performing the
test? Surely if a cement bond log was ever necessary, it would
be in a ``nightmare well'' situation. But sending the team
home, BP saved $100,000 and 9 or 10 hours of work.
Mr. Hayward, I hope you are here today to answer questions
about the decision made on Deepwater Horizon that led to this
tragic and deadly blowout. Earlier this week, this committee
sent you a letter with detailed information about topics we
would like you to address today. In reviewing your statement
submitted for today's hearing, I am extremely disappointed in
your avoidance of the requested topics. I certainly hope that
you use the opportunity today to answer our questions openly
and truthfully.
I know BP has committed to clean up the gulf region, and I
expect that commitment to be ongoing. I welcome your pledge to
pay damages through a $20 billion escrow fund. But that is just
the tip of the iceberg. Rebuilding the public's trust in your
company and your industry will take years and many serious
changes in the way you do business.
When you operate on our land and in our waters, you are
only there because the public's trust has allowed you to be
there. You violated that trust in the worst possible way.
Mr. Hayward, I look forward to your testimony. I look
forward to your answers to our questions and your ongoing
efforts to regain America's trust.
Mr. Chairman, I yield back.
Mr. Stupak. Thank you, Mr. Doyle.
Mr. Griffith for an opening statement, 3 minutes, please.
OPENING STATEMENT OF HON. PARKER GRIFFITH, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ALABAMA
Mr. Griffith. Thank you, Mr. Chairman and Ranking Member,
for calling this important hearing today and, Mr. Hayward, for
taking time to come before our subcommittee to discuss what
happened on the Deepwater Horizon.
I know that, like us, your number-one priority is stopping
the flow of oil. Congress and this committee owe it to the
American people to do whatever we can to aid the unified
command in reaching this goal. This is a time for engineering
and action, and I hope you will let us know what we can do in
Congress to be helpful.
There are still many questions to be answered about what
happened on the Deepwater Horizon, and unfortunately we do know
that, from the documents that we are reviewing, it does not
look good.
My hope for our hearing today is that we will be able to
put political public-relations shenanigans aside and focus on
understanding why decisions were made and how BP and the
industry can ensure that they learn from this incident so that
drilling safely for our valuable resources can continue.
And I might say this to you: You are never as good as they
say you are or as bad as they say you are. So this hearing will
go back and forth.
The other thing I would like to remind the committee is
that the greatest environmental disaster in America has been
cigarettes. Sixty thousand Americans this year will die from
cigarette-related cancer. So if we are going to talk about the
environment, let's be sure we don't leave that out. I am a
cancer specialist, by the way, by training, and I never fail to
bring that up.
So the environment is an important concept. We regret the
loss of life. But there is much that we can do and we will put
this in perspective. This is not going to be the worst thing
that has ever happened to America.
Thank you.
Mr. Stupak. Ms. Schakowsky, 3 minutes opening statement,
please.
OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS
Ms. Schakowsky. Thank you, Mr. Chairman.
At this very moment oil is gushing from the Deepwater
Horizon blowout at a rate between, we learned, 35,000 and
60,000 barrels a day, killing animals, destroying fragile
wetlands, and wiping out entire populations of fish, and along
with it the jobs of hundreds of thousands of people.
Most upsetting about this travesty is that it could have
been avoided. As the ongoing investigation by this committee
has already discovered, BP executives created an atmosphere
where safety concerns were ignored in order to ensure that the
company's already staggering profits this year, approximately
$93 million a day in the first quarter, continued unabated.
This appalling disregard for the Gulf Coast and its inhabitants
is without question one of the most shameful acts by a
corporation in American history.
Sadly, the Deepwater Horizon spill is just the most
significant example of BP's disregard for the environment and
the well-being of its workers. A report published by the Center
for Public Integrity found that between June 2007 and February
2010, BP received a total of 862 citations from the
Occupational Safety and Health Administration. Of those, a
staggering 760 were classified as being egregious and willful,
compared with 8 at the 2 oil companies tied for second place.
Inexcusably this pattern of behavior continued in the
spill's aftermath. I hold in my hand a document called
Voluntary Waiver of Release that BP made unemployed fishermen
sign before they could be hired for spill cleanup. The waiver
states, I hereby agree on behalf of myself and my
representatives to hold harmless and to indemnify and to
release, waive and forever discharge BP Exploration Production,
Inc., from all claims and damages that I or my representatives
may have with regard to my participation in the spill response
activities.
I know that you said this was an early misstep and that
this was just a standard document, but this was a first
response that you had to people that were hired. And outrage
does not begin to express my feeling. These are people who are
unemployed because of the recklessness of BP, forced to take
jobs cleaning up BP's mess in order to survive, yet to qualify
for those jobs they had to hold BP harmless for any further
damages that they may suffer in BP's employ. This from a
company that made $93 million a day.
Fortunately, a court trumped your fancy lawyers who wrote
this document, but still it begs the question, how could you do
that?
I am glad that you are here, Mr. Hayward. I expect you to
explain why your company has operated in such a wholly
unacceptable manner. In the final analysis, the simple fact
remains that if BP had thought more about the residents, as
these widows said, and the workers, as these widows said,
rather than the already exorbitant profits of its shareholders,
we would not be here today.
I yield back.
Mr. Stupak. Mr. Latta for an opening statement, 3 minutes,
please.
OPENING STATEMENT OF HON. ROBERT E. LATTA, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OHIO
Mr. Latta. Thank you, Mr. Chairman, Ranking Member Burgess.
I want to thank you for holding this subcommittee hearing on
the role of BP in the Deepwater Horizon oil rig explosion and
the ongoing oil spill in the Gulf of Mexico.
First and foremost, I also want to extend my heartfelt
condolences to the families of those who have lost loved ones
and to those who have been injured. The unprecedented scale of
the spill and its increasing harmful impact on the gulf economy
and environment demand a thorough investigation of BP's actions
and inactions, as well as BP's current and future plans.
The flow of oil must be stopped. Every day anywhere from
35,000 to 60,000 barrels are spilling into the gulf, and only
15,000 barrels a day are being captured. The environmental
effects on the oil spill are harming shorelines and coastal
wetlands, fisheries and fishery habitat, as well as marine
mammals and sea turtles. What is worse, we will not fully know
the ecological ramifications of the oil spill until years down
the road. Furthermore, local businesses suffering great losses,
including jobs and revenues that are dependent on tourism, are
being threatened.
The NOAA announced a revised commercial recreation fishing
closure in the oil-affected portions of the Gulf of Mexico,
accounting for 33 percent of the Gulf of Mexico's exclusive
economic zone. As oil continues to flow, this area is sure to
enlarge, further exasperating the economic damage. A recent
economic impact study by the American Sportfishing Association
indicated that the entire Gulf Coast will close to recreational
fishing from May through August. The region will lose $1.1
billion in revenue, which supports 2.5 billion in total sales,
1.3 billion value added, 811.1 million income and 18,785 jobs.
This potential economic damage is devastating to an area that
has already suffered greatly from the aftermath of natural
disasters.
Americans continue to be frustrated at the lack of
management and solutions from all parties involved, and I am
interested to hear more about the coordinated efforts between
BP and the administration. The economic and environmental
magnitude of this disaster necessitates a clear understanding
of what went wrong, and BP needs to be held accountable for the
disaster.
I also look forward to having MMS and the Department of
Interior before this subcommittee to also--for them to answer
some tough questioning.
I look forward to hearing Mr. Hayward's testimony, and I
yield back the remainder of my time. Thank you.
Mr. Stupak. Thanks, Mr. Latta.
[The prepared statement of Mr. Latta follows:]
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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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