[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
BOEMRE/U.S. COAST GUARD
JOINT INVESTIGATION TEAM
REPORT: PARTS 1 AND 2
=======================================================================
OVERSIGHT HEARINGS
before the
COMMITTEE ON NATURAL RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
October 13, 2011 and November 2, 2011
__________
Serial No. 112-70
__________
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COMMITTEE ON NATURAL RESOURCES
DOC HASTINGS, WA, Chairman
EDWARD J. MARKEY, MA, Ranking Democrat Member
Don Young, AK Dale E. Kildee, MI
John J. Duncan, Jr., TN Peter A. DeFazio, OR
Louie Gohmert, TX Eni F.H. Faleomavaega, AS
Rob Bishop, UT Frank Pallone, Jr., NJ
Doug Lamborn, CO Grace F. Napolitano, CA
Robert J. Wittman, VA Rush D. Holt, NJ
Paul C. Broun, GA Raul M. Grijalva, AZ
John Fleming, LA Madeleine Z. Bordallo, GU
Mike Coffman, CO Jim Costa, CA
Tom McClintock, CA Dan Boren, OK
Glenn Thompson, PA Gregorio Kilili Camacho Sablan,
Jeff Denham, CA CNMI
Dan Benishek, MI Martin Heinrich, NM
David Rivera, FL Ben Ray Lujan, NM
Jeff Duncan, SC John P. Sarbanes, MD
Scott R. Tipton, CO Betty Sutton, OH
Paul A. Gosar, AZ Niki Tsongas, MA
Raul R. Labrador, ID Pedro R. Pierluisi, PR
Kristi L. Noem, SD John Garamendi, CA
Steve Southerland II, FL Colleen W. Hanabusa, HI
Bill Flores, TX Vacancy
Andy Harris, MD
Jeffrey M. Landry, LA
Charles J. ``Chuck'' Fleischmann,
TN
Jon Runyan, NJ
Bill Johnson, OH
Todd Young, Chief of Staff
Lisa Pittman, Chief Counsel
Jeffrey Duncan, Democrat Staff Director
David Watkins, Democrat Chief Counsel
------
CONTENTS
----------
Page
Hearing held on Thursday, October 13, 2011....................... 1
Statement of Members:
Hastings, Hon. Doc, a Representative in Congress from the
State of Washington........................................ 1
Prepared statement of.................................... 2
Markey, Hon. Edward J., a Representative in Congress from the
Commonwealth of Massachusetts.............................. 3
Prepared statement of.................................... 5
Statement of Witnesses:
Ambrose, Bill, Managing Director, North America Division,
Transocean Offshore Deepwater Drilling Incorporated........ 70
Prepared statement of.................................... 71
Bement, James, Vice President, Sperry Drilling, Halliburton.. 72
Prepared statement of.................................... 74
Response to questions submitted for the record........... 75
Bromwich, Hon. Michael R., Director, Bureau of Safety and
Environmental Enforcement, U.S. Department of the Interior. 20
Prepared statement of.................................... 22
Dempsey, Raymond C., Jr., Vice President, BP America......... 61
Prepared statement of.................................... 63
Response to questions submitted for the record........... 66
Dykes, James David, Co-Chair, USCG/BOEMRE Joint Investigation
into the Deepwater Horizon/Macondo Well Blowout, Former
BOEMRE Staff............................................... 10
Prepared statement of.................................... 11
Nguyen, Captain Hung, Co-Chair, Deepwater Horizon, U.S. Coast
Guard/Bureau of Ocean Energy Management, Regulation and
Enforcement................................................ 7
Prepared statement of.................................... 9
Salerno, Admiral Brian M., Deputy Commandant for Operations,
U.S. Coast Guard........................................... 17
Prepared statement of.................................... 18
Additional materials supplied:
Mason, Joseph R., Louisiana State University, Statement
submitted for the record................................... 86
Ogrydziak, Randall S., CRD, USCG, Supervisor, Liquefied Gas
Carrier National Center of Expertise, Email submitted for
the record by The Honorable Dan Boren...................... 88
CONTENTS
----------
Page
Hearing held on Wednesday, November 2, 2011...................... 91
Statement of Members:
Hastings, Hon. Doc, a Representative in Congress from the
State of Washington........................................ 91
Markey, Hon. Edward J., a Representative in Congress from the
Commonwealth of Massachusetts.............................. 91
OVERSIGHT HEARING ENTITLED ``BOEMRE/U.S. COAST GUARD JOINT
INVESTIGATION TEAM REPORT'': PART 1
----------
Thursday, October 13, 2011
U.S. House of Representatives
Committee on Natural Resources
Washington, D.C.
----------
The Committee met, pursuant to call, at 10:05 a.m., in Room
1324, Longworth House Office Building, The Honorable Doc
Hastings [Chairman of the Committee] presiding.
Present: Representatives Hastings, Duncan of Tennessee,
Bishop, Fleming, Thompson, Duncan of South Carolina, Gosar,
Southerland, Flores, Harris, Landry, Markey, Holt, Grijalva,
Boren, and Sarbanes.
Also present: Jackson Lee.
Mr. Hastings. The Committee will come to order. The
Chairman notes the presence of a quorum, which under Rule 3[e]
is two, and so we exceed that.
The Committee on Natural Resources is meeting today to hear
testimony on an oversight hearing on BOEMRE/U.S. Coast Guard
Joint Investigative Team Report. Under Rule 4[f] opening
statements are limited to the Chairman and the Ranking Member.
However, I ask unanimous consent that any Member that wishes to
have a statement in the record have it to the Committee before
the end of business today, and without objection, so ordered.
I will now recognize myself for five minutes.
STATEMENT OF THE HON. DOC HASTINGS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF WASHINGTON
The Chairman. First of all, I want to thank all of the
witnesses for being here today. Although I was greatly
frustrated by the events that led to the delay and the repeated
scheduling of this hearing, I am pleased that today we will
hear testimony from the investigative Co-Chairs who conducted
and oversaw extensive interviews, depositions and document
review. This Committee will also hear from the three companies
named in the report.
The primary purpose for originally scheduling this hearing
was to hear directly from the actual front line investigators
about their official workings and findings. As the Committee
responsible for overseeing the agencies and laws responsible
for offshore energy production, it is our duty to get the full
facts regarding the Deepwater Horizon explosion and oil spill
and the findings of the report.
At our very first hearing this year this Committee heard
testimony from the Co-Chairs of the President's own commission
that he selected and he appointed, and it is only logical that
we give the same attention to this official report. I have said
from day one that we need all the facts and information
regarding this spill before rushing to judge or to legislate.
This report is an important piece of the puzzle that gives us
deeper insight and greater clarity as to what caused the
explosion that tragically took 11 lives and led to an oil spill
that caused widespread impacts throughout the Gulf.
The JIT investigation is unique and important in many ways.
While there have been several investigations and reports
issued, this is the only investigative team that had subpoena
power. This is the only investigative team comprised of
technical engineers and experts, and this is the only
investigative team that actually examined the blowout
preventer. Members of this investigative team were on the
ground from day one and had the necessary tools to complete a
thorough and comprehensive investigation. They had access to
information that others didn't and it is important for this
Committee to hear directly from them on their report and their
conclusions.
In short, this report finds that the disaster was the
direct result of multiple human errors and technical failures.
While the report makes a number of recommendations, it is
interesting to note that it includes no specific recommendation
for congressional action.
I have repeatedly stated that the top priority of this
Committee is to make offshore drilling the safest in the world.
Over the past 18 months there have been significant changes and
reforms to improve offshore drilling and response. It is
important that Congress, the Administration and the industry
continue to respond appropriately. I stress that reforms must
be done thoroughly and done right. We have no other choice when
the stakes are this high. Offshore drilling must be done
safely, but we cannot afford to make it impossible through
overregulation.
Yesterday this Committee heard from people and businesses
in the Gulf who continue to suffer one year after the Obama
Administration lifted the official moratorium in the Gulf of
Mexico. Their livelihoods are linked to U.S. energy production,
and for that matter so is our nation's. Our national economy,
American jobs and our national security are all dependent on
the safe and reliable U.S. energy production. We must move
forward with offshore energy production in a safe, timely and
efficient manner.
So I look forward to hearing today from our witnesses and
learning more about the months of on-the-ground work from the
JIT investigators. America owes both of you and your teams our
appreciation for your service to our nation.
[The prepared statement of Mr. Hastings follows:]
Statement of The Honorable Doc Hastings, Chairman,
Committee on Natural Resources
In May 2010, shortly after the tragic Deepwater Horizon explosion
and oil spill, the Obama Administration placed a moratorium on all
deepwater drilling in the Gulf of Mexico. This official moratorium
lasted for nearly six months and was lifted on October 12, 2010--
exactly one year ago today.
This official moratorium, unfortunately, was followed by a de facto
moratorium that still did not allow businesses and their employees to
return to work until the first permits were issued in February of this
year. The Obama Administration's inability, or refusal, to issue
permits in a timely and efficient manner after the official moratorium
was lifted resulted in lost jobs and significant economic pain.
Since the moratorium was imposed, this Committee has heard directly
from businesses and local community groups about the economic impacts.
Today, one year later, this hearing is an opportunity to follow-up and
listen to those from the Gulf about what economic conditions are like
there today.
While I recognize that some permits indeed are being issued, there
are facts and data that demonstrate recovery is moving at a pace that
continues to hamper job creation and the economy.
First, permitting activity in the Gulf has dramatically declined
under the Obama Administration and has operated at lows that equate to
hurricane-induced slowdowns.
Additionally, permitting activity has not returned to pre-Deepwater
Horizon levels. The average number of permits issued in the six-months
prior to the Deepwater Horizon incident was 71 per month. The average
number for the past six months is 52 per month. That's a 27% decrease,
which directly affects jobs and the local economy.
Second, instead of looking at the number of permits issued, we
should also look at production levels. This chart shows how production
has declined. The top line is what production in the Gulf was projected
to be before the spill and the President's moratorium. The bottom line
represents actual production.
Third, the time it takes to get approval for permits and
exploration plans is much longer today. Director Michael Bromwich has
frequently stated that there is not a backup of offshore drilling
permits waiting for approval. . .and that this proves there is no de
facto moratorium. This chart actually helps highlight what Director
Bromwich is referring to. It shows the number of days it took specific
explorations plans to be accepted and approved in order to receive a
permit to drill. As you can see from this chart, these plans are being
approved in a relatively short time-frame. But that is only part of the
story.
This next chart shows how long it actually took companies to get
their plans approved-sometimes nearly 300 days. The biggest delay in
the process, as shown here, is getting the Interior Department to
accept the exploration plan and declare it `deemed submitted.'
Companies are submitting plans and getting stuck in a back and forth
limbo with the Interior Department that can drag on for months. This is
the step the Obama Administration doesn't talk about.
Keep in mind, companies can't apply for permits until its
exploration plan has been submitted and approved. That's why it's
disingenuous to only refer to pending permits and approved permits--as
the Interior Department likes to do--because the log jams occurs before
companies even get to that point. It's a slight of hand to make the
process look much more efficient.
Fourth, 11 deepwater rigs have left the Gulf of Mexico for foreign
countries such as Egypt and Brazil. Every time one of these rigs
leaves, it takes away good-paying American jobs. In addition, 84
offshore support vessels have also departed the Gulf.
The livelihood of communities and businesses throughout the Gulf
depend on safe and responsible offshore energy production. It's been a
year and a half since the Deepwater Horizon incident, and a year since
the President's moratorium was officially lifted. It's time to get
people back to work and get the Gulf's economy growing again.
______
Mr. Hastings. With that, I recognize the distinguished
Ranking Member.
STATEMENT OF THE HON. EDWARD MARKEY, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF MASSACHUSETTS
Mr. Markey. Thank you, Mr. Chairman.
More than one year has passed since BP's blown out well
finally stopped spewing oil into the Gulf of Mexico, but
Congress has not enacted a single legislative reform in
response to the worst environmental disaster in American
history. And what has been the reason for this delay?
The Republican Majority has blocked all legislative action
because they said they wanted to wait until all the facts were
in before taking action to respond to the spill. Well, we have
now heard from the independent BP Spill Commission. We have
seen the forensic examination of the blowout preventer, and the
government's Joint Investigation Team has now issued its
findings and recommendations. The facts are in and it is well
past time for this Committee and this Congress to enact
comprehensive legislation to ensure that we prevent a similar
disaster in the future.
The government's investigation reached many of the same
conclusions as the independent BP Spill Commission. The report
says that this disaster was preventable, not inevitable. It
says that corners were cut, bad decisions were made and that
stronger safety standards and more emphasis on worker training
could have helped prevent this disaster.
Today we have before us the government investigators who
looked long and hard into this disaster. We will also hear from
representatives of the oil companies responsible for the spill.
While it is good that this Committee is finally hearing from
some of the companies involved in this disaster, I feel
compelled to note that the Minority was not notified that these
additional witnesses would testify until very late on Tuesday,
less than two days before this hearing. The testimony of the
oil company representatives was not made available until
yesterday afternoon. I am worried that the effect of this
process could be to shield these companies from proper scrutiny
or hamper the ability of Members and staff to fully review and
analyze the companies' testimony. It has also prevented
Democrats from being able to exercise our rights to call
Minority witnesses.
For this reason, a majority of the Democratic Members of
the Committee have signed a letter to you, Mr. Chairman,
exercising our rights, pursuant to Rule XI of the House, to
call witnesses to testify at a second day of hearings on this
subject.
However, regardless of how we arrived here today there will
be many questions at this hearing, and after today we should
have the answers we need to finally move forward with
comprehensive reform. It is time to hold these companies fully
accountable for this spill. In fact, late yesterday the
Interior Department officially issued seven violations of
Federal regulations against BP and four a piece against
Halliburton and Transocean.
Unfortunately, even in a worst-case scenario for BP, these
violations that resulted in the nearly 5 million barrels of oil
spilling into the Gulf would cost the company a total of $21
million, not billion, million.
Considering what we know about what caused this disaster,
BP should stand for ``bigger penalties''. BP is on pace to make
more than $25 billion this year; $21 million represents a
little over seven hours of profits for this oil giant. That
fine, obviously, does not even begin to approach the amount
needed to be a deterrent against a repeat of this tragedy. That
fine is nothing more than a slap on the wrist.
The Transocean Company has already announced that it plans
to appeal the fines, and it seems that once again Transocean is
trying to transfer blame. We need to ensure that there are
sufficient financial incentives in place to deter oil companies
from cutting corners. We need to enact legislation to
dramatically increase civil penalties for oil companies who
violate Federal regulation to increase the liability cap for
companies responsible for a spill.
As the Democratic spill response bill would do, we need to
hold these companies responsible for their actions, and we need
to ensure that the agencies here today are working to implement
the safety reforms recommended by the Joint Investigation Team.
After this hearing I hope the Republican Majority will end
their push to revert to the same speed over safety mentality
that led to this disaster and join Democrats in pushing for
real reforms to protect the economy and the environment of the
Gulf.
I yield back the balance.
[The prepared statement of Mr. Markey follows:]
Statement of The Honorable Edward J. Markey, Ranking Member,
Committee on Natural Resources
Thank you.
More than one year has passed since BP's blown out well finally
stopped spewing oil into the Gulf of Mexico. But Congress has still not
enacted a single legislative reform in response to the worst
environmental disaster in American history.
And what has been the reason for this delay? The Republican
Majority has blocked all legislative action because they said that they
wanted to wait until all the facts were in before taking action to
respond to the spill.
Well, we have now heard from the independent BP Spill Commission.
We have seen the forensic examination of the blowout preventer. And the
government's Joint Investigation Team has now issued its findings and
recommendations.
The facts are in. And it is well past time for this Committee and
this Congress to enact comprehensive legislation to ensure that we
prevent a similar disaster in the future.
The government's investigation reached many of the same conclusions
as the independent BP Spill Commission. The report says that this
disaster was preventable, not inevitable. It says that corners were
cut, bad decisions were made, and that stronger safety standards and
more emphasis on worker training could have helped prevent this
disaster.
Today we have before us the government investigators who looked
long and hard into this disaster. We will also hear from
representatives of the oil companies responsible for the spill.
While it is good that this Committee is finally hearing from some
of the companies involved in this disaster, I feel compelled to note
that the Minority was not notified that these additional witnesses
would testify until late on Tuesday, less than two days before this
hearing. The testimony of the oil company representatives was not made
available until yesterday afternoon.
I am worried that the effect of this process could be to shield
these companies from proper scrutiny or hamper the ability of Members
and staff to fully review and analyze the companies' testimony. It has
also prevented Democrats from being able to exercise our rights to call
Minority witnesses. For this reason, a Majority of the Democratic
Members of the Committee have signed a letter to you, Mr. Chairman,
exercising our rights, pursuant to Rule XI of the House, to call
witnesses to testify at a second day of hearings on this subject.
However, regardless of how we arrived here today, there will be
many questions at this hearing. And after today, we should have the
answers we need to finally move forward with comprehensive reform.
It is time to hold these companies fully accountable for this
spill. In fact, late yesterday the Interior Department officially
issued seven violations of federal regulations against BP, and four
apiece against Halliburton and Transocean. Unfortunately, even in a
worst-case scenario for BP, these violations, that resulted in the
nearly five million barrels of oil spilling into the Gulf, would cost
the company a total of $21 million.
Considering what we know about what caused this disaster, BP should
stand for Bigger Penalties.
BP is on pace to make more than $25 billion this year. $21 million
represents a little over 7 hours of profits for this oil giant. That
fine obviously does not even begin to approach the amount needed to be
a deterrent against a repeat of this tragedy. That fine is nothing more
than a slap on the wrist.
And Transocean has already announced that it plans to appeal the
fines. It seems that once again Transocean is trying to transfer blame.
We need to ensure that there are sufficient financial incentives in
place to deter oil companies from cutting corners. We need to enact
legislation to dramatically increase civil penalties for oil companies
who violate federal regulations and increase the liability cap for
companies responsible for a spill, as the Democratic spill response
bill would do. We need to hold these companies responsible for their
actions.
And we need to ensure that the agencies here today are working to
implement the safety reforms recommended by the Joint Investigation
Team. After this hearing, I hope the Republican Majority will end their
push to revert to the same speed-over-safety mentality that led to this
disaster, and join Democrats in pushing for real reforms to protect the
economy and the environment of the Gulf.
______
Mr. Hastings. I thank the gentleman.
Before I recognize the panel just let me respond. The
Minority certainly has every right to exercise whatever
authority they have to have hearings. I respect that. But I do
want to say, and I alluded to this in my opening statement, I
too am very, very frustrated with how this all came about, but
nevertheless it is here, and we are going to have this hearing,
and I think hopefully we will shed some light on what we are
looking at, but let me make an observation.
When the gentleman referred to Minority witnesses, in this
hearing today there are no Majority or Minority witnesses. As a
matter of fact, the first panel is made up of Co-Chairs of the
Joint Investigative Team and then representatives from the
Department of the Interior, DOE, BOEMRE and then also the Coast
Guard. And the second panel is simply made up of those that are
referenced in the report. So in this case, we don't have a
situation of Majority and Minority witnesses. It simply does
not exist with this panel.
Nevertheless, the Ranking Member and the Minority have
every right to ask for an additional hearing. We will certainly
take that into consideration.
Our first panel today----
Mr. Markey. Will the gentleman yield just briefly?
Mr. Hastings. Sure, I will yield to the gentleman.
Mr. Markey. And it is to say that there was no consultative
process on the second panel whatsoever.
Mr. Hastings. Well, reclaiming my time on that, I privately
mentioned to the gentleman on the Floor of the House, if he
recalls, that it was always my intention to have
representatives from the companies here. Now I know the
gentleman has requested CEOs. If I had my way, every time we
have a hearing here and have a member of the Administration
here I would like to have the Secretary of the Interior here.
That obviously doesn't work. In fact, it would be even better
if we had President Obama here on every one. So we asked for
representatives of the company. They sent executives. They had
chosen the ones that could best respond to what we I think need
to learn through this hearing.
But I do want to say, and this goes back to my original
observation, I was very, very frustrated that we had to
postpone this for three weeks, and by the time we got
confirmation of having the panels here we made that
announcement. It is nothing more complicated than that, so this
isn't ideally how I would have wanted it, but this is the hand
that we are dealt with, so with that----
Mr. Markey. If the gentleman would just yield?
Mr. Hastings. I would be more than happy to yield.
Mr. Markey. And I thank the gentleman very much.
I am trying here to divide the question and by that I mean
that, yes, we do want representatives from the companies to
testify. The point that we are making here is that we were not
notified until 4:00 on Tuesday afternoon that at a 10:00
meeting on Thursday morning that there would be a second panel.
We had no idea that there was even going to be a second panel,
much less who was going to be testifying.
So the issue that we are really raising here is one of the
consultative process. We are going to disagree obviously on the
issues, but in terms of the notice that the Minority gets in
order to prepare for a hearing in order to make in a timely
fashioned request for a witness or even to have a discussion as
to whether or not a Minority witness is necessary was not
provided, so that is the point that we are making even as we
are just trying to construct something here that makes it
easier for the Minority to be able to raise their concerns in a
timely fashion.
Mr. Hastings. And reclaiming my time, and I appreciate the
gentleman's response. I just simply want to say that in a
private conversation that the two of us have had it was always
my intent to do so. We didn't get confirmation until late that
the representatives would be here. I thought this was precisely
the right venue in order to have if you will an investigative
report followed by representatives of the companies here, but I
appreciate the gentleman's point, and I understand that. I was
in his place before. I am disappointed, he said we don't agree
on everything, I thought that we did agree on everything, but
at any rate, I thank the gentleman for his remarks.
Our first panel today, I am very pleased even though we had
frustrations of putting it together that all of you are here.
We have Captain Hung Nguyen, Co-Chair of the Joint
Investigative Team from the U.S. Coast Guard; Mr. David Dykes,
Co-Chair of the JIT Team, he is a former BOEMRE staffer. We
have Vice Admiral Brian Salerno, Deputy Commander for
Operations of the U.S. Coast Guard and of course The Honorable
Michael Bromwich, Director of the Bureau of Safety and
Environmental Enforcement.
For those of you who have not been here, Director Bromwich
has, so he knows the rules very well and I know that he will
not exceed his five minutes because he knows how touchy I am on
that regard, but the way the lights work there. I would like
you to have your oral remarks confined to five minutes, and
your full statement will appear in the record. When the green
light is on, it means you are doing very, very well. When the
yellow light comes on, it means you have one minute left, and
when the red light comes on, it means the five minutes are
over. So I would ask you to try to confine your remarks to that
time because your full statement will appear in the record.
So, Captain Nguyen, we will start with you and you are
recognized for five minutes. Welcome to the panel.
STATEMENT OF CAPTAIN HUNG NGUYEN, CO-CHAIR OF THE JOINT
INVESTIGATION TEAM, U.S. COAST GUARD
Captain Nguyen. Good morning, Chairman Hastings, Ranking
Member Markey and distinguished Members of the Committee. I am
honored to appear before you today to discuss the Coast Guard
Joint Investigation. Immediately following the loss of the
Deepwater Horizon, the Department of Homeland Security, DHS,
and Department of the Interior, DOI, convened a formal joint
investigation for the purpose of examining the circumstances
surrounding this incident and to make recommendation to prevent
recurrence.
On April 26, 2010, Rear Admiral Kevin Cook, Director of
Coast Guard Prevention Policy, informed me that I would be
designated as the Coast Guard Co-Chair for the Joint
Investigation. In addition to me, there were three other Coast
Guard members only assigned to the Joint Investigation Team,
JIT, including Captain Mark Higgins, the Atlantic area Staff
Judge Advocate, Captain Retired Gerard Whitley, Sector San
Francisco Senior Investigation Officer and Lieutenant Commander
Robert Butts, a Training Center Yorktown instructor. Lieutenant
Commander Jeff Bragg, a headquarter Staff Judge Advocate,
served as the Coast Guard attorney for the JIT.
The DHS/DOI convening order identified Mr. David Dykes as
the Bureau of Ocean Energy Management, Regulations and
Enforcement, BOEMRE Co-Chair. I thank Mr. Dykes and the other
JIT BOEMRE members for their cooperation and support.
The Deepwater Horizon casualty demanded transparency and
needed to be systematically investigated. Consequently, in
early May 2010, in collaboration with BOEMRE investigators, we
developed an initial investigation program which was posted on
our internet website in June 2010. As new issues of concern
were identified, the roadmap was updated to include additional
public hearing sessions and parties in interest. We closely
followed the roadmap.
As the hearings progressed and the number of parties in
interest increased, the number of objections increased
significantly. It was determined that the addition of members
with a legal background would assist the Co-Chair with handling
objections and enable the investigator to focus on technical
matters subsequent to the hearing sessions. Retired Federal
Judge Wayne Anderson and Captain Mark Higgins were added to the
JIT. While the Co-Chairs did preside over the hearing, the
addition of Judge Anderson and Captain Higgins have moved the
investigation forward.
The Coast Guard investigation focused on the factors on
board the Deepwater Horizon that might have contributed to the
explosion, fire and subsequent sinking of the vessel. We
examined the firefighting, evacuation and search and rescue
efforts.
By the beginning of January 2011, JIT Coast Guard members
began to conduct our causal analysis. With no access to the
damaged sunken vessel, we relied on witness statements,
testimonies and documentary evidence. Based on the obtained
information we identified facts and developed our conclusion
and recommendations. The findings, conclusions and
recommendations of the Coast Guard Investigative Team are in
Volume 1 of the final report which was released in April 2011.
With the exception of the five-year dead weight error in
conclusion 4L, which does not change the related recommendation
4-H, JIT Coast Guard members stand by our conclusions and
recommendations.
The Coast Guard Marine Investigation Program is a system of
checks and balances. Our investigators get to exercise their
judgment and report as they think appropriate. Once the report
of investigation is complete, it is transmitted to Coast Guard
headquarters for the final agency action. JIT Coast Guard
members do not participate in the development of the
Commandant's final agency memorandum. Again, thank you for the
opportunity to testify before you today. I am pleased to answer
your questions.
[The prepared statement of Captain Nguyen follows:]
Statement of Captain Hung Nguyen, Co-Chair, Deepwater Horizon, United
States Coast Guard/Bureau of Ocean Energy Management, Regulation and
Enforcement
Good Morning Chairman Hastings, Ranking Member Markey, and
distinguished members of the Committee. I am honored to appear before
you today to discuss the Coast Guard's contributions to the Deepwater
Horizon Joint Investigation Team Report.
Immediately following the April 20, 2010 distress notification of
an explosion and fire onboard the Mobile Offshore Drilling Unit
DEEPWATER HORIZON, a coordinated preliminary marine casualty
investigation was launched. Investigators from both the U.S. Coast
Guard (USCG) and the Minerals Management Service (MMS) (predecessor to
the Bureau of Ocean Energy Management, Regulation and Enforcement
(BOEMRE)) were dispatched by helicopter and ultimately boarded the
Offshore Supply Vessel (OSV) DAMON B. BANKSTON, where they initiated
interviews of the surviving crew and witnesses. The investigators also
began gathering documentary and physical evidence.
On April 27, 2010, the Department of Homeland Security (DHS) and
the Department of the Interior (DOI) determined that a joint
investigation was the best strategy for determining the events,
decisions, actions, and consequences of this marine casualty and
entered into a Statement of Principles and Convening Order. The
Convening Order stated that a Joint Investigation was to be conducted
and Co-Chaired by equal representation from both the USCG and MMS. This
endeavor was classified under 46 U.S.C. 6308 and the governing rules
for both agencies and was defined as a Coast Guard Marine Board of
Investigation within the meaning of 46 C.F.R. Sec. 4.09 and a Panel
Investigation within the meaning of 30 C.F.R. Sec. 250.191.
The Commandant of the U.S. Coast Guard convenes a Marine Board of
Investigation when necessary to promote safety at sea or when in the
public interest. This formal process includes maintaining a record of
the proceedings and the transcription of witness testimony. The
Convening Order directed that the public hearing portions of the
investigation follow the policies and procedures of a Marine Board of
Investigation. Where the procedures of a Marine Board of Investigation
differed from those of a Panel Investigation, the Convening Order
further directed that Marine Board of Investigation procedures govern.
A Joint Investigation Team (JIT) was then formed and tasked with
carrying out the investigation. The team used the combined
investigative powers and authorities afforded to the USCG and MMS.
Personnel from each agency were assigned to the JIT based on their
background and experience in order to facilitate the most effective and
efficient collection of evidence, to conduct public hearings and
inquiries, and to coordinate forensic testing. Pursuant to 46 U.S.C.
Sec. 6304, the JIT held subpoena authority that was consistent with
that of a U.S. district court in civil matters, and could administer
oaths.
The agencies operated under the 2009 Memorandum of Agreement (MOA)
that identifies responsibilities of the MMS and the USCG. The USCG and
MMS entered this agreement under the authority of 14 U.S.C. Sec. 141--
USCG Cooperation with other Agencies; 43 U.S.C. Sec. Sec. 1347,
1348(a)--the Outer Continental Shelf Lands Act (OCSLA), as amended; 33
U.S.C. Sec. 2712(a)(5)(A)--the Oil Pollution Act of 1990 (OPA); 43
U.S.C. Sec. Sec. 1301-1315--the Submerged Lands Act (SLA), as amended;
and the Energy Policy Act of 2005, Pub L. 109-58, 119 Stat. 594
(codified in scattered sections of 7 U.S.C., 15 U.S.C., 16 U.S.C., 26
U.S.C., and 42 U.S.C.).
Additionally, the USCG and MMS had formerly signed a Memorandum of
Understanding (MOU) to delineate inspection responsibilities between
both agencies. The MOU is further broken down into five MOAs: OCS-01
Agency Responsibilities, OCS-02 Civil Penalties, OCS-03 Oil Discharge
Planning, Preparedness and Response, OCS-04 Floating Offshore
Facilities and OCS-05 Incident Investigations. OCS-01 established
responsibilities for each agency and clarified overall responsibility
where jurisdiction overlapped.
Under the MOAs, BOEMRE, as MMS's successor, is responsible for
investigating incidents related to systems associated with exploration,
drilling, completion, work over, production, pipeline and
decommissioning operations for hydrocarbons and other minerals on the
Outer Continental Shelf (OCS). The USCG is responsible for
investigating marine casualties involving deaths, injuries, property/
equipment loss, vessel safety systems, and environmental damage
resulting from incidents aboard vessels subject to U.S. jurisdiction.
The MOA assigns responsibility in joint investigations according to
these responsibilities. Volume I of the JIT report addresses the areas
of USCG responsibility and Volume II addresses the areas of BOEMRE
responsibility.
The joint investigation was conducted under the April 27, 2010,
Statement of Principles and Convening Order which ensured that the
investigative process was rigorous, comprehensive, independent and
transparent. The JIT was composed of four lead members and supporting
technical staff from each agency. The JIT held seven public hearings
governed by the policies and procedures for a Marine Board of
Investigation contained in 46 C.F.R. Sec. 4.09 and the USCG Marine
Safety Manual, Volume V. The JIT recorded the testimony of more than 80
witnesses; conducted multiple interviews with more than 25 individuals:
received, processed, and analyzed hundreds of thousands of pages of
documents; and maintained custody of hundreds of pieces of physical
evidence, ranging from small rock samples to the actual blowout
preventer that had been in place at the Macondo wellhead. Taking into
consideration their status as the Flag State, the Republic of Marshall
Islands Maritime Administrator was accorded the rights of a Party in
Interest in addition to certain procedural rights. The JIT also
designated Parties in Interest, who were afforded their statutory
rights specified in 46 U.S.C. Sec. 6303. Those rights are to: (1) be
represented by counsel; (2) cross-examine witnesses; (3) introduce
evidence; and, (4) ask the Board to call witnesses on their behalf.
On April 22, 2011, the USCG members of the JIT submitted Volume I
of their report of investigation to the Commandant, USCG for their
comments on the findings, conclusions and action on the JIT's safety
recommendations. Additionally, Volume I of the report was disseminated
to the Next of Kin of those lost in the marine casualty, members of
Congress, all Parties in Interest, and the general public via the
internet on or before that date.
As prescribed by Coast Guard policy, Volume I, which is the Coast
Guard portion of the investigation, was submitted to the Commandant for
review, endorsement, and determination of Final Action. The Commandant
took Final Action on Volume I on September 9, 2011. Also on September
9, 2011, the Commandant and Director Bromwich of BOEMRE signed a joint
cover memo on the Joint Investigation Team Report of Investigation.
Volume I, as accepted by the Commandant's Final Action, and Volume II
together provide a comprehensive assessment of the incident and
comprise the completed joint report of investigation.
Thank you for the opportunity to testify today. I look forward to
your questions.
______
Mr. Hastings. Thank you very much, Captain Nguyen, for your
testimony. I will now recognize Mr. David Dykes, who was Co-
Chairman of the JIT team. The gentleman is recognized for five
minutes.
STATEMENT OF MR. DAVID DYKES, CO-CHAIR OF THE JOINT
INVESTIGATION TEAM, FORMER BOEMRE STAFF
Mr. Dykes. Thank you, Mr. Chairman, Members of the
Committee. For the record, my name is James David Dykes. For
the last 17 months I served as Co-Chair for the Joint Marine
Board of Investigation. My written testimony presented and my
oral statement given here this morning is from my very best
recollection of the facts as I know them. In preparing the
written testimony I had limited access to evidence due to my
resignation from the Bureau back in September. It came from web
information and it came from my own recollection of the
information.
My written testimony attempts to address the investigation
as it was conducted, what was discovered during the
investigation and what the investigation findings showed.
On the morning of April 21, 2010, Investigator Kirk
Malstrom, the Houma district manager, Bryan Domangue, and I
were in Houston when we learned of the Deepwater Horizon
incident. Upon hearing of the news we immediately began both
the investigation phase and the response phase in BP's office
in Houston while other personnel in the MMS office in New
Orleans were ramping up their operations there.
The Coast Guard was preparing to dispatch investigators to
the offshore location to start interviewing surviving crew
members. We dispatched MMS investigators to Houma, Louisiana,
to rendezvous with the Coast Guard investigators and to travel
to the offshore location.
The investigators intercepted the motor vessel Damon
Bankston en route to the beach and began conducting interviews
and collecting statements. Within the first few days MMS was
coordinating with the Coast Guard on areas that needed to be
explored. I met with Coast Guard personnel from the Morgan City
Marine Safety Office and representatives from the Republic of
Marshall Islands to determine what information was in hand and
what information needed to be collected. At this time
preservation orders were issued to both BP and to Transocean.
The Joint Investigation issued more than 90 subpoenas and
collected over 400,000 pages of evidence over the course of
this investigation. These documents encompass everything from
company safe work practices and drilling program procedures and
permits to employee performance reviews and master service
agreements.
The JIT held seven public hearings and called over 80
witnesses. Some witnesses refused to testify however, perhaps
due in part to the announcement of a criminal investigation by
U.S. Attorney General Eric Holder on June 1, 2010.
In closing, the findings from the investigation revealed
that additional barriers are needed to reduce the probability
of similar events of this magnitude from happening again.
Recommendations for additional research and regulatory
provisions as well as rig design revisions along with changes
to well control and emergency response will add these barriers.
However, they cannot guarantee that the human element in the
equation will perform as intended. This specific issue is one
issue that will haunt the oil and gas industry and every other
industry where personnel are required to make decisions based
on raw data.
This concludes my opening statement. I will be happy to
answer any questions. Thank you.
[The prepared statement of Mr. Dykes follows:]
Statement of James David Dykes, Co-Chair, USCG/BOEMRE Joint
Investigation Into the Deepwater Horizon/Macondo Well Blowout, Formerly
with the U.S. Department of Interior, Bureau of Ocean Energy
Management, Regulation and Enforcement
Opening Oral Summary Statement
Ladies and Gentlemen of the Committee, my name is James David
Dykes. For the last 17 months, I served as co-chair for the Joint
Marine Board of Investigation. My written testimony and my oral
testimony here today are given from my best recollection of the facts
as I remember them. In preparing the written testimony, I had very
limited access to the evidence due to my resignation from federal
employment back in September of this year. The information presented
has been gleaned from the final published report, my own recollection,
and from published information available on the web. My written
testimony attempts to address the investigation as it was conducted,
what was discovered during the investigation, and what the findings of
the investigation show.
On the morning of April 21, 2010, Investigator Kirk Malstrom, Houma
District Manager Bryan Domangue and I were in Houston when we learned
of the Deepwater Horizon incident. Upon hearing of the incident, we
immediately began both the investigation and MMS response phase in BP's
Houston office while other MMS personnel were ramping up in our New
Orleans office. The Coast Guard was preparing to dispatch investigators
to the offshore location to start interviewing and gathering witness
statements from the surviving crew members. We dispatched MMS
investigators to Houma, LA to rendezvous with the Coast Guard
investigators and travel to the offshore location. The investigators
intercepted the M/V Damon Bankston enroute to BP's Fourchon, LA dock
and began conducting interviews and collecting statements
Within the first few days, MMS was coordinating with the Coast
Guard on areas that needed to be explored. I met with Coast Guard
personnel from the Morgan City, LA Marine Safety Office and
representatives of the Republic of the Marshall Islands to determine
what information was in hand and what information needed to be
collected. At this time, preservation orders were issued to both BP and
Transocean.
The JIT issued more than 90 subpoenas and collected over 400,000
pages of evidence over the course of this investigation. These
documents encompassed everything from company safe work practices and
drilling program procedures and permits to employee performance reviews
and master service agreements.
The JIT held seven public hearings and called over 80 witnesses.
Some witnesses refused to testify, however, perhaps due in part to the
announcement of a criminal investigation by U.S. Attorney General Eric
Holder on June 1, 2010.
Outside experts were retained to conduct focused studies and
analyses in areas where the JIT did not possess the necessary
experience and skill sets.
In closing, the findings from this investigation revealed that
additional barriers are needed to reduce the probability of similar
events of this magnitude from happening again. Recommendations for
additional research and regulatory revisions as well as rig design
revisions, along with changes to well control and emergency response
training will add these additional barriers; however, they cannot
guarantee that the human element in the equation will perform as
intended. This specific issue will haunt the oil and gas industry and
every other industry where personnel are required to make decisions
based on raw data.
Thank You.
Personal Background
At the time of the event, I was Chief of the Office of Safety
Management for the Minerals Management Service (MMS), Gulf of Mexico
OCS Region. I have approximately 27 years of combined industry and
regulatory experience in the oil and gas arena. I started out as a
roustabout in 1984 working production operations for Diamond Shamrock
Exploration and Production Co. I was fortunate enough that Diamond
Shamrock had an education tuition assistance program which allowed me
to obtain my college degree at Nicholls State University while working
offshore. Over the next fifteen years and several mergers,
acquisitions, and downsizes, I worked my way up through the ranks to
the Safety Manager position with Taylor Energy Company. I joined the
MMS in 1999, and worked as a safety and environmental management
specialist, civil penalty reviewing officer, and accident investigator
before becoming the Chief of the Office in 2007. My career has allowed
me to obtain a wealth of knowledge in accident investigation techniques
including root cause and causal factor analysis. I have attended Conger
& Elsea's ``Mishap Analysis and Prevention System'' safety training as
well as System Improvements ``TapRooT'' Root-Cause Analysis training.
For a brief period, I also taught accident investigation and causal
factor/root cause analyses. During my tenure as an accident
investigator, I served as the MMS lead investigator in the MMS/USCG
joint investigation of BP's Thunder Horse facility's ballast control
failure incident following the passage of Hurricane Dennis in 2005; and
I also served as the MMS lead investigator in the MMS/USCG joint
investigation of Chevron's Typhoon facility's mooring failure incident
following the passage of Hurricane Rita in 2005.
Initial Investigative Actions
On the morning of April 21, 2010, Investigator Kirk Malstrom, Houma
District Manager Bryan Domangue and I were in Houston when we learned
of the Deepwater Horizon incident. We were already in Houston
conducting a whistleblower investigation into allegations that BP did
not have proper drawings necessary for the safe operation of its
Atlantis facility. We immediately began both the investigation and
agency response phase in BP's Houston office while other agency
personnel were ramping up in our New Orleans office. The Coast Guard
had been conducting search and rescue operations since the night before
and was preparing to dispatch investigators to the offshore location to
start interviewing and gathering witness statements from the surviving
crew members. We dispatched MMS investigators, Randy Josey and Glynn
Breaux, to Houma, LA to rendezvous with the Coast Guard investigators
and travel to the offshore location. The investigators intercepted the
M/V Damon Bankston enroute to BP's Fourchon, LA dock and began
conducting interviews and collecting statements from everyone.
Approximately 115 statements were collected from both the DWH crew and
the crew of the Damon Bankston. Attorneys for Transocean later
complained that we should not have delayed the Damon Bankston in its
journey to the shorebase and further, that we should not have
interviewed the witnesses without company legal representation present.
Those allegations aside, these witness statements were critical to the
investigation in that they provided the basis for identifying fact
witnesses because of their location on the rig at the time of the
events and they also helped to determine the location of those
crewmembers who did not survive. Additionally, several of these
statements were the basis for our conclusions regarding timing of
certain events and the most probable ignition sources of the
hydrocarbons.
Within the first few days, the agency was coordinating with the
Coast Guard on areas that needed to be explored. I met with Coast Guard
personnel from the Morgan City, LA Marine Safety Office and
representatives of the Republic of the Marshall Islands to determine
what information was in hand and what information needed to be
collected. Preservation orders were issued to BP and to Transocean.
Facility and equipment tours were scheduled with Cameron (manufacturer
of the BOP stack) to get personnel up to speed with what we would be
dealing with. Visits were made to BP's Fourchon, LA dock to begin
inventorying and cataloging debris and any other evidence as it was
recovered from the offshore site.
The Convening Order
The joint investigation was formally established with the signing
of the Joint Statement of Principles and Convening Order, by USCG
Commandant Allen, MMS Director Birnbaum, and Secretaries Salazar and
Napolitano on April 27, 2010. The scope of the Deepwater Horizon
investigation was to determine the cause of the fire, pollution, and
sinking of the mobile offshore drilling unit, Deepwater Horizon. The
convening order identified Captain Hung Nguyen and myself as co-chairs
of the joint investigation; outlined the process and procedures by
which the investigation would be conducted; designated the Republic of
the Marshall Islands (flag state of the vessel) as a ``Party In
Interest and afforded all rights associated with such status; and
stated a deadline for the final report. This deadline was nine months
from the date of the convening order. The fact that the well was still
flowing uncontrollably rendered witnesses who were devoted to
containment efforts and some witnesses unavailable for months, and the
original deadline became impossible to meet. Most of the information as
to why the blowout preventer (BOP) stack did not seal the well was with
the BOP stack 5000 feet beneath the surface of the Gulf of Mexico.
Until the BOP stack could be pulled, certain questions could never be
answered. On April 29, 2010, Chris Oynes--Associate Director for
Offshore Energy and Minerals Management, designated the following MMS
personnel to the JIT:
Glynn Breaux, Office of Safety Management, GOM OCS Region
John McCarroll, Lake Jackson District, GOM OCS Region
Ja son Mathews, Accident Investigation Board, Office of
Regulatory Programs
Kirk Malstrom, Regulations and Standards, Office of Regulatory
Programs
The MMS/BOEMRE members concentrated on the well-related activities.
These activities included the source and path of the hydrocarbons
causing the blowout, the practices on the Deepwater Horizon leading to
the blowout, the cause of the explosion, and the failures of the
blowout preventer stack.
The Coast Guard members focused on the fire-fighting, life-saving,
and evacuation efforts onboard the Deepwater Horizon, the search and
rescue efforts by the USCG and assisting vessels, the International
Maritime Organization (IMO) compliance areas, the fire-fighting efforts
of the assisting vessels, and the stability of the Deepwater Horizon.
Potential Flow Paths
The investigative team began reviewing all well information that
the agency had in hand. The team quickly narrowed down the potential
flow path of hydrocarbons to three possible scenarios;
The first possibility is that the casing cement shoe
at the end of the production casing at 18310 feet failed and
allowed the flow from the bottom of the wellbore.
The second possibility was that the production casing
leaked or the casing collapsed at the crossover joint within
the wellbore.
The third possibility was that the production casing
moved or ``floated'' inside the wellbore causing the production
casing seal assembly to fail.
Hearings
The JIT issued more than 90 subpoenas and collected over 400,000
pages of evidence over the course of this investigation. These
documents encompassed everything from company safe work practices and
drilling program procedures and permits to employee performance reviews
and master service agreements.
The JIT held seven public hearings and called over 80 witnesses.
Some witnesses refused to testify, however, perhaps due in part to the
announcement of a criminal investigation by U.S. Attorney General Eric
Holder on June 1, 2010. The BP drilling engineers responsible for the
design of the Macondo drilling program and one of the BP Wellsite
Leaders exercised their Constitutional rights and refused to speak with
the JIT.
The JIT held the first hearing the week of May 10, 2010, in New
Orleans. This hearing solely concentrated on search and rescue efforts,
fire-fighting responses, and the industry oversight of MMS, U.S. Coast
Guard, and the Republic of the Marshall Islands.
The second hearing was held the week of May 24, 2010, in New
Orleans. The JIT wanted to better understand the prior surveys
conducted on the DWH by ABS and DNV. The JIT also wanted to get a
foundation of the events on the rig during the blowout. Based on the
written witness reports we called most of the rig crew who had the best
recollection of the incident and surrounding events.
The third hearing was held the week of July 19, 2010, in New
Orleans. This hearing focused on reviewing the activities a few hours
prior to and through the incident by analyzing the Sperry-Sun that had
been subpoenaed from BP. The JIT wanted to better understand the
operational and design specifics for the well, including BP's
procedures for running the Lock-down sleeve, and the down-hole
equipment and design. We also wanted to know the details and
involvement of the wells team leader, John Guide.
The fourth hearing was held the week of August 23, 2010 in Houston.
This hearing was to find out the circumstances surrounding BP's upper
management and their interactions/decisions with contracting companies,
other management teams, and rig personnel. Witnesses also included VIP
persons who were on the rig and their actions.
The fifth hearing was held the week of October 4, 2010 in New
Orleans. This hearing focused on gathering facts about salvage plans,
bridge activities, DPO alarm systems, rig logistics--flight manifests,
and supplies--centralizers. We also questioned John Guide again.
The sixth hearing was held the week of December 6, 2010 in Houston.
This hearing focused on collecting information regarding international
safety management systems, BP's AFE budget for the Macondo well, and
Transocean's command center involvement and response.
The seventh and final hearing held the week of April 4, 2010, in
New Orleans. This hearing focused on gathering information and feedback
related to the recently released BOP stack forensic report completed by
Det Norske Veritas (DNV).
BOP Stack Recovery and Forensics
In July 2010, the JIT began a search for a third party expert
capable of performing a forensic examination of the BOP stack. Because
the BOP stack was oilfield equipment and not a marine apparatus, the
JIT determined that BOEMRE, in coordination with the Department of
Justice (DOJ), would take the lead on identifying experts qualified to
perform this forensic work. The contracting team prepared a statement
of work and circulated it for review by JIT members, BOEMRE and Coast
Guard personnel and counsel, and DOJ representatives from both the
civil and criminal divisions. BOEMRE also conducted market research
into potentially qualified forensic examiners.
On September 2, 2010, Det Norske Veritas (DNV) was contracted to
undertake a forensic examination of the blowout preventer stack (BOP),
its components and associated equipment used by the Deepwater Horizon
drilling operation.
The objectives of the forensic examination were to determine the
performance of the BOP system during the well control event, any
failures that may have occurred, the sequence of events leading to
failure(s) of the BOP stack and the effects, if any, of a series of
modifications to the BOP stack that BP and Transocean officials
implemented.
The set of activities undertaken by DNV included:
Establishing a base of operations at the NASA Michoud
facilities for receiving and testing the BOP stack and
associated equipment;
Building a temporary enclosure to house the BOP stack
to facilitate the forensic examinations;
Recovery of and assessment of drill pipe, rams,
fluids and other material from the BOP stack and recovered
drilling riser;
Function testing of the hydraulic circuits,
mechanical components and control systems of the BOP stack;
Visual examination of evidence and additional
analysis using laser profilometry;
Mechanical and metallurgical testing of pieces of
drill pipe;
Coordination of activities with other stakeholders
through the JIT and the Technical Working Group (TWG);
Review of documents and Remotely Operated Vehicle
(ROV) videos;
Mathematical modeling of the mechanical damage and
deformation of drill pipe; and,
Developing possible failure scenarios.
The BOP stack consists of the BOP and lower marine riser package
(LMRP). The stack can be separated into the two individual components
with each weighing approximately 360,000 pounds. The components, when
combined, are contained within a framework that is approximately 14
feet square and stands approximately 60 feet tall and can only be
transported by a marine vessel. The sheer size of the BOP stack limits
the availability of facilities that can handle anything of this
magnitude. After extensive efforts to locate an acceptable facility to
host the examination that was both secure and accessible to marine
transport, the JIT, in close consultation with DOJ, determined that the
NASA Michoud facility in New Orleans was the best option. The Michoud
facility provided a secure location with marine transport access;
however, the dockside facility could not handle the weight of the BOP
and LMRP without additional preparations. Site preparation activities
included constructing a test pad capable of supporting the 360-ton BOP
stack, mobilizing a heavy-lift crane to transfer the BOP and LMRP to
the dock, obtaining environmental containment equipment, and the
erection of a temporary structure to house the BOP and LMRP.
Additionally, other accident evidence was already being stored on site
at Michoud under an ongoing lease between the Coast Guard and NASA.
Security measures for the BOP stack were developed and implemented
in close coordination with DOJ and the FBI Evidence Recovery Team (ERT)
to preserve the integrity of the forensic work and evidence.
On September 4, 2010, the BOP stack was retrieved from the Macondo
well by Helix Energy's mobile offshore unit, the Q4000. JIT personnel,
along with DOJ, FBI -ERT, were on location with DNV personnel to
oversee the retrieval and the execution of the short-term preservation
procedures in preparation for transfer to the NASA Michoud facility.
The BOP and LMRP were then transported by barge to the Michoud
facility.
The JIT, in consultation with DOJ and DNV, formed a technical
working group to provide DNV with technical support and expertise as
DNV conducted the forensic examination. On November 1, 2010, the JIT
selected a six-member technical working group which included one expert
each from Cameron, Transocean, BP, DOJ, CSB, and an expert representing
the plaintiffs in the multi-district litigation suit. Additionally, a
controlled access file transfer protocol site was established for the
purpose of sharing photo, video, and other documentary media that was
being captured during the forensic examination, with the technical
working group members.
Contracted Services
In addition to DNV, the JIT also needed experts to conduct focused
studies/analyses in areas where the JIT did not possess the necessary
experience and skill sets. The following outside entities were
retained:
Dr. John Smith was contracted to review the Sperry-
Sun log data and the IADC reports to identify key issues during
the last 24 hours on the rig.
Keystone Engineering was contracted to conduct a
casing buoyancy analysis to determine the potential for the
casing to ``float'' inside the wellbore.
Oilfield Testing and Consulting was contracted to
conduct the Macondo well cement blend analysis. This work was
similar to the cement analysis conducted by Chevron for the
National Commission.
Findings and Conclusions
As stated earlier in this document, the MMS/BOEMRE members of the
JIT focused on determining the root causes/causal factors in three
areas:
How (source and flow-path) and why did the Macondo
well blow out?
What ignited the hydrocarbons once they reached the
rig?
Why did the BOP stack fail to seal the wellbore?
How (source and flow-path) and why did the Macondo well blow out?
As stated earlier, the JIT identified three possible flow paths for
the hydrocarbons to travel up the wellbore. Forensic work conducted by
the Development Driller II under the direction of the JIT and the
Unified Area Command, determined that the casing did not float and
there was no failure in the casing string. By the process of
elimination, the JIT determined that the only possible path was
directly from the bottom of the well through the casing shoe. The JIT
concluded contamination or displacement of the shoe track cement, or
nitrogen breakout or migration, could have caused the shoe track cement
barrier to fail.
Next, during the conduct of the negative test, the rig crew
(including BP, Transocean, and Sperry-Sun personnel) failed to detect
the influx of hydrocarbons until the hydrocarbons were above the BOP
stack. Additionally, the crew's collective misinterpretation of the
negative tests was a critical mistake that would escalate into the
blowout, fire and eventual sinking of the Deepwater Horizon.
Once the hydrocarbons reached the rig floor, the rig crew began
taking necessary steps to attempt to control the flow. Understand that
the most important part of well control is early kick detection. For
deepwater operations utilizing a subsea BOP stack, this task becomes
even more critical. Once hydrocarbons are above the BOP stack, options
become limited for appropriate well control response actions.
What ignited the hydrocarbons once they reached the rig?
The JIT concluded that there were two plausible ignition sources at
the time of the blowout: 1) engine rooms number 3 and/or number 6
(including the associated switchgear rooms); and/or 2) the mud-gas
separator located near the rig floor. Witness statements and testimony
from crewmembers that were in the engine control rooms support the
conclusion that the ignition sources were in the engine rooms. Witness
statement and testimony from members of the crew of the M/V Damon
Bankston and rig crew members on the aft weather deck support the
conclusion that it was the mud-gas separator.
Contributing causes of the ignition include the rig's engine air
intake design, the operating philosophy of a dynamically positioned
rig, the vagueness in the Transocean Well Control Manual regarding use
of the mud-gas separator, and the design of the mud-gas separator vent
system.
Why did the BOP stack fail to seal the wellbore?
Within moments of the loss of well control, explosions likely
damaged the Deepwater Horizon's multi-plex cable and hydraulics,
rendering the crew unable to activate the blind shear rams or the
emergency disconnect sequence of the BOP stack. These conditions should
have triggered the automated mode function (also referred to as the
``deadman'' function), which should have activated the blind shear rams
in the event of loss of communication between the rig and the BOP
stack.
The forensic examination concluded that the drill pipe had become
trapped in a position between the upper annular BOP component and the
upper variable bore ram BOP component. The JIT concluded that either
the hydrocarbons that were blowing out of the well through the drill
pipe or the weight of the drill pipe had forced the drill pipe into a
buckled state against the side of the BOP wellbore. This buckling
caused the drill pipe to move off center outside the cutting area of
the blind shear rams, thus preventing the complete cutting of the drill
pipe and sealing of the wellbore.
Summary of Additional Causes, Contributing Causes, and Possible
Contributing Causes
Poor risk management on BP's part was a key contributing cause. BP
failed to identify, evaluate, and inform all parties involved in the
operation about the associated risks. BP did not fully analyze the
cement properties testing results. They did not evaluate the gas flow
potential. Even though everyone within the BP organization stated that
they never compromised safety, BP made multiple cost/time saving
decisions without subjecting those decisions to a formal risk
assessment. Additionally, Both BP and Transocean personnel failed to
observe and respond to critical indicators. The rig crew (both BP and
Transocean) experienced a kick a month earlier and it took over 30
minutes to identify the kick. The rig crew did not evaluate the
anomalies encountered during the float collar conversion.
Recommendations
The JIT made multiple recommendations that encompass regulatory
changes, research and collaboration with industry to develop best
practices for well control training. Some of the recommendations have
already been incorporated; however, BOEMRE will need to evaluate and
consider the other recommendations for implementation.
This concludes the written testimony.
______
Mr. Hastings. Thank you very much, Mr. Dykes. And now I
would like to recognize Vice Admiral Brian Salerno. The
gentleman will be recognized for five minutes.
STATEMENT OF VICE ADMIRAL BRIAN M. SALERNO,
DEPUTY COMMANDANT FOR OPERATIONS, U.S. COAST GUARD
Admiral Salerno. Good morning, Chairman Hastings, Ranking
Member Markey and Distinguished Members of the Committee. I am
very pleased to have this opportunity to answer any questions
you may have on the Commandant's action on Volume 1 of the
Joint Investigation Report and the loss of the mobile offshore
drilling unit, or MODU, Deepwater Horizon. Specifically I am
prepared to discuss the steps the Coast Guard has taken to
improve safety in the offshore oil industry.
I would first like to express on behalf of Secretary
Napolitano and the Commandant of the Coast Guard our deepest
sympathies to the families of the 11 men who lost their lives
in this tragic accident. The Coast Guard has kept those
families informed of the investigation's progress and most
recently provided them with a summary of the actions we are
taking to improve MODU safety.
Although the sinking of Deepwater Horizon followed a well
blowout, the investigation revealed numerous system
deficiencies and acts of omission on the MODU itself that had
an adverse impact on the ability to prevent or limit the
magnitude of the disaster. These deficiencies included poor
maintenance of electrical equipment that may have ignited the
explosion earlier than might otherwise have been the case, the
bypassing of hydrocarbon gas alarms and automatic shutdown
systems and a lack of training on when and how to shut down
engines and disconnect the MODU from the well.
Coast Guard members of the Joint Investigation Team made 65
recommendations, safety recommendations and administrative
recommendations to improve safety on board MODUs operating on
the Outer Continental Shelf. These recommendations can be
characterized in three broad areas: recommendations related to
the effectiveness of both domestic and international standards;
recommendations related to enforcement of those standards; and
administrative recommendations. The Commandant concurs in whole
or in part with the vast majority of the proposed safety
actions.
Overall, Volume 1 reveals that regulated safety systems
aboard the MODU enabled 115 of the 126 persons on board to
survive the explosions and subsequent fire. For example, all
survivors were able to evacuate the MODU using the installed
life-saving equipment with the exception of approximately six
who on their own initiative jumped from the rig into the water.
Also, even though significantly damaged by the explosion
and the ensuing fire, the Deepwater Horizon had enough
structural resiliency to stay afloat for more than 48 hours
despite being engulfed in a major fire that was being fed from
an uncontrolled fuel source.
Nevertheless it is clear from this tragedy that the Coast
Guard must refine its procedures and improve oversight to
better fulfill its responsibility to ensure safety, security
and stewardship on the U.S. Outer Continental Shelf. To
accomplish this, the Coast Guard will work both domestically
and internationally to improve standards and oversight for U.S.
and foreign-flag MODUs.
We have already taken action based on the lessons learned
from this casualty. For example, we have initiated a new policy
on risk-based targeting for foreign-flag MODUs operating on the
Outer Continental Shelf. Our goal in this policy is to
prioritize our examination activity according to risk, taking
into account numerous factors, including the past performance
of the managing company, the owner, the flag state, and the
recognized organizations that are delegated authority to act on
behalf of the flag state. The intention is to enhance safety
for all vessels operating on the U.S. Outer Continental Shelf.
We are also updating our domestic regulations which govern
vessels operating on the Outer Continental Shelf to reflect the
lessons learned from the Deepwater Horizon and the current
state of technology. We are also harmonizing Coast Guard area
contingency planning efforts with the offshore spill response
plans approved by the Bureau of Safety and Environmental
Enforcement to ensure consistency and improve overall
preparedness.
Finally, the Coast Guard continues to work through the
International Maritime Organization where, among other
initiatives, we are leading U.S. efforts in support of a
mandatory code for recognized organizations. The code will
improve accountability of recognized organizations acting on
behalf of flag states and will better ensure that all vessels,
including MODUs, comply with international standards.
Thank you, and I look forward to answering your questions.
[The prepared statement of Admiral Salerno follows:]
Statement of Admiral Brian Salerno, Deputy Commandant for Operations,
BOEMRE/U.S. Coast Guard Joint Investigation Team Report
Good Morning Chairman Hastings, Ranking Member Markey, and
distinguished members of the Committee. I am honored to appear before
you today to discuss the Coast Guard's Final Action on the Coast Guard
Volume--Volume I--of the Joint Investigation Team report.
INVESTIGATIVE ACTION SUMMARY
Immediately following the explosion and sinking of the DEEPWATER
HORIZON Mobile Offshore Drilling Unit (MODU), the Department of
Homeland Security, through the U.S. Coast Guard, and the Department of
Interior, originally through the Minerals Management Service (MMS), now
the Bureau of Ocean Energy Management, Regulation and Enforcement
(BOEMRE), convened a formal investigation with the purpose of gathering
evidence and examining the circumstances surrounding the tragic
incident. The Joint Investigation Team (JIT) was comprised of and co-
chaired by members from the Coast Guard and BOEMRE.
The Coast Guard members of the JIT examined five aspects of the
disaster relating to areas under Coast Guard jurisdiction: the
explosions; the fire; the evacuation; the flooding and sinking of the
MODU; and the safety systems of the DEEPWATER HORIZON including the
safety management system implemented by owner-operator, Transocean. The
investigative findings, conclusions and recommendations of the Coast
Guard members of the JIT were publicly issued on April 22, 2011, in
Volume I of the JITs report. In the Final Action Memo (FAM), released
on September 14, 2011, the Commandant accepted Volume I and commented
on its findings, conclusion, and recommendations.
SUMMARY OF FINDINGS
Although the sinking of DEEPWATER HORIZON was triggered by a loss
of well control, the investigation revealed numerous system
deficiencies and acts and omissions by Transocean and the DEEPWATER
HORIZON crew that adversely impacted opportunities to limit the
magnitude of the disaster. These included poor maintenance of
electrical equipment that may have ignited the explosion, bypassed
hydrocarbon gas alarms and automatic shutdown systems, and training
shortfalls in critical areas such as engine shutdown and emergency well
disconnect procedures. These and other deficiencies indicate that a
flawed safety management system and safety culture aboard DEEPWATER
HORIZON may have contributed to this disaster.
COMMANDANT FINAL AGENCY ACTION PROCESS REGARDING VOLUME I
To ensure the JIT investigation was conducted in a methodical,
thorough, and transparent manner, the Coast Guard applied longstanding
Service processes and principles. This includes the completion of an
independent investigation by members of a Marine Board of Investigation
(Board) and submission of a written report containing investigative
findings, conclusions, and recommendations to the Commandant. Upon
receipt by the Commandant, the report is further reviewed by technical
experts who have policy and oversight responsibility for the actions
and conditions identified by the Board as causal factors in the
incident. The technical experts provide key policy insight and
recommendations into the development of the Final Action. This second
level of independent review by technical and policy experts is critical
in determining the Commandant's Final Action on all recommendations,
including potential implementation.
In the Final Action, the Commandant may address the facts,
opinions, and conclusions of the report and provide a response to each
recommendation. When the Commandant concurs with a recommendation, a
description of the action he intends to take is included in the Final
Action. If he does not concur with a recommendation, the reason for his
non-concurrence is also included.
During the course of the Board's investigation, parties in interest
(PIIs) are afforded certain statutory rights, including the right to
counsel, to introduce evidence, and to call and cross-examine
witnesses. Typically, however, the Board's report and the review
process are not open to any PIIs or the general public until the
Commandant's review is finished and the Final Action completed. Once
the Commandant's Final Action is complete, it is appended to, and
released simultaneously with, the Board's original report.
In the case of the DEEPWATER HORIZON incident, the process was
modified in order to provide increased transparency into the
investigation of a marine incident that had a direct impact on
unprecedented numbers of American citizens. The Coast Guard released
Volume I of the JIT Report in April, before the Commandant's Final
Action was complete. The Commandant's Final Action was issued in
September. The comments from the PIIs were carefully considered in
developing the Commandant's Final Action and a summary of those
comments and the Coast Guard's response is included as an enclosure to
the FAM.
FINAL AGENCY ACTIONS ON RECOMMENDATIONS--SUMMARY
In addition to determining the causal factors of this incident, the
JIT was empowered to make recommendations to reduce the risk of similar
incidents in the future. These recommendations can be broadly
categorized as: recommendations regarding domestic or international
standards; recommendations regarding oversight to ensure compliance
with standards; and administrative recommendations. Within these broad
categories, there were three primary areas addressed in the safety
recommendations:
1. The adequacy of international and domestic safety regimes;
2. The adequacy of the Flag State oversight of recognized
organizations that are delegated authority to act on behalf of the Flag
State; and
3. The adequacy of recognized organizations.
In the FAM, the Commandant concurs in whole or in part with the
vast majority of safety recommendations made by the JIT. Some of the
actions directed by the Commandant will impact domestic regulations and
inspection or oversight practices, as discussed in the Implementation
section below; others will potentially impact the ongoing work at the
International Maritime Organization (IMO) to develop standards for
MODUs and for the organizations that oversee compliance with the
standards.
The Commandant did not concur with nine of the JIT's
recommendations, and thus did not direct any specific action relating
to those recommendations. The recommendations with which the Commandant
did not concur fall into three categories:
1. Those that the Commandant determined were not directly
supported by the facts provided in the report;
2. Those that the JIT related to problems with the standards, but
the Commandant determined to be compliance or oversight issues; and,
3. Those that the Commandant determined were adequately addressed
by action directed in response to other recommendations in the report.
Volume I of the investigation revealed that, with certain
identified exceptions, the Coast Guard-regulated safety systems aboard
the MODU were generally effective despite the extreme nature of the
event. Of the 126 persons on board, 115 survived the explosions and
subsequent fire. Most of the survivors were able to evacuate the MODU
using the installed lifesaving equipment. A few of the survivors jumped
from the rig into the water and were rescued. Even though significantly
damaged by the explosions and the ensuing fire, the DEEPWATER HORIZON
was able to stay afloat for more than 48 hours.
While the Coast Guard-regulated safety systems generally performed
well under extreme conditions, the Commandant determined that
additional action can be taken to protect the sea and those who work on
it.
IMPLEMENTATION OF ACTIONS DIRECTED BY THE COMMANDANT
The Coast Guard has already taken action to enhance safety and
stewardship on the U.S. Outer Continental Shelf (OCS). Earlier this
year, the Coast Guard published a policy for risk-based targeting of
foreign flagged MODUs. The policy allows field commanders to target
limited resources to highest risk operations and ensure a uniform, high
level of safety for all vessels operating on the U.S. OCS. In addition,
Coast Guard regulations for construction, equipment and operation of
vessels on the OCS are being updated to reflect the current and
emerging state of technology, and to address lessons learned from
DEEPWATER HORIZON.
Internationally, the Coast Guard has engaged the IMO through its
Flag State Implementation Sub-Committee with regard to the provisions
of the proposed new Code for Recognized Organizations. The Coast Guard
anticipates that the new Code will be ready for adoption in 2012, will
be mandatory, and will include more specific and detailed requirements
and guidelines for Recognized Organizations covering their management
and organization, resources, certification processes, performance
measurement, analysis and improvement, and quality management system
certification. The U.S. delegation at IMO, led by the Coast Guard, will
work to ensure the results of this investigation are considered in
IMO's development of the Code.
On Oct. 1, 2011, the Department of the Interior formally
established two new, independent bureaus--the Bureau of Safety and
Environmental Enforcement (BSEE) and the Bureau of Ocean Energy
Management (BOEM)--to carry out the offshore energy management and
safety and environmental oversight missions previously under the
jurisdiction of BOEMRE. The Coast Guard and BSEE are working to
harmonize offshore spill response plans with the Area Contingency Plans
to maximize awareness and preparedness to respond to future spills from
offshore facilities, including enhanced understanding of worst case
discharge scenarios.
CONCLUSION
The FAM is the result of long standing Coast Guard procedures with
minor modifications, designed to accommodate the complexity of this
investigation, and to ensure the investigation was conducted in a
methodical, thorough, and transparent manner. The Coast Guard is now
taking action domestically and through international engagement to
carry out the actions directed by the Commandant.
Thank you for the opportunity to testify before you today and I
will be pleased to answer your questions.
______
Mr. Hastings. Thank you very much, Admiral Salerno. And
last but certainly not least I would like to welcome back
Director Bromwich, and you are recognized for five minutes.
STATEMENT OF HON. MICHAEL BROMWICH, DIRECTOR, BUREAU OF SAFETY
AND ENVIRONMENTAL ENFORCEMENT
Mr. Bromwich. Thank you very much, Mr. Chairman and Members
of the Committee. I very much appreciate the opportunity to be
here today to testify about the findings of the BOEMRE/Coast
Guard Joint Investigation and the causes of the explosion and
fire on board the Deepwater Horizon and the devastating oil
spill that followed.
I want to note that this report validates many of the
important reforms to offshore regulation oversight that we have
already implemented, but it further underscores the need for
government and industry to continue to identify and implement
practices that will ensure that domestic oil and gas production
proceeds safely and responsibly.
The panel identified the causes of the blowout as well as
various failures that occurred prior to the blowout. It
concluded that the central cause of the blowout was the failure
of a cement barrier in the production casing stream, a high
strength steel pipe set in a well to ensure well integrity and
to allow future production. The failure of the cement barrier
allowed hydrocarbons to flow up the well bore through the riser
and onto the rig. The panel's findings, conclusions and
recommendations also address a wide range of other technical
issues.
The panel found that the loss of life at the Macondo well
on April 20 and subsequent pollution of the Gulf of Mexico were
in part the result of poor risk management, last minute changes
to plans, failure to observe and respond to critical
indicators, inadequate well control response and insufficient
emergency response training by companies and individuals. The
failure of the BOP stack to seal the well allowed the well to
continue to flow after the blowout.
The JIT found clear and compelling evidence that BP as well
as its contractors, Transocean and Halliburton, violated
BOEMRE's regulations and the consequences were undeniably dire.
We believe that issuing citations for such regulatory
violations upholds the principles of accountability, specific
deterrence and general deterrence and vindicating BOEMRE's
regulations.
The panel concluded that stronger and more comprehensive
Federal regulations might have reduced the likelihood of the
Macondo blowout. In particular, the panel recommended that
regulations could be enhanced with respect to cementing
procedures and testing, BOP configuration and testing, well
integrity testing and other drilling operations. In addition,
the panel concluded that the agency's inspections program could
be improved.
I can report the regulatory and process changes implicated
by this report have been formulated and implemented over the
past 15 months. The report concludes with the panel's
recommendations which seek to improve the safety of offshore
drilling operations in a variety of different ways that are
spelled out in the report. Those recommendations will be
carefully considered as the basis for future rulemaking.
The JIT's findings reinforce and build on many of the
safety and oversight gaps that had already been identified and
significantly improved upon since the Deepwater Horizon
tragedy. These include our drilling safety rule and our SEMS
rule which I have described to you here on previous occasions.
Our reforms since the Deepwater Horizon tragedy have been
broad and swift and have made deepwater drilling significantly
safer, but the JIT report is a sobering reminder that there
remains more to be done. We must continue to analyze
information that becomes available and to implement reforms
necessary to make offshore oil and gas production safer,
smarter and with stronger protections for workers and the
environment. The process of making offshore energy development
both safe and sufficient will never be complete. It must be a
continuing, ongoing, dynamic enterprise that remains responsive
to new learning.
As we evaluate the lessons learned from the JIT report, I
believe the industry is uniquely poised to assess findings and
test creative solutions. To that end, I hope that the companies
will take a hard look at this report as well as other recent
investigations to understand what went wrong and to think about
what they can do to go above and beyond existing requirements,
enhance safety and ultimately help us to identify best
practices that could be adopted across the industry.
Thank you very much and I look forward to your questions.
[The prepared statement of Mr. Bromwich follows:]
Statement of Michael R. Bromwich, Director, Bureau of Safety and
Environmental Enforcement, United States Department of the Interior
Mr. Chairman and members of the Committee,
I very much appreciate the opportunity to be here today to testify
about the findings of the Bureau of Ocean Energy Management, Regulation
and Enforcement (BOEMRE) and the U.S. Coast Guard's joint investigation
into the explosions and fire onboard the Deepwater Horizon. As you
know, the explosions and fire led to multiple deaths, serious injuries,
and the release of an estimated 4.9 million barrels of oil into the
Gulf of Mexico. I will summarize the findings, conclusions, and
recommendations of the BOEMRE panel of investigators (``the Panel'')
who served on the BOEMRE-USCG Joint Investigation Team (JIT). I want to
note that this report validates many of the important reforms to
offshore regulation and oversight that we have already implemented in
the wake of Deepwater Horizon, but it also underscores the need for
government and industry to continue to identify, adopt, and implement
practices that will ensure that domestic oil and gas production
proceeds safely and responsibly.
Introduction
At approximately 9:50 p.m. on the evening of April 20, 2010, as the
crew of the Deepwater Horizon rig was finishing its work on the Macondo
exploratory well, an undetected influx of hydrocarbons into the well
(commonly referred to as a ``kick'') escalated to a blowout.
Hydrocarbons flowed onto the rig floor through a mud gas vent line and
ignited in two separate explosions. A fire began on the rig and the
flowing hydrocarbons continued to fuel the fire on the rig, which
continued to burn until it sank on April 22. Eleven men died on the
Deepwater Horizon, many more were injured, and over the next 87 days,
almost five million barrels of oil flowed into the Gulf of Mexico.
The JIT was formed on April 27, 2010 by a convening order of the
Departments of the Interior and Homeland Security to investigate the
causes of the Deepwater Horizon explosion, loss of life, and resulting
oil spill, and to make recommendations for safe operations of future
oil and gas activities on the U.S. Outer Continental Shelf (OCS). The
JIT held seven sessions of public hearings, received testimony from
more than 80 witnesses and experts, and reviewed a large number of
documents and exhibits pertaining to all aspects of the investigation.
Evidence-gathering included the salvage of the blowout preventer (BOP)
stack and portions of the drill pipe and riser.
The final report includes two volumes: Volume I includes findings
on five aspects of the disaster under Coast Guard jurisdiction--and I
will defer to my colleague, Admiral Salerno, to explain this content.
My testimony today will focus on Volume II of the report, which details
the findings of the BOEMRE panel regarding the causes of the Macondo
well blowout and the resulting explosion and fire aboard the Deepwater
Horizon. Based on the evidence it collected and analyzed, the Panel
concluded that BP, Transocean and Halliburton's conduct in connection
with the Deepwater Horizon disaster violated a number of BOEMRE's
offshore safety regulations. The Panel has also developed
recommendations for the continued improvement of the safety of offshore
operations.
Before I go on, I'd like to recognize the massive effort by members
of my staff and the Coast Guard that went into this investigation and
the issuance of this report. They conducted a thorough investigation,
and we have published a report that will be a lasting legacy to their
tireless efforts.
Findings of the BOEMRE Panel
The Panel identified the causes of the blowout as well as various
failures that occurred before and on April 20, 2010. It concluded that
the central cause of the blowout was failure of a cement barrier in the
production casing string, a high-strength steel pipe set in a well to
ensure well integrity and to allow future production. The Panel's
findings, conclusions, and recommendations address a full range of
issues, including well design; cementing; possible hydrocarbon flow
paths during the blowout; temporary abandonment of the Macondo well;
kick detection and rig response; ignition source and explosion; the
failure of the Deepwater Horizon blowout preventer to arrest the
blowout; regulatory findings and conclusions; and company practices.
The loss of life at the Macondo well on April 20, 2010, and the
subsequent pollution of the Gulf of Mexico through the summer of 2010
were, in part, the result of poor risk management, last minute changes
to plans, failure to observe and respond to critical indicators,
inadequate well control response, and inadequate emergency response
training by companies and individuals responsible for drilling at the
Macondo well and for the operation of the Deepwater Horizon.
Well design, cementing, and flow path
At the time of the blowout, the rig crew was engaged in temporary
abandonment procedures designed to secure the well after drilling had
ceased and before the Deepwater Horizon left the site. In the days
leading up to April 20, BP made a series of decisions that complicated
cementing operations, added incremental risk, and may have contributed
to the ultimate failure of the cement job. These decisions included:
the point at which they decided to stop drilling;
the decision to only have one cement barrier in the
well during temporary abandonment operations;
the decision to set a lock-down sleeve; and
the decision to use certain material as ``spacer''
(fluid between the drilling mud and the water).
BP failed to communicate these decisions and the increasing
operational risks to Transocean. As a result, BP and Transocean
personnel onboard the Deepwater Horizon on the evening of April 20,
2010, did not fully identify and evaluate the risks inherent in the
operations that were being conducted at Macondo.
As mentioned above, the Panel found that a central cause of the
blowout was failure of the cement barrier in the production casing
string. The failure of the cement barrier allowed hydrocarbons to flow
up the wellbore, through the riser and onto the rig. This is the
immediate cause of the blowout. The precise reasons for the failure of
the production casing cement job are not known. The Panel concluded
that the failure was likely due to:
swapping of cement and drilling mud (referred to as
``fluid inversion'') in the shoe track (the section of casing
near the bottom of the well);
contamination of the shoe track cement; or
pumping the cement past the target location in the
well, leaving the shoe track with little or no cement (referred
to as ``over displacement'').
Notably, BP and Halliburton failed to perform the production casing
cement job in accordance with industry-accepted recommendations, as
defined in the American Petroleum Institute's Recommended Practice 65.
The cement failure allowed the flow of hydrocarbons through the
riser and onto the rig. The Panel identified three possible paths by
which hydrocarbons could have flowed up the well to the rig during the
initial stage of the blowout: (1) up the production casing annulus
cement barrier and upward through the annulus and the wellhead seal
assembly; (2) up the production casing and related components from
above the top wiper plug located on the float collar at 18,115 feet; or
(3) up the last 189 feet of the production casing (the shoe track). The
Panel concluded that the hydrocarbons flowed through the shoe track and
up through the riser to the rig.
Problems at the Macondo well: temporary abandonment, kick detection,
and emergency response
BP and Transocean encountered a number of problems during drilling
and temporary abandonment operations at the Macondo well--including
kicks, stuck pipe, lost returns of drilling fluids, equipment leaks,
cost overruns, well scheduling and logistical issues, personnel changes
and conflicts, and last minute procedure changes. These problems led
rig personnel and others to refer to Macondo as the ``well from hell.''
Even when faced with anomalous readings, data, and other
indications, the rig crew failed to detect the flow of hydrocarbons
until it was too late. On April 20, BP and Transocean personnel onboard
the Deepwater Horizon missed the opportunity to remedy the cement
problems when they misinterpreted anomalies encountered during a
critical test of cement barriers called a negative test. The negative
test attempts to simulate what will occur at the well after it is
temporarily abandoned and to show whether barriers, such as the cement
job, will hold against pressures from the reservoir.
The rig crew conducted an initial negative test on the production
casing cement job that showed a pressure differential between the drill
pipe and the kill line, which is a high pressure pipe leading from the
BOP stack to the rig pumps. This was a serious anomaly that should have
alerted the rig crew to potential problems with the cement barrier or
with the negative test. After some discussion among members of the crew
and a second negative test on the kill line, the rig crew explained the
pressure differential away as a ``bladder effect'' (or annular
compression), a theory that later proved to be unfounded. Around 7:45
p.m., after observing for 30 minutes that there was no flow from the
kill line, the rig crew concluded that the negative test was
successful. As a result, at that point, the rig crew most likely
concluded that the production casing cement barrier was sound. At this
point, rig crew members moved forward with temporary abandonment
procedures, unaware of the failed cement job and the looming influx of
hydrocarbons.
However, the cement in the shoe track barrier had in fact failed,
and hydrocarbons began to flow from the reservoir into the well.
Despite a number of additional anomalies that should have signaled the
existence of a kick or well flow, the crew failed to detect that the
Macondo well was flowing until 9:42 p.m. By then it was too late--the
well was blowing drilling mud up into the derrick and onto the rig
floor. If members of the rig crew had detected the hydrocarbon influx
earlier, they might have been able to take appropriate actions to
control the well.
Ignition source and the explosion
A number of additional missteps after the rig crew realized what
was happening contributed to the explosion, fire, and the loss of life.
On April 20, 2010, at around 9:40 p.m., powerful pressures from the
well caused mud to flow up from the well. Drilling mud spilled on the
rig floor as the well began to blow out. But instead of diverting the
flow overboard, the crew responded to the situation by diverting the
flow to the rig's mud gas separator, part of the diverter system to
which the crew could direct fluids coming up from the well. The mud gas
separator could not handle the volume of hydrocarbons; it failed and
discharged a gas plume above the rig floor. The gas quickly ignited,
causing the first explosion on the rig at 9:49 p.m. Approximately ten
seconds later, a second larger explosion occurred and the fire onboard
the rig spread rapidly. Shortly after the second explosion, the rig
lost power and experienced a total blackout.
The Panel found evidence that the configuration of the Deepwater
Horizon general alarm system and the actions of rig crew members on the
bridge of the rig contributed to a delay in notifying the entire crew
of the presence of very high gas levels. A critical 12 minutes elapsed
between the time that the high gas alarms sounded and the general alarm
sounded. The general alarm was not configured to sound automatically
when the high gas alarms were triggered. Transocean personnel do not
appear to have been adequately trained for this type of situation--
which required quick and decisive action. Quicker reactions might have
saved lives.
Failure of the blowout preventer
As you know, the failure of the BOP stack to seal the well allowed
the well to continue to flow after the blowout. The forensic
examination of the BOP determined that the forces of the blowout caused
the drill pipe to buckle and move to the side of the wellbore. As a
result, although it was activated, the blind shear ram could not
completely shear the drill pipe and seal the well. A gap in the
wellbore resulted, which allowed continued flow of hydrocarbons through
the riser to the rig.
The Deepwater Horizon's BOP stack, a massive, 360-ton device
installed at the top of the well, was designed to allow the rig crew to
handle numerous types of well control events. However, on April 20, the
BOP stack failed to seal the well to contain the flow of hydrocarbons.
The explosions likely damaged the Deepwater Horizon's multiplex cables
and hydraulic lines, rendering the crew unable to activate the BOP
stack. The BOP stack was equipped with an ``automatic mode function,''
which upon activation would trigger the blind shear ram (BSR), two
metal blocks with blades on the inside edges that are designed to cut
through the drill pipe and seal the well during a well control event.
The Panel concluded that there were two possible ways in which the
BSR might have been activated: (1) on April 20, by the automatic mode
function, immediately following loss of communication with the rig; or
(2) on April 22, when a remotely operated vehicle triggered the
``autoshear'' function, which is designed to close the BSR if the lower
marine riser package disconnects from the rest of the BOP stack.
Regardless of how the BSR was activated, it did not seal the well.
A forensic examination of the BOP stack revealed that elastic
buckling of the drill pipe had forced the drill pipe up against the
side of the wellbore and outside the cutting surface of the BSR blades.
After buckling, the off-center drill pipe was not in a position that
would allow the BSR to completely shear the drill pipe and seal the
well. The buckling of the drill pipe, which likely occurred at or near
the time when control of the well was lost, was caused by the force of
the hydrocarbons blowing out of the well; by the weight of the 5,000
feet of drill pipe located in the riser above the BOP forcing the drill
pipe down into the BOP stack; or by a combination of both. As a result
of the failure of the BSR to completely cut the drill pipe and seal the
well, hydrocarbons continued to flow after the blowout.
Regulatory findings and conclusions
The JIT found that BP, as well as its contractors Transocean and
Halliburton, violated BOEMRE's regulations. BOEMRE has the authority to
cite all companies conducting activity on the OCS relating to lease
activities for regulatory violations, including contractors. Here,
there is clear and compelling evidence that Transocean and Halliburton
(BP contractors) violated a number of BOEMRE regulations--and those
violations obviously had dire consequences. We believe the issuance of
citations for such regulatory violations upholds the principles of
accountability, specific deterrence, and general deterrence.
The JIT found ample evidence that the companies committed the
following violations:
30 CFR Sec. 250.107--BP failed to protect health,
safety, property, and the environment by (1) performing all
operations in a safe and workmanlike manner; and (2)
maintaining all equipment and work areas in a safe condition;
30 CFR Sec. 250.300--BP, Transocean, and Halliburton
(Sperry Sun) failed to take measures to prevent the
unauthorized release of hydrocarbons into the Gulf of Mexico
and created conditions that posed unreasonable risk to public
health, life, property, aquatic life, wildlife, recreation,
navigation, commercial fishing, or other uses of the ocean;
30 CFR Sec. 250.401--BP, Transocean, and Halliburton
(Sperry Sun) failed to take necessary precautions to keep the
well under control at all times;
30 CFR Sec. 250.420(a)(1) and (2)--BP and Halliburton
failed to cement the well in a manner that would properly
control formation pressures and fluids and prevent the release
of fluids from any stratum through the wellbore into offshore
waters;
30 CFR Sec. 250.427(a)--BP failed to use pressure
integrity test and related hole-behavior observations, such as
pore pressure test results, gas-cut drilling fluid, and well
kicks to adjust the drilling fluid program and the setting
depth of the next casing string;
30 CFR Sec. 250.446(a)--BP and Transocean failed to
conduct major inspections of all BOP stack components; and
30 CFR Sec. 250.1721(a)--BP failed to perform the
negative test procedures detailed in an application for a
permit to modify its plans.
Company practices
BP, as the designated operator under BOEMRE regulations, was
ultimately responsible for conducting operations at Macondo in a way
that ensured the safety and protection of personnel, equipment, natural
resources, and the environment. Transocean, the owner of the Deepwater
Horizon, was responsible for conducting safe operations and for
protecting personnel onboard. Halliburton, as a contractor to BP, was
responsible for conducting the cement job, and, through its subsidiary
Sperry Sun, had certain responsibilities for monitoring the well.
Cameron was responsible for the design of the Deepwater Horizon BOP
stack.
Prior to the events of April 20, BP and Transocean experienced a
number of problems while conducting drilling and temporary abandonment
operations at Macondo, which reflect shortcomings in company practices
in areas including worker training, adherence to schedules and budgets,
and management of personnel changes and conflicts. These problems
included:
Recurring well control events and delayed kick
detection. At least three different well control events and
multiple kicks occurred during operations at Macondo. On March
8, it took the rig crew at least 30 minutes to detect a kick in
the well. The delay raised concerns among BP personnel about
the Deepwater Horizon crew's ability to promptly detect kicks
and take appropriate well control actions. Despite these prior
problems, BP did not take steps to ensure that the rig crew was
better equipped to detect kicks and to handle well control
events. As of April 20, Transocean had not completed its
investigation into the March 8 incident.
Scheduling conflicts and cost overruns. At the time
of the blowout, operations at Macondo were significantly behind
schedule. BP initially planned for the Deepwater Horizon to
move to BP's Nile well by March 8, 2010. In large part as a
result of this delay, as of April 20, BP's Macondo operations
were more than $58 million over budget.
Personnel changes and conflicts. BP experienced a
number of problems involving personnel with responsibility for
operations at Macondo. A recent reorganization changed the
roles and responsibilities of at least nine individuals with
some responsibility for Macondo operations. In addition, the
Panel found evidence of conflicts between the BP drilling and
completions operations manager and the BP wells team leader, as
well as a failure to adequately delineate roles and
responsibilities for key decisions.
At the time of the blowout, both BP and Transocean had extensive
internal procedures in place regarding safe drilling operations--but
evidence collected by the Panel shows gaps in compliance with those
procedures. BP required that its drilling and completions personnel
follow a ``documented and auditable risk management process.'' The
Panel found no evidence that the BP Macondo team fully evaluated
ongoing operational risks, nor did it find evidence that BP
communicated with the Transocean rig crew about such risks.
Transocean had a number of documented safety programs in place at
the time of the blowout. Nonetheless, the Panel found evidence that
Transocean personnel themselves questioned whether the Deepwater
Horizon crew was adequately prepared to independently identify hazards
associated with drilling and other operations. Everyone on board the
Deepwater Horizon was obligated to follow the Transocean ``stop work''
policy that was in place on April 20, which provided that ``[e]ach
employee has the obligation to interrupt an operation to prevent an
incident from occurring.'' Despite the fact that the Panel identified a
number of reasons that the rig crew could have invoked stop work
authority, no individual on the Deepwater Horizon did so on April 20.
Recommendations
The Panel found no evidence that Minerals Management Service (MMS)
regulations in effect on April 20, 2010 were a cause of the blowout.
Even so, the Panel concluded that stronger and more comprehensive
federal regulations might have reduced the likelihood of the Macondo
blowout. In particular, the Panel found that MMS regulations in place
at the time of the blowout could be enhanced in a number of areas,
including: cementing procedures and testing; BOP configuration and
testing; well integrity testing; and other drilling operations. In
addition, the Panel found that there were a number of ways in which the
MMS drilling inspections program could be improved. For example, the
Panel concluded that drilling inspections should evaluate emergency
disconnect systems and other BOP stack secondary system functions. As
discussed below, BOEMRE--which replaced MMS in June 2010--has already
implemented many improvements to safety standards for offshore
operations.
The Report concludes with the Panel's recommendations, which seek
to improve the safety of offshore drilling operations in a variety of
different ways:
Well design. Improved well design techniques for
wells with high flow potential, including increasing the use of
mechanical and cement barriers, will decrease the chances of a
blowout.
Well integrity testing. Better well integrity test
practices (e.g., negative test practices) will allow rig crews
to identify possible well control problems in a timely manner.
Kick detection and response. The use of more accurate
kick detection devices and other technological improvements
will help to ensure that rig crews can detect kicks early and
maintain well control. Better training also will allow rig
crews to identify situations where hydrocarbons should be
diverted overboard.
Rig engine configuration (air intake locations).
Assessment and testing of safety devices, particularly on rigs
where air intake locations create possible ignition sources,
may decrease the likelihood of explosions and fatalities in the
event of a blowout.
Blowout preventers. Improvements in BOP stack
configuration, operation, and testing will allow rig crews to
be better able to handle well control events.
Remotely operated vehicles (ROVs). Standardization of
ROV intervention panels and intervention capabilities will
allow for improved response during a blowout.
Based on the investigation, the JIT recommended specific regulatory
changes, including:
Making certain specific cementing requirements
included in industry recommended practices mandatory--for
example, prescribing a minimum hole diameter of 3.0 inches
greater than the casing outer diameter; rathole mud density
greater than cement; and mud conditioning volume greater than
one annular volume.
Regulations that require at least two barriers (one
mechanical and one cement barrier) for a well that is
undergoing temporary abandonment procedures.
Revision of the incident reporting rule at 30 CFR
Sec. 250.188 to capture well kick incidents, similar to the
March 8, 2010, Macondo well control event. Under current
regulations, operators are only required to report ``losses of
well control'' and are not required to report ``well control''
events such as kicks. The reporting of these events would allow
the Agency to track well control events and kicks and evaluate
trends that may indicate problems with a specific operator or
contractor.
Specific requirements for well monitoring and kick
detection training.
Regulatory Reform
The JIT's findings reinforce and build upon many of the safety and
oversight gaps that had already been identified, and significantly
improved upon, since the Deepwater Horizon tragedy.
Recent reforms
In the immediate aftermath of the spill, BOEMRE recognized that
existing regulations had not kept up with the advancements in
technology used in deepwater drilling. In response, we quickly issued
new, rigorous prescriptive regulations that bolstered offshore drilling
safety. We also ratcheted up our efforts to evaluate and mitigate
environmental risks. We introduced--for the first time--performance-
based workplace safety standards similar to those used by regulators in
the North Sea, to make operators responsible for identifying and
minimizing the risks associated with drilling operations. We did this
through the development and implementation of two new rules that raised
standards for the oil and gas industry's operations on the OCS.
The Drilling Safety rule created tough new standards for well
design, casing and cementing--and well control procedures and
equipment, including blowout preventers. This rule requires operators
to have a professional engineer certify the adequacy of the proposed
drilling program. In addition, the new Drilling Safety rule requires an
engineer to certify that the blowout preventer to be used in a drilling
operation meets new standards for testing, maintenance and performance.
The second rule was our Workplace Safety rule, which requires
operators to systematically identify risks and establish barriers to
those risks in order to reduce the human and organizational errors that
cause many accidents and oil spills. Under the rule, operators must
develop a comprehensive Safety and Environmental Management Systems
(SEMS) program that identifies the potential hazards and risk-reduction
strategies for all phases of activity, from well design and
construction through the decommissioning of platforms. Many companies
had developed such SEMS systems on a voluntary basis in the past, but
many had not. Because the rule required substantial work by many
operators, we delayed enforcement of the rule for a year. Starting in
November, we will begin to enforce compliance. Based on my discussions
with our own personnel who have been gearing up to ensure compliance
with the SEMS rule, and my meetings with individual operators, I am
confident that the vast majority of operators will be ready with their
SEMS programs by that date.
Just last week, we proposed a follow-up rule that further advances
the purposes of the SEMS rule. It addresses additional safety concerns
not covered by the original rule and applies to all oil and natural gas
activities and facilities on the OCS. The proposed SEMS II rule
includes procedures that authorize any employee on a facility to cause
the stoppage of work--frequently called Stop Work Authority--in the
face of an activity or event that poses a threat to an individual, to
property or to the environment. As discussed earlier, the failure of
the rig crew to stop work on the Deepwater Horizon after encountering
multiple hazards and warnings was a contributing cause of the Macondo
blowout. The proposed rule also establishes requirements relating to
the clear delineation of who possesses ultimate authority on each
facility for operational safety; establishes guidelines for reporting
unsafe work conditions that give all employees the right to report a
possible safety or environmental violation and to request a BOEMRE
investigation of the facility; and requires third-party, independent
audits of operators SEMS programs. We look forward to receiving public
comments on the proposed rule, and our process of finalizing the rule
will include a close review of the JIT's recommendations on regulatory
reforms.
In addition to these important new rules, we have issued Notices to
Lessees (or NTLs) that provide additional guidance to operators on
complying with existing regulations. Last summer, we issued NTL-06,
which outlines the information that must be provided in an operator's
oil spill response plan, including a well-specific blowout scenario,
aworst-case discharge scenario, and the assumptions and calculations
behind these scenarios. Our engineers and geologists then independently
verify these worst case discharge calculations to ensure that we have
an accurate picture of the spill potential of each well.
We also issued NTL-10, a document that outlines additional
informational requirements, including a mandatory corporate statement
from the operator that it will conduct drilling operations in
compliance with all applicable agency regulations, including the new
Drilling Safety Rule. The NTL also confirms that BOEMRE will be
conducting well-by-well evaluations of whether the operator has
demonstrated that it has access to, and can deploy, subsea containment
resources that would be sufficient to promptly respond to a deepwater
blowout or other loss of well control.
Thus, operators must now have a plan--in advance--to shut in a
deepwater blowout and capture oil flowing from a wild well. They must
have a plan, they must have access to the equipment, and they must have
arrangements--contractual or otherwise--that show their ability to make
use of that equipment. Rather than improvising a containment response
on the fly--with hits and misses--each operator needs to work through
its containment plan in advance, and we have to approve its plan.
Moving forward
Our reforms since the Deepwater Horizon tragedy have been broad and
swift, and themselves made deepwater drilling significantly safer.
However, the JIT report is a sobering reminder that there remains more
to be done. We must continue to analyze information that becomes
available--including the findings and recommendations of the JIT's
investigation--and to implement reforms necessary to make offshore oil
and gas production safer, smarter and with stronger protections for
workers and the environment. The process of making offshore energy
development both safe and sufficient to help meet the nation's and
world's energy demands will never be complete, and so it must be a
continuing, ongoing, dynamic enterprise that remains responsive to new
learning.
In the near future, we expect to make available for public comment
additional proposals that will further enhance drilling safety and
environmental protection. In order to ensure that we incorporate the
very best ideas and best practices of the offshore industry and other
interested stakeholders in offshore exploration, development and
production--including the environmental community--we will proceed
through a notice and comment rulemaking process that will begin with an
Advance Notice of Proposed Rulemaking (ANPRM). It is our hope and
expectation that at the end of this process, we will develop consensus
proposals that will significantly enhance safety and environmental
protection. While we have been anticipating the ANPRM for the past
year, we thought that it was important to initiate the process after
the release of the JIT's report, in order to ensure that commenters
would be in a position to benefit from their insights.
As we evaluate the lessons learned from the JIT and move towards a
sound and sensible rulemaking process, I believe that industry is
uniquely poised to assess findings and test creative solutions. To that
end, I hope that companies will take a hard look at this report, as
well as other recent investigations, both to understand what went
wrong, and to think about what they can do to go above and beyond
existing requirements, enhance safety, and ultimately help us to
identify best practices that could be adopted across industry.
Thank you and I look forward to your questions.
______
Mr. Hastings. Thank you very much, and I want to thank all
of you for your statements, and I will start the questioning.
My first question probably is more of a reaffirmation to
the Co-Chairs, but I just want to ask both of you, Captain
Nguyen and Mr. Dykes, do you believe that after 17 months and
the number of interviews that you have had and the resources,
do you think that this investigation does in your review
reflect the most accurate account of what happened at the
Deepwater Horizon? Captain Nguyen?
Captain Nguyen. Mr. Chairman, yes, I do. I think the Coast
Guard investigation is probably the most comprehensive
investigation reports out there, especially on the marine-
related side, sir.
Mr. Hastings. OK. Mr. Dykes?
Mr. Dykes. Mr. Chairman, I agree with Captain Nguyen. Based
on what we have, it is the most accurate accounting of what
took place. Now unfortunately we lost 11 individuals in that
event. Those 11 individuals are key witnesses to what was going
on on the rig floor at the time of the blowout, and we have to
put the pieces of the puzzle together without those 11
testimonies. But from everything that I have seen, we did not
leave any stone unturned.
Mr. Hastings. Good. Well, you alluded to that in your
testimony. I just wanted to reaffirm that, so thank you.
Director Bromwich, in view of the citations that were
issued, you have repeatedly asserted that the Department has
now found new authority under a law to not only just regulate
the leaseholders but also the contractors to the leaseholders
as well, so I am not going to comment whether that is
appropriate or not. My question though is very specific. What
statutory authority does the Department have to regulate those
subcontractors to the leaseholders?
Mr. Bromwich. Thank you very much for the question, Mr.
Chairman. We have talked about this issue on a number of
occasions here. It is OCSLA and the other related statutes that
give the Secretary of the Interior authority to regulate
offshore operations, and I would revise what you said. We
didn't find new authority. That authority has always been
there. It has simply been the history, practice and custom
within the agency to only go against the operators, and when I
came on board and I had to review a variety of issues, one of
the issues I reviewed was whether it made sense in the face of
egregious violations by nonoperators, that is, contractors.
Mr. Hastings. I understand that part, but my question is
specific. You broadly said OCSLA. I just want to know
specifically, and the reason I say that is pretty basic, and I
admit I am at an automatic disadvantage. You are a lawyer, I am
not a lawyer. But we write the laws here and then that is
carried out by the Executive Branch. I am just simply asking
very specifically what specific part of the law do you have,
since you haven't regulated, what specific part do you have
that is now?
Mr. Bromwich. I can provide you in writing, Mr. Chairman,
what the specific sections and subsections are. Clearly, in our
regulations, which are based on OCSLA, we specifically say that
we have the authority to hold jointly and severally liable all
entities, not just operators that deal offshore with respect
to----
Mr. Hastings. That is specific in the law?
Mr. Bromwich. That is specific in our regulations which are
based on the law, but no one has ever----
Mr. Hastings. That is where I am going. You are saying the
regulations. I am talking about the law that gives you
statutory authority. It is a distinction not without a
difference. I think it is very, very important. And the reason
I say that is because we had a discussion with another area of
Interior on wildlands designation, it has nothing to do with
you. I asked Director Abbey what statutory authority he had,
and he says we don't have statutory authority.
I am just simply asking this question because I don't know
if this is a pattern of this Administration, but I am asking
specifically. You refer to regulations. I am talking about
statutory law.
Mr. Bromwich. The regulations would be invalid if they were
not based on a statutory authority.
Mr. Hastings. OK. That statutory authority in?
Mr. Bromwich. It is OCSLA, I can give you the specific
citations. Just so you know, Mr. Chairman, because the agency
had not historically exercised its regulatory authority over
contractors, I specifically asked the Solicitor's Office, the
lawyers for the Department, to make sure that in fact we have
the authority, and so they researched the issue just to be
double sure, and they came back to me and told me that we did
indeed have that authority.
Mr. Hastings. Right. If you would, and you offered to give
us a written explanation of specifically which part of that
statute gives that authority, I would like you to if you would
just give that to the Committee as soon as possible. How soon
do you suppose you can get that?
Mr. Bromwich. I would be happy to do it. I can do it today
because we have provided that to Senator Vitter in response to
a letter that he wrote many, many months ago, so it would be a
very simple matter to do it.
Mr. Hastings. OK. Well, we have reviewed that, and I would
simply say that when we reviewed that response to Senator
Vitter we didn't think that that covered all of it, so if you
could be more specific than what you did with Senator Vitter,
that would be very helpful to us.
Mr. Bromwich. That is fine. We will do that.
Mr. Hastings. OK. And the timeframe would be the same as
today.
Mr. Bromwich. Well, I was going to offer a letter that had
already been written.
Mr. Hastings. OK.
Mr. Bromwich. It would be helpful if I found out from your
staff which aspects of that that you think are not sufficiently
detailed because I think they are.
Mr. Hastings. It is very simple. The statutory authority.
Again, I am not an attorney. I am at a big disadvantage when I
am talking to a lawyer on this, but I would think that being a
lawyer you would say, I know--you know, you would ask your
people what statutory authority.
Mr. Bromwich. And that is in the letter. We cite the
specific statutory authority in that letter.
Mr. Hastings. All right. We will look forward to that, and
my time has expired. In fact, I have gone over. So I will
recognize the distinguished--I guess you are pinch-hitting for
Mr. Markey, the gentleman from New Jersey, Mr. Holt.
Mr. Holt. Thank you, Mr. Chairman. I thank the witnesses. I
thank you for your work in this investigation. Let me begin
with you, Admiral Salerno.
The JIT completed the work of Volume 1, the Coast Guard
part of the investigation, in April. There were 50 specific
recommendations, 40 of which the Coast Guard Commandant has
recently concurred with. Is that correct?
Admiral Salerno. That is correct, sir.
Mr. Holt. OK. Has the Coast Guard commenced rulemaking on
any of the recommendations?
Admiral Salerno. Yes, sir, we have. There is an ongoing
project to improve our what we call Subchapter N in Title 33,
C.F.R., which governs offshore activities, and we are
incorporating the recommendations from this report into that
ongoing rulemaking process.
Mr. Holt. So, of these 40 accepted recommendations, how
many will be in force say by the end of the year? I mean, what
is the timing on this? We keep hearing really a drum beat from
this room drill faster, permit faster, move faster, let us do
more. I guess I would like to see this sense of urgency that
our colleagues are constantly hitting us with applied to your
regulatory process.
Admiral Salerno. Sir, if I could characterize it this way.
Not all of the recommendations will require regulatory actions.
Some can be executed as a matter of policy. In fact, we have
already moved on that. The risk-based targeting is a prime
example. What we will do in our coastal state authority is we
will mimic what we already do for ships, in other words, take a
look at the performance history of the owners, the operators.
Mr. Holt. Well, have you at least determined how many of
the 40 required rules have to go through the rulemaking
process?
Admiral Salerno. Yes, sir.
Mr. Holt. Do you have the number?
Admiral Salerno. I don't have the exact number right now,
but I can get that for you, but certain things, for example----
Mr. Holt. If you could get back to the Committee----
Admiral Salerno. I would be happy to.
Mr. Holt.--kind of a breakdown of these 40, you know, here
is a dozen that will be done this month and here are two dozen
that will have to go through the formal rulemaking, whatever
that is, and lay those out for us, that would help.
Admiral Salerno. We can lay that out for you.
Mr. Holt. Now, on the matter of the country flag, you
talked about a risk-based targeting that I think might be a
suitable approach. Right now there are, let us see, well, about
a third of the vessels operating are U.S.-flagged, about two-
thirds are from other countries. Five from Panama, for example,
which the Coast Guard has identified as the most at-risk
country. Are there limitations that can be placed on some of
these most egregious violators or the weakest enforcers pending
development of the more complete rules and regulations?
Admiral Salerno. Yes, sir. What that risk-based methodology
will do is stimulate----
Mr. Holt. I am saying while you are putting that in place
should there be limitations placed on some of these clearly
more risky flags right away?
Admiral Salerno. Well, these are risk indicators, sir, so
what it does is trigger more frequent Coast Guard examinations,
more in-depth examinations when we are on board. That is
currently in place. That risk-based methodology is operating
now and we are building additional information that will
further refine the risk model.
You are correct, Panama has been identified as a flag state
that indicates greater risk than some others, and we are paying
closer attention to rigs with a Panamanian flag.
Mr. Landry. Would the gentleman yield?
Mr. Holt. I have only a few seconds, but I would be happy
to yield.
Mr. Landry. I would love to work with the gentleman to make
sure that all of the MODUs in the Gulf of Mexico are U.S.-
flagged vessels. If we could simply start to roll back some of
the onerous regulations that fabrication yards are under and
get to a point where we could increase productivity in those
fabrication yards, we would not have to worry about having
foreign-flagged vessels in the Gulf of Mexico, and we could use
all U.S.-flagged vessels.
Mr. Holt. I think my time has expired. I look forward to
pursuing that.
Mr. Hastings. I thank the gentleman. We seem to have a
grand agreement here.
[Laughter.]
Mr. Hastings. Well, we have a grand agreement to start.
[Laughter.]
Mr. Hastings. I recognize the gentleman from Louisiana, Dr.
Fleming.
Dr. Fleming. Thank you, Mr. Chairman.
Do we have a slide to throw up? We had a hearing yesterday
and I will preface this question. Being from Louisiana we have
taken three hits on this. The first one was, of course, the
death of 11 good people, the tragedy for their families. The
second has been the perception that our beaches and the beaches
of Florida, Alabama, Mississippi have been harmed to the point
that vacationers stopped coming and these sort of things, which
turned out really not to be the case.
And then third and more importantly at this point in time
is the permit slowdown that Mr. Bromwich and I and Mr. Landry
have had many discussions on, and I will just give an example
of what came out of the hearing because for us it has been what
is it in the process that seems to create this, and I have
gotten one graph in front of you.
I am not throwing it up, but talking about permitting
activity in the Gulf of Mexico, that prior to the Macondo
disaster permits were being approved at about a rate, it looks
like 110 per month, dropped to 60, about half, and it has
remained there, and then if you look at oil production, it has
dropped from where it was before, as high as 1.8 million
barrels a day, and it looks like it is dropping off now to
below 1.4 million barrels a day.
So we are seeing the permit activity still well below par,
production well below par, and this graph here shows you, if
you look at the red bar, what you see is the difference between
the reports from the Obama Administration as to how long it
takes permits to be reviewed and how long it takes for them to
be approved, and what you see is the ``deemed submitted'' is
the problem.
And so what the companies are telling us is people are
submitting the forms, the paperwork, which by the way we heard
from a witness yesterday going from an average of 30 to 35
pages to 100 times that, well over 3,000 pages, that the forms
are not uniform; that is, one time it can be one way and
another time another; again the I's are not dotted, the T's are
not crossed. It ends up on someone's desk someplace. So we are
looking at in many cases more than 100 days delay just to
getting the permit application process up and going.
We also heard that we understand that the final report came
out just last month, but yet all of this new bureaucracy, the
reforming of MMS and so forth, all this occurred prior to that
report.
So I would ask Mr. Dykes since you are kind of really out
of the system now and maybe if you are a little bit of an
objective voice, do you feel that this delay in permitting, do
you feel that all these regulations----
Mr. Hastings. Would the gentleman yield?
Dr. Fleming. Yes.
Mr. Hastings. I just want to say that their responsibility
was to investigate. You are really asking him unfortunately to
make a judgment call, and I don't think that is quite fair to
the people that were Co-Chairmen of the Investigating
Committee. I understand what you are asking, but I think in
this particular case it wouldn't quite be appropriate to ask
those two.
Dr. Fleming. OK, I thank the Chairman. I will ask the
question to maybe Mr. Bromwich. Do you think that all this
delay and do you think all these new regulations and the
confusion that is going on in that process, do you feel that
that is justified in a period of which we didn't even have the
results of the report?
Mr. Bromwich. Well, first of all, the data that you have is
badly flawed. First of all----
Dr. Fleming. I will interrupt you. Every time we give you
data you always say that. We would love to have your data.
Mr. Bromwich. OK, I will give it to you right now.
Dr. Fleming. OK.
Mr. Bromwich. The time that it takes to review plans, and
again this chart conflates plans and permits, two separate
processes, but the plans which you list as sometimes taking 100
days, 200 days, so on, it is just not true. We had outside
consultants take a look at our plan review process for three
different periods of time, pre-Macondo, Macondo, and about a
year after that, the most recent period. The facts are that
currently it takes an average of 34 days from the time a plan
is originally submitted until it is deemed submitted and
completed, 34 days. Pre-Macondo the average was 37 days. In
between when there was undeniably disruption in the process the
average time was 83. This is based on outside experts looking
at the raw data in our files, and all 103 plans that were
submitted during those periods of time.
Dr. Fleming. Yes. Well, we don't have that. Why is it that
we don't? We have been calling your department, your offices to
try to get that data. We can't get it. Of course we have the
incident with Mr. Landry, who couldn't even get in contact with
one of your officials, couldn't even get a phone number for
him.
So we hear this in the meetings and hearings, but we can't
ever get this information directly from your department, and I
can tell you that that certainly doesn't explain why production
is continuing to go down. We can disagree with your facts even
though we don't have your facts to compare ours with. We
publish ours, you don't. But the production is clearly going
down. Nobody seems to dispute that at all.
Mr. Bromwich. We do publish ours. I understand after
hearing from you and many others that it may be confusing. We
are happy to meet with you and members of your staff and
further explain what the data means and how to----
Dr. Fleming. Where is it published today?
Mr. Bromwich. It is on our website.
Dr. Fleming. It is on your website.
Mr. Bromwich. Right.
Dr. Fleming. Everyone, my staff, Natural Resources staff
all tell us that there is very little information and certainly
nothing that clarifies this issue on the website.
Mr. Bromwich. Well, they may find it confusing, but no one
can honestly say there is little information. There is a ton.
Mr. Hastings. The time of the gentleman has expired. I have
been leaving it on, but I want to make sure everyone has an
opportunity, but I understand where the gentleman is going and
we would like that information.
I recognize the gentleman from Oklahoma, Mr. Boren.
Mr. Boren. Thank you, Mr. Chairman. I want to thank the
panelists for being here and the Co-Chairs for all they have
done, all the work that you have put in, and Director Bromwich,
we don't always agree, we don't always have the same
philosophy, but you work well with our staff and have been
attentive, and your staff has as well, so we do want to thank
you.
I have a question, and this goes to Captain Nguyen. This is
really troubling to me. You know, as you know, one of the tasks
of the Marine Board was to determine whether there was any
incompetence, negligence or misconduct on the part of
government persons in the Deepwater Horizon oil spill, and I
have an email, and this is an email from I guess his title is
Lieutenant Commander Michael Odom, and let me just read this
email. This is to Randall, and I hope I don't butcher this up,
Ogrydziak. Anyway, his email basically says, ``I made it to
NOLA last night,'' New Orleans, ``and we are starting prep work
now for my testimony. Just as an FYI, if you are interested,
the questions they will be asking are attached. Call me if you
need anything. Everything is pretty informal and I can't be in
the hearing room until it is my turn in the barrel, so there
will be a fair amount of standing around time.''
That right there is extremely troubling, the fact that a
government person has already been prepped beforehand with what
the questions are going to be. And so my question to you is,
and whether it was Mr. Odom or other government witnesses, is
it true that you all provided government witnesses with
information, questions that were going to be asked, in a sense
coaching, you know, what the responses are going to be? Is that
true? And if it is, wouldn't you agree that it would be hard to
make objective determinations from these government witnesses?
Also, another question, were the non-government folks,
people from the energy industry, were they provided with
questions ahead of time as the government witnesses were, and
how do you think that impacts the validity of your report? I
would be happy to share any of those emails with the Committee,
with the Chairman.
Mr. Hastings. We would like to have those. Thank you.
Captain Nguyen. Mr. Boren, based on our understanding is
that in terms of witness prepping, the government prepping, our
policy is that we can sit down with our witnesses and explain
to them that these are the areas that we are going to be
exploring, and it would be some of the questions that we are
asking. But my understanding is that we did not provide answers
to those questions, and I understand that practice is
acceptable. And if my understanding is incorrect, I am sure the
Coast Guard would provide a clarification.
Mr. Boren. But the government witnesses were provided with
the questions beforehand. Why weren't the non-government
witnesses provided with questions beforehand, the folks from
the industry?
Captain Nguyen. Right. My understanding is Coast Guard
policy is that we can prep our witnesses by explaining to them
the areas that we are going to go into and the type of
questions we may ask them. We did not provide answers to them.
Mr. Boren. So let me interrupt real quick. The questions
that were going to be asked, you said the areas. If I come up
with this attachment that shows these are the exact questions,
would that be against Coast Guard policy?
Captain Nguyen. What attachment, sir?
Mr. Boren. If there is an attachment to this email from Mr.
Odom, who was the last person to inspect.
Captain Nguyen. Yes, sir.
Mr. Boren. If there was an attachment that had the specific
questions, not the areas to be discussed, would that be against
Coast Guard policy?
Captain Nguyen. My understanding is that providing
questions that we would potentially be asked at the hearing is
according to Coast Guard policy. We do not provide answers to
the witness, or we do not coach them how to answer the
questions. Our witnesses would be under oath and they speak to
the truth, so I do not believe that compromised the integrity
of the investigation.
Mr. Boren. OK. I will take the Captain--Mr. Chairman, I
just think this is kind of a troubling development I wanted to
share with you.
Mr. Hastings. Will the gentleman yield?
Mr. Boren. I would yield, yes.
Mr. Hastings. Perhaps we could work together and dig into
this a little bit more and maybe from a document standpoint,
certainly to get more clarification. I think the last point you
made as to the specific questions rather than general areas is
something that needs to be pursued, and I would be more than
happy to work with you on this.
Mr. Boren. Thank you, Mr. Chairman. I yield back.
Mr. Hastings. I recognize the gentleman from Florida, Mr.
Southerland.
Mr. Southerland. Thank you, Mr. Chairman.
I know earlier in the year we were presented with the
President's Commission, their findings, and today we have
obviously the JIT report. I am learning everything that I have
learned, stuff that I have gathered, I see recommendations.
There were nine, I am sure you read it, nine recommendations
that the President's Commission made. I am looking at the
report that was given to us today, company practices and
regulatory agency recommendations.
I guess my question to you, Mr. Bromwich, is in none of
this do I see any reference, and it is kind of along the lines
of Mr. Boren's questioning, but in none of this do I see any
recommendations or the pointing out of where the government
bore any responsibility in not preventing this accident. So,
therefore, I would like you to tell me where did the government
fail? One thing that I see in all of the industry that I am
looking at is the government's presence, and so I ask you where
did the government fail and where are the recommendations that
should follow that recommendation of how your department and
your agency is going to do their best to prevent this from ever
occurring again?
Mr. Bromwich. Well, we do do our best at all times to make
sure that nothing like this happens, and Mr. Dykes worked for a
number of years in connection with helping us do that. The fact
is that you can never guarantee that an accident like this
can't happen, but what you can do is to take regulatory action
and enforcement actions----
Mr. Southerland. But----
Mr. Bromwich. Let me finish, please.
Mr. Southerland. No, sir.
Mr. Bromwich.--to reduce the chances that it won't happen
again.
Mr. Southerland. My point is, sir----
Mr. Bromwich. Directly responding to your question, we have
already put in place new rules, new safeguards that address
some technical issues that were issued both in the President's
Commission report and in the JIT report in terms of
strengthening the requirements while----
Mr. Southerland. This is simple. Where did the government
fail? You had written----
Mr. Bromwich. We didn't have sufficiently strong
regulations that were both in the prescriptive area and also
that set some of the performance-based standards that the
agency historically has not had, but now does have----
Mr. Southerland. But to this particular organization, this
particular well, I understand there were infractions, there
were areas where they had already been cited, correct?
Mr. Bromwich. Well, they are cited as a result of this
report. Are you saying that they had previously been cited?
Mr. Southerland. That is what I am asking you.
Mr. Bromwich. No, they had not been cited.
Mr. Southerland. So your belief is that the government did
everything--everything. It was my understanding that there were
instances where basically the government has not done its part
in getting rid of problems that may exist.
Mr. Bromwich. This was not a governmental failure. This was
a failure by the companies who drilled the well. Now there are
things the government can do through strengthening its
regulations and through increasing its inspections that will
help to reduce the chances that anything like this will happen
again. You can never eliminate it. That is why it needs to be a
partnership where we as the government do our best to improve,
simplify, modify, adopt new regulations, and industry on its
own needs to continue to be committed to increasing the safety
offshore.
Mr. Southerland. Part of that partnership is recognizing
what both parties can do to improve the system going forward. I
am just saying that in all of these reports that we have been
given and all the thousands of hours, there is no recognition
in that partnership that you claim you want, there is no
recognition of what, and you are a big part of this industry,
obviously through regulatory presence, that there is no
recognition, in other words, all the fault I have found falls
squarely on the operators in the Gulf and I just find that it
is amazing that none of the changes that an administrator would
see necessary to prevent this from happening again are ever
presented in any of the papers that we get.
Mr. Bromwich. Well, they are in the President's Commission
report, and they are to some extent in our report, and we have
already acted on those.
Mr. Southerland. We don't know that. I mean, none of the
nine recommendations in the President's report deal with your
agency for changes that are necessary in your agency. I mean, I
challenge the statement that you just made, but I see I am
running out of time, so, Mr. Chair, I yield back.
Mr. Hastings. The time of the gentleman had expired. The
gentleman from Maryland, Mr. Sarbanes, is recognized.
Mr. Sarbanes. Thank you, Mr. Chairman, appreciate it. Thank
you all for your testimony. This report is an important piece
of the puzzle and we ought to pay great mind to it. I wanted to
ask you, Director Bromwich, to speak to the importance of
resources for your agency, particularly as it responds to the
line of questioning you just got.
In other words, you alluded to the fact that where
government might have fallen down on the job was in not being
able to do as much inspecting as you would need, and I remember
us having hearings in the early days of this disaster where we
got statistics about the number of production facilities and
platforms and others that individual inspectors were
responsible for, just a very small number of inspectors to
cover a tremendous number of these facilities, and so I want to
give you the opportunity to speak to how important it is that
the resources be there for the capacity of your agency and the
oversight function that it performs and any proposals that
relate to how the industry can help to fund that kind of
inspection and oversight responsibility.
Mr. Bromwich. Well, thank you very much for the question.
Obviously resources are critical, and I have spoken here and
elsewhere many times that over the 28 years of its existence
this agency has been starved for resources. It had patently
inadequate level of resources. So, for example, the number of
inspectors.
Shortly after Deepwater Horizon we had approximately 58
inspectors covering just in the Gulf of Mexico more than 3,000
facilities and rigs. And when you compare it to the resources,
inspectors compared to facilities in some of the other
countries with substantial offshore activity, like the U.K.,
like Norway, it is laughable how inadequate our resources are.
It would be laughable if it weren't so serious.
So we very much appreciate the President's request for
additional resources, the Congress's efforts to fund at least
some of those, but we are nowhere near where we need to be in
terms of the resources we need. We need to hire scores of
additional inspectors. We need to bolster our regulatory
program so we can address the sort of issues that the
Congressman was talking about but do it in a way that is
collaborative with industry, that puts in place regulations
that make sense and that are more performance-based than our
historically prescriptive regulations.
So we are trying to get the agency with Congress's help,
with the President's help, off the starvation diet that it has
been on for 28 years and has dramatically impeded and impaired
its ability to do a job that all of us want it to do.
Mr. Sarbanes. Well, I appreciate that, and I hope that the
Majority appreciates it as well because in their appropriations
bill where they peg the budget for BOEMRE was significantly
under where it needed to be I think to the tune of about $35
million as against your original request, so I hope those
resources will be there.
I also wanted to ask you to just restate what I thought
were very impressive statistics from a moment ago about how you
handled the turnaround time for the issuance of these permits,
and I think you even noted that you got the time down to a
lesser number of days now than even existed before the
Deepwater Horizon tragedy, which is a real tribute to the
agency. It is not something I think the average person
necessarily appreciates. I wanted to give you a chance to
review that one more time.
Mr. Bromwich. Well, I appreciate that, and it is very
troubling and disappointing to me that what I think are really
urban legends about the length of time it takes to review plans
and review permits. It gets circulated and recirculated and
recirculated again.
We have made a huge number of efforts to work together with
the industry in the Gulf to clarify what is required in plan
submissions, to clarify what is required in permit submissions.
We have had workshops both on plans and permits which have been
extraordinarily well attended by industry where we have taken
every effort possible to answer the questions that operators in
the Gulf have. They have thanked us for that, for the
clarification we have provided, and I think that is part of the
reason that processing time for plans and permits have been
reduced.
I heard Mr. Fleming say that some of the plan packages are
3,600 pages long. I gather that was something that was said in
a hearing. Well, when we heard that had been said we looked
back, the longest submission we could find was only a tenth of
that. So I don't know where these stories come from, but they
are not true.
Mr. Sarbanes. Appreciate it. I yield back.
Mr. Hastings. Time for the gentleman has expired. The Chair
recognizes the gentleman from Texas, Mr. Flores.
Mr. Flores. Thank you, Mr. Chairman. I would like to thank
the panel for appearing today. Director Bromwich, I am not
going to ask you about planning and permitting today. I hope to
have you back many more times to do so.
Mr. Bromwich. Thank you, sir.
Mr. Flores. In any event, as I understand it, and this is
going to be directed primarily to Captain Nguyen and Mr. Dykes.
As I sort of sit back and jumped up to the 50,000 foot level it
looks to me like this accident occurred because of three
principal reasons. One is you had serious planning and design
errors, you had safety systems that didn't function as designed
or they weren't operating correctly, and then last you had
human error and response problems.
This is a philosophical question for you. I think most of
us believe we can address safety and design through
regulations, and we can address safety system design and
operation regulations. Would you each concur with that?
Mr. Dykes. Yes, I would concur with that, but the critical
aspect is what you talked about last is the human aspect of it.
Mr. Flores. I am going to get to that in a minute.
Captain Nguyen, do you agree with the first? I mean, you
can address those first two problems I think with regulations
and regulatory oversight, is that correct?
Captain Nguyen. Yes, sir. First off, in our regulations we
have equipment standards and we have operation standards.
However, we also on the human elements, we also have licensing
of mariners, so that will take care of some of that in terms of
training and licensing.
Mr. Flores. Through training and capabilities?
Captain Nguyen. Yes, sir.
Mr. Flores. OK. So that takes us to the philosophical
question. How do you, and this is not meant to be a ``gotcha''
question because I am going to ask the next panel the same
thing, how do you address the human error problem that we have?
I mean, you said when a pilot makes serious errors and crashes
an airplane, how do you address the human error problem? Can
you do that only through regulations? What else does it take to
get there?
Mr. Dykes. Philosophically, from the standpoint to reduce
the number of human errors you have to reduce the number of
interactions where you need that individual to make a decision.
If you can reduce the probability by reducing that number, that
is the first step. That is where you come in through
administrative controls or engineering and you remove that
aspect of the job.
The second half of that is where you actually cannot
engineer out or put administrative controls in place to remove
the individual from the equation and you have to factor him in.
Key to that is awareness, knowledge, training, education and
getting that individual all of the information he needs in a
format that he can understand it, digest it and make a decision
based on what he knows.
Mr. Flores. My question would be, do you think the industry
got the message in that last part? Because if we don't fix this
part of the equation, we will have not this accident again, but
we will have another accident of some sort because it is
impossible to legislate away or regulate away human error. So
do you think the industry has got the message? Has the industry
learned from you alls' perspective? Do you think they got the
message?
Mr. Dykes. I would hope so. I can't speak for industry from
that standpoint. From our report standpoint, I hope they got
the message.
Mr. Flores. OK. But let me rephrase the question. Do you
have any evidence that they haven't gotten it, that they
haven't tried to respond affirmatively to take care of that?
Mr. Dykes. No, sir, I have no information that would
indicate that they have not gotten that message.
Mr. Flores. Captain Nguyen, do you----
Captain Nguyen. Yes, sir. In your report we are talking
about safety culture, not only do we know we saw a discrepancy
on one vessel, we saw discrepancy on multiple vessels in
multiple locations and in the corporate office. So I don't
think government regulations can regulate safety culture. That
has to go down to the individual.
Mr. Flores. OK.
Captain Nguyen. And I think that when I went out to visit--
--
Mr. Flores. I think you answered. I am going to reclaim my
time because I have two more questions if I can.
Admiral Salerno, the Coast Guard has jurisdiction of
foreign-flagged vessels in U.S. waters, right?
Admiral Salerno. That is correct, sir.
Mr. Flores. OK. I forgot what my last question was. Sorry
about that. Oh, there was an allegation, and this is for
Director Bromwich, that you don't have sufficient legislative
authority to issue the regulations to address the causes of
this accident and to keep it from occurring again. Is that
allegation correct? We heard the Minority side say that at the
outset of this conversation.
Mr. Bromwich. We have talked on a number of other occasions
that certain kinds of legislation, including raising our civil
fine authority, which would be extraordinarily helpful, and
this incident certainly underlies that. Speaking with the
Chairman about the importance and desirability of having
organic legislation to support new agencies we have enforced.
But specific safety-related issues, legislative recommendations
do not flow specifically from this report, that is correct.
Mr. Flores. That is what I thought. So you have the
authority to--I mean, regulations you have written--I guess
what I am trying to say is the allegation is that there is not
sufficient, that we need more legislation to fix this seems to
be incorrect.
Mr. Bromwich. The specific issues that are raised that our
agency deals with in terms of being able to regulate the
industry we do think we have the power that we need.
Mr. Flores. OK, thank you.
Mr. Hastings. The time of the gentleman has expired and I
recognize the gentleman from Arizona, Mr. Grijalva.
Mr. Grijalva. Thank you, Mr. Chairman.
Vice Admiral Salerno, in the report the U.S. Coast Guard
identified Transocean and Deepwater Horizon, their crew, as
partly complicit in the blowout that led to the disastrous oil
spill. What regulatory changes do you think that would prevent
this sort of negligence, going back in the human error issue,
from happening in the future, and how did the U.S. Coast Guard
ensure that this study was conducted in an objective manner?
Admiral Salerno. Sir, there are a number of things in work
here. Some are design related, the systems in place as just was
discussed. Some are human element. I think one of the most
significant aspects of this case is the dual command structure
that was on the rig and the confusion that that created as to
who had authority in an emergency, and as far as the actual
conduct of the investigation, I think Mr. Dykes or Captain
Nguyen can focus on that more directly. I was not part of that
investigation.
Mr. Grijalva. Thank you. Director Bromwich, that same
question, how did your agency assure that the study was
conducted in an objective manner, and then, if you would
because we went through this already, sometimes you have to put
an historical context into the conversation, the agency that
you have has gone through significant reform and restructure,
has asked for initially resource support for it to be able to
do its job in response to what was government lack of oversight
at the beginning of this process, and also to deal with the
ethical issues of the kind of cozy industry/regulatory
relationship that existed, and I think that should be part of
the context that we talk about. So we could talk about where
the agency was, where it is now, and I think that is important,
and the objective manner is the question.
Mr. Bromwich. Let me talk about where the agency is now
compared to where it used to be. It obviously not only has a
different name, we split it into different component parts to
eliminate some of the mission conflict that existed in the old
MMS, and we worked extraordinarily hard over the last 15 months
to get that reorganization right, and that went final, as I
think you know, on October 1, so that we now have a revenue
entity that is in a different line of reporting within the
Department of the Interior, and the most recent split is to
split the resource manager and the safety and regulatory agency
into two parts.
Not only did we do the reorganization and splitting of the
agency, but we have based on the many reviews, studies and
investigations of the agency taken a hard look at ourselves and
some of the weaknesses that have been identified, including the
alleged coziness with industry over time, and we are in an
ongoing way looking to reform many of the ways that we do
business. This is in midstream. That is in the process that
needs to continue and it needs to continue for a significant
period of time. It relates to enforcement, it relates to
investigations, it relates to regulations, it relates to a
whole raft of things, and you have my commitment that that will
continue.
In terms of the investigation, Mr. Dykes can certainly
speak to that, but the investigation, the designation of
witnesses, questioning of witnesses and so forth was handled by
the investigative team and by the investigative team alone. You
heard Mr. Dykes say that, with the exception of the 11
witnesses, because of their tragic deaths they were not able to
interview, in his words, they left no stone unturned and
gathered all the information that was relevant. I know of no
reason that that is not accurate.
Mr. Grijalva. Thank you, and I asked that question to
preface the thanks of Mr. Dykes, the Co-Chair, and the team for
the report and study. Very much appreciate it. I believe it is
objective without question.
And the last posing question for you, Mr. Director, there
is an interesting process going on where government is at fault
for what happened, we can't ask the industry because half of
them could plead the Fifth in the next panel, but we can ask
you. The government had a role and there are corrective steps
being taken to ensure that that role is not a passive role
anymore, and that is how I see it, and I would ask for your
response to that.
Mr. Bromwich. I agree with that. I think largely because of
the shortage of resources we have been too passive in the past
and we are looking to change that.
Mr. Grijalva. Thank you.
Mr. Hastings. The time of the gentleman has expired. The
Chair recognizes the gentleman from Maryland, Mr. Harris.
Mr. Harris. Thank you, Mr. Chairman. I will yield my time
to the gentleman from Louisiana.
Mr. Hastings. The gentleman is recognized.
Mr. Landry. I thank the gentleman from Maryland and the
people of Louisiana thank you as well.
Mr. Bromwich, I just want to clear up a couple of things
that the Chairman addressed in the very beginning, which I have
some concern on the authority that all believe you have to
reach and conduct oversight on contractors and subcontractors.
Mr. Bromwich. I do have a statutory citation for you, Mr.
Landry, and Mr. Chairman.
Mr. Landry. OK, great, because I have Senator Vitter's
letter and the response that you gave Senator Vitter that you
told the Chairman that would give us that information, and I
don't see the citation in there. What is the citation you have?
Mr. Bromwich. It is OCSLA Section 24(b), which is codified
at 43 U.S.C. Sec. 350, subsection b, which authorizes the
assessment of civil penalties against any person who fails to
comply with the terms of a lease, permit, regulation, et
cetera, and what we have been advised by the Solicitor's Office
is that ``any person,'' it is not limited to lessees or
operators, so that is the foundation.
Mr. Landry. I just want to grab some time. I will stipulate
that that is in the Code. I know you are a very prolific
orator--litigator. However, I have in Title 30, part 250, oil
and gas, C.F.R. 250.146, who is responsible for fulfilling
leasehold obligations, and I will tell you that when you are
not the sole lessee, you are the co-lessee, you are jointly and
severally responsible, et cetera, and within that----
Mr. Bromwich. That is exactly the regulatory----
Mr. Landry. But there is nothing in here that defines
contracts or subcontractors. In fact, when you go back to the
C.F.R., which I did this morning in my review, the Code
specifically defines lessees and co-lessees but does not in any
way define contractors or subcontractors.
Mr. Bromwich. I did not know this was a definitional issue.
Mr. Landry. Well, normally if you are going to cover
enforcement action over those, the Code is specific in defining
who those people are. I think you would agree to that. I am
sure you have used that several times as you have litigated
cases. And also in Senator Vitter's request that he made, he
asked for the internal legal analysis by the Interior
Department that justified expansion of your current regulatory
authority, and I don't see that you have provided us with that.
You cite the Code. Certainly we will go back and look at
that particular part, but I think that particular part will
bring me back to the part that I looked in, and I don't think
that it gives you that authority, and of course that is under
the regulations that you promulgated. What the Chairman asked
for was where you get the authority to issue that type of
regulation under OCSLA, and of course again----
Mr. Bromwich. It has the statutory authority----
Mr. Landry. But that comes from OCSLA.
Mr. Bromwich. Yes.
Mr. Landry. OK.
Mr. Bromwich. OCSLA----
Mr. Hastings. Would you repeat precisely----
Mr. Bromwich. OCSLA, Section 24[b], which is codified at 43
United States Code--Title 43, United States Code Sec. 1350,
one, three, five, zero, [B].
Mr. Hastings. B or D?
Mr. Bromwich. B, B as in boy. OK, thank you. Thank the
gentleman for yielding.
Mr. Landry. OK. Mr. Chairman, I would like to yield the
balance to Mr. Flores. He has a couple of questions.
Mr. Flores. Thank you to the gentleman from Louisiana. This
question is for Mr. Dykes. What was the impact of the Attorney
General's announcement that he was going to pursue a criminal
investigation in terms of getting to the bottom of this
investigation?
Mr. Dykes. I believe they had forced some of the key
witnesses not to testify, and, for example, Mr. Mark Hagley,
who was one of the BP engineers testified before the JIT during
the second hearing. That was the week of March 24, I am sorry,
May 24, and the announcement of the criminal investigation came
out June 1. Two or three hearings later we wanted to call Mark
Hagley back for further interviews and he refused to testify.
Mr. Flores. OK. Do you think that the report or the follow-
up recommendations or regulatory changes following the
recommendations, is there any loss of fidelity in those because
of the fact that Attorney General Holder issued this criminal
investigation announcement?
Mr. Dykes. No, sir, I do not.
Mr. Flores. OK, thank you. I yield back.
Mr. Hastings. The time has expired. The next gentleman is
recognized, Mr. Landry.
Mr. Landry. Real quickly, I also would like to state, Mr.
Bromwich, we continue to hear about resources being used, but
yet as I do the math in the increase in BOEMRE's budget has had
since 2009, 2009 you had $116 million, sometimes it is hard for
me to count all the zeros, so in 2009, you went from $116 to
$181 in 2010. From 2010 to 2011, you went to $225, and so just
real quickly, have you utilized all those resources in being
able to hire everyone that you could possibly hire today?
Mr. Bromwich. We have utilized those resources to hire
people. If we had more resources, we could hire more.
Mr. Landry. So you have hired everyone that you can
possibly hire today?
Mr. Bromwich. We have put out announcements as we got the
additional funding, and obviously we did not get it until April
when the continuing resolution passed, we didn't know how much
money we would get, we immediately put a full court press on to
hire the categories of people that we most needed, including
inspectors, drilling engineers and so forth. So, yes, we made
every effort we possibly can to bring as many people on board
as we possibly could given the resources that Congress provided
us.
Mr. Landry. So you have hired everyone?
Mr. Bromwich. No. I just said we have hired everyone that
we had the money to hire. We have not hired everyone that we
need, not even close.
Mr. Landry. OK. Mr. Dykes, and of course, Mr. Chairman,
please let me know if I am out of bounds here, under the
guidelines and the regulations that MMS had in place at the
time of the accident, do you believe that they were sufficient
in order to prevent the accident?
In other words, and this kind of goes to what Mr.
Southerland was saying, is that did BOEMRE have the ability
under the regulations that were currently in place to help
prevent this type of accident?
Mr. Dykes. That is more of a philosophical question from
that standpoint. When we looked at the regulations on the books
and compared them to the event, we found nothing that directly
would have prevented any, and it is hard to forecast as you put
regulations in the book, to forecast what you are trying to
prevent.
Mr. Landry. OK. Well, real quickly because here is the
problem I have. I want you to know that today I got a call from
one gentleman, a family, before he went to work in 1973 with a
seventh grade education, a son who went to the eleventh grade,
one got a GED, and they got laid off as we do in the marine
offshore business. They have been laid off, of course, it flies
in the face of what we hear here, that the process is back up
and rolling, that the Gulf of Mexico is back. The man has not
looked for a job since 1973, but he got laid off last week.
That family combined, three members, brought home over half a
million dollars combined. Good jobs, OK, good jobs. And what I
am trying to understand as I read through the investigative
report that the three of you all have that there is human
error. Was there a systemic problem in the industry based upon
your findings?
Mr. Bromwich. The investigation wasn't pointed to look at
industry as a----
Mr. Landry. Do you believe there was a systemic problem? I
mean, you did a lot of investigation. Captain?
Captain Nguyen. Sir, from the Coast Guard side we only
investigate this vessel.
Mr. Landry. OK.
Captain Nguyen. So we did not investigate the----
Mr. Landry. Mr. Dykes.
Mr. Hastings. You are making a judgment call there,
gentlemen. I understand what you are----
Mr. Landry. Well, I am trying to understand. They have done
a lot of work. They looked over a lot of evidence, and of
course Mr. Dykes has been working for MMS for 17 plus years I
guess.
Mr. Bromwich. Twelve years.
Mr. Landry. Twelve years, and he would have seen a lot. You
know, I just can't tell you how much I appreciate this witness,
and I am trying to understand because we have a political
report that the President wanted us to take legislation action
on, and yet we have a scientific report that is contrary to the
political report, and I have people that are interested. I have
an industry suffering. I have a Director saying that we are
increasing permitting, and everything is pointing to the fact
that the problem we have is politics, and that is what I am
trying to get to the bottom line. That is the only reason for
the question.
Mr. Hastings. Would the gentleman yield?
Mr. Landry. Yes.
Mr. Hastings. Listen, I think that is probably something
that this Committee will have to weigh and come to our own
conclusions. You asked me to kind of say if the question is out
of line or not and perhaps to the Co-Chairs, but if they have
an opinion, obviously we would welcome that. But I think I have
some concerns too.
Mr. Landry. OK.
Mr. Hastings. And they will be expressed. But the time of
the gentleman has expired.
Mr. Landry. I will withdraw it.
Mr. Hastings. The time of the gentleman has expired. The
gentleman from Massachusetts is recognized.
Mr. Markey. Thank you, Mr. Chairman, very much.
Director Bromwich, yesterday the Department issued
violations to BP, Transocean and Halliburton for violating
Federal regulations in place at the time of the spill. BP was
cited for seven infractions, Halliburton and Transocean four
violations. Unfortunately, the monetary penalties associated
with these violations, which led to the worst environmental
disaster in American history, would amount to only $21 million
for BP and $12 million for Halliburton and Transocean.
Do you think that that is a sufficient financial deterrent
to oil companies so that we do not have a repeat of the
disaster or should Congress pass legislation to increase the
civil penalties for oil companies that violate the law? That is
a proposal, which I have made along with Mr. Holt and Mr.
Grijalva, so that the penalties match the actual events that
despoiled our environment, Mr. Bromwich?
Mr. Bromwich. No, I don't think the current civil penalty
authorization is a deterrent. I don't even think it is close,
Mr. Markey. In an industry where it costs between $500,000 and
a million dollars a day for a rig, the kinds of figures that
you are talking about are trivial to these companies. So I
think there needs to be a very significant increase. I have
resisted in the past putting a dollar figure on it, but it
needs to be clearly well into the six figures to be a
significant deterrent for individual oil companies and to
provide a general deterrence for the industry as a whole.
Mr. Markey. So you are saying that you start with $100,000
per incidence per day.
Mr. Bromwich. At a minimum.
Mr. Markey. At a minimum. You think that Congress should
consider raising them much higher in order to ensure that the
oil companies pay a price when people die, when businesses are
crushed, when the environment is destroyed, is that what you
are saying?
Mr. Bromwich. Yes.
Mr. Markey. Director Bromwich, the Federal Government has
the authority to suspend or debar companies that commit fraud
or violate Federal law from receiving contracts or entering
into agreements with the Federal Government. The Department of
the Interior has the ability to debar companies from non-
procurement programs, including lease sales. Suspension and
debarment has a different purpose than civil penalties. It is
not intended to punish but to protect the American people from
unlawful and unethical companies. Companies can be suspended or
debarred for violations of statutory or regulatory
requirements, fraud, criminal or civil judgments against them
and a lack of business integrity or business honesty. The
Office of Management and Budget guidance describes the purpose
of suspension and debarment for non-procurement programs.
Specifically it states to protect the public interest. The
Federal Government ensures the integrity of Federal programs by
conducting business only with responsible persons.
The first Gulf lease/sale since the BP spill is scheduled
for December. Should the Department consider suspension or
debarment of BP from the lease/sale to give us time to assess
whether BP has made the necessary changes to protect the public
interest?
Mr. Bromwich. We are not going to suspend or debar BP from
that lease sale. We have considered and thought about this
issue quite a lot, and we don't think it is appropriate in
these circumstances.
I do want to remind Mr. Markey that BP has taken on itself
the obligation to abide by additional voluntary requirements
over and above what our regulations require. I think that has
been their approach in dealing with my agency since I have been
there. Also, given the historical record offshore, Mr. Dykes is
knowledgeable about, we don't think suspending or debarring
there is appropriate.
Mr. Markey. Again, the reason I am raising these issues is
that it is not just the Gulf of Mexico, it is everywhere. You
know, when you pass a statute against some crime, it is not
just to protect the people from where it occurred originally,
it is to protect everyone else from the same set of events. OK,
so we are not limiting. We are looking at this in terms of
everyone anywhere that might have the same people out there
thinking that they got away with it.
So I think we should take another look at whether or not BP
should be allowed to participate. I think that it is still, in
my mind, an open question that should be dealt with as part of
this entire process, and Mr. Chairman, I thank you.
Mr. Hastings. The gentleman's time as expired. The
gentleman from Pennsylvania, Mr. Thompson.
Mr. Thompson. Thank you, Chairman, thanks to the panel for
testifying today. My question is for the Co-Chairs and just a
clarification regarding a specific piece of equipment, the
riser disconnect it seems played a key role in the incident. On
the day of the disaster, that specific day, what agency was
responsible for the inspection of the riser disconnect with the
Deepwater Horizon?
Mr. Dykes. That would fall under the Department of the
Interior, the Minerals Management Service.
Mr. Thompson. OK, very good. Was that disconnect properly
inspected?
Mr. Dykes. Every information that we have, all of the
inspection documents indicate that it had been inspected.
Mr. Thompson. So what happened?
Mr. Dykes. Well, as the report indicates, we believe the
second explosion, which occurred on the rig near the rig pool,
took out all of the mud's control lines to the BOP stack, and
by this time we believe that the pipe got into compression such
that as it goes through the sequencing that disconnect will not
function until you have completed the sequencing of the BOP
stack closure.
Mr. Thompson. Thanks for the clarification. I yield back,
Chairman.
Mr. Hastings. The gentleman yields back. We have had
requests from several Members, at least on my side, for a
second round and I am going to honor that. We will begin the
second round with Dr. Fleming.
Dr. Fleming. Thank you, Mr. Chairman. Would you throw that
slide back up again that I talked about with Director Bromwich
a moment ago?
Mr. Bromwich. Mr. Chairman, can I just ask? This is a
hearing devoted to the accident investigation report. I am
happy to come back at anytime, as I have many times in the
past, to talk about plans and permits. I don't think it is fair
frankly to Mr. Dykes, Captain Nguyen or Admiral Salerno to have
to go through issues that are exclusively mine.
Dr. Fleming. Mr. Chair, I just want a clarification, that
is all I have.
Mr. Hastings. I am going to allow it. We had that line of
questioning earlier. We had the hearing before and I know
sometimes we overlap, but there is an overriding issue
certainly I have heard, I know you have, Director Bromwich, of
people on the Gulf Coast and response, so I think it is
appropriate in this time because it does all tie together, so I
will recognize the gentleman from Louisiana.
Dr. Fleming. If you will throw that up and we may come to
some agreement here after all.
OK, it is the bar graph that I showed before, and you
indicated, and I forget the word you used, it was fairly
strong, it was not true, dishonest, a lie, what is your
characterization?
Mr. Bromwich. It is badly flawed and misleading.
Dr. Fleming. Badly flawed and misleading.
Mr. Bromwich. Yes.
Dr. Fleming. All right, it comes from the Gulf Economic
Survival Team. Do you know where they got that data from?
Mr. Bromwich. Yes, that is part of--we talked about this
last time I was here, Congressman. That is from the IHS CERA
report that was issued over the summer, and as I told you last
time----
Dr. Fleming. Let me correct you before you go any further.
No, sir, it comes from your website. They extracted this from
your website. Now the reason why there is confusion, and I
think you used that word, is because it is hard to find. We
actually had to go through and search. I have three different
screen shots and if I had this graph, I would show you, but in
bar graph one, I believe that is Shell, and again it was
extracted from your data.
Mr. Bromwich. Are you saying--let me just be clear.
Dr. Fleming. Yes.
Mr. Bromwich. Are you saying that that specific bar graph
appears on our website?
Dr. Fleming. No, sir, the data, the data.
Mr. Bromwich. OK. OK. OK.
Dr. Fleming. Is created from your data, but from this and
you see the BSEE logo on the first page here. The second bar
graph, it says--from your website. It says received date 9-20-
2010, and then it says, date deemed submitted March 31, over
six months later, 2011, and then the green part of the bar
graph, staff instructs me we would have to go to another part
of your website. The point is that what they did is simply take
your data and put it together in a graph.
Mr. Bromwich. Well, that is not what they did, and I am
happy to go through this privately with you in detail. That is
not what they did.
Dr. Fleming. OK. Well, until I am proven otherwise I am
going to have to assume that is true, but I have another
question for you. This outside independent agency or agencies,
now that is the first we have ever heard of that, who are they?
Mr. Bromwich. It is McKenzie & Company.
Dr. Fleming. McKenzie & Company.
Mr. Bromwich. Yes.
Dr. Fleming. And you will be able to get that to us within
a few days?
Mr. Bromwich. What specifically are you requesting?
Dr. Fleming. Well, you said that they did an independent
analysis, an objective analysis, and we haven't seen it. We
don't know where it is.
Mr. Bromwich. I just got it last week, Congressman. Let me
just be clear, and this really addresses your concern too, Mr.
Chairman, we have been focused very intently on trying to
improve and make more efficient our plans and permitting
process because we are very aware of how concerned and upset
Mr. Fleming is, Mr. Landry is, and many other people. Perfectly
legitimate. They have had complaints from their constituents.
People are being laid off. We understand that.
McKenzie has been helping us with a wide range of issues,
primarily the reorganization, but they have also been helping
us with looking at specific issues that are of importance to
me, and included among the things that they looked at recently
were the permitting process, which we can improve by making it
transparent, and the plans process. And so the review that I
got that I mentioned earlier in response to Mr. Fleming's
questions I just got last week as a result of a review that
they just completed in the last 10 days. So it is not as though
we have been holding out on you. This is something that I
specifically asked for in light of the concerns that you have
expressed to me previously, and so that is why you haven't seen
it yet. I am happy to provide it to you.
Dr. Fleming. Sure. OK. But I was just simply asking how
quickly can we get it?
Mr. Bromwich. It is a one-pager. I can probably give it to
you this afternoon.
Dr. Fleming. OK, great. So we will look forward to that.
But anyway, again to reemphasize, that is where these people
tell us they got the data, and we can go back and sit in front
of a computer screen, but again, that is where they are saying
they are getting the information. The one example we were able
to find does correlate with what they say is on this graph.
Now it is our opinion and certainly, and I asked you this
question before, but I will ask it again almost humorously, you
don't think EIA is a flim-flam operation. You feel like they
are basically good and honest with their debt.
Mr. Bromwich. I have never said they were a flim-flam
operation.
Dr. Fleming. No, I asked you that question before and you
answered no, you did not think----
Mr. Bromwich. I haven't changed my answer.
Dr. Fleming. You have not changed your mind?
Mr. Bromwich. No, I have not changed my answer on that.
Dr. Fleming. Good. They say that the production levels
continue to go down. They go down to something around 1.3
million barrels a day, so something is holding up production,
and again, all the data that we see says it goes back to the
permits or the pre-permitting process. You say that that could
probably be improved by better funding. So can you--because,
see, again the permit has been increased by a factor of 100.
Mr. Bromwich. The permit has?
Dr. Fleming. The permit size. Remember the----
Mr. Bromwich. No, no, no. First you said it was plans, and
that is not true. I think somebody identified the----
Dr. Fleming. The application.
Mr. Bromwich. Right, file different applications. There is
a plan application. There is a permit application.
Dr. Fleming. Right.
Mr. Bromwich. You were talking before about plan
applications, and I think you had a witness say yesterday and
you repeated it this morning that they run as long as 3,600
pages.
Dr. Fleming. Right.
Mr. Bromwich. I had somebody look through the file of all
plan applications, and they weren't able to find anything even
remotely close to that long. So I would ask you to ask your
constituents to actually produce it.
Dr. Fleming. Sure.
Mr. Bromwich. I would like to see it.
Dr. Fleming. Well, let me ask you a two-part question, and
I will do it real quickly because I am running out of time.
Would it be fair to say that our perceived slowness of
permitting could be improved by more resources? I think that is
the case you are trying to make.
Mr. Bromwich. Yes. Yes, the answer is yes.
Dr. Fleming. And if so, do you see there are also other
parts of the permitting process that could also be streamlined
even short of increased resources; that is to say, better
applications, more uniform applications, better training for
people who are filling them out? Do you feel like there is some
improvement there that could be had?
Mr. Bromwich. All of the above, and we have done a lot of
that already, and I think industry has seen and will continue
to see the results of those changes that we have implemented.
We fully shared them with industry and we made it clear we are
receptive to their suggestions to further streamline and make
the process more efficient. They can check the status of their
permits online. That is brand new.
Dr. Fleming. Right.
Mr. Bromwich. And I think it is a welcome development for
them.
Dr. Fleming. This is the last question, I'm running out
of----
Mr. Hastings. The gentleman is really out of time. I think
we need to respect this so everybody has the time. I understand
the gentleman wants to pursue, but we have these five-minute
rules which are sometimes onerous. I recognize that. Maybe
somebody who finishes earlier can yield time to you. Mr.
Grijalva, do you have a second round?
Mr. Grijalva. Thank you, sir. A couple of questions for Mr.
Dykes.
Earlier, I think in response to a question regarding the
announcement of the criminal investigation by the AG, that that
may have impacted the decision of oil company employees not to
testify before the Joint Committee Team. But from what I
understand the criminal investigation was announced on June 1,
2010, and BP and Transocean employees declined to testify at
the JIT hearing that was on May 27, 2010, before the
announcement of criminal investigations, so that announcement
didn't affect the decision by the oil employees not to testify,
did it or did it not?
Mr. Dykes. Those witnesses that refused to testify at the
May hearing were those that were testing the subpoena authority
of the Joint Investigation Team. Once we moved the hearing to
Houston, then some of those witnesses testified, and some
witnesses exercised their Fifth Amendment right.
Mr. Grijalva. And just to follow up, do you think that the
government at this point, the U.S. Attorney, should not look
into whether there was criminal violations in this whole
episode that we have been talking about here?
Mr. Dykes. Sir, that is outside the scope of my knowledge.
Mr. Grijalva. And I want to go back to a point that I think
you had in your testimony. You have 27 years experience in the
oil and gas, both in the industry side and the regulatory side,
and all the experience that you have, Mr. Dykes, in terms of
accident investigation, the JIT concluded that the negligence
on the part of BP, poor risk management, inadequate oversight,
was ultimately responsible for the blowout. What regulatory
changes do you think are needed to prevent and mitigate this
kind of mismanagement in the future?
Mr. Dykes. Well, the key things in our recommendations,
once again as I stated earlier to Mr. Flores, is if you can
remove those decision points from the operators' control and
put it into the regulatory side of the equation, then you are
adding those additional barriers in the regulatory process.
For example is the requirement for the major test
procedures. One of our recommendations is for industry and the
agency to work together to establish standardized major tests
so that you have expected results that you can know what you
need to know once you have those results.
Mr. Grijalva. And if I may just to follow up, Mr. Director,
on another question, talking about the resources and the lack
of adequate resources for the agency as it moves forward with
not only these recommendations but other recommendations that
have been generated in terms of how to prevent and mitigate
these kind of situations in the future.
Part of the staffing issue is over not just--we see the
concentration of the question is on the permitting aspect, how
to expedite that, how to cut the time. I am sure that the
resources are needed, as the Co-Chair just indicated, on the
oversight, coordination, technical side that in the long term
deals with the prevention question that we are talking about.
Mr. Bromwich. That is absolutely true. I mean, I more often
get questions on permitting and plan approval and the resources
that are allocated to that, but the request for funding that we
submitted to Congress and the President has submitted to
Congress broadly allocate recourse increases in lots of
different places, including importantly increasing oversight
through adding to the number of inspectors and for many other
things as well.
Mr. Grijalva. Is the echo for faster permitting, not enough
permitting continues, I think there has to be an understanding
that if that is to be expedited even more from the 34-day
period, there has to be a corresponding resource allocation to
assure that the oversight that the agency is responsible and we
as a Congress are responsible to the American people is also
present as part of the package. It is a package deal. It is not
a one-sided deal, and with that I yield back.
Mr. Hastings. Would the gentleman yield?
Mr. Grijalva. Gladly.
Mr. Hastings. Just to follow up with Mr. Dykes to the
response you gave Mr. Grijalva. Did any government witnesses
take the Fifth Amendment in your----
Mr. Dykes. No, sir, no government witnesses took the Fifth
Amendment.
Mr. Hastings. OK. The Chair recognizes the gentleman from
Florida, Mr. Southerland.
Mr. Southerland. Thank you, Mr. Chair.
Mr. Bromwich, I just have a question on budget issues, this
is a simple question. I am looking at some numbers provided for
me on the budget and I am looking at 2008, $118 million, 2009,
$116 million, 2010, $181 million, 2011, $225 million, and the
President's budget request of $358 million. I mean, are those
ballpark figures close?
Mr. Bromwich. It sounds about right. I don't have the
figures with me, Congressman, but that sounds about right.
Mr. Southerland. I know you don't, and I don't want to be
unfair to you, but when we are looking at 2008, $118 million,
to 2011, $225 million, and we are talking about--you know, they
have been accused by the other side that the agency is being
starved. I mean, that is almost in a three-year period almost a
100 percent increase in funding. So, I mean, if a 100 percent
increase in funding is not enough, what is enough?
Mr. Bromwich. The starvation comment was mine, and that
is----
Mr. Southerland. Well, it has also been laid at us.
Mr. Bromwich. The historical level of funding for the
agency, and so if you start from nothing or close to nothing,
the percentage increases can look quite huge on paper and still
not get to where you need to be, and that is a statement----
Mr. Southerland. Well, but I do think in the current
economic environment, I think to make the claim to the American
people that a 100 percent increase in your funding is nothing I
think will fall on deaf ears, especially in my state where we
have 12 percent unemployment.
Mr. Bromwich. I didn't say the increase was nothing. I said
we started with nothing.
Mr. Southerland. You said you started with nothing.
Mr. Bromwich. Yes.
Mr. Southerland. So the $120 million budget that you had in
2008 was nothing.
Mr. Bromwich. Compared to what we needed it was nothing.
Mr. Southerland. All right. I would like to yield the
balance of my time to the gentleman from Louisiana.
Mr. Landry. Real quick to follow up with that. Thank you,
Mr. Southerland. Did all of that increase go into BOEMRE, into
oil and gas inspectors? I mean, how much of those resources
actually went to helping get you where you need to get so we
can get the permit process?
Mr. Bromwich. So are you talking about the part of the
increase that went just to admin power to writing?
Mr. Landry. Right, just----
Mr. Bromwich. I don't have that percentage for you.
Mr. Landry. Would you say it is 5, 10, 20, 30----
Mr. Bromwich. More than that.
Mr. Landry.--40, 50, 60, 70 percent?
Mr. Bromwich. I am sorry.
Mr. Landry. Five, 10, 15, 20?
Mr. Bromwich. Well, I would have to go back and look at the
numbers. It is a significant number. It is certainly over 10
percent.
Mr. Landry. Significant is not 10 percent. Fifty percent
would be significant because, again, I think what we all have
here is we have a concern about where the money is going, OK. I
don't want to give you more money just to add on top--I would
bet you could scrub your agency and see where that money has
gone and say, no, that is not quite as important as making sure
that men and women who get to drilling in the Gulf of Mexico do
so safely. You know, I think you can----
Mr. Bromwich. When we began this process, Congressman
Landry, I think the shared sense of both the Majority and the
Minority was where we were the most inefficient was in the
number of inspectors to review facilities.
Mr. Landry. OK.
Mr. Bromwich. And so that was our initial hiring priority.
That has been replaced over time with a more balanced set of
priorities which includes continuing to hire additional
inspectors as well as hiring people who are directly involved
in the permitting process.
Mr. Landry. Well, again, I just would like to see where the
resources are going within that increase. But anyhow, real
quickly also, I want to let you know I have read the citation
you gave us. I don't agree with you, but that is OK, I could be
wrong, I have been wrong before. So since we have a
disagreement, just to clarify, are we going to be able to get
the legal analysis from the Solicitor because I think you said
it came from the Solicitor's Office?
Mr. Bromwich. The Department of the Interior, like every
executive branch agency, has policies against turning over--
turning attorney-client communications within those agencies.
Mr. Landry. But how does that attorney-client conflict? I
mean, we are a part of government as well. I mean, we are as
much the client as you all are I guess.
Mr. Bromwich. No, you are not.
Mr. Landry. I am not.
Mr. Bromwich. No. I am the client agency, and the Solicitor
in the Department of the Interior is our attorneys.
Mr. Landry. Is all your attorneys, OK, and I guess Congress
just doesn't have the ability to conduct that kind of
oversight. We are not privileged. Are you saying it is a
privileged issue?
Mr. Bromwich. Yes.
Mr. Landry. So we don't have the privilege of being able to
extract from you how you interpret the laws we pass?
Mr. Bromwich. Well, I have given you the statutory basis,
Mr. Landry, and so I don't see what there is to gain other than
intruding on internal agency communication to see if----
Mr. Landry. We are trying to see if you are usurping your
power.
Mr. Bromwich. Well, you are a lawyer. You have looked at
the statute. We can talk about it.
Mr. Landry. We disagree with--OK.
Mr. Hastings. The time of the gentleman has expired. I find
this interesting as a non-lawyer to hear two lawyers. I guess
that is what----
Mr. Bromwich. Not that interesting.
Mr. Hastings. The Chair recognizes the gentleman from
Texas, Mr. Flores.
Mr. Flores. Thank you, Mr. Chairman. Also, I didn't say
this in my earlier round of questioning, but I think we all
mourn the loss of the 11 men and the families that lost their
loved ones. As a person who lost a brother to an oil accident,
I can fully identify with their pain, and so I come at this
from a little different angle, and that is because I want the
industry to operate as safe as it can, and I came from that
industry and we always tried to do that as much as we could.
That said, that takes me to the next question, and this has
to do with sort of an allegation that was lofted out there by
the Ranking Member about fraud. Are any of you aware of any
frauds that were committed by any of BP or Halliburton,
Transocean or anybody else in this accident?
Mr. Dykes. No, sir, I am not aware of any information and
we did not uncover anything that indicated fraud on BP's part,
Halliburton's part, Transocean's part, none whatsoever.
Mr. Flores. OK. I mean, we definitely have identified many,
many errors and problems, but I have not heard anything about
frauds or criminal acts. Did any of you all pick up anything to
indicate that there is a fraud or a criminal act?
Mr. Dykes. During the course of our investigation we did
not uncover anything that would indicate fraud or criminal
activity from that standpoint.
Mr. Flores. OK, good. I didn't either, and I just wanted to
make sure we didn't leave that leaning out there in the air to
cloud the issues. There were mistakes made. I think everybody
has admitted that, and so the issue we are trying to address is
how best to keep those from happening in the future.
So that takes us to the next point, and that is for
Director Bromwich. If we raise the fines materially, that is
what happens on the back end. How does that influence what
happens on the front end when these mistakes were made?
I mean, we could raise the price to a billion dollars a
day, but does that have an impact? I mean, does that change the
way this would have come out?
Mr. Bromwich. We have made efforts across the board,
Congressman, as I think you know, and so the civil fine
authority that I am requesting be raised is only a part of the
puzzle. But you are quite right, you need to focus on the front
end, primarily you need to focus on prevention. That has been
our main focus since this happened, and that is what explains
many of the new rules that have been developed which, frankly,
industry has found hard to comply with at times. We are in a
better place now than we were a number of months ago, but it
was precisely because we were focusing on the front end and the
importance of prevention that those rules were put in place
very quickly.
And just a footnote. You asked about whether any crimes
were committed. There are people looking at that in the Justice
Department and elsewhere, and I am a criminal lawyer and I know
that what may not appear to be a crime to a non-lawyer may
indeed be a crime to somebody who lived with----
Mr. Flores. But you haven't seen anything at this point?
Mr. Bromwich. Well, I didn't do the investigation, so I
would defer to what Mr. Dykes saw in the course of his work.
Mr. Flores. OK. Well, I mean, you have read the reports
like I have, and I haven't seen anything to indicate crime or
fraudulent behavior, criminal fraudulent behavior.
I agree with you. I mean, the part of the package, the
other side of the aisle in this hearing has only focused on let
us go punish BP and beat the crap out of them, and really to me
we need to look at the holistic approach to make sure that
nobody ever has to pay a fine again because they do it right in
the beginning and you don't have the accidents to start with,
and that way you have 11 more lives today, you would not have
had the pollution. BP would not have spent $20-plus billion to
clean the mess up that they made. That is the direction I am
trying to go is come up with a preemptive response and not the
sort of punishment response. That is the direction I would like
to go.
I would like to yield the rest of my time to the gentleman
from Louisiana.
Mr. Landry. Thank you, Mr. Flores.
Mr. Dykes, are you familiar with SEMS, a safety
environmental agency?
Mr. Dykes. Yes, sir, I am.
Mr. Landry. Did BP have a SEMS in place?
Mr. Dykes. They had a safety management system in place.
Mr. Landry. They had a complete functional safety
environmental management system in place?
Mr. Dykes. They had it in place.
Mr. Landry. OK. Was that something that came within the
scope of your review?
Mr. Dykes. Yes, it did.
Mr. Landry. Was there any part of that SEMS that failed
which caused the accident?
Mr. Dykes. From the aspect of the program, no, the program
did not fail. There were certain aspects that we pointed to,
for example, the risk register that BP had implemented to
determine the risk dealt with the drilling of the well, the
crew members, or the engineers anyway, not the crew members of
the rig, but the engineers in the office did not properly use
the risk register.
The management had changed a program that BP had in place.
They were in transition from a paperwork management change
process to an electronic management change process. There were
still some gaps in that management change, but for the most
part everything was intact.
Mr. Landry. So there is nothing that would say that if
every company out there had a functioning SEMS that that would
again prevent the accident?
Mr. Dykes. Having a functioning SEMS adds those additional
barriers that I mentioned in my opening statement, but there is
no guarantee that it will prevent it, but you are trying to
reduce the probability as much as possible.
Mr. Landry. OK.
Mr. Hastings. The gentleman's time has expired. The Chair
recognizes the gentleman from Arizona, Mr. Gosar.
Dr. Gosar. Mr. Chairman, I yield my time to the gentleman
from Louisiana.
Mr. Hastings. That is why I broke it up because I thought
we would have the continuity. The gentleman is recognized.
Mr. Landry. I want to go a little further. On this SEMS
issue, I am concerned, and I probably have to go back to
Director Bromwich, you and I spoke about this fairly often. I
want you to know that yesterday we heard testimony from a
gentleman who said it took him five years to implement his SEMS
program, to get one fully functioning. Now he is a small
contractor.
Mr. Bromwich. So he did it voluntarily?
Mr. Landry. He did it voluntarily. That is right. He came
here. He actually is not under--well, right now he is not under
your oversight. I guess that was part of our argument earlier,
but he is actually on the Coast Guard. The Coast Guard pointed
this out to him in 2004, and so he determined that he was going
to implement what took him five years, and so it goes back to
my biggest concern is that it seems to me that the majors have
SEMS in place because they have the resources necessary to
implement these things, and, you know, I will say we graciously
gave the industry 12 months to implement their SEMS programs
when we know that the majors all have theirs, so this really
affects our small operators out there.
And so I would again ask you to comment as to the type of
burden you believe we are going to place on our small operators
and the expense that they are going to incur. Again let me echo
that none of them said they don't want to implement SEMS, but
we also heard from a witness who said that it is industry-wide
going to be a problem in November.
So really what I am really trying to do in your favor is
the calls are going to start coming in November, and you are
going to come back here, and we are going to have to go through
this all over again. So I am trying to pass on to you what the
industry is telling me. I know they are not telling you that
directly, but you issued a permit, not me, and so I think there
is a fear factor there on that. So I wanted to pass that on.
Maybe you could tell the Committee again, because we heard from
investigators that this is not a crucial piece, but that----
Mr. Bromwich. That is not what I heard him say. He said he
couldn't guarantee that an accident wouldn't happen, but he did
say that it would reduce the likelihood and that is the key.
Mr. Landry. Well, OK. Mr. Dykes, on a scale of one to ten,
ten being the most crucial thing that we can do in order to
prevent the accident, where would a SEMS fall?
Mr. Dykes. Well, you can't look at SEMS as being a single
component. SEMS is a management tool for managing the
operations by conducting them in a safe and orderly fashion. It
identifies multiple aspects that a company should look at in
putting their operations programs together: hazards analysis,
operating procedures, safe work practices. As an operating
company large or small, that company needs to make sure that he
is covering those bases.
Mr. Landry. And you know what, you brought up a good point
because the operators that I am talking about are in fear of
what is coming, because there are like 13 elements to the SEMS
plan. For a majority of those elements, their biggest concern
is on the documentation standpoint, and so maybe I ought to
rephrase my question.
If an operator has a majority of the elements complete,
again on that scale of one to ten, I mean, where does it fall
in being crucial? Is that something that is as important as
fixing the bottom of the BOPs, the cementing of wells? I mean,
is it that crucial?
Mr. Dykes. Your operating SEMS program should incorporate
your repair and your BOPs and your cement design. Critical to a
SEMS program, and let me back up and rephrase that. Critical to
a safety management system, there are multiple models out there
that you could use. You could use an ISO model, you can use the
RP 75, which is the Safety Environmental Management Program,
you could go back to the original predecessor of that, being
API RP 750, which is managing operating hazards.
Critical to that are four basic elements that to me are the
cornerstone of those documents. That is hazards analysis, that
is operating procedures, that is mechanical integrity and
managing the change within that group. Those are four key
cornerstones to any safety management program.
Mr. Landry. Thank you.
Mr. Hastings. The time of the gentleman has expired. The
gentleman from Pennsylvania, Mr. Thompson.
Mr. Thompson. Thank you, Chairman.
Mr. Dykes, going to the Joint Investigation Team report,
BP's well control manual states that the mud/gas separator
should be lined up at all times when displacing a keg, but
given that it is only meant to handle small amounts the
diverter line is recommended to divert the kick overboard
rather than on deck when you are working with high flow rates.
I think we have all seen a video of the spill and surmise that
this was a high flow rate.
Can you explain to this Committee why crew on the board of
the Deepwater Horizon would direct a heavy kick to a device
that couldn't handle the flow and in doing so direct flammable
hydrocarbons on board that eventually ignited and let the
flows----
Mr. Dykes. Sir, that is a critical question that we can
only conclude that the crew on the rig floor at the time did
not realize the magnitude of the volume of hydrocarbons coming
up the well bore. This well, and I am going to get a little
technical here, this well had a gas/oil ratio of roughly 3,000
cubic feet of gas for one barrel of oil. It has a breakout at
roughly about 1,500 feet in the water column, such that one
barrel of influx coming up the riser, and once it gets to that
hyperstatic depth of about 1,500 feet it releases roughly 3,000
cubic feet of gas.
So a small influx from the reservoir of 10 barrels
immediately gives you a large plume of gas on the rig floor as
it breaks out in that riser.
I believe that the crew, by the time the gas broke out the
crew did not realize that they had substantial flow and a
substantial release until it was too late.
Mr. Thompson. Do you think that the punishment of a thimble
full of oil over the side under the Clean Water Act created a
culture contributing to the disaster?
Mr. Dykes. A culture? Could you define what you mean by
culture?
Mr. Thompson. Cultures influence decisionmaking. You can
certainly see it in this body, pluming punishments under the
Clean Water Act, just a thimble full of oil over the side
versus to the separator as a decision point, did that
contribute to that?
Mr. Dykes. I did not find any information that would
indicate that. The issue with the well control manual is to
divert that flow once you realize you cannot handle it. The
indications for the data is that they attempted to do that at
some point in time. However by the time that decision was made
the plume was already on the rig floor.
Mr. Thompson. Is it possible that knowing what all the
punishments are from the regulators turning in would influence
the timing of making that decision?
Mr. Dykes. Well, we can speculate, we can speculate and
say, yes, it is possible.
Mr. Thompson. I yield the balance of my time to Mr. Landry.
Mr. Landry. Thank you. I have a quick question for you,
Admiral. The ability of the Damon Bankston to meet to respond
so quickly, how crucial was that in life saving?
Admiral Salerno. Well, sir, they were right there, and they
saved the vast majority of the people who evacuated from the
rig, so they were a very crucial part of that, and we recognize
the crew for their actions.
Mr. Landry. So, if they had not been there, that could have
taken away to save some lives there, I mean, if they were not
as close as they were?
Admiral Salerno. It would have certainly taken longer to
retrieve the survivors from the water and to get them to a
place of safety, yes.
Mr. Landry. I yield to Mr. Flores.
Mr. Flores. Thank you, Mr. Landry.
I wanted to ask you, do any of you all have any criticisms
of BP or Halliburton or Transocean cooperativeness or response
to the investigation? Start with Captain Nguyen.
Captain Nguyen. No, sir, I don't. There was a lot of
objections to my questions and other Coast Guard members'
questions, but I believe that just the PII attorneys were just
doing their job, so I do not.
Mr. Flores. OK. Mr. Dykes?
Mr. Dykes. I agree with Captain Nguyen. I did not see any
resistance other than the normal objections to the lines of
some of the questions.
Mr. Flores. OK. Admiral Salerno?
Admiral Salerno. Sir, I was not actually part of the
investigative process, but I am not aware of any.
Mr. Flores. And I have lost my time.
Mr. Bromwich. Mr. Flores, I can say that I am not aware of
any issues relating to BP or Halliburton, but I am aware of an
issue related to Transocean where I think they relied on
technical objections to fail to produce certain important
witnesses, and I responded to that by a letter to their CEO,
which was not satisfactorily responded to.
Mr. Flores. Thank you.
Mr. Hastings. The gentleman's time has expired, and
remarkably in this second round Mr. Landry has not had an
opportunity to control his own time in this round, so he is
recognized for five minutes.
Mr. Landry. Thank you, Mr. Chairman.
I am concerned because I fish out of the Gulf of Mexico. We
are continually going further and further offshore, and the
distance it takes to respond to particular accidents is a
concern of mine. Of course, this particular accident we all
were lucky. The seas were calm. It was at a time where water
temperatures were warming up.
Do you feel that, again, the ability of the Damon Bankston
to respond, because I think the next vehicle closest to them
was the Mopkian, is that correct?
Admiral Salerno. I don't have the distance of the closest
vessel. Obviously, as you know, there were a number of vessels
operating out there, but I can get that for you.
Mr. Landry. When we are having drilling operations, don't
you agree that having those vessels there is a safety blanket
for those workers?
Admiral Salerno. Sir, it is basically a time/distance
problem. Exactly. The closer a vessel is the quicker it can
respond.
Mr. Landry. Mr. Dykes?
Mr. Dykes. No, I agree. The closer the vessel is, when you
have vessels in near proximity to these facilities, it gives
somewhat some comfort to those individuals on that rig or that
platform that should they have to evacuate they have a safe
harbor to go to. From that standpoint, moving forward I believe
the next vessel was roughly an hour and a half to two hours
away to the Deepwater Horizon.
Mr. Landry. Do you want to----
Captain Nguyen. Yes, sir, that is one of our
recommendations is for the Coast Guard to look at requirement
for standby vessel, and I believe the Commandant final agency
memorandum agreed with that recommendation, sir.
Mr. Landry. OK. Thank you. Before I yield to Mr. Flores,
real quickly, I have already said that the greatest natural
resource that we have in this country is not what lies beneath
the waters or the soil but the men and women along the Gulf
Coast and elsewhere who have such a dangerous trade, and would
you agree that that is a fair statement, that at the end of the
day this is all about making sure we give them not only as much
protection but also provide opportunities that if there is an
accident, because we have heard, like Mr. Dykes says, that we
can't guarantee anything 100 percent--that we have a way to get
those people safely home because it would have been a great day
if we could have just discussed the environmental tragedy of
this spill rather than having to add the 11 lives that were
lost there, wouldn't you all agree with that?
Captain Nguyen. Yes, sir, I do, and I think you can look at
the Coast Guard philosophy on life preservers. We can't
guarantee that nothing is going to happen, but we can give
people a second chance.
Mr. Landry. Go ahead, Mr. Dykes.
Mr. Dykes. No, but that indicates that--talking about
resources. The personnel that work in the offshore industry are
the greatest asset and greatest resource. From the voluntary
civilian operators to the agency indicates that you have
roughly anywhere between 30,000 and 35,000 people physically
offshore or the industry. That does not include the service
companies, the dockside facilities and so forth that support
that industry.
Mr. Landry. Congressman Flores has a couple of followups,
so I will stop right there. I yield the balance to Mr. Flores.
Mr. Flores. This question is going to sound a little bit
odd, but bear with me for a minute. Back to the human error,
the human element parts of the equation that were part of this
accident. I am a pilot and one of the ways I have avoided
having any problem in my real aircraft is by flying a
simulator, and in that simulator you can create all sorts of
unusual situations so that you learn how to inherently respond
to those situations.
Do we do anything like that in the deepwater drilling
business in terms of the way to control accidents? Are there
simulators? Is there any sort of simulator training that is
available to the industry today?
Mr. Bromwich. My understanding is that there is,
Congressman. In fact, on some visit I took to some of the
facilities of some of the major operators I actually saw a well
control simulator that is used in training. I believe it was by
Exxon, but I think a number of the other companies have it as
well. I think they have adjusted and modified and improved
those kinds of simulators since the accident. I think that is
the sort of thing that continues to require focus, to continue
to improve the kind of training that can be provided.
Mr. Flores. OK, very good. Thank you.
Mr. Hastings. The time of the gentleman has expired, and
the second round is over, and I appreciate very much the panel
for sitting through that second round, and I also appreciate
sometimes getting off course a little bit, but that happens. We
are trying to get the information. Before I dismiss the first
panel though I do want to make a short statement.
Throughout this hearing I have refrained from commenting on
the timing of the releases of the incidents of non-compliance
that were released last night, but the fact is that Director
Bromwich stated in September that the citations would be
released the week of our original hearing, which of course was
three weeks ago before it was postponed when obviously we had
some problems with witnesses.
But now these citations were delayed and they were actually
released last night, which is literally hours before this
congressional committee held an oversight hearing on this
investigation report. So I have serious questions about the
timing of these actions and whether or not they were an effort
by the Executive Branch to time legal penalties to influence,
affect or potentially interfere with the official activities of
the legislative branch.
I have not asked these questions during this hearing
because I wanted to stay true to what I thought was the
original intent and purpose, which is to hear directly from the
investigators of this report, and further I refrained because I
don't believe that anything that could be said at this hearing
was going to provide a satisfactory answer as to whether there
was an effort or an intent to time these penalties to affect
these official hearings.
So I will be sending written questions and requests for
documents to provide complete answers to the question of the
timing of this. The fact that citations were to originally
occur the week of the first hearing and subsequently happened
just last night before this hearing strikes me as one of
extreme coincidence, well, perhaps it is, and I intend to find
out when I ask the request.
So with that I will dismiss the first panel and thank you
very, very much for coming. If there are further follow-up
questions, I would ask each of you to respond in a timely
manner as you possibly can, so I dismiss the first panel and at
the same time call the second panel.
[Pause.]
Mr. Hastings. I am very pleased to have our next panel. We
have Mr. Ray Dempsey, Vice President of BP America; Mr. Bill
Ambrose, Managing Director of North American Division of
Transocean; Mr. James Bement, did I say that correctly?
Mr. Bement. Yes, sir.
Mr. Hastings. Vice President of Sperry Drilling, which is a
division of Halliburton. You were in the audience and you saw
what the ground rules are as far as timing. Your full statement
will appear in the record. When the green light is on you are
doing very fine. When the yellow light comes on it means you
have a minute, and when the red light comes on it means your
time has expired, and I would ask that you be as close to that
as possible.
As a programming note, we anticipate votes sometime between
1:00 and 1:15. If this all wraps up before then, that will be
fine; otherwise we will have votes and then come back
immediately after the votes. We can't go any longer than 4:00.
I don't anticipate that happening, but I just want to give a
heads-up to everybody. So, with that, Mr. Dempsey, you are
recognized for five minutes.
STATEMENT OF MR. RAY DEMPSEY,
VICE PRESIDENT, BP AMERICA
Mr. Dempsey. Thank you, Mr. Chairman.
Chairman Hastings, Members of the Committee, my name is Ray
Dempsey, and I am Vice President for BP America. I have worked
for BP for more than 20 years. I have filled a variety of
management and operational roles in engineering, strategy and
financial areas. During the response, I oversaw the St.
Petersburg, Florida, information center where BP worked with
the Coast Guard and other Federal and state government
representatives to share information on spill-related efforts.
The Deepwater Horizon accident was a tragic event that
profoundly affected us all. From the outset, BP has been
committed, and remains committed today, to meeting our
obligations in the Gulf Coast. While we appreciate the
Committee's attention to the Joint Investigation Report, given
the ongoing litigation and multiple investigations, BP cannot
discuss details regarding the findings of the report. That
said, I will do my best to answer your questions and to convey
to you the actions BP has taken since the accident.
The Joint Investigation Team Report, like every official
report previously released, makes clear that the Deepwater
Horizon accident was complex. It resulted from a number of
interrelated causes involving multiple parties, including BP,
Transocean and Halliburton. That finding is also consistent
with the report of BP's own investigation commissioned
immediately after the accident and released publicly more than
a year ago.
While we received a communication from DOI last night and
are in the process of reviewing it, the issuance of notices of
noncompliance to BP, Transocean and Halliburton makes clear
that contractors, like operators, are responsible for properly
conducting their deepwater drilling activities and are
accountable to the U.S. Government and the American public for
their conduct.
We are dedicated to applying the lessons of the accident.
In September 2010, BP announced the establishment of a new
centralized Safety and Operational Risk organization or S&OR.
One of S&OR's key objectives is to provide an independent check
on safety critical operational decisions by, one, setting clear
standards; two, providing expert scrutiny of safety and risk
independent of line managers and advising on examining and
auditing operations; three, providing deep technical support to
the line businesses; and four, intervening and escalating, as
appropriate, where corrective action is needed.
In addition, BP has implemented on a voluntary basis new
performance standards as applicable to our deepwater offshore
drilling operations in the Gulf of Mexico that go beyond
existing regulatory requirements. These standards address sub-
sea blowout preventers, third party verification of blowout
preventer testing and maintenance, requirements for laboratory
testing of certain cement slurries and enhanced measures for
oil spill response.
BP has also voluntarily undertaken several additional
actions to enhance safety. These include establishing a real
time drilling operation center in our Houston office,
collaborating with spill response groups to augment and enhance
industry response technology and capabilities, joining the
Marine Well Containment Corporation, and making available to it
BP's relevant containment knowledge and equipment, and working
with government regulators and others in joint technology
programs focusing on blowout preventer systems.
We expect our contractors to do their job safely and in
full compliance with all applicable government regulations.
Notwithstanding this expectation, BP is conducting a thorough
review of the contractors we use in drilling operations as well
as the measures we use to assure contractor compliance with
safety and quality standards. From the outset BP took action to
contain and respond to this accident, restore affected
environment and pay legitimate claims. We established a $20
billion trust available to satisfy legitimate individual and
business claims, state and local government claims, final
judgments and settlements, state and local costs and natural
resources damages and related costs. To date, BP has paid more
than $7 billion in individual business and government claims
and advances. BP has also committed significant amounts to
initiatives beyond paying claims received under the Oil
Pollution Act of 1990. For example, we voluntarily committed a
billion dollars to refund early restoration projects, more than
$250 million for tourism and seafood testing and marketing, and
$500 million to the Gulf of Mexico Resource Initiative for a
study of the environmental and public health impacts of the
accident.
BP deeply regrets the Deepwater Horizon accident, and we
have dedicated ourselves to meeting our commitments in the Gulf
Coast and to applying the lessons learned from this accident. I
look forward to answering your questions.
[The prepared statement of Mr. Dempsey follows:]
Statement of Raymond C. Dempsey, Jr., Vice President, BP America
Chairman Hastings, Ranking Member Markey, members of the Committee,
my name is Ray Dempsey, and I am Vice President for BP America. I am
pleased to participate in today's hearing regarding the final report of
the Bureau of Ocean Energy Management, Regulation and Enforcement
(BOEMRE) and the U.S. Coast Guard Joint Investigation (Joint
Investigation Team Report) regarding the April 20, 2010 Deepwater
Horizon accident and resulting oil spill. The Deepwater Horizon
accident was a tragic event that profoundly affected us all. From the
outset BP has been committed--and remains committed today--to meeting
its obligations in the Gulf Coast.
My testimony is focused on the important lessons BP has learned
from this accident--lessons that BP has been sharing with industry
participants and government officials across the globe in a continuing
effort to enhance safety throughout the oil and gas industry. As we
have communicated to this Committee, while we respect and appreciate
the Committee's attention to the release of the Joint Investigation
Team Report, we cannot discuss and comment on the report's findings in
any detail because the facts regarding the causes of the accident are
the subject of ongoing litigation and investigations regarding the
accident. As you can appreciate, these legal proceedings will make it
challenging to respond to questions the Committee may have about the
Joint Investigation Report or the accident. That said, I appreciate the
opportunity to share with the Committee what BP has learned from the
accident and the changes we have made.
I have worked for BP for more than twenty years. Since joining the
company in 1990, I have held a variety of management and operational
roles in engineering, strategy, and financial areas of BP's operations
in the United States and abroad. On May 6, 2010, while serving as Vice
President for Strategy and Portfolio for BP's Fuels Value Chain
Strategic Performance Unit, I joined the St. Petersburg Unified
Command, which directed spill response efforts for the west coast of
Florida and worked together with incident command centers throughout
the Gulf region. As part of my responsibilities, I oversaw the St.
Petersburg Joint Information Center, where BP worked with the Coast
Guard and other federal and state government representatives to share
information on spill-related efforts. I volunteered for this position
because I wanted to contribute to BP's response efforts and assist in
addressing the needs of the people of the Gulf Coast region. I assumed
my current role, in which I continue to be involved in information-
sharing with external stakeholders regarding response issues, in
October 2010.
Today I would like to share with you and the Committee some of the
actions that BP has taken, not only to contain and respond to the
spill, restore the affected environment, and pay all legitimate claims,
but also further to improve safety. These initiatives to improve safety
include organizational changes within BP to facilitate enhanced
company-wide process safety, operational integrity, and risk management
programs; the implementation of voluntary performance standards for
deepwater drilling that go beyond existing regulatory obligations;
strengthening contractor management; and continuing the implementation
of the recommendations from BP's investigation report.
A Complex Accident With Multiple Causes Involving Multiple Parties
Consistent with the findings of every official investigation, the
Joint Investigation Team Report makes clear that the Deepwater Horizon
accident was the result of multiple causes, involving multiple parties,
including BP, Transocean, and Halliburton. This finding is also
consistent with the report of BP's own non-privileged investigation,
commissioned immediately after the accident and released publicly more
than a year ago. BP has consistently acknowledged its role in the
accident. BP continues to encourage other parties to acknowledge their
roles in the accident and to step forward to fulfill their obligations
to Gulf communities.
BP's Response and Restoration Efforts
From the first day of the Deepwater Horizon accident, BP took
action to contain and respond to the spill, restore the affected
environment, and pay legitimate claims. At its peak, the response
involved nearly 48,000 people, scores of aircraft, and thousands of
boats. To date, BP has spent approximately $14 billion on response
efforts. In addition, BP established a $20 billion Trust to enhance
public confidence in the availability of funds for economic and
environmental restoration. That Trust was established in 2010 to
satisfy legitimate individual and business claims resolved by the Gulf
Coast Claims Facility (GCCF), state and local government claims
resolved by BP, final judgments and settlements, state and local
response costs, and natural resource damages (NRD) and related costs.
As of October 11, 2011, BP has paid more than $7 billion in individual,
business, and government claims and advances.
BP has also committed significant amounts to initiatives beyond
paying claims received under the Oil Pollution Act of 1990. BP
voluntarily committed $1 billion to fund early restoration projects and
has committed more than $250 million to support tourism and seafood
testing and marketing in the Gulf region. BP has committed $500 million
to the Gulf Research Initiative, a research program to be conducted by
independent experts from academic institutions to study the
environmental and public health impacts of the accident. BP has also
provided $52 million to five public health agencies and $10 million to
the National Institutes of Health; established a $100 million fund for,
among others, unemployed rig workers in the Gulf region; and made
significant financial contributions to social service organizations in
the Gulf. In total, BP's efforts to date have exceeded $20 billion.
BP's Initiatives To Improve Safety
In addition to its unprecedented efforts to respond to the spill,
restore the environment, and pay legitimate claims, BP has worked
intensively to implement enhanced company-wide process safety,
operational integrity, and risk management programs. BP has dedicated
itself to applying the lessons of the Deepwater Horizon accident, and
is undertaking a range of actions to further strengthen risk
management, process safety, and contractor oversight throughout the
company, as well as sharing these lessons learned across the industry
and the globe.
I explain below some of these initiatives.
Organizational Initiatives
In September 2010, BP announced the establishment of a new,
centralized Safety and Operational Risk (S&OR) organization. S&OR
drives implementation of mandatory safety-related standards and
processes and provides checks and balances independent of the business
line. One of its key objectives is to provide an independent check on
safety-critical operational decisions. S&OR accomplishes its mandate at
the BP Group and local business levels by: (1) setting clear
requirements; (2) providing expert scrutiny of safety and risk--
independent of line managers--and advising on, examining, and auditing
operations; (3) providing deep technical support to the line
businesses; and (4) intervening and escalating, as appropriate, where
corrective action is needed. S&OR has the authority to intervene in
operational and technical decisions in the company's line businesses.
BP has also reorganized its upstream business into three separate
divisions--Exploration, Developments, and Production--each of which is
led by an Executive Vice President reporting directly to the Chief
Executive Officer. The new structure for BP's upstream business allows
increased executive management visibility into each division and
facilitates consistent implementation of BP's existing Operating
Management System (OMS)--BP's comprehensive, company-wide management
system that sets forth guiding principles, mandatory standards, and
operating procedures--as well as closer connectivity with the S&OR
organization. In addition, specialized personnel who were previously
part of a separate, advisory drilling and completions function are
being integrated into the line operating businesses where they can
share their knowledge and build capability. Within the Developments
Division, BP has established a single Global Wells Organization, which
has responsibility for drilling all BP's wells around the world
according to high standards. Global Wells' agenda for assuring the
safety of drilling operations covers seven areas: standards,
compliance, risk management, capability-building, contractor
management, redefining performance, and enhancing technology.
Voluntary Performance Standards
As we have announced, BP has implemented, on a voluntary basis,
specific new performance standards applicable to our deepwater offshore
drilling operations in the Gulf of Mexico. These new standards go
beyond existing regulatory obligations. Specifically, BP has committed
to four voluntary performance standards for deepwater offshore drilling
operations conducted on leases for which BP Exploration & Production is
the designated operator in the Gulf. BP will incorporate these
voluntary performance standards in any future drilling permit
application or proposed plan application that BP submits, and upon the
regulator's approval of that permit or plan those standards will become
conditions of operation and fully enforceable by the regulator.
First, BP will use, and will require its contractors involved in
drilling operations to use, subsea blowout preventers (BOPs) equipped
with no fewer than two blind shear rams and a casing shear ram on all
drilling rigs under contract to BP for deepwater service operating in
dynamic position mode.
Second, each time a subsea BOP from a moored or dynamically
positioned drilling rig is brought to the surface and testing and
maintenance on the BOP are conducted, BP will require that a third
party verify that the testing and maintenance of the BOP were performed
in accordance with manufacturer recommendations and API Recommended
Practice 53.
Third, BP will require that laboratory testing of cement slurries
for primary cementing of casing and exposed hydrocarbon bearing zones
relating to drilling operations of deepwater wells be conducted or
witnessed by a BP engineer competent to evaluate such laboratory
testing, or a competent third party independent of the cement provider.
BP will provide laboratory results to the applicable BOEMRE field
office.
Fourth, BP's Oil Spill Response Plan will include information about
enhanced measures for responding to a spill in open water, near shore
response or shoreline spill response based on lessons learned from the
Deepwater Horizon oil spill.
BP has also voluntarily undertaken six additional actions. First,
BP has established a real-time drilling operations center in its
Houston office which will be operational before the company begins
drilling any new oil or gas wells in the Gulf. Second, BP will work to
augment and improve industry response capabilities and technology in
collaboration with groups such as Clean Gulf Associates and the Marine
Spill Response Corporation. As a member of both organizations, BP will
actively encourage and support additional investments in technology,
training and people to continuously improve response capability and
performance. Third, BP has joined the Marine Well Containment
Corporation (MWCC) and has made its relevant procedures, expertise and
available equipment developed during the Deepwater Horizon accident
available to industry through the MWCC. Fourth, BP will share the
company's increased remotely operated vehicle (ROV) and simultaneous
operations (SIMOPS) monitoring capabilities with industry and
government through an industry workshop. Longer term, BP will
collaborate with BOEM/BSEE, the USCG, and other agencies and industry
work groups to share new learning regarding ROVs and SIMOPS. Fifth, BP
will collaborate with BOEM/BSEE, the Ocean Energy Safety Advisory
Committee, the Center for Offshore Safety, and others in a joint
technology development program to provide enhanced functionality,
intervention, testing and activation of BOP systems, including acoustic
and subsea communications capabilities. Sixth, BP will increase its
well control competencies through assessments of its employees and
agents who have authority to act on BP's behalf in overseeing drilling
operations on BP-operated facilities and drilling rigs.
Contractor Management and Oversight
BP expects its contractors to do their jobs safely and in full
compliance with all applicable government regulations. Notwithstanding
this expectation, BP is conducting a thorough review of the contractors
it uses in drilling operations, as well as of the measures it uses to
assure contractor compliance with safety and quality standards. The
actions stemming from this review will build on BP's existing programs
and requirements for selecting and working with contractors, which
include assessing contractors' safety performance as part of the
selection process, defining safety requirements in contracts, and
evaluating contractor performance.
Implementation of the Recommendations from the BP Investigation Report
on the Deepwater Horizon--Lessons Learned
As part of its commitment to safety and learning the lessons of the
Deepwater Horizon accident, BP conducted its own investigation of that
accident. On the day that investigation report was published (September
8, 2010), BP immediately accepted and committed to implement the
report's twenty-six recommendations. These recommendations include
measures to strengthen contractor management, as well as assurance on
blowout preventers, well control, pressure testing for well integrity,
emergency systems, cement testing, rig audit and verification,
personnel competence, and leading and lagging performance indicators
for drilling operations. As the Report noted, ``[f]ull implementation
of the recommendations w[ill] involve a long-term commitment and a
prioritized plan.'' Consistent with that guidance, BP developed a
comprehensive project plan and is making progress in the implementation
at a pace appropriate to maintain quality and to enable rigorous
implementation down to the front line of the organization. BP is also
developing a program of self-verification and auditing by S&OR to
confirm implementation.
BP's comprehensive Operating Management System (OMS) provides a
strong foundation for the company's ongoing initiatives to enhance its
process safety, risk management, and operational integrity programs.
OMS is facilitating effective implementation of the Report's
recommendations and other safety enhancements that BP is making.
Conclusion
BP deeply regrets the Deepwater Horizon accident, and has dedicated
itself to meeting its commitments in the Gulf Coast and to applying the
lessons of this accident. BP is undertaking a broad range of actions to
further strengthen risk management, process safety, and contractor
oversight throughout the company, and is committed to doing its part in
disseminating the lessons of the Deepwater Horizon accident. To that
end, BP has shared lessons learned with over 20 countries globally, and
the company is working with governments and industry groups around the
world to facilitate industry-wide changes that will further promote the
safety of offshore drilling. We believe that we have the necessary
systems and capabilities in place to continue to enhance the safety of
deepwater drilling.
______
Response to questions submitted for the record by Ray Dempsey,
Vice President, BP America Inc.
QUESTION FROM REPRESENTATIVE FLORES:
1. Mr. Dempsey, during the hearing I asked you what the total
anticipated financial outlay of BP will be in response to
Macondo incident. This would include the trust fund, response,
cleanup, etc. Please provide BP's estimate to the Committee.
Please see Notes 2 and 37 to BP p.l.c.'s Form 20-F filed on March
2, 2011, as well as Note 2 to BP p.l.c.'s Form 6-K filed on October 25,
2011, for information on the Gulf of Mexico oil spill and provisions.
These documents are available at http://www.sec.gov/Archives/edgar/
data/313807/000095012311021108/u10175e20vf.htm and http://www.sec.gov/
Archives/edgar/data/313807/000119312511280172/d234390d6k.htm,
respectively.
In addition, BP also wants to underscore what it has done in the
Gulf following the Deepwater Horizon accident. From the outset, BP has
stepped up to meet its commitments in the Gulf of Mexico region. BP is
meeting its obligations under the Oil Pollution Act of 1990 (OPA) and
has waived that statute's $75 million liability cap. Thus far, BP has
paid out more than $7 billion to individuals, businesses, and
governments in claims and advances and has spent more than $14 billion
on other response activities in the Gulf. In addition, BP is
cooperating in a natural resource damages assessment (NRDA) with
federal and state trustees and, in an unprecedented voluntary agreement
with those trustees, BP agreed to commit up to $1 billion to fund early
restoration projects to accelerate Gulf Coast restoration. On December
14, the Trustees unveiled the first set of early environmental
restoration projects that are proposed for funding under that landmark
agreement. The eight proposed projects are located in Alabama, Florida,
Louisiana and Mississippi. Collectively, the projects will restore and
enhance wildlife, habitats, and the services provided by those habitats
and provide additional access for fishing, boating, and related
recreational uses. More early restoration projects are anticipated in
the future.
BP also has made a number of voluntary contributions, including
committing: $500 million, over 10 years, to the Gulf of Mexico Research
Initiative (GoMRI) to study the potential impact of the Deepwater
Horizon accident on the environment and public health; $100 million to
the Rig Worker Assistance Fund administered by the Baton Rouge Area
Foundation; $179 million to the Gulf States for tourism programs; $77
million to the Gulf States for seafood testing and marketing programs;
$52 million for federal and state mental health programs; and $10
million to NIH for a long-term response worker health study.
In June 2010, BP established a $20 billion trust to enhance public
confidence in the availability of funds for economic and environmental
restoration. That trust was established to satisfy legitimate
individual and business claims processed by the Gulf Coast Claims
Facility (GCCF), state and local government claims processed by BP,
final judgments and settlements, state and local response costs, and
natural resource damages and related costs. The $20 billion is neither
a floor nor a ceiling.
QUESTIONS FROM REPRESENTATIVE MARKEY:
1. Please detail the capital investments made by BP in oil and gas
exploration in each of the last three fiscal years? Of these
investments, please detail how much was spent on exploration of
new fields?
The table below details BP p.l.c.'s worldwide capital expenditures
for exploration and production.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The table below details BP p.l.c.'s worldwide exploration and
appraisal costs on new fields.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The chart above includes exploration and appraisal drilling
expenditures, which are capitalized within intangible assets, and
geological and geophysical exploration costs, which are charged to
income as incurred. These costs are based on activities of subsidiaries
and do not include costs associated with equity-accounted entities.
2. How much money has BP invested in each of the last three fiscal
years on research and development generally? Of these research
and development investments, how much was focused on the
research and development of safer offshore drilling
technologies? How much was focused on technologies related to
rig safety and accident prevention? How much was focused on
spill response technologies? How much was focused on research
regarding renewable and alternative energy sources? Please
break down that investment by renewable energy type (e.g.,
wind, solar, etc.).
The table below details BP p.l.c.'s worldwide research and
development expenditure.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Currently, exploration and production accounts for roughly 40%
of BP's Research & Development expenditures; refining and marketing
accounts for 35% and alternative energy makes up the remaining 25%. The
share dedicated to alternative energy reflects the growing potential of
alternative energy in BP's energy portfolio.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Safety is embedded in everything that BP does, thus much of
BP's capital and operating spend incorporates elements of safety.
Pursuant to the definition of ``Research & Development'' used in
BP's annual report, exploration & production Research & Development
contains several programs that focus on safety and reliable offshore
operations, including drilling. The program on drilling technology is
focused on measurement by drilling, downhole gas detection and
resistivity ahead of bit. The total spent in this area over the last 3
years is approximately $25 million.
However, this amount does not cover the full extent of Research &
Development embedded in BP's spend and that of its contractors. By way
of example, BP's Thunderhorse production facility contains hundreds of
technology firsts in well completions, subsea and topsides facilities
that in total cost several billion dollars to develop, manufacture and
install over a period of 10 years. None of these expenditures was
accounted for as BP's Research & Development but BP nonetheless paid
suppliers to develop them. Additionally, BP works with suppliers in the
design and development of safe drilling equipment. BP's contribution to
these efforts is not classified as Research & Development.
3. How much has BP invested in deployment of renewable or alternative
energy in each of the last three fiscal years? Please break
that down that investment by renewable energy type (e.g. wind,
solar, etc.).
BP supports a comprehensive climate and energy policy that includes
development of all forms of energy (oil, natural gas, coal, nuclear,
biofuels, wind, solar, etc.) and encourages efficiency and
conservation. The chart below details BP p.l.c.'s worldwide alternative
energy capital expenditure and revenue investment.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
4. Does BP support the elimination of the subsidies for oil and
gas companies identified in the President's Budget Request for
Fiscal Year 2012 in order to reduce the federal budget deficit?
Determination of tax policy is up to the government, but BP wants
to participate in the dialogue on the important issues of comprehensive
tax reform and deficit reduction. BP believes that it is important that
tax reform be undertaken as a comprehensive effort that results in the
U.S. tax system's being competitive. In that regard, BP does not
support proposals that target a single industry to provide revenue for
deficit reduction.
5. Does BP believe that the voluntary enhanced drilling standards for
offshore drilling that it adopted in July are technologically
practicable and economically feasible for the industry as a
whole?
BP is implementing a set of voluntary deepwater oil and gas
drilling standards in the Gulf of Mexico that go beyond existing
regulatory obligations and demonstrate the company's commitment to safe
and reliable operations. BP is not in a position to speak on behalf of
the industry as a whole. BP has worked hard to share lessons learned
from the Deepwater Horizon accident broadly--with regulators and with
industry--in the United States and abroad.
6. Does BP believe that the voluntary enhanced drilling standards for
offshore drilling that it adopted in July are technologically
practicable and economically feasible for other major,
vertically integrated oil companies such as ExxonMobil,
Chevron, ConocoPhillips and Shell?
BP is not in a position to speak on behalf of those corporations.
BP has concluded that these voluntary standards and practices should be
part of BP's operations in the Gulf of Mexico.
7. What recommendations does BP have for improving the safety of
offshore drilling?
In July 2011, BP Exploration & Production Inc. (BPXP) announced a
new set of voluntary deepwater oil and gas drilling standards in the
Gulf of Mexico that demonstrate the company's commitment to safe and
reliable operations. These performance standards go beyond existing
regulatory obligations and reflect the company's commitment, following
the Deepwater Horizon accident and subsequent oil spill, to apply
lessons learned. BP is already sharing key lessons learned from the
spill response with regulators and other industry participants around
the world. Although BP is not in a position to speak on behalf of the
industry as a whole, BP has concluded that these voluntary standards
and practices should be part of BP's operations in the Gulf of Mexico.
The four new BP performance standards are:
BPXP will use, and will require its contractors
involved in drilling operations to use, subsea blowout
preventers (BOPs) equipped with no fewer than two blind shear
rams and a casing shear ram on all drilling rigs under contract
to BPXP for deepwater service operating in dynamic position
mode. With respect to moored drilling rigs under contract to
BPXP for deepwater drilling service using subsea BOPs, the
subsea BOP will be equipped with two shear rams, to include at
least one blind shear ram and either an additional blind shear
ram or a casing shear ram.
Each time a subsea BOP from a moored or dynamically
positioned drilling rig is brought to the surface and testing
and maintenance on the BOP are conducted, BPXP will require
that a third party verify that the testing and maintenance of
the BOP were performed in accordance with manufacturer
recommendations and API RP 53.
BPXP will require that lab testing of cement slurries
for primary cementing of casing and exposed hydrocarbon bearing
zones relating to drilling operations of deepwater wells be
conducted or witnessed by a BPXP engineer competent to evaluate
such lab testing, or a competent third party independent of the
cement provider. BPXP will provide lab results to the
applicable BSSE field office within a reasonable period of
time.
BPXP's Oil Spill Response Plan (OSRP) includes
information about enhanced measures for responding to a spill
in open water, near shore response and shoreline spill response
based on lessons learned from the Deepwater Horizon oil spill.
QUESTIONS FROM REPRESENTATIVE GRIJALVA:
1. The report we're talking about found, quote, `BP was ultimately
responsible for conducting operations at Macondo in a way that
ensured the safety and protection of personnel, equipment,
natural resources and the environment.' The report said while
it was Halliburton's job to mix and test the cement that failed
in the seal, BP had the final word and made a series of
decisions that saved money but increased risk and may have
contributed to the cement's failure. Yet you say today, because
you're being sued, you can't explain any of this to us. I'd
like to ask you directly: Why did BP decide to save money
rather than lives?
BP strongly disagrees with the question's characterization of BP's
actions in connection with the Macondo well. The findings of every
official investigation report--including the MBI, the Presidential
Commission, and the NAE/NRC--are consistent with the core conclusion
that the Deepwater Horizon accident was the result of multiple causes,
involving multiple parties, including Transocean and Halliburton, as
well as BP.
2. The report named a BP employee, Mark Hafle, as specifically failing
to investigate anomalies detected during the cementing and said
he did not run a test that evaluates the quality of the cement
job. Mr. Hafle still works for BP, and refused to testify last
year citing his right against self-incrimination. Does this
committee need to ask Mr. Hafle to testify?
BP does not believe it would be appropriate to comment, at this
time, on the Committee's processes for issuing invitations to testify.
With respect to Mr. Hafle's testimony before the Joint Investigation
Team of the Bureau of Ocean Energy Management, Regulation and
Enforcement and the United States Coast Guard, the Joint Investigation
Team's report states that ``[a]fter testifying at one hearing, Mark
Hafle invoked his Fifth Amendment Rights and refused to testify a
second time.'' See Bureau of Ocean Energy Management, Regulation and
Enforcement, Report Regarding the Causes of the April 20, 2010 Macondo
Well Blowout 11 n.9 (2011).
3. What can you tell us about the safety and compliance role of other
BP employees who weren't named in the report? Why was Mr. Hafle
the only one identified by name?
BP cannot speak to the Joint Investigation Team's decisions
regarding what to include in their report.
______
Mr. Hastings. Thank you very much, Mr. Dempsey. Next we
will recognize Mr. Bill Ambrose, Managing Director of the North
America Division of Transocean. Mr. Ambrose, you are recognized
for five minutes.
STATEMENT OF MR. BILL AMBROSE, MANAGING DIRECTOR, NORTH AMERICA
DIVISION, TRANSOCEAN
Mr. Ambrose. Chairman Hastings, other Members of the
Committee, thank you for the opportunity to be here before your
panel today. My name is Bill Ambrose. I am the Managing
Director of the North American Division of Transocean Offshore
Drilling in Deepwater, Incorporated. I also led Transocean's
internal investigation into the Macondo incident on April 20,
2010.
The findings of that investigation were published in June
2011. I am grateful for the opportunity to highlight some of
those with the Committee today as the Committee reviews the
final reports of BOEMRE and the U.S. Coast Guard's Joint
Investigation Team.
First and foremost, let me state the last 17 months have
been a time of great sorrow and reflection for our company.
Nothing is more important to Transocean than the safety of our
people and our crew members, and our thoughts and prayers
continue for the widows, parents and children of the 11 lost.
This period has been one of intense effort on the part of
our company and numerous investigative bodies and oversight
entities, including this Committee, to get to the bottom of
what caused this tragedy. To that end Transocean formed an
investigative team comprised of dedicated Transocean personnel
and numerous independent industry experts. Transocean provided
the investigative team with the resources necessary to produce
a thorough investigation of the incident.
Following the incident Transocean issued Alert 114 to its
global fleet to ensure BOP's schematics reflect the current
arrangements of each rig's BOP. Alert 114 also reenforced our
emergency response preparedness. We have also developed
standardized procedures for conducting negative tests for
operators, and in consultation with our customers we have
enhanced our well integrity guidelines. Further, the company
has expanded the scope of its internal audit and assessment
program and updated its well control to reflect lessons
learned.
We continue to study the appropriateness and reliability of
acoustic control systems for BOPs, and we continue to evaluate
potential equipment and procedures for early kick detection and
handling of gas in the riser.
Transocean remains ready and willing to assist your
committee as this important work moves forward. However, we are
unable to respond to specific findings and conclusions of the
U.S. Coast Guard and BOEMRE reports. The Joint Investigation
Team convening order incorporates for both the Coast Guard and
BOEMRE the provisions of 46 U.S.C. Sec. 6308[a] which prohibits
the use of reports of any proceedings other than the
administrative proceedings initiated by the United States. This
BOEMRE report acknowledges this limitation on page 10 where it
states, ``The convening work provide the relevant statutes and
regulations relating to both the U.S. Coast Guard and BOEMRE,
govern the JIT, and the JIT public hearing conducted in
accordance with U.S. Coast Guard rules and procedures relating
to marine investigation.''
Last the BOEMRE proceedings are still active in the
limitation process and therefore I cannot discuss them.
Again, on behalf of Transocean I am pleased to discuss the
facts as we know them to further understanding of what occurred
on the night of April 20, 2010, and what we can do to prevent
its reoccurrence. Thank you.
[The prepared statement of Mr. Ambrose follows:]
Statement of Bill Ambrose, Managing Director, North America Division,
Transocean Offshore Deepwater Drilling Incorporated
Chairman Hastings, Ranking Member Markey, and other members of the
Committee, thank you for the opportunity to appear before your panel
today. My name is Bill Ambrose, and I am Managing Director of the North
America Division at Transocean Offshore Deepwater Drilling
Incorporated. I also led Transocean's internal investigation into the
Macondo incident of April 20, 2010. The findings of that investigation
were published in June 2011, and I am grateful for the opportunity to
highlight some of those for the Committee today as the Committee
reviews the final report of the Bureau of Ocean Energy, Management,
Regulation and Enforcement (BOEMRE) and the U.S. Coast Guard (USCG)
Joint Investigation Team (JIT).
First and foremost let me state that the last 17 months have been
a time of great sorrow and reflection for our Company. Nothing is more
important to Transocean than the safety of its employees and crew
members, and our thoughts and prayers continue to be with the widows,
parents and children of the 11 crew members who died on April 20, 2010.
This period has also been one of intense effort on the part of our
Company and numerous investigative and oversight entities, including
this Committee, to get to the bottom of what caused this tragedy.
To that end, Transocean formed an internal investigative team
comprised of dedicated Transocean personnel and numerous independent
industry experts. Transocean provided the investigation team with the
resources necessary to produce a thorough investigation of the
incident.
Following the incident, Transocean issued Alert Number 114 to its
global fleet to ensure that BOP schematics reflect the current
arrangements of each rig's BOP. Alert Number 114 also reinforced our
emergency response preparedness.
We have also designed standardized procedures for conducting
negative pressure tests for operators. In consultation with our
customers, we have enhanced our well integrity guidelines. Further, the
Company has expanded the scope of its internal audit and assessment
program and updated its well control manual to reflect lessons learned.
We continue to study the appropriateness and reliability of
acoustic control systems for the BOP, and we continue to evaluate
potential equipment and procedures for early kick detection and the
handling of gas in the riser.
Transocean remains ready and willing to assist your Committee as
this important work moves forward. However, we are unable to respond to
specific findings and conclusions of the U.S. Coast Guard and BOEMRE
reports. The Joint Investigation Team (JIT) Convening Order
incorporates for both the U.S. Coast Guard and BOEMRE the provisions of
46 U.S.C. Sec. 6308 (a), which prohibits the use of reports in any
proceeding other than the administrative proceedings initiated by the
United States. The BOEMRE report acknowledges this limitation at page
10:
The Convening Order provides that relevant statutes and
regulations relating to both the USCG and BOEMRE govern the JIT
and that the JIT's public hearings be conducted in accordance
with the USCG's rules and procedures relating to Marine Boards
of Investigations.
Lastly, the BOEMRE proceedings are still active in the litigation
process and therefore I cannot discuss them.
Again, on behalf of Transocean, I am pleased to discuss the facts
as we know them to further understand what occurred on the night of
April 20, 2010, and what we can do to prevent its reoccurrence.
______
Mr. Hastings. Thank you, Mr. Ambrose. Next I recognize Mr.
James Bement, Vice President of Sperry Drilling, which is a
part of Halliburton. You are recognized for five minutes.
STATEMENT OF MR. JAMES BEMENT, VICE PRESIDENT, SPERRY DRILLING,
HALLIBURTON
Mr. Bement. Thank you, Chairman Hastings, Ranking Member
Markey and Members of the Committee. Thank you for the
invitation to testify today.
As one of my colleagues made clear in our company's first
appearance before Congress in May 2010, Halliburton looks
forward to continuing to work with Congress to understand what
happened at Macondo and what collectively we can do in the
future to ensure oil and gas production in the United States is
undertaken in the safest and most environmentally responsible
manner possible.
I want to again express my condolences to the families who
lost loved ones. We will never forget the deaths, injuries
suffered by members of our industry, nor the consequences that
the oil spill had on people living and working the Gulf of
Mexico region.
In appearing before you I want to assure you and your
colleagues that Halliburton has cooperated with the
investigation into how and why the Deepwater Horizon incident
happened. From the outset, Halliburton has made senior
personnel and other employees available to brief Members and
staff, including Members and staff of this Committee. As Mr.
Markey may recall, I provided a briefing to him and his
colleagues on May 4 last year in the initial stages of the
review of the incident. I also participated in other
congressional briefings during 2010.
Our company testified at four separate hearings and
produced tens of thousands of pages of documents to this
Committee. We voluntarily provided to the Committee and other
committees real time logging data preserved by Sperry Drilling
by the Macondo well so that you and your colleagues could have
a first-hand view of one of the various data strings available
to individuals on the rig and on shore. In addition,
Halliburton has produced hundreds of thousands of pages of
documents in the multiple investigations that have been
underway since last year. In fact, six Halliburton employees
provided testimony to the Joint Investigative Team during its
hearing.
At present Halliburton is the subject of more than 400
class action lawsuits with many thousands of potential
claimants. As you can appreciate with that many lawsuits
pending and more potentially in the offing, I will be very
limited in what I can say today.
Let me begin with the background of our company. As a
global leader in oil field services, Halliburton has been
providing a variety of services to oil and gas exploration
production industry for over 90 years. Halliburton is the
largest service and material provider in the oil and gas
industry. Halliburton provides its own isolation and
engineering solutions for the life of the oil company.
Sperry Drilling is a product service by Halliburton and is
a global supplier of reliable, innovative and highly technical
drilling and formation evaluation services to the oil and gas
drilling industry. In fact, Sperry Drilling is the second
largest company in all these categories and is the largest
surface data logging company today in the Gulf of Mexico.
Halliburton safely conducts thousands of successful well
service operations each year. It is committed to continuously
improving its performance. Because the company views safety and
environmental performance as critical to the success, they are
core elements of our corporate culture. However, it has much to
offer to help our nation needs, its energy and security needs.
The construction of the deepwater well is a complex
operation involving the performance of numerous tasks by many
parties led by the well owner's representative who has the
ultimate authority for decisions on how and when various
activities are conducted. For the Macondo well, Halliburton was
contracted by the well owner to perform a variety of services
on the rig. These included cementing, mud logging, directional
drilling, logging well drilling and measuring well drilling. In
addition, Halliburton provided select real time drilling and
rig data acquisition and transmission services to key personnel
both onboard the Deepwater Horizon and at various onshore
locations.
Subsequent to the blowout Halliburton worked at the
direction of the well owner to provide assistance in the effort
to bring the well under control. This effort included
intervention support to help secure the damaged well and
planning and services associated with drilling the relief well
operations. I was grateful to have been able to work with
others in our industry in an enormously challenging but
ultimately successful effort to bring the well under control.
Thank you for the opportunity to appear before you today.
Look forward to your questions.
[The prepared statement of Mr. Bement follows:]
Statement of James Bement, Vice President, Sperry Drilling, Halliburton
Chairman Hastings, Ranking Member Markey, and Members of the
Committee:
Thank you for the invitation to testify today as the Committee
meets to review the BOEMRE/Coast Guard Joint Investigation Team Report.
As one of my colleagues made clear in our company's first
appearance before Congress last May, Halliburton looks forward to
continuing to work with Congress to understand what happened in
drilling the Mississippi Canyon 252 well and what we collectively can
do in the future to ensure that oil and gas production in the United
States is undertaken in the safest, most environmentally responsible
manner possible.
The April 20th blowout, explosions and fire on the Deepwater
Horizon rig and the spread of oil in the Gulf of Mexico are tragic
events for everyone. The deaths and injuries to personnel working in
our industry cannot be forgotten. At the time, Halliburton extended its
heartfelt sympathy to the families, friends, and colleagues of the 11
people who lost their lives and those workers injured in the tragedy. I
wish to do so again today.
In appearing before you, I want to assure you and your colleagues
that Halliburton has and will continue to fully support, and cooperate
with, the ongoing investigations into how and why the tragic Deepwater
Horizon incident happened. From the outset, Halliburton has made senior
personnel available to brief Members and staff, including Members and
staff of this Committee. Our company testified at four separate
hearings last year and produced tens of thousands of pages of documents
to this Committee. In addition, Halliburton has produced hundreds of
thousands of pages of documents in the multiple ongoing investigations
that have been underway since last year, including the one that is the
subject of today's hearing. In fact, six Halliburton employees provided
testimony to the Joint Investigative Team during its hearings.
At present, Halliburton is the subject of more than 400 lawsuits.
As you can appreciate, with that many lawsuits pending and more
potentially in the offing, I will be very limited in what I can say
today.
Background on Halliburton
As a global leader in oilfield services, Halliburton has been
providing a variety of services to the oil and natural gas exploration
and production industry for more than 90 years. Halliburton's areas of
activity are primarily in the upstream oil and gas industry. They
include providing products and services for clients throughout the life
cycle of the hydrocarbon reservoir, from locating hydrocarbons and
managing geological data to directional drilling and formation
evaluation, well construction and completion, to optimizing production
through the life of the field. The company is also engaged in
developing and providing technologies for carbon sequestration, and we
are a service provider to the geothermal energy industry.
Halliburton is the largest cementing service and material provider
in the oil and gas industry. Halliburton provides zonal isolation and
engineering solutions for the life of a well. Sperry Drilling is a
product service line of Halliburton and is a global supplier of
reliable, innovative, and highly technical drilling and formation
evaluation services to the oil and gas drilling industry. The company
safely conducts thousands of successful well service operations each
year and is committed to continuously improve its performance. Because
the company views safety and environmental performance as critical to
its success, they are core elements of our corporate culture.
Halliburton has much to offer to help our nation meet its energy
security needs.
For the Mississippi Canyon 252 well, Halliburton was contracted by
the well owner to perform a variety of services on the rig. These
included cementing, mud logging, directional drilling, and measurement
while drilling services. In addition, Halliburton provided selected
real-time drilling and rig data acquisition and transmission services
to key personnel both on board the Deepwater Horizon and at various
onshore locations.
Halliburton's Participation in the Remediation Efforts on Mississippi
Canyon 252 Well
Subsequent to the blowout, Halliburton worked at the direction of
the well owner to provide assistance in the effort to bring the well
under control. This effort included intervention support to help secure
the damaged well and planning and services associated with drilling
relief well operations. My product service line was responsible for the
portion of this effort that was undertaken by Sperry Drilling.
Halliburton deployed survey management experts to assist in
planning the path of the two relief wells and mobilized its technology
group to work in collaboration with another industry partner to combine
our technologies, in an effort to develop an integrated ranging system
to expedite the intersection of the original well. I was grateful to
have been able to work with others in our industry in the enormously
challenging but ultimately successful effort to bring the well under
control.
Roles and Responsibilities in Drilling Operations
As a service provider to a well owner, Halliburton is contractually
bound to comply with the well owner's instructions on all matters
relating to the performance of all work-related activities in drilling
an exploratory well. We also are limited by information on down-hole
conditions provided by the well owner. The construction of a deep water
well is a complex operation involving the performance of numerous tasks
by multiple parties led by the well owner's representative, who has the
ultimate authority for decisions on how and when various activities are
conducted.
Halliburton is confident that its work on the Mississippi Canyon
252 well was completed in accordance with the requirements of the well
owner's well construction plan.
Thank you for the opportunity to share our views today.
______
Response to questions submitted for the record by James Bement, Vice
President, Sperry Drilling, Halliburton
Questions for the Record from Rep. Edward J. Markey, Ranking Democratic
Member
1. What recommendations does Halliburton have for improving the safety
of offshore drilling?
Response: As Mr. Bement said in his statement, ``Halliburton looks
forward to continuing to work with Congress to understand what happened
in drilling the Mississippi Canyon 252 well and what we collectively
can do in the future to ensure that oil and gas production in the
United States is undertaken in the safest, most environmentally
responsible manner possible.'' The company continues to evaluate
proposed legislation that would achieve this goal, but has not taken a
formal position on any such legislation.
2. How much money has Halliburton invested in each of the last three
fiscal years on research and development generally? Of these
research and development investments, how much was focused on
the research and development of safer offshore drilling
technologies? How much was focused on technologies related to
rig safety and accident prevention?
Response: Halliburton does not report research and development data
by fiscal year or in the manner as requested in the question. In the
annual reports on Form 10-K for 2008, 2009, and 2010, as filed with the
U.S. Securities and Exchange Commission, the company said the
following:
From Halliburton's 2008 Annual Report on Form 10-K:
Research and development costs
We maintain an active research and development program. The
program improves existing products and processes, develops new
products and processes, and improves engineering standards and
practices that serve the changing needs of our customers. Our
expenditures for research and development activities were $326
million in 2008, $301 million in 2007, and $254 million in
2006, of which over 96% was company-sponsored in each year.
As our customers award work in this environment of declining
commodity prices pricing competition in the international arena
has intensified Following is brief discussion of some of our
recent and current initiatives:
--making our research and development efforts more
geographically diverse in order to continue to supply our
customers with leading-edge services and products and to
provide our customers with the ability to more efficiently
drill and complete their wells. To that end we opened
technology center in India in 2007 and in Singapore in the
first quarter of 2008 and research and development laboratory
in Norway in the third quarter of 2008.
From Halliburton's 2009 Annual Report on Form 10-K:
Research and development costs
We maintain an active research and development program. The
program improves existing products and processes develops new
products and processes and improves engineering standards arid
practices that serve the changing needs of our customers such
as those related to high pressure/high temperature
environments. Our expenditures for research and development
activities were $325 million in 2009, $326 million in 2008, and
$301 million in 2007, of which over 96% was company-sponsored
in each year.
From Halliburton's 2010 Annual Report on Form 10-K:
Research and development costs
We maintain an active research and development program The
program improves existing products and processes develops new
products and processes and improves engineering standards and
practices that serve the changing needs of our customers such
as those related to high pressure/high temperature environments
Our expenditures for research and development activities were
$366 million in 2010, $325 million in 2009, and $326 million in
2008 of which over 96% was company-sponsored in each year.
3. Does Halliburton support the elimination of the subsidies for oil
and gas companies identified in the President's Budget Request
for Fiscal Year 2012 in order to reduce the federal budget
deficit?
Response: Halliburton is a service company, not an oil and gas
company. The company has not taken a formal position on proposed
legislation that would implement the tax proposals set forth in the
President's Budget Request for Fiscal Year 2012.
______
Mr. Hastings. Thank you. I thank all three of you for your
opening statement. I now ask unanimous consent that one of our
colleagues who does not sit on the Committee but asked to be
allowed to sit on the dais, and that is the gentlelady from
Houston. Without objection, so ordered. The gentlelady may join
us.
We will start the question period, and I will reserve my
time, but I will recognize the gentleman from Texas, Mr.
Flores.
Mr. Flores. Thank you, Mr. Chairman. Thank you, gentleman,
for appearing here today.
The question is for Mr. Dempsey of BP. Assuming that the
trust fund is full funded at $20 billion, when you add that
cost plus all the other costs, what is the total cost of BP
from this accident?
Mr. Dempsey. Congressman Flores, I think I should emphasize
a couple of points in response to your question. When the $20
billion trust was established we were clear that it was neither
a floor nor a ceiling. It wasn't intended to represent any
total or minimum amount of the costs associated with response
to the accident. Our spending to date related to the accident
is more than $20 billion.
Mr. Flores. OK. But you have obviously estimated some
future cost as well, so what would that be when you add it to
the 20 billion? Is that a number you can share with us today?
Mr. Dempsey. Thank you, Congressman. There is an important
clarification I should make. The $20 billion trust was
established to do a few specific things, including the payment
of claims, individual and business and government claims.
Mr. Flores. Correct.
Mr. Dempsey. It was also entered into to provide for
funding for some of the natural resource damage costs as that
work is carried out. It was not intended and has not been used
for payment of the direct response costs, so we have spent on
the order of some $13 billion now in the response cost. There
has been spent to this point a payment of claims, about $5.6 to
$5.7 billion of that to individuals and businesses and about
$1.3 billion in payment of claims to government entities.
Mr. Flores. OK. So you spent about $20 billion today. How
much of the trust fund have you actually--what have you
actually deposited into the trust fund?
Mr. Dempsey. There have been deposits, Congressman, into
the trust fund that exceed the amount that has been spent,
which I just described as about--actually it is somewhat less
than $7 billion. I could actually give you----
Mr. Flores. That is all right. Let us make this simple. Is
it going to be $30 billion, $35 billion? This isn't a trick
question. I am just trying to find out. How much are you going
to spend on the trust fund, response, everything, cleanup, what
is it going to cost?
Mr. Dempsey. Congressman, I wish I could anticipate or
speculate.
Mr. Flores. We will submit a written question and I will
ask you to submit that in writing. BP shouldn't have a legal
problem in responding to the Committee question on that. The
point I am trying to get to is this has left a mark on BP and I
am assuming that BP has learned from this, and so that takes me
to the next question. What are the lessons learned by BP
because of the $30 some odd billion you spent on this?
Mr. Dempsey. This is an important question, Congressman. So
one of our biggest priorities in this and was evident
immediately following the accident, we were clear in
acknowledging our role. We established within days of the
accident our own internal investigation team who proceeded to
do a thorough investigation as to the causes, we committed to
make the results of that investigation public. We did that more
than a year ago, and on the day that that report was published
it included 26 recommendations. We immediately accepted the
findings and the recommendations of that report.
Mr. Flores. OK, good. And then this is for Transocean and
for Halliburton. In this report, which is the President's
Commission, one of the allegations that has been made in this
is that because of the fact that Transocean and Halliburton are
worldwide oil field contractors, that because of your
attachment to this accident that there is a systemic issue in
oil field operations all over the United States and all over
the world. How would you respond to that allegation in this
report? Let us go with Transocean first, and try to keep your
answer to about 30 seconds.
Mr. Ambrose. I cannot comment specifically for that report.
From our findings, I don't believe we found any that were
systemic. If there were something systemic, you would feel that
there would be more of these types of incidents in the
industry, and there are not, so we did not find anything
systemic in the course of our investigation.
Mr. Flores. OK, thank you.
Mr. Bement. Congressman, I share the same commitment to----
Mr. Hastings. Turn on the microphone if you would.
Mr. Bement. Share the same commitment that my peers do. We
commit every day to make every job as safe as possible, to
continuously improve our drilling processes around the world,
and we have adopted that philosophy as a management company. It
is core to our culture, and we committed to that on a global
basis.
Mr. Flores. The bottom line is you wouldn't agree with any
sort of systemic allegation of unsafe operation around the
world in the offshore drilling business, is that correct?
Mr. Bement. I would again comment we drill thousands of
wells safely each year very successful to our customer,
Transocean.
Mr. Flores. Mr. Ambrose?
Mr. Ambrose. I would just reiterate we have not found
anything systemic.
Mr. Flores. I yield back.
Mr. Hastings. The time of the gentleman has expired. The
gentleman from Louisiana is recognized, Mr. Landry.
Mr. Landry. I would like to expand a bit on that. Mr.
Ambrose, you are with Transocean, right? And so you work for
Mr. Dempsey's company, correct? When you work for other majors,
does your drilling plan mimic BP's? So, if you were drilling
for another major, would you drill a well the same way you
would drill for BP?
Mr. Ambrose. Interesting question. Every well is different.
Every operator has their own management system. I cannot say
specifically how different or how similar those are.
Mr. Landry. I know, and I appreciate that each well is
different, but wouldn't you agree that not only is each well
different but each company drills under different drilling
plans?
Mr. Ambrose. I would say each company has their own
management system under which they operate.
Mr. Landry. And no two are alike.
Mr. Ambrose. They may have differences between them. We
have never looked at the differences between those, so I
couldn't comment on that.
Mr. Landry. OK. Mr. Bement, do the cement jobs that you do
for BP, are they identical to the ones you do for other majors?
Mr. Bement. I would agree with Mr. Ambrose that no two
wells are alike, but at the end of the day we are not the
permitting or the operator of the well, and we have an
important role to successfully bring energy to the U.S. and
work very close to execute those processes, so each operator,
we follow those work instructions.
Mr. Landry. Again, you follow guidelines set by the
operators because, you know, there was a great Wall Street
Journal article that appeared not long after that talked about
the hangars and the way a strong--the liners in the well bores,
and how one major does it one way and BP does it another, and
where I am going with this is the fact that if you don't--each
time you work for a different operator, and if each well is
different, and so that you are having to adjust the
application, then how could it be possible for the industry to
have a systemic problem?
Mr. Bement. Sounds repetitive, but we do thousands of wells
a year with a lot of different----
Mr. Landry. It is impossible for the industry to have a
systemic problem based on those facts, wouldn't you agree? Come
on, don't be like the government witnesses. Just say yes or no.
You don't have to think of the problem. Your opinion, I mean. I
have a lot of respect for the amount of time you have served in
the industry. I mean, thinking about those elements, isn't it
impossible for the industry to have a systemic problem if each
time they drill a well they do it differently, there are
different processes, they have to abide by different
engineering specifications that are laid out by the operators?
Isn't that correct?
Mr. Bement. I think it is a culmination of a couple of
things, Congressman Landry. Number one, we have processes
procedures. We improve each and every job that we do. Our job
is to improve each and every job. We do work for the operator
and we apply those processes accordingly and again thousands of
wells each year for multiple operators with no safety issues
and we continue to deliver oil and gas.
Mr. Landry. Well, you also bring up a good point is that
you work for the operator, right? You are under the control of
the operator. The operator is under the control of the
permittee, who is BOEMRE, but yet you heard today from Director
Bromwich that he would like to extend or he believes that he
has the authority to extend his reach to govern--to reach into
our contract.
My concern is that doing so is going to muddy the water. We
have this nice pattern of responsibility of how we go and say,
OK, we are going to lease a piece of property to the operator.
The operator says yes. We are going to drill safely. They
provide the drill plan. They provide the specs. They sub it out
to you all. Their responsibility of making sure that you follow
their plans is their responsibility and the responsibility of
ensuring that their plans are followed is BOEMRE. And so by
going out and reaching into you guys, then all of a sudden it
is going to be this cross finger point. Don't you agree?
Mr. Bement. Yes, sir. The allegations came last night. I
personally have not even had a chance to review those myself. I
can tell you we will engage with the administrative process. We
will also reserve the right for appeal.
Mr. Hastings. The time of the gentleman has expired. The
gentleman from Pennsylvania, Mr. Thompson
Mr. Thompson. Thank you, Chairman. Thank the panel. I want
to follow up. Mr. Flores had asked Mr. Dempsey about basically
lessons learned and procedure, you know, identified, BP had
identified 26 recommendations from your internal investigation.
I want to turn to Mr. Ambrose and Mr. Bement. What is the most
significant action or changes your companies have initiated as
a result of lessons learned from the incident?
Mr. Ambrose. Thank you for the question.
I listed in my opening statement, the key ones were that we
implemented a well integrity use guideline for our operations
for the drill crews on the rig, and make sure we are very clear
about what needs to be done prior to entering the next would
section, the next part of the operation, and you know, at times
maybe there was an ambiguity about what is required, and we are
very clear about that now as well as we have established
negative pressure test guidelines. So, as a minimum as a
company there is something now that we have, and this is what
we have to have. We can't go below this. If we don't have this
information, we can't proceed, and that was something that was
missing when everyone is left to their own devices to do that.
These are probably the two biggest things we learned from the
incident to make sure that we have in place.
Mr. Thompson. Mr. Bement?
Mr. Bement. Yes, sir. I think from the BOEMRE report as
well as the other investigation I think there has been several
opportunities of best practices that we have reviewed. Again as
I shared with you in the opening statements, I think we wake up
every morning trying to be better, safer, more environmentally
friendly in order to produce oil and gas for our great country.
So there is a host of things I think we continue to look
at. Our Halliburton systems, HMS is what we refer to, we
continue to, in parallel with this effort of continuous
improvement, we make that very robust. Some little simple
things that from an industry perspective we have gone to BOEMRE
with our inside real time capability.
Has that been a help of the government to facilitate the
permitting or regulatory requirements that may be coming out?
You know, we are trying to bring innovation that way. Another
example is real time data log that will now, in our new latest
inside version, that will capture real time visual log of the
comments and activities. That was a large part of the question
during the investigation, what activities were going on during
that. So little best practices like that I think have been a
significant improvement.
Mr. Thompson. Thank you. My colleague, Dr. Fleming from
Louisiana, on the last panel looked a lot at permitting and,
since that time, there appears to be a decrease in permitting.
I know job loss in the Gulf area. I have to say that being from
Pennsylvania and having natural gas, I have a lot of folks from
Louisiana now working in Pennsylvania. We appreciate their
expertise, but this is all because they have lost their jobs
down there.
Mr. Bement, you mentioned that Halliburton is currently the
subject of more than 400 lawsuits in your testimony. We have
seen the same thing with some Federal agencies. You know, they
have difficulty performing their core functions because they
are constantly being sued. What role does the endless stream of
litigation play in preventing your company from receiving
permits? Any insight into that?
Mr. Bement. I am sorry, can you repeat the question? What I
assume it would have on permits?
Mr. Thompson. Yes, in terms of impacting the process to
where it would be a reflection of this decrease in permits or
the impact of the permits.
Mr. Bement. Specific to the Gulf of Mexico, we are ready to
go to work. I mean, we are quite excited. In fact, as we have
seen some return to the deepwater, we have a number of our
employees that were deployed to other deepwater markets around
the world during the moratorium. We are seeing those employees
return. We are investing tens of millions of dollars in
facility expansion in that region as well as tens of millions
of dollars of new capital support for deepwater. In fact, we
will hire 11,000 new people in the U.S. in 2012.
Mr. Thompson. Just curious to all the panelists just real
quickly. What impact have you seen on the timeliness and
efficiency of the permitting and the leasing since last
October?
Mr. Ambrose. From Transocean's standpoint, that is a
process that we are on the outside looking in as the operator
is really driving that process. We provide information to them.
I can just give you my opinion about it from outside looking
in. I understand that the process is very onerous. It seems
that people are starting to get permits for the deepwater
operations we have. They come close sometimes to when everyone
needs to be going to work, but they are getting them.
Mr. Dempsey. BP is getting ready to go back to work in the
deepwater Gulf of Mexico and making the kinds of enhancements
in our safety processes and procedures and systems to be able
to provide the confidence to regulators that we would be ready
to go. The introduction and adoption of our voluntary standards
which I referred to in my opening comments and to which
Director Bromwich made reference in his testimony earlier today
is an example of the kinds of things that we have done to try
to enhance our ability to operate safely and to get ready to go
back to work.
Mr. Thompson. Thank you. Thank you, Chairman.
Mr. Hastings. The time of the gentleman has expired. The
Chair recognizes the gentleman from New Jersey, Mr. Holt.
Mr. Holt. Thank you, Mr. Chairman. I had to step out of the
room, so forgive me if I am going over ground that is already
plowed here, but I think it is important to get this on the
record. So, Mr. Dempsey, the Interior Department yesterday
issued seven violations against BP yesterday. Does BP plan to
appeal?
Mr. Dempsey. Congressman Holt, as you know, these
violations were released just yesterday evening, and so we will
certainly take those very seriously. We will review those. It
is important to note that it is really the beginning of a
process. It is not the final determination of violations, so we
will absolutely participate in the process to determine where
those end up and we will continue in that as we have and always
will.
Mr. Holt. So does BP agree that it failed to protect
health, safety, property and the environment by failing to
perform all operations in a safe and workman-like manner?
Mr. Dempsey. Congressman, what I can say is that BP has,
from the very start, acknowledged its role in this accident.
The notices of violation are an important indication that the
regulator also expects that they will hold accountable
contractors in their role in accidents like the Deepwater
Horizon, and so while we have acknowledged our role from the
start we have also been clear that this has been a very, very
complicated accident involving multiple parties and a series of
complex interconnected causes. It certainly included BP as it
did Transocean and Halliburton.
Mr. Holt. Thank you. Does BP agree that it ``failed to take
necessary precautions'' to keep the well under control at all
times?
Mr. Dempsey. Congressman, what I have to say to that is
that we hire contractors to provide work and provide service
for us in the deepwater drilling industry and in this
particular case we do that because they bring specialized
expertise, deep experience. We expect them to perform their
jobs safely and according to all regulatory requirements.
Mr. Holt. So it is all a matter of expectations, that is
what you rely on then?
Mr. Dempsey. Congressman, we actually rely on the expertise
and the experience that they bring.
Mr. Holt. All right. So it is the subcontractors that were
at fault. Mr. Bement, do you expect to appeal?
Mr. Bement. As Mr. Dempsey said, these allegations only
came out late yesterday evening. I personally have not seen
them. We will go through the process as I mentioned earlier,
and we will reserve the right to appeal.
Mr. Holt. Mr. Ambrose, Transocean, I understand, I believe
you said a brief while ago that you do intend to appeal the
violations, is that correct?
Mr. Ambrose. Sir, I have personally not reviewed that
allegation. I have not been involved in the response.
Mr. Holt. Would we have a better hearing right now if in
fact the chief officers of your companies were here, the people
who actually establish the company policy, who actually are in
a position to decide what we are going to do? Would you be more
comfortable if they were sitting where you are sitting so that
they could actually answer these questions? That is a
rhetorical question. I don't suppose--well, the gentleman
does--I would yield to the Chairman of course.
Mr. Hastings. Well, I would say this at the end of this
panel, I will say it right now. If you submit a written
request, I am sure that they will take it to the proper
authorities to get the answer to that written request, so I
think that option is certainly open to you, and I thank the
gentleman for yielding.
Mr. Holt. Yes, I am not trying to play ``gotcha'' here.
This is a very serous matter. Many of us maintain that this was
not a one of a kind accident; this was an accident waiting to
happen and that other such accidents will occur unless the
culture is changed. There has been some effort this morning I
think to ignore or I guess you would say correct the findings
of these commissions now that spoke of a culture of
carelessness, a culture of cutting corners, a culture of not
testing, not monitoring, not following through, and if we are
going to address that culture we need companies that face up to
it and not try to shift blame; not try to wiggle out of it.
I don't know what else to say in the time remaining. I
yield back my time.
Mr. Hastings. You actually did not have any time to
reclaim.
I understand the gentlelady from Texas would like to ask a
question, so I ask unanimous consent even though she is not a
member of the Committee that she be given the opportunity to
ask questions. Without objection, the gentlelady is recognized
for five minutes.
Ms. Jackson Lee. Mr. Hastings, I wish to thank you and Mr.
Holt for your kind indulgence on something that has impacted my
region in the early days of the spill. Spent a lot of time in
the Louisiana region, and I think my issue coming from that
region and feeling that we do better when we move forward to
recognize that we can cure what may have happened that caused
the horrific incident in the first place. I interacted with
oyster fishermen and others, and I believe they were looking
for a cure.
So I want to ask Mr. Dempsey, if I can, because I think as
I came in I heard you saying that you had secured findings and
that you were looking them straight in the eye and were dealing
with those findings. First let me just ask a general question.
Do you know how many employees BP has in the United States?
Mr. Dempsey. Congresswoman, BP has more than 23,000
employees in the United States.
Ms. Jackson Lee. So you are vested in this country?
Mr. Dempsey. We are, Congresswoman. BP has been one of the
largest producers of oil and natural gas in the United States
for several years, and we believe it is important that we
continue to support the American desire for energy security.
Ms. Jackson Lee. And in the same time as your employees
live along the Gulf, you too want clean air, clean water, your
employees be protected. Are you moving around by saying we want
to put employees in jeopardy?
Mr. Dempsey. Absolutely not, Congresswoman. We agree
completely. It is indeed our priority.
Ms. Jackson Lee. Well, can you tell me your response to the
findings--of you moving forward to address the findings, and
let me not say this in any kind of get you, but you recognize
that 11 people died and families are suffering, so are you
moving forward to address the findings? I think it is important
that there is a sense that we understand that the company
understands that they have to be actively engaged, and I sense
that you were saying you read the findings and you are working
toward them. Would you expand on that, please?
Mr. Dempsey. I will, Congresswoman. We have made
fundamental substantial changes in our organization in the way
that we conduct this work and in the way that we think about
the long-term processes that will apply. For our organization,
I mentioned in my opening comments that we have created an
organization called Safety & Operation Risk or S&OR. This is
important because that organization provides for several
things. It embeds deep expertise in the live businesses. It
provides an opportunity for intervention whenever they see the
need to intervene in an activity that is underway.
We have organized our exploration and production business
into three separate divisions, and within one of them there is
a global well, so there is a place now where we have housed the
expertise, the best practices for drilling in our operations
around the world in a common way.
We introduced the voluntary standards, Congresswoman, which
I have also referred to and which Director Bromwich made some
mention to. These are providing for an opportunity for several
things, including a commitment we will only use blowout
preventers that are equipped with double blind sheer ram
anywhere where we are operating from a dynamically positioned
drilling rig.
We will make changes in terms of third party testing and
verification of cement. We have made some advancements to the
oil spill activity based on the learnings we have acquired
through this Deepwater Horizon accident.
Ms. Jackson Lee. My time is moving, I have a sense of it.
You had findings issued last night. Will you look at them as
well in a way that says let us see how we can get moving
forward, fixing what we need to fix? I am not asking you to
make a determination of yes or no, but are you in that kind of
mode?
Mr. Dempsey. We are, Congresswoman, and we will review and
consider these findings in that way.
Ms. Jackson Lee. I appreciate that. Mr. Ambrose, are you in
that mode representing Transocean to fix what needs to be
fixed?
Mr. Ambrose. Yes. We take what happened very seriously.
Ms. Jackson Lee. I think that is an important statement
that needs to be on the record. I can't hold you any longer
because I need to get Mr. Bement. Are you committed to fixing
what needs to be fixed?
Mr. Bement. Yes, ma'am. Wake up every morning trying to
drill faster, better.
Ms. Jackson Lee. But you are fixing what needs to be fixed,
is that correct?
Mr. Bement. We improve every day.
Ms. Jackson Lee. Mr. Dempsey, I just want to ask this. Do
you have any impact on the $20 billion? It is moving very
slowly. Are you able to at least call or find out because it
may be separate, but it has your name connected, and I will say
publicly I don't like the way it is proceeding in terms of
reimbursement. It is not you that is doing it, but do you have
any ability in your company to ask a question, to ask the
gentleman that is handling it why he is moving so slowly?
Mr. Dempsey. Congresswoman, we do have the opportunity to
offer our input and our views to Mr. Feinberg and his team who
lead the GCCF, the Gulf Coast Claims Facility.
Ms. Jackson Lee. I would appreciate, sir, if you would do
that oversight and determine why so few dollars have gone out
at this point, and I do thank the witnesses and I do thank the
Committee for allowing me just to pose those questions. We are
looking to go forward, and as I have gleaned from all of you,
you have to fix the problems and move forward. Let me thank you
very much for your testimony. I yield back.
Mr. Hastings. I thank the gentlelady, and I recognize the
gentleman from New Jersey before I ask my last questions.
Mr. Holt. And I thank the Chair, and this is more by way of
a statement than questions, but I would like everyone to hear
this, and really, despite multiple investigations now that have
documented the systemic safety problems that existed before the
Macondo well blowout, despite clear evidence of failures on the
part of the companies to properly design, properly drill,
properly cement the well, despite the continued insistence by
the industry and by others who sit around this dais here that
all the safety problems have been fixed and we should hurry up
and open up any and all areas for drilling, what I hear is a
continued failure on the part of the industry to acknowledge
its responsibility for the negligence that caused deaths and
untold environmental damage.
The companies here have told us that they will--well,
probably I am reading a little bit into your comments--will
fight even the minimal fines, $21 million for BP and $12
million each for Transocean and Halliburton, which I would call
minimal that are allowed under the law. Transocean has made
clear that it will continue to fight to withhold spill
documents from the government safety regulators and continues
to refuse to comply with Justice Department subpoenas.
Maybe the Department should debar BP from future lease
sales and refuse to issue drilling permits for any operator who
plans to use these companies until the companies step up and
show that this was not a ``one off'', this was not just a
single occurrence. This was an accident waiting to happen
because of a careless culture, and with that I yield back.
Mr. Hastings. I thank the gentleman, and I would just point
out I am sorry, I know that he was elsewhere, but if he had
heard the exchange between Mr. Landry and the panel, you might
have gotten an indication of the issue of the systemic issue
that has been floating around, and I would certainly invite you
to go back and look at that transcript.
I just have a couple of questions, and this is a question
to all three of you. Are you all currently conducting
operations in the Gulf today? And we will start with you, Mr.
Dempsey. Are you conducting operations in the Gulf today?
Mr. Dempsey. Yes, Congressman, Mr. Chairman. We are indeed
conducting operations in the Gulf of Mexico.
Mr. Hastings. Mr. Ambrose?
Mr. Ambrose. Yes, we are, sir.
Mr. Hastings. OK, and Mr. Bement?
Mr. Bement. Yes, sir, and actively recruiting additional
personnel for the Gulf of Mexico.
Mr. Hastings. So there are jobs available.
Mr. Bement. Absolutely. Yes, sir.
Mr. Hastings. OK. We will consider this a call for more
jobs then.
Again to all three of you, three of your companies received
permits or in your case, BP, approved exploration plans since
last April of last year. In other words, have you gotten new
operations in the Gulf since last April, since April of last
year?
Mr. Dempsey. Mr. Chairman, for exploratory drilling we have
not yet received any approved permits. We have one pending
application for our Kaskida Well, an exploratory plan, a
revised exploratory plan that has been submitted. It closed its
public comment period on the second of October, and the
regulator is now in its 30-day review period.
Mr. Hastings. OK. And then as far as subcontractors have
you gotten work since April of last year, Mr. Ambrose? Well,
Mr. Bement, since you are ready to go.
Mr. Bement. Mr. Hastings, yes, sir. We are on the outside
looking in, working with our customers.
Mr. Hastings. I understand.
Mr. Bement. But we are seeing an increase in activity as we
talk.
Mr. Hastings. Mr. Ambrose?
Mr. Ambrose. Yes, sir, we are seeing permits for our
customers.
Mr. Hastings. OK. Finally, and this was brought up when
Transocean's President, Mr. Newman, and Mr. McKay were here a
year ago, involving the stop work policy. My district is not on
the coast, but right across from where I live is the most
contaminated nuclear site in the country, and the contractors
there allow the workers, whenever they see something wrong, the
work can stop immediately. Is that true with all three of your
companies as a matter of company policy, whether somebody tells
you to or not? Is that a matter of company policy? And we will
start with you, Mr. Dempsey.
Mr. Dempsey. Mr. Chairman, it is indeed a policy and a
practice in our operations around the world that when we see an
unsafe act any and all of us have the obligation to stop work.
Mr. Hastings. OK. Mr. Ambrose?
Mr. Ambrose. Yes, sir, it is. We have a policy of time out
for safety, and it is implemented worldwide. It is in our
policies and procedures. It is an obligation. It is not a
right, it is an obligation. You have to do it. And I think when
you look at this particular incident they did do it at 9:30.
They shut the operation down because they saw an anomaly.
Mr. Hastings. OK. And Mr. Bement.
Mr. Bement. Yes, sir, stop work is part of our Halliburton
management system and part of our continuous improvement
process. It is embedded within the culture of that process.
Mr. Hastings. OK. I just think that is worth emphasizing
because there has been a lot of discussion about this and what
has happened. Clearly when 11 people die and you have the
environmental damage that happened in the Gulf, it is serious.
But I just think that point needs to be made.
So, once again, seeing no other Members on the dais, I will
adjourn this meeting, but I want to thank all three of you for
being here and I want to re-thank the first panel for being
here, and once again if there are follow-up questions to be
sent to you, I think Mr. Holt has one, at least I encouraged
him to do that, that you would respond in a timely manner and
of course make it available to everybody on the Committee.
With that, the Committee stands adjourned.
[Whereupon, at 1:20 p.m., the Committee was adjourned.]
[Additional material submitted for the record follows:]
Statement submitted for the record by Joseph R. Mason,
Louisiana State University
Thank you for this opportunity today to submit a written statement
on the lingering impacts of the Obama administration's six-month
moratorium on offshore drilling for oil and natural gas. It has been
one full year since this moratorium was officially lifted. Yet, U.S.
federal energy policy today remains woefully out of balance.
These policies, or quite frankly lack thereof, have had severe
consequences for U.S. domestic oil production since the moratorium was
lifted. According to the U.S. Energy Information Administration (EIA),
U.S. domestic production will decrease by 250,000 barrels per day (bpd)
each year going forward under the current production policy regime. In
particular, EIA estimates that, in the Gulf of Mexico (GOM) alone, oil
production will decline approximately 14 percent both in 2011 and 2012
due to the administration's unwillingness to grant expedient and
sufficient access to U.S. reserves.
In sum, not very much has changed in the Gulf region--and the
country at-large--since my initial study on this topic in July of last
year, ``The Economic Cost of a Moratorium on Offshore Oil and Gas
Exploration to the Gulf Region.''
I. Continued Regulatory Burdens
The current regulatory framework charged with overseeing the U.S.
oil and natural gas industry has continued to hamper economic growth
generally and the oil and natural gas sector specifically. Since the
offshore moratorium has been lifted, executive agencies such as the
Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE)
have worked tirelessly to prove their worth and flex their muscles. As
such, new agencies like these regularly undergo dramatic power shifts
before settling into anything that could be considered a stable role in
the U.S. regulatory framework. And these types of power struggles and
yearning for approval inevitably lead to rampant inefficiencies.
Jim Noe, senior vice president, general counsel and chief
compliance officer of Hercules Offshore Inc., the largest shallow-water
drilling company in the Gulf of Mexico, recently noted that, ``the
backlog of permits awaiting decisions within the Department of the
Interior just reached its highest level since the Gulf spill 1 1/2
years ago.''
The pace at which new permits for new wells are issued has come to
an almost complete crawl. The current average is 5.2 per month; this
level has not been evidenced since energy demand plummeted in 2009.
But laborious regulations and continued delays are not the only
costs threatening U.S. oil and natural gas operations. The
administration's continued advocacy of repealing Section 199 of the
American Jobs Creation Act and Section 1.901-2 of the U.S. Department
of the Treasury Regulations (``dual capacity'') presents the industry
with additional challlenges. Those changes would eliminate domestic and
international tax credits for the U.S. energy sector. Although
regulators are hoping to raise substantial revenues from the repeals,
the fully-scored economic cost of the regressive legislation could
further debilitate the oil and natural gas sector and most likely
result in decreased tax revenues from the industry.
The Peterson Institute for International Economics detailed the
harmful effects of the administration's new proposed taxation schemes.
In a new policy brief, US Tax Discrimination Against Large Corporations
Should Be Discarded, authors Gary Clyde Hufbauer and Martin Vieiro
argue that, ``If the targets of discrimination are the nation's largest
firms, the country will find it harder to compete on a global scale in
industries that require dedicated research, industries that exhibit
huge scale economies, and industries that network across national
borders.'' U.S. oil and natural gas firms are, by and large, some of
the nation's largest and most internationalized of companies.
In looking at the political economy of new regulatory arrangements
like BOEMRE, therefore, we must look with skepticism and concern upon
both the political motivations of the regulatory officials charged with
enforcing the rules, and the economic power that will be concentrated
in those regulatory officials as a result of their influence over the
implementation costs and economic redistribution. Without restraint, a
toxic mix of politics and power may damage both the industry and the
environment.
II. Painful Consequences of Administration's Negligent Energy Policies
Using my July 2010 report's results--but also accounting for delays
following the official end of the six-month moratorium--is it evident
that regional economic losses continue to grow.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Table 1 shows that output losses continue to mount with stalled
development in the GOM, rising from $2.1 billion regionally and $2.8
billion nationally to $3.3 billion and $4.4 billion, respectively. Job
losses are estimated to have increased from 8,000 regionally and 12,000
nationally to 13,000 regionally and 19,000 nationally. Lost wages
previously estimated to amount to $500 million regionally and $700
million nationally are now $800 million regionally and $1.1 billion
nationally. Finally, lost tax revenues estimated to be $100 million on
the state and local level and $200 million on the national level now
amount to $155 million and $350 million, respectively.
With the latest jobs figures released last week from the U.S.
Bureau of Labor Statistics (BLS) showing national unemployment remains
at 9.1 percent, we simply cannot afford to give up any more economic
activity.
III. Conclusion
IHS Global Insight recently published a study that puts the impacts
on jobs, energy production and local economies of the Obama's
administration's precarious attitude toward conventional energy into
clear context. The report states that, next year, releasing
restrictions on ``the [Gulf oil and gas] industry could create 230,000
American jobs, generate more than $44 billion of U.S. [gross domestic
product], contribute $12 billion in tax and royalty revenues, produce
150 million barrels of domestic oil, and reduce by $15 billion the
amount the U.S. sends to foreign governments for imported oil.''
Nonetheless, oil and natural gas production is set to decline in
response to higher taxes, onerous government regulation and greater
political uncertainty. That means less jobs, lower wages, and lower
gross domestic product (GDP) growth than would otherwise occur. Those
are indisputable laws of economics, regardless if policymakers agree
with them or not. In the spirit of hope, I look forward to the day the
administration realizes the very real pain that its energy policies are
having on U.S. job creation, capital allocation and broader economic
recovery, as well as the environmental threats, political instability,
and market volatility that come from meeting U.S. energy needs from
foreign supplies.
______
[An email submitted for the record from Randall S.
Ogrydziak, Liquefied Gas Carrier National Center of Expertise,
follows:]
From: Ogrydziak, Randal CDR
Sent: Monday, May 10, 2010 1:02:23 PM
To: Odom, Michael LCDR
CC: Thorne, Paul CDR
Subject: Re: DWH Marine Board
Mike,
You should not have any concerns with the Marine Board. Will you be
returning to Port Arthur before your leave starts (15-25 May)?
Randall S. Ogrydziak, CRD, USCG
Supervisor, Liquefied Gas Carrier National Center of Expertise
Wk: (409) 723-9874; Cell: (409) 284-2296; Fax: (409) 723-6504
______
----Original Message----
From: Odom, Michael LCDR
Sent: Monday, May 10, 2010 9:01 AM
To: Ogrydziak, Randal CDR
Cc: Fernie, James
Subject: DWH Marine Board
I made it to NOLA last night we are starting the prep work not for
my testimony. Just as an fyi if you're interested the questions they
will be asking are attached. Call me if you need anything everything is
pretty informal and I can't be in the hearing room till it is my turn
in the barrel, so there will be a fair amount of standing around time.
* * *
OVERSIGHT HEARING ON THE BOEMRE/
U.S. COAST GUARD JOINT INVESTIGATION TEAM REPORT: PART 2
----------
Wednesday, November 2, 2011
U.S. House of Representatives
Committee on Natural Resources
Washington, D.C.
----------
The Committee met, pursuant to call, at 2:40 p.m. in Room
1324, Longworth House Office Building, Hon. Doc Hastings
[Chairman of the Committee] presiding.
Present: Representatives Hastings, Young, Duncan of
Tennessee, Lamborn, Wittman, Broun, Fleming, Coffman,
McClintock, Thompson, Benishek, Rivera, Tipton, Gosar, Flores,
Runyan, Johnson, Amodei, Markey, Kildee, DeFazio, Pallone,
Napolitano, Grijalva, Bordallo, Heinrich, Lujan, Sarbanes,
Tsongas, Pierluisi, and Hanabusa.
STATEMENT OF THE HON. DOC HASTINGS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF WASHINGTON
Mr. Hastings. The Committee will reconvene or come back to
order, and the Chair notes the presence of a quorum, which
under Rule 3[e] is two Members.
The Committee meets again today to continue its October 13,
2011, hearing on the BOEMRE/U.S. Coast Guard Joint
Investigative Team Report. At that hearing, if you recall, the
Committee heard from seven witnesses, including the two Co-
Chairs of the Investigative Team, the Director of BOEM, the
Vice Admiral of the Coast Guard and executives representing BP,
Transocean and Halliburton, three companies, each of whom was
cited in the JIT report.
Under Rule 4[f][1], there are no opening statements since
we are continuing a hearing that was already going on. This
obviously gives the Minority an opportunity to call their
witnesses, but since none of the individuals requested by the
Minority are here to testify, to be very honest with you, what
would be in order would be a motion to adjourn.
However, prior to adjourning I will inquire if the Ranking
Member, Ranking Democrat, wants to pursue a different course,
and I will yield to the gentleman.
STATEMENT OF THE HON. EDWARD MARKEY, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF MASSACHUSETTS
Mr. Markey. I thank you, Mr. Chairman. Mr. Chairman,
following the BP oil spill this Committee has a responsibility
to the American people to ensure that offshore oil and gas
drilling is occurring in a safe and responsible manner.
We must vigorously exercise our oversight responsibilities
to make certain that BP and other oil companies involved in the
Deepwater Horizon disaster are taking the corrective steps
necessary to protect the workers, economy and environment of
the Gulf and to ensure that we never have a similar spill
again.
BP and the other companies involved in the oil spill are
now seeking to resume drilling operations in the Gulf. BP has
now applied for and had approved by the Interior Department its
first exploration plan and drilling permit in the Gulf
following this accident.
Mr. Hastings. Reclaiming my time from the Ranking Member,
we are aware of that. Remember, this is a continuation hearing
on the Joint Investigative Team.
My question to you, since we afforded you the courtesy of
getting witnesses, we sent the letter out obviously in a timely
manner and the witnesses declined to come for whatever reasons.
Since there is no panel, as I said in my opening statement, it
is certainly in order to accept a motion to adjourn, but as a
courtesy to you.
I have read the reports, press reports that you have sent
out, and, listen, I respect that. I just want to know what your
intentions are. I fully understand the difference of opinion
that we may have on these issues, but I just want to know what
your intentions are. That is all.
Mr. Markey. All right.
Mr. Hastings. And I will yield to the gentleman.
Mr. Markey. I thank the gentleman. Pursuant to Clause
2[k][6] and 2[m] of Rule 11 of the Rules of the House, I move
that the Committee issue subpoenas to the following individuals
to compel them to appear before the Committee to provide
testimony regarding the findings of the Joint Investigative
Team Report on the Deepwater Horizon oil spill: Mr. Robert
Dudley, CEO of BP; Mr. Steven Newman, President and CEO of
Transocean; Mr. David Lesar, Chairman of the Board, President
and CEO of Halliburton; and Mr. Jack Moore, Chairman, President
and CEO of Cameron.
I do believe they have a responsibility to testify
postinvestigation as to their view of the findings so that they
can be accountable to the U.S. Congress as the protectors of
the oceans of the United States.
Mr. Hastings. The Chair notes the absence of a quorum and
so I will announce that a 15-minute quorum call be made, and
the clerk will call the roll.
Ms. Locke. Mr. Hastings?
Mr. Hastings. Present.
Ms. Locke. Mr. Markey?
Mr. Markey. Present.
Ms. Locke. Mr. Young?
Mr. Young. Here.
Ms. Locke. Mr. Kildee?
Mr. Kildee. Present.
Ms. Locke. Mr. Duncan of Tennessee?
Mr. Duncan of Tennessee. Present.
Ms. Locke. Mr. DeFazio?
Mr. Gohmert?
Mr. Faleomavaega?
Mr. Bishop?
Mr. Pallone?
Mr. Lamborn?
Mr. Lamborn. Here.
Ms. Locke. Mrs. Napolitano?
Mr. Wittman?
Mr. Holt?
Mr. Broun?
Mr. Grijalva?
Mr. Fleming?
Dr. Fleming. Present.
Ms. Locke. Ms. Bordallo?
Ms. Bordallo. Present.
Ms. Locke. Mr. Coffman?
Mr. Coffman. Present.
Ms. Locke. Mr. Costa?
Mr. McClintock?
Mr. McClintock. Present.
Ms. Locke. Mr. Boren?
Mr. Thompson?
Mr. Thompson. Present.
Ms. Locke. Mr. Sablan?
Mr. Denham?
Mr. Heinrich?
Mr. Benishek?
Dr. Benishek. Here.
Ms. Locke. Mr. Lujan?
Mr. Lujan. Present.
Ms. Locke. Mr. Rivera?
Mr. Sarbanes?
Mr. Duncan of South Carolina?
Ms. Sutton?
Mr. Tipton?
Mr. Tipton. Here.
Ms. Locke. Ms. Tsongas?
Mr. Gosar?
Mr. Pierluisi?
Mr. Pierluisi. Present.
Ms. Locke. Mr. Labrador?
Mr. Garamendi?
Ms. Noem?
Ms. Hanabusa?
Mr. Southerland?
Mr. Flores?
Mr. Flores. Here.
Ms. Locke. Mr. Harris?
Mr. Landry?
Mr. Runyan?
Mr. Runyan. Present.
Ms. Locke. Mr. Johnson?
Mr. Johnson. Present.
Ms. Locke. Mr. Amodei?
[Pause.]
Mr. Hastings. The clerk will call those that did not answer
present.
Ms. Locke. Mr. DeFazio?
Mr. Gohmert?
Mr. Faleomavaega?
Mr. Bishop?
Mr. Pallone?
Mr. Pallone. Yes. Present.
Ms. Locke. Mrs. Napolitano?
Mrs. Napolitano. Present.
Ms. Locke. Mr. Wittman?
Mr. Holt?
Mr. Broun?
Mr. Grijalva?
Mr. Costa?
Mr. Boren?
Mr. Sablan?
Mr. Denham?
Mr. Heinrich?
Mr. Rivera?
Mr. Sarbanes?
Mr. Duncan of South Carolina?
Ms. Sutton?
Ms. Tsongas?
Mr. Gosar?
Mr. Labrador?
Mr. Garamendi?
Ms. Noem?
Ms. Hanabusa?
Mr. Southerland?
Mr. Harris?
Mr. Landry?
Mr. Amodei?
Mr. Amodei. Present.
[Pause.]
Mr. Grijalva. Present.
Ms. Locke. Mr. Grijalva votes present.
[Pause.]
Mr. Hastings. How is Mr. Wittman recorded?
Ms. Locke. He has not been recorded.
Mr. Wittman. Present.
Ms. Locke. Mr. Wittman is present.
Mr. Hastings. Is Mr. Gosar recorded?
Dr. Gosar. Here.
Ms. Locke. Mr. Gosar votes present.
Voice. Mr. Chairman, there is the presence of a quorum.
Mr. Hastings. The Chairman notes the presence of a quorum.
We have a motion before us, and I will recognize myself.
Let me be very clear. If the companies officially cited for
the oil spill had outright refused to provide witnesses,
testimony or answers to the Committee, then I would be leading
the effort to compel them to appear by subpoena if necessary.
But those are not the facts. For the record, this hearing
is occurring at the request of the Democrat Minority, who
exercised their rights under the Rules of the House and the
Committee to demand a second day of hearings with witnesses
that they request.
The original hearing occurred on October 13, and for the
record, that hearing featured testimony and the opportunity for
every Member of the Committee to ask questions of seven
witnesses on two panels: the two Co-Chairs of the Joint
Investigative Team, the heads of the respective agencies, BSEE,
Director Bromwich, and Vice Admiral Salerno of the Coast Guard,
and the executives that were officially representing the three
companies cited in the investigative report, BP, Transocean and
Halliburton.
With that, I recognize the gentleman from Colorado.
Mr. Lamborn. Mr. Chairman, I move that the motion be
tabled.
Mr. Hastings. The motion is not debatable. The clerk will
call the roll.
Voice. Don't we do a voice first, all those in favor?
Mr. Hastings. Yes. I know it is going to be a roll call. We
may as well roll call.
Ms. Locke. Mr. Hastings?
Mr. Hastings. Aye.
Ms. Locke. Mr. Hastings votes aye.
Mr. Markey?
Mr. Markey. No.
Ms. Locke. Mr. Markey votes no.
Mr. Young?
Mr. Young. Aye.
Ms. Locke. Mr. Young votes aye.
Mr. Kildee?
Mr. Kildee. No.
Ms. Locke. Mr. Kildee votes no.
Mr. Duncan of Tennessee?
Mr. Duncan of Tennessee. Aye.
Ms. Locke. Mr. Duncan votes aye.
Mr. DeFazio?
[No response.]
Ms. Locke. Mr. Gohmert?
[No response.]
Ms. Locke. Mr. Faleomavaega?
[No response.]
Ms. Locke. Mr. Bishop?
[No response.]
Ms. Locke. Mr. Pallone?
Mr. Pallone. No.
Ms. Locke. Mr. Pallone votes no.
Mr. Lamborn?
Mr. Lamborn. Aye.
Ms. Locke. Mr. Lamborn votes aye.
Mrs. Napolitano?
Mrs. Napolitano. No.
Ms. Locke. Mrs. Napolitano votes no.
Mr. Wittman?
Mr. Wittman. Aye.
Ms. Locke. Mr. Wittman votes aye.
Mr. Holt?
[No response.]
Ms. Locke. Mr. Broun?
Mr. Broun. Aye.
Ms. Locke. Mr. Broun votes aye.
Mr. Grijalva?
Mr. Grijalva. No.
Ms. Locke. Mr. Grijalva votes no.
Mr. Fleming?
Dr. Fleming. Aye.
Ms. Locke. Mr. Fleming votes aye.
Ms. Bordallo?
Ms. Bordallo. No.
Ms. Locke. Ms. Bordallo votes no.
Mr. Coffman?
Mr. Coffman. Aye.
Ms. Locke. Mr. Coffman votes aye.
Mr. Costa?
[No response.]
Ms. Locke. Mr. McClintock?
Mr. McClintock. Aye.
Ms. Locke. Mr. McClintock votes aye.
Mr. Boren?
[No response.]
Ms. Locke. Mr. Thompson?
Mr. Thompson. Aye.
Ms. Locke. Mr. Thompson votes aye.
Mr. Sablan?
[No response.]
Ms. Locke. Mr. Denham?
[No response.]
Ms. Locke. Mr. Heinrich?
[No response.]
Ms. Locke. Mr. Benishek?
Dr. Benishek. Aye.
Ms. Locke. Mr. Benishek votes aye.
Mr. Lujan?
Mr. Lujan. No.
Ms. Locke. Mr. Lujan votes no.
Mr. Rivera?
Mr. Rivera. Aye.
Ms. Locke. Mr. Rivera votes aye.
Mr. Sarbanes?
Mr. Sarbanes. No.
Ms. Locke. Mr. Sarbanes votes no.
Mr. Duncan of South Carolina?
[No response.]
Ms. Locke. Ms. Sutton?
[No response.]
Ms. Locke. Mr. Tipton?
Mr. Tipton. Aye.
Ms. Locke. Mr. Tipton votes aye.
Ms. Tsongas?
Ms. Tsongas. No.
Ms. Locke. Ms. Tsongas votes no.
Mr. Gosar?
Dr. Gosar. Aye.
Ms. Locke. Mr. Gosar votes aye.
Mr. Pierluisi?
Mr. Pierluisi. No.
Ms. Locke. Mr. Pierluisi votes no.
Mr. Labrador?
[No response.]
Ms. Locke. Mr. Garamendi?
[No response.]
Ms. Locke. Ms. Noem?
[No response.]
Ms. Locke. Ms. Hanabusa?
Ms. Hanabusa. No.
Ms. Locke. Ms. Hanabusa votes no.
Mr. Southerland?
[No response.]
Ms. Locke. Mr. Flores?
Mr. Flores. Aye.
Ms. Locke. Mr. Flores votes aye.
Mr. Harris?
[No response.]
Ms. Locke. Mr. Landry?
[No response.]
Ms. Locke. Mr. Runyan?
[No response.]
Ms. Locke. Mr. Johnson?
Mr. Johnson. Aye.
Ms. Locke. Mr. Johnson votes aye.
Mr. Amodei?
Mr. Amodei. Yes.
Ms. Locke. Mr. Amodei votes aye.
Mr. Hastings. Any Member not recorded? How is Mr. DeFazio
recorded?
Ms. Locke. Mr. DeFazio has not been recorded.
Mr. DeFazio. No.
Ms. Locke. Mr. DeFazio votes no.
Mr. Hastings. How is Mr. Heinrich recorded?
Ms. Locke. Mr. Heinrich has not been recorded.
Mr. Heinrich. No.
Ms. Locke. Mr. Heinrich votes no.
Voice. It is 13 to 16.
Mr. Hastings. The clerk will report.
Ms. Locke. Mr. Chairman, on this vote, the yeas are 17 and
the nays are 13.
Mr. Hastings. The motion is agreed to. There being no
further business before the Committee, without objection, the
Committee stands adjourned.
[Whereupon, at 2:57 p.m., the Committee was adjourned.]