Live coverage of Energy and Commerce Questioning of BP CEO Tony Hayward

Rep. Henry Waxman chairs the committee grilling BP CEO Tony Hayward

Here is live video of the hearing.

Rep. Henry Waxman expressed his exasperation in his opening statement:

“BP repeatedly took shortcuts that cost lives and increased the risk of catastrophic blowouts… There is not a single e-mail that indicates that you understood the danger… We are seeing in the oil industry the same corporate indifference to risk that we saw in the collapse on Wall Street.”

Rep. Bart Stupak scores this zinger:

“You owe it to all Americans, we are not small people, but we deserve to get out lives back… Mr. Hayward, I am sure that you will get your life back, with a golden parachute to boot.“

Republican Rep. Joe Barton called the $20 Billion compensation fund a “slush fund” and a “shakedown.”  I suppose he trusts BP to settle quickly, unlike Exxon, which only recently finished its legal case on the Exxon Valdez spill, and paid limited settlements.  I suppose he forgets that Dow Chemical only recently completed its legal settlement after the 1984 Bophal catastrophe, where approximately 15,000 Indian people died after a chemical leak.

Rep. Mike Ross, Democrat of Arkansas, pointed out the obvious: “Mr. Hayward, since this hearing began one hour ago, 112,846 gallons have spilled into the Gulf… It seems apparent that BP put profit before safety.”

Rep. Peter Welch of Vermont artfully described the numerous accidents and safety failures that BP operations produced in the last decade, and concluded: “We’ve heard time and time again from BP that this is an aberration… for BP, regrettably this is business as usual.  This is déjà vu, again, and again, and again.”

The opening statements are over, and Tony Hayward already is slumped. Now he is ready to testify. After Mr. Hayward was sworn in, and was about to begin his opening statement, a woman in the back screamed that Mr. Hayward needed to go to jail.

Tony Hayward’s opened with this: “The explosion and fire on the Deepwater Horizon and the resulting oil spill in the Gulf of Mexico never should  have happened, and I am deeply sorry that it did.  When I learned that 11 men lost their lives, I was personally devastated. Three weeks ago I attended a memorial service for those men, and it was a shattering moment… I can only begin to imagine their [friends and families’] sorrow.”

I understand how serious the situation is.  It is a tragedy.  I want to speak directly to the people who live and work in the Gulf region.  I know that this incident has had a profound impact on your lives, and caused great turmoil and I deeply regret that.  I also deeply reget the impact the spill has had on the environment, the wildlife, and the ecosystem of the Gulf.  I want to acknowledge the questions that you and the public are rightly asking.  How could this happen?  How damaging is the spill to the environment? Why is it taking so long to stop the flow of oil and gas into the Gulf?  We don’t yet have all the answers to these important questions.  But I hear and understand the concerns, frustrations, and anger being voiced across the country, and I know that these sentiments will continue until the leak is stopped and until we prove through our actions that we are doing the right thing.”

Well, Tony Hayward and BP may not have all the answers, but the House committee will try to get them.

Tony continues: “I’ve been to the Gulf Coast.  I’ve met with fishermen, business owners, and families.  I understand what they are going through, and I promise them as I am promising you, that we will make this right. After yesterday’s announcement (of the $20 Billion fund) I hope that they feel we’re on the right track.  I’m here today because I have a responsibility to the American people to do my best to explain what BP has done, is doing, and will do in the future to respond to this terrible accident.”

Tony Hayward certainly claims to understand everyone’s troubles.  It reminds me of Bill Clinton, he used that language a lot.

“To sum up, I understand the seriousness of the situation, and the concerns frustrations and fears that have been and will continue to be voiced.  I know that only actions and results, not mere words, ultimately can give you the confidence you seek.  I give my pledge as the leader of BP that we will not rest until we make this right.  We’re a strong company, and no resources will be spared.  We, and the entire industry will learn from this event, and emergy stronger, smarter, and safer.”

OK, I give in, Tony Hayward really understands.  While stock prices rose yesterday after the establishment of the $20 Billion fund, I am not sure BP is, or will remain a strong company.  Words may not hurt Tony Hayward, and words will not give confidence, but Tony will be under fire shortly, and will have to provide some tough answers.

Mr. Hayward is tapdancing early.  He was asked the following questions by Rep. Stupak, which is gave the identical non-answer:

Should there be a ban on companies with miserable safety records drilling off our coast? … Who are we going to hold accountable?  … Do you expect to be CEO of BP much longer?

Tony’s response to all: “Since I’ve become CEO, safe reliable operations have been our first priority.”

Rep. Michael Burgess, (R-TX) is, like his colleague Joe Barton, most concerned with the $20 Billion fund, and not the CEO right in front of him.

Rep. Waxman asked if BP made a fundamental mistake in the selection of the casing?  Tony responded: “I wasn’t involved in that decision.”  Tony is not taking responsibility for the decisions and actions of his company.

Rep. Waxman and Tony Hayward had this remarkable interchange:

Rep Waxman: “Don’t you feel any sense of responsibility for these decisions?

Tony Hayward: “I feel a great sense of responsibility for this accident.”

Rep. Waxman: “What about the decisions?”

Tony Hayward: “I can’t pass judgement on those decisions.”


Was BP acting in the best interest of British pensioners?

BP CEO Tony Hayward will appear before the House Energy & Commerce Committee Thursday

On Thursday, Tony Hayward will appear before the House Committee on Energy and Commerce, and offer testimony about BP’s failures on the Deepwater Horizon Rig.  These documents, released by the Committee in advance of the hearing, make it clear that BP cut corners.  This e-mail, between BP engineers a week before the blowout, discusses BP’s choice of a faster, less expensive, and less protective casing for the well:

From: Morel, Brian P

Sent: Wednesday, April 14, 2010 1:31 PM

To: Miller, Richard A

Cc: Hafle, Mark E

Subject: Macondo APB

Rich,

There is a chance we could run a production liner on Macondo instead of the planned long string. As this does not change much for APB based on the original design assumptions of a trapped annular, I don’t see any major effects, but wanted to confirm I am not missing something. Attached is the proposed schematic, please let me know if you have any questions. We could be running it in 2-3 days, so need a relative quick response. Sorry for the late notice, this has been nightmare well which has everyone all over the place.

Thanks

Of course, among the documents are also approval e-mails from the Minerals Management Service.  There are also e-mails from Halliburton, showing that BP went against the Halliburton recommendation for the number of centralizers, devices to keep the casing centered on the well while the cement was poured and set.  Halliburton recommended 21, but BP went with only six, because the well was behind schedule.

BP and the British Government, are fighting American efforts to force BP to set up an escrow account to ensure claims settlement, and to cease payment of dividends.  Of course, in Britain, BP dividends account for a large portion of retirement income:

‘BP’s position at the top of the London Stock Exchange and its previous reliability have made it a bedrock
of almost every pension fund in the country, meaning its value is crucial to millions of workers. The firm’s dividend payments, which amount to more than £7 billion a year, account for £1 in every £6 paid out in dividends to British pension pots. BP is so concerned about Mr Obama’s power to affect share value that it has urged David Cameron to appeal to the White House on its behalf. Downing Street, however, has refused to get involved. “We need to ensure that BP is not unfairly treated – it is not some bloodless corporation,” said one of Britain’s top fund managers. “Hit BP and a lot of people get hit. UK pension money becomes a donation to the US government and the lawyers at the expense of Mrs Jones and other pension funds.”’

Now, did BP have British pensioners in mind when it opted for cheaper casing, and fewer centralizers?  No, it opted for risky cost-cutting instead of safe, secure profit that pensioners would expect. Will blaming the President help the pensioners?  Not quite.  The pensioners are simply learning the same lesson that stockholders of Enron and Worldcom learned, that many corporations incentivize short term earnings without an eye to the long term.