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http://www.nytimes.com/2010/06/16/business/16oil.html?hp

 This story is worth a careful read for its insights into oil industry
strategy for continuing offshore drilling.

June 15, 2010
 Executives Tell House That Spill Is an Aberration By JOHN M.
BRODER<http://topics.nytimes.com/top/reference/timestopics/people/b/john_m_broder/index.html?inline=nyt-per>

WASHINGTON — The chairmen of four of the world’s largest
oil<http://topics.nytimes.com/top/reference/timestopics/subjects/o/oil_spills/gulf_of_mexico_2010/index.html?inline=nyt-classifier>companies
broke their nearly two-month silence on the major spill in the
Gulf of Mexico on Tuesday and publicly blamed
BP<http://topics.nytimes.com/top/news/business/companies/bp_plc/index.html?inline=nyt-org>for
mishandling the well that caused the disaster.

Seeking to insulate their companies from the continuing crisis in the gulf
and the political backlash in Washington, the leaders of Exxon
Mobil<http://topics.nytimes.com/top/news/business/companies/exxon_mobil_corporation/index.html?inline=nyt-org>,
Chevron<http://topics.nytimes.com/top/news/business/companies/chevron_corporation/index.html?inline=nyt-org>,
Shell and ConocoPhillips<http://topics.nytimes.com/top/news/business/companies/conocophillips_inc/index.html?inline=nyt-org>insisted
at a Congressional
hearing<http://energycommerce.house.gov/index.php?option=com_content&view=article&id=2034:hearing-on-drilling-down-on-americas-energy-future-safety-security-and-clean-energy&catid=130:subcommittee-on-energy-and-the-environment&Itemid=71>that
they would not have made the mistakes that led to the well explosion
and the deaths of 11 rig workers on April 20.

“We would not have drilled the well the way they did,” said Rex W.
Tillerson<http://energycommerce.house.gov/documents/20100615/Tillerson.Testimony.06.15.201.pdf>,
chief executive of Exxon Mobil.

“It certainly appears that not all the standards that we would recommend or
that we would employ were in place,” said John S.
Watson<http://energycommerce.house.gov/documents/20100615/Watson.Testimony.06.15.2010.pdf>chairman
of Chevron.

“It’s not a well that we would have drilled in that mechanical setup,” said
Marvin E. Odum, president of Shell.

The hearing was an opportunity for three dozen members of Congress to vent
their frustration at top executives of the world’s largest privately owned
oil companies. The occasion was reminiscent of the 1994 hearing before a
panel of the same committee — the House Energy and Commerce Committee — at
which the chief executives of the major tobacco companies were ritually
grilled on the dangers of their products. Top banking executives recently
got the same treatment.

The oil company leaders presented a similar tableau on Tuesday — a group of
middle-aged, dark-suited executives raising their right hands in preparation
for nearly five hours of hostile interrogation.

Democrats generally were seeking confessions of error and expressions of
regret. Republicans focused more on the economic impact of the spill and the
moratorium on most offshore
drilling<http://topics.nytimes.com/top/reference/timestopics/subjects/o/offshore_drilling_and_exploration/index.html?inline=nyt-classifier>that
President
Obama<http://topics.nytimes.com/top/reference/timestopics/people/o/barack_obama/index.html?inline=nyt-per>imposed
in the aftermath of the disaster. They sought assurances that
deepwater drilling could resume safely.

But even some Republicans were moved to join the attack on Lamar
McKay<http://energycommerce.house.gov/documents/20100615/McKay.Testimony.06.15.201.pdf>,
president of BP America and designated scapegoat of the day, who was seated
at the witness table with the other executives. Representative Cliff
Stearns, Republican of Florida, told Mr. McKay that he should resign;
another Republican, Representative Joseph Cao of Louisiana, said, “In
samurai days, we would just give you a knife and ask you to commit
hara-kiri.”

Representative Edward J.
Markey<http://energycommerce.house.gov/documents/20100615/Markey.Statement.ee.06.15.2010.pdf>,
Democrat of Massachusetts, chairman of the energy and environment
subcommittee that convened the hearing, demanded that Mr. McKay apologize
for what Mr. Markey termed the incompetence and deceit that led to
consistently low estimates of the size of the spill and the resulting
damage.

After weaving for a bit, Mr. McKay said meekly: “We are sorry for everything
the Gulf Coast is going through. We are sorry for that and for the spill.”

He refused repeated requests that he promise to place billions of dollars of
BP’s profits in an escrow fund to pay damage claims, as members of Congress
and Mr. Obama have demanded. “I cannot commit today one way or another to a
fund,” he said. “We said we’ll honor all legitimate claims, and the full
company stands behind that.”

Until now, the other major oil companies had provided technical assistance
to BP and refrained from criticizing the company’s handling of the disaster.
Even as they watched their offshore rigs idled and their stock values fall,
they had presented a united front.

But that unity crumbled Tuesday before the House committee, mirroring
growing private frustration with being linked to BP. Some executives have
been angered at BP’s efforts to paint the gulf accident as an industrywide
problem that will require industrywide reforms. The executives of the other
companies asserted Tuesday that they believed BP was an outlier, cutting
corners to save time and money in ways that they would not tolerate.

The BP spill came just as the industry was about to realize a long-awaited
goal of expanding offshore drilling to new parts of the gulf, the Atlantic
Coast and parts of the Arctic. That is now all in question.

Although most of the Congressional fire was aimed at BP on Tuesday, the
other executives came under criticism as well, particularly for the response
plans that they prepared for a major spill in the gulf. The five companies
submitted virtually identical plans to government regulators and to the
committee. The 500-page document, prepared by a private contractor, refers
to measures to protect walruses and gives a phone number for a marine
biologist who died five years ago.

James J. Mulva<http://topics.nytimes.com/top/reference/timestopics/people/m/james_j_mulva/index.html?inline=nyt-per>,
chief executive of ConocoPhillips, said the citations were “certainly an
embarrassment to Conoco,” adding, “Plans need to be updated more
frequently.”

Representative Henry A.
Waxman<http://energycommerce.house.gov/documents/20100615/Waxman.Statement.ee.06.15.2010.pdf>,
the California Democrat who is chairman of the Energy and Commerce
Committee, noted that each of the companies said it had planned for a much
larger spill than the BP accident, even though it is clear that even a spill
of the current size is beyond any company’s ability to handle.

“BP failed miserably when confronted with a real leak,” Mr. Waxman said,
“and Exxon Mobil and the other companies would do no better.”

Mr. Tillerson admitted that the only way to deal with major spills was to
keep them from occurring.

“The point is,” he said, “we have to take every step to prevent these things
from happening, because when they happen we are not well equipped to prevent
any and all damage. There will be damage. There is no response capability
that will ensure that you won’t have an impact.”

Jad Mouawad contributed reporting from New York.


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******************************************
Michael Balter
Contributing Correspondent, Science
Adjunct Professor of Journalism,
New York University

Email:  [log in to unmask]
Web:    michaelbalter.com
NYU:    journalism.nyu.edu/faculty/balter.html
******************************************

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