At hearing, a cautious CEO frustrates his accusers
WASHINGTON -- BP PLC chief executive officer Tony Hayward said he is "devastated" and "deeply sorry" for the mammoth Gulf oil spill, but he refused to acknowledge possible safety and engineering lapses.
Mr. Hayward's deliberate and repetitive answers continually frustrated U.S. lawmakers at a congressional hearing Thursday, as they pressed to discover what the company might have done differently to prevent the largest oil spill in American history. Members of the House oversight and investigations subcommittee accused Mr. Hayward of stonewalling, ducking questions and not telling the whole truth during hours of often angry questioning.
"You're the CEO ... You have a PhD. You've been head of exploration. You know what's going on," committee chairman Bart Stupak complained. "We would hope to have more candour to your responses."
Mr. Hayward, a 52-year-old British executive who has spent nearly three decades with BP, was contrite, but wasn't willing to accept personal or corporate responsibility for the blowout, which continues to spew between 35,000 and 60,000 barrels of crude per day into the Gulf of Mexico, according to the most recent government estimates. BP has been collecting part of the spill off the surface.
His caution illustrates the difficult bind that BP, and Mr. Hayward, are in. He is eager to make amends with lawmakers and Americans and salvage the company's reputation; BP has agreed to set aside $20-billion (U.S.) to pay for ongoing cleanup efforts and compensate businesses and individuals who've suffered losses.
But admitting specific mistakes or negligence could expose BP to even greater liabilities that could ultimately cripple the company financially.
Mr. Hayward told the hearing he wasn't involved in key decision making involving the Deepwater Horizon oil rig, and couldn't answer key questions until the completion of multiple investigations. At various times, he deflected questions by pointing out that he isn't an oceanographic expert, a drilling engineer or a cement engineer.
"I think it's too early to reach conclusions" about what caused the rig to explode April 20, Mr. Hayward added. "The investigations are ongoing."
He later insisted he's "seen no evidence of reckless behaviour" at BP. And he denied the company put profits ahead of safety in the drilling of the well, which one BP official described in internal e-mails as a "nightmare" before the accident.
The appearance by Mr. Hayward is part of a sweeping damage-control effort by the company as it faces potentially crushing costs and a decimated share price. On Wednesday, BP announced it would suspend its dividend and sell assets to help pay for the special cleanup fund.
Several committee members pointed to internal documents and e-mails suggesting BP engineers made decisions at several junctures during the drilling of the Macondo well aimed at saving time or money. And at another Congressional hearing this week, the heads of the several rival oil producers said they would never have drilled the well the way BP did.
Suspicion for the cause of the spill has centred on the failure of a blowout preventer as well as the cement seals and the casing around the well, located roughly 1.6-kilometres underwater off the Louisiana coast.
Henry Waxman, chairman of the House energy and commerce committee wanted to know why BP chose a riskier but cheaper well design that saved the company $7-million to $10-million, according to BP documents.
Mr. Hayward responded that as CEO, he didn't make design choices.
"I'm not stonewalling," he insisted. "I simply was not involved in the decision-making process."
That didn't sit well with Mr. Waxman, who shot back: "You're not taking responsibility. You're kicking the can down the road and acting like you have nothing to do with ... this company."
The hearing was briefly interrupted just as Mr. Hayward was being sworn in when a protester smeared what appeared to be oil on her face and hands and began shouting.
"You need to be charged with a crime. You need to go to jail," screamed the woman, identified as Diane Wilson, a Texas shrimper and peace activist. Ms. Wilson, who was also arrested at a Senate hearting last week, was wrestled to the ground by security guards and taken out of the room.
BP (BP)
Close: $31.71, down 14¢
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DIGGING DEEP
Cleanup, fines and lawsuits stemming from the spill are likely to cost BP tens of billions of dollars. Yet many analysts say the British oil giant can survive the crisis. Here's a look at some of the costs BP faces, and a snapshot of its finances:
BP'S COSTS ARE ADDING UP ...
It has already paid $1.8-billion.
Cleanup tab could hit $20-billion, assuming worst-case spill estimates.
If BP is found "negligent"
under federal law, fines quadruple to $4,300 per barrel spilled, adding perhaps $20 billion to the bill.
BP agreed to put $20-billion into a fund to pay fisherman and other workers who've lost money.
Court cases could add tens
of billions to cost, especially if criminal charges are filed.
... BUT ITS FINANCES ARE STRONG
Strong cash flow from
operations, estimated at
$30-billion for 2010.
Suspending dividend, tapping cash and selling assets frees up $25 billion this year.
It could tap $10-billion in debt already lined up with banks.
Because it has borrowed little so far, BP can easily hit up lenders for another $15-billion.
