Ronald Schupp protests near BP's offices in Chicago on Wed., May 12.Scott Olson
U.S. politicians investigating BP's catastrophic blowout in the Gulf of Mexico are increasingly characterizing the accident as an act of greed and ruling out an act of God.
The giant British oil company - which has a lengthy history of accidents blamed on negligence - is again finding itself pilloried for what politicians charge is a shoddy approach to safety that resulted in the death of 11 workers and the fouling of a coastline.
In what could be the worst-ever U.S. oil spill, crude is still gushing from the sea floor at a rate of about 5,000 barrels a day and oil has reached at least four shorelines.
The fallout could change the direction of U.S. energy politics and significantly diminish the fortunes of one of the western world's largest producers of oil and gas - a company that was touted as a leader in offshore production.
In hearings in Washington Wednesday, members of Congress chronicled a series of errors and poor judgment calls that likely contributed to the blowout, and said they were consistent with the company's past record for ignoring risk in the hunt for reward.
In the days after the explosion and blowout, Texas Governor Rick Perry cautioned against a rush to judgment, saying the blowout could simply have been an "act of God." But federal politicians rejected that view on Wednesday.
"This catastrophe appears to have been caused by a calamitous series of equipment and operational failures," Henry Waxman, the Democratic chairman of the House committee on energy and commerce, said at the opening of the session.
"If the largest oil and oil services companies in the world had been more careful, 11 lives might have been saved and our coastlines protected," he said.
Investigators are turning up evidence that industry essentially designed its own safety procedures, with little oversight from the federal regulator, the Minerals Management Service. And analysts say one result of the disaster will be a much more heavily regulated industry, driving up costs for companies that are already spending $100-million on a single well in deep water.
BP PLC informed the committee that major pressure problems were detected in the well hours before the blowout, Mr. Waxman noted. And there was disagreement between BP and the drill rig operator, Transocean Ltd., on how to proceed.
The oil company also revealed that it had detected a hydraulic leak in the massive valve that is meant to prevent blowouts, and that it failed when the company tried to close it to stop the unforeseen gush of oil. The blowout preventer had been modified at the request of BP to make it easier and more cost effective to test the equipment.
"BP, one of the world's largest companies, assured Congress and the public that it could operate safely in deep water and that a major oil spill was next to impossible," Mr. Waxman said as executives from BP, Transocean and Halliburton Co. sat shoulder to shoulder to testify. Halliburton provided well-servicing.
"We now know those assurances were wrong."
Democrat Bart Stupak, who chairs the subcommittee on oversight and investigations, was even more harsh in his judgment.
Mr. Stupak noted that Congress had investigated BP twice in recent years - after a fatal refinery explosion in Texas in 2005 and a major oil spill from its Alaska pipeline in 2006. He noted the company's own 2007 report pointed to a corporate culture that "seemed to ignore risk, tolerated non-compliance and accepted incompetence." And he suggested the evidence from the Gulf of Mexico would indicate the company has not fixed those problems.
On Thursday, Canadian parliamentarians will take their turn to grill BP. The Commons natural resources committee has called BP and the federal regulator, the National Energy Board, to a hearing on the company's plan to drill in Canadian Arctic waters.
BP, meanwhile, faces a massive bill for cleanup and compensation for residents who suggest financial loss. Federal law limits liability for non-cleanup costs at $75-million, but BP has already said it will pay "all legitimate claims."
"We recognize that beyond the environmental impacts there are also economic impacts on the people of the Gulf Coast states," BP American chairman Lamar McKay said Wednesday. "BP will pay all necessary cleanup costs and is committed to paying legitimate claims for other loss and damages caused by the spill."
The White House indicated Wednesday that it supports legislation to increase the liability to $10-billion, while some estimates have put the bill as high as $14-billion.
The company - and its partners - will almost certainly face a barrage of lawsuits from those who feel they deserve compensation but were not considered "legitimate" claimants.
BP, which earned $17-billion (U.S.) last year, will almost certainly withstand the financial hit, said James Williams, a veteran oil industry analyst. He noted that Exxon Mobil Corp. was not seriously weakened by the financial impact of the Exxon Valdez tanker spill on the West Coast in 1989.
"This is going to cost BP a lot. It's cost them already a lot of reputation - or added to their reputation depending on how you look at it," he said.
"But I don't think it's an event that craters the company. It probably slows them down some and maybe that needed to be done."
The Gulf of Mexico blowout will also shape U.S. energy politics. Democrats are determined to use the environmental catastrophe as further evidence of the need to invest heavily in renewable energy and reduce dependency on oil, while Republicans say greater regulation may be needed - but so is the oil lying several kilometres beneath the Gulf of Mexico.