BP Becomes Target of Congress, and Its Peers

Posted June 15, 2010 at 5:59pm

When executives for the five oil giants took their seats at a House Energy and Commerce subcommittee hearing Tuesday, Lamar McKay, the president of BP America, found himself at the far end of the table.

It turned out to be a fittinglay lonely spot for the BP chief, who garnered precious little support from his industry counterparts for his company’s predicament in the wake of the worst oil spill disaster in the nation’s history.

The mantra for the day turned out to be, as Exxon Mobil CEO Rex Tillerson put it, “We would not have drilled a well the way they did.”

Officials from Shell, ConocoPhillips, and Chevron echoed variations on the theme during several hours of grilling by the Subcommittee on Energy and Environment. They questioned BP’s well design and its cementing process and emphasized that standards were in place to safeguard against such catastrophes.

“This could have been preventable,” said James Mulva, CEO of ConocoPhillips.

It was Tillerson, whose company experienced its own public relations disaster in 1989 with the Exxon Valdez tanker spill off the coast of Alaska, who was particularly emphatic in trying to draw distinctions between his company and BP.

In his opening testimony, he noted that Exxon had successfully drilled almost 8,000 wells worldwide over the past 10 years, including 262 in deep water and 35 in the Gulf of Mexico.

“We do not proceed with operations if we cannot do so safely,” said Tillerson, who sat at the opposite end of the table from McKay.

McKay spent much of the time fending off criticism of his company, saying the spill response “has actually been pretty effective” and calling the command structure “functional.”

The BP executive also maintained his strategy of being vague in response to questions about legislative or other proposals. He would not commit to a plan by President Barack Obama to set up an escrow account to pay for claims stemming from the spill.

The spotlight on BP is likely to grow even harsher when the company’s CEO, Tony Hayward, is scheduled to testify Thursday for the first time before the Energy and Commerce Subcommittee on Oversight and Investigations.

The appearance by the other major oil companies Tuesday was the first time they have jointly addressed the oil spill before Congress. However, over the years, the oil industry’s lobby has not been shy about trying to influence Washington, D.C., decision-makers.

The five companies whose executives testified before the Energy and Commerce subcommittee have spent more than $378 million in lobbying the federal government since 1998, according to a CQ MoneyLine analysis of public lobbying disclosures. During that time, the political action committees controlled by these corporations contributed $11.1 million to Congressional and presidential candidates.

Leading the way is Exxon Mobil, which has spent more than $147 million on lobbying and directed $4.7 million to federal campaigns in the past 12 years.

Despite that financial investment, the committee’s top Democrats hammered the oil executives for not being that different from BP when it comes to dealing with a potential oil spill crisis.

Subcommittee on Energy and Environment Chairman Ed Markey (D-Mass.) said the major oil companies have oil spill response plans that “are virtually identical.”

Energy and Commerce Chairman Henry Waxman (D-Calif.) said that while those 500-page plans may be extensive, he noted that they contained errors, including the phone number of an expert at the University of Miami who has been dead for five years and details of how to protect walruses. The problem, Waxman noted, is that “there are no walruses in the Gulf of Mexico.”

Waxman referred to the plans, which had been prepared by the same company, the Response Group, as “cookie-cutter plans.”

Tillerson admitted that including walruses in the plan was an embarrassment but added that even though the expert was dead, his scholarship could still prove useful.

Subcommittee on Oversight and Investigations Chairman Bart Stupak (D-Mich.) took aim at Exxon Mobil for devoting too much of its oil spill plan to explaining how it would respond to the media.

Stupak said that while Exxon wrote 40 pages on media response, its plan for resource protection is five pages and its plan for oil removal is nine pages.

“The oil company response plans are great public relations,” he said. “But the plans are worthless when an actual spill occurs.”

The committee’s Republicans, however, criticized the Democrats for trying to politically exploit the oil spill to push their agenda on climate change legislation. They questioned the executives about the loss of jobs that would result from the six-month moratorium on offshore drilling in deep water imposed by Obama. The executives responded that if the drill operations remain idled off the U.S. coasts, they would likely be moved elsewhere in the world where there was great demand for such drilling.

Energy and Commerce ranking member Joe Barton (R-Texas) warned of the economic impact of coming down too hard on the oil industry with too many federal regulations.

“When you take a patient to the emergency room, the solution is not normally to kill the patient,” he said.

However, Barton may have sickened the patient a bit more when at one point he called the company “British Petroleum,” a moniker that has infuriated the British, who note that BP dropped the full name years ago and believe American politicians are still using it to blame foreigners.

Alex Knott contributed to this report.