At Senate Energy Committee hearings in Washington, D.C., on Tuesday, as BP admitted that "oil had begun washing on the Louisiana shoreline," BP, Transocean, and Halliburton blamed each other for the Gulf Disaster, Reuters reported.[1]  --  The Wall Street Journal gave more details of the hearing, and said it "came as the Obama administration's Interior Department announced plans to reorganize the Minerals Management Service, which currently is responsible for both safety oversight and collecting revenues from oil and gas leasing on federal lands.  Interior Secretary Ken Salazar, responding to criticism about the potential for conflicts of interest, said the agency would be split so the two functions would be separated."[2]  --  At another hearing, convened by the Coast Guard and the Minerals Management Service in Kenner, LA, a suburb of New Orleans, the captain and crew of a supply ship that was near the Deepwater Horizon at the time of the blowout on Apr. 20 described the effort to save rig workers and coordinate early rescue efforts in testimony the Los Angeles Times described as "riveting."[3] ...

1.

EXECUTIVES TRADE BLAME AS OIL GUSHES IN U.S. GULF

By Timothy Gardner and Steve Gorman

** Protests planned for Wednesday in several cities -- Obama "deeply frustrated" leak not stopped -- BP stock extends losses in London and New York **

Reuters
May 11, 2010

http://www.reuters.com/article/idUSN1124632920100512


WASHINGTON/PORT FOURCHON, La. --
Executives from BP Plc and other companies involved in a deadly Gulf of Mexico offshore oil well blowout blamed each other in Washington on Tuesday as troops and prison inmates rushed to shore up Louisiana's coast against a huge oil slick.

The oil bosses were grilled on safety practices by members of the Senate Energy Committee, with committee chairman Jeff Bingaman saying it appeared the explosion on the Deepwater Horizon rig that triggered the oil slick was due to a "cascade of errors, technical, human, and regulatory."

The hearings are set to continue on Wednesday, the same day a group of activists called Seize BP plans demonstrations at the company's offices and other sites across the United States to demand the government freeze its assets to ensure payment for the cleanup and compensation for those hurt by the spill.

BP's stock ended down 0.67 percent in London and its American Depositary Receipts fell 0.12 percent in New York.  The shares have fallen more than 15 percent since the rig blast on April 20, wiping more than $30 billion from its market value.

White House spokesman Robert Gibbs said President Barack Obama is "deeply frustrated" that the oil leak in the Gulf has not yet been stopped three weeks after the blast.

There are fears it could become the worst oil spill in U.S. history with staggering ecological and economic consequences for fisheries, beaches, wildlife, and tourism in at least four states.

BP spokesman Daren Beaudo said that some oil had begun washing on the Louisiana shoreline.

Beaudo, who took reporters on a boat tour, said oil had washed ashore at three locations:  Dauphin Island, Alabama; the Chandeleur Islands off Louisiana; and the South Pass-Port Eads area on a remote stretch of Louisiana's mainland.

"Well, we are outside the South Pass of Louisiana where some of the first oil has impacted the shoreline.  What we have behind is a forward staging area," he said as clean-up crews removed contaminated sand from the coast.

For some Gulf residents, life went on.

Alabama residents were taking a "wait and see" approach to tar balls that washed up on the shore of a popular local beach on Dauphin Island, which government officials have not yet confirmed were linked to the spill.

"The water is pretty clear . . . fishing is still good," angler Clyde Willis said.

The fight to contain the slick went on in Louisiana, Mississippi, Alabama, and Florida, whose fishing and tourism industries are already feeling the pinch, while BP readied another potential subsea fix.

But the U.S. government is concerned about whether enough protective booms are being provided to adequately defend the U.S. Gulf Coast shoreline from a massive oil spill, Homeland Security Secretary Janet Napolitano said on Tuesday.

"We have some concerns about getting adequate boom," she told reporters during a visit to Mobile, Alabama, referring to the plastic barriers that are being strung along the coast to keep the oil off the shore.

The accident's fallout is being felt on the regulatory front as the ruptured well keeps spewing at least 5,000 barrels (210,000 gallons/795,000 litres) of crude into the Gulf each day in what threatens to be the worst-ever U.S. oil spill.

In response, U.S. Interior Secretary Ken Salazar announced that the federal agency that oversees offshore drilling will be split in two to separate the collection of oil royalties from safety inspection duties.

The explosion of the Transocean Ltd-owned and operated rig, which killed 11 workers, has governments at all levels scrambling to react.  Obama has already suspended a plan to open up more waters to oil drilling.

FINGER-POINTING


In the congressional hearings, BP America President Lamar McKay, Transocean Chief Executive Steven Newman and Tim Probert, an executive at Halliburton Co. sat through senators' accusations, then pointed fingers at each other.

McKay said the rig's blowout preventer, equipment designed to protect workers by cutting the flow of crude in the case of sudden changes in pressure, had been modified.

Indeed, modifications to the gear were made in 2005, but at BP's request, said Transocean's Newman.

Republican Senator John Barrasso told the executives:  "I hear one message and the message is:  'Don't blame me.' Well, shifting this blame does not get us very far."

Senator Ron Wyden, a Democrat, at one point interrupted McKay, saying, "The culture of this company has been one accident after another."

BP had been trying to repair its image following a 2005 explosion at its Texas City refinery, which killed 15 workers.

Senator Barbara Boxer, a Democrat, slammed BP for stating before it began drilling the fateful well that it would use "proven technology" as it sought to get an exemption from an environmental assessment.  After the accident, BP said it wasn't sure how the clean-up would go because the equipment had never been tested in deep water conditions.

"This is just unacceptable to say two starkly different things about the same project," Boxer told McKay.

Halliburton joins BP and Transocean in the hot seat because it provided a variety of services on the rig and was involved in cementing the well to stabilize its walls and plug it.

Transocean pins the blast on the failure of the cementing to plug the well.  BP leased the rig and operated the well.

On their way into the hearings, the oil men were jeered by protesters holding signs saying "Boycott BP" and "BP Kills."

BP will try covering the leak nearly a mile (1.6 km) under the surface with a much smaller funnel than the 98-ton dome it tried in vain to put in place over the weekend.

The so-called "top hat" dome is expected to be placed over the relentless leak on Thursday.

Desperate efforts continued to protect the coastline, including fragile wetlands, from the approaching slick.

In Port Fourchon, Louisiana, fatigue-clad Army National Guard troops from the 769th Engineer Battalion of Louisiana sweated alongside prisoners in scarlet red pants and white T-shirts with "Inmate Labor" on the back as they filled giant 1,000-pound (450-kg) sandbags.

Black Hawk helicopters dropped the sandbags to plug gaps in coastal beaches through which the oil could seep. 

(Additional reporting by Tom Doggett in Washington, Pascal Fletcher in Miami, Erwin Seba in Robert, Louisiana, Greg Savoy in Venice, Louisiana, Verna Gates in Mobile, Alabama, Deborah Gembara in Dauphin Island, Alabama and Anna Driver in Houston; Tom Bergin in London; Writing by Deborah Charles and Jeffrey Jones; Editing by Ed Stoddard and Eric Walsh)

2.

COMPANIES, LAWMAKERS LEVEL BLAME AT OIL HEARING

By Siobhan Hughes and Corey Boles

Wall Street Journal

May 11, 2010

http://online.wsj.com/article/BT-CO-20100511-719944.html

WASHINGTON -- Irregular pressure readings, limitations in some testing, and deference on decision-making preceded last month's deadly oil-rig explosion in the Gulf of Mexico, according to new details emerging from testimony by oil company executives before the U.S. Senate.

The testimony added to the picture of the accident on the Transocean Ltd. (RIG) rig, which BP Plc (BP) was leasing in order to drill an exploratory well with the help of Halliburton Co. (HAL) employees.  But a big question about whether procedures took place in the correct sequence remained unanswered, as officials said that none of them was familiar with the federally approved plans for drilling an exploratory well that was located one mile below the ocean's surface.

BP America President Lamar McKay told the Senate Environment and Public Works Committee that "there were anomalous pressure-test readings" in an exploratory well that was drilled into the ocean floor before the explosion.  Last month's blast has caused an oil leak that has been spewing 5,000 barrels of oil a day into the sea for roughly three weeks.

Halliburton safety chief Tim Probert, whose company was cementing a pipeline into the hole bored into the sea floor, said that only a particular type of test could have determined the effectiveness of the cementing, but that test wasn't conducted.

Probert also said that the explosion occurred before Halliburton had installed a final cement plug in the well on the ocean's floor, at a time when workers had begun replacing heavy mud that had exerted pressure on the well with lighter seawater, a sequence that some people have called into question.

Probert said he wasn't sure how common it was to remove the heavy mud before installing a cement plug that is the final barrier put into place to guard against blowouts.  That prompted Sen. Jeff Sessions (R., Ala.) to angrily respond:  "You do this business, do you not?  You're under oath, I'm just asking you a simple question."

The hearing came as the Obama administration's Interior Department announced plans to reorganize the Minerals Management Service, which currently is responsible for both safety oversight and collecting revenues from oil and gas leasing on federal lands.  Interior Secretary Ken Salazar, responding to criticism about the potential for conflicts of interest, said the agency would be split so the two functions would be separated.

Senate Environment and Public Works Committee Chairman Barbara Boxer (D., Calif.) questioned BP America's chief on why the company said it foresaw no problems when it requested government permission to drill earlier this year.  She also asked why Halliburton steered clear of testing the cement "unless they ask you?"

Under repeated questioning, Prebert allowed that "we would feel an obligation if we felt that the integrity of the cement was in question."

As companies and lawmakers assigned blame, Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D., N.M.) said that multiple factors were at work.

"At the heart of this disaster are three interrelated systems -- a technological system of materials and equipment; a human system of persons who operated the technological system; and a regulatory system," he said.  "These interrelated systems failed in a way that many have said was virtually impossible.  We need to examine closely the extent to which each of these systems failed to do what it was supposed to do."

BP's McKay, questioned repeatedly about the oil company's plans to pay for costs related to the spill, said BP would pay all "legitimate" claims.  But he said that "claims have to have some basis, have to have some substantiation."

Senators also said the oil industry and regulators weren't prepared when disaster did strike.  Speaking at a later hearing in the Senate Environment and Public Works Committee, Sen. Arlen Specter (D., Pa.), said oil companies could have had a containment dome, which BP is now trying to lower onto the leaking well to collect runaway oil, "ready for the spill rather than building one after it happened."

Sen. Lisa Murkowski (R., Alaska) questioned why tests on using chemical dispersants underwater hadn't been conducted before the spill.  BP is using dispersants to break up the oil on the ocean's surface, but it has suspended the use of underwater dispersants pending the outcome of Environmental Protection Agency tests.

Halliburton was performing the cementing work, which involves filling up a space between the hole bored into the sea floor and the casing inserted into the hole.  Transocean Chief Executive Steven Newman testified that "the one thing we know with certainty" is that in the blast "there was a sudden, catastrophic failure of the cement, the casing, or both."

"I agree," F.E. Beck, a petroleum engineer at Texas A & M University, told the Senate Energy and Natural Resources Committee.  But he said that the wellhead casing "is also suspect."

BP has been unable to activate a blowout preventer, equipment made of up heavy-duty valves that can shut of the well as a last resort.  Lawmakers questioned whether such equipment is subject to enough testing.

"Why is it that the testing always seems to pass, and yet when it was needed, it failed?" asked Sen. Bob Menendez (D., N.J.).

--By Siobhan Hughes and Corey Boles, Dow Jones Newswires; 202-862-6654; This email address is being protected from spambots. You need JavaScript enabled to view it.


3.

RIVETING TESTIMONY ON OIL RIG RESCUE EFFORT

By Julie Cart

** Workers on the Deepwater Horizon drilling rig leaped eight stories into the Gulf of Mexico after the huge natural gas explosion, witnesses tell a federal hearing in Louisiana. **

Los Angeles Times

May 12, 2010

http://www.latimes.com/news/science/la-na-oil-spill-kenner-20100512,0,6962995.story


KENNER, Louisiana --
Workers leaped eight stories into the sea as flames engulfed the Deepwater Horizon oil drilling rig, according to gripping testimony Tuesday during a federal hearing into last month's Gulf of Mexico disaster.

The testimony in a crowded ballroom here painted a picture of chaos mixed with heroism in the aftermath of an explosion of natural gas.  Nearby ships raced to the scene unfolding 50 miles offshore as the crew of a solitary supply boat plucked survivors from burning water, witnesses said.

The hearing, convened by the Coast Guard and the federal Minerals Management Service, offered the first broad public view of the events that led to a spill already measuring more than 4 million gallons of oil and threatening the fragile wetlands of Louisiana and its multimillion-dollar fishery.  Eleven men are missing and presumed dead after the April 20 explosion and sinking of the rig two days later.

In the morning session, the captain and crew of the Damon B. Bankston told about 200 people how they scrambled to save rig workers and coordinate early rescue efforts.  A Coast Guard official described doctors on the decks of rocking boats desperately performing triage of the burned and injured, and a four-day round-the-clock search that covered 5,300 square miles.

The afternoon session was dominated by legal sparring among several companies with potential liability, including BP, which owns the oil lease; Transocean, which owns the rig; Halliburton, which applied the cement that is suspected of being a factor in the explosion; and Cameron, which manufactured the blowout preventer atop the well, which may have failed.

Coast Guard search-and-rescue specialist Kevin Robb said he was home after working a 12-hour shift when he got a call to return to handle a rig fire.  The incident escalated into a massive rescue effort, and Robb said the Coast Guard called in every available helicopter to begin a nighttime search of the gulf.  Pilots were flying with night-vision goggles, and other aircraft were fitted with radar equipment that detected heat to aid in finding anyone in the water.  The task was enormous, he said.

"What you are looking for in these circumstances is about the size of a volleyball -- a person's head," Robb said.

Alwin Landry was the captain of the Damon B. Bankston, a supply boat alongside the oil rig.  He said he was on the bridge catching up on paperwork when drilling mud from the Horizon began to spew onto the back of his boat, coming down "like black rain."

Landry testified that he soon got a radio call from the Horizon ordering him to immediately move 500 meters away from the rig.

Just after the call, he heard and felt an explosion and glanced at the drilling platform, where he saw a green flash and heard a hissing sound.  Debris began to hit his boat, he said.  As it moved away from the burning platform, Landry said, he saw three men jump into the sea. He ordered his boat's rescue vessel to pick up anyone in the water.

The Bankston's rescue crew picked up men from a debris field around the rig, in one instance pulling them aboard while oil burned nearby on the water's surface.  The crew also saved several deck hands who had abandoned the rig but found themselves in a life raft tied to the sinking structure.  The crew of the rescue boat cut the raft free and, with men in the water clinging to the side of the raft, towed it back to the larger ship.

The Bankston was credited with recovering or taking aboard all 115 survivors, including Curt Kuchta, the captain of the Horizon.

Landry said he had a brief conversation with the captain.  "They said they pressed the kill switch, didn't know if it worked or not," he said.

That detail was of great interest to the attorneys present, as it seemed to suggest a failure of the blowout preventer designed to keep oil and gas from erupting out of the wellhead.

As compelling as the rescue testimony was, it was the obscure technical details that interested the six-member panel and attorneys in the audience.

There were suggestions Tuesday of problems on the rig long before the explosion.  The Bankston's first mate testified that he was "vaguely aware" BP was having problems drilling the well.  Paul Erickson said he had heard that the company was "having to redrill or reroute the well."  He said that the boat made a trip to bring more mud to the rig because of a circulation problem and that he had heard the Deepwater Horizon operation was "a difficult well, not typical."

Later, a Minerals Management Service inspector said he visited the rig Feb. 2 and noted a loss of circulation in the drilling system.  But he said three other monthly inspections generally found no problems.

Frank Patton, district drilling manager for the MMS, said the agency had no reports that the rig was "taking kicks," or having problems with well pressure or malfunctions of the blowout preventer.

Patton was questioned closely about BP's history of testing blowout preventers, including its blind-shear ram, which can cut the drill pipe when well pressure gets out of control.  Jason Mathews, an MMS petroleum engineer on the panel, asked if Patton had BP's assurances that its blind-shear ram was operative.

Patton, who approved BP's permit to drill, said he never looks for that information in an operator's paperwork and that he thought that BP had not submitted that information, as required.  Patton also acknowledged that most inspectors rely on data provided by the company, not on in-person inspections.

The last inspection of the Deepwater Horizon occurred April 1.  Eric Neal, who performed the inspection, said nothing seemed amiss.

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