Royal Dutch Shell plc .com Rotating Header Image

Shell, Exxon, Chevron and Conoco no better prepared to deal with a major oil spill than BP

Getty Images: ExxonMobil CEO Rex Tillerson, Chevron CEO John Watson, ConocoPhillips CEO James Mulva, Shell President Marvin Odum, and Lamar McKay, president of BP America, at a House hearing.

THE WALL STREET JOURNAL

By STEPHEN POWER JUNE 15, 2010

WASHINGTON—Senior House Democrats accused all five oil companies attending a congressional hearing Tuesday of relying on “cookie cutter” spill-response plans.

Rep. Edward Markey (D., Mass.) said a review of oil companies’ response plans found that, like BP PLC, three other companies had made references in plans to protecting walruses, “which have not called the Gulf of Mexico home for three million years.” He added that two other plans “are such dead ringers for BP’s that they list a phone number for the same long-dead expert.”

Mr. Markey didn’t identify the companies or the deceased expert. He also said the oil companies had spent an average of $20 million a year on research for safety, accident prevention and oil-spill response plans—an amount he called paltry, compared with the $39 billion they had spent over the past three years to explore for oil and gas.

“The oil companies may think it’s fine to produce carbon copies of their safety plans, but the American people expect and deserve more,” Mr. Markey said.

He called for significantly raising the cap on oil companies’ legal liability for spills and legislation that would mandate safety requirements for companies that drill offshore.

Separately, Rep. Henry Waxman (D., Calif.) presented an excerpt of BP’s spill-response plan that is virtually identical to one filed by Exxon Mobil Corp. He said Exxon Mobil, Chevron Corp. Conoco Phillips and Royal Dutch Shell PLC are “no better prepared to deal with a major oil spill than BP” and said the companies had relied on the same company—the Response Group—to write their plans. The Response Group described those plans to congressional investigators as cookie-cutter plans, Mr. Waxman said.

“When you look at the details, it becomes evident these plans are just paper exercises,” Mr. Waxman said. “BP failed miserably when confronted with a real leak, and Exxon Mobil and the other companies would do no better.”

Republicans who attended the hearing accused Democrats and the Obama administration of inappropriately using the disaster to pass legislation aimed at limiting emissions of heat-trapping gases linked to climate change.

“Anger and frustration do not solve problems,” said Rep. Joe Barton (R., Texas). “We must focus on the real problems: how to mitigate the spill, assist Gulf residents and ensure a disaster like this never happens again.”

In advance of the hearing, top oil-company executives moved to distance their companies from BP.

Exxon Mobil Chief Executive Officer Rex Tillerson called the April 20 explosion and subsequent collapse of the Deepwater Horizon rig “a dramatic departure from the industry norm in deepwater drilling,” according to testimony prepared for the hearing.

Exxon is eager to know “what went wrong at this well that did not occur at the 14,000 other deepwater wells that have been successfully drilled around the world,” Mr. Tillerson said.

Chevron Chairman and Chief Executive John S. Watson said in prepared remarks that he believes an independent investigation of the accident “will show that this tragedy was preventable.”

Chevron’s drilling and well-control practices in deep water “are safe and environmentally sound,” he said. He urged lawmakers not to use this incident as the basis for scaling back or shutting down “the many positive benefits of offshore development in the Gulf of Mexico and elsewhere.”

The Obama Administration has put a six month halt on new deep-water drilling and has stopped drilling in waters shallower than 500 feet until new safety and environmental rules are in place. Oil-industry executives have said the delay in publishing final shallow-water rules is putting thousands of jobs at risk.

A representative of Royal Dutch Shell, Marvin Odum, said in his prepared remarks that the company remains confident in its drilling expertise and procedures. He predicted that the Obama administration’s decision to halt new deep-water drilling for six months will cost “thousands of jobs and billions in lost wages and spending.”

The executives’ statements raise the pressure on BP, which is already facing criticism from members of Congress over its plans to pay a dividend to shareholders.

On Tuesday, two Democratic senators—Ron Wyden of Oregon and Charles Schumer of New York—expressed outrage over reports that BP is considering setting up an escrow account to pay a dividend in the future. The lawmakers reiterated their demand that the company shelve any payment to shareholders until the cost of the oil spill is fully calculated and sufficient reserves are set aside to meet those costs.

U.S. Rep. Joe Barton (R., Texas) called for Congress to be careful in designing new regulations for offshore oil exploration. But he also scolded the assembled CEOs for relying too heavily on blowout-prevention technology that is supposed to stop a runaway well before a major spill occurs.

“You can’t have a contingency plan that says ‘cross your fingers and hope the blowout preventer works,’ ” Mr. Barton said. “We need more than a cookie-cutter contingency plan.”

Write to Stephen Power at [email protected]

WSJ ARTICLE

Comments are closed.

%d bloggers like this: