WRAPUP 6-Executives shift blame as oil gushes into US Gulf

Tue May 11, 2010 6:23pm EDT

Related Topics

* Companies appear before US lawmakers, blame one another

* Obama "deeply frustrated" leak not stopped

* Changes made in agency that regulates offshore drilling

* BP stock slips in London and New York (Adds protests planned, dome set be lowered to well)

By Timothy Gardner and Steve Gorman

WASHINGTON/PORT FOURCHON, La., May 11 (Reuters) - Executives from BP Plc (BP.L) 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 in the first of two days of hearings, 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." [ID:nN11111830]

The hearings continue on Wednesday, the same day as 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 about $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.

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.

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. [ID:nN1199777]

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

TAKE A LOOK on the spill [ID:nSPILL]

INSIDER TV: link.reuters.com/gen92k

Graphic: link.reuters.com/xeh23k

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

The Minerals Management Service (MMS) currently carries out both roles, drawing criticism from some U.S. lawmakers and environmental groups that it is a conflict of interest for one agency to be responsible for regulating the safety of offshore oil production while also being charged with keeping the oil flowing so the government can collect royalties.

The explosion of the Transocean Ltd-owned and operated (RIG.N) 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 hearing, BP America President Lamar McKay, Transocean Chief Executive Steven Newman and Tim Probert, an executive at Halliburton Co (HAL.N), 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."

Halliburton joins BP and Transocean 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 underwater well. BP leased the rig and is operator of 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-tonne 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.

BP is also drilling a relief well, which could take as long as three months to complete. It plans a second one as well.

Those efforts are not without risk either. In documents filed with the MMS in late April, BP said a worst-case scenario -- the blowout of both relief wells at once -- would result in 240,000 barrels a day of crude gushing into the Gulf.

TROOPS, INMATES

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 bags to plug gaps in coastal beaches through which the oil could wash into fragile inland marshes and wetlands. Bulldozers also worked to build up the beach line in areas they could reach.

"We started filling a few bags Sunday evening but the big push came yesterday," said Sergeant Wesley Melton, 38.

"Just about everybody out here has been deployed in Afghanistan or Iraq, some numerous times," he added, saying their mission there had been to clear roadside bombs known as IEDs, or improvised explosive devices. "You won't find anyone out here that will complain about helping."

In another development, the U.S. National Oceanic and Atmospheric Administration expanded its no-fishing zone on Tuesday by as much as 45 percent, adding large parts of the Gulf west of the Mississippi and out in the deep water, officials said. More than 16,000 square miles (41,440 sq km) are now off limits to fishing.

Despite the expanded ban, 93 percent of the Gulf is still open for fishing, NOAA said.

Officials agree that delays in containing the leaking well increase the chances it could become the worst U.S. oil spill ever, surpassing the 1989 Exxon Valdez accident in Alaska.

The latest forecasts from NOAA indicate that southeast winds will persist throughout the week and move the oil westward.

Along the Alabama coastline, residents braced for the impact on their shores, and on their livelihoods.

"It is going to touch everyone whose income relates to the water and recreation," said Andrew Saunders, owner of Saunders Yachtworks, a boat repair company in Dauphin Island. "Even if the oil doesn't hit, it will be like 9/11, when people sat on their hands for a couple of months to see what might happen."

Despite the spreading oil, port operators said shipping lanes and ports on the Gulf of Mexico were open on Tuesday.

(Additional reporting by Tom Doggett in Washington, Pascal Fletcher in Miami, Erwin Seba in Robert, Louisiana, Verna Gates in Dauphin Island and Anna Driver in Houston; Tom Bergin in London; Writing by Deborah Charles and Jeffrey Jones; Editing by Ed Stoddard and Philip Barbara)

FILED UNDER: