BP Executives To Face Capitol Hill, White House Next Week

11th Jun 2010 23:08

By Siobhan Hughes Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--BP Plc (BP, BP.LN) executives will be hauled up to the U.S. Congress and the White House next week to face officials angry over the continued gush of oil and natural gas from a broken well a mile below the Gulf of Mexico. BP America chief Lamar McKay will join four executives from other oil companies at a hearing on Tuesday before a House Energy and Commerce subcommittee. On Wednesday, BP officials will meet with President Barack Obama and other administration officials. BP Chief Executive Tony Hayward will appear Thursday before a House Energy and Commerce subcommittee on oversight and investigations, in his first testimony since the April 20 explosion of a drilling rig in the Gulf. Past hearings have produced angry criticisms from lawmakers but yielded little from BP's McKay, who has repeatedly promised to pay "all legitimate claims" and has said that ongoing investigations will help determine what went wrong. But with the Obama administration and lawmakers facing voters outraged at an inability to shut off the leak, more is on the line for the oil industry, with the hearings shaping the direction of offshore drilling policy and penalties for oil spills. "A congressional 'stampede' towards one or several dramatic changes in U.S. energy policy hasn't happened yet," Kevin Book and his partners at ClearView Energy Partners LLC wrote in a research note this week. "But a highly visible catalyst for action (perhaps a hurricane, skyrocketing cleanup costs, or health impacts) could still make it impossible for members of either party--even those who have historically supported the oil and gas industries--to vote against sweeping and restrictive reforms." The entire oil industry faces the risks that a current moratorium on drilling new wells in the deep waters of the Gulf will extend beyond the six-month period that President Obama has established. Already, Rep. John Dingell (D, Mich.), who holds a position on the House Energy and Commerce subcommittee that will hear from Hayward, has called for a moratorium on all leasing and drilling until proof that the operations are being done "with full attention to safety." BP also faces the potential of damaging new disclosures. At a late May hearing on the oil spill, House Energy and Commerce Committee Chairman Henry Waxman (D, Calif.) complained that BP had omitted mention of key issues in its briefing to the committee, including its strategy for casing the ruptured Macondo well, its decisions about the number of spacers to use to center the casing line before cementing, and how long to circulate drilling mud through the well on April 19, prior to cementing. Rep. Joe Barton (R, Texas) has defended the company by saying that there hasn't been "one decision" made by BP and other companies working on the Deepwater Horizon facility "that wasn't acknowledged by federal officials and wasn't approved by federal officials." The deadline for BP to respond to Waxman and provide relevant documents to the committee was June 3. Another issue involves dividend payments. Rep. Peter Welch (D, Vt.), who sits on the panel that will hear from Hayward, has demanded that BP refrain from proceeding with a previously announced dividend. In the meantime, the Obama administration has called for BP to pay the salaries of oil-services workers laid off as a result of the deepwater-drilling moratorium. The administration has also called for eliminating entirely a cap on damage claims that BP and other companies would have to pay for such spills, which some Democratic lawmakers are already pushing. Penalties associated with the spill are another issue that could be influenced by Congress. With some key penalties tied to the amount of oil flowing from the broken well, lawmakers such as Rep. Ed Markey (D, Mass.) have hammered BP over how many barrels of oil a day are being released. On Thursday, a team led by government scientists charged with measuring the Macondo's well flow rate announced that about 20,000 to 40,000 barrels a day of oil could be spewing into the Gulf, far more than an initial estimate of 1,000 barrels a day. Assuming a court finds that the oil spill was a result of gross negligence by BP, penalties could be as high as $4,300 a barrel. And assuming the oil flows for at least 90 days--the amount of time it takes to drill the relief wells that are supposed to shut off the well--penalties could be between $7.7 billion to $15.5 billion. "BP is either lying or is grossly incompetent," Markey, who is on the panel that will hear from Hayward said earlier this week. A BP spokesman declined to provide details about what company executives plan to tell U.S. politicians next week. -By Siobhan Hughes; Dow Jones Newswires; 202-862-6654; [email protected] (Susan Daker contributed to this article.) (END) Dow Jones Newswires June 11, 2010 18:08 ET (22:08 GMT)