CORRECT (6/15): AT A GLANCE: Oil ExecutivesTestify

16th Jun 2010 13:24

("AT A GLANCE: Oil Execs Testify; US Govt Raises Estimate Of Oil Flowing Into Gulf" published at 5:48 p.m. ET Tuesday misstated the Republican who called on BP America Chairman Lamar McKay to resign. A corrected version follows.) THE NEWS: Executives from BP PLC (BP, BP.LN) and other major oil companies testified before Congress Tuesday as oil continues to gush into the Gulf of Mexico from BP's damaged well. Executives from Exxon Mobil Corp. (XOM), ConocoPhillips (COP), Royal Dutch Shell PLC (RDSA) and Chevron Corp. (CVX) tried to distance their companies from BP. Meanwhile, a team of government and independent scientists has raised the estimate of how much oil is flowing into the Gulf to between 35,000 and 60,000 barrels per day. THE DETAILS: Rep. Edward Markey (D., Mass.) accused all of the oil companies at the hearing of having spill response plans that are outdated and "dead ringers for BP's." Markey zeroed in on BP America Chairman Lamar McKay, asking him: "Are you ready to apologize for getting that number so grossly wrong that the capacity of federal and state governments to put in place a response was delayed because you did not do the job?" "I'm asking you to resign," Rep. Cliff Stearns (R, Fla.) told McKay. The hearing follows accusations Monday from the House Energy and Commerce Committee that BP took shortcuts to save money, against the advice of key contractors, which may have contributed to the April 20 explosion that killed 11 workers and unleashed the worst offshore oil spill in U.S. history. Exxon (XOM) Chief Executive Rex Tillerson called the explosion "a dramatic departure from the industry norm in deepwater drilling," according to prepared remarks. Chevron (CVX) CEO John S. Watson said in prepared remarks that he believes an independent investigation "will show that this tragedy was preventable" and urged lawmakers not to use "this single incident" as the basis for scaling back or shutting down offshore drilling. Both Tillerson and Watson said they would have made different well-design decisions than those investigators say were made by BP. Tillerson said that "we would not have drilled the well the way they did," while Watson pointed out that "it's not a well we would have drilled" and told the panel an independent investigation will show that "this tragedy was preventable." Meanwhile, Rep. Michael Burgess (R., Texas) used the hearing to raise questions about the safety of a controversial technique for accessing vast new natural-gas supplies. CALL FOR ESCROW ACCOUNT: Senate Democrats demanded that BP put $20 billion into an escrow account to cover future cleanup costs and compensation payments. The White House has also called for an escrow account free from the control of BP to be established, but has yet to name a specific amount. BP is also facing criticism over plans to pay a dividend to shareholders. Lawmakers say the company should shelve any dividend until funds are reserved to pay for the cleanup and two Democratic senators expressed outrage over reports that BP is considering setting up an escrow account to pay a dividend in the future, which they called a "backdoor payment." FITCH DOWNGRADES BP's DEBT: Fitch cut BP's credit rating by six notches to BBB, just two steps above junk, citing increased estimates of the size of the spill and demands from U.S. authorities that the company put $20 billion into a fund for cleanup and compensation costs. SIZE OF SPILL: A group of federal and independent scientists raised the estimate on the flow rate of oil spilling from the broken pipe to between 35,000 and 60,000 barrels per day. Last week, a team led by government scientists announced that about 20,000 to 40,000 barrels of oil could be spewing into the Gulf. BP initially estimated 1,000 barrels per day. PAUSE IN CONTAINMENT EFFORTS: BP Tuesday shut down its oil containment and recovery operation in the Gulf of Mexico for several hours as a safety precaution, following a fire aboard the vessel that has been processing the oil. FORCE MAJEURE REJECTED: Transocean Inc. (RIG) is disputing that President Barack Obama's 6-month halt on offshore drilling allows oil companies to prematurely end offshore rig leases. At least three oil producers are invoking force majeure on their Gulf of Mexico drilling contracts, claiming the moratorium will prevent them from using the rigs. Transocean operates two of the five rigs affected by the declarations, which are typically made when an outside event, such as a hurricane or war, prevents drilling. MARKET REACTION: BP's ADRs closed up 2.4% to $31.40. But BP has lost nearly half of its market value since the spill began. Meanwhile, BP bonds slumped and the cost of insuring the oil company's debt soared in the wake of the Fitch downgrade. WHAT'S NEXT: President Obama will address the nation Tuesday night to outline his plans for cleaning up the oil spill, compensating victims, getting tough on the offshore oil industry and enacting new policies to reduce U.S. oil dependence. BP Chairman Carl-Henric Svanberg and other company executives will meet Obama at the White House on Wednesday. BP Chief Executive Tony Hayward is scheduled to appear Thursday before a House subcommittee, his first appearance before lawmakers since the April 20 explosion. DOW JONES COVERAGE: -Oil Chiefs Back Away From BP; Democrats Say Industry Unprepared -BP Resumes Containment Operation After Brief Stoppage -MONEY TALKS: Reforming Both Big Banks And Big Oil Companies -Transocean: Rejecting Force-Majeure Claims On US Gulf Rigs -BP Tries To Sell Some Real Estate Amid Oil-Spill Woes -BP Bonds Fall, CDS Soar After Fitch Cuts Rating To Near Junk -BP Exec Says Company Supports Administration Decisions -WSJ:Obama To Call For Broad Energy Action,More Compensation From BP -Anger Over Oil Spill Spills Over To BP-Branded Fuel Retailers -Official:Tally Of Spill-Flow Rates Won't Be Known For Long Time -Safety Of Hydraulic Fracking For Gas Is Questioned At Hearing -Chevron CEO: Practices We Wouldn't Use Employed By BP -Under Pressure From Govt, BP To Accelerate Claims Process -Rep. Markey Demands Apology From BP Over Spill Estimates -Adm. Allen: US Prepared To Process Jones Act Waivers Quickly -Democratic Senators: BP Escrow Dividend Plan 'Unacceptable' -Exxon To Distance Itself From BP As House Hearing Begins -WSJ: Oil Executives Face Congressional Anger Over Spill -BP Slide After Fitch's Six-Notch Rating Downgrade -For more coverage of the oil spill, please search under the code BP. (END) Dow Jones Newswires June 16, 2010 08:24 ET (12:24 GMT)