(Reuters) - BP Plcs US chief
faces accusations in Congress on Tuesday that the energy giant
caused the worst oil spill in US history with a calculated
strategy to cut costs, hours before President Barack Obama uses
a televised address to defend his handling of the disaster.
A day after BP shares fell 9 percent in London and New York
and the company hired investment bankers for undisclosed
reasons, US lawmakers will ask Lamar McKay why BP made
repeated choices that appeared to favor cost savings over
safety before its rig blew up in the Gulf of Mexico.
McKay, the head of BP America, will be surrounded at the
congressional hearings by executives from Exxon Mobil lt;XOM.Ngt;,
Chevron, ConocoPhillips and Royal Dutch Shell seeking to stave
off repercussions for the industry.
McKays rivals are likely to hang him out to dry in a rush
to prove their companies would never take such risks or face
such failures as the spill that has poured millions of gallons
of oil into the Gulf of Mexico.
This incident represents a dramatic departure from the
industry norm in deepwater drilling, Exxon Mobil Chairman and
Chief Executive Rex Tillerson said in prepared testimony
obtained by Reuters.
The April 20 explosion on an offshore rig killed 11 workers
and ruptured BPs well. The spill has fouled 120 miles (190 km)
of US coastline, imperiled multibillion-dollar fishing and
tourism industries and killed birds, sea turtles and dolphins.
In a pivotal week in the crisis, Obama wraps up a two-day
trip to the Gulf on Tuesday before returning to Washington to
give a televised speech aimed at seizing political momentum
that has slipped away as the oil flows unabated.
Some Gulf residents are angry at the commander-in-chief.
This is ridiculous. This is America. Theyre letting BP
control this country? Or any other oil company? Whats going on
in this world? said oyster dock manager Terry Alexis in
Empire, Louisiana.
Obama said he would press BP executives to deal justly,
fairly and promptly with damage claims when he meets them at
the White House on Wednesday.
The spill has overshadowed Obamas political agenda of job
creation and Wall Street reform — both key issues in November
congressional elections in which his fellow Democrats are
expected to face tough fights to hold on to their majorities.
GRILLING IN CONGRESS
BP has lost more than 40 percent of its market value since
the crisis began and faced a barrage of criticism over its
handling of the cleanup. Last week, it was confronted with a
White House threat to widen its liabilities for the disaster.
Two Democratic lawmakers said British-based BP chose faster
and cheaper drilling options in the Gulf of Mexico that
increased the danger of a catastrophic well failure.
It appears that BP repeatedly chose risky procedures in
order to reduce costs and save time and made minimal efforts to
contain the added risk, Henry Waxman and Bart Stupak, the top
Democrats on the House of Representatives Energy and Commerce
Committee, said in a letter ahead of Tuesdays hearing.
They quoted e-mails sent before the explosion by BP
drilling engineers who called the project a nightmare well
and said a team leader who opted not to use extra equipment to
reduce the potential for gas flows into the well was right on
the risk/reward equation.
BP Chief Executive Tony Hayward is expected to face harsh
questioning at a congressional hearing on Thursday. A BP
spokesman declined to comment on testimony before the hearings,
which many investors see as political theater.
The BP hearings will be a prime opportunity for members of
Congress to show off their populist credentials, said Michael
Block, chief equities strategist at broker Phoenix Partners
Group, declining to make a call on BP stock.
US politicians have been calling on BP to scrap its
quarterly dividend to ensure it has enough money on hand to pay
the compensation claims and clean up the spill.
BP has hired investment banks Blackstone Group, Goldman
Sachs Group and Credit Suisse Group as advisers, a source
familiar with the matter said, without identifying the purpose
of the advice.
ALTERNATIVE ENERGY PLAN?
The biggest thing he (Obama) can do is make sure that this
doesnt happen down the line, National Wildlife Federation
naturalist David Mizejewski said in a boat off Louisianas tiny
Queen Bess island. We need to get serious about passing clean
energy and climate legislation now.
The smell of crude oil and dispersants filled the air and
oily brown pelicans teemed on the island.
But stopping drilling is a double-edged sword for many on
the Gulf of Mexico, who count on oil rigs to keep their states
economically afloat.
BPs McKay will argue that cutting back drilling operations
will hurt American workers and increase risks of a spill,
POLITICO reported, citing testimony provided to the Energy and
Commerce Committee in advance of Tuesdays hearing.
Americas economy, security and standard of living today
significantly depend upon domestic oil and gas production.
Reducing our energy production, absent a concurrent reduction
in consumption, would shift additional jobs and dollars
off-shore and place millions of additional barrels per day into
tanker ships that must traverse the worlds oceans, McKay is
scheduled to say.
Moodys Investors Service warned in a report on Monday that
it could be up to two years before oil production reaches
pre-spill levels and that a six-month moratorium on deepwater
drilling by the Obama administration posed many uncertainties.
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