Hayward Defends BP’s Safety Record | The Mesh Report

Hayward Defends BP’s Safety Record

the Mesh Report Staff September 15, 2010 0

LONDON — The chief executive of BP, Tony Hayward, faced a Parliamentary committee on Wednesday and rejected claims that the accident in the Gulf of Mexico was partly the result of BP’s aim to cut costs.

“We have found no evidence to suggest that costs were any part of how this occurred,” Mr. Hayward told the committee in London.

Mr. Hayward, along with BP’s safety chief, Mark Bly, and the head of North Sea operations, Bernard Looney, went before the parliamentary committee to discuss deep water drilling off the British coast and faced questions about its safety record including the explosion in April aboard an oil rig in the Gulf of Mexico that killed 11 people and caused millions of barrels of oil to leak into the gulf. The committee is weighing the need for additional drilling regulations in the aftermath of the explosion. “The safety measures that oil companies have to comply with in the U.K. are already stricter than in the U.S., but serious questions still need to be asked in light of the Gulf of Mexico oil spill,” Tim Yeo, chairman of the energy and climate committee, said before the hearing.

Mr. Hayward and Mr. Looney said safety lapses at BP’s North Sea operations, which include a lack of training for employees in emergency situations, which were reported Wednesday by The Financial Times, do not point to “any fundamental weaknesses” at the operation but are merely administrative oversights. The newspaper report cited offshore inspection records and said that BP was cited for failing to conduct oil spill exercises adequately.

“It is true that there were less than 10 people who have not undergone refresher training,” Mr. Looney said. “It was an administrative error. We’ve taken action that this administrative error does not occur.”

The Department of Energy and Climate Change, which monitors compliance, had cited BP for failing to adequately conduct oil spill exercises and questioning whether all workers had been correctly trained.

On Wednesday, Reuters quoted a spokeswoman for the government, as saying that BP had confirmed that offshore managers had completed the required training. BP also confirmed that the installations tested oil pollution emergency plans within the last year, Reuters reported, quoting the spokeswoman.

Defending his company’s safety record, Mr. Hayward said a blowout preventer on the gulf rig that failed to stop oil leaking “was fully compliant with the regulatory regime and it should have functioned.”

Why it did not is something the industry has yet to find out, he said.

Asked why an engineer had called the gulf well a “nightmare” well, Mr. Hayward said that such a description was “unfortunate” but that the well “had been challenging — not unusually so for the Gulf of Mexico. The gulf is a more challenging drilling environment than the rest of the world.”

In June, Mr. Hayward faced relentless questioning by American lawmakers and was sharply criticized for saying that he had little knowledge of decisions that led to the oil rig explosion.

Peppered with questions over whether BP officials had cut corners to save time and money, Mr. Hayward repeatedly said he was not present on the drilling rig and had no advance knowledge of problems with what one company engineer called a “nightmare well” six days before it blew on April 20.

“I’m not stonewalling,” he said at the time. “I simply wasn’t involved in the decision-making.”

Mr. Hayward bowed to pressure and announced his resignation as chief executive in July after a series of public relations blunders and accusations that he had mishandled the oil spill. Robert Dudley, who was in charge of the gulf cleanup effort, was named as his successor. He is to take over on Oct. 1.

BP has started to sell assets worth a combined $30 billion as part of a plan to raise cash to pay for the damage from the oil spill. BP has decided to shed mostly older onshore fields, many with a declining output. Such divestments would increase BP’s reliance on riskier deep-water assets, which are much more difficult to develop and maintain but have greater profit potential.

Mr. Dudley said in July that BP, which had a record $17.2 billion loss in the second quarter, had no intention of leaving the United States and also did not think the firm would be required to do so as a result of the gulf spill.

Several investigations are under way to find out how the blast occurred.

BP published the results of its own investigation on Sept. 8, mostly pointing fingers at other companies involved in the construction and maintenance of the rig. In the report, BP said that the accident was the result of “a complex and interlinked series of mechanical failures, human judgments, engineering design, operational implementation and team interfaces.”

Transocean, the owner of the rig and the company hired by BP to drill the well, disagreed with BP’s findings and accused BP of having made “cost-saving decisions that increased risk — in some cases, severely.” Transocean is conducting its own investigation.

BP has agreed to set aside $20 billion to cover any claims and damages as a result of the gulf oil spill. The company is now engaged in an effort to rebuff claims that it acted with gross negligence in order to keep damage costs from spiraling.

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