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[Senate Hearing 111-653, Part 1]
[From the U.S. Government Printing Office]



                                                 S. Hrg. 111-653, Pt. 1
 
                MASSIVE OIL SPILL IN THE GULF OF MEXICO

=======================================================================


                                HEARING

                               before the

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                                   TO

 REVIEW ISSUES RELATED TO DEEPWATER OFFSHORE EXPLORATION FOR PETROLEUM 
 AND THE ACCIDENT IN THE GULF OF MEXICO INVOLVING THE OFFSHORE OIL RIG 
                           DEEPWATER HORIZON

                               __________

                              MAY 11, 2010


                       Printed for the use of the
               Committee on Energy and Natural Resources



                  U.S. GOVERNMENT PRINTING OFFICE
61-700                    WASHINGTON : 2010
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20402-0001




               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                  JEFF BINGAMAN, New Mexico, Chairman

BYRON L. DORGAN, North Dakota        LISA MURKOWSKI, Alaska
RON WYDEN, Oregon                    RICHARD BURR, North Carolina
TIM JOHNSON, South Dakota            JOHN BARRASSO, Wyoming
MARY L. LANDRIEU, Louisiana          SAM BROWNBACK, Kansas
MARIA CANTWELL, Washington           JAMES E. RISCH, Idaho
ROBERT MENENDEZ, New Jersey          JOHN McCAIN, Arizona
BLANCHE L. LINCOLN, Arkansas         ROBERT F. BENNETT, Utah
BERNARD SANDERS, Vermont             JIM BUNNING, Kentucky
EVAN BAYH, Indiana                   JEFF SESSIONS, Alabama
DEBBIE STABENOW, Michigan            BOB CORKER, Tennessee
MARK UDALL, Colorado
JEANNE SHAHEEN, New Hampshire

                    Robert M. Simon, Staff Director
                      Sam E. Fowler, Chief Counsel
               McKie Campbell, Republican Staff Director
               Karen K. Billups, Republican Chief Counsel


                            C O N T E N T S

                              ----------                              

                               STATEMENTS

                                                                   Page

Beck, F.E., Associate Professor of Petroleum Engineering, Texas 
  A&M University, College Station, TX............................     6
Bingaman, Hon. Jeff, U.S. Senator From New Mexico................     1
Danenberger, Elmer P., III, Former Chief, Offshore Regulatory 
  Program, Minerals Management Service, Department of the 
  Interior.......................................................    11
McKay, Lamar, President and Chairman, BP America, Inc............    34
Murkowski, Hon. Lisa, U.S. Senator From Alaska...................     4
Newman, Steven, Chief Executive Officer, Transocean Ltd..........    40
Probert, Tim, President, Global Business Lines, and Chief Health, 
  Safety and Environmental Officer, Halliburton..................    45

                                APPENDIX

Responses to additional questions................................    75


                MASSIVE OIL SPILL IN THE GULF OF MEXICO

                              ----------                              


                         TUESDAY, MAY 11, 2010

                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.

    The committee met, pursuant to notice, at 10 a.m. in room 
SR-325, Russell Senate Office Building, Hon. Jeff Bingaman, 
chairman, presiding.

OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW 
                             MEXICO

    The Chairman. The committee will come to order. We're here 
today because of a disaster that never should have happened. 
The sobering reality is that, despite the losses and damage 
that have already been suffered, we do not yet know what the 
full impact of this disaster will be.
    We should begin by remembering the 11 people who lost their 
lives in the explosion at the Deepwater Horizon rig and express 
deep sympathy for their families. I'm glad to be a co-sponsor, 
along with Senator Murkowski, of the Senate resolution that 
Senator Landrieu and other Gulf State Senators are offering and 
authoring, expressing the condolences that I know we all share. 
I hope the Senate will act on that resolution as soon as 
possible.
    I'd also, of course, like to express our concern for all in 
the Gulf region whose jobs and way of life, are threatened by 
the effects of this Deepwater Horizon disaster. We owe it to 
them to see that disasters like this never happen again.
    This hearing is the start of the Energy Committee's 
oversight of issues related to offshore oil development and the 
catastrophic blowout that occurred in the Gulf on the evening 
of April 20. It is the first of what I expect to be several 
hearings on these issues. Next week we'll be receiving 
testimony from Secretary of Interior Ken Salazar on these 
events and issues.
    Our goal in the hearings is to create a thorough factual 
record and an informed discussion of the very important 
questions presented by the disaster. The disaster raised here 
both technological and regulatory questions. We have an 
obligation to bring a level of seriousness to this endeavor and 
to determine as quickly as possible and to the best of our 
ability the appropriate next steps.
    As those steps become clear through the testimony we 
receive and the investigative work of our committee staff, I 
intend to work with Senator Murkowski, the ranking member, and 
other members of the committee on a bipartisan basis to develop 
and introduce and advance any necessary and appropriate 
legislation through the Senate.
    At the heart of this disaster are three interrelated 
systems: a technological system of materials and equipment; 
second, a human system of persons who operated the 
technological system; and third, a regulatory system. Those 
interrelated systems failed in a way that many have said was 
virtually impossible. We need to examine closely the extent to 
which each of these systems failed to do what it was supposed 
to do.
    I don't believe it's enough to just label this catastrophic 
failure as an unpredictable and unforeseeable occurrence. I 
don't believe it's adequate to simply chalk what happened up to 
a view that accidents do happen. If this is like other 
catastrophic failures of technological systems in modern 
history, whether it was the sinking of the Titanic, Three Mile 
Island, or the loss of the Challenger, we will likely discover 
that there was a cascade of failures and technical and human 
and regulatory errors.
    So our examination of what happened here will have the goal 
of putting in place improved systems to ensure that this type 
of catastrophe never happens again. We will also be looking to 
identify any problems or risks that might exist for operations 
that are ongoing so that we can ensure that they are addressed 
with quick and appropriate action to safeguard human lives and 
the environment.
    We will begin the process today with two panels of 
excellent witnesses, and I welcome all of them. The first panel 
we will hear from is composed of two technical experts. One has 
long experience in the industry, as well as an independent view 
as a highly regarded university professor. The other is a 
retired expert from the Minerals Management Service of the 
Department of the Interior, with long experience in overseeing 
safety of offshore oil and gas operations.
    After our first panel has given us a baseline of 
information and perspective on best practices for controlling 
oil and gas wells and overseeing their safety, we'll hear from 
a second panel composed of leaders of the three companies 
involved in this accident, BP, Transocean, and Halliburton. 
They'll provide us the information currently at their disposal 
on the disaster, the steps being taken to deal with the 
aftermath, and their future plans for continued investigation 
and remediation.
    [The prepared statement of Senator Landrieu follows:]

    Prepared Statement of Hon. Mary L. Landrieu, U.S. Senator From 
                               Louisiana
    Thank you, Mr. Chairman, for holding this important hearing to 
examine the terrible tragedy that occurred on April 20, 2011 and the 
record of offshore exploration and development of petroleum.
    Our nation lost 11 men in this terrible accident. Our thoughts and 
prayers are with their families and with those that are injured.
    Today, along with all of the Senators from the Gulf Coast, and with 
the Chairman and Ranking Member of this Committee, I introduced a 
Senate Resolution in their memory.
    We must not forget them. And we must do everything we can to 
prevent an incident kike this from happening again.
    In short, we need to learn from this. But we most learn the right 
lessons.
We Can't Retreat
    Some have suggested that we put a halt to all new offshore 
drilling. I believe it would be a terrible mistake to retreat from 
domestic energy production. In the face of this disaster, it may seem 
easy to simply ban offshore oil and gas. But banning offshore drilling 
will not keep industry workers safe and it won't prevent our shores 
from the threat of an oil spill.
    Why? Because unless we stop using oil, then we have to get it from 
somewhere. We could stop drilling here, but then we would simply import 
more than we already do from Saudi Arabia, Nigeria, Venezuela and 
elsewhere.
    Transporting larger quantities of oil from far away places will 
increase, not decrease, our risks. That's because we need to get it 
from there to our gas tanks in massive oil tankers. And periodically, 
those tankers crash. In fact, according to the National Academy of 
Sciences, oil tankers spill about 4 times as much oil as offshore 
drilling does, on average.
    Of course, it is also true that when we rely on energy production 
overseas, we are exporting it to countries whose environmental 
standards are lower, and whom have fewer resources to mitigate the 
impacts.
Why not stop using oil?
    America must reduce its oil consumption, for national security, and 
yes, for environmental reasons.
    But we need to be realistic. Today America consumes about 20 
million barrels of oil each day. We produce about 5 million barrels of 
oil per here. We produce another 3 million barrels worth of biofuels.
    I believe that the right course is reducing our oil consumption by 
promoting safe and clean alternative energy while increasing our 
domestic production. That is the true environmental stance. In that 
way, the United States takes responsibility for its production needs. 
And we would extricate ourselves from any number of geopolitical 
hotspots.
Summary--We Need to Learn the Right Lessons
    We have seen disasters like this before. We have seen them in the 
oil industry, in coal mining, in shipping, in the nuclear power 
industry, and in the space race. We can react to this disaster in a 
meaningful fashion or we can react to it the wrong way.
    We could deal with this disaster in the same way that we dealt with 
the meltdown at the Three Mile Island nuclear power plant. But I think 
that decision had terrible consequences:
    We are 30 years behind the French in nuclear technology. Today, 
France gets almost 80% of its electricity from nuclear power. We get 
20%.
    France is also the world's largest net exporter of electric power, 
exporting 18% of its total production, and the cost of electricity in 
France is among the lowest in Europe. The United States is a net 
importer.
    Today, France's carbon emissions per kilowatt hour are less than 1/
10th that of Germany and the UK, and 1/13th that of Denmark. US carbon 
emissions are amongst the highest in the world.
            By contrast, let's look at how the United States reacted to 
                    the disaster of the Space Shuttle Challenger. In 
                    that instance, millions of Americans watched in 
                    horror as the shuttle exploded after takeoff, 
                    killing all 7 of its crew, including the school 
                    teacher, Christa McAuliffe.
    The horror of that disaster shocked us all, and has haunted the 
nation with its memory. But what is notable is what we did not do: we 
did not end the U.S. space program. We did put the shuttle program on a 
brief hiatus and we carefully reviewed what went wrong, corrected those 
mistakes, and then kept the program going.
    As a result, the United States remains the global leader in the 
space race. We have the best technology, the best satellites, and our 
space age industries are undisputed global leaders--generating jobs, 
spin-off industries, and technological innovations that have generated 
billions in revenues and improved the quality of life for all 
Americans.
Conclusion
    Mr. Chairman, today I hope that we can begin to understand what 
went wrong on April 20th when 11 offshore oil-workmen lost their lives. 
And I hope that we can take steps to reduce the chances that it will 
ever happen again.
    But I also hope that we learn the right lessons.
   Attachment.--Statement of Statistics on Louisiana and Gulf Coast 
             Seafood Industry Submitted by Senator Landrieu
   Louisiana seafood is a $2.4 billion industry, and is 
        responsible for more than 27,000 jobs.
   In 2008, commercial fishermen in the Gulf of Mexico 
        harvested 1.27 million pounds of finfish and shellfish and 
        generated $659 million in revenue from these harvests.
   Depending on the season, up to 40 percent of the nation's 
        commercial seafood harvest comes from the Gulf of Mexico.

    Let me turn now to Senator Murkowski for her opening 
statement.

        STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR 
                          FROM ALASKA

    Senator Murkowski. Thank you, Mr. Chairman.
    It's been 21 days now since the explosion of the Deepwater 
Horizon rig, and since that time I think all of us have been 
intently following the news as the incident has unfolded. At 
first we hoped to hear that the 11 missing rig workers had been 
found, and now each day we watch the battle to shut off the 
flow and contain the oil spill.
    I've said before that this incident is a tragedy on many, 
many levels, and our prayers continue to be with those who have 
lost loved ones in the explosion and with those who were 
injured. Mr. Chairman, you mentioned the resolution honoring 
the crew of the Deepwater Horizon and I too am honored to be a 
co-sponsor of that.
    We continue to hope that this spill can be stopped and 
cleaned up as soon as possible in order to minimize the impact 
on the Gulf Coast, its residents, and the marine environment. 
America joins every Gulf Coast resident in hoping for all the 
factors to work in their favor right now, and it's everything 
from the weather cooperating, the technology to work, and the 
judgment of those in charge to be decisive and to be correct.
    This accident has reminded us of a cold reality, that the 
production of energy will never be without risk or 
environmental consequence. Last November we on this committee 
heard testimony that left us with a simple conclusion, that 
offshore development does carry risks to both human and marine 
life, as well as the livelihoods of our coastal citizens, so 
government and industry must never grow complacent and always 
strive to minimize those risks.
    Those reasons why are very, very simple: We all agree that 
we need to steadily minimize the percentage of oil in our 
overall energy mix, but under anyone's most optimistic scenario 
our Nation will need a lot of oil for a long time to come. For 
the sake of our Nation's economy, for the sake of our national 
security, and, this incident notwithstanding, for the sake of 
the world's environment, we need to safely produce the maximum 
amount of that energy here at home.
    I was talking to someone recently about why those lessons 
that we truly take to heart tend to either be very painful or 
very expensive. Unfortunately, we all know that this incident 
has been both. We need to make sure that we take the right 
lessons to heart.
    I'm going to have questions today for our technical panel 
and for BP, Transocean, and Halliburton on what they've learned 
and how we can produce oil while minimizing future risks. I've 
got a host of questions about what caused the initial blowout, 
about well design, field pressure, the casing, the cementing 
process, the blowout preventer design requirements and their 
inspection and triggering mechanisms. I've got questions about 
sources of ignition, the challenges of very deep oil 
exploration and production, and the newly learned issues with 
mitigating a spill originating a mile under water. I've got 
questions about the interactions and authorities between the 
different parties with varying degrees of control over the 
drill rig and the well.
    I've got many more questions than will fit at this hearing 
or that I can reasonably expect the witnesses to know at this 
time. But I am committed to getting full answers to all of 
them.
    We often cite our Nation's strict safety and environmental 
laws for oil and gas development as a means to reassure 
Americans that we can responsibly develop our resources. But 
this argument will ring hollow if those stringent laws are not 
enforced equally stringently and objectively.
    Many times I've said that there are words and then there 
are actions, and actions necessarily have consequences. 
Hopefully, all the actions associated with the Deepwater 
Horizon incident were in good faith and compliant with our 
laws. But if that's not the case, there will be no excuse.
    Next week this committee will be hearing from Secretary 
Salazar. We'll be discussing with him the impacts on America's 
energy policy of the Deepwater Horizon incident. Our Nation is 
struggling to define our energy policy and this Deepwater 
Horizon will affect that process. But we can't look at this bad 
chapter and conclude that we should increase the billions of 
dollars we are sending to foreign governments who run greater 
risks and use our own money against our interests.
    According to several polls that were released last week, it 
appears that Americans understand this. The American people are 
not yet ready to turn their backs on offshore production and 
neither should we. Again, our Nation already has some of the 
strongest environmental standards in the world. Those 
protections will only grow stronger in the wake of this 
tragedy.
    But that fact doesn't make our jobs on this committee 
easier. It makes our jobs even harder. We are tasked with 
figuring out how to deliver America's energy resources to 
Americans in an imperfect system where lives can be lost and 
environments and lifestyles put at risk. What's worse, we must 
find the right balance in a global economy where so many other 
nations can compete for our energy dollars by relaxing their 
worker safety and environmental standards rather than 
strengthening them.
    To that end, the Deepwater Horizon will teach us here today 
and perhaps for many years to come about how America can 
strengthen our standards for producing the energy that we need 
without compromising our economy or energy security. The 
question is how and when we might arrive at constructive and 
realistic agreements. We know where to start. We must figure 
out what happened to the Deepwater Horizon, what caused the 
apparent blowout, what started the fire on the rig, and what 
caused so many safety mechanisms to fail. Above all else, after 
this pain, after this expense, after this tragedy, what are the 
lessons that we need to take to heart?
    Mr. Chairman, I look forward to the testimony this morning 
from all gathered and appreciate the opportunity today.
    The Chairman. Why don't we go ahead with the first panel. 
We have two witnesses, Dr. F.E. Beck, who is an Associate 
Professor of Petroleum Engineering at Texas A&M University, and 
Mr. Elmer Danenberger, who retired in January from his position 
as the Chief of Offshore Regulatory Programs for the Minerals 
Management Service, if those two gentlemen would come forward.
    Because of the gravity of this hearing, we have asked that 
all witnesses testify under oath. So I would ask if each of you 
would stand, please, and raise your right hand. Do you solemnly 
swear that the testimony you're about to give to the Senate 
Committee on Energy and Natural Resources shall be the truth, 
the whole truth, and nothing but the truth?
    Mr. Beck. I do.
    Mr. Danenberger. I do.
    The Chairman. Thank you. Please be seated.
    Let me mention a couple of housekeeping matters. First of 
all, of course, your written statements will be made part of 
the record, so we would ask you to take 6 or 8 minutes to 
summarize the main points that you think we need to understand 
from what you have developed as testimony.
    We may, depending upon the number of Senators who come to 
ask questions, we may want to have only one round of questions 
to this panel, so that we can also hear from the second panel 
before we have to adjourn for the weekly lunches that we take. 
But we'll just see how many people arrive. If there is no great 
attendance, then we won't have to limit it that way.
    The other point I would make as a housekeeping matter is 
we've been advised by the Majority Leader that there will be 
two votes on the Senate floor starting about 11:30, and it 
would be my intention to try to keep the hearing going and just 
ask that Senators who are not asking questions and who can go 
to vote early and then come back, and they can then keep the 
hearing going while others of us go.
    So Dr. Beck, why don't you go ahead and tell us what you 
can to inform us as to the circumstances, not just of this 
accident, but the whole process that goes on with regard to 
deepwater drilling.

   STATEMENT OF F.E. BECK, ASSOCIATE PROFESSOR OF PETROLEUM 
     ENGINEERING, TEXAS A&M UNIVERSITY, COLLEGE STATION, TX

    Mr. Beck. Chairman Bingaman, Ranking Member Murkowski, 
members of the committee: Good morning. Thank you for allowing 
me the opportunity to provide this testimony today. I have come 
here in hopes of providing some basic blowout prevention 
knowledge that I think each of you will find useful as you 
investigate the events which occurred on the Deepwater Horizon 
drill ship.
    I am an Associate Professor of Petroleum Engineering at 
Texas A&M University. Prior to joining A&M, which was just last 
fall, I worked in industry for over 20 years and had academic 
experience prior to that time. During my industry career I have 
safely drilled numerous high-pressure natural gas wells. I do 
not claim to be an expert in deepwater drilling, but I do not 
see that this is a hindrance. Perhaps it is even an advantage, 
as I have no preference for any process, practice, or equipment 
package exclusive to deepwater drilling.
    I maintain that any well, deepwater or onshore, drilled 
into a high-pressure oil or gas zone employs a common strategy 
for controlling pressure. I believe that understanding this 
strategy, which I'll call the multiple barrier strategy, will 
be critical in order for you to dissect the events that led to 
the Deepwater Horizon disaster. As I continue my discussion 
this morning, I will refer to oil and gas collectively as 
``gas'' for simplicity.
    Gas occurring in the subsurface is pressurized, as we all 
know, and it will naturally seek to flow to the atmosphere once 
it is penetrated by a wellbore. Barriers are used to protect 
the gas from flowing to the atmosphere. So a barrier provides a 
means by which gas is prevented from entering the wellbore or, 
if it has already entered the wellbore, from continuing to 
enter the wellbore, and from moving up the wellbore to the 
surface.
    In the context of barriers, a ``kick'' occurs when a 
primary barrier, such as drilling fluid, has become ineffective 
and gas unexpectedly flows into the wellbore. This is not an 
uncommon event and there are time-proven techniques for 
preventing that kick from escalating to a blowout. A 
``blowout'' occurs when gas flows uncontrollably to the surface 
because all barriers have failed.
    In the drilling business, it is standard practice to have 
multiple barriers in place in the wellbore at all times. That 
way, if one barrier fails another barrier is already in place 
to be used to stop the well from flowing in an uncontrolled 
manner. There are numerous barriers that are routinely used for 
pressure control, many of which you may have already heard 
about in the accounts of this disaster. Common barriers are 
drilling fluid, cement, casing, wellhead seals, float valves, 
and of course blowout preventers.
    The diagram before you shows how these barriers would exist 
in a typical wellbore. As you study this diagram, note that the 
pathway for gas to travel from the subsurface to the surface 
must cross multiple barriers. This simple principle, to assure 
that multiple barriers are in place in the wellbore at all 
times, is the cornerstone for safely drilling a high-pressure 
gas well.
    Routine test procedures confirm the effectiveness of a 
given barrier. Barriers must be tested to be effective, 
oftentimes repeatedly, as in the case of blowout preventers. As 
we all know, we do not live in a perfect world and there 
remains the possibility that human error can create conditions 
whereby the design limits of a barrier are exceeded or where a 
barrier is not put in place correctly or in a timely manner.
    If a barrier is lost or becomes ineffective and a kick 
occurs, it is critical that drill crews be able to quickly 
recognize when a kick is occurring and immediately take 
corrective action to prevent a kick from turning into a 
blowout. Monitoring the well at all times is critical.
    Once again, for a blowout to occur multiple barriers must 
fail, be removed, or rendered useless through human error. As 
you seek to determine what happened on the Deepwater Horizon, 
there will be many highly technical and complicated discussions 
related to the equipment and processes involved. I encourage 
the committee to stay focused on determining the barriers that 
were in place in the wellbore and in how the barriers were 
tested and how they failed.
    Many of the best and brightest people in the drilling 
industry have been working diligently for years to assure that 
a disaster like the Deepwater Horizon never happens. Now that 
the unthinkable has happened, the industry will now need to 
take the lessons to be learned from the Deepwater Horizon and 
move forward to ensure that an accident such as this never 
happens again.
    The industry needs to know the precise well conditions, 
well configurations, and operational decisions which led to the 
blowout on the Deepwater Horizon sooner rather than later.
    Thank you very much.
    [The prepared statement of Mr. Beck follows:]

   Prepared Statement of F.E. Beck, Associate Professor of Petroleum 
         Engineering, Texas A&M University, College Station, TX
    Good morning, thank you for the opportunity to provide testimony to 
this Committee. I trust that I will be able to provide some basic well 
construction knowledge that each of you will find useful as you 
investigate the events which occurred on the Deepwater Horizon semi-
submersible drillship.
    I sit before you today as a practicing petroleum engineer and 
Associate Professor of Petroleum Engineering at Texas A&M University, 
specializing in drilling deep, high pressure wells. I have, in the 
course of a twenty-plus year industry career, been involved in all 
aspects of designing and safely drilling deep, high pressure wells. I 
do not present myself as a deepwater drilling expert, as the bulk of my 
career has been onshore. However, I do offer myself as an expert in 
drilling engineering and operations management of high pressure wells 
in general.
    The principles of well construction, blowout prevention and 
control, and safe operating practices are common across the onshore and 
offshore operating environments. While specific equipment and systems 
used in the deepwater offshore environment are unique and often quite 
different from that used onshore, the underlying purpose for which 
specific equipment is to be used is common to an onshore well of 
similar complexity. I believe that understanding a few of the basic 
principles that are used to plan and safely drill a high pressure well 
will assist you in dissecting the events that led to the Deepwater 
Horizon disaster.
    As many of you know, oil and gas, which I will call ``gas'' from 
now on, are trapped in the microscopic pore space of subsurface rock 
formations. As the depth of the trapping formation increases, the 
pressure of the gas in the rock also increases. To complicate things, 
the rate at which the pressure increases is often variable and 
difficult to predict. If a borehole is drilled into the formation where 
the gas is trapped, there is a natural tendency for the gas to try to 
escape, or ``flow'' into the wellbore.
    The challenge in designing and drilling a wellbore into a 
pressurized gas formation is to be able to prevent the gas from 
escaping the formation; and if it does escape, to be able to stop it 
from continuing to escape; and, then be able to return the wellbore to 
a balanced and safe condition whereby the gas remains in the formation. 
This leads me to a simple but fundamental concept that is used in well 
planning and blowout control, the concept of a ``barrier''. A barrier 
provides a means by which gas is prevented from entering the wellbore, 
or if it has already entered the wellbore, from continuing to enter the 
wellbore and from moving up the wellbore to the surface.
    In the drilling business it is standard practice to always have 
multiple barriers in place in the wellbore at any given time. That way 
if one barrier fails, another barrier is already in place to be used to 
stop the well from flowing in an uncontrolled manner. A ``kick'' occurs 
when gas enters a wellbore during the drilling process because a 
barrier has become ineffective. A ``blowout'' occurs when gas flows 
uncontrollably to the surface because all barriers have failed. The 
drilling industry has time tested and proven techniques for installing 
barriers in a wellbore. In kick situations, barriers must be used to 
prevent the kick from escalating to a blowout.
    To safely drill a well, it is very important to routinely check the 
effectiveness of a given barrier. It is even more critical to install a 
new barrier, and test the effectiveness of that barrier, before any 
barrier is removed from the wellbore. There are numerous barriers that 
can be used, many of which may be familiar to you. One barrier is the 
fluid that fills the wellbore during drilling, commonly called ``mud'' 
or ``drilling fluid''. Drilling fluid is an extremely versatile barrier 
and is considered in most instances the first, or primary, barrier in 
the wellbore. Drilling fluid is very useful as a barrier because the 
density of this fluid can be changed to respond to changing formation 
pressures. The density of the fluid causes the drilling fluid to exert 
pressure against the formation. Increasing density causes an increase 
in pressure exerted against the formation, while reducing the density 
reduces the pressure exerted against the formation. In most instances, 
adjusting the density of the drilling fluid is all that is required to 
keep the pressures in the wellbore in balance.
    Another common barrier is the high strength steel casing used in 
the construction of the well. Casing placed across a pressurized 
formation is an effective barrier, but only when used in conjunction 
with other barriers such as cement and some type of mechanical sealing 
element at the top of the casing. Casing is installed in a wellbore 
when the density of the drilling fluid can no longer be adjusted to 
exert sufficient pressure to keep the pressurized gas contained in the 
formation.
    Cement is one of the key barriers used during the well construction 
process, but it is important to recognize that cement is perhaps the 
most difficult barrier to install and control. This is because cement 
is installed as a liquid but acts as a barrier as a solid. The time 
during which cement transitions from a liquid to a solid is critical, 
and the cement must be tested in place, meaning in the wellbore, as a 
solid in order to be a dependable barrier.
    A different type of barrier is the mechanical barrier. A mechanical 
barrier is a device which, when deployed, physically blocks the 
movement of gas in the wellbore. The most common mechanical barrier is 
a blowout preventer. A blowout preventer is a large valve, more 
precisely series of valves, called the blowout preventer stack, placed 
at the top of the wellbore and used to stop movement of fluids into and 
up the wellbore.
    Because piping, called the drill string, is used to drill the well, 
certain components of the blowout preventer stack are used to seal off 
the volume around the outside of the drill string. This leads to the 
need to also seal off the inside of the drill string by the use of 
smaller valves called ``inside'' blowout preventers or safety valves. 
Casing strings also require mechanical barriers, called float valves, 
to be installed at the bottom of the casing string.
    Other components of the blowout preventer stack are used to seal 
off odd shaped or sized drilling tools run in the wellbore, or across 
the full diameter of the wellbore when no drill string is in place in 
the wellbore. Finally, a special valve, called the blind shear ram, is 
used to seal the wellbore in its entirety by cutting through the drill 
pipe, and possibly other piping components, and sealing the wellbore. 
The blind shear ram is used only in an emergency and is the last 
barrier against a blowout. It is very important to note that the blind 
shear ram will not necessarily cut though all possible piping 
components that may be in place in the wellbore.
    The blowout preventer stack has multiple components with which to 
provide a barrier for given preconceived situations. Components of the 
stack have pressure ratings, for instance 10,000 pounds per square 
inch, or psi. This means that a blowout preventer component rated to 
10,000 psi should be able to trap or contain wellbore pressures up to 
10,000 psi, but that if pressures exceeding 10,000 psi are encountered 
the component cannot be expected to function properly. As with other 
barriers, testing the effectiveness of the blowout preventers is 
critical in that a non-functioning blowout preventer cannot be a 
barrier.
    I should note at this point that the blowout preventer stack on a 
subsea well, as existed on the Deepwater Horizon, is an extremely 
complicated system, particularly in the means by which the blowout 
preventer is installed, tested, and operated. Blowout preventer valves 
are operated by hydraulic pressure; applying hydraulic pressure 
reliably at a water depth of five thousand feet can be a very 
complicated task and is an engineering marvel in itself.
    An often overlooked but critical mechanical barrier exists at the 
junction between the casing and the blowout preventers. This junction 
is called the ``wellhead''. The wellhead system provides a mechanical 
barrier at the top of the outside of the steel casing and is critical 
in the event that cement fails to provide a barrier. Failure of a 
wellhead barrier can be catastrophic.
    This leads us back to cement. Cement can be used as a barrier in 
several ways. First, cement is placed on the outside of the casing 
string to provide hydraulic isolation between the pressurized gas in 
the formation and the top of the casing string, wellhead, and wellbore.
    Cement can also be used as a barrier in the form of a ``plug'' 
across the full diameter of the wellbore. When in place and tested this 
is considered to be a very reliable barrier. Mechanical devices such as 
bridge plugs and packers also act as barriers and can be used in place 
of cement plugs.
    Failure of cement as a barrier is not in and of itself uncommon or 
disastrous. However, when cement fails as a barrier it is critical that 
a second barrier be in place and tested so as to offer the opportunity 
to repair the cement failure. Repairing cement failures is not 
uncommon, but can be time consuming and thus expensive.
    I have mentioned several barriers that are commonly used to 
construct a wellbore in a safe and systematic manner, providing a means 
by which gas pressure in a formation can be safely encountered and 
balanced. These barriers are drilling fluid, cement, casing, the 
wellhead, and the blowout preventers.
    As we all know we do not live in a perfect world, and often during 
the course of drilling a well a barrier becomes ineffective and gas 
enters the wellbore. In this event a second barrier, most often a 
mechanical barrier such as a blowout preventer, is called upon to be 
used to control the entry of gas into the wellbore.
    As I mentioned earlier, the variation of pressure within subsurface 
formations is often erratic and unpredictable, and continuous 
adjustments of the density of the drilling fluid are required to 
balance the pressure in the formation. Often major adjustments to the 
drilling fluid density are required when a kick enters the wellbore. It 
is my experience that in the event of a kick on a deep high pressured 
well it is critical that the drill crew be able to flawlessly execute 
the standard procedures that the drilling industry has developed for 
such situations.
    These procedures involve activating the blowout preventers, 
removing the kick from the wellbore, and then adjusting the density of 
the drilling fluid in order to return the wellbore to a balanced 
condition, in the process re-establishing the drilling fluid as an 
effective barrier.
    For the drill crew to be able to do this, it is critical that the 
crew be able to recognize when a kick has occurred. Failure of a drill 
crew to recognize a kick in a timely manner is often disastrous. When a 
kick is recognized it is critical that the crew respond immediately to 
the kick and install a barrier, such as closing a blowout preventer 
valve across the wellbore or around the drill string.
    In order for the drill crew to respond to a kick in a timely 
manner, it is imperative that certain critical parameters be 
continuously monitored. Since the drilling process requires the 
circulation of drilling fluid into the drill string and out of the 
wellbore, perhaps the most critical parameter to monitor is the rate at 
which fluid is exiting the well relative to the rate at which fluid is 
pumped into the well. It is a warning sign of a kick when fluid exits 
the well at a rate greater than fluid is entering the well.
    Another warning sign of a kick is when the fluid volume in the 
drilling fluid holding tanks begins to increase. I cannot overstress 
the importance of monitoring fluid volumes throughout all phases of a 
drilling operation.
    Only when at least two mechanical barriers are in place, and 
sufficiently tested, can the drilling fluid be removed as a barrier. 
Once again I stress the importance of testing a barrier for reliability 
prior to depending upon it to prevent a blowout.
    The drilling industry strives to assure multiple barriers remain in 
place at all times during operations on a well. This reduces the 
possibility of a blowout caused by sequential loss of barriers. 
However, there remains the potential for human error to create 
conditions by which barriers are subjected to loads for which they were 
not designed. The industry has used intensive training as a means of 
reducing this risk, but unfortunately it has not eliminated the risk.
    Drilling a deep, high pressured well is a complicated task. 
Drilling the same well in a deep water environment only adds to the 
complexity. However, deepwater wells, like any other well, can be 
safely drilled by insuring that multiple barriers remain in place at 
all times during the drilling operation.
    For a blowout to occur multiple barriers must fail or be rendered 
useless through human error.
    I hope that my testimony has provided the committee with a means to 
understand the barrier concept and to relate many terms such as 
drilling fluid, cement, casing, and blowout preventers to this concept.
    I encourage the committee to continually ask themselves and 
interested parties whether or not multiple tested barriers were in 
place at all times on the Deepwater Horizon. It is my opinion that 
understanding all of the barriers that were in place on the Deepwater 
Horizon and their status at the time of the blowout will lead to a 
clear understanding of the disaster.
    If a barrier failed, we must determine when and how it was tested, 
and when and how it failed; if a barrier was removed, we must ask why 
it was removed and determine if another barrier was put in place and 
tested in proper sequence. I know through extensive discussion with my 
peers that the drilling industry is keen to determine what happened on 
the Deepwater Horizon, and why it happened. Thank you very much.

    The Chairman. Thank you very much.
    Mr. Danenberger, why don't you go right ahead.

STATEMENT OF ELMER P. DANENBERGER, III, FORMER CHIEF, OFFSHORE 
REGULATORY PROGRAM, MINERALS MANAGEMENT SERVICE, DEPARTMENT OF 
                          THE INTERIOR

    Mr. Danenberger. Thank you, Mr. Chairman.
    Firstly, I want to extend my sincere condolences to the 
family and friends of the 11 workers who lost their lives. I 
talked to a lot of people associated with offshore oil and gas 
operations and every one of them has taken this personally and 
is committed to doing everything that they can to make sure 
this doesn't happen again, in the Gulf of Mexico, elsewhere in 
the U.S., off of Canada, in the North Sea, West Africa, Brazil, 
Arabian Gulf, Southeast Asia, Australia, and anywhere that oil 
and gas operations are conducted.
    Also I want to express my disappointment with some of the 
comments that have been directed at my former colleagues with 
the Minerals Management Service. I can tell you without 
hesitation that everyone in that regulatory program is fully 
committed to safety and pollution prevention--inspectors, 
engineers, geologists, scientists, and others. The inspectors, 
they expose themselves to considerable risk every day when they 
fly offshore and they go around platforms, every day. After 
Hurricanes Ivan, Katrina, Rita, Gustav, Ike, even when their 
own personal lives were disrupted, these people were on the job 
next day doing everything they could to get production restored 
in a safe and timely manner.
    Ethics? These people won't take a donut from industry. I 
know; I've tried to set them up.
    So, that said, I want to get to my main points here. My 
written statement summarizes the history of offshore deepwater 
drilling, compliance record, blowout record, and then I've got 
some suggestions that I would like to offer to the committee.
    Just quickly on the history, deepwater drilling really goes 
back to 1965 offshore California, with wells in comparable 
depths to the Deepwater Horizon well first being drilled in 
1979 offshore Newfoundland. There's extensive history of 
deepwater drilling, over 3,000 wells drilled in more than 1,000 
feet of water.
    The compliance record has been very good. I looked back 
through all the civil penalty data and there really is a 
flawless record for the deepwater operations. Blowout history 
is better for deepwater operations than it is for shallow. I 
also took a look at some of the issues that have been raised 
since April 20. I've provided some comments on those for your 
consideration.
    But I want to spend the rest of my time talking about the 
path forward. I think there should be an independent commission 
that takes a look at all aspects of this, regulatory and 
otherwise. They should draw from the detailed technical 
investigation that the MMS and Coast Guard have initiated 
today, not duplicate it but draw from it. I think we need some 
technical and regulatory experts on this committee.
    Some of the things that I think that they should consider 
would be looking at whether we should streamline the OCS 
regulatory regime. Gaps, overlap, confusion can exist when 
there are too many different organizations. The amount of time 
that's dedicated to coordination should be focused on safety 
and preventing accidents. Those are resources that we need.
    I don't have any studies to confirm this, but from my 
experience the less complicated the authority and the regime 
the more effective. That said, we can't have the regulator 
investigating themselves. So I think there needs to be an 
independent investigation authority for major offshore 
accidents like this. This was first recommended by a former 
colleague of mine who used to be a professor at the University 
of Oklahoma, and it was after the Santa Barbara blowout and 
incidents in the early 1970s. It never really got traction, but 
I think it's an excellent idea.
    I think we should either expand the role of the Coast 
Guard's National Offshore Safety Advisory Committee or 
establish a new expert committee to consider technological 
advances, performance data, and then make recommendations to 
the regulators, Congress, and others on standards and 
procedures. There should also be some sort of an annual forum 
so that everybody can be presented the latest information on 
research and technological advances.
    I think there should be a system, preferably a private one, 
for collecting and assessing failure data for blowout 
prevention equipment. We may also want to look at standardized 
manufacturer testing programs for some BOP components, 
particularly the shear rams. This data I think should be 
publicly released so everyone can see it.
    Beyond that, I think we should conduct a thorough review of 
blowout preventer performance considerations, including their 
redundancy, independent functioning, shearing capability, 
backup actuation options, and riser disconnect and sequencing, 
intentional and otherwise.
    I think existing well control training programs should be 
expanded to include some of the well integrity, casing, and 
cementing aspects that have been prominent not only in this 
blowout, but in the recent Montara blowout offshore Australia. 
I think we should develop standards that address best practices 
for cementing operations, with decision fault trees that 
describe safeguards, problems, and appropriate responses. We 
also need to give considerations to other options for ensuring 
the integrity of the annulus and redundancy there, with perhaps 
some external packers in some situations.
    I think we need to establish procedures that will 
facilitate the prompt publication of safety rules. This was 
always a frustration of mine and many other people that work in 
the Federal Government, trying to get a rule out in a timely 
way when it's urgent for safety reasons.
    That said, we can't accomplish everything with prescriptive 
rules. There's no amount of--no number of people, no number of 
volumes, that's going to tell people precisely what they have 
to do in every situation. So really it has to fall back to 
operator responsibility, and that has to be clearly established 
through safety and environmental management programs.
    These programs should also indicate what are you going to 
do for the industry as a whole, what are you going to do to 
participate in standards, what are you going to do in research. 
After Katrina and Rita we had an important hurricane conference 
in New Orleans and less than half of the operators showed up. 
Now, how do you operate in the Gulf of Mexico without paying 
attention to hurricane issues?
    Last, I think we need to recognize the importance of 
international cooperation on safety issues. This is an 
international industry. We have the same issues and concerns. I 
think we need to work together, and a good example for that has 
been the informal work of the International Regulators Forum.
    Thank you for your time. I appreciate the opportunity.
    [The prepared statement of Mr. Danenberger follows:]

Prepared Statement of Elmer P. Danenberger, III, Former Chief, Offshore 
  Regulatory Program, Minerals Management Service, Department of the 
                                Interior
    My name is Elmer Danenberger. In January, I retired after a 38 year 
career with the Department of the Interior's offshore oil and gas 
regulatory program. During my career, I served as a staff engineer in 
the Gulf of Mexico regional office, Chief of the Technical Advisory 
Section at the headquarters office of the U.S. Geological Survey, 
District Supervisor for Minerals Management Service (MMS) field offices 
in Hyannis, Massachusetts and Santa Maria, California, and Chief of the 
Engineering and Operations Division at MMS Headquarters. For the past 
five years, I served as Chief, Offshore Regulatory Programs, with 
responsibilities for safety and pollution-prevention research, accident 
investigations, regulations and standards, and inspection and 
enforcement programs.
    Since retirement, I have closely followed the investigation of the 
Montara blowout in the Timor Sea northwest of Australia and the ongoing 
Deepwater Horizon (DWH) blowout in the Macondo field in the Gulf of 
Mexico. My comments to the Australian Commission of Inquiry may be 
viewed at http://www.montarainquiry.gov.au/submissions.html
    In this statement, I will briefly comment on the history of 
deepwater drilling, the compliance and performance record with an 
emphasis on blowout data, and regulatory issues that have emerged since 
the Macondo well blew out three weeks ago. I will then suggest 
technical and regulatory improvements for your consideration.
    Before I begin, I want to extend my sincere condolences to the 
families and friends of the eleven men who lost their lives on the 
Deepwater Horizon. Offshore workers are vital to our economy and energy 
security; yet their important contributions to society often go 
unnoticed. The best way to honor the victims of this tragedy is through 
our commitment to prevent future accidents. Everyone I have spoken to, 
in the US and around the world, is eager to assist in any way possible.
    I also want to express my disappointment in certain media comments 
directed at my former MMS colleagues. These comments have not only been 
ill-informed and unsubstantiated, but malicious. Without hesitation, I 
can tell you that MMS regulatory personnel--inspectors, engineers, 
scientists, and others--are 100% committed to their safety and 
pollution prevention mission. MMS inspectors are themselves exposed to 
risks every day when they fly offshore and inspect facilities. MMS 
personnel have repeatedly made personal sacrifices to support the 
regulatory mission. After Ivan, Katrina, Rita, Gustav, and Ike, MMS 
employees worked to restore oil and gas production essential to our 
economy, even when their personal lives had been disrupted by the 
onshore impacts of these hurricanes. These personnel work under strict 
ethics standards, and despite a few isolated and highly publicized 
incidents that occurred more than four years ago, conduct themselves 
with the highest degree of professionalism. While a critical review of 
the entire offshore regulatory regime is necessary and appropriate, 
unsubstantiated accusations and personal attacks are not.
                history, compliance, and blowout record
    Deepwater drilling is not new. In 1965, the drillship CUSS I 
ushered in the deepwater era by drilling a well in 632' of water 
offshore California. In 1979, the Discoverer Seven Seas drilled an 
exploratory well in 4876' of water off Newfoundland. This was the first 
of many wells to be drilled in water depths similar to or greater than 
those at the Macondo site. In the early 1980s, the Discoverer Seven 
Seas drilled a series of deepwater wells in the Mid-Atlantic including 
a record-setting well in 6952' in 1984. The current water depth record 
is 10139'--more than twice the depth of the water at the blowout 
location. In the Gulf of Mexico alone, 2500 wells were drilled in water 
depths greater than 1000' between 1992 and 2006. Recently, 
approximately 30 rigs have been operating in greater than 1000' of 
water, about half of which are working in depths of 5000' or more.
    Deepwater rigs are typically staffed with experienced and capable 
personnel, and their compliance records tend to be very good. I 
reviewed civil penalties summaries for the past 5 years (2006 to 
present) on the MMS website. Not a single case appeared to be related 
to deepwater drilling operations. According to recent news reports, the 
DWH had achieved a milestone of 7 years of accident-free operations.
    I have written several papers on blowout occurrence rates and 
causes. The most recent paper, co-authored with David Izon and Melinda 
Mayes, reviews the blowout record during the 15-year period from 1992-
2006. I have attached a link to that paper and a summary of the 
pertinent findings. According to these data, well control performance 
for deepwater drilling was significantly better than for shallow water 
operations. There were no fatalities or major spills associated with 
deepwater drilling blowouts during the 15-year study period.
               regulatory issues raised since the blowout
    I will briefly comment on some regulatory issues that have been 
raised by the media since the Macondo blow out began on April 20. The 
extent to which these issues are relevant to the blowout has yet to be 
determined.
    Acoustic Backup Systems for Seafloor Blowout Preventers.--At this 
time, there is no evidence that such systems would have made a 
difference in this incident. Attempts to close BOPs were reportedly 
made prior to the DWH evacuation. The BOP should have also been 
signaled when the rig lost power and when the riser disconnected. It is 
unlikely that additional signals sent acoustically to the stack would 
have prevented the blowout.
    MMS requires a backup system for all seafloor BOPs, and disconnect 
sequencing that ensures that a well is secured before the marine riser 
is detached from the well bore. http://www.gomr.mms.gov/homepg/
regulate/regs/ntls/2009NTLs/09-g11.pdf
    The DWH backup was a remotely operated vehicle (ROV) which 
successfully stabbed into the BOP stack and attempted to actuate ram 
closure after the well blew out. Problems with the rams or other BOP 
components apparently prevented a full, effective closure. The press 
has reported that cost was a factor in the MMS decision not to require 
acoustic backups. I never heard cost mentioned in any discussions about 
these systems. Concerns were raised that ambient noise from a flowing 
well would render the ROV systems ineffective, that seafloor topography 
might affect their reliability and performance, and that there was a 
risk of unintended actuations. The internal consensus was that ROVs 
were the more reliable option. Further research on this topic is 
suggested.
    Shear Ram Reliability.--Shear rams are intended to cut through pipe 
that might be in the BOP stack when the well has to be secured in an 
emergency situation. Heavier, high strength drill pipe is more 
difficult to shear, and thus a complete seal of the well bore is not 
always achieved. Also, increased hydrostatic pressure at greater water 
depths and higher well pressure increase the force required to 
completely shear the pipe. In 2003, MMS revised its regulations 
(250.416(e)) to require the submittal of information demonstrating that 
shear rams on the proposed BOP stack can cut the drill pipe in the hole 
under maximum anticipated surface pressure. However, shear rams may not 
be able to cut tool joints and certain other equipment that is run 
through the BOP. Since this is an industry-wide issue, I suggest that 
an international standard or guidance document be developed for 
minimizing the risk of shearing failures. Standardized shearing tests 
should be required for each BOP model, and test data should be publicly 
available. http://www.mms.gov/tarprojects/463/
%28463%29%20West%20Engineering%20Final%20Report.pdf
    Reduced BOP Testing Frequency.--MMS reduced the required BOP 
pressure testing frequency to once every 14 days (from once every 7 
days) after an internal review and a contract research study (http://
www.mms.gov/tarprojects/253/AA.PDF) indicated that there would be no 
increase in the risk of BOP failure. To the best of my knowledge, no 
company or international regulator requires more frequent testing.
    Cementing.--Cement is used to secure the steel casing installed in 
the well bore, and prevent the migration of gas or fluids in the 
annulus surrounding the casing. As indicated in the attached summary of 
blowout data, 18 of 39 blowouts during the 15-year period from 1992-
2006 involved cementing operations. An industry standard should be 
developed to address cementing problems, how they can be prevented, and 
the actions that should be taken when they do occur. In light of the 
findings from the Montara blowout (Australia) and related concerns 
elsewhere, there is significant international interest in such a 
standard. The advisability of using external casing packers, in 
addition to cement, to seal certain annuli should also be considered.
    Research--Deepwater and Well Control.--The MMS Technology 
Assessment and Research (TAR) program has been a leader in deepwater 
operations (http://www.mms.gov/tarprojectcategories/deepwate.htm) and 
drilling research (http://www.mms.gov/tarprojectcategories/
drilling.htm), and funded a pioneering deepwater well control research 
center at Louisiana State University. MMS also participates in the 
International Committee on Regulatory Authority Research and 
Development (ICRARD), a consortium that addresses offshore safety 
issues. Many operators and contractors conduct related research. An 
organized process for reviewing the findings and recommendations of 
industry and government safety research and proposing follow-up studies 
is suggested.
    Research--Spill Response.--The TAR program has conducted oil spill 
response research (http://www.mms.gov/taroilspills/) for more than 30 
years and currently operates the Ohmsett spill response research center 
in New Jersey (http://ohmsett.com/). Most boom and skimmer and skimmer 
performance data have been collected at Ohmsett. Some of the first in 
situ burn tests were conducted at the facility. Remote sensing tests 
and data on dispersant performance have also been collected at Ohmsett. 
The TAR program funded one of the first studies on seafloor containment 
and collection systems. The Coast Guard, NOAA, the states of Alaska and 
California, Norway, and Canada have been important oil spill research 
partners. The oil spill research community is rather small, and the 
communication among researchers has been quite good. Consistency is 
critical, and we need to make sure that industry and governmental 
research efforts are sustained.
                              path forward
    In the aftermath of the DWH tragedy, we need to consolidate our 
efforts and ensure that all pertinent issues are addressed in a 
complete and timely manner. I recommend that a single, independent 
commission be established to recommend operational and regulatory 
changes to the President and Congress. The Commission should be 
comprised of technology, operations, and regulatory policy experts from 
the public and private sectors, and should draw on, not duplicate, the 
detailed technical investigation that the MMS and Coast Guard have just 
initiated. The following are policy and technical recommendations that 
I believe such a Commission should consider:

          1. Streamline the OCS regulatory regime to minimize the 
        potential for gaps, overlap, and confusion. Because of the 
        complexity of the OCS regime, regulatory and industry personnel 
        spend too much time resolving and coordinating administrative 
        and procedural matters. This time would be better spent 
        focusing on mission critical safety issues. A single agency 
        should be responsible and accountable for safety and pollution 
        prevention at offshore facilities, and should draw on the 
        expertise of other agencies and organizations as necessary to 
        achieve performance objectives.
          2. Establish an independent authority to investigate offshore 
        accidents, make recommendations, and assess trends. Such an 
        authority was first recommended by Dr. Don Kash, then a 
        professor at the University of Oklahoma, in 1973 following a 
        series of major offshore accidents.
          3. Either expand the role and jurisdiction of the Coast 
        Guard's National Offshore Safety Advisory Committee, or 
        establish a new expert advisory board to review technological 
        advances and performance data, and make recommendations 
        regarding new research, standards, and procedures. This board 
        should also organize an annual public forum for presenting 
        government and industry research and safety performance 
        updates.
          4. Establish a public or private system for collecting and 
        assessing failure data for blowout prevention equipment. 
        Establish standardized manufacturer testing programs for 
        certain BOP components (e.g. shear rams). The resulting data 
        should be publicly released. Existing quality assurance program 
        for surface and subsurface safety valves (producing wells) 
        should also be reviewed.
          5. Conduct a thorough review of BOP performance 
        considerations including redundancy, independent functioning, 
        shearing capability (for pipe or other obstructions), backup 
        actuation options, and riser disconnect and drive-off 
        sequencing (intentional and unintentional).
          6. Expand existing well control training programs or develop 
        new programs to cover well integrity issues. This training 
        should include a review of major historical accidents to remind 
        personnel what can happen and why.
          7. Develop standards that address best practices for 
        cementing operations with decision/fault trees that describe 
        safeguards, problems, and appropriate responses. Consideration 
        should be given to other options, such as external packers, for 
        redundant annular protection above oil and gas reservoirs.
          8. Establish special procedures that will facilitate the 
        prompt publication of safety rules. The Federal review and 
        publication process for rules is enormously complex, time 
        consuming, and frustrating. Too many resources must be 
        dedicated to getting rules through the system, and 
        technological advances and new findings cannot be readily 
        addressed.
          9. Require that all OCS operators have comprehensive safety 
        and environmental management programs. Compliance with 
        prescriptive rules and standards is only part of the safety 
        equation. Companies must actively manage their activities to 
        minimize safety and environmental risks. These management 
        programs should also explain how the company will participate 
        in the standards development and research activities needed to 
        make everyone safer.
          10. Recognize the importance of international cooperation on 
        offshore safety and pollution prevention issues. The offshore 
        industry is international in scope, as are the operational and 
        regulatory challenges. Effective international communication 
        reduces risks and burdens. The International Regulators' Forum 
        (http://www.irfoffshoresafety.com/) is a model for informal 
        cooperation, but more could be done.
                               attachment
                  ocs drilling blowouts--1992 to 2006
            elmer danenberger, david izon, and melinda mayes
(http://drillingcontractor.org/dcpi/dc_-julyaug07/
        DC_July07___MMSBlowouts.pdf)
Highlights
          1. During the study period, blowouts occurred at a rate of 
        one for every 387 wells drilled, compared with a rate of one 
        blowout for every 246 wells during the period covered in my 
        previous blowout study (1971-91).
          2. 2493 wells were drilled over the study period in water 
        depths greater than 1000.' There were five minor blowouts 
        yielding a rate of 499 wells per incident. This is better than 
        the rate of 387 wells per incident for all water depths.
          3. The severity of blowouts, as measured by their duration 
        and consequences, decreased significantly compared with the 
        previous study period (1971-1991). Only one fatality and two 
        injuries resulted from drilling blowouts during the 1992-2006 
        period compared with 25 fatalities and 61 injuries during the 
        previous period. The fatality was on a jackup rig; a crew 
        member was found missing after the rig was evacuated because of 
        well control incident.
          4. The seven fires and explosions associated with the 1992-
        2006 blowouts occurred either on jackups or platform rigs, not 
        deepwater floating rigs.
          5. Blowouts during the 1992-2006 period resulted in the 
        spillage of 341 bbls of oil/condensate and 982 bbls of 
        synthetic-based mud. Most of the spillage resulted from an 
        unintended riser disconnect, that caused a release of mud and 
        allowed the well to flow briefly. The blowout preventers were 
        shut-in by a remotely operated vehicle. Procedures were changed 
        to automatically close blowout preventers when the riser is 
        disconnected.
          6. Over-pressured shallow gas influxes persisted as a major 
        contributing factor to blowouts. These incidents have minimal 
        environmental risk, but significant safety risk.
          7. While the number of blowouts declined, the percentage of 
        blowouts associated with cementing operations increased 
        significantly. Cementing problems were a contributing factor in 
        18 of the 39 incidents.
          8. Half of the blowouts lasted less than 24 hours. The 
        longest lasted 11 days. Over 50% of the blowouts were 
        controlled by pumping mud or cement or by actuating mechanical 
        well control equipment. 36% of the wells ceased flowing because 
        sediments bridged or sealed the well. 13 of the wells ceased 
        flowing when trapped gas or shallow gas pockets were depleted. 
        Although relief wells were initiated in two of the blowouts, 
        both wells were controlled by other means prior to completion 
        of the relief well.
          9. Of the 34 blowouts involving mobile drilling units, 28 
        were bottom-founded jackups. Only 6 involved floating rigs, all 
        semisubmersibles.

    The Chairman. Thank you very much.
    Let me start questions. One of our witnesses on the second 
panel, Steven Newman, who is the Chief Executive for 
Transocean, has in his testimony a statement that I wanted to 
ask you two gentlemen about. He says: ``The one thing we know 
with certainty is that on the evening of April 20 there was a 
sudden catastrophic failure of the cement and the casing or 
both. Therein lies the root cause of the occurrence. Without a 
disastrous failure of one of these elements, the explosion 
could not have occurred.''
    Do you agree with that, Dr. Beck?
    Mr. Beck. I agree, but I think it must be supplemented with 
the statement that the wellhead system at the top of the casing 
is also suspect in that situation. So if you consider the seals 
at the top of the casing part of the casing, then yes, I would 
say that that's a likely scenario on where the failure was.
    The Chairman. Let me just ask, though. What occurs to me 
just reading through your testimony about all of the different 
things that need to be done properly in order to ensure that a 
blowout not occur, it seems that, although that failure of the 
cement or casing may well be a proximate cause, a cause that 
led to this disaster, you can cite others as well that are also 
proximate causes: the failure of the shear rams on this blowout 
protector to work properly. Had they worked properly, I assume 
that that would have prevented the blowout from occurring. Is 
that an accurate--
    Mr. Beck. It's not totally accurate, Senator, because in 
the context of a failure at the wellhead system it is possible 
in my opinion that that could create a situation across the 
blowout preventers that would render them useless at that point 
because they're attempting possibly to close on a piece of 
casing for which they were not intended to close or shear.
    So in my opinion, with what I've read about the situation, 
while it seems obvious that the shear rams did not shear, they 
may have been asked to function on a piece of tubular in the 
well that they were never intended to function on to begin 
with. So it's possible there was something blocking the blowout 
preventers that kept them from functioning correctly.
    The Chairman. Let me ask about--your testimony also talks 
about the importance of properly responding to a kick when 
there's a kick involved, so that that doesn't become a blowout. 
I would assume that an adequate response to a kick in this 
circumstance might well have prevented this accident from 
occurring?
    Mr. Beck. It may have prevented it. It really depends upon 
the failure that occurred. If there was a sudden catastrophic 
failure, for instance at the wellhead, that somehow blocked the 
BOP's, recognition of the kick wouldn't have made the blowout 
preventers function in that situation. It may have given much 
more time for people to evacuate, though, in that situation.
    The Chairman. Another issue that's been raised is the 
question of whether or not there should be sensors in the well, 
as I understand it, to detect changes in temperature, changes 
in pressure, and whether or not the lack of those, those 
sensors, could have been a cause. What's your thinking on that?
    Mr. Beck. Typically, putting a sensor in that situation is 
desirable. Whether we could continually sense temperature is 
difficult. Sensing pressure behind the casing is routine 
practice onshore and I believe that some of the systems that 
are used for hanging the casing in the wellbore prevent 
monitoring the pressure behind the casing string. In my 
opinion, that would be a desirable addition to the wellhead 
systems that we use in subsea drilling.
    The Chairman. Mr. Danenberger, you have a very good list of 
recommended changes that ought to occur. I think you have ten 
of them that you briefly described to us. The obvious question 
is why hasn't the MMS put some of these in place prior to this 
accident occurring? Has the need for this has only become 
obvious since the 20th of April, or is this something that 
should have been required previously?
    Mr. Danenberger. I think regulations are an evolutionary 
process. MMS has a research program that's been a leader in 
deepwater well control and has looked at a lot of these issues, 
and changes have been made over time in the regulations. More 
need to be made, but I think it's been a process that perhaps 
needs to be--could have been accelerated had some of these 
issues been looked at more carefully. But I think MMS has made 
a consistent effort over the years to address technological 
issues.
    The Chairman. Senator Murkowski.
    Senator Murkowski. Thank you, Mr. Chairman.
    Mr. Beck, you have stated in your testimony: ``For a 
blowout to occur, multiple barriers must fail or be rendered 
useless through human error.'' You've outlined the multiple 
barriers process. Trying to understand where it failed is 
obviously going to be an ongoing process. Will the eventual 
removal of the BOP so that we can literally dissect it, will 
that necessarily give us the answers that we're looking for in 
terms of really what has happened?
    Mr. Beck. I think that that will definitely address whether 
or not some external blockage occurred in the BOPs that 
prevented them from failing--or caused them to fail, excuse me, 
that prevented them from functioning. So recovery of the BOPs 
will be hugely beneficial to the investigation.
    Senator Murkowski. Mr. Danenberger, your testimony provides 
that you think that the frequency of the BOP tests is probably 
sufficient, testing I guess every 14 days, and that it's as 
stringent as it is anywhere else in the world. But what about 
the test itself? Is there a way to fully execute the shearing 
of a pipe each time that a BOP test is done without cutting off 
that well entirely?
    Are we testing what we need to test to give us that 
certainty that we need?
    Mr. Danenberger. That's an excellent question. I think that 
the test is very good from the standpoint of measuring the 
ability of the different rams and chokes and other components 
in the blowout preventer system to hold pressure, and even the 
blind shear ram with nothing in the hole. But I think there 
probably needs to be a better program, as I indicated in my 
testimony, for testing blind shears independently to better 
understand what force is being generated and what force is 
required to shear some of these different components that might 
be in the blowout preventer stack.
    Senator Murkowski. So it's not just an issue of making sure 
that we're doing the monitoring on a regularly scheduled basis. 
It's making sure that we've tested all that we can possibly 
test?
    Mr. Danenberger. Some of these other tests wouldn't be 
during your biweekly test. They'd be an independent laboratory 
effort. Also, good maintenance is critical throughout the 
operation of this equipment.
    Senator Murkowski. How often are you supposed to----
    Mr. Danenberger. Excuse me?
    Senator Murkowski. In terms of timing or regularly 
scheduled maintenance, what is suggested there?
    Mr. Danenberger. Any time a component fails during a 
pressure test, that is corrected. But after each well there can 
and I think typically is, should be, a thorough inspection of 
the entire stack when it's back up on the surface.
    Senator Murkowski. Let me ask you, Dr. Beck, about the 
pressures. Can you give us some kind of indication as to what 
pressures the Deepwater Horizon may have been contending with 
leading up to the event? I've read in various media accounts 
that it's anywhere between 10,000 psi to 40,000 psi. What were 
we dealing with?
    Mr. Beck. I have--I did have a chance to review just 
quickly some of the data in the second panel's discussion, 
although it wasn't complete enough for me to make direct 
calculations. But a very well educated guess would be that 
bottom hole pressure was in the neighborhood, in the subsurface 
formation, was in the neighborhood of about 14,000 psi.
    I'm working--once again, I don't--it is an assumption, but 
with a 10,000 pound wellhead system BOP stack that failed, then 
it's clear that that much pressure occurred at the surface. So 
pressure of 10,000 psi was able to be generated probably all 
the way up at the seafloor at the wellhead.
    Senator Murkowski. To what extent is it likely or perhaps 
unlikely that as we keep pushing out and going deeper into 
seeking additional reservoirs out there, that we're going to 
encounter these higher pressure reservoirs? I mean, is this 
going to be the norm as we continue to push further out, that 
we'll be seeing pressures like this?
    Mr. Beck. The deeper the wells that we drill, the higher 
the pressures that we will encounter. I think our industry is 
capable of handling surface pressures of 15,000 psi almost 
routinely. But if we start trying to handle 20,000 psi or 
higher, new systems--the reliability of those systems is going 
to need to be tested extremely before we deploy those.
    Senator Murkowski. The reliability needs to be tested, but 
according to Mr. Danenberger we need to make sure that we're 
doing the right kind of testing.
    Thank you, Mr. Chairman.
    The Chairman. Senator Dorgan.
    Senator Dorgan. Mr. Chairman, thank you very much.
    I think it's likely the one thing that unites all of us on 
this committee is we don't know very much about the details of 
this spill, and that's the purpose of the first panel, to hear 
from these experts.
    The chairman indicated that there's technology, human 
factor, and the regulatory factor, and suggested all have the 
potential to see failures. This is--as I understand it, the 
offshore platform is one mile above the ocean floor and the 
drilling goes 18,000 feet below the ocean floor. That's the 
kind of sophisticated exploration that most of us have very 
little understanding of. So I appreciate the testimony that 
you've given us.
    Let me ask, if I might, Dr. Beck. Is the equipment and the 
technology used on this platform different or similar or 
identical to the equipment and technology used on other 
drilling that's going on around the world?
    Mr. Beck. The technology used in deepwater drilling is 
developed specifically for deepwater drilling. Now, the work 
that's done in the Gulf of Mexico is similar to the work that's 
done in other areas of the world in terms of deepwater. So 
those equipment packages would be very similar, right, supplied 
by the same companies and the like.
    It's quite a bit different, of course, from my world, which 
would be onshore drilling. The same small components on a small 
scale, but on a large scale the complexity of the deepwater 
systems are extreme.
    Senator Dorgan. Dr. Beck, the kind of well that we're 
talking about here, because of its depth and because of the 
nature of it, is are there higher risks trying to access that 
oil?
    Mr. Beck. I don't see that the conditions that this well 
was drilled into are, while severe, extreme relative to what 
the industry capabilities are right now. It's a very difficult 
well, but it is not the most difficult well the industry has 
drilled really by any means. Our capabilities are--we are 
capable of handling much higher formation pressures than what 
in my observation or deduction from the data tells us we 
encountered in this well.
    Senator Dorgan. So, Dr. Danenberger, if this is not an 
unusual situation, using no different technology, or no 
different equipment, how should we consider the situation? I 
was in an area of Norway recently where they have massive 
numbers of offshore drilling and production and so on. We've 
had offshore production for years. Then clearly this has to be 
a failure of systems. Is that correct? Is the chairman correct 
when he says it's likely a failure of one of three things, the 
technology that exists, the human factor, or the regulatory 
system?
    Mr. Danenberger. Yes, absolutely correct. That should have 
been--at the time that this blowout occurred, the production 
casing had been set. It should have been a totally sealed 
wellbore with no potential for influx.
    Senator Dorgan. Mr. Chairman, I'm going to discontinue 
questions. I'm anxious for the second panel, obviously. I think 
these two witnesses have provided a substantial amount of 
information.
    Thank you very much.
    The Chairman. Thank you.
    Senator Barrasso.
    Senator Barrasso. Thank you very much, Mr. Chairman. Thank 
you for holding this hearing. As the members know, there is no 
coastline in Wyoming, but we know quite a bit about energy 
production, about treasured landscapes, and about wildlife 
protection. The tragedy unfolding in the Gulf of Mexico is 
heart-wrenching and communities and people's economic 
livelihoods are in jeopardy. Our first priority needs to be 
stopping the leak, containing the spill.
    Reading the written testimony for today's hearing, reading 
the written testimony, I hear one message, and the message is: 
Don't blame me. Shifting this blame does not get us very far. I 
am hopeful that we can learn from this experience, first to 
better prevent another massive spill, and also to ensure that 
we have an immediate and effective response.
    It's important to remember that this tragedy does not 
change America's energy needs and our continued dependence on 
foreign oil. Blocking future offshore exploration only means we 
will import more from foreign countries. I'm confident that 
America can do a better job of developing offshore energy than 
Azerbaijan, Nigeria, and Venezuela. If there is a way to make 
the process safer and the response more effective, then it's 
very important that we implement it immediately.
    Mr. Danenberger, if I could--38 years of experience with 
the Department of the Interior--we're talking multiple 
administrations, nonpartisan, working as you have. I was 
wondering about the suggestion by Secretary Salazar recently 
that he's considering proposing splitting MMS into two. One 
agency would be in charge of inspecting the rigs, investigating 
oil companies, enforcing safety regulations; the other to 
oversee leasing and royalties.
    Do you think that that will be more effective for managing 
offshore exploration and improving safety?
    Mr. Danenberger. Let me just say that that tends to be the 
trend internationally, to separate the resource management 
agency from the safety and pollution prevention agency. 
Certainly, at least it would be viewed as being more 
independent under those circumstances.
    Senator Barrasso. In the last Congress I introduced, along 
with Senator Wyden, a bill to encourage and make the Director 
of MMS be someone who would then be confirmed by the Senate. 
Right now that position is not a Senate- confirmed position. I 
think that by doing such a thing that actually lets the Senate 
focus on that person and ask these tough questions during every 
confirmation process. What would you think of that idea?
    Mr. Danenberger. I don't really have an opinion on that.
    Senator Barrasso. Dr. Beck, one of the things that you 
said, you said that something blocking the blowout preventers--
that there might have been something blocking the blowout 
preventers that prevented them from working properly, something 
blocking them that might have prevented them from working 
properly. Then the question comes there, are these systems 
vulnerable to sabotage, to terrorist attack? Are these systems 
vulnerable either prior to installation or by someone plotting 
against us who is working on the rig?
    Mr. Beck. That's a very difficult question. I think a 
determined effort, obviously, by a knowledgeable person, would 
be--somebody would be capable of doing damage in that manner. 
The fact that there are multiple people on the rig, multiple 
people--you can't do any single operation on a rig like this 
singlehandedly, right. It would take a lot of people. A single 
person would have a hard time, I think, doing anything like 
that.
    For instance, when you're working on the BOPs, that's not 
one person. It's a crew doing it. So I think that the risk of 
terrorism on a rig like this would be extremely minimal.
    Senator Barrasso. Mr. Danenberger, I saw you shaking your 
head.
    Mr. Danenberger. Yes, I agree totally. I don't think it was 
a terrorism situation.
    Senator Barrasso. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Senator Landrieu.
    Senator Landrieu. Thank you, Mr. Chairman. Thank you for 
noting when this important hearing started the loss of the 11 
workers and those that are still struggling with injuries. 
Several of those were from my State of Louisiana, from other 
Gulf Coast States, and our thoughts and prayers continue to be 
with them.
    I want to just make a short statement and then ask my 
questions, because I think it's important to keep this in 
perspective. There are over 300,000 men and women that work in 
the oil and gas industry in Louisiana alone, and almost every 
State in the Nation contributes in some way, shape, or form to 
this industry, both onshore and offshore. The work done by 
offshore crewmen is particularly difficult and dangerous at 
times. They are separated from their families weeks at a time, 
usually 2 weeks on and 2 weeks off. We owe a debt of gratitude 
to the people that work in this industry.
    I believe some of these facts are important. Mr. 
Danenberger, you outlined some today, but I'd like for the 
record to put some more into the record. From 1947 until today 
there have been 42,645 wells drilled in State and Federal 
waters in the Gulf of Mexico. The first deep well was 31 years 
ago in 1979. That well was 1,022 feet deep. Until that time 
until now, there have been 2,259 deepwater wells drilled. That 
averages approximately 133 wells per year. These wells 
accounted for only 4 percent of oil production in the Gulf in 
1990, but today they're responsible for 60 percent, and we need 
their production. We must find a way to do this more safely.
    Since 1971, not a single spill in the Gulf or the entire 
Federal OCS caused by a well blowout exceeded 1,000 barrels of 
oil. We're exceeding 7,000 barrels of oil every day and a half 
with this current uncontrolled flow.
    The record will show from 1947 to 2009, 175,813 barrels 
have been spilled out of 16 billion produced. That is one one-
thousandth percent of the total production.
    I think it's important to keep that in perspective. I also 
think it's important to understand, Mr. Chairman, as you have 
said many times, that America uses 20 million barrels of oil a 
day. We produce less than half of that. Any constriction of 
domestic oil and gas production either onshore or offshore will 
only further put us in a perilous situation and an overreliance 
on foreign oil, and in addition will export some of these 
problems to countries less equipped and less inclined to 
prevent this kind of catastrophic disaster.
    So my question to you, Mr. Danenberger, is about this shear 
ram. There was a report done in 2004, I understand, by West 
Engineering Service that recommended that there be some changes 
because it was noted that sometimes the shear rams would not 
work in terms of multiple prevention. Can either one of you 
comment about why that was not taken into more serious 
consideration, and should we continue to go forward with 
deepwater production when we know now that blowout preventers, 
which is one of the last lines of defense, may not function if 
there's something jamming that casing?
    Mr. Danenberger, starting with you, and then Mr. Beck.
    Mr. Danenberger. Thank you. There were changes made in the 
regulations to require that operators provide data to show that 
the shear ram would effectively shear the drill pipe that was 
in the--that was being used on the well, under the worst 
possible conditions. However, we do know that tool joints and 
other type of piping that might be in the hole can't always be 
sheared. So I think more work is needed there to minimize the 
amount of time that such equipment--that you're exposed to that 
risk, and to get more data on the performance of shear rams and 
the challenges. You almost need a little safety assessment with 
each well right now until things are more comfortable.
    Senator Landrieu. Mr. Beck, real quickly?
    Mr. Beck. Senator, in the context of the West report, I'm 
not familiar with that report, so I won't address that. But in 
the context of shear rams, I think it's important for everybody 
to realize that the use of shear rams is a rare occurrence. 
This is not something that's going on daily or weekly or 
monthly. It's possible that rigs out there have never used 
their shear rams in a serious event such as this. So it is the 
last line of defense. It is something we definitely need to 
look at. They will not shear all elements, all piping elements, 
that are latent. They are subject--it is subject to human error 
for incorrectly spacing the pipe across the BOPs. You have to 
physically say or measure and not place a tool joint across a 
shear ram.
    So the shear rams are built to shear a specific tube, OK.
    Senator Landrieu. Mr. Chairman, as I conclude I want to 
call on this committee again to relook at the revenue-sharing 
proposals that have been put before this committee. Obviously, 
these are resources belonging to the Federal Government, but 
right now Louisiana and the Gulf Coast States are assuming 
almost 100 percent of the risk to our wetlands and coastline, 
which is why I believe we need a new look at that provision.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Sessions.
    Senator Sessions. Thank you, Mr. Chairman, and for having 
this hearing.
    I was able to fly over the Gulf recently and it was a very 
disturbing scene. People are very worried. Some people think 
that the Atlantic Coast may be beginning to see some signs of 
oil on our beaches, but the mayors that I have talked to told 
me their beaches are OK so far. But we're just at the whim of 
the tides and the winds.
    So it has a ramification that goes beyond almost anything 
I've seen in terms of the economics of this situation. I'm 
really worried about it. I believe we need to have some 
questions answered. I believe we need to review our policies 
and only then can we feel confident that we can go forward 
effectively.
    The production of oil and gas off our shores is so 
important to this Nation and to our economy which most people 
probably don't fully recognize. It is something that I have 
supported for a long time, and I hope and I pray that we can 
get this situation straightened out. But I believe we must have 
a full review of what we are doing and how we do it. We've had 
a good success record in the Gulf, that could have created some 
laxity or complacency or overconfidence. I don't know, but it 
is time to find that out.
    Mr. Beck, you talked about the shear rams and how often 
they're activated. Do you know how many times in the Gulf of 
Mexico shear rams have actually been executed?
    Mr. Beck. No, sir, I do not know that.
    Senator Sessions. You mentioned that the use of shear rams 
were rare and then you mentioned that they have never been 
activated. What was that?
    Mr. Beck. There are many rigs drilling in the Gulf of 
Mexico that have never experienced a blowout. It just doesn't 
happen to every well, every rig that we drill. So these people 
are not going to have--they're not going to say, well, my shear 
rams worked in this situation. Perhaps in a situation where you 
were evacuating for a hurricane they would use them, but not 
always in the context of a blowout, because we just don't have 
that number of blowouts to test every single blowout preventer 
out there.
    Senator Sessions. But that does not diminish the necessity 
that they work, does it?
    Mr. Beck. Not at all. They need to be tested and known to 
work.
    Senator Sessions. Now, one of you indicated that you had 
unusual pressure coming from this well. There is a 2004 study, 
Mr. Danenberger, by the MMS which raised significant questions 
about the ability of the rams to cut through the stronger pipes 
used in deepwater drilling. Apparently, these are thicker 
pipes, and they have additonal pressure placed on them at these 
great depths. In your opinion, Dr. Beck, was that MMS finding 
correct and can we depend on shear rams as presently configured 
to operate at 5,000 feet of water?
    Mr. Beck. Once again, all I can say, Senator, is that a 
shear ram as designed to cut a specific tube is very 
dependable. It's when it attempts to cut something other than 
that tube that it's no longer dependable.
    Senator Sessions. Mr. Danenberger, is there any assurances 
we have that these shear rams are being used so that we can 
depend on them to work? When people have raised questions about 
whether or not it's safe to drill in the Gulf, I've made 
reference to them, and I'm under the impression we can depend 
on this technology. What I understand Dr. Beck to say is, well, 
it may not work. What do you think?
    Mr. Danenberger. I think there are good data that they're 
reliable from a functioning standpoint and they're reliable, as 
Dr. Beck indicated, in cutting pipe that they're designed to 
cut. But I think we need to take more of a look at the 
situations where there might be----
    Senator Sessions. Do MMS regulations require that shear 
rams actually work or does it accept the fact that it just 
might not work?
    Mr. Danenberger. They require to drill pipe that is going 
to be primarily in the well, that it be able to shear that. 
Now, there are going to be short time periods where something 
else is in the wellbore and I think that needs to be examined 
more closely.
    Senator Sessions. Would that kind of pipe be in the well 
after it's being brought on line, after the drilling is 
complete?
    Mr. Danenberger. I don't think so, but I'm not sure exactly 
what activity was going on at the time of the blowout.
    Senator Sessions. So you would acknowledge that there is 
uncertainty. Would you say too much uncertainty, which needs to 
be eliminated?
    Mr. Danenberger. I think, as I mentioned in my testimony, 
we need to have a little bit better standardization on the 
performance of certain BOP components, and the shear ram would 
be one of them.
    Senator Sessions. Is that what MMS is supposed to do? 
Aren't they supposed to have minimum regulations that would 
ensure that the shear rams work?
    Mr. Danenberger. MMS sponsored the study you referenced. 
They're very much attentive to these issues and have made 
changes in the regulations. Whether they're sufficient at this 
time, I think----
    Senator Sessions. Could they have mandated changes so that 
they could be certain to work?
    Mr. Danenberger. I think we need to know better the 
potential for problems and the extent of the problems and the 
options in terms of solutions.
    Senator Sessions. I would agree.
    Thank you, Mr. Chairman. I don't think we're there yet and 
we need to do more.
    The Chairman. Senator Menendez.
    Senator Menendez. Thank you, Mr. Chairman.
    Mr. Chairman, despite what I have heard for quite some time 
from the industry, that we are just absolutely safe under all 
circumstances, I think it doesn't take a rocket scientist to 
figure out that there is no such thing as too safe to spill, 
because we've had that experience already. I'm looking forward 
to the second panel because, as I read the written testimony, I 
can already see the liability chase. In one step, it's like a 
bit of a Texas two-step: Oh, yeah, we're responsible, but. BP 
says Transocean, United States says Halliburton.
    So I can see the liability chase that's going to go on. So 
I'm looking forward to that second panel to see who's going to 
fess up to what.
    Let me ask you, Mr. Danenberger. I understand you left MMS 
a year ago, is that right?
    Mr. Danenberger. January, this January.
    Senator Menendez. Oh, January this year, OK. Thank you for 
your service.
    I wonder. The Montara wellhead explosion off the coast of 
Australia in 2009, it spilled for 105 days. It leaked between 
1.2 and 9 million gallons of oil. Based upon the testimony we 
received from MMS last year, it seems MMS simply dismissed the 
spill as something that could not occur in U.S. waters. Now 
it's happened.
    Did MMS learn anything from this accident?
    Mr. Danenberger. That investigation, like this one, is 
still going on. As a matter of fact, they just finished the 
hearings 4 days before this incident occurred. So there are 
still lessons to be learned there. There are some similarities 
in that there is a failure of well integrity in both 
situations. I think there needs to be renewed emphasis on the 
well integrity work.
    Senator Menendez. You submitted, I guess on a voluntary 
basis, to the commission in the Montara a statement; is that 
correct?
    Mr. Danenberger. Yes.
    Senator Menendez. In it you said, among other things I 
found to be very interesting, it says: ``This incident appears 
to have been entirely preventable if internationally accepted 
practices were followed.'' Is that true in the case of the 
situation here?
    Mr. Danenberger. It may be. We have to find out more. The 
main point there with the Montara blowout was that they didn't 
have a secondary barrier in the production casing. So that's 
internationally recognized and it was going to be in place 
here, but apparently it never happened.
    Senator Menendez. Dr. Beck, the blowout preventer as I 
understand it--correct me if I'm wrong--had supposedly multiple 
redundancies, right?
    Mr. Beck. Correct.
    Senator Menendez. Yet none of them worked; is that a fair 
statement?
    Mr. Beck. That I think is a fair statement.
    Senator Menendez. So we have multiple redundancies. It's 
not just a singular thing that's going to work to create the 
safety. Multiple redundancies. We're told that, oh well, don't 
worry because if one doesn't work another one will, and if that 
one doesn't work another one will. None of them worked. None of 
them worked.
    So, Mr. Danenberger, when MMS goes ahead and does testing, 
can you give me a sense of the testing? How is it that the 
testing always seems to pass and yet when it was needed it 
failed?
    Mr. Danenberger. All the components of the blowout 
preventer stack that have to hold pressure are pressure- tested 
during these blowout preventer tests and charts are made that 
show the pressure holding, and they're certified. So it's----
    Senator Menendez. This is a test that in retrospect now is 
an appropriate test to really judge whether or not under these 
set of circumstances it will operate as it's supposed to? Is it 
something that should be----
    Mr. Danenberger. It's an appropriate test. Whether more 
needs to be done, we'll have to learn that.
    Senator Menendez. One final question. Dr. Beck, as I 
understand it, current safety and environmental regulations 
don't differentiate between deep and shallow water development. 
Should there be more stringent regulations for deepwater 
development?
    Mr. Beck. Senator, I would defer that to Mr. Danenberger in 
terms of----
    Senator Menendez. All right. Mr. Danenberger, can you 
answer that question for me?
    Mr. Danenberger. The operations are similar in many 
circumstances, particularly with regard to well integrity, and 
there are some differences in the regulations. Whether there 
should be a separate set of regulations or a separate section 
for deepwater, I think that merits consideration.
    Senator Menendez. Thank you, Mr. Chairman.
    The Chairman. Senator Risch.
    Senator Risch. Thank you, Mr. Chairman. Thank you for 
holding this hearing.
    Gentlemen, I have just one question for you. I come at this 
with a couple of premises. First of all, we're going to 
continue to develop oil wells in the Gulf. I don't think 
there's any question about that. It's necessary. Fourty years 
ago on the first Earth Day, the big issue was stopping nuclear 
power, and they were incredibly successful and stopped nuclear 
power, and as a result of that, of course, we are much more 
reliant today on fossil fuels than what we were. We're going to 
continue to be like that as we drift away from that, and this 
committee I think, as everyone on this committee, is committed 
to move from fossil fuels. But it's going to take some time, 
there's no question about it.
    When you have human activity like this, where you have a 
highly technical and highly sophisticated process of developing 
a deepwater well, accidents are going to happen. The thing that 
has struck me, aside from the tragedy of this--and I think 
everyone would concur that this is an awful situation--but it 
seems to me that we have been totally unprepared to respond to 
this. Knowing the Federal Government as I do and the 
bureaucracy as I do, that doesn't--it really doesn't surprise 
me, that the government is not able to respond to this.
    But it seems to me that the industry itself has the 
expertise, has the technology, has the engineers, that they 
should be able to respond to this better. Now, I know that 
there was some concerted effort to get the best minds together 
to try to resolve this, but it would seem to me that some type 
of an agency--and I'm thinking of a private agency--that brings 
together all of the companies that are doing this kind of 
exploration and production, would be very beneficial to them, 
because this is a problem--this isn't just BP's problem. This 
is an industry problem that everyone's going to pay the price 
for for a long time, along with the American consumer.
    So my question to you is, what do you think about some type 
of a private agency, obviously overseen by the Federal 
Government or that sort of thing, that provides the technical 
help when something like this happens to respond quickly and to 
put the best minds together they can to try to resolve this? 
Mr. Beck, could we start with you?
    Mr. Beck. Senator, in terms of a private agency, there are 
so many operators drilling wells in the Gulf, each of them 
needing a staff to be able to do the types of responses that 
you're talking about. I think a private agency would turn into 
an extremely large organization to be able to service all of 
those individual companies, if I understand your premise here 
in terms of a centralized response unit.
    The industry is very good at sharing technical information. 
We have societies, technical societies that publish large 
amounts of papers that people read and digest what's happening 
technically. But there is no central clearinghouse for assuring 
that everybody knows that information.
    Senator Risch. It seems to me that a central clearinghouse 
might work better. I mean, the response right now, I don't 
think anybody is satisfied with the way the industry is 
coordinating a response to this.
    Mr. Danenberger, I'd like to hear your response.
    Mr. Danenberger. I think in terms of a response, I really 
have a hard time finding a lot of fault. Every option in terms 
of the intervention and trying to stop the flow hasn't worked, 
but every possibility is being tried in terms of actuating the 
existing equipment or trying new equipment and concepts. So I 
think that's been very good myself.
    Senator Risch. What's the exit strategy here? What is going 
to work? Or what's the path to get there? I mean, obviously you 
can't tell me what's going to work, but I'm looking for a path 
to get to an end game, because there's got to be an end game 
here.
    Mr. Danenberger. The relief well will work and I think the 
chances are good that the well will be killed before the relief 
well is called on to complete the job.
    Senator Risch. Gentlemen, thank you very much.
    Mr. Chairman, I'm less than satisfied with those answers, 
but thank you.
    The Chairman. All right. Senator Wyden.
    Senator Wyden. Thank you, Mr. Chairman.
    Mr. Danenberger, you spent decades at the lead Federal 
agency in this area, the Minerals Management Service, the key, 
particularly in terms of offshore oil drilling, before your 
retirement in January. The agency allowed rigs like Deepwater 
Horizon to drill with near certainty that blowouts would occur, 
without adequate backup devices. Why?
    Mr. Danenberger. I think I'm not really sure about the 
question. There were good backup capabilities----
    Senator Wyden. They weren't required, were they?
    Mr. Danenberger. Yes, they were required to have a backup 
actuation system, which in this case was the remotely operated 
vehicle. It performed its function. It's just there were some 
other issues----
    Senator Wyden. So the agency you're saying required these, 
enforced the regulations, and they just didn't work? Or what 
happened?
    Mr. Danenberger. Yes, they were required to have a backup 
actuation capability, not an acoustic backup----
    Senator Wyden. Pardon me?
    Mr. Danenberger. They're required to have a backup 
actuation capability, which doesn't appear to have been the 
problem.
    Senator Wyden. But they weren't required to have a backup 
capability that worked, were they?
    Mr. Danenberger. The backup worked. It was just the stack--
it did its job. It's just the stack was either damaged or 
unable to perform the function when it was activated by the 
backup ROV.
    Senator Wyden. In 2007 you co-authored a study of blowouts 
and it's entitled ``Absence of Fatalities in Blowouts 
Encouraging; an MMS Study of Offshore Incidents'' in the 
previous decade. It strikes me that that title is instructive 
because, though not every blowout ends in tragedy, it turns out 
that blowouts and fatalities are not exactly absent in oil and 
gas drilling.
    So again, my question is, when you're putting out these 
studies, how can one conclude that Minerals Management is doing 
its job to ensure that adequate preventive activities are 
taking place, when you're saying, shoot, absence of problems 
are what people ought to be thinking about here?
    Mr. Danenberger. The study showed an improvement in the 
blowout record and performance. So I think that's what that 
title was reflecting.
    Senator Wyden. Was it fair to say that there were an 
absence of these problems? Because to me that's a signal, Mr. 
Danenberger, from the lead Federal agency that people really 
don't have to sweat it in this area.
    To me--Mr. Chairman, I'd like to put into the record as 
well this particular study, because it looks, for example, at 
the number of blowouts, for example, in these deepwater 
situations, and you sure can't conclude that there is an 
absence here. For wells in water deeper than 1,000 feet, 
there's a blowout once for every 499 wells. People who are 
riding on airplanes aren't going to say it's acceptable to have 
a tire blowing out every 500 takeoffs, and yet the lead Federal 
agency is basically telling everybody they really don't have to 
sweat the safety concerns here, and I don't think that is what 
a lead Federal safety agency ought to be doing.
    By the way, Mr. Danenberger, when you talk about the 
question of financial oversight, we had the Inspector General 
do a report, as you will recall, that I asked for with respect 
to financial improprieties, and it seems to me there are some 
pretty significant safety gaps at this agency that need to be 
corrected as well.
    I want to give you the last word, Mr. Danenberger.
    Mr. Danenberger. The purpose of studies like that is not to 
say there aren't problems. It's to report on the record, and 
that was the purpose of that study. It was a 15-year period. 
There was one fatality from a blowout that didn't have anything 
to do with deepwater drilling. Most of the blowouts cited are 
not blowouts that you would consider--that the average person 
would think of as a blowout. It was just a short loss of well 
control, less than a day, and it was controlled either with 
blowout preventer equipment or other immediately available 
options.
    Senator Wyden. Mr. Chairman, I hope colleagues will take a 
look at this study, because what this study is all about is 
sending a message that there really are not the safety concerns 
in this industry that the American people now full well exist.
    Thank you, Mr. Chairman.
    The Chairman. All right. We have four other Senators who 
have not asked questions of this panel yet. Let me call on 
Senator Lincoln.
    Senator Lincoln. Thank you, Mr. Chairman, and a special 
thanks to you and Senator Murkowski for holding such an 
important hearing on the tragedy that's taken place in the Gulf 
of Mexico. While I think it's clear to many of us that domestic 
oil production is critical to our national security, so is the 
safety of our domestic oil production, and that's what we're 
here today to talk about. It's imperative that we get some 
answers as to what happened, what the response has been, and 
how another accident like this one in the Gulf can be 
prevented. We appreciate you gentlemen being here today to help 
us answer some of those questions. We appreciate your 
expertise.
    I'm not sure how many of my questions have been addressed, 
as I was absent for a little bit. But I would like to ask Dr. 
Beck, in your testimony you state that the blowout preventer 
valves were operated by hydraulic pressure and that applying 
hydraulic pressure reliability at a water depth of 5,000 feet 
can be a very complicated task and is an engineering marvel in 
itself. What are the differences in how blowout preventers are 
installed and, more importantly, tested, as well as operated, 
at deepwater levels? Do you believe that the blowout preventers 
are any less reliable in deepwater than they are in the more 
shallow water? What's the testing for all of that?
    Mr. Beck. Senator, as I said in my introduction, I do not 
portray myself as a deepwater drilling expert. So the issues 
with specifics on the deepwater BOP stacks I have not dealt 
with in my career. So I would decline to speak about specifics 
that are going on in the testing and the installation of those. 
There are much better experts than me to address that.
    Senator Lincoln. Are they tested at those levels?
    Mr. Beck. The BOP stacks are tested repeatedly on 1-day 
intervals.
    Senator Lincoln. At 5,000 feet?
    Mr. Beck. On the sea floor, I believe. But once again, I'm 
stretching out of my expertise. But it's a very difficult task 
to retrieve a BOP stack off of the sea floor, so maintenance 
work and testing work should be done in place.
    Senator Lincoln. Right. But you don't know that it is?
    Mr. Beck. I don't know the specifics of how that's 
accomplished.
    Senator Lincoln. I just think it's important for us to know 
that if these are the technologies that we're depending on, 
that they've been tested in the circumstances that they're 
being used.
    Just to Mr. Danenberger: As you well know, in 2000 MMS 
issued a report that recommended deepwater drillers be 
installed with remote control shutoff devices. However, in 2003 
I believe MMS determined that these devices were not essential 
and therefore not required. Some reports claim that MMS based 
these decisions on complaints from some of the drilling 
companies in terms of cost: too expensive, not always reliable.
    In your testimony you dispute that costs were discussed in 
that decision from MMS and state other concerns led to the 
decision. Do you believe a remote control shutoff switch would 
have made a difference in this accident, and do you believe 
that MMS should review this decision and make remote shutoff 
switches mandatory, as they do in Norway and Brazil?
    Mr. Danenberger. They had backup capabilities on the 
Deepwater Horizon that should have actuated the blowout 
preventer system. So I don't think the problem was the absence 
of an acoustic backup. However, I think that's something that 
merits further review as to whether it would provide any 
advantages in the future. The ROV system has been reliable when 
tested and attempted.
    Senator Lincoln. The remote shutoff?
    Mr. Danenberger. Yes, shutting in with the remotely 
operated vehicle, which is presently used by most of the rigs 
in the Gulf.
    Senator Lincoln. So you're not necessarily saying that it 
would have been a difference in this, but you do think it 
should be further reviewed?
    Mr. Danenberger. Yes.
    Senator Lincoln. Thank you.
    In the testimony as well, you state that 18 of the 39 
blowouts from the years 1992 to 2006 involved cementing 
operations. I don't know--I know Senator Wyden brought some 
issues from the letter there. But you go on to say that an 
industry standard should be developed to address cementing 
problems, how they can be prevented, and the actions that 
should be taken. Would you care to elaborate on that, on the 
need for industry standards for cementing in offshore drilling, 
and what role do you believe that cementing may have played in 
this accident?
    Mr. Danenberger. Possibly played a significant role. We 
don't know what happened yet. But that should have been a 
secure wellbore with no influx possible at that point. So there 
was some failure, and quite possibly the cementing system. I 
just think the record on well integrity points to some problems 
with cementing operations that require further review and 
perhaps standardization.
    Senator Lincoln. So there are no standards currently?
    Mr. Danenberger. There are standards, more for the makeup, 
composition, but not the real fault tree, like if this happens 
I'll do this, that type of analysis.
    Senator Lincoln. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Stabenow.
    Senator Stabenow. Thank you, Mr. Chairman.
    In the interest of time, I would just ask one question, but 
I would first preface that we all understand that this was a 
horrible disaster and the most important thing to remember is 
there are 11 lives that were lost as well as the catastrophe 
economically and environmentally.
    Mr. Danenberger, I just have one question. You had a series 
of recommendations regarding an independent commission, to 
streamline regulations, so that they can focus more on safety, 
expanding training. Then you said that we need standards for 
best practices. I'm very surprised that today we don't 
currently have standards for best practices. Are you suggesting 
we don't have standards for best practices?
    Mr. Danenberger. There are many standards for best 
practices, over 100 incorporated in the MMS regulations. There 
are just a couple areas where maybe more work should be done. 
One we just mentioned, cementing, and maybe some more work on 
certain BOP components.
    Senator Stabenow. I think, Mr. Chairman, I think probably 
the American people would have assumed we would have had 
standards for best practices in all of these areas. Certainly 
if we don't, we need to.
    Thank you.
    The Chairman. Senator Udall.
    Senator Udall. Thank you, Mr. Chairman. I'll also be short 
and ask one question. I do associate myself with all the 
remarks this morning from my colleagues on both sides of the 
aisle.
    Mr. Danenberger, I appreciate your comments in your written 
statement and I look forward to reading it more exhaustively, 
and your support and, if you will, defense of most of the 
employees at MMS. That's true, but there's also been a couple 
of cases that I believe you're aware of where MMS has 
demonstrated its close and sometimes inappropriate relationship 
with industry, most notably in the Denver office. As a Colorado 
Senator, it's on the forefront of my mind.
    MMS collects billions of dollars in royalties from oil and 
gas lease sales every year, but it's also charged with 
regulating the safety and environmental practices of the 
industry. Those two roles, you could argue, contradict each 
other, come into conflict. Can you comment on this mixed role 
that MMS plays as both the advocate and the regulator for the 
oil and gas industry?
    Mr. Danenberger. I think it's something that is probably 
going to be looked at, and that's a reasonable--something 
that's reasonable for your committee certainly to look at, 
whether we should have a truly independent safety and pollution 
prevention regulator that's separate from the resource 
management and royalty collection function. I think that 
concept might merit further attention.
    The Chairman. Senator Shaheen.
    Senator Shaheen. Thank you, Mr. Chairman. I also would like 
to thank our panelists for being here, especially you, Mr. 
Danenberger, because I think your knowledge of MMS is very 
helpful to this committee.
    My question is for you. I would like to follow up on the 
issue raised by Senator Lincoln. She was asking about the 
cement that's used to keep oil and gas from bubbling to the 
surface and exploding during drilling. It's my understanding 
that in 2000 MMS asked the industry for advice on how to deal 
with problems with that cement used in the drilling. I guess 
I'd like to ask you, do you think it should take a decade or 
longer to fix a problem MMS has identified, and in your 
experience with the agency are these types of delays common or 
have they occurred more recently since MMS has begun relying 
more on industry self- regulation?
    Mr. Danenberger. I think that the issues associated with 
cementing have been under discussion for a while and there have 
been some changes made in practices and in the regulations. I 
think clearly more needs to be done and that should be a focus 
of attention right now.
    Senator Shaheen. Can you just--do you know what the 
regulation is governing that cement use and how the industry 
was involved with developing that regulation?
    Mr. Danenberger. Yes. It was developed by the MMS. That 
regulation tells when you have to cement, how much cement you 
have to use, how high up into the annulus, how long you have to 
wait on cement, how you pressure-test the casing after the 
cement is set. So that is well covered. It's just from my 
experience in looking at the Montara blowout--and I don't know 
what the situation is with this one--there wasn't a good 
understanding on the part of some of the workers as to what 
actions they should take when certain signals were given that 
maybe they didn't have a good cement job. So that's kind of a 
fault tree assessment that we may need in a standard.
    Senator Shaheen. Given that the training is now done by the 
industry, is that something that should be incorporated into 
the industry training?
    Mr. Danenberger. Yes, I think there should be--there are 
certain specialists that do the cementing, but I think the 
primary operator's representatives and drilling contractor 
people should have a pretty good familiarity with those 
operations. Cementing is not currently required as part of the 
overall well control training program.
    Senator Shaheen. Thank you.
    The Chairman. I believe that everyone's had a chance to ask 
questions. We appreciate both of you testifying today very much 
and we may call on you in the future for additional expert 
advice on this issue.
    Our second panel is composed of witnesses from the three 
companies that are most immediately involved in the operation 
on the Deepwater Horizon drilling rig in the days and hours 
leading up to this catastrophic failure. BP is the integrated 
exploration and production company that was ultimately the 
primary operator of the well being drilled. Its representative 
on this panel is Lamar McKay, President, Chairman and President 
of BP America.
    Transocean Limited was the owner and operator of the 
Deepwater Horizon drilling rig that exploded on April 20. It is 
the primary offshore drilling contractor in the deepwaters of 
the Gulf of Mexico, providing rigs to many of the deepwater 
exploration and development wells, and its representative on 
this panel is Steven Newman, its Chief Executive Officer.
    Halliburton is the oilfield services provider that was 
subcontracted to provide a range of services on the Deepwater 
Horizon, including the cement and casing program of the well 
that experienced the disastrous blowout. Its representative on 
this panel is Tim Probert, the President of Global Business 
Lines and Chief Health, Safety and Environment Officer.
    As I indicated before, we're asking all witnesses to please 
be sworn today. If each of you would stand, raise your right 
hand, I'll administer the oath to you. Do you solemnly swear 
that the testimony you're about to give to the Senate Committee 
on Energy and Natural Resources shall be the truth, the whole 
truth, and nothing but the truth?
    Mr. McKay. I do.
    Mr. Newman. I do.
    Mr. Probert. I do.
    The Chairman. Please be seated.
    As with the previous panel, your entire statement, written 
statement, will be made part of the record, and we would ask 
that each of you take 5 or 6 minutes to make the main points 
that you think we need to understand, starting with you, Mr. 
McKay, and then Mr. Newman, and then Mr. Probert. Go right 
ahead.

 STATEMENT OF LAMAR MCKAY, PRESIDENT AND CHAIRMAN, BP AMERICA, 
                              INC.

    Mr. McKay. Thank you, Chairman. Chairman Bingaman, Ranking 
Member Murkowski, members of the committee: My name is Lamar 
McKay and I am the Chairman and President of BP America.
    We have experienced a tragic series of events. 3 weeks ago 
tonight, 11 people were lost in an explosion and a fire aboard 
the Transocean Deepwater Horizon and 17 others were injured. My 
deepest sympathies go out to the families and friends who have 
suffered such a terrible loss and to those in the Gulf Coast 
communities whose lives and livelihoods are being impacted.
    Over the last few days I've seen the response firsthand and 
I've talked with the men and women on the front line. There is 
a deep and steadfast resolve to do all we humanly can to stop 
the leak, contain the spill, and to minimize the damage 
suffered by the environment and the people of the Gulf Coast.
    As a responsible party under the Oil Pollution Act, we will 
carry out our responsibilities to mitigate the environmental 
and economic impacts of this incident. Our efforts are part of 
a unified command that was established within hours of the 
accident and provides a structure for our work with Departments 
of Homeland Security and Interior, as well as Defense, Energy, 
OSHA, and other Federal agencies, as well as affected State and 
local governments and Transocean.
    We are grateful for the involvement of President Obama and 
members of his Cabinet and for the leadership, direction, and 
resources they have provided. We are also grateful to the 
Governors, Congressional members, State agencies, and local 
communities of Mississippi, Alabama, Louisiana, Texas, and 
Florida.
    I want to underscore that the global resources of BP are 
committed to this effort and have been from the outset. Nothing 
is being spared. Everyone understands the enormity of what lies 
ahead and is working to deliver an effective response at the 
wellhead, on the water, and at the shoreline.
    Before I describe our round-the-clock efforts to respond to 
this series of events, I want to reiterate our commitment to 
find out what happened. Figuring out what happened and why it 
happened is a complex process. We are cooperating with the 
joint investigation by the Departments of Homeland Security and 
Interior and investigations by Congress. In addition, BP has 
commissioned an internal investigation whose results we plan to 
share so we can all learn from these terrible events.
    I want to be clear. It's inappropriate to draw any 
conclusion before all the facts are known. As we speak, our 
investigation team is locating and analyzing data, interviewing 
available witnesses, and reviewing and assessing evidence. 
Today I think it's important to give you and the American 
public an idea of the questions we are asking. There are really 
two key sets of questions here and we're actively exploring 
both of them. First, what caused the explosion and fire on 
board Transocean's Deepwater Horizon rig? Second, why did 
Transocean's blowout preventer, the key fail-safe mechanism, 
fail to shut in the well and release the rig?
    With respect to the first question, the key issue we are 
examining is how hydrocarbons could have entered the wellbore. 
BP as the leaseholder and the operator of the well hired 
Transocean to drill that well. Transocean as owner and operator 
of the Deepwater Horizon drilling rig had responsibility for 
the safety of drilling operations. We don't know yet precisely 
what happened on the night of April 20, but what we do know is 
that there were anomalous pressure test readings prior to the 
explosion. These could have raised concerns about well control 
prior to the operation to replace mud with seawater in the 
well, in preparation for setting of the cement plug.
    Through our investigation we hope to learn more about what 
happened and what was done in the hours before the explosion. 
Apart from looking at the causes of the explosion, we are also 
examining why the blowout preventer, the BOP as it is called, 
did not work as the ultimate fail- safe to seal the well and 
prevent an oil spill. Clearly the BOP remains a critical piece 
of equipment throughout all operations to ensure well control 
up until the time the well is sealed with a cement plug and is 
temporarily abandoned.
    We will continue full speed ahead with our investigation, 
keeping all lines of inquiry open, until we find out what 
happened and why. At the same time, we are fully engaged in 
efforts to respond to these events. Our subsea efforts to stop 
the flow of oil and secure the well involve four parallel and 
concurrent strategies. Activating the BOP would be the 
preferred course since it would stop or diminish the flow at 
the source. Unfortunately, this has proved unsuccessful so far.
    We are working on a containment system which will place 
large enclosures or containment chambers atop the leaks and 
conduct flow to a ship at the surface. There have been 
technical challenges, however. Engineers are now working to see 
if these challenges can be overcome.
    We have begun to drill the first of two relief wells 
designed to intercept and permanently secure the original well. 
We began drilling the first relief well on May 2 and expect to 
begin drilling the second relief well later this week. This 
operation could take approximately 3 months.
    A fourth effort, known as a ``top kill,'' uses a tube to 
inject a mixture of multi-sized particles directly into the 
blowout preventers to cap the well. It's a proven industry 
technique and it's been used worldwide, but never in 5,000 feet 
of water.
    On the open water a fleet of about 300 response vessels has 
been mobilized and about one million feet of boom is now in 
place, with more than a million more feet available. We ar also 
attacking the spill area with Coast Guard-approved 
biodegradable dispersants, which are being applied from planes 
and boats. We have also developed and tested a technique to 
apply dispersant at the leak point on the seabed. The EPA is 
carefully analyzing options for this technique's further use.
    To protect the shoreline, we are implementing what the U.S. 
Coast Guard has called the most massive shoreline protection 
effort ever mounted. 13 staging areas are in place and over 
4,000 volunteers have already been trained.
    We recognize that there are both environmental and economic 
impacts. BP will play all necessary cleanup costs and is 
committed to paying legitimate claims for other loss and 
damages caused by the spill.
    Tragic and unforeseen as this accident was, we must not 
lose sight of why BP and other energy companies are operating 
in the offshore, including the Gulf of Mexico. The Gulf 
provides one in four barrels of oil produced in the United 
States, a resource our economy requires. BP and the entire 
energy industry are under no illusions about the challenge we 
face. We know that we will be judged by our response to this 
crisis. We intend to do everything in our power to bring this 
well under control, to mitigate the environmental impact of the 
spill, and to address economic claims in a responsible manner. 
No resource available to this company will be spared. I can 
assure you that we and the entire industry will learn from this 
terrible event and emerge from it stronger and safer.
    Thank you for the opportunity to appear before you today. 
I'd be happy to answer your questions.
    [The prepared statement of Mr. McKay follows:]

Prepared Statement of Lamar McKay\1\, Chairman & President, BP America, 
                                  Inc.
---------------------------------------------------------------------------
    \1\ The data described throughout this testimony is accurate to the 
best of my knowledge as of 8am Monday, May 10, 2010, when this 
testimony was submitted. The information that we have continues to 
develop as our response to the incident continues.
---------------------------------------------------------------------------
    Chairman Bingaman, Ranking Member Murkowski, members of the 
committee, I am Lamar McKay, Chairman and President of BP America.
    We have all experienced a tragic series of events.
    I want to be clear from the outset that we will not rest until the 
well is under control. As a responsible party under the Oil Pollution 
Act, we will carry out our responsibilities to mitigate the 
environmental and economic impacts of this incident.
    We--and, indeed, the entire energy sector as a whole--are 
determined to understand what happened, why it happened, take the 
learnings from this incident, and make the changes necessary to make 
our company and our industry stronger and safer. We understand that the 
world is watching and that we and our industry colleagues will be 
judged by how we respond to these events.
    Three weeks ago tonight, eleven people were lost in an explosion 
and fire aboard the Transocean Deepwater Horizon drilling rig, and 
seventeen others were injured. My deepest sympathies go out to the 
families and friends who have suffered such a terrible loss and to 
those in Gulf Coast communities whose lives and livelihoods are being 
impacted.
    This was a horrendous accident. We are all devastated by this. It 
has profoundly touched our employees, their families, our partners, 
customers, those in the surrounding areas and those in government with 
whom we are working. There has been tremendous shock that such an 
accident could have happened, and great sorrow for the lives lost and 
the injuries sustained. The safety of our employees and our contractors 
and the safety of the environment are always our first priorities.
    Even as we absorb the human dimensions of this tragedy, I want to 
underscore our intense determination to do everything humanly possible 
to minimize the environmental and economic impacts of the resulting oil 
spill on the Gulf Coast. From the outset, the global resources of BP 
have been engaged. Nothing is being spared. We are fully committed to 
the response.
    And from the beginning, we have never been alone. On the night of 
the accident, the Coast Guard helped rescue the 115 survivors from the 
rig. The list of casualties could easily have been longer without the 
professionalism and dedication of the Coast Guard.
    Even before the Transocean Deepwater Horizon sank on the morning of 
April 22nd, a Unified Command structure was established, as provided by 
federal regulations. Currently led by the National Incident Commander, 
Admiral Thad Allen, the Unified Command provides a structure for BP's 
work with the Coast Guard, the Minerals Management Service and 
Transocean, among others.
    Immediately following the explosion, in coordination with the 
Unified Command, BP began mobilizing oil spill response resources 
including skimmers, storage barges, tugs, aircraft, dispersant, and 
open-water and near shore boom.
    Working together with federal and state governments under the 
umbrella of the Unified Command, BP's team of operational and technical 
experts is coordinating with many agencies, organizations and 
companies. These include the Departments of Energy, Interior, Homeland 
Security and Defense, National Oceanic and Atmospheric Administration 
(NOAA), US Fish & Wildlife Service (USFW), National Marine Fisheries 
Service (NMFS), EPA, OSHA, Gulf Coast state environmental and wildlife 
agencies, the Marine Spill Response Corporation (an oil spill response 
consortium), as well as numerous state, city, parish and county 
agencies.
    As Coast Guard Rear Admiral Mary Landry noted on April 28: ``BP is 
being appropriately forward leaning in bringing all the resources to 
bear to control this spill.''
    The industry as a whole has responded in full support. Among the 
resources that have been made available:

   Drilling and technical experts who are helping determine 
        solutions to stopping the spill and mitigating its impact, 
        including specialists in the areas of subsea wells, 
        environmental science and emergency response;
   Technical advice on blowout preventers, dispersant 
        application, well construction and containment options;
   Additional drilling rigs to serve as staging areas for 
        equipment and responders, more remotely operated vehicles 
        (ROVs) for deep underwater work, barges, support vessels and 
        additional aircraft, as well as training and working space for 
        the Unified Command.
The actions we're taking
    As Chairman and President of BP America, I am part of an executive 
team that reports directly to our Global CEO, Tony Hayward. I am BP's 
lead representative in the US and am responsible for broad oversight 
and connectivity across all of our US-based businesses.
    BP itself has committed tremendous global resources to the effort. 
Among many other tasks, they are helping to train and organize the more 
than 10,000 citizen volunteers who have come forward to offer their 
services.
    Indeed, we have received a great many offers of help and 
assistance. The outpouring of support from government, industry, 
businesses and private citizens has truly been humbling and inspiring. 
It is remarkable to watch people come together in crisis.
    Our efforts are focused on two overarching goals:

   Stopping the flow of oil; and
   Minimizing the impact on the environment.
Subsea efforts to secure the well
    Our subsea efforts to stop the flow of oil and secure the well have 
involved four concurrent strategies:

   Working to activate the blow-out preventer (BOP) on the well 
        using submersible ROVs. This would be the preferred course of 
        action, since it would stop or diminish the flow at the source 
        on the ocean floor. Unfortunately, this effort has so far not 
        proved successful.
   Work continues on a subsea oil recovery plan using a 
        containment system, placing large enclosures or containment 
        chambers atop the leaks and conducting flow from the ocean 
        floor to a ship at the surface through a pipe. As we 
        anticipated, however, there have been technical challenges. 
        This system has never been used before at 5,000 feet. Engineers 
        are now working to see if these challenges can be overcome.
   We have begun to drill the first of two relief wells to 
        permanently secure the well. These wells are designed to 
        intercept the original MC252 #1 well. Once this is 
        accomplished, a specialized heavy fluid will be injected into 
        the well bore to stop the flow of oil and allow work to be 
        carried out to permanently cap the existing well. On Sunday, 
        May 2nd, we began drilling the first of these wells. A second 
        drillship will mobilize to the area to begin the second relief 
        well later this week. This relief well operation could take 
        approximately three months.
   A fourth effort is known as a ``top kill.'' It is a proven 
        industry technique for capping wells and has been used 
        worldwide, but never in 5000 feet of water. It uses a tube to 
        inject a mixture of multi-sized particles directly into the 
        blowout preventer. The attempt to do this could take two or 
        three weeks to accomplish.

    We have succeeded in stopping the flow from one of the three 
existing leak points on the damaged well. While this may not affect the 
overall flow rate, it should reduce the complexity of the situation to 
be dealt with on the seabed.
Attacking the spill
    We are attacking the spill on two fronts: in the open water and on 
the shoreline, through the activation of our pre-approved spill 
response plans.

   On the water On the open water, we have mobilized a fleet of 
        294 response vessels, including skimmers, storage barges, tugs, 
        and other vessels. The Hoss barge, the world's largest skimming 
        vessel, has been onsite since April 25. In addition, there are 
        15, 210-foot Marine Spill Response Corporation Oil Spill 
        Response Vessels, which each have the capacity to collect, 
        separate, and store 4000 barrels of oil. To date, over 97,000 
        barrels of oil and water mix have been recovered.
    Also on the open water, we are attacking the spill area with Coast 
Guardapproved biodegradable dispersants, which are being applied from 
both planes and boats. Dispersants are soap-like products which help 
the oil to break up and disperse in the water, which, in turn, helps 
speed natural degradation.
    Thirty-seven aircraft, both fixed-wing and helicopters, are now 
supporting the response effort. Over 444,000 gallons of dispersant have 
been applied on the surface and more than 180,000 gallons are 
available. Typically, about 2,100 gallons of dispersant is needed to 
treat 1,000 barrels of oil.
    To ensure that adequate supplies of dispersant will be available 
for surface and subsea application, the manufacturer has stepped up the 
manufacturing process, and existing supplies are being sourced from all 
over the world. The cooperation of industry partners has been superb 
and that is deeply, deeply appreciated.
    We have also developed and tested a technique to apply dispersant 
at the leak point on the seabed. As far as we are aware, this is the 
first documented attempt to apply dispersant at the source. Early 
evidence suggests that the test has been impactful, and we are working 
with NOAA, EPA, and other agencies to refine and improve the technique. 
EPA is carefully monitoring the impact of dispersant and is analyzing 
its potential impact on the environment and options for possible future 
use.
Actions to protect the shoreline
    Near the shoreline, we are implementing with great urgency oil 
spill response contingency plans to protect sensitive areas. According 
to the Coast Guard, the result is the most massive shoreline protection 
effort ever mounted.
    To ensure rapid implementation of state contingency plans, we 
announced last week that we would make available grants of $25 million 
to Louisiana, Mississippi, Alabama, and Florida.
    To date, we have about one million feet of boom deployed in an 
effort to contain the spill and protect the coastal shoreline, and 
another 1.3 million feet are available. The Department of Defense is 
helping to airlift boom to wherever it is needed across the Gulf coast.
    Incident Command Posts have been or are being established at:

   Alabama: Mobile;
   Florida: St. Petersburg;
   Louisiana: Robert and Houma.

    Thirteen staging areas are also in place to help protect the 
shoreline:

   Alabama: Theodore, Orange Beach and Dauphin Island;
   Florida: Panama City and Pensacola.
   Louisiana: Grand Isle, Venice, Shell Beach, Slidell, 
        Cocodrie;
   Mississippi: Pascagoula, Biloxi and Pass Christian;

    Highly mobile, shallow draft skimmers are also staged along the 
coast ready to attack the oil where it approaches the shoreline.
    Wildlife clean-up stations are being mobilized, and pre-impact 
baseline assessment and beach clean-up will be carried out where 
possible. Rapid response teams are ready to deploy to any affected 
areas to assess the type and quantity of oiling, so the most effective 
cleaning strategies can be applied.
    A toll-free number has been established to report oiled or injured 
wildlife, and the public is being urged not to attempt to help injured 
or oiled animals, but to report any sightings via the toll-free number.
    Contingency plans for waste management to prevent secondary 
contamination are also being implemented.
    Over 10,000 personnel are now engaged in the response, including 
shoreline defense and community outreach.
    Additional resources, both people and equipment, continue to arrive 
for staging throughout the Gulf states in preparation for deployment 
should they be needed.
Communication, community outreach, & engaging volunteers
    We are also making every effort to keep the public and government 
officials informed of what is happening.
    BP executives have regularly briefed the President's Cabinet and 
National Security Council team, members of Congress, the governors and 
attorneys general of the Gulf Coast states, and many local officials.
    On the ground, in the states and local communities, we are working 
with numerous organizations such as fishing associations, local 
businesses, parks, wildlife and environmental organizations, 
educational institutions, medical and emergency establishments, local 
media, and the general public.
    BP is leading volunteer efforts in preparation for shoreline clean-
up. We have and will continue to help recruit and deploy volunteers, 
many of whom are being compensated for their efforts, to affected 
areas. More than 14,000 calls from volunteers offering their help have 
been received and over 4,000 volunteers have been trained thus far.
    Volunteer activities at this time are focused on clearing the 
beaches of existing debris and placing protective boom along the 
shoreline. Our ``adopt a boom'' program is proving very successful in 
engaging local fishermen in the response. More than 600 fishing vessels 
are signed up to deploy boom and assist with the response.
    There are five BP community-outreach sites engaging, training, and 
preparing volunteers:

   Alabama: Mobile;
   Florida: Pensacola;
   Louisiana: Venice
   Mississippi: Pascagoula and Biloxi.

    A phone line has been established for potential volunteers to 
register their interest in assisting the response effort.
Coping with economic impacts
    We recognize that beyond the environmental impacts there are also 
economic impacts on the people of the Gulf Coast states. BP will pay 
all necessary clean up costs and is committed to paying legitimate 
claims for other loss and damages caused by the spill.
    We have put in place a BP Claims Process. All claimants are being 
directed to a toll-free number and a website and will be assigned to 
experienced adjusters who will assist them in making their claim.
    As an alternative, claimants can visit one of BP's Community 
Outreach Centers or claims centers.
    The process is being expedited to make immediate payments to those 
who have experienced a loss of income, while the overall claim is more 
fully evaluated. As of today, we have paid out approximately $3.5 
million.
Commitment to investigate what happened
    BP is one of the lease holders and the operator of this exploration 
well. As operator, BP hired Transocean to conduct the well drilling 
operations. Transocean owned the Deepwater Horizon drilling rig and its 
equipment, including the blowout preventer.
    The questions we all want answered are: What happened on the seabed 
and aboard the Deepwater Horizon and why did these things happen?
    A full answer to those questions will have to await the outcome of 
a joint investigation by the Departments of Homeland Security and 
Interior, investigation by Congress, and an independent internal 
investigation that BP is conducting.
    BP's investigation into the cause of this accident is being led by 
a senior BP executive from outside the affected business. The team has 
more than 40 people. The investigation is ongoing and has not yet 
reached conclusions about incident cause. We intend to share the 
results of our findings so that our industry and our regulators can 
benefit from the lessons learned.
    Investigations take time, of course, in order to ensure that the 
root cause of the failure is fully understood. But let me give you an 
idea of the questions that BP and the entire energy industry, are 
asking:

   What caused the explosion and fire?
   And why did the blowout preventer fail?

    Only seven of the 126 onboard the Deepwater Horizon were BP 
employees, so we have only some of the story, but we are working to 
piece together what happened from meticulous review of the records of 
rig operations that we have as well as information from those witnesses 
to whom we have access.
    We are looking at our own actions and those of our contractors, as 
is the Marine Board. We are looking at why the blowout preventer did 
not work because that was to be the fail-safe in case of an accident. 
The blowout preventer is a 450-ton piece of equipment that sits on top 
of the wellhead during drilling operations. It contains valves that can 
be closed remotely if pressure causes fluids such as oil or natural gas 
to enter the well and threaten the drilling rig. By closing this valve, 
the drilling crew can regain control of the well.
    Blowout preventers are used on every oil and gas well drilled in 
the world today. They are carefully and deliberately designed with 
multiple levels of redundancy and are regularly tested. If they don't 
pass the test, they are not used.
    The systems are intended to fail-closed and be fail-safe; sadly and 
for reasons we do not yet understand, in this case, they were not. 
Transocean's blowout preventer failed to operate.
    All of us urgently want to understand how this vital piece of 
equipment and its built-in redundancy systems failed and what measures 
are required to prevent this from ever happening again. In this 
endeavor, you will have the full support of BP as well as, I am sure, 
the rest of the industry.
Energy policy remains critical
    Tragic and unforeseen as this accident was, we must not lose sight 
of why BP and other energy companies are operating in the offshore, 
including the Gulf of Mexico. The Gulf is one of the world's great 
energy producing basins, providing one in four barrels of oil produced 
in the United States. That is a resource that powers America and the 
world every day, one our economy requires.
Conclusion
    But before we can think about the future, we have to deal with the 
immediate challenge of today.
    BP is under no illusions about the seriousness of the situation we 
face. In the last three weeks, the eyes of the world have been upon us. 
President Obama and members of his Cabinet have visited the Gulf region 
and made clear their expectations of BP and our industry. So have 
members of Congress, as well as the general public.
    We intend to do everything within our power to bring this well 
under control, to mitigate the environmental impact of the spill and to 
address economic claims in a responsible manner.
    Any organization can show the world its best side when things are 
going well. It is in adversity that we truly see what they are made of.
    We know that we will be judged by our response to this crisis. No 
resource available to this company will be spared. I can assure you 
that we and the entire industry will learn from this terrible event, 
and emerge from it stronger, smarter and safer.

    The Chairman. Thank you.
    Mr. Newman, go right ahead.

     STATEMENT OF STEVEN NEWMAN, CHIEF EXECUTIVE OFFICER, 
                        TRANSOCEAN, LTD

    Mr. Newman. Chairman Bingaman, Ranking Member Murkowski, 
and other members of the committee: I want to thank you for the 
opportunity to speak with you today. My name is Steven Newman 
and I am the chief executive officer of Transocean Limited. 
Transocean is the leading offshore drilling contractor, with 
more than 18,000 employees worldwide. I am a petroleum engineer 
by training and I have spent years working with and on drilling 
rigs. I have worked at Transocean for more than 15 years and I 
am incredibly proud of the contributions our company has made 
to the energy industry during that time.
    Today, however, I sit before you with a heavy heart. The 
last few weeks have been a time of great sadness and reflection 
for our company and for me personally. Nothing is more 
important to me and to Transocean than the safety of our crew 
members, and our hearts ache for the widows, parents, and 
children of the 11 crew members, including 9 Transocean 
employees, who died in the Deepwater Horizon explosion. These 
were exceptional men and we are committed to doing everything 
we can to support their families as they struggle to cope with 
this tragedy.
    Over the last few weeks, we have also seen great acts of 
courage and kindness in our colleagues and in our communities. 
That courage and kindness was embodied by the 115 crew members 
who were rescued from the Deepwater Horizon and were as worried 
about the fate of their colleagues as they were about their own 
safety. It was embodied by the brave men and women of the U.S. 
Coast Guard who provided onsite response and search and rescue 
efforts, and by the medical professionals and families and 
friends who received the injured crew members when they arrived 
on shore. It is embodied by our friends and colleagues in 
Transocean and across the industry who have rallied to help the 
families of those who were lost.
    This has been a very emotional period for all of us at 
Transocean. It has also been a period of intense activity and 
effort. Immediately after the explosion, Transocean began 
working with BP and the unified command in the effort to stop 
the flow of hydrocarbons from the well. Our finest engineers 
and operational personnel have been working with BP to identify 
and pursue options for stopping the flow as soon as possible.
    Our drilling rig, the Development Driller III, is involved 
in drilling the relief well, and our drill ship, the Discoverer 
Enterprise, is standing by on location to carry out unique oil 
recovery operations in the Gulf.
    We will continue to support BP and the unified command in 
all of these efforts. At the same time, we have been working 
hard to get to the bottom of the question that this committee 
and the American public want and deserve an answer to: What 
happened on the night of April 20, and how do we assure the 
American public that it will not happen again?
    Transocean has assembled an independent investigative team 
to determine the cause of these tragic events, a team that 
includes Transocean and industry experts. They will be 
interviewing people who have potentially helpful information 
and studying the operations and the equipment involved. Because 
the drilling process is a collaborative effort among many 
different companies, contractors, and subcontractors, the 
process of understanding what led to the April 20 explosion and 
how to prevent such an accident in the future must also be 
collaborative. Our team is working side by side with others, 
including BP and governmental agencies, and these investigative 
efforts will continue until we have satisfactory answers.
    While it is still too early to know exactly what happened 
on April 20, we do have some clues about the cause of the 
disaster. The most significant clue is that these events 
occurred after the well construction process was essentially 
complete. Drilling had been finished on April 17 and the well 
had been sealed with casing and cement. For that reason, the 
one thing we do know is that on the evening of April 20 there 
was a sudden catastrophic failure of the cement, the casing, or 
both. Without a failure of one of those elements, the explosion 
could not have occurred.
    It is also clear that the drill crew had very little, if 
any, time to react. The initial indications of trouble and the 
subsequent explosions were almost instantaneous. What caused 
that sudden violent failure? Was the well properly designed? 
Were there problems with the casing or the seal assembly? Was 
the casing properly cemented and the well effectively sealed? 
Were all appropriate tests run on the cement and the casing? 
Were the blowout preventers damaged by the surge that emanated 
from the well? Did the surge blow debris into the BOPs which 
prevented them from squeezing, crushing, or shearing the pipe? 
These are some of the critical questions that need to be 
answered in the coming weeks and months.
    Until we know exactly what happened on April 20, we cannot 
determine how best to prevent such tragedies in the future. But 
regardless of what the investigations uncover, ours is an 
industry that must put safety first. We must do so for the sake 
of our employees, for the sake of their families, and for the 
sake of people all over the world who use and enjoy and rely on 
our oceans and waterways for their sustenance.
    Thank you again for the opportunity to speak here today, 
and I'm happy to answer any questions.
    [The prepared statement of Mr. Newman follows:]

     Prepared Statement of Steven Newman, Chief Executive Officer, 
                            Transocean, Ltd
    Chairman Bingaman, Ranking Member Murkowski, and other members of 
the Committee, I want to thank you for the opportunity to speak with 
you today.
    My name is Steven Newman, and I am the Chief Executive Officer of 
Transocean, Ltd. Transocean is a leading offshore drilling contractor, 
with more than 18,000 employees worldwide. I am a petroleum engineer by 
training, I have spent considerable time working on drilling rigs and I 
have worked at Transocean for more than 15 years. I am proud of the 
Company's historical contributions to the energy industry during that 
time. Today, however, I sit before you with a heavy heart.
    The last few weeks have been a time of great sadness and reflection 
for our Company--and for me personally. Nothing is more important to me 
and to Transocean than the safety of our employees and crew members, 
and our hearts ache for the widows, parents and children of the 11 crew 
members--including nine Transocean employees--who died in the Deepwater 
Horizon explosion. These were exceptional men, and we are committed to 
doing everything we can to support their families as they struggle to 
cope with this tragedy.
    We have also seen great courage and kindness since April 20 that 
has reaffirmed our faith in the human spirit. That spirit is embodied 
by the 115 crew members who were rescued from the Deepwater Horizon and 
were as worried about the fate of their colleagues as they were about 
themselves. It is embodied by the emergency workers and friends and 
family who were waiting for the injured crew members when they arrived 
ashore. And it is embodied by the friends and colleagues who have 
rallied to help the families of those who were lost at sea.
    While this has been a very emotional period for all of us at 
Transocean, it has also been a period of intense activity and effort.
    Immediately after the explosion, Transocean began working with BP 
(in BP's role as operator/leaseholder of this well) and the ``Unified 
Command'' (which includes officials from the U.S. Coast Guard, the 
Department of the Interior's Minerals Management Service (MMS), and the 
National Oceanic and Atmospheric Administration (NOAA)) in the effort 
to stop the flow of hydrocarbons. Our finest operational personnel and 
engineers have been working with BP to identify and pursue options for 
stopping the flow as soon as possible. Our drilling rig, the 
Development Driller III, is involved in drilling the relief well at the 
site, and our drillship, the Discoverer Enterprise, is involved in the 
unique oil recovery operations in the Gulf. We will continue to support 
BP and the Unified Command in all of these efforts.
    We have also been working hard to get to the bottom of the question 
to which the Members of this Committee--and the American people--want 
and deserve an answer: What happened the night of April 20th, and how 
do we assure the American public that it will not happen again?
    Transocean has assembled an investigative team to determine what 
led to these tragic events--a team that includes dedicated Transocean 
and industry experts. They will be interviewing people who have 
potentially helpful information and studying the operations and the 
equipment involved. Our team is working side by side with others, 
including BP and governmental agencies, and these investigative efforts 
will continue until we have satisfactory answers.
    As is often the case after a tragedy of this kind, there has been a 
lot of speculation about the root cause. I believe it is premature to 
reach definitive conclusions about what caused the April 20th 
explosion, but on behalf of our Transocean employees, I feel compelled 
to respond to some of this speculation. In particular, as we seek to 
uncover what happened, it is important to understand the well 
construction process--and the roles of the various parties involved in 
an operation like the one that was taking place in the Gulf of Mexico.
    All offshore oil and gas production projects begin and end with the 
Operator. When the Operator (in this case, BP) leases a parcel of land 
on the outer continental shelf (OCS) from the U.S. government, it must 
prepare and submit detailed plans specifying where and how a well is to 
be drilled, cased, cemented and completed based on its interpretation 
of propriety data, including geologic data from seismic surveys. Once 
those plans are approved and permits are issued and work begins, the 
Operator--or leaseholder--serves as the general contractor that manages 
all of the work that is performed on its lease. In this capacity, the 
Operator hires various contractors to perform specific functions in the 
construction of the well.
    In addition, the Operator brings in various sub-contractors to 
perform specific roles. For example:

   The Operator selects a driller (in this case, Transocean), 
        which provides a vessel (called a ``rig'') from which drilling 
        operations are performed. As the name suggests, the driller is 
        also responsible for rotating the long string of drill pipe 
        with a drill bit on the end that drills a hole deeper and 
        deeper into the ocean floor. The Operator's well plan dictates 
        the manner in which the drilling is to occur, including the 
        location, the path, the depth, the process and the testing. The 
        drill bits, which are selected by the Operator, are supplied by 
        another sub-contractor.
   A key element of the drilling process is drilling mud, a 
        heavy fluid manufactured to the Operator's specifications. That 
        mud is pumped into the well hole and circulated in order to 
        hold back the pressure of the reservoir and prevent oil, gas or 
        water in that reservoir from moving to the surface through the 
        well. The mud is monitored by another sub-contractor (the mud 
        engineer) (in this instance, M-I Swaco) to detect any problems.
   As the drilling progresses, huge pipes are inserted into the 
        well to maintain the integrity of the hole that has been 
        drilled and to serve as the primary barrier against fluids 
        entering the well. This job is coordinated by the casing sub-
        contractor selected by the Operator (in this case, 
        Weatherford). In its well plan, the Operator specifies the 
        diameter and strength of each casing segment, purchases the 
        casing, and dictates how it will be cemented in place. Well 
        casing is inserted in a telescope-like manner, with each 
        successive section inside the previous one. Each casing segment 
        also includes a seal assembly to ensure pressure containment.
   After drilling is concluded, yet another area of expertise 
        comes into play. The cementing sub-contractor is responsible 
        for encasing the well in cement, for putting a temporary cement 
        plug in the top of the well, and for ensuring the integrity of 
        the cement. The purpose of this work is to seal the well to 
        make sure that the contents of the reservoir (i.e., oil and 
        natural gas) are not driven by the reservoir pressure into the 
        well. (Once drilling is complete and the well is cased and 
        cemented, it is no longer necessary to circulate drilling mud 
        through the well; at that point, the casing and cement serve to 
        control the formation pressure.) The cementing process is 
        dictated by the Operator's well plan, and the testing of the 
        cement on the Deepwater Horizon was performed by the cement 
        contractor (Haliburton in this instance) as specified and 
        directed by BP.

    Against that background, let me turn to the April 20 Deepwater 
Horizon explosion and its possible causes. What is most unusual about 
the explosion in this case is that it occurred after the well 
construction process was essentially finished. Drilling had been 
completed on April 17, and the well had been sealed with cement (to be 
reopened by the Operator at a later date if the Operator chose to put 
the well into production). At this point, drilling mud was no longer 
being used as a means of reservoir pressure containment; the cement and 
the casing were the barriers controlling pressure from the reservoir. 
Indeed, at the time of the explosion, the rig crew, at the direction of 
the Operator, was in the process of displacing drilling mud and 
replacing it with sea water.
    For that reason, the one thing we know with certainty is that on 
the evening of April 20, there was a sudden, catastrophic failure of 
the cement, the casing, or both. Therein lies the root cause of this 
occurrence; without a disastrous failure of one of those elements, the 
explosion could not have occurred. It is also clear that the drill crew 
had very little (if any) time to react. The explosions were almost 
instantaneous.
    What caused that catastrophic, sudden and violent failure? Was the 
well properly designed? Was the well properly cemented? Were there 
problems with the well casing? Were all appropriate tests run on the 
cement and casings? These are some of the critical questions that need 
to be answered in the coming weeks and months.
    Over the past several days, some have suggested that the blowout 
preventers (or BOPs) used on this project were the cause of the 
accident. That simply makes no sense. A BOP is a large piece of 
equipment positioned on top of a wellhead to provide pressure control. 
As explained in more detail in the attachment to my testimony, BOPs are 
designed to quickly shut off the flow of oil or natural gas by 
squeezing, crushing or shearing the pipe in the event of a ``kick'' or 
``blowout''.a sudden, unexpected release of pressure from within the 
well that can occur during drilling.
    The attention now being given to the BOPs in this case is somewhat 
ironic because at the time of the explosion, the drilling process was 
complete. The well had been sealed with casing and cement, and within a 
few days, the BOPs would have been removed. At this point, the well 
barriers--the cementing and the casing--were responsible for 
controlling any pressure from the reservoir.
    To be sure, BOPs are an important aspect of well control. During 
drilling, BOPs provide a secondary means of controlling pressure if the 
primary mechanisms (e.g., drilling mud) prove inadequate. BOPs are 
robust, sophisticated pieces of equipment that can be activated by 
various direct and remote methods. Since the BOPs were still in place 
in this circumstance, they may have been activated during this event 
and may have restricted the flow to some extent. At this point, we 
cannot be certain. But we have no reason to believe that they were not 
operational--they were jointly tested by BP and Transocean personnel as 
specified on April 10 and 17 and found to be functional. We also do not 
know whether the BOPs were damaged by the surge that emanated from the 
well beneath or whether the surge may have blown debris (e.g., cement, 
casing) into the BOPs, thereby preventing them from squeezing, crushing 
or shearing the pipe.
    For these reasons, I believe it is inappropriate to focus any 
causation discussions exclusively on the BOPs. Certainly, we need to 
understand what happened to the BOPs and whether changes should be made 
to improve the effectiveness of these devices in the unusual 
circumstances of an accident like the one on April 20. But the BOPs 
were clearly not the root cause of the explosion. Our most important 
task is to understand why a cased and cemented wellbore suddenly and 
catastrophically failed. As a starting point, our investigative team 
has looked at numerous possible causes, contributing factors, or 
trigger events, in an effort to ensure that nothing is overlooked in 
this investigation.
    As I explained earlier, the well construction process is a 
collaborative effort. For the same reason, the process of understanding 
what led to the April 20 explosion and how to prevent such an accident 
in the future must also be collaborative. Ours is an industry that must 
put safety first. And I can assure you that Transocean has never--and 
will never--compromise on safety. In 2009, Transocean recorded its best 
ever Total Recordable Incident Rate (TRIR). And the federal agency 
charged with enforcing safety on deepwater oil rigs, MMS, which--as you 
know--is a unit of the U.S. Department of the Interior, awarded one of 
its top prizes for safety to Transocean in 2009. The MMS SAFE Award 
recognizes ``exemplary performance by Outer Continental Shelf (OCS) oil 
and gas operators and contractors.'' In the words of MMS, this award 
``highlights to the public that companies can conduct offshore oil and 
gas activities safely and in a pollution-free manner, even though such 
activities are complex and carry a significant element of risk.'' In 
awarding this prize to Transocean, MMS credited the Company's 
``outstanding drilling operations'' and a ``perfect performance 
period.''
    Despite a strong safety record, Transocean has never been 
complacent about safety. We believe that any incident is one too many. 
Last year, our Company experienced an employee accident record that I 
found unacceptable. As a result, I recommended to our Board of 
Directors that they withhold bonuses for all executives in order to 
make clear that achieving stronger safety performance was a basic 
expectation--and fundamental to our success. That recommendation was 
accepted, and our Company paid no executive bonuses last year, in order 
to send a loud message that we evaluate our success in large part based 
on the safety of our operations.
    Until we fully understand what happened on April 20, we cannot 
determine with certainty how best to prevent such tragedies in the 
future. But I am committed--for the sake of the men who lost their 
lives on April 20, for the sake of their loved ones, for the sake of 
all the hard-working people who work on Transocean rigs around the 
world, and for the sake of people in each of the affected states and 
worldwide who rely on our oceans and waterways for their livelihood--to 
work with others in the industry, with Congress and with all involved 
federal agencies to make sure that such an incident never happens 
again.

    The Chairman. Thank you very much.
    Mr. Probert.

STATEMENT OF TIM PROBERT, PRESIDENT, GLOBAL BUSINESS LINES, AND 
  CHIEF HEALTH, SAFETY AND ENVIRONMENTAL OFFICER, HALLIBURTON

    Mr. Probert. Chairman Bingaman, Ranking Member Murkowski, 
and members of the committee: Thank you for inviting 
Halliburton to testify. We'll continue to work with you and 
your staff to collect the factual data that will enable an 
understanding of what took place and what we can collectively 
do to ensure that domestic oil and gas production is undertaken 
in the safest, most environmentally responsible manner 
possible.
    The catastrophic blowout and the spread of oil in the Gulf 
of Mexico are tragic events for everyone. On behalf of the 
entire Halliburton family, we extend our heartfelt sympathy to 
the families, the friends, and the colleagues of the 11 people 
who lost their lives and those workers who were injured in the 
tragedy.
    As we hope you can appreciate, neither Halliburton nor any 
other party can make a judgment or offer any credible theories 
about what happened until, at a minimum, the well owner has 
interviewed everyone on the Deepwater Horizon to recreate the 
daily log of activities on April 20. In the absence of that 
information, we should not be making a rush to judgment. 
However, two things can be said with some certainty: the casing 
shoe was cemented some 20 hours prior to the tragic incident; 
and had the BOP functioned as expected, this catastrophe may 
well not have occurred.
    For more than 50 years Halliburton has provided--excuse me. 
For more than 90 years, Halliburton has provided a variety of 
production and--a variety of products and services to well 
owners throughout the life cycle of their reservoirs in the oil 
and gas exploration and production industry. With respect to 
the Mississippi Canyon 252 well, Halliburton was contracted by 
the well owner to perform a variety of services. These included 
cementing, mud logging, directional drilling, and real-time 
data acquisition and data delivery services for key personnel 
on board the rig and on shore.
    Since the blowout, Halliburton's been working at the 
direction of the well owner to assist in the effort to bring 
the well under control. This includes intervention support to 
help secure the damaged well and assistance in drilling one or 
more relief wells.
    At the outset I need to emphasize that Halliburton as a 
service provider to the well owner is contractually bound to 
comply with the well owner's instructions on all matters 
relating to the performance of all work-related activities. The 
construction of a deepwater well is a complex operation 
involving the performance of many tasks by many parties. While 
the well owner's representative has ultimate authority for 
planning and approving activities on the rig, the drilling 
contractor performs and directs much of the daily activity.
    Now, cement can be used to isolate formation fluids, to 
prevent movement of these fluids between formations, and to 
bond and support the steel casing. There are many external 
factors which affect the design and the execution of the cement 
job. These include the variability of the hole geometry, the 
relative location of hydrocarbon zones, and the hydrocarbon 
content of associated drilling fluids. The centralizer 
placement on the production casing, the drilling fluid, 
conditioning program prior to cementing, and the cement slurry 
and placement design used for the well were implemented as 
directed by the well owner and as shown on the diagram which is 
attached to my prepared remarks. By design, there was no 
continuous cement column installed throughout the entire 
wellbore.
    Approximately 20 hours prior to the catastrophic loss of 
well control, Halliburton had completed the cementing of the 
ninth and final production casing string in accordance with the 
well program. Following the placement of the cement slurry, the 
casing seal assembly was set in the casing hanger. In 
accordance with accepted industry practice and as required by 
MMS and as directed by the well owner, a positive pressure test 
was then conducted to demonstrate the integrity of the 
production casing string. The results of the positive tests 
were reviewed by the well owner and the decision was made to 
proceed with the well program.
    The next step included the performance of a negative 
pressure test, which tests the integrity of the casing seal 
assembly and is conducted by the drilling contractor at the 
direction of the well owner and in accordance with MMS 
requirements. We understand that Halliburton was instructed to 
record drill pipe pressure during this test. After being 
advised by the drilling contractor that the negative test had 
been completed, Halliburton's cementing personnel were placed 
on standby.
    We understand that the drilling contractor replaced the 
dense drilling fluid in the riser with lighter seawater prior 
to the planned placement of the final cement plug, the drilling 
fluid being transferred directly to a work boat standing by 
alongside.
    The final cement plug would have been installed inside the 
production string and enabled the planned temporary abandonment 
of the well. But prior to that point in the well construction 
plan that Halliburton personnel would have set the final cement 
plug, the catastrophic incident occurred. As a result, the 
final cement plug was not set.
    Halliburton's confident that the cementing work on the 
Mississippi Canyon 252 well was completed in accordance with 
the requirements of the well owner's well construction plan.
    Thank you for the opportunity to share our views and I also 
look forward to answering your questions.
    [The prepared statement of Mr. Probert follows:]

Prepared Statement of Tim Probert, President, Global Business Lines and 
      Chief Health, Safety and Environmental Officer, Halliburton
    Chairman Bingaman, Ranking Member Murkowski, and Members of the 
Committee:
    Thank you for the opportunity to share my company's perspective as 
you review issues related to deepwater exploration for petroleum and 
the accident in the U.S. Gulf of Mexico involving the offshore oil rig 
Deepwater Horizon. Halliburton looks forward to continuing to work with 
you, your colleagues, and your staff to understand what happened and 
what we collectively can do in the future to ensure that oil and gas 
production in the United States is undertaken in the safest, most 
environmentally responsible manner possible.
    At the outset, I want to assure you and your colleagues that 
Halliburton has and will continue to fully support, and cooperate with, 
the ongoing investigations into how and why this tragic event happened. 
We have already made our senior personnel available to brief Members 
and staff and we have produced thousands of pages of documents in 
support of current investigations. Halliburton had four employees 
stationed on the rig at the time of the accident. They returned to 
shore safely and each has and will continue to be made available to 
assist the investigative efforts. We are mindful, however, that 
Halliburton cannot make any judgment or offer any theories about what 
happened until at a minimum the well owner has completed interviewing 
everyone on board to re-create the daily log of activities, including 
those that occurred after we successfully completed the cementing 
operations of the production casing string.
    The April 20th catastrophic blowout, explosions and fire of the 
Deepwater Horizon rig and the spread of oil in the Gulf of Mexico are 
tragic events for everyone connected to the situation. The deaths and 
injuries to personnel working in our industry cannot be forgotten. 
Halliburton extends its heartfelt sympathy to the families, friends and 
colleagues of the 11 people who lost their lives and those workers 
injured in the tragedy.
Background on Halliburton
    As a global leader in oilfield services, Halliburton has been 
providing a variety of services to the oil and natural gas exploration 
and production industry for more than 90 years. Halliburton's areas of 
activity are primarily in the upstream oil and gas industry. They 
include providing products and services for clients throughout the life 
cycle of the hydrocarbon reservoir--from locating hydrocarbons and 
managing geological data, to directional drilling and formation 
evaluation, well construction and completion, to optimizing production 
through the life of the field. The company is also engaged in 
developing and providing technologies for carbon sequestration and we 
are a service provider to the geothermal energy industry.
    Halliburton is the largest cementing service and material provider 
in the oil and gas industry. Halliburton provides zonal isolation and 
engineering solutions for the life of a well. The company safely 
conducts thousands of successful well service operations each year and 
is committed to continuously improve its performance. The company views 
safety and environmental performance as critical to its success and 
these are core elements of our corporate culture. Halliburton has much 
to offer to help our nation meet its energy security needs.
    With respect to the Mississippi Canyon 252 well, Halliburton was 
contracted by the well owner to perform a variety of services on the 
rig. These included cementing, mud logging, directional drilling, and 
measurement-while-drilling services. In addition, Halliburton provided 
selected real-time drilling and rig data acquisition and transmission 
services to key personnel both on board the Deepwater Horizon and at 
various onshore locations.
Halliburton's Participation in the Remediation Efforts on Mississippi 
        Canyon 252 Well
    Since the blowout, Halliburton has been working at the direction of 
the well owner to provide assistance in the effort to bring the well 
under control. This includes intervention support to help secure the 
damaged well and planning and services associated with drilling relief 
well operations.
    Halliburton has deployed survey management experts to assist in 
planning the path of the relief wells and has mobilized its technology 
group to work in collaboration with another industry partner to combine 
our technologies, in an effort to develop an integrated ranging system 
to expedite the intersection of the original well.
Operations Preceding the Catastrophic Loss of Well Control on 
        Mississippi Canyon 252 Well
    I need to start this section with an important statement of 
disclosure. Halliburton, as a service provider to the well owner, is 
contractually bound to comply with the well owner's instructions on all 
matters relating to the performance of all work-related activities. It 
is also important to understand the roles and responsibilities of the 
various parties involved in the construction of a well. The 
construction of a deep water well is a complex operation involving the 
performance of numerous tasks by multiple parties led by the well 
owner's representative, who has the ultimate authority for decisions on 
how and when various activities are conducted.
    Attached* to this testimony is an illustration showing the 
approximate depths and positions of the casing and liner strings set in 
this well. In addition, the approximate position of the various cement 
placements is illustrated, which is consistent with the well design. It 
should be noted that cement is used at specific designated spots and is 
not designed to be a complete barrier through the entire wellbore.
---------------------------------------------------------------------------
    * Illustrations have been retained in committee files.
---------------------------------------------------------------------------
    Cement can be used to isolate formation fluids, to prevent movement 
of these fluids between formations and to bond and support the casing. 
A mixture of cement, water and chemicals is combined in a slurry that 
can be pumped into position around the outside of steel liners and 
casing. There are many external factors that impact the design and 
execution of a cement job. These include the variability in the hole 
geometry, relative location of hydrocarbon zones, hydrocarbon content 
and the prior condition of the wellbore and associated fluids as 
determined by the drilling fluid provider. Casing strings are typically 
run with devices to centralize the casing concentrically in the 
wellbore and prevent incomplete displacement of drilling fluid, or 
``channeling''.
    While every effort is made to complete a cement job with the 
highest levels of mechanical and hydraulic integrity, the above 
mentioned well conditions may prevent this. Confirming cement integrity 
after placement would require the well owner to direct the wireline 
provider to obtain cement evaluation logs. Based on the findings of 
these logs, the well owner can elect to perform remedial action by 
perforating the casing and ``squeezing'' cement into remaining voids to 
improve the integrity of the original cement.
    The centralizer placement on the production casing, the drilling 
fluid conditioning program prior to cementing and the cement slurry and 
placement design used for this well were implemented as directed by the 
well owner. However, as shown in the attached diagram, by design there 
is no continuous cement column throughout the entire wellbore.
    Approximately 20 hours prior to the catastrophic loss of well 
control, Halliburton had completed the cementing of the ninth and final 
production casing string in accordance with the well program.
    Following the placement of 51 barrels of cement slurry, the casing 
seal assembly was set in the casing hanger. In accordance with accepted 
industry practice, as required by MMS and as directed by the well 
owner, a positive pressure test was then conducted to demonstrate the 
integrity of the production casing string. The results of the positive 
test were reviewed by the well owner and the decision was made to 
proceed with the well program.
    The next step included the performance of a ``negative'' pressure 
test, which tests the integrity of the casing seal assembly and is 
conducted by the drilling contractor at the direction of the well owner 
and in accordance with MMS requirements. We understand that Halliburton 
was instructed to record drill pipe pressure during this test until 
Halliburton's cementing personnel were advised by the drilling 
contractor that the negative pressure test had been completed, and were 
placed on standby.
    We understand that the drilling contractor then proceeded to 
displace the riser with seawater prior to the planned placement of the 
final cement plug, which would have been installed inside the 
production string and enabled the planned temporary abandonment of the 
well. Prior to the point in the well construction plan that the 
Halliburton personnel would have set the final cement plug, the 
catastrophic incident occurred. As a result, the final cement plug was 
never set.
    Halliburton is confident that the cementing work on the Mississippi 
Canyon 252 well was completed in accordance with the requirements of 
the well owner's well construction plan.
    Thank you for the opportunity to share our views.

    The Chairman. Thank you very much.
    I just note for all Senators we're in the middle of a vote. 
I guess we're halfway through a vote. So we will plan to keep 
the hearing going. If Senators want to go ahead and vote and 
then return to ask their questions, they're encouraged to do 
that.
    Let me start with some questions. Mr. Probert, you say in 
one of your last statements there that you understand the 
drilling contractor proceeded to displace the riser with 
seawater prior to the planned placement of the final cement 
plug. Is that standard operating procedure?
    Mr. Probert. That is an operating procedure which is 
commonly used, yes.
    The Chairman. There's no safety problem in doing that as a 
normal matter?
    Mr. Probert. What that effectively does is it reduces the 
density of fluid in the riser, and as a result of that reduces 
the hydrostatic head which is bearing down on the wellhead. 
Other than that, that's the primary issue associated with that 
process.
    The Chairman. But I would have thought that you would want 
as much pressure in the well, downward pressure, as possible 
until you had that plug in place. Am I wrong about that?
    Mr. Probert. No, there's no question that the hydrostatic 
head would have been reduced during the course of that process. 
But it is a process which is undertaken prior to the setting of 
the final cement plug.
    The Chairman. Let me ask just a very general question about 
data. I think you make reference to the need to recreate the 
daily log of activities that occurred on the rig. I think that 
was your comment, Mr. Probert. Is all of the data that was 
available on the rig prior to the explosion, is all of that 
information--has it been preserved and is it information that 
is being made available to the government investigators at this 
time, Mr. McKay?
    Mr. McKay. As I understand it, there's quite a bit of data 
that was located on a remote server from the rig onshore. That 
data has been preserved. All data, everything that we can get 
our hands on and turn over, is being turned over, yes.
    The Chairman. All right.
    Mr. Newman, is that your view as well?
    Mr. Newman. There would be some amount of written data that 
would have been on the rig at the time of the event, and 
obviously that data is no longer available to us. But whatever 
was transferred electronically or sent in to our offices prior 
to the event is being preserved and provided to the government.
    The Chairman. Did you have a remote server that was 
capturing this data away from the rig, just as Mr. McKay 
indicated BP did?
    Mr. Newman. The only distinction I would draw, Senator, is 
that BP's data would have been real-time leading up right to 
the sequence of events that transpired. Our data, there is some 
delay in the replication of our data, so our operational data, 
our sequence of events, ends at 3 o'clock in the afternoon on 
the 20th.
    The Chairman. Mr. Probert, do you have that, all that data 
preserved?
    Mr. Probert. Yes, all that data has been preserved and it 
has been made available as requested.
    The Chairman. One of the issues that is going to be focused 
on probably when we have Secretary Salazar next week is whether 
there were efforts made to improve or to strengthen the safety 
requirements for this type of drilling operation that MMS made 
that were not successful, that industry resisted. Are there any 
aspects of this that you're aware of, Mr. McKay, where the MMS 
was urging additional safety precautions to be taken that the 
industry was not in compliance with?
    Mr. McKay. No, I'm not aware of any. Some people have 
referenced a letter that went in to comment to the MMS about 
safety regulations where we were providing comments as to the 
nature and prescriptive nature of the regulation.
    We suggested that performance standards should be set, 
companies should be made to adhere to those performance 
standards. So we made recommendations on how we thought 
regulations could be made better. But we have not submitted 
anything that would try to slow down or limit safety 
regulations.
    The Chairman. Mr. Newman, do you have any knowledge of 
circumstances where your company or industry more generally has 
been resistant to efforts by MMS to impose stricter safety 
requirements?
    Mr. Newman. Senator, I would draw a distinction between 
discussions with the regulatory authorities and regulations. We 
participate in those discussions when the area or topic being 
discussed would have specific application to our business or 
where we would have expertise that we could bring to bear on 
those discussions.
    When the regulations are passed, we adopt the regulations 
and we stand in full compliance with those.
    The Chairman. Mr. Probert, did you have a comment on this?
    Mr. Probert. No, just to say that we also work closely with 
the API and the MMS in developing standards for certain 
processes which are undertaken.
    The Chairman. Thank you all.
    Senator Murkowski.
    Senator Murkowski. Thank you, Mr. Chairman.
    I might just note that in reading through the testimony of 
each of the three of you--and this was alluded to by Senator 
Menendez--that he suggests that there's this transference of 
liability or finger-pointing. I have stated that there's going 
to be plenty of time to try to figure out who is to blame, who 
is at fault. That will go on, and I think we appreciate and 
recognize that.
    You have suggested, Mr. McKay, that as the owner and 
operator of the Deepwater Horizon rig that Transocean--you're 
not suggesting that that liability is there, but you're 
transferring it. Mr. Newman is suggesting that it's not the BOP 
at all. You're very clear about that in your testimony. You say 
that's not the root cause, and that in fact we should be 
looking to some of the things that could cause the catastrophic 
failure, the casing, the cementing. Then Mr. Probert takes it 
all the way back around to the well owner here, at BP.
    I would suggest to all three of you that we are all in this 
together, because this incident is affecting, will have impact 
on the development of our energy policy for this country. If we 
can't continue to operate and convince people that we can 
perform safely, then not only will BP not be out there, but the 
Transoceans won't be there to drill the rigs and the 
Halliburtons won't be there to provide for the cementing. So we 
figure out how we make this happen together.
    Mr. McKay, I want to ask you some questions about what's 
happening right now. We've been watching with fascination this 
containment dome and whether it's going to work. It's not 
encouraging and it's very disappointing to so many who were 
hoping it would be able to contain some of that. We're now 
talking and watching the ongoing effort with drilling the two 
relief wells, but recognize that that's 2 months off.
    We're now discussing the top-kill, but that too is a couple 
weeks off. In the mean time, we've got volumes that are--we're 
not entirely certain exactly how much is coming up on a daily 
basis.
    The issue with the dispersants. I would like to understand 
from you whether or not we have the supply of dispersants that 
we need, whether we are getting them out there, not only at the 
surface but at the seabed, in a manner that is aggressive. When 
the Exxon Valdez incident happened, we delayed with some 
critical methods that we could have perhaps contained, whether 
it was burning or dispersants. I'd like to think that there has 
not been any delay. The dispersants at the seabed have been 
held off until some further testing came about. Can you give me 
some assurance that we're moving aggressively to try to break 
up as much as we possibly can?
    Mr. McKay. Yes. To answer pretty quickly, we've got two 
levels of dispersants that we're utilizing. One is at the 
surface through multiple sorties flown every day that the 
weather permits, and that's been very successful and impactful, 
I think, so far. We have also been testing--
    Senator Murkowski. Do you have enough of the dispersant?
    Mr. McKay. Yes. What we've done is we've worked the supply 
chain such that NALCO, our chemical supplier, can supply 75,000 
gallons a day sustainably. That amount of dispersant should 
cover the amount we're using at the surface on the water, as 
well as what we hope to do, is more subsea injection.
    We've just done a 2-hour. The third test on subsea 
injection for dispersant was yesterday. It ended at 4:40 a.m. 
this morning, I believe. EPA is making absolutely sure that the 
correct monitoring is in place and will be in place, and we 
hope to be getting approval pretty soon for further 
dispersants.
    Senator Murkowski. Mr. McKay, do you know if this is the 
first time that EPA has done these testings at these deepwater 
levels, testing the dispersants for safety and effectiveness?
    Mr. McKay. I believe--I believe this is the first use at 
5,000 feet and the first test at 5,000 feet.
    Senator Murkowski. It stuns me to think that we know that 
we need to utilize dispersants in the event of a spill and yet 
we haven't put in place the testing necessary. We've probably 
lost days here where we could have been acting while we wait 
for the testing to play out, which is more than just a little 
bit frustrating there.
    Let me ask you, Mr. Probert. You have--your written 
testimony, and you've just repeated, indicates that the final 
cement well plug wasn't yet placed prior to the blowout. This 
is contrary to certain media accounts out there. So the 
question is why is that significant. I want to make sure that I 
am clear. The well--was the well in fact cased and completed 
when the blowout occurred?
    Mr. Probert. There are certainly some conflicting reports 
in the media, and I can confirm that the final cement plug was 
not set. As we heard in the testimony this morning, the concept 
of multiple barriers is very important in any given well. That 
plug would have been the final barrier before the well would 
have been temporarily suspended, as was the plan, for 
completion at a later date.
    Senator Murkowski. So I know that we've got a vote that 
we've got to get off to, but just one question. What sorts of 
tests were conducted? What kind of maintenance logs are in 
place for the cement work on the well? Do we have all that?
    Mr. Probert. In actual fact there is no direct test that 
was performed on the cement itself. However----
    Senator Murkowski. Do you usually do a direct test?
    Mr. Probert. The direct tests were to be performed on the 
cement. It would be something called either a temperature log 
or a cement bond log. That's the only test that can really 
determine the actual effectiveness of the bond between the 
cement sheath, the formation, and the casing itself.
    Senator Murkowski. Then when is that typically conducted?
    Mr. Probert. That is conducted after two prior tests which 
are conducted. The first test is a so-called positive pressure 
test, which is conducted to test the integrity of the casing 
itself. The second test is a so- called negative test, which is 
designed to test the integrity of the casing hanger seals, or 
the seal assembly, which contains the casing.
    Senator Murkowski. Were both of those tests conducted?
    Mr. Probert. Those tests were performed, though I can't 
comment as to what the information was relating to either of 
those tests.
    Senator Murkowski. Why can't you comment?
    Mr. Probert. Because we do not have data associated with 
both of those tests.
    Senator Murkowski. Will you be able to gain that data?
    Mr. Probert. There is information on the positive test, 
though I do not believe that there is information available 
from our data stream on the negative test.
    Senator Murkowski. But is it fair to say, though, that 
somebody has that?
    Mr. Probert. I'm afraid I can't comment. It's certainly not 
collected on our servers. I would have to defer on that 
particular point to these gentlemen.
    Senator Murkowski. It would seem to me, Mr. Chairman, that 
we'd want to know whether or not the tests were conducted and 
then what the results of those tests were. That seems to be 
pretty key to what could have taken place.
    Mr. Probert. I think that everyone is working very hard to 
make sure that the data is made available so a reconstruction 
of events can take place, so that determination can be made.
    Senator Murkowski. Mr. McKay or Mr. Newman, do you have 
that data?
    Mr. McKay. I have not had a chance to review any data. I 
know it's all being gathered. I hope that we do.
    Senator Murkowski. You do believe you have it?
    Mr. McKay.T1 I believe there should be some data, at least 
from interviews, if not physical data from the servers, digital 
data. So that will be a large part of the investigation, to 
understand that sequence.
    The Chairman. We're going to take a short recess until we 
can return from these votes. We'll just stand in recess a few 
minutes.
    [Recess from 12:03 p.m. to 12:13 p.m.]
    Senator Shaheen[presiding]. Thank you all for coming back 
to order. We will go ahead and resume, and other members of the 
committee will arrive shortly.
    I missed some of the questioning, so if I'm covering 
territory that's already been covered please let me know. I 
think, to you, Mr. McKay, one of the things that I have found 
troubling and I know that, in talking to others, they are also 
concerned, is that there didn't seem to be an emergency plan in 
place that could address how to deal with the spill once it 
happened.
    I know that there's a lot of investigating relative to what 
actually happened, but, as you said or someone from BP said, 
this was a spill that was unthinkable, but once it happened the 
strategy around the containment dome seemed to be not a plan 
that had been thought through in any significant way prior to 
the accident.
    So I guess I would like to ask, what kinds of measures BP 
has had in place to address this sort of a spill and why did it 
take the actual spill before the company came up with the idea 
of the containment dome and had tested that to see how it might 
work?
    Mr. McKay. As far as spill response, the industry and I 
think BP is very similar to the rest of industry in this 
regard, the spill responses have heretofore concentrated 
primarily on dealing with oil at the surface and dealing with 
the spill, which I think sits under the national contingency 
plan, One Gulf, and then the BP and MMS-approved spill response 
plan, which I think has worked foundationally really well, and 
it's been spooled up and it's the largest effort that's ever 
been undertaken.
    The point you bring up is about subsea intervention. We've 
not dealt with a situation like this before. There are--
obviously, it's a specifically difficult situation in 5,000 
feet of water. This fluid type is extremely difficult as well. 
I think after this is under control and thought about in 
hindsight, there will be some ideas about how to make the 
subsea intervention response better. I think we're learning 
right now as we go.
    So I think that is something that needs to be looked at.
    Senator Shaheen. Maybe each of you could answer: How much 
research and development does your company do on deepwater 
spills, and is this an area where there should be more focus? 
Right now can you quantify how much money is being spent on 
that kind of R and D to address deepwater spills, if anything?
    Mr. McKay. I cannot quantify how much is being spent. We 
work with government agencies, but I cannot quantify how much.
    Senator Shaheen. Are you--is BP doing research in that 
area, on how to respond to deepwater spills?
    Mr. McKay. We have worked very hard on our spill response. 
As I said, I think what we're learning here is subsea 
intervention capability is something that needs to be looked at 
further.
    Senator Shaheen. Mr. Newman.
    Mr. Newman. Transocean is not currently engaged in any 
research and development with respect to deepwater oil spills.
    Senator Shaheen. Mr. Probert.
    Mr. Probert. Halliburton's focus really has revolved to 
this point around the intervention of wells which require some 
kind of remedial activity, either a relief well or some other 
kind of activity associated with that.
    Senator Shaheen. Are any of you aware of anyone in the 
industry who is researching on how to handle deepwater spills, 
or anybody in universities, for example? Is there anybody in 
the industry, first of all?
    Mr. McKay. I think the industry has a lot of knowledge 
about handling deepwater interventions. But the question is in 
the specific situation. We are dealing with fluids and depth of 
water that hasn't been dealt with before in actuality. So what 
we're doing is utilizing the industry experts all across the 
world. We've got 160 companies working on this, as well as 
government agencies.
    I really do think what we learn from here is going to 
impact the industry and how we ought to do this.
    Senator Shaheen. I appreciate that, and I think we all 
understand the enormous response and the commitment that BP now 
has to try and respond to this accident. I guess my question 
really is should we not be more proactive about recognizing 
that when we're drilling at these depths that, despite all of 
the precautions, that there is the potential for this kind of a 
disaster and therefore having research under way that would 
show us how to respond in case of a disaster is something that 
we ought to figure out how to do? You can take that as a 
statement rather than a question.
    The Chairman [presiding]. I guess the normal routine is to 
go back and forth. Senator Sessions, did you have questions?
    Senator Sessions. Yes, thank you, Mr. Chairman.
    The matters we're dealing with are exceedingly important. 
If we don't produce oil off our shores, we'll be importing oil 
that was produced somewhere else in the world. We do it today. 
Diving for the reserves on our Outer Continental shelf is 
important to our economy, it is important to jobs, and it is 
important to our Nation's ability to be competitive.
    But it needs to be done safely. Again I will say that maybe 
we have become a bit too complacent.
    To follow up on the chairman's comments, first let me 
follow up on Senator Shaheen's question. It is a bit odd to me 
that no one had considered prior to this incident that we would 
have a spill of this magnitude and that industry did not have 
the technology readily deployable to address the situation so 
I'll ask you, Mr. McKay. Immediately after this blowout 
occurred and we begin to see the leaks, the idea came that we 
needed a cofferdam, a containment mechanism that could go over 
the leak and take the oil out. That took several weeks to 
construct.
    Why had something like this not been constructed, and why 
were these kinds of ideas not thoroughly examined prior to 
diving in deepwater and under these unusual circumstances?
    Mr. McKay. This situation is extremely, as you may imagine, 
extremely hard to predict, the specifics of the situation. What 
we have in this case is we have a blowout preventer that didn't 
work, for whatever reason. We don't know why. We've got the 
lower marine riser package still on top of that blowout 
preventer. The emergency system disconnect, which we believe 
was hit on the rig, did not activate the blowout preventer or 
release that disconnect. So we've got a disconnect connected on 
top of the blowout preventer and a riser coming off the top of 
that.
    Then that impacts what solution we have to use to address 
the problem. So this situation where we've got a lower marine 
riser package that hasn't come off and a riser bent over at the 
top of it and along the seabed, that's extremely difficult to 
predict, impossible to predict that.
    So the intervention activity that we're doing has been 
focused on trying to get that blowout preventer actuated and 
shut. That's not been successful so far.
    Senator Sessions. All I was asking basically was shouldn't 
you have anticipated that these kind of things could occur, and 
that this kind of cofferdam would be needed, and shouldn't we 
have some already constructed or at least the designs tested?
    Mr. McKay. I think what I would say, as we learn from this 
incident we're going to have to understand what type of 
capability we will--I think it's difficult to have predicted a 
cofferdam would have been needed. But I think we're going to 
have to look back and see what is needed.
    Senator Sessions. The Wall Street Journal had an article 
today regarding the removal of the mud. First I'll ask you, Mr. 
McKay: Did BP direct that the reverse procedure should be 
undertaken and ask the Minerals Management Service to alter the 
normal requirements and to displace the mud before the plugging 
operation began?
    Mr. McKay. I've not read that article, so I can't comment 
directly. I do know that the investigation----
    Senator Sessions. You work for BP?
    Mr. McKay. I do work for BP.
    Senator Sessions. All right. But it said, according to a 
worker, BP asked permission from Minerals Management Service to 
displace the mud before the plugging operation, final plugging 
operation, had begun, which mud weighs about, what, 50 percent 
more than water. As the heavy mud was taken out and replaced by 
the much lighter seawater, quote, ``that's when the well came 
at us, basically,'' the worker said.
    Mr. McKay. I'm not familiar with the individual procedure 
on that well. The investigation is going to look at every piece 
of the procedure, the directives, the decisions, and the 
processes that were used, and that investigation is under way. 
So I have not had a review of that yet.
    Senator Sessions. Mr. Newman, what would be your answer? 
What do you know--and I would ask you to tell us what you know. 
This is an important question. Do you know whether BP made that 
decision or did Transocean make that decision?
    Mr. Newman. Because BP are the operator of the well and BP 
are the permitholder and BP have the relationship with the MMS, 
if there was a discussion between somebody and the MMS about 
whether or not it was appropriate to proceed in a particular 
fashion, that conversation would have taken place between BP 
and the MMS.
    Senator Sessions. Mr. Probert, I'll ask you what you know 
about that situation.
    Mr. Probert. I concur with Mr. Newman's view.
    Senator Sessions. Not his view, but what do you know?
    Mr. Probert. We have no knowledge of that discussion. 
However, if a discussion took place it would be with the 
leaseholder and the MMS.
    Senator Sessions. What knowledge do you have about a 
decision being made to remove the mud before the plug was 
finished?
    Mr. Probert. The only information that we have, that it was 
part of the well program.
    Senator Sessions. But it's an unusual thing, was it not?
    Mr. Probert. I cannot say that it's not a procedure that 
has been utilized--not utilized previously. It is a process 
which has been undertaken previously. I'm afraid I can't tell 
you how many times.
    Senator Sessions. But it would not be the normal procedure, 
would it not? Yes or no, normally?
    Mr. Probert. It is a procedure which has been used on 
multiple occasions in the Gulf of Mexico.
    Senator Sessions. Would it be used less than 10 percent of 
the procedures?
    Mr. Probert. I'm afraid I am not in a position to comment.
    Senator Sessions. You are in this business, are you not? 
You're under oath. I'm just asking you a simple question. What 
percentage in your best judgment is it that they remove the mud 
before the final plug is put in?
    Mr. Probert. I do not know, Senator.
    Senator Sessions. Is it less than 50 percent?
    Mr. Probert. I do not know, Senator.
    Senator Sessions. You don't know?
    Mr. Probert. I do not know. The obligation for that 
decision lies between the leaseholder and MMS, and that's the 
discussion----
    Senator Sessions. I didn't ask about that. I asked you what 
the procedure normally.
    Do you know, Mr. Newman.
    Mr. Newman. I couldn't be able to--I wouldn't be able to 
quantify the percentage of wells that are handled in this 
particular manner.
    Senator Sessions. This article indicates it's unusual. Are 
you aware of any time that this has been done before?
    The Chairman. Could you withhold until we get to another 
round?
    Senator Sessions. I'm sorry, I'm over time. Thank you.
    The Chairman. Thank you, Senator Sessions.
    Senator Landrieu.
    Senator Landrieu. Thank you very much.
    As you can imagine, since this has happened I've been down 
to the State on every occasion that I can get there. Just as 
late as yesterday, I was visiting with elected officials and 
fishermen that are extremely concerned about what's actually 
happening on the ground today, as you can imagine.
    My first question is to BP, because this is the question, 
Mr. McKay, that I get more than any other question: Will BP 
pay? Let me ask it in this way. It's my understanding that you 
are the lease operator, that you're the responsible party under 
the 1990 Act. It is also my understanding that if you're found 
to be grossly negligent you can--will automatically be pressed 
by the law to exceed the $75 million liability cap. But my 
question is, if you're not found to be grossly negligent, is BP 
prepared to pay the full extent of real economic damage, not 
just to the individual businesses, but to parishes and other 
government entities that are expending huge amounts of money to 
try to contain this industry?
    Mr. McKay. We've been very clear. Tony Hayward, our CEO, 
has been very clear, and we are going to pay all legitimate 
claims, all legitimate claims.
    Senator Landrieu. Define ``legitimate,'' please, for us?
    Mr. McKay. Substantiated claims. I can't define the term. 
Here's the intent. The intent is to be fair, responsive, and 
expeditious. As to the $75 million that you mentioned, we think 
that we're going to exceed that, obviously, and that is 
irrelevant. So we have been very clear we're going to pay the 
claims and the entire resources of BP are behind this.
    Senator Landrieu. Mr. Chairman, I may announce, because I'm 
happy that we made this step yesterday, but at least for the 
small businesses--and there are many, small and large, affected 
by this catastrophe along the Gulf Coast--that the Small 
Business Administration yesterday has made clear that on an 
individual basis the 6,000 small business disaster loans that 
are still pending in the same area from the last disasters we 
had can be deferred and new loans can be given until these 
claims can come full circle, because the last thing we want to 
do is for a region that has been hammered by storms and other 
disasters, is to have this be another economic disaster for the 
people of this region. So knowing that gives some confidence.
    My next question, Mr. Newman, is to you. Are you the 
largest drilling operator in the world, and if not who is 
larger than you and what rank are you?
    Mr. Newman. Senator, we are the largest offshore drilling 
contractor.
    Senator Landrieu. Can you speak right into the mike, 
please.
    Mr. Newman. We are the largest offshore drilling contractor 
in the world.
    Senator Landrieu. To your knowledge, has a blowout of this 
magnitude in terms of volume spilled in an uncontrolled fashion 
for this length of time ever happened in the offshore waters in 
the United States or anywhere else, to your knowledge?
    Mr. Newman. The only incident that comes to my mind, 
Senator, is the Ixtoc well in Mexico, which I believe happened 
in the 1970s.
    Senator Landrieu. Do you know how deep that well was? Do 
you have any recollection?
    Mr. Newman. I have a vague recollection that that operation 
was conducted from a jackup, so it would have been shallow 
water.
    Senator Landrieu. I think, Mr. Chairman, for the record, 
that incident, which is well documented, was in shallow water. 
The Montara incident that was referred to by my colleague from 
New Jersey was in 200 feet of water. This is in 5,000 feet of 
water, 18,000 feet deep.
    Now, given that, what are the regulations for these ultra-
deep wells that you can just comment briefly on that give our 
people confidence that this deep drilling can be done safely? 
Obviously it has, but it wasn't in this case. Is there anything 
that you can offer that shows what you as the primary driller 
in the world? Do you call special meetings? Do you have special 
requirements? Did you not anticipate that this could happen?
    Mr. Newman. With respect to the applicable regulations, 
which have to do in our case with specifically the blowout 
preventer, the regulations in the U.S. require two control 
stations on the rig, and in fact on the Deepwater Horizon there 
were three control stations. The regulations require that you 
have three ram preventers and one annular preventer, and in the 
case of the Deepwater Horizon the rig was fitted out with five 
ram preventers and two annulars, so in excess of the 
regulations.
    The regulations require that there be an independent means 
of activating the BOP, and in the case of the Deepwater 
Horizon, in addition to manual operation from the rig, the BOP 
system on the Deepwater Horizon was fitted out with two 
automatic response systems and an ROV intervention system. So 
in terms of satisfying and in fact far exceeding the 
regulations with respect to the blowout preventer, we certainly 
comply.
    Senator Landrieu. Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Senator Wyden.
    Senator Wyden. Thank you, Mr. Chairman.
    Mr. McKay, there have been with BP a series of horrific 
accidents over a number of years. Again and again, major safety 
problems, problems that have resulted in hundreds of millions 
of dollars in fines being paid by your company, settling 
criminal charges. In each case, as far as I can tell--and I've 
looked back at the explosion at the Texas City refinery, the 
fire at the Whiting refinery, the violations at the Toledo 
refinery, the failure to maintain the pipeline system on the 
North Slope--the company always says the same thing. I want to 
have your reaction to this because I think we've all said that 
we understand that the specific cause for the Deepwater Horizon 
disaster isn't known, but this sure fits in my view a pattern, 
a pattern of serious safety and environmental problems at BP.
    The company always says the same thing after one of these 
accidents: We're going to toughen up our standards, we're going 
to improve management, we're going to deal with risk. Then 
another such accident takes place and we have yet more finger-
pointing.
    So my question to you is, why hasn't BP been able to change 
its corporate culture and end this pattern of accidents?
    Mr. McKay. In 2005 and 2006, you mentioned some incidents 
that were extremely serious, extremely serious. I believe we 
are changing this company. I believe it's being changed to its 
core. Our CEO, Tony Hayward, in 2007 took over the reins. His 
single mantra has been: Safety and compliant operations.
    We are changing this company. We've put in management 
systems that are covering the world in a consistent and 
rigorous way----
    Senator Wyden. But tell me, if you would, what management 
systems you put in that would have taken all possible 
precautions against this kind of problem? Because it seems to 
me I'm hearing about reports of various things that others in 
the industry are doing, various kinds of computer models and 
the like that they test. What specifically have you done to put 
in place changes that reduce the likelihood of these kinds of 
accidents that BP has a history of being involved in?
    Mr. McKay. I believe our operating management system in the 
Gulf of Mexico is as good as anyone. I can't point to any 
deficiencies to point out to you. The investigations are 
obviously going to be important in terms of if there was 
something missed. I know of nothing that points me in a 
direction that we have deficiencies in our operating management 
system.
    Senator Wyden. With respect to the changes that you have 
put in since 2007, in 2007--I'm looking now at a comment that 
Tony Hayward made as Chief Executive: ``Our operations failed 
to meet our own standards, the requirements of the law. We're 
going to improve risk management.'' These are just quotes that 
he has made.
    You're telling me you know of no deficiencies, but I'm 
still not clear what changes the company has made since those 
comments from Tony Hayward, because we know for a fact--what's 
on the record? We can't yet pinpoint the cause of this 
disaster. Everybody stipulates that. But we sure know that 
there has been a pattern of problems at BP, and I'm trying to 
get you to tell me what changes, concrete changes, have been 
implemented since Tony Hayward made that statement in 2007.
    Mr. McKay. We have several things that have been made. One, 
we have a board-level safety and environmental and ethics audit 
committee that is very active. We have a group organizational 
risk committee that has been installed by Tony Hayward at the 
very, very top. We have an operation management system that has 
been standardized and is being put in place in every single 
location in the world, and I believe is very, very rigorous and 
very complete.
    I'll acknowledge we've had issues and we've got to change 
some of the areas of the company. I don't see any----
    Senator Wyden. What has to change at the company? You said 
you've got to make changes at the company. That's what I want 
to hear about.
    Mr. McKay. As I said, we're installing operation and 
management systems everywhere in the world that are consistent, 
diligent, and rigorous, to a higher standard than they have 
been in some places in the world. I would say in the Gulf of 
Mexico this has been an area where we've been extremely safe. 
We have a tremendous track record of compliance as measured by 
the MMS.
    What I'm telling you is I have not been aware of or seen 
deficiencies in the Gulf of Mexico systems.
    Senator Wyden. I'm still not clear what changes have been 
made after Tony Hayward said there were going to be changes 
made.
    Mr. McKay. It gets down to the agenda and the culture of 
the company.
    Senator Wyden. It sure does, and the culture of this 
company is that there's been one accident after another.
    Mr. McKay. The agenda has been clear. I believe we've 
progressed a long way. We're not finished. We'll never be 
finished.
    Senator Wyden. I'll hold the record open on this point, but 
I would like to see an itemized list of what has actually been 
changed since Tony Hayward said that there are going to be 
changes. You told me that there were no deficiencies. I'm not 
clear on what's been changed.
    Thank you, Mr. Chairman.
    Senator Menendez. Thank you, Mr. Chairman.
    Mr. McKay, we're sitting in the very same hearing room 
where the hearings were held to investigate the sinking of the 
Titanic. At that time we had a ship supposedly so 
technologically advanced that it could not sink. Here we have a 
rig that the industry has told us so many times is so 
technologically advanced it supposedly could not spill. 
Unfortunately, despite these claims, both technological marvels 
ended in tragedy.
    When I look at this tragedy, it's not only, of course, the 
loss of those lives, which we lament, and the enormous damage 
being done to the Gulf region. But I look at BP's response 
here. On page 7-1 of BP's exploration plan for the lease sale 
in question, BP certified that it had the, quote, ``capability 
to respond to a worst case discharge resulting from the 
activities proposed in our exploration plan.'' What I see is a 
company not prepared to address a worst case scenario, but a 
company that is flailing around trying whatever they think of 
next to try to deal with the worst case scenario that you had 
the ability to do.
    You seem to be jumping from action to action, which we all 
hope and pray can work. But that doesn't give me a sense of a 
plan that was ready to be implemented in a worst case scenario. 
Isn't that a fair criticism?
    Mr. McKay. Let me explain what we are doing. We have 
multiple parallel efforts at every level of this crisis. One, 
in the subsurface we're drilling 2 relief wells. Two, we're 
working on the subsea, on the blowout preventers. We've got 8 
remote operated submarines around that blowout preventer trying 
to get it to actuate.
    We've got containment and subsea systems that are being 
developed to deal with a very unique and specific situation. We 
have aggressive spill response on the surface that is part of 
the national contingency plan, One Gulf, and the BP response 
plan, which I think has worked well. We're fighting it 
aggressively offshore. We are using dispersant, in situ burn, 
and skimming. We're protecting the shorelines with boom. We are 
prepared to clean up and deal with anything that gets to shore, 
and we're prepared to deal with the economic impacts.
    Senator Menendez. I appreciate your litany of what you're 
attempting to do, but one seems more incredible than the other. 
First we had this four-story dome, trying to lower it into a 
spill, which I guess you couldn't all foresee the 
crystallization that might take place. Then you have the oil 
dispersants, which in and of themselves is a challenge. Then 
I'm hearing of a plan that is called a ``junk shot,'' whereby 
garbage such as shredded tires and golf balls would be shot 
down the blowout preventer to clog the leak.
    I mean, I don't get the sense that you are truly prepared 
for the certification you made to the Interior Department of a 
worst case scenario. I get the sense you're making things up as 
you go along.
    Let me go to--I know that my colleague asked you about 
liability questions and you said all legitimate--``legitimate 
claims,'' that was your word? Yes. I don't get the sense that 
you are necessarily quantifying what a legitimate claim is or 
defining what a legitimate claim is, which makes me nervous.
    Do you have a problem with raising the liability cap in the 
legislation that I proposed to $10 billion?
    Mr. McKay. I have not had a chance to look at any 
legislative proposals and understand----
    Senator Menendez. Very simply, you have a $75 million 
liability cap. You say that you're going to pay all legitimate 
claims. I think it's pretty reasonable to understand that $75 
million is not going to reach the amount that is going to be 
conducted in damages here. So do you have a problem? You earned 
$5.6 billion in the last quarter alone. Do you as an industry 
have a problem with the $10 billion cap?
    Mr. McKay. As I said, I can't comment right now on the 
legislation or the $10 billion. What I can comment on is I've 
made it clear and our CEO has made it clear we are going to pay 
all legitimate claims. The $75 million does not come into 
account. We've been as clear as we can be on this incident 
about that.
    Senator Menendez. Are you going to shift those legitimate 
claims to the liabilities that we see in your testimony, when 
you talk about Deepwater Horizon and when you talk about--they 
talk about Halliburton? Is this going to be a liability chase 
where all of those people harmed are going to have to wait and 
file and go, as they did on the Exxon Valdez, all the way up? 
Is that what you intend to do?
    Mr. McKay. We have made it clear we're going to deal with 
the people and the communities that are affected directly. 
We've made that clear.
    Senator Menendez. One last question, Mr. Chairman.
    BP's lease for Deepwater Horizon received a categorical 
exclusion from the NEPA process last year. Why would this rig 
not require the oversight and regulation mandated under our 
country's most important environmental legislation? How could 
such an inherently dangerous activity not undergo through the 
environmental review of that process?
    Mr. McKay. You're asking me?
    Senator Menendez. Yes.
    Mr. McKay. The exclusion you're referring to is essentially 
when the lease sale is done there's an environmental impact 
statement that's done with the lease sale. Then there are grid 
environmental assessments that are done for areas within that 
lease sale. Those are utilized as the environmental assessments 
for wells that are drilled in those areas, and that's what we 
use, and that's a common industry practice, and it's also 
used--it's MMS regulated.
    Senator Menendez. It seems to me it's a common industry 
practice we've got to review.
    Mr. Chairman, I have a series of other questions. I'll 
submit them for the record.
    The Chairman. Very good.
    Senator Udall.
    Senator Udall. Thank you, Mr. Chairman.
    Mr. Newman, I want to direct a question your way. I've 
heard reports that your workers were instructed to sign energy 
and liability waivers as soon as they returned to shore, in 
some cases before they were even able to see their families. 
Were employees given an opportunity to consult with their 
doctors or lawyers before signing these waivers? I have a copy 
of one of them here I'd like to ask to be included in the 
record.
    The Chairman. We'll include that in the record.
    Senator Udall. If so, why was there a rush here? The 
accounts certainly have me concerned. I think they would 
concern other members of the committee as well.
    Mr. Newman. Senator, if I could put that question into 
context. Immediately after the disaster happened on the rig, we 
mobilized a team of Transocean people to Louisiana to begin 
preparations for the arrival on shore of those crew members. 
That preparation included providing them with clothing, because 
many of them were awakened from their beds when the explosion 
happened. It included providing them with food and water. It 
included providing them with medical care because they had left 
the rig under such extreme circumstances. Many of them did not 
have identification with them, so it included consultation with 
the TSA to make sure that as those crew members were put on 
planes the following day to reunite with their families that 
they would have no identification issues with the TSA at the 
airport.
    It included a preliminary gathering of facts. The statement 
that you're referring to is an exercise in our attempt to 
facilitate that. So we asked our workers if they had any 
information related to the cause of the event, and we asked our 
workers if they were injured. I don't think it's appropriate to 
characterize those statements as waivers.
    Senator Udall. We'll leave that judgment as the 
investigation unfolds. It certainly left, I think, in many 
people's mouths a sour taste and questions about what the 
intent was of Transocean, whether it was to support the workers 
or defend Transocean from potential liability.
    Let me move to all three of you. I know each of you are 
conducting your own investigations. I'm just curious, will the 
results and the analysis, as well as any testimony you generate 
in your companies, will that be available to the Federal 
Government and to the Congress? Mr. McKay, I could start----
    Mr. McKay. Yes, it will.
    Senator Udall. Mr. Newman.
    Mr. Newman. I think this event has such an impact on our 
business and our industry that it behooves us to share 
everything we can with respect to understanding exactly what 
happened, so that we can prevent it from ever happening again.
    Senator Udall. Mr. Probert.
    Mr. Probert. Similarly, I will add that we will of course 
share any information and hopefully use it as a basis for 
ensuring that the industry is safe and environmentally sound as 
we look forward into the future.
    Senator Udall. If I might, with a final question directed 
to all three of you, I had the great honor to chair the 
subcommittee in the House, Space and Aeronautics, so I'm very 
familiar with the difficulty of working in extreme conditions 
such as those that NASA works in. NASA's had its share of 
disasters and its experiences emphasize that accidents, while 
they can be few and far between, that doesn't make them any 
less catastrophic or tragic.
    It seems unfathomable to me that we didn't have any focus 
on technological improvements in spill cleanup technology since 
the Exxon Valdez more than 20 years ago. We've expanded our 
technology to get to these resources, but we seem to be using 
20th century technologies to respond to what's happened. Again, 
I welcome your comments from each three--all three of you.
    Mr. McKay. I think the improvements are in the deployment 
and usage of some of the technology, as well as what we were 
talking about earlier, subsea dispersant, which I think is a 
new potential technology that could be, No. 1, effective, and 
No. 2, use a lot less dispersant for the impact it may have. So 
I think there is quite a bit of new technology being developed.
    Senator Udall. Mr. Newman.
    Mr. Newman. Senator, under the provisions of the 
International Maritime Organization, IMO, which we are 
obligated to comply with because we operate marine assets, 
every one of our rigs is required to have a shipboard oil 
pollution plan, which deals with the chemicals and the 
materials that we use on the rig, such as diesel for our 
engines, cleaning products, and things like that. I would tell 
you that we work very closely with the providers of those 
materials to ensure that our shipboard oil pollution plans are 
as robust and comprehensive as possible to deal with the 
materials we have on our drilling rigs.
    Senator Udall. Mr. Probert.
    Mr. Probert. As I may have mentioned earlier, our primary 
focus as a company has revolved around intervention of existing 
wells that may be challenged as a result of some kind of well 
control issue. That is where most of our technological effort 
has been focused.
    Senator Udall. I know Senator Shaheen--and, Mr. Chairman, 
I'll just finish with this comment--asked a similar question. 
Her understanding, and mine, was that nobody's really doing any 
research to address deepwater spills. I think that stands out 
as obviously something that needs to be pursued with real vigor 
here in the short term and immediately.
    Mr. Chairman, thank you.
    The Chairman. Thank you.
    Senator Cantwell. Thank you, Mr. Chairman.
    I want to follow up on my colleague Senator Landrieu's 
question that was talking about how we're going to pay for this 
and the full cost. I understand, Mr. McKay, you said that you 
would pay all viable claims. What are ``viable claims''? Are 
you talking about a legal standard of whether you are found 
with gross negligence in the case?
    Mr. McKay. No, no. Let me explain. What we've said is we 
want to be very responsive and direct with claims, with people 
and businesses that are affected. We've been clear that we want 
to stand behind that. We mean it. That's our intent.
    The only reason we say ``legitimate'' is that claims have 
to have some basis, some substantiation. We've been clear about 
the $75 million, that that's not going to be a limit for this.
    Let me just tell you what we are paying. We've paid--I 
don't know the number as of this morning, but as of yesterday 
it was closing on 1,000 claims, mostly fishermen who are out of 
work, mostly folks who don't have cash to make ends meet 
because they're out of work, and that's what we're trying to 
concentrate on right now.
    So I think we're being very responsive with that. 
Obviously, we've got to make sure that we keep getting better 
and better at it. But so far I think we're meeting the local 
needs, and we'll go from there.
    Senator Cantwell. How are you determining a viable claim? 
I'm assuming a lot of the discussion this morning, or at least 
it sounds like BP is saying maybe the fault lies with the rig 
operators, and Transocean is saying maybe the fault lies with 
improper cementing by Halliburton, and Halliburton seems to 
imply that Transocean may not have properly operated the drill 
fluid right.
    So is that an ongoing part of the discussion? Are you 
saying any legitimate claim incident to this will be paid by 
BP?
    Mr. McKay. Let me be really clear. Liability, blame, fault, 
put it over here. We are dealing with we are a responsible 
party. Our obligation is to deal with the spill, clean it up, 
and make sure the impacts of that spill are compensated, and we 
are going to do that.
    Senator Cantwell. No matter if that's $14 billion?
    Mr. McKay. I'm not going to speculate on numbers. All we've 
said is that every legitimate claim and the full resources of 
BP are behind this.
    Senator Cantwell. There is cost estimates by experts now 
that say it could be as high as $14 billion. So are you saying 
that BP will pay all claims, even if----
    Mr. McKay. I'm saying we will pay all legitimate claims, 
yes.
    Senator Cantwell. Mr. Chairman, I think that that is the 
question before us, is this is a panel and discussion about how 
we're going to move forward from this, and I think it reminds 
me of when we had in this very hearing--I guess you have this 
room for big investigative hearings. The last time I think I 
was in here was when the Challenger blew up and we had a big 
discussion about what was the fault behind the Challenger 
system, and we found out that there were system failures. Yes, 
there was freezing of the temperature in the O-ring, but we 
found that there were many, many other problems that led to 
that. I think that's what we're going to find here as well, 
that there is too cozy a relationship with MMS and the 
oversight, and that the industry and the oversight of the 
various things my colleagues have been talking about with the 
blowout preventers and other things, that there is much more 
oversight and detail that needs to be made here.
    But I think the question that's going to remain is how are 
we going to clean up $14 billion of oil spill, or whatever the 
number is, and that we really have an accounting here of how 
that is going to work, because we have to move forward with 
preserving that area.
    So, Mr. Newman or Mr. Probert, I don't know if you have any 
comments about that, because I definitely feel like the case 
from defense is being built here this morning.
    Mr. Newman. I guess I would agree with the way Mr. McKay 
has characterized it. Liability and culpability and ultimate 
responsibility for the events that resulted in the incident are 
one thing, and responding to the economic impact of the event 
is another thing. I think the way Senator Landrieu has 
explained it coincides with my understanding, which is that as 
the lease operator and the well owner that falls on BP.
    Mr. Probert. I would simply add that well owners, drilling 
contractors, and service providers like ourselves really do 
work very closely to try and create a safer environment to 
develop oil and gas resources, and it's in the interests of all 
of us and the industry in general and the Nation's energy 
security that we learn from this and continue to take those 
learnings and build them into our future operating procedures 
and technology.
    Senator Cantwell. For one opinion, what I've learned from 
this situation is I think it's time for us to diversify off of 
oil.
    So thank you, Mr. Chairman.
    Senator Landrieu. Mr. Chairman.
    The Chairman. Senator Landrieu wishes to put something in 
the record. Go right ahead.
    Senator Landrieu. Thank you. I just have some documentation 
about the value of the Louisiana seafood industry, which is 
more than $3.4 billion I just want to put in the record. Thank 
you, Mr. Chairman.
    The Chairman. I think all Senators, at least all who are 
here, have had a chance to ask one round of questions. Let me 
now start on a second round. Senator Murkowski, did you have 
questions?
    Senator Murkowski. I'll be very brief, Mr. Chairman.
    Mr. McKay, there was an Associated Press article that 
referenced the comprehensive blowout plan for the Deepwater 
Horizon. The article states that BP had not filed a specific 
comprehensive blowout plan and indicated that it was not 
required to file a scenario for potential blowout because it 
didn't trigger certain conditions cited in the MMS report. The 
article goes on to speculate whether or not--if there had been 
a specific, a site-specific plan, it would have helped to 
facilitate a quicker response.
    Can you comment on this? Was there in fact an exemption? 
did you file a site-specific comprehensive blowout plan?
    Mr. McKay. I believe that is in reference to the exclusion 
that's granted by the MMS for specific wells in a given area.
    Senator Murkowski. What is the exclusion?
    Mr. McKay. When the lease sale is conducted, an 
environmental impact statement is done, which is a very 
extensive environmental study. That's one for the lease sale. 
Then there are grid environmental assessments that are done in 
the areas within that lease sale. That environmental assessment 
in the EIS are utilized as the environmental assessments for 
drilling wells, and you essentially apply for exclusion because 
they've already been done, and that's what we did. That's 
industry practice and MMS practice.
    Senator Murkowski. Do you believe that it would have helped 
BP, Transocean, Halliburton, in this instance had there been a 
specific blowout prevention plan?
    Mr. McKay. I don't think it's called a ``blowout prevention 
plan,'' though maybe I'm wrong.
    Senator Murkowski. I'm going off an AP article, so I 
apologize for that.
    Mr. McKay. I don't--I honestly don't believe that--we filed 
our scenarios around this well and the environmental 
assessments that were done impact the spill response plans, and 
those are clear, those are worked with the MMS. They're very 
extensive. I don't think the individual well location within an 
area, an environmental assessment would have made any 
difference. I don't think so. I don't know that for a fact, but 
that's what I believe.
    Senator Murkowski. But you maintain that because MMS did 
not require it there was no necessity from BP's part in doing 
anything?
    Mr. McKay. I don't believe so. I believe we were under 
normal industry and MMS practice.
    Senator Murkowski. Then a question to all three of you, and 
it's the same question: Given where we are after the Deepwater 
Horizon incident, have you ordered any additional safety 
measures or modified procedures for operation outside the U.S. 
based on this incident?
    Mr. McKay. Yes. We have requested that all of our rig 
contractors provide an update on any modifications that may 
have been made to blowout preventers. We have instituted some 
incremental testing on blowout preventers worldwide and have 
sent notices to all of our businesses around the world that are 
doing deepwater drilling. We have also communicated with the 
MMS everything we understand about that, and they are 
incorporating what we're learning here into new and--I think 
new testing--well, I don't know what will come out, but new 
ideas around how to ensure safety around these types of 
incidents.
    Senator Murkowski. Let me ask you. You've indicated that 
you're asking for information on any modifications. Do you have 
any reason to believe that the Deepwater Horizon BOP was 
modified?
    Mr. McKay. During our intervention work in the last 3 weeks 
we have--we do have reason to believe that it was modified. I 
don't know the extent of those modifications.
    Senator Murkowski. Mr. Newman, can you speak to that, 
because I'm assuming if there were any modifications that would 
have been done by Transocean?
    Mr. Newman. They were in fact done by Transocean, Senator. 
They were performed in 2005. They were done at BP's request and 
at BP's expense.
    Senator Murkowski. What were those modifications?
    Mr. Newman. As I mentioned in a comment earlier, the BOP on 
the Deepwater Horizon is fitted with five ram preventers on the 
rig. The modification made in 2005 converted one of those ram 
preventers, the lowermost ram preventer, from a conventional 
wellbore sealing ram preventer to a BOP test ram. So it allowed 
for more efficient testing of the BOP.
    Senator Murkowski. OK, but why would that modification have 
been requested?
    Mr. Newman. Because testing a BOP interrupts the well 
construction process, it does have an impact on the efficiency 
of the operation, and to the extent that we can make that 
process more efficient it has clear benefits in terms of the 
overall time required to drill the well.
    Senator Murkowski. Have you ever done such a modification?
    Mr. Newman. Yes, ma'am.
    Senator Murkowski. Multiple times? I mean, is this standard 
on deeper water wells?
    Mr. Newman. On rigs that have blowout preventers that are 
fitted with a number of ram preventers that exceeds 
requirements, we have converted rams to BOP test rams.
    Senator Murkowski. Have there been any incidents with those 
where the BOPs have been modified?
    Mr. Newman. There have been BOPs modified. There are no----
    Senator Murkowski. Right, but have there been any 
incidents?
    Mr. Newman. No incidents related to that modification.
    Senator Murkowski. Let me ask you the same question. Within 
your interests outside the United States, have you requested 
any additional safety measures or modification procedures as a 
result of this incident?
    Mr. Newman. Senator, we operate a consistent standard of 
policies and procedures, maintenance practices, and operating 
practices across the Transocean fleet throughout the world, and 
in the aftermath of this incident until we find out what may 
have contributed to the cause of events, we have not changed 
any of that standard Transocean system of policies and 
procedures around the world.
    Senator Murkowski. Mr. Probert.
    Mr. Probert. Other than to alert our organization around 
the world to this incident, firstly. Second, we also operate to 
a standard set of procedures, and it's certainly our 
expectation that as we learn from this incident there may well 
be some changes in process, procedures, or other approaches 
which we would then implement as part of our global standard. 
But that will wait, obviously, on the findings of the analysis 
of the root causes of this incident.
    Senator Murkowski. Thank you, Mr. Chairman.
    The Chairman. Let me just ask a question here before going 
on to everybody else. One of the issues the first panel talked 
about was the known limitations on the ability of these shear 
rams to function under certain circumstances where there's 
joints in the drill shaft that they're expected to cut and that 
sort of thing. Do you agree that the shear ram cannot cut these 
tool joints, and if so is that not a serious design flaw in the 
BOP? Mr. Newman?
    Mr. Newman. I agree with the statement that there are 
tubulars that are used in the well construction process that 
the shear rams are incapable of shearing.
    The Chairman. Do you agree that that's a serious design 
flaw in the BOP?
    Mr. Newman. I do not support the contention that that's a 
design flaw in the BOP, because the industry recognizes those 
limitations and there are strict operating procedures in place 
to account for the inability of the BOP--the inability of the 
shear rams to shear every tubular that might run through the 
BOP.
    The Chairman. Those are operating procedures that would 
apply to your personnel operating that BOP?
    Mr. Newman. Yes, our personnel understand what those 
operating procedures are.
    The Chairman. Do you believe they were followed in this 
case?
    Mr. Newman. I do.
    The Chairman. So you think that, even though the 
operating--the proper operating procedures were followed, the 
failure of the shear rams to stop the explosion or the blowout 
from occurring was not a problem with--it's not a problem with 
the design of the BOP, it's not a problem with the way the BOP 
was operated or managed? How do you explain the fact that this 
BOP was not able to prevent this blowout?
    Mr. Newman. The operating procedures that I referred to 
earlier, Senator, would apply to the processes our people use 
when they are manipulating pipe in the BOP or through the BOP. 
So running drill pipe down to the bottom to put the drill bit 
on the bottom of the hole to continue to drill, pulling that 
drill bit back up through the BOP, running casing down through 
the BOP to progress a casing operation.
    The operating procedures I was referring to that are people 
are following relate to situations where our people are in 
control of the pipe that is going through the BOP.
    The Chairman. They were not in control at the time this 
accident occurred?
    Mr. Newman. I believe there are--without knowing today, 
Senator, what's inside the BOP, it is entirely possible that 
there is material inside the BOP that would have come from the 
wellbore, not from the Transocean people on the rig.
    The Chairman. From the wellbore itself?
    Mr. Newman. Yes, sir.
    The Chairman. Let me go ahead with Senator Landrieu.
    Senator Landrieu. Thank you, Mr. Chairman.
    Let me just, since I've got a minute, put some additional 
information into the record which I think will be important. 
The commercial fishermen in the Gulf of Mexico harvested 1.27 
million pounds of fish and shellfish, generated $659 million in 
revenue. 40 percent of the Nation's commercial seafood harvest 
is from the Gulf of Mexico, and that's one of the industries at 
risk.
    We also, of course, have commercial boat captains whose 
boats have been pushed into their slips and their harbors, 
unable to operate. So the amount of economic damage continues 
to mount.
    I am encouraged, Mr. McKay, by what you say, that there 
will be no limit to legitimate true economic damage, because it 
will be substantial, whether it's $14 billion or something up 
to that amount. We don't know. It's important for the Gulf 
Coast, who has leaned forward in this production, for the 
people of the Gulf Coast, from Florida, even though they don't 
allow drilling, all the way over to Texas, that do allow 
drilling, to know that BP and the operators will be there to 
protect their economic interests. We want to make sure that the 
government agencies like the Small Business Administration, 
like Commerce, like other industries, can step up and help us 
through this difficult time.
    But because my eyes are leaning forward even despite this 
accident, I want to ask a question about ultra-deep drilling. 
According to Offshore Magazine, there are currently about 120 
deepwater sites drilling in the world today. Is that 
approximately accurate, 120 are drilled every year, deepwater? 
That's my information. Do any of you dispute that?
    [No response.]
    Senator Landrieu. OK, approximately 120 are being drilled 
as we speak. What is required internationally to make sure that 
this doesn't happen? Or maybe I should ask the question this 
way: Are the requirements, Mr. Newman, which you say you 
exceeded, that MMS requires for this deepwater drilling--are 
our requirements the highest internationally or are there other 
nations that require higher safety standards than what MMS is 
requiring of us to do this kind of exploration and production?
    Mr. Newman. The regulatory regimes--we operate around the 
world and we operate in about 30 countries. The regulatory 
regimes vary from very minimal to quite stringent. I would 
characterize the U.S. as closer to the end of being quite 
stringent in terms of very well-described rules as it relates 
to----
    Senator Landrieu. But we're not the most stringent?
    Mr. Newman. I think there are aspects of the regulatory 
regime in places like the U.K. and Norway that might be 
characterized as being more stringent than the United States.
    Senator Landrieu. But you're also testifying that there's 
some places where the regulations could be quite lax?
    Mr. Newman. There are areas where we operate with very 
little regulatory oversight. But as I mentioned a minute ago, 
our policies and procedures, our maintenance standards, our 
equipment standards, our operating practices, are consistent 
throughout the world regardless of the regulatory environment 
we're operating in.
    Senator Landrieu. So you would say that the requirements 
that--and this committee has a great deal of responsibility in 
this regard as the oversight for Interior and MMS. You would 
say that the standards that we promote in this committee and 
here in this Congress have international implications, because 
what we require of you to drill in the Gulf you normally would 
follow those around the world? So it's important for us to 
everything this right; would you say that's true or not?
    Mr. Newman. I think because of the opportunity that the 
administration and the Congress have to influence the way 
things are done in the U.S., it does have international 
implications.
    Senator Landrieu. Let me ask you this, Mr. Newman. You just 
recently, your company, acquired another drilling operator, 
which I think caused you then to become the largest in the 
world. My question--some of my constituents might be thinking, 
are you too large to be safe? What kind of parameters are in 
place to make sure that--and you did, too, Mr. McKay. You've 
acquired other companies to become a quite large operator.
    What could you say, Mr. Newman, to give us any confidence 
that when you acquired this most recent acquisition--if you 
doubled in size, did you double your safety operators? Could 
you comment about that?
    Mr. Newman. You're referring to the combination between 
Transocean and GlobalSantaFe----
    Senator Landrieu. Yes.
    Mr. Newman [continuing]. Which took place in November 2007. 
That, the combination of those two companies and the 
integration of such a large work force, I think in hindsight 
went extremely well, and I believe that was due in large part 
to the strong operating cultures and strong safety cultures 
that both of those organizations had. Both organizations prided 
themselves on a focus on safety, a focus on customer 
satisfaction, and a focus on the quality and the performance of 
our drilling equipment.
    So I do not think it had an impact on our ability to 
operate safely.
    Senator Landrieu. Mr. Chairman, in this instance it may or 
may not have, but I do think that this committee has to give 
some focus to the merging of some of these companies and to the 
extent in which they operate to make sure that they have 
consistent policies throughout.
    Thank you.
    The Chairman. Senator Sessions.
    Senator Sessions. Just to follow up a bit on the removal of 
the mud, the Wall Street Journal says that it is common 
practice to pour wet cement down into the pipe. The wet cement, 
which is heavier than drilling mud, sinks down through the 
drilling mud and hardens into the plug. Then the mud is removed 
after the plug is in place.
    In this case, a decision was made shortly before the 
explosion to perform the remaining tasks in reverse order, 
which is to take the mud out first. Mr. Lloyd Heinz, Chairman 
of the Department of Petroleum Engineering at Texas Tech, 
agrees that this is an unusual approach. ``Normally you would 
not evacuate the riser''--that's the pipe from the seafloor to 
the rig--``until you were done with the last plug at the 
seafloor,'' he said in an interview.
    So I guess I'll ask you, Mr. McKay: Do you agree that 
normally you would not do that?
    Mr. McKay. I don't have specific knowledge of the procedure 
for this well, whether reverse circulating was part of the 
procedure or not. That will be part of the investigation.
    Senator Sessions. Mr. Newman, would you comment on that? Is 
that normal? Would you agree with Mr. Heinz?
    Mr. Newman. It is normal practice to remove the drilling 
mud from the riser prior to disconnecting the riser from the 
well, and that would have been part of the logical sequence of 
events. Now, I don't have any specific knowledge with respect 
to the actual order of the events as they took place on Tuesday 
evening the 20th, because our record of events ends at 3 p.m.
    Senator Sessions. Would you agree, Mr. Probert, that that 
was normal?
    Mr. Probert. I don't know the details. I certainly don't 
want to be nonresponsive to your request, Senator, concerning 
your earlier question, which was is this normal procedure and 
is this undertaken on a regular basis. That's something that I 
don't have knowledge of today, but I would certainly be more 
than willing to sort of gather, attempt to gather that 
information for you should it be helpful to you.
    Senator Sessions. Mr. McKay, had the mud not been removed 
first and replaced by seawater, would that have made the 
blowout more or less likely in your opinion?
    Mr. McKay. I don't know. I don't know.
    Senator Sessions. Mr. Newman.
    Mr. Newman. I think that calls into question the actual 
mode of failure, and until we can determine that I think any 
hypothesis about the impact the mud in the riser might have had 
I think is premature.
    Senator Sessions. Mr. Probert.
    Mr. Probert. Indeed, we really need to gather the 
information, reconstruct the sequence of events, to be in a 
position to establish exactly what took place.
    Senator Sessions. Mr. Newman, I suppose you've worked for a 
number of companies and drilled for them. I'm intrigued by my 
colleague's $10 billion cap on the strict liability 
legislation. I think it's something we should consider. But I 
understand there could be a result that it would favor only the 
super-major oil producers because the sum of money is so large. 
Do you think that significant increase to the liability caps 
could keep competitors out of the business, smaller companies? 
Would that be good policy?
    Mr. Newman. I'm not sure I want to comment on public 
policy. But I believe the Congress ought to take into 
consideration all of the potential ramifications, including the 
commercial ramifications of such a policy.
    The Chairman. Senator Cantwell, did you have additional 
questions?
    Senator Cantwell. I did, Mr. Chairman. I know we're trying 
to wrap this up, but I wanted to go back to Mr. McKay if I 
could because I think this issue of who pays for this cleanup 
is so critically important.
    Mr. McKay, just going back to you, although I'm happy to 
have the other witnesses chime in here. It literally was just 
last year that the last parts of the Exxon Valdez cleanup were 
settled. I mean, it was a 20-year process. It went all the way 
to the Supreme Court.
    So Mr. McKay, are you saying you're going to avoid that by 
paying legitimate claims in advance? I know you can't stop 
anybody from suing you, but are you saying you're going to pay 
legitimate claims in advance of any court process?
    Mr. McKay. We are paying legitimate claims right now, so 
yes, I am. Obviously we can't keep from being sued, but yes, we 
have said exactly what we mean: We're going to pay the 
legitimate claims.
    Senator Cantwell. So if it's a legitimate claim of harm to 
the fishing industry, both short-term and long- term, you're 
going to pay?
    Mr. McKay. We're going to pay all legitimate claims.
    Senator Cantwell. If it's an impact for a business loss 
from tourism, you're going to pay?
    Mr. McKay. We're going to pay all legitimate claims.
    Senator Cantwell. To State and local governments for lost 
tax revenue, you're going to pay?
    Mr. McKay. Question mark.
    Senator Cantwell. Long-term damages to the Louisiana 
fishing industry and its brand?
    Mr. McKay. I can't--I can't quantify or speculate on long-
term. I don't know how to define it.
    Senator Cantwell. Additional troubles from depleted 
fisheries and their recovery?
    Mr. McKay. We're going to pay all legitimate claims.
    Senator Cantwell. Shipping impacts?
    Mr. McKay. Legitimate claims.
    Senator Cantwell. Impacts on further drilling operations? 
I'm talking about things now that were part of the Exxon 
Valdez. I guess what I'm saying is I think the American people 
are most anxious about this. I guess let me just go back. OPA 
1990 set a framework, a process, that basically said: Here's 
the liability and here's the framework. So we obviously only 
have so much money in that. I know my colleagues think we're 
going to raise that, but to make that retroactive is nearly 
impossible.
    So you're stepping up today at a hearing with probably the 
best advice money can buy behind you, with PR and legal teams, 
and I'm sure they're saying: Let's say that we're going to pay. 
So I want to make sure that we really understand what you are 
saying you are going to be committed to today, because the 
long-term impacts of this is going to be for 20 years and we 
cannot sustain this kind of behavior or cost, and I want to 
make sure that we're getting full answers to the coverage that 
you are really signing up for today.
    Mr. McKay. I'm trying to give you as clear an answer as I 
possibly can. We are trying to be extremely responsive, 
expeditious, meet every responsibility we have as a responsible 
party, and that means pay all legitimate claims. So that is our 
intent. I can't speculate on every individual case, but I can 
tell you this is not about legal words; this is about getting 
it done and getting it done right.
    Senator Cantwell. I hope so. Impacts to the pristine 
beaches that we have in this area, those are legitimate claims?
    Mr. McKay. Yes, as termed. If it impacts the beaches and 
impacts commerce, yes.
    Senator Cantwell. Mr. Chairman, I am one who hopes that we 
never get into that situation where now we're into some court 
debating about what is now a legitimate claim, because you're 
making a big presentation here that you are stepping up to 
these responsibilities. I hope that is true. I hope, Mr. 
Chairman, that we will also go back on the legislation we've 
already passed out of this committee that included an opening 
up further of the Gulf and pass legislation to reconsider that. 
I think this is clear evidence that the beaches of Destin don't 
need to be subject to any more oil spill threats in the future.
    I thank the chair.
    The Chairman. Thank you very much.
    If there are no other questions--do you have anything more, 
Senator Sessions?
    Senator Sessions. No. I thank Senator Cantwell for pursuing 
that line of inquiry. I do believe there's some confusion 
about--I've tried to look at the law on it. My understanding is 
legally you still remain subject to all the normal trespass and 
pollution laws of a State if you damage property or beaches. Is 
that correct?
    Mr. McKay. I don't understand the law in detail, but we'll 
be subject to all laws for sure.
    Senator Sessions. Essentially I would say this. The 
provisions in the Pollution Act that provide for these damages, 
strict liability damages, expressly--it is expressly stated in 
the Act that that does not abrogate existing State law. So I do 
feel like that that's part of it.
    But I believe, again, your answer is you should do what's 
right and compensate fully and not try to utilize technical 
defenses that are not legitimate.
    Thank you, Mr. Chairman.
    The Chairman. Let me just thank the witnesses for their 
testimony, indicate that if members have additional questions 
they want to submit for the record they should do so by the end 
of business tomorrow on Thursday. If you folks would be able to 
respond to those in the next week, that would be appreciated.
    Thank you all very much, and that will conclude the 
hearing.
    [Whereupon, at 1:22 p.m., the hearing was adjourned.]
                                APPENDIX

                   Responses to Additional Questions

                              ----------                              

       Responses of F.E. Beck to Questions From Senator Murkowski
    Question 1. Can you describe your perspective in terms of your 
observations of the regulatory environment and technological 
improvements for offshore oil and gas over the years? Specifically, do 
you observe that industry and government have been taking their safety 
and environmental responsibilities more seriously, less seriously, or 
about the same as OCS development has expanded into the deepwater?
    Answer. Although I am not involved in the offshore business, my 
observation is that safety and environmental concerns for deepwater are 
taken very seriously by the vast majority of operators and service 
companies. Development of technologies for deepwater have far outpaced 
developments for OCS and onshore environments. However, in light of the 
Deepwater Horizon disaster, I cannot help but think that the abilities 
of regulatory agencies have not kept pace with the technological 
developments associated with deepwater. I believe there needs to be an 
expanded skill set and training matrix developed for regulators so that 
they will be able to properly monitor and approve deepwater operation 
plans.
    Question 2. In the event of a large natural gas ``bubble'' hitting 
the rig, are you aware of or would you favor requiring mechanisms to be 
available where gas sensors and alarms could trigger an automatic 
shutoff of any potential spark or flame source?
    Answer. Using gas sensors in a ``smart'' manner to prevent an 
explosion seems to me a very good idea. The ``smart'' part will need to 
recognize that shutting down power at the wrong time can create many 
other problems on the rig and potentially in the wellbore itself, so it 
would be necessary to make sure the automatic shutoff would only occur 
in a true emergency. In the normal course of drilling a well there are 
numerous instances of gas being brought to surface that are not 
emergency situations, so these normal occurrences would need to be 
built into the ``smart'' system. All-in-all I like the concept.
    Question 3. Can you describe the level to which the Deepwater 
Horizon is in a situation where it is dependent on its BOP to avoid 
catastrophic blowouts perhaps more than other rigs in shallower waters?
    Answer. Actually, I consider deepwater drilling to be less risky in 
terms of blowouts than OCS, or shallow water, operations. This is 
because the BOP's are on the seafloor, and when correct designs and 
procedures are in place, the gas and pressures are kept well away from 
the rig and personnel. I think it is critical that everyone understands 
that blowout preventer systems as designed today will never be able to 
overcome poor well design or faulty operational decision making. The 
blowout preventers fit into an overall well design. Drilling engineers, 
and regulators, must understand how the BOP's are intended to be used 
as a well control tool. I think that blowout preventer systems in a 
subsea or deepwater environment are much more critical as a means to 
protect the environment. As we have seen on the Deepwater Horizon, 
there are limited subsea intervention methods for capping a subsea 
blowout. On OCS operations there are many more tools, methods, and 
techniques developed for controlling a blowout once it has occurred. It 
is obvious that we need to develop new methods for intervention.
         Response of F.E. Beck to Question From Senator Lincoln
    Question 1. In media reports following this disaster, I keep 
reading over and over again that certain devices and technologies being 
discussed to stop the leak have never been used in water this deep. Do 
you believe the depth of water presents more challenges in containing 
the leak? Do you believe more testing, research and technologies are 
needed to ensure the safety of deepwater and ultra-deep water drilling?
    Answer. There are very few proven technologies for capping a subsea 
blowout, partially because there have been so few blowouts in this 
environment, but also because the deepwater environment is very 
difficult to mimic in a controlled manner, so proving technology is 
very difficult. There definitely needs to be a concerted effort made to 
develop and test equipment, new technology, and procedures in a 
realistically simulated deepwater environment. Industry, government, 
and academia need to join in a consortium to create a research and 
testing facility and think tank so that new and improved tools and 
processes can be developed to allow continued safe and reliable 
development of deepwater resources.
                                 ______
                                 
                                                WilmerHale,
                                     Washington, DC, June 11, 2010.
Hon. Jeff Bingaman,
Chairman, Committee on Energy and Natural Resources, U.S. Senate, 
        Dirksen Senate Building, Washington DC.
Re: Response to Chairman Bingaman's Correspondence Dated May 17, 2010, 
to Mr. Lamar McKay, Chairman and President of BP America, Inc.

    Dear Chairman Bingaman: I am writing on behalf of BP America, Inc. 
(BP) in response to your May 17, 2010 correspondence to Mr. Lamar 
McKay, its Chairman and President, in which you and your colleagues 
requested responses to certain questions for the record in connection 
with the U.S. Senate Energy and Natural Resources Committee's 
examination of the incident in the Gulf of Mexico involving the 
Deepwater Horizon oil rig. As part of BP's commitment to provide 
information responsive to the Committee's requests in a timely manner, 
we are providing the following responses to questions of the Committee, 
which are highlighted below, including the documents identified by the 
Bates range [BP-HZN-SNR00016959 to BP-HZN-SNR00019314]. To provide 
responsive information in a timely fashion, BP has endeavored to 
collect information and documents from some of the sources likely to 
have relevant data and best able to provide it within the timeframe set 
out by the Committee. This information supplements BP's earlier 
production to the Committee on June 3, 2010 and represents current 
understandings of these matters.
    Included in this production are the following documents responsive 
to the Committee's requests (b), (c), (d) and certain subparts of (f), 
respectively, from your May 17 letter: (1) additional correspondence 
between BP employees and the Minerals Management Service (MMS) related 
to the Macondo well [BP-HZN-SNR00016988 to -89; BP-HZN-SNR00016991 to -
995; BP-HZN-SNR00017392 to -94; and BP-HZN-SNR00018153 to -75]; (2) 
documents relating to the risk of an accidental release of oil or gas 
at the Deepwater Horizon drilling rig or other offshore deepwater 
drilling facilities; (3) additional reports of daily activity on the 
Deepwater Horizon [BP-HZN-SNR00017395 to -8152]; and (4) well program 
documents [BPHZN-SNR00016959 to -87; BP-HZN-SNR00016990; BP-HZN-
SNR00016996 to -7391; and BP-HZN-SNR00018176 to -80]. In addition, this 
production includes documents responsive to elements of the document 
requests embedded in the Chairman's several questions herein.
      Responses of Lamar McKay to Questions From Senator Bingaman
    Question 1. Please list all types of data from the Deepwater 
Horizon operation now in BP's possession, and whether each item of data 
has been made available without limitation to the Federal Government 
investigators, and identify those investigators.
    Answer. If the data has not been made available without limitation, 
please state the extent and nature of any limitation. Please describe 
the means by which data was transferred from the rig to BP data 
collection facilities off of the rig. BP currently possesses the 
following information recorded or measured by sensors on or from the 
Deepwater Horizon for the Deepwater Horizon Mississippi Canyon 252 Well 
#1 (MC252 #1) drilling operation. Except as noted, these data have not 
been provided to any federal investigator. BP understands the request 
as seeking data of the types listed and, on that basis, believes the 
listing below is complete. However, reviews are continuing and BP will 
supplement this response as appropriate.
          (a) Wellbore data
           Wireline logs and evaluation data.--This data for 
        the Deepwater Horizon was provided to BP by the contractor on a 
        CD after the April 20 incident.
           Mud logs.--The Deepwater Horizon mud logs were 
        provided to BP on a CD by the contractor after the April 20 
        incident.
           Logging While Drilling/Monitoring While Drilling 
        (LWD/MWD) logs.--The Deepwater Horizon LWD/MWD logs were 
        provided to BP by the contractor on a CD after the April 20 
        incident.
           Wellbore Surveys.--The Deepwater Horizon surveys 
        were provided to BP on a CD by the contractor after the April 
        20 incident.

          (b) Surface Data--(rig sensors that capture parameters such 
        as flow-in, flow-out, pit volume and pressures). This 
        information is real-time data that is provided to BP via an 
        internet site established by the contractor and on ASCII files 
        supplied by the contractor. This data was provided to the 
        Marine Board Investigation (MBI) Panel, on May 8 and May 21, 
        2010.
          (c) Computer Analyzed Makeup Of Casing String Connections.--
        This information is believed to have been provided to BP by the 
        contractor to BP after the April 20 incident.
          (d) Blowout Preventer (BOP) Digital Test Data.--This data for 
        the Deepwater Horizon was provided electronically to BP by the 
        contractor.
          (e) Cement Pumping Data Report Data.--This data was provided 
        to BP by the contractor after the April 20 incident.

    Question 2. Please list all contacts with and witness statements 
from eyewitnesses to the Deepwater Horizon operation including but not 
limited to the crew present on the rig at the time of the explosion. 
Please state whether these statements and witnesses have been made 
available to the Federal government investigators without limitation, 
and identify those investigators. If they have not, please state the 
extent and nature of any limitation.
    Answer. The following BP employees were eyewitnesses to the 
incident and present on the scene at the time of the April 20 Deepwater 
Horizon incident: (a) Shane Albers, (b) Robert Kaluza, (c) Lee Lambert, 
(d) Patrick O'Bryan, (e) David Sims, (f) Brad Tippetts, and (g) Donald 
Vidrine. Each of these witnesses provided a witness statement to United 
States Coast Guard personnel following the April 20 incident. Messrs. 
Vidrine and Kaluza also prepared a written statement shortly after the 
April 20 incident. BP understands that employees of other companies 
also provided statements to the Coast Guard. Pursuant to a 
confidentiality order issued by the Coast Guard, BP is prohibited from 
distributing this information.
    Question 3. Please describe BP's data and document retention policy 
as it relates to material relevant to the Deepwater Horizon Macondo 
well operation. Please state when the last data from the Deepwater 
Horizon was received by BP.
    Answer. Since the Deepwater Horizon incident occurred on April 20, 
2010, BP has taken steps to preserve documents that are potentially 
relevant to the Macondo well operation, the April 20 incident, and the 
subsequent discharge of hydrocarbons into the Gulf of Mexico. For 
example, BP has sent a Legal Hold Order to over 3,500 BP employees 
identified as possible custodians of potentially relevant documents. 
The Legal Hold Order directs recipients to preserve all potentially 
relevant documents, including those relating to the April 20 incident; 
the response to that incident, including investigation, containment and 
clean-up efforts; any damages resulting from the incident; the 
exploration of, and drilling operations at, Mississippi Canyon Block 
252, where the Macondo well is located; and the Deepwater Horizon rig 
and equipment, including their design, safety features, maintenance and 
operation; among many other matters. The Legal Hold Order explains that 
the ``documents'' that must be preserved include all potentially 
relevant electronically stored information (including electronic mail, 
and other electronic databases or files, such as Word, Excel, and 
PowerPoint), paper documents, video and other recordings, and physical 
objects, among other things. The Legal Hold Order instructs that all 
potentially relevant documents must be preserved, and calls for the 
immediate suspension of any document retention policies that could 
cause any such documents to be discarded or no longer retained.
    Based on presently available information, the surface data from the 
Deepwater Horizon was transmitted continuously by the contractor, 
including on April 20, to a website to which BP had access that 
disclosed real-time data of certain parameters, and stopped being 
transmitted at 21:49 CT on the night of April 20, which is the last 
data received from the Deepwater Horizon.
    Question 4. Please describe the number of BP company employees at 
the rig site at the time of the explosion as well as their job title 
and function, education, and years of experience working offshore. Also 
please state the number and job titles of all BP employees involved in 
the well planning team for the Macondo well, including the original and 
all subsequent well plans. Please include information for each employee 
as follows: job title, education, and years of experience.
    Answer.
          (a) The following BP employees were on the Deepwater Horizon 
        at the time of the April 20 incident:

            1. Shane Albers. Mr. Albers' job title is Subsea Project 
        Engineer Challenger. Mr. Albers' job function is focused on 
        delivery of subsea tie-back projects to new or existing hosts. 
        Mr. Albers holds a Bachelor of Science in Mechanical 
        Engineering and a Bachelor of Business Administration in 
        Finance, Economics, and General Business from Texas Tech 
        University, earned in 2009. Mr. Albers has 1 year of experience 
        working offshore.
            2. Robert Kaluza. Mr. Kaluza's job title is Well Site 
        Leader. Well Site Leaders are stationed on the rig site to 
        evaluate whether the well is constructed to BP design 
        specifications. Mr. Kaluza holds a Bachelor of Science in 
        Business Administration and Finance from University of North 
        Dakota, earned in 1973. He also has a Masters of Business 
        Administration from the University of Alaska, earned in 1986, 
        and a Bachelor of Science in Petroleum Engineering from the 
        University of Alaska, earned in 1995. Mr. Kaluza has 35 years 
        of experience in the oil and gas industry and over 8 years as a 
        Well Site Leader, including nearly 2 years of offshore 
        deepwater working experience.
            3. Conward Lee Lambert. Mr. Lambert's job title is Well 
        Site Leader Trainee. Mr. Lambert's job function is to develop 
        the necessary skills and competency needed to work as a 
        deepwater Well Site Leader. Mr. Lambert holds a Bachelor of 
        Business Administration in Computer Information Systems from 
        Texas State University, earned in 2002. Mr. Lambert has 2 years 
        of experience as a Well Site Leader, and 6 months of offshore 
        drilling training experience.
            4. Patrick O'Bryan. Dr. O'Bryan's job title is Vice 
        President for Drilling and Completions in the Gulf of Mexico. 
        Mr. O'Bryan's job function is to manage drilling and 
        completions for BP's Gulf of Mexico business. Mr. O'Bryan holds 
        a PhD in Petroleum Engineering from Louisiana State University, 
        earned in 1988, a Master of Science in Petroleum Engineering 
        from Louisiana State University, earned in 1985, and a Bachelor 
        of Science in Petroleum Engineering from Mississippi State 
        University, earned in 1983. Mr. O'Bryan has 22 years of 
        experience in the oil and gas industry including over 5 years 
        of deepwater drilling experience.
            5. David Sims. Mr. Sims' job title is Operations Manager 
        for Exploration & Appraisal in the Gulf of Mexico. Currently, 
        Mr. Sims' responsibilities include managing operations for the 
        relief well being drilled by Transocean's DDIII rig, and 
        previously, for exploration and appraisal in the Gulf of 
        Mexico. Mr. Sims holds a Bachelor of Science in Mechanical 
        Engineering from Texas A&M University, earned in 1982. Mr. Sims 
        has 28 years of experience in the oil and gas industry, 
        including 4 years of deepwater drilling experience.
            6. Brad Tippetts. Mr. Tippetts' job title is Subsea Wells 
        Engineer Challenger. Mr. Tippetts' job function is to plan and 
        oversee all activities that fall under the category of wellhead 
        conversion for exploration/appraisal wells to development well. 
        Mr. Tippetts holds a Bachelor of Science from University of 
        Utah, earned in 2006 and has 3 years of experience working 
        offshore.
            7. Donald Vidrine. Mr. Vidrine's job title is Well Site 
        Leader. Well Site Leaders are stationed on the rig site to 
        evaluate whether the well is constructed to BP design 
        specifications. Mr. Vidrine holds a Bachelor of Science in 
        Agronomy from McNeese University, earned in 1970. Mr. Vidrine 
        has 32 years of experience as a Well Site Leader, including 25 
        years of experience working offshore.

          b. Numerous BP employees provided input and guidance in the 
        planning, design, and/or execution of the MC252 #1 well. To 
        date we have identified the following as individuals who 
        provided such input and/or guidance:

            1. David Sims. Identified above.
            2. Mark Hafle. Mr. Hafle's job title is Senior Drilling 
        Engineer. Mr. Hafle holds a Bachelor of Science in Petroleum 
        Engineering from Marietta College. He has 23 years of 
        experience in the oil and gas industry, all working for BP. He 
        has 17 years of experience in deepwater drilling.
            3. Brett Cocales. Mr. Cocales' job title is Senior Drilling 
        Engineer. Mr. Cocales holds a Bachelor of Science in Petroleum 
        Engineering from Montana Tech, earned in 1986 and a MBA from 
        University of Montana earned in 1989. He has 24 years of 
        experience in the oil and gas industry, including nearly 10 
        years in deepwater drilling.
            4. John Guide. Mr. Guide's job title is Wells Team Leader. 
        Mr. Guide holds a Bachelor of Science in Chemical Engineering 
        from the University of Pittsburgh, earned in 1980. He has 30 
        years of experience in the oil and gas industry, including 10 
        years in deepwater drilling.
            5. Ian Little. Mr. Little's title is Vice President of 
        Drilling and Completions for North Africa. Mr. Little holds a 
        Bachelor of Science in Civil Engineering from University of 
        Strathclyde (Glasgow, Scotland), earned in 1981. He has 28 
        years of experience in the oil and gas industry, including 8 
        years of deepwater experience in West of Shetlands (UKCS), 
        Egypt, and the Gulf of Mexico.
            6. Donald Vidrine. Identified above.
            7. Robert Kaluza. Identified above
            8. Ronald Sepulvado. Mr. R. Sepulvado's job title is Well 
        Site Leader. He has a Bachelor of Science in Agricultural 
        Business from Louisiana State University, earned in 1971. He 
        has 33 years of experience as a Well Site Leader, all in 
        offshore drilling.
            9. Murry Sepulvado. Mr. M. Sepulvado's job title and 
        function is Well Site Leader. He has 32 years experience as a 
        Well Site Leader, all in offshore drilling.
            10. Gregg Walz. Mr. Walz's title is Drilling Engineering 
        Team Leader, Gulf of Mexico Exploration & Appraisal. Mr. Walz 
        holds a Bachelor of Science in Petroleum Engineering from New 
        Mexico Institute of Mining and Technology, earned in 1980. He 
        has 30 years of experience, including 14 years of experience in 
        offshore drilling of which 6 have been in deepwater.
            11. Brian Morel. Mr. Morel's job title is Drilling 
        Engineer. Mr. Morel holds a Bachelor of Science in Mechanical 
        Engineering from Rice University, earned in 2005. He has 5 
        years of experience in the oil and gas industry, including 2 
        years experience in deepwater drilling.

    Question 5. Were there any incentives or bonus programs available 
for your company employees or employees of any of your contractors in 
effect at the time of the Deepwater Horizon accident? If so, please 
describe the terms on which bonuses or incentives were available.
    Answer. BP had no incentives or bonus programs for any of the 
employees of any of the contractors for the Deepwater Horizon.
    Further, BP had no incentives or bonus programs for any BP 
employees directly related to the Deepwater Horizon. BP employees, 
including the BP employees who worked on the Deepwater Horizon, are 
eligible for participation in the Variable Pay Program (VPP), which 
creates the opportunity to receive additional compensation beyond the 
employee's base salary. The amount of the variable pay award depends on 
the combination of the employee's performance based on individual 
objectives set at the beginning of each year and the performance of the 
employee's Strategic Performance Unit (SPU) during the year. BP's Gulf 
of Mexico (GoM) operations is the SPU for BP's employees involved with 
the Deepwater Horizon. The variable pay award for such BP employees is 
based on the overall performance of the Gulf of Mexico SPU as a whole, 
and not on the performance of any individual drilling operation.
    Question 6. Please state whether there was any active monitoring in 
the Macondo well of the annulus (using downhole sensors) in the 20 
hours preceding the accident? Were there any sensors in the borehole? 
If so, please provide that data. Please also state whether it is 
included in the data listed in response to Question #1.
    Answer. Based on information presently available, during the 20 
hours immediately preceding the April 20 incident, all active 
monitoring was conducted using sensors at the surface, and not with 
downhole sensors.
    Question 7. Please state whether it is your intention to acquire 
downhole data during the relief well drilling process, and if so state 
the purposes for which you intend to use the data. Include in your 
answer whether it is your intention to use such data to analyze the 
integrity of the bottomhole or to get a better understanding of the 
competence of the cement within the production liner and in the 
annulus. Include in your answer whether HR2D seismic data has been or 
will be acquired. Do you have or will you obtain any data indicating 
any changes to the subsurface, both in terms of the existing Macondo 
well and the geology surrounding the well following the well blowout?
    Answer. BP has acquired high resolution two dimensional (HR2D) 
seismic data during the relief well drilling process. The purpose of 
collecting this data is to determine the presence of shallow hazards to 
support the relief well drilling program and casing design. These data 
were produced to this Committee on June 3, 2010 [BP-HZN-SNR00000007 to 
-010]. In addition, BP currently intends to collect downhole data in 
compliance with MMS requirements, as well as any other data necessary 
to complete the drilling of the relief wells, including but not limited 
to the following:

          (a) MWD/LWD logging data. Monitoring while drilling and 
        logging while drilling data includes subsurface lithology, 
        directional surveys, wellbore pressures and temperatures, and 
        drillstring dynamics of the relief well while drilling. The 
        purpose of collecting this data is to ensure the relief well 
        achieves the objective of intersecting the MC 252 #1 well and 
        to comply with regulatory requirements.
          (b) Drill cuttings from the 22'' shoe to total depth (TD). 
        The purpose of collecting this data is to allow for comparison 
        of the cuttings from the original well to aid in determining 
        the interval being drilled and to comply with regulatory 
        requirements.
          (c) Mud Samples from the 22'' shoe to TD. The purpose of 
        collecting this data is to allow for geochemical analysis to 
        check for any potential oil from the original well.
          (d) Base oil samples from the 22'' shoe to TD. The purpose of 
        collecting this data is to allow for geochemical analysis to 
        check for any potential oil from the original well.
          (e) Magnetic Ranging data. The relative position of the 
        relief well with respect to the MC 252 #1 well will be 
        determined using magnetic measurements.

    The primary purpose of collecting the data described above is to 
enable the relief well's intersection with the MC 252 #1 well and for 
pumping operations to stop the flow of the MC 252 #1 well and prevent 
further flow. The collection of this data is not specifically intended 
to analyze the condition of the bottomhole and/or quality of the 
cementing related to the MC 252 #1 wellbore. Some of the data 
collected, specifically the mud and base oil samples, may provide some 
indication of changes to the subsurface, but it is not being collected 
solely or primarily for this purpose. BP may collect additional data in 
the future.
    Question 8. Please provide a complete description of the activities 
that were occurring on the rig within the last 12 hours of operation 
prior to the accident, and complete copies of any documents or data in 
your possession that reflect those activities. Include in your answer 
information on the activities of each employee and whether there were 
any visitors on the rig at the time. If so, what were the purposes of 
their visit?
    Answer. Investigations into the Deepwater Horizon incident are 
ongoing. That said, BP is producing a copy of a presentation developed 
by the team that is conducting BP's nonprivileged, internal 
investigation, which includes a timeline of events covering certain 
activities during the last 12 hours of operations [BP-HSN-SNR00018985 
to -9032]. As noted in the presentation itself, not all information 
contained therein has been verified, and its perspectives are subject 
to further review in light of additional information or analysis. BP is 
also producing the cement test reports referred to in response to the 
Chairman's question No. 1. Documents reflecting activities during the 
last 12 hours prior to the accident also are included among those 
produced to this Committee on June 3, 2010.
    BP employees Patrick O'Bryan and David Sims were visiting the 
Deepwater Horizon at the time of the incident for a scheduled 
leadership visit.
    Question 9. Please state your current understanding of the timing 
and possible causes of this accident, and whether you believe it was a 
sudden catastrophic failure or whether there were warning signs in 
advance of the explosion. If you believe there were warning signs, 
please state what they were and why they were not acted upon. Include 
copies of any and all data and documents in your possession relevant to 
your answer.
    Answer. Investigations into the Deepwater Horizon incident are 
ongoing, including BP's nonprivileged, internal investigation intended 
to address the topics posed by this question. That said, we are 
producing a copy of the presentation made by BP's internal 
investigation team (referred to in the response to the Chairman's 
question No. 8) which tentatively provides information relevant to your 
inquiry. Not all information contained within the presentation has been 
verified, and its preliminary perspectives are subject to review in 
light of additional information or analysis. BP's investigation is 
continuing into the timing and possible causes of the incident and the 
actions of those persons on the Deepwater Horizon prior to the April 20 
incident.
    Other documents responsive to this request include: (a) the 
technical data described in response to the Chairman's question No. 1; 
and (b) the documents produced to this Committee on June 3, 2010 
detailing well construction details and daily operations on the 
Deepwater Horizon in the period prior to the incident.
    Question 10. You have testified that there were anomalous pressure 
readings on the well in advance of the explosion. Please provide 
specific information about these pressure readings, when they were 
obtained, and what you believe they indicate, including any information 
they provide to you regarding the possible causes of the explosion. 
Please provide copies of any and all documents in your possession 
relevant to these pressure readings.
    Answer. BP's non-privileged, internal investigation into the 
activities and events of the April 20 incident is continuing. Based on 
information presently available, there were pressure readings on the 
MC252 #1 well prior to the April 20 incident that on post-incident 
review appear anomalous. BP's current understanding of these pressure 
readings is outlined in the presentation being produced with this 
letter (referred to in the response to the Chairman's question No. 8). 
As noted in the presentation itself, not all information contained 
therein has been verified, and the preliminary perspectives it reflects 
are subject to review in light of additional information or analysis. 
BP's investigation as to the potential connection, if any, between 
these pressure readings and factors that may have contributed to the 
April 20 incident is continuing.
    Other documents responsive to this request include the data 
(including surface data) described in response to the Chairman's 
question No. 1.
    Question 11. Please state how the decision was made regarding the 
number of centralizers to be used in this well, and whether you believe 
the number used is industry best practice. Were there changes made to 
the original well plan and casing program that reduced the number of 
centralizers? If so, please state whether you believe that was adequate 
to maintain the integrity of the casing and cement program. Please 
provide any and all data and documentation regarding the decision on 
the number of centralizers to be used. BP's non-privileged, internal 
investigation into the April 20 incident is continuing.
    Answer. BP's present understanding is that the number of 
centralizers used with the MC252 #1 well was selected based on the 
judgment and experience of the drilling team who were involved with the 
well design and execution and their understanding of the 
characteristics of the MC252 #1 well. For the 9-7/8'' x 7'' production 
casing, early plans called for six centralizers. As the cementing 
design iterations progressed, the number of centralizers varied. Six 
centralizers were run and believed in the judgment and experience of 
the drilling team to be adequate to maintain integrity of the casing 
and cement program. We are producing with this letter documents 
responsive to the assessment of the number of centralizers used.
    Question 12. Questions have been raised about the timing of 
removing drilling mud from the Macondo well and replacing it with 
seawater during the plugging and abandonment process. Please state the 
point at which this operation began, whether this aspect of the 
operation was performed in accordance with your instructions to the rig 
operator, and whether there were changes in these plans during the 
course of the well operation. Please state whether any employee of any 
company involved in the rig operation expressed opinions on this 
subject or disagreed with any aspect of the operation directed by BP as 
the well operator. Please provide any and all data and documents 
relevant to this operation including the original and any modified 
plans for the plugging and abandonment operation.
    Answer. BP's non-privileged, internal investigation into the 
activities and events of the April 20 incident are continuing and 
includes an analysis of the topics posed by this question. That said, 
based on presently available information, the removal of drilling mud 
and replacement with seawater on April 20, in preparation for temporary 
abandonment, began at approximately 16:00 CST. Based on information 
known to date, and its understanding of the facts, BP is not aware that 
any of its employees expressed disagreement regarding removal of 
drilling mud and replacement with seawater for MC252 #1 in preparation 
for temporary abandonment.
    BP is producing a copy of the draft presentation developed by the 
team that is conducting BP's internal investigation (referred to in the 
response to the Chairman question no. 8). A copy of the Temporary 
Abandonment Permit approved by MMS on April 16, 2010 for the temporary 
abandonment of the Macondo MC 252 #1 well bore, which sets out the 
procedure approved by MMS for the temporary abandonment of the well, 
and related documents were produced to this Committee on June 3, 2010 
[BP-HZN-SNR00000011--BP-HZN-SNR00000994]. Other documents responsive to 
this request include the data (including surface data) described in 
response to the Chairman's question No. 1.
    Question 13. Some have suggested that the absence of an acoustic 
trigger device on the blowout preventer on this rig is a significant 
factor in the BOP's failure. Please state your view of this, including 
whether you think the BOP was triggered and failed to operate properly 
or whether there was a failure of the trigger mechanism itself. Please 
provide copies of any and all data and documents relevant to your 
response.
    Answer. BP's investigation is continuing, and no determination has 
been made yet as to whether the absence of an acoustic backup control 
system was a significant factor with respect to the Deepwater Horizon 
BOP's performance.
    The purpose of an acoustic backup control system is to provide back 
up operation of critical BOP functions in an emergency. Although the 
Deepwater Horizon did not have an acoustic backup control system, the 
Deepwater Horizon was equipped with multiple emergency systems: (1) an 
Emergency Disconnect System (EDS), (2) an automatic mode function 
(AMF), or ``deadman,'' which activates when all hydraulic and 
electrical power is lost, and (3) ROV intervention capability. If a rig 
is equipped with multiple emergency systems, such as the Deepwater 
Horizon, an additional acoustic backup control system may be 
disadvantageous because it adds complexity to the hardware on the BOP 
stack.
    BP is continuing its investigation and has not yet determined 
whether the BOP rams activated and closed either during the April 20 
incident or subsequently.
    Question 14. Testimony was received to the effect that the shear 
ram of the blowout preventer was known to be unable to cut through 
certain material in the well, including tool joints and possibly other 
debris. Please state your view of this. If this is the case, explain 
how in your view a blowout preventer can be considered a fail-safe 
mechanism? Were there other mechanisms on this blowout preventer that 
you believe would have overcome this problem? Are there other 
technologies not used on this blowout preventer but available that may 
have overcome this problem?
    Answer. The 5-1/2'' drillpipe tube that was across the BOP stack at 
the time of the incident was capable of being sheared and sealed by the 
blind shear rams. It is known that the blind shear ram cannot shear the 
tool joint of the 5-1/2'' drillpipe, and it is the responsibility of 
the drilling contractor, which operates the drill pipe and in this case 
was Transocean, to know the location of the tool joints in the BOP 
during all operations. In the event that the blind shear rams need to 
be shut and there are non-shearable components across the BOP stack, 
Transocean has procedures to drop the components into the well and 
allow the blind shear ram to be closed. There are no other mechanisms 
available on the BOP stack for the Deepwater Horizon that would shear 
the drillpipe tool joint. BP is aware that at least one manufacturer is 
developing shear ram technology that can shear through the tool joint 
for certain sizes of drillpipe, but such technology is not yet 
commercially available.
      Responses of Lamar McKay to Questions From Senator Murkowski
    Question 1. Your testimony on the response efforts reflects that 
evacuated workers were all debriefed on the incident as soon as was 
possible. Please talk about who was conducting these debriefings, 
whether they knew the right questions to ask, and what mechanisms your 
company and the Unified Command had in place to transmit any timely and 
useful information back to the team working to contain the leak.
    Answer. Individuals who were on the Deepwater Horizon rig were 
debriefed concerning the April 20 incident by the U.S. Coast Guard. The 
Coast Guard personnel responsible for debriefing these witnesses would 
be the most knowledgeable concerning the specific nature of the 
questions asked, and any transmission of information contained in the 
statements to the larger Unified Command.
    Question 2. Can you describe the process for applying dispersants 
to oil at the leak source--how is it done and have initial attempts 
been encouraging?
    Answer. The U.S. Environmental Protection Agency (EPA) and the U.S. 
Coast Guard have authorized BP to use dispersants underwater at the 
source of the Deepwater Horizon leak. Authorization followed a series 
of trials with ongoing sampling and monitoring of dispersant 
effectiveness and water column effects with Coast, Guard, EPA and other 
agency supervision. BP is currently applying liquid dispersant (Corexit 
9500) at the wellhead at the rate of approximately 10,080 gallons/day, 
pursuant to a June 8, 2010 subsea dispersant application plan and 
approval. BP is using ROV's to apply the dispersant to the escaping oil 
at the source.
    EPA has stated that, ``[p]reliminary testing results indicate that 
subsurface use of the dispersant is effective at reducing the amount of 
oil from reaching the surface.'' EPA has also said that ``what the 
monitoring data indicates so far is that the underwater use of 
dispersants is effective at breaking up the oil and, to this point, 
does not seem to have had any significant impacts on aquatic life. 
Using the dispersant underwater at the source of the leak also requires 
far less dispersant to be applied.'' [May 24, 2010 Press Release by EPA 
and Coast Guard].
    All dispersant use is performed under the supervision of the EPA 
and the Coast Guard. The current plan requires BP gradually to reduce 
the amount of dispersants used at the site. As more oil is captured in 
the riser, less dispersant is needed to treat oil in the water column. 
EPA maintains a website dedicated to this topic which contains further 
details and documentation regarding the use of dispersants in 
connection with the incident, the associated ongoing monitoring 
required by EPA, and detailed monitoring.\1\
---------------------------------------------------------------------------
    \1\ http://www.epa.gov/bpspill/dispersants.html
---------------------------------------------------------------------------
    Question 3. Law requires the responsible party to advertise how to 
claim compensation for losses due to a spill. Can you describe this 
process for the committee and viewers?
    Answer. BP Exploration & Production Inc. (BPXP) has been designated 
as a ``responsible party'' under OPA and, when addressing claims, will 
be guided by the statute and implementing U.S. Coast Guard regulations 
and guidance. BPXP will abide by the statutory and regulatory guidance, 
and our intent is to be efficient, practical, and fair. Under OPA, 
claimants may recover for the following categories of costs and damages 
caused by an oil spill: removal costs, property damage, subsistence use 
of natural resources, net lost government revenue due to injury, 
destruction or loss of property or natural resources, lost profits and 
earnings due to injury, destruction or loss of property or natural 
resources, and net costs of providing increased or additional public 
services.
    As directed by Congress under OPA, BPXP will evaluate a claim in 
the first instance. BPXP has hired ESIS, Inc. (ESIS)--a known leader in 
the field--to assist in the handling of claims. ESIS is part of the ACE 
Group of Companies, headed by ACE Limited. The ESIS Claims team 
assisting BPXP has extensive experience with claims, including injury, 
environmental and property damage claims. BPXP will work with ESIS, the 
Coast Guard and other relevant stakeholders as necessary in making 
decisions regarding specific claims. After the first month, claimants 
will continue to receive any future payments electronically. The check 
for the advance payment will be mailed or can be picked up at the 
nearest BP Claims Center, the location of which will be communicated to 
the claimant. Alternative arrangements can be made if these methods of 
check delivery are not feasible.
    BP has established claims offices for the Deepwater Horizon 
incident along the Gulf Coast in Alabama, Florida, Louisiana, and 
Mississippi, with office hours from 8 a.m. to 7 p.m. each day. A 
complete listing of BP claims office locations is available to the 
public on the www.deepwaterhorizonreponse.com website.
    Question 4. BP appears to be actively directing funds towards the 
containment, response, and compensation efforts underway and we've 
heard the company's statements about how it expects to exceed the $75 
million strict liability cap under the Oil Pollution Act. Since the cap 
is expected to be exceeded, does that indicate the cap should 
potentially be raised?
    Answer. In regard to the economic damages cap of $75 million 
contained in the Oil Pollution Act (OPA), BP has stated that it is 
prepared to pay above $75 million on these claims and will not seek 
reimbursement from the U.S. Government or the Oil Spill Liability Trust 
Fund. More generally, the OPA is applicable to a wide variety of 
activities involving exploration, production, transport and handling of 
oil. BP does not have a position at this time concerning changes that 
might be made to that federal authority.
    Question 5. Would BP anticipate a raise in this strict liability 
cap to limit its ability to partner with and do business with 
Independent exploration and production
    Answer. BP has not assessed whether raising the economic liability 
cap under the OPA would limit its ability to do business with 
independent exploration and production firms. BP would expect to 
participate in the public discourse in connection with any future 
legislative proposals.
    Question 6. As I understand it there are 10,000 personnel employed 
on containment and response efforts with 2,500 volunteers. Can you 
describe any positive developments in terms of innovative response that 
the collective minds have come up with?
    Answer. Since the start of the MC252 spill, BP has received 
thousands of suggestions from the public describing potential ways to 
stop the flow of oil and gas or to contain the spill on and off the 
Gulf coast shoreline. Over 40,000 ideas had been submitted up until the 
end of May. Since the beginning of June, the number of suggestions 
coming in has increased--with BP's Houston Call Center now receiving, 
on average, 5,000 suggestions a day. These suggestions have come in 
from across the world. The suggestions have come in from a variety of 
people, ranging from general members of the public to oil industry 
professionals. The suggestions also have come in from those speaking 
many different languages, ranging from Arabic to Russian. Anyone with 
an idea for BP's team is encouraged to submit it using the Alternative 
Response Technology (ART) online form located at http://
www.horizonedocs.com/artform.php.
    This form is a valuable tool in helping the team to see quickly the 
potential of the idea because it collects a list of the materials, 
equipment, and skills required for the idea to work. After the caller 
completes and submits the form, 30 technical and operational personnel 
review its technical feasibility and application and classify it as one 
of three categories:

   Not possible or feasible under these conditions;
   Already considered or planned for; or
   Feasible.

    So far, over 7,000 ideas have been reviewed by BP technical and 
operational personnel. Currently, over 250 ideas have been advanced to 
a higher-level review in order to determine which ones fill an 
operational need and may require testing in the field.

   One such idea, submitted by Clean Beach Technologies, is a 
        solution that is designed to mechanically separate oil from 
        sand. A sample taken from an oiled beach in Louisiana was lab 
        tested to verify this solution's efficacy. It appears that this 
        solution may be feasible, so it is being prepared for field 
        testing.
   Another idea, presented by Ocean Therapy Solutions, offers 
        centrifuge equipment technology that can effectively separate 
        oil from water within an oil spill scenario. This idea is also 
        undergoing field tests.
   Other information being evaluated includes methods to combat 
        the oil saturated in the sargassum, or seaweed, along the Gulf 
        Coast. BP is currently looking for technologies that might be 
        viable in this regard.

    To ensure each idea received is reviewed in a timely manner, BP now 
has expanded its internal team and has linked up with a new working 
group. The working group has been set up by the U.S. Coast Guard. The 
Interagency Alternative Technology Assessment Program (IATAP) workgroup 
was announced in Washington on Friday, June 4th and includes 
representatives from the Minerals Management Service (MMS), the 
National Oceanic and Atmospheric Administration (NOAA), the 
Environmental Protection Agency (EPA), the United States Army Corps of 
Engineers (USACE), United States Department of Agriculture (USDA), and 
the Maritime Administration (MARAD).
      Responses of Lamar McKay to Questions From Senator Menendez
    Question 1. Should BP be drilling in places and at depths at which 
it is evidently not equipped to stop an oil spill once one has begun?
    Answer. The circumstances of the Deepwater Horizon spill are 
extremely unique. The cause of the April 20 incident is the subject of 
BP's non-privileged, internal investigation, but, preliminarily, it 
appears that it resulted from a series of unexpected and unusual 
events. More than 40,000 wells have been drilled in the Gulf of Mexico 
and the incident on April 20 is the first event of its kind. Because 
the investigations of the incident are ongoing, it is premature to draw 
any conclusions about causes, but BP expects those investigations and 
review of the sub-sea interventions to be highly instructive concerning 
appropriate sub-sea intervention capability. The lessons learned will 
be incorporated into future planning and training.
    Question 2. BP's lease at Deepwater Horizon received a categorical 
exclusion from the NEPA process last year. Why would this rig not 
require the oversight and regulation mandated under our country's most 
important environmental regulation? How could such an inherently 
dangerous activity not undergo thorough environmental review?
    Answer. The MC252 well did undergo thorough prior environmental 
review under the National Environmental Policy Act (NEPA). The Council 
on Environmental Quality (CEQ) detailed the standard review steps 
followed for this well in a recent Federal Register notice:

          Under the Outer Continental Shelf Lands Act, MMS has 
        implemented a process for oil and gas development consisting of 
        the following stages: (1) Preparing a nationwide 5-year oil and 
        gas development program, (2) planning for and holding a 
        specific lease sale, (3) approving a company's exploration 
        plan, and (4) approving a company's development and production 
        plan. MMS is required to apply NEPA during each of these 
        stages, beginning with the initial planning of outer 
        continental shelf leasing and ending with a decision on a 
        specific well. The sequence of NEPA analyses is informed by the 
        CEQ Regulations Implementing the Procedural Requirements of the 
        National Environmental Policy Act, 40 CFR parts 1500-1508 . . . 
        Specifically, 40 CFR 1502.20, discusses ``tiering,'' a strategy 
        used to avoid repetitive discussions of the same topics, and to 
        prevent unnecessary duplication of work by reviewers, as the 
        NEPA reviews progress from a broad program to a site specific 
        action.
          In the case of the Gulf of Mexico leases, MMS prepared 
        several tiered NEPA analyses. Environmental Impact Statements 
        (EIS), the most intensive level of analysis, were prepared at 
        two decision points. First, in April 2007, MMS prepared a broad 
        ``programmatic'' EIS on the Outer Continental Shelf Oil and Gas 
        Leasing Program for 2007-2012. Also, in April 2007, MMS 
        prepared an EIS for the Gulf of Mexico OCS Oil and Gas Lease 
        Sales in the Western and Central Planning Areas, the ``multi-
        sale'' EIS. In October 2007, MMS completed another NEPA 
        analysis, an Environmental Assessment (EA), under the multi-
        sale EIS, for Central Gulf of Mexico Lease Sale 206. This is 
        the sale in which the lease was issued for the location that 
        includes the Deepwater Horizon well. MMS previously approved 
        BP's development operations based on a programmatic EA that MMS 
        prepared in December 2002. Finally, for the Deepwater Horizon 
        well, MMS applied its existing Categorical Exclusion Review 
        (CER) process prior to the decision to approve the Exploration 
        Plan that included the drilling of the Deepwater Horizon well. 
        The Categorical Exclusion used by MMS for Deepwater Horizon was 
        established more than 20 years ago.
    75, Fed. Reg. 29996 (May 28, 2010). BP understands that the CEQ is 
now conducting a review of NEPA policies, practices, and procedures for 
the Minerals Management Service.

    Question 3. BP likes to say that it is moving ``Beyond Petroleum.'' 
What percent of your company's global capital expenditures in each of 
the last five years was spent on researching, exploring, and producing 
fossil fuels, and what percent was spent on those same activities for 
renewable fuels and renewable energy?
    Answer. Since 2005, BP has invested approximately $4 billion in 
alternative energy, with activity focused on advanced biofuels, wind, 
solar power, and carbon capture and storage. From 2005 until 2009, BP's 
most recent reporting date, capital expenditures on activities related 
to exploration and production of oil and natural gas resources were 
approximately $73.85 billion.
    Question 4. In a regional oil spill response plan BP filed, the 
company said it was capable of handling a spill of up to 300,000 
gallons per day, which might be more than what is currently spilling in 
the Gulf of Mexico. Yet BP is evidently incapable of responding 
properly to the current spill. Why was the oil spill response plan 
insufficient to handle the blowout? What lessons do you draw from this 
failure?
    Answer. BP has a comprehensive oil spill response plan (OSRP) that 
was most recently reviewed and approved by the Mineral Management 
Service in June 2009. The worst case scenario anticipated by the OSRP 
is 250,000 barrels a day for 30 days. In connection with this event, 
the OSRP was implemented and BP was able to draw on and deploy an 
inventory of boom, dispersant, skimmers and other equipment to respond 
to the spill. Upon notification, resources from Marine Spill Response 
Corporation (MSRC) and National Response Corporation (NRC) (among 
others) were activated and mobilized to the scene. The OSRP has been 
the foundation from which the Coast Guard, other government agencies 
and BP have directed the response across the Gulf on the surface, in 
the subsea environment, and at the shore line. However, the type of 
failure here is unprecedented and has complicated the response effort. 
The investigations of the incident are ongoing, and it is premature to 
draw any conclusions about causes or relative effectiveness. When the 
leak is brought under control and investigations are complete, BP 
expects to share with governmental authorities, the industry and others 
any lessons learned, and it will certainly incorporate them into future 
planning and training.
    Question 5. Recent news reports reveal that, based on the videotape 
of oil spilling from the seabed that BP released, numerous scientists 
believe that far more oil is spilling out than earlier estimates 
suggested. Does BP have other video or technical data that it has not 
yet made publicly available that would help independent experts 
determine the extent of the spill and what caused it? If so, do you 
pledge to make these resources available to the public so that 
independent experts can determine what went wrong?
    Answer. BP has made video footage and other data information 
available to a range of stakeholders, including the U.S. Coast Guard, 
Minerals Management Service, National Oceanic and Atmospheric 
Administration, U.S. Environmental Protection Agency, U.S. Department 
of Homeland Security, U.S. Department of the Interior, U.S. Fish & 
Wildlife Service, National Park Service, U.S. Department of State, U.S. 
Geologic Survey, Centers for Disease Control, and the Occupational 
Health and Safety Administration, Members of Congress, and the public 
through live streaming video. In addition, the federal government 
created a Flow Rate Technical Group (FRTG), comprised of members of the 
scientific community and government agencies, to provide further 
specificity on the flow rate. Consistent with its stated commitment to 
transparency and cooperation, BP has provided the FRTG with data 
showing release points and amounts of oil and gas currently being 
collected on the surface, as well as subsea video of the oil release to 
assist with FRTG's efforts. BP will continue to contribute its 
resources to contain the oil spill and understand the rate of oil 
release and its implications.
       Responses of Lamar McKay to Questions From Senator Lincoln
    Question 1. In media reports following this disaster, I keep 
reading over and over again that certain devices and technologies being 
discussed to stop the leak have never been used in water this deep. Do 
you believe the depth of water presents more challenges in containing 
the leak? Do you believe more testing, research and technologies are 
needed to ensure the safety of deepwater and ultra-deep water drilling?
    Answer. The depth of the water (in this case, nearly a mile) does 
present certain challenges, but it is important to note that the 
particular circumstances that led to the April 20 incident and that 
have impacted the containment response efforts are unique.
    BP has committed up to $500 million to an open research program 
studying the impact of the Deepwater Horizon incident and the 
associated response actions on the marine and shoreline environment of 
the Gulf of Mexico. The key questions to be addressed by this 10-year 
research program reflect discussions with the US government and 
academic scientists. BP will fund research to examine topics including 
technology improvements to detect oil, dispersed oil, and dispersant on 
the seabed, in the water column, and on the surface; improved 
remediation technology to address the impact of oil accidently released 
to the ocean; the behavior of oil, dispersed oil and dispersant on the 
seabed, in the water column, on the surface, and on the shoreline; and 
the impacts of oil, dispersed oil, and dispersant on the biota of the 
seabed, the water column, the surface, and the shoreline.
    Question 2. As the responsible party, BP has assumed liability for 
the damages resulting from this accident. What is BP doing to ensure 
that in the response and cleanup efforts, taxpayers don't end up 
footing the bill for this disaster?
    Answer. As a responsible party under the Oil Pollution Act (OPA), 
BPXP is carrying out its responsibilities to mitigate the environmental 
and economic impacts of this incident. Its efforts are part of a 
unified command that was established within hours of the accident, and 
that provides a structure for its work with the Departments of Homeland 
Security and Interior, other federal agencies, and state and local 
governments. BP is committed to working with President Obama and 
members of his Cabinet, the governors, relevant state agencies and 
local communities of the affected Gulf States, and Congressional 
members. Everyone at BP fully understands the enormous nature of what 
lies ahead and is working to deliver an effective response at the 
wellhead, on the water, and on the shoreline.
    Pursuant to the OPA, BP is paying all necessary cleanup costs and 
is committed to paying all legitimate claims for other loss and damages 
caused by the spill. BP is expediting interim payments to individuals 
and small-business owners whose livelihoods have been affected. As of 
June 8, BP had received over 39,000 claims and paid over $53 million. 
As BP has indicated, it believes the claims related to this event will 
exceed the economic damages cap set out in the OPA. BP is prepared to 
pay amounts above the statutory limit and will not seek reimbursement 
from the U.S. Government or the Oil Spill Liability Trust Fund.
    Pursuant to OPA and other laws, as of June 8, 2010, BP also has 
paid $45 million to federal and state trustees, to enable them to 
engage in the pre-assessment and initial assessment of potential 
injuries to natural resources in the Gulf. The parties are working 
together in a cooperative manner to develop and implement further 
studies to evaluate the potential effects of this incident on natural 
resources.
    Question 3. In your testimony, you state that blowout preventers 
are used on every oil and gas well today, and are supposed to be ``fail 
safe.'' Clearly, as you indicated, that was not the case on the 
Deepwater Horizon rig, and BP is looking at why the blowout preventer 
did not work.
    Answer. The functioning of the blowout preventer (BOP), and 
specifically why it did not function as expected on the Deepwater 
Horizon, is the subject of BP's ongoing non-privileged, internal 
investigation.
    Question 4. What was BP's contingency plan should a blowout 
preventer fail and a leak take place? Do you believe a remote-control 
shutoff device would have made a difference in this accident? Do you 
believe that MMS should review their decision not to require remote 
shutoff switches and make them mandatory as they do in Norway and 
Brazil?
    Answer. BP's investigation is continuing, and no determination has 
been made yet as to whether the absence of an acoustic backup control 
system was a significant factor with respect to the Deepwater Horizon 
BOP's performance.
    The purpose of an acoustic backup control system is to provide back 
up operation of critical BOP functions in an emergency. Although the 
Deepwater Horizon did not have an acoustic backup control system, the 
Deepwater Horizon was equipped with multiple emergency systems: (1) an 
Emergency Disconnect System (EDS), (2) an automatic mode function 
(AMF), or ``deadman'', which activates when all hydraulic and 
electrical power is lost, and (3) ROV intervention capability. If a rig 
is equipped with multiple emergency systems, such as the Deepwater 
Horizon, an additional acoustic backup control system may be 
disadvantageous because it adds complexity to the hardware on the BOP 
stack.
    BP is continuing its investigation and has not yet determined 
whether the BOP rams activated and closed either during the April 20 
incident or subsequently.
      Responses of Lamar McKay to Questions From Senator Sessions
    Question 1. What is BP's safety record with offshore drilling in 
the Gulf of Mexico and worldwide? Have you had any other incidents when 
you have subcontracted with Transocean?
    Answer. BP's Drilling and Completions operations safety performance 
is at or better than industry (as measured by the International 
Association of Drilling Contractors voluntary survey) for both Gulf of 
Mexico and worldwide operations. In 2009, BP experienced 14 recordable 
incidents including 2 that resulted in Lost Time Incidents (LTIs) in 
our drilling and completion operations in the Gulf of Mexico. One of 
the LTIs and 7 of the recordables occurred on Transocean drilling rigs. 
These 14 incidents result in a LTI frequency of 0.12 and a Recordable 
Injury Frequency (RIF) of 0.82 for BP 2009 Drilling & Completion 
activity in the Gulf of Mexico. According to the International 
Association of Drilling Contractors website, a voluntary reporting 
mechanism for companies, the average 2009 US Waters Lost Time Incidents 
frequency rate was 0.20 and the Recordable Injury Frequency was 0.87.
    BP's 2009 worldwide Drilling & Completions Lost Time Incident rate 
was 0.09 and the RIF rate was 0.67. According to IADC, global industry 
rates in 2009 were 0.37 and 1.92 for LTI and total Recordable rates, 
respectively. On Transocean rigs in 2009, BP experienced a total of 4 
lost time incidents and 15 recordable incidents globally. There was one 
fatality in 2009 that occurred on a rig in Azerbaijan operated by a 
Joint Venture company, Caspian Drilling Company, which Transocean 
provided rig management services. Transocean are no longer involved in 
this operation.
    There have been two incidents involving Transocean's Deepwater 
Horizon drilling rig since January 2005, both of which occurred in 2007 
and one of which resulted in a fine. One of the two incidents involved 
a Notice of Violation assessed by the U.S. Coast Guard in April 2007 in 
connection with the accidental release of 10-12 gallons of synthetic 
base mud into the Gulf of Mexico. A $250 fine was imposed for this 
incident.
    The second incident occurred in March 2007. MMS issued an Incident 
of Noncompliance (INC) after concluding that a pressure washer located 
on the rig floor had no external ground wire. Rescission of the INC was 
requested because the equipment in question was maintained and operated 
in accordance with all applicable safety codes and regulations. On July 
17, 2007, MMS approved the rescission request and removed the INC from 
its database. No fine was imposed in connection with this incident.
    Question 2. What is/was the role of BP in drilling this particular 
well? Is there a BP employee on the rig overseeing the subcontractors? 
Was BP responsible for all the drilling requirements (Ex. the depth of 
the well, where to drill, the mud mixture, cement mixture, when to 
remove the mud, when to place the cement plug in place)?
    Answer. The roles and responsibilities of BP in drilling this well 
are governed by the 1998 drilling contract between BP America 
Production Co. and Transocean Holdings LLC.\2\ A summary interpretation 
of these roles and responsibilities is provided below, in accordance 
with BP's current understanding and interpretation of the contract. BP 
reserves the right to amend or supplement this response upon further 
review and analysis of contractual rights and obligations, and upon 
further investigation.
---------------------------------------------------------------------------
    \2\ The original contract was between Vastar Resources, Inc. and 
R&B Falcon Drilling Co. The contracting parties became BP America 
Production Co. and Transocean Holdings LLC through acquisition and 
assignments.
---------------------------------------------------------------------------
    MMS awarded the lease to BP Exploration & Production Inc. 
(``BPXP''). As operator, BPXP creates the well design, which includes 
drilling parameters such as well depth, drilling location, and the 
overall requirements for mud and cement to meet the well objectives. BP 
provides the procedures for well construction, including the order that 
they are to be performed. As the owner of the rig and equipment, 
Transocean is responsible for performing the drilling operation to the 
supplied specifications, and is responsible for overall safety on the 
rig. In addition, BP engages third-party contractors to provide 
specialized services such as mud and cement design. Specifically, 
Transocean is responsible for the safe handling of well control 
situations in accordance with the procedures set forth in, for example, 
the Transocean Emergency Response Manual.
    BP company representatives, called Well Site Leaders, are stationed 
on the rig site to evaluate whether the well is constructed to BP 
design specifications. In addition, the Well Site Leaders are the 
primary interface with the third-party contractors on the rig that 
provide specialist services, such as mud and cementing services. The 
third-party contractors are independent contractors and are responsible 
for ensuring that their specialist services are performed properly and 
according to specifications. Typically, two Well Site Leaders are 
stationed on the rig site, and they work 12-hour shifts.
    Question 3. Who were the subcontractors that BP hired to drill the 
well, to pour the mud, and pour the cement?
    Answer. The contractors retained for drilling the MC252 #1 well 
were Transocean LTD to drill the well, M-I SWACO for mud-related 
services, and Halliburton Company for cement-related services.
    Question 4. It is my understanding that drillers rely on three 
lines of defense to protect themselves from an explosive blowout: heavy 
mud, cement/cement plugs, and a BOP and alll three of these defenses 
failed? Could you please explain to me how three defenses failed to 
work?
    Answer. Please refer to BP's response to the Chairman's question 
No. 8.
    Question 5. Was this well abnormal in the amount of pressure that 
was being released from the reservoir?
    Answer. BP's current understanding is that the pressure in the 
MC252 well is not materially different from the pressure that was 
anticipated during well planning.
    Question 6. Could you please tell me the progress of the relief 
well and the current depth and time line for reaching the reservoir?
    Answer. BP is currently drilling two relief wells. The depth of one 
relief well, MC252 #3, is approximately 14,000 feet, as of June 9. The 
depth of the other relief well, MC252 #2, is approximately 8,500 feet, 
again as of June 9. BP expects to reach the reservoir by August.
            Sincerely,
                                            Tonya Robinson.
                                 ______
                                 
 Responses of Elmer P. Danenberger to Questions From Senator Murkowski
    Question 1. Your testimony indicates significant familiarity with 
the Montara blowout off of Australia last year, so can you enlighten 
the committee as to how this incident is different from the Montara 
incident?
    Answer. The differences are significant. The Montara blowout well 
was one of six development wells drilled with a jackup rig cantilevered 
over a production platform in <100 m of water. The wells were suspended 
from the jacket (platform tower) above the water surface pending 
installation of the platform decks. There was no BOP in place when the 
blowout occurred. The only barrier in the well bore at that time was 
the cement at the shoe of the production casing. The flow rate at 
Montara was significantly lower (probably <1000 BOPD). The main 
similarity in the two incidents is the failure of well integrity after 
the wells had been drilled to total depth and the production casing had 
been set. Both wells should have been completely sealed with casing and 
cement, and oil and gas influxes should not have been possible.
    Question 2. Can you describe your experience at MMS in terms of 
your several decades as a regulator now that you've left? Specifically, 
do you observe that MMS has been taking its safety and environmental 
responsibilities more seriously, less seriously, or about the same as 
OCS development has expanded into the deepwater?
    Answer. MMS regulatory personnel have always demonstrated a high 
degree of professionalism and taken their safety and pollution 
prevention responsibilities very seriously. I haven't seen any change 
in that commitment over the years. I do believe the function-based 
division of responsibilities proposed by Secretary Salazar will ensure 
that accountability and authority are clear, and will enable regulatory 
managers and staff to focus solely on safety and pollution prevention. 
I also believe this function-based approach will improve the efficiency 
of the regulatory program and minimize the potential for gaps and 
confusion.
    Question 3. In the event of a large natural gas ``bubble'' hitting 
the rig, has MMS required or contemplated requiring mechanisms be 
available where gas sensors and alarms could trigger an automatic 
shutoff of any potential spark or flame source?
    Answer. As provided in 30 CFR 250.459 the areas around the rig 
floor and mud pits are designed and equipped to minimize the risks of 
sparks and other flame sources. However, the required alarm systems do 
not actuate BOP equipment. The concern is that auto-actuations 
triggered by gas alarms might compromise ongoing well control actions. 
For example, if a gas kick was detected and a shear ram was 
automatically actuated, it would no longer be possible to circulate mud 
down the drill pipe and kill the well in that manner. In light of the 
multiple BOP panels around the rig, personnel should be able to 
initiate an emergency closure prior to evacuation. Also, the shear ram 
should automatically actuate if power is lost or the riser is 
disconnected. Why these signals were either not delivered or 
unsuccessful in closing the shear ram on the BP well will be central 
issues in the investigation.
    Question 4. Can you describe the level to which the Deepwater 
Horizon is in a situation where it is dependent on its BOP to avoid 
catastrophic blowouts perhaps more than other rigs in shallower waters?
    Answer. In my opinion, the dependency on the BOP is the same 
regardless of the water depth. If there is a wellbore integrity failure 
and effective downhole barriers are not in place, the BOP will have to 
shut-in the well in any water depth. However, I agree that BOP 
reliability, while important at any depth, is more critical in 
deepwater. This is because of the greater difficulty in performing 
subsea well interventions as compared to surface capping operations on 
a shallow-water rig or platform.
  Responses of Elmer P. Danenberger to Questions From Senator Menendez
    Question 1. Why do the current safety and environmental regulations 
not differentiate between deep and shallow water development? Do you 
think there should be more stringent regulations for deepwater 
developments?
    Answer. There are differences in drilling, production, pipeline, 
and environmental regulations for deep and shallow water. However, the 
requirements specific to deepwater operations are not collated in a 
separate regulatory subpart. This is something that I'm sure will be 
considered as the regulations are reviewed in the aftermath of this 
tragic accident.
    A higher degree of reliability is critical in deepwater, because of 
the greater difficulty in performing well interventions. Regulations 
never precede technological and safety advances, so we cannot rely 
entirely on standards and prescriptive rules. Operators must assess 
risks and clearly demonstrate that they have redundant controls in 
place to protect people and the environment. These protections must be 
present during every phase of the drilling program and throughout the 
life of production operations. Regulators must challenge operators and 
make sure their management systems are effective and fully implemented 
in the field.
    Question 2. Do you think we are drilling at depths in our waters 
that are too risky?
    Answer. No, but I think well integrity risks need to be more 
closely scrutinized for all OCS operations, particularly those in 
deepwater. Special attention should be given to deepwater operations 
because of the size and complexity of the facilities, the high flow 
potential, the number of workers, and the greater difficulty and 
complexity of emergency responses. Operators must carefully examine and 
manage the risks associated with all of their activities and regulators 
need to continually question operators, audit their management 
programs, inspect their facilities, and hold them accountable for 
safety achievement, not just for compliance.
   Response of Elmer P. Danenberger to Questions From Senator Lincoln
    Question 1. In media reports following this disaster, I keep 
reading over and over again that certain devices and technologies being 
discussed to stop the leak have never been used in water this deep. Do 
you believe the depth of water presents more challenges in containing 
the leak? Do you believe more testing, research and technologies are 
needed to ensure the safety of deepwater and ultra-deep water drilling?
    Answer. Deep water makes well intervention more difficult and 
complicates well control operations, particularly when the rig and 
riser are disconnected from the well. While the drilling technology for 
5000' water depth wells is well established, there has never been a 
major deepwater blowout, and subsea intervention and containment 
systems are not sufficiently advanced. I believe that more research and 
development are needed to further evaluate deepwater well intervention 
options and test subsea containment systems.
                                 ______
                                 
     Responses of Steven Newman to Questions From Senator Bingaman
    Question 1. You have testified that the Deepwater Horizon explosion 
was a sudden catastrophic failure of the casing, the cement, or both. 
Please state the basis for that testimony, and provide any and all data 
and documents in your possession that support that statement.
    Answer. The Deepwater Horizon explosion occurred after the well 
construction process was essentially finished. Drilling had been 
completed on April 17, and the well had been sealed with cement by the 
cementing contractor. BP did not plan to use the well for production at 
this time; rather BP planned to reopen the well at a later date if it 
chose to put the well into production. At the time of the explosion and 
fire, the Transocean crew, at the direction of BP, was in the process 
of displacing drilling mud and replacing it with sea water. The 
drilling mud thus was no longer being used as a means of reservoir 
pressure containment. The cement and the casing were the barriers 
controlling pressure from the reservoir.
    The basis for my belief that there was a sudden catastrophic 
failure of the casing, the cement, or both, is that the reservoir of 
oil at the Macondo well is located more than 13,000 feet below the sea 
floor. The blowout preventer (``BOP'') is located at the sea floor. At 
that stage of the drilling process, the pathway from the reservoir to 
the sea floor was supposed to be barriered by cement and casing. In 
other words, in order for the hydrocarbons to get from 13,000 feet 
below the sea floor to the sea floor and ultimately the rig, one or 
both of those barrier mechanisms must have failed.
    Transocean has assembled an investigative team to determine what 
caused the explosion and fire, a team that includes dedicated 
Transocean and other industry experts. That investigation is ongoing. 
As this Committee and others have requested, Transocean will report the 
findings of the investigation when it is complete.
    Question 2. You have testified that the plans for an offshore well 
operation like the Deepwater Horizon begin and end with the Operator. 
You have stated that the Operator's well plan dictated to Transocean as 
the driller the ``manner in which the drilling is to occur, including 
the location, the path, the depth, the process and the testing.'' 
Please provide a complete copy of the Operator's plan for drilling the 
Macondo well including any changes made during the course of the 
operation.
    Answer. In response to this request, Transocean will provide the 
Committee with a copy of the BP Well Plan for the Macondo well. For 
ease of reference, the Well Plan will bear Bates-numbers TRN-HCEC-
00064695 through TRNFICEC-00064802. The Operator may submit changes; if 
so, those would be in the possession of the Operator or the regulator.
    Question 3. Please state whether Transocean would take any action 
to challenge any aspect of such a plan if Transocean believed it to be 
inadequate or unsafe. Would Transocean carry out a plan at the behest 
of an Operator that it believed to be inadequate or unsafe? Did any 
employee of Transocean suggest or express a preference for a different 
approach for any aspect of the well operation or its implementation at 
any time prior to the explosion? In particular, did any employee 
suggest a different approach or any different activities for withdrawal 
of drilling mud during the plugging and abandonment phase of the 
operation? If not, did you believe the rig operation and implementation 
of all phases of the drilling operation to be safe at all times up to 
the explosion? Please provide any and all data and documents relevant 
to any aspect of your answer. If Transocean employees' actions were 
oral rather than written, please identify the employees and their job 
titles.
    Answer. Transocean does not participate in the creation of 
Operator's well plan or changes and does not have expertise in that 
area. Transocean would not carry out a specific action being urged by 
an Operator if Transocean believed that action would be unsafe. 
Transocean would, however, generally rely on the operator with respect 
to decisions regarding the well design or integrity. Transocean is in 
the business of leasing rigs to our customers, and customer 
satisfaction is important to us, but we will not compromise safety in 
pursuit of customer satisfaction.
    Our investigation into the cause or causes of this accident is 
ongoing. The investigation will examine the events leading up to the 
explosion, including, but not limited to, whether any Transocean 
employee suggested or expressed a preference for a different specific 
action with respect to withdrawal of drilling mud during the 
abandonment phase of the operation. There is some evidence of a 
discussion about activities on the rig on April 19 or 20 as reflected 
in testimony at the U.S. Coast Guard hearings. Transocean has a copy of 
the transcript of Coast Guard proceedings. We have seen media 
statements reporting various versions of events on April 19 and 20, but 
our investigation has not yet provided sufficient information in part 
because some Transocean employees died in the accident and some on the 
rig are employed by 13P or are BP contractors.
    Question 4. You have testified that the blowout preventer (BOP) was 
not the cause of the accident. Please state whether. had it performed 
correctly, it could have prevented the oil spill as a result of the 
accident. If not, please state what you believe to be the ``fail-safe'' 
mechanisms that should be present in an offshore well operation. Please 
provide any data or documentation relevant to your response.
    Answer. Transocean will produce the following operations, 
maintenance and training manuals from Cameron related to the BOP and 
its control systems.
    The Cameron BOP is designed to close around, or cut through, a 
string of drill pipe in use on the well to restrict the flow of oil; it 
is not designed to cut through cement, casing, tool joints, or other 
significant debris. Thus, provided that the BOP was asked to function 
within its design specifications, there currently is no reason to 
believe that it would not have done so.
    Because the BOP has not been retrieved from the sea floor, we do 
not know whether it was damaged by the surge that emanated from the 
well beneath the BOP or whether the surge may have blown debris into 
the BOP, thereby preventing it from fully squeezing, crushing or 
shearing. As part of the ongoing Transocean investigation into this 
accident, personnel hope to examine the BOP when it is retrieved from 
atop the well.
    Question 5. Many have testified to the fact that BOP's shear rams 
are known to be unable to cut through certain material in the well such 
as tool joints or other debris. Do you agree? If so, please discuss 
whether BOP's can or should be considered a fail safe protection 
against well failure? Do you advocate or require any steps be taken 
address this problem?
    Answer. The BOP is designed to facilitate pressure control by 
closing around, or cutting through, drill pipe and most sizes of 
casing; it is not designed to close around, or cut through, all types 
of materials, including significant debris, such as cement. Without 
knowing what was inside the BOP at the time of the event, it is not 
possible to determine whether the BOP was subjected to conditions that 
exceeded its design constraints.
    The BOP is a very robust piece of equipment and extremely effective 
during drilling operations. At the same time, should not he and has 
never been viewed by the industry as ``fail-safe'' in every 
circumstance. We do not subscribe to the position that the inability of 
the BOP shear rams to cut through every type of tubular or debris is a 
design flaw. The industry recognizes those limitations, and there are 
operating procedures in place to account for these limitations. Having 
said that, Transocean believes that we need to fully understand what 
happened to the well, the barriers, and the BOP and determine whether 
changes should be made to improve the effectiveness and safety in the 
unusual circumstances of an accident like the one on April 20, 2010.
    Question 6. Please state whether the retrofit to the BOP discussed 
during your hearing testimony was conducted with the approval and 
oversight of the BOP manufacturer, Cameron.Please state whether these 
changes were tested following the retrofit of the altered rams and, if 
so, describe the nature of the tests and whether all the rams were 
tested and passed inspection. Please provide all documents or data in 
your possession that describe or otherwise discuss the retrofit or 
modifications of the BOP stack and any testing of the BOP following the 
retrofit.
    Answer. As discussed in the hearing, the BOP was modified in 2005 
at BP's request and at BP's expense, and as requested, Transocean will 
provide the Committee with a copy of the October 11, 2004 agreement in 
which BP requested the modification. The BOP on the Deepwater Horizon 
was fitted with seven preventors on the stack (five rain preventors and 
two annulars), which exceeded regulatory requirements. The 2005 
modification converted one of those ram preventers, the lowermost ram 
preventer, from a conventional well bore sealing rain to a BOP test 
ram, which allowed for more efficient testing of the BOP.
    Transocean performed the modifications under the direction of BP, 
and BP presumably coordinated with the Minerals Management Service 
(``MMS''). Although Cameron did not participate in these modifications, 
the changes were made using Cameron equipment.
    The BOP rams--including the test ram--have been tested regularly 
since the conversion in 2005. The BOP most recently passed tests on 
April 10, 2010, and April 17, 2010, and the BOP blind shear rams passed 
a pressure test on April 20, 2010.
    Question 7. Please describe any and all data or documents in your 
possession relevant in any way to the Deepwater Horizon operation at 
the Macondo well. Please state whether that data has been made 
available without exception to Federal government investigators, and 
identify those investigators. If not, please describe the extent that 
any data or documents have been withheld and the reason for 
withholding.
    Answer. Transocean has been and will continue to be open and 
responsive to requests from Congress and the federal government. This 
request is too broad in scope to be answered in a narrative or at this 
time; however, Transocean has collected and produced more than 100,000 
documents to the federal government, including MMS and the U.S. Coast 
Guard, the U.S. Senate Committee on Environment and Public Works, the 
House Committee on Energy and Commerce, the House Committee on the 
Judiciary, and the House Committee on Natural Resources and Transocean 
continues to collect, review, and produce responsive materials. 
Transocean will provide the Committee with disks containing the 
documents it has previously produced and will provide the Committee 
with additional documents as they arc produced.
    Question 8. Please identify any and all Transocean witnesses, and 
describe all witness statements from Transocean employees, with 
knowledge of the Deepwater Horizon operation, whether present on the 
rig or not. Please state whether these witnesses and statements have 
been made available without exception to Federal government 
investigators, and identify those investigators. If not, please 
describe the extent to which witness statements or access to witnesses 
has been withheld.
    Answer. In response to this request, Transocean first refers the 
Committee to the April 20 Daily Drilling Report and the Persons on 
Board report that list all persons working on the rig that day. 
Transocean has produced all written and/or transcribed oral statements 
that Transocean representatives took from these employees after the 
accident and also produces statements that were taken by the U.S. Coast 
Guard following the accident to the extent these statements have been 
shared with Transocean. In addition, several persons on board have 
testified in the Coast Guard proceeding that is ongoing and/or to the 
House Judiciary Committee in May. Transocean has made its witness 
statements available from the outset.
    Transocean has not prevented any federal government investigators 
from meeting with or speaking to any Transocean employee on the rig 
during the accident. For instance, we understand that most of the 70 
surviving Transocean employees on the Deepwater Horizon at the time of 
the accident provided written statements to the Coast Guard and some 
have testified in the ongoing Coast Guard proceedings and/or the House 
Judiciary Committee hearing on May 27. For those employees who have 
retained their own counsel, Transocean has provided contact information 
for such counsel.
    Finally, Transocean has not produced any of its attorneys' notes 
prepared during and after witness interviewed to assist Transocean's 
preparation for civil litigation. In addition to being privileged work 
produce, such interview notes do not appear responsive to this request 
upon request.
    Question 9. Some have suggested that replacement of drilling mud 
with seawater is an area of concern in connection with this accident. 
Please describe in detail the operation and its sequence in the well 
plugging and abandonment process in which drilling mud was withdrawn 
from the well. Please state whether the sequence and timing of this 
operation is considered industry best practice, and whether you have 
ever used this sequence and timing of operation in other wells. If so, 
what percentage of your wells are handled in this manner? To the extent 
not covered in your response to question #3, please state whether any 
Transocean employee expressed any opinion on this matter to the 
Operator BP. If so, what was that opinion? Please provide any data or 
documents in your possession relevant to this issue, and identify any 
employee who made oral statements in this regard.
    Answer. It is normal practice to remove the drilling mud from the 
riser prior to disconnecting the riser from the well, and that would 
have been part of the logical sequence of events during abandonment of 
the well. Given that our investigation into the accident has not yet 
concluded, however, we do not yet have a definitive understanding of 
the actual order of the events that took place on the evening of April 
20, 2010, and therefore have not assessed whether the sequence of 
events would be considered consistent with industry best practices.
    Question 10. You have testified that BP and Transocean jointly 
tested the BOP on April 10 and April 17 and it was found to be 
operational. Please state whether all the rams were activated during 
these tests and indicate whether they were tested individually or in 
concert (i.e. were all annular rams tested at the same time?). Please 
provide any and all data and documents related to these tests. In 
addition, please address media reports suggesting that pieces of rubber 
or rubber seals from the annular rams were brought up to the rig in 
drilling mud. Did any Transocean employees observe or learn of this 
result? Did they have opinions expressed in writing or orally about the 
causes and seriousness of this event? What actions if any were 
recommended or taken as a result? Please provide any data or documents 
in your possession related to this issue, and identify any employees 
who made oral statements in this regard.
    Answer. In response to this request, Transocean has produced the 
IADC Daily Drilling Reports and the RMS Morning Reports documenting the 
results of the 130P tests conducted on April 10. 2010, and April 17, 
2010. These reports reflect that the BOP passed tests on April 10, 
2010, and April 17, 2010. In accordance with standard procedures, all 
rams except the shear rams were activated during these tests, and all 
were found to be functioning properly. This complies with testing 
procedures which are that all rams except the shear rams be tested 
individually, not simultaneously. In addition, the blind shear rams of 
the BOP were pressure tested on April 20, 2010, and passed.
    We understand from the May 16, 2010 60 Minutes segment that 
Transocean Chief Electronics Technician Michael Williams stated that he 
saw pieces of rubber brought up to the rig in drilling mud 
approximately four weeks before the accident. While the Company has not 
located any record of this reported observation, having some rubber 
returns to the shakers in the drilling mud is normal. There are several 
sources of rubber down hole; annular rubber would be the most common 
source. Given the size of the annular, the manufacturer advises that 
periodic stripping by use is expected, and a handful of chunks of 
rubber is immaterial. The annular is roughly three feet in diameter, 
about 18 inches tall, and weights about 2.000 pounds. It is designed to 
close around drill pipe, and drill pipe regularly moves through closed 
annular valves, which can displace small pieces of the annular rubber. 
The rubber used in annular blowout preventers is known to be a 
consumable item, and rubber loss is not considered problematic if the 
annular blowout preventer continues to hold rated pressure. Cameron 
brochures, publicly available on Cameron's website highlight these 
facts. For example, one such brochure explains that ``Rifle elastomeric 
packing elements used in CAMERON Type D/DL annular blowout preventers 
are considered to be consumable items and will eventually wear-out as a 
result of repeated closures and pressure test. Every closure and 
pressure test while in-service will use up some of the packing element 
life. The packing element subassembly should not he rejected for 
continued service based on cosmetic appearance. Failure of a pressure 
test or drift test are the only justifiable reasons for rejection.'' 
See In-Service Condition of CAMERON D/DL Annular BOP Packing Element 
Subassemblies, available athttp://www.c-am.com/cam/search/
showdocw.cfm?DOCUMENT__ID=8360.
    Question 11. Please state how many centralizers were used in the 
casing of the Macondo well. Include in your answer the number required 
in the original well plan and whether any changes were made to that 
aspect of the plan or its implementation at any time prior to the 
explosion. Please provide any and all data and documents relevant to 
your answer.
    Answer. The Wall Street Journal has reported on the number of 
centralizers used in the casing of the Macondo well. Centralizers are 
used in the cement process and were provided by either the cementing 
contractor or the Operator. Transocean does not have independent 
knowledge of the number of centralizers available or used in the easing 
of the Macondo well.
    Question 12. Please describe Transocean's data and document 
retention policy as relevant to the Deepwater Horizon Macondo well 
documents and data.
    Answer. Almost immediately after the incident, Transocean 
instituted a policy of preserving documents that may he informative 
about the incident. That policy, which preceded any government or 
external requests to hold documents, remains in place. Any written 
documentation maintained solely on the rig at the time of the event is 
no longer available.
    Question 13. Please describe when the last data available to 
Transocean regarding the Deepwater Horizon Macondo well operation was 
generated.
    Answer. Recording of data is triggered by the manual entry of data 
on the rig. The next manual entries were not expected until midnight or 
later, as entries are typically made on the rig at the end of a twelve-
hour shift that starts at noon. Transocean received the last data pack 
from the rig at 3:00 p.m. on April 20, 2010, the time of the last entry 
on the April 20, 2010 drilling report. Any information generated after 
3:00 p.m. is not available to Transocean, although BP is believed to 
have real-time, streaming data from the rig to shore.
          Responses of Steven Newman to Questions From Senator
    Question 1. Briefings and testimony have indicated that mud weight 
in the drill column is an important barrier against blowouts. This 
blowout seems to have occurred after drilling and after the mud weight 
would have been relevant, so is it a fair assumption that the root 
problem seems to have been with the actual well?
    Answer. You are correct in that this blowout seems to have occurred 
after drilling and after the mud weight would have been relevant, where 
the casing and cement are expected to provide the sole barrier to 
hydrocarbon ingress. Therefore, without a failure of the cement, the 
casing, the well head hanger assemble seal for the 9-5/8'' casing, or 
both, the explosion would not have occurred.
    Question 2. Our previous panel spoke to the range of pressures that 
may have been at play leading up to the incident. Is it fair to say 
that at some point before the explosion, the rig experienced some kind 
of abnormality in well pressure, even though the well had been cased 
and cemented and was nearly complete?
    Answer. The Deepwater Horizon explosion occurred after the well 
construction process was essentially finished. Drilling had been 
completed on April 17, and the well had been sealed with cement by the 
cementing contractor.
    A blowout is associated with abnormal pressure. Transocean does not 
have records to determine when or how pressures became abnormal or 
triggered the blowout although BP is believed to received real-time, 
streaming data from the rig to shore.
    The reservoir of oil at the Macondo well is located approximately 
13,500 feet below the sea floor whereas the blowout preventer (``BOP'') 
is located at the sea floor about 2 V2 miles away. At that stage of the 
drilling process, the pathway from the reservoir into the well and up 
to the sea floor was supposed to be effectively sealed by cement and 
casing. Therefore, in order for the hydrocarbons to get from 13,500 
feet below the sea floor to the sea floor and the BOP and ultimately to 
the rig, one or both of the casing or cementing must have failed.
    Question 3. What was the crew's and management's reaction to this 
abnormality?
    Answer. As the Operator, BP was managing operations on the 
Deepwater Horizon. Media reports have indicated that BP stated that 
they were not prepared to address abnormalities of this nature. Media 
has also reported a rig to shore communication among BP personnel in 
which Transocean was not involved.
    We do have information that members of the Transocean crew 
activated the blowout preventor prior to evacuating the rig.
    Question 4. To the extent you are familiar with the Montara blowout 
off of Australia last year, can you enlighten the committee as to how 
this incident is different from the Montara incident?
    Answer. Transocean has no direct knowledge of the Montara blowout 
other than what was reported in initial findings issued by the U.S. 
Coast Guard. While both involved the use of nitrogen cement, Transocean 
understands that the Montara incident involved a shallow-water 
operation using a jack-up rig over a platform, which is distinct from 
the deepwater incident involving the Deepwater Horizon.
    Question 5. Transocean's operations have been directly affected in 
US waters as a result of the Deepwater Horizon incident, but have you 
ordered any additional safety measures or modified procedures for 
operations outside the U.S. based on the incident?
    Answer. Transocean maintains a consistent standard of policies and 
procedures, maintenance practices, and operating practices across the 
Transocean fleet throughout the world. Until we know exactly what 
happened on April 20, 2010 and the real sequence of events, it is 
difficult to speculate about what additional safety measures should be 
implemented or what operational procedures should be modified. In the 
aftermath of this incident, we have continued to follow Transocean 
policies and procedures around the world until we find out what may 
have contributed to the cause of events.
    Transocean is committed to working hard to understand what caused 
this accident and what might have averted it. We will implement 
whatever recommendations come out of that analysis.
    Question 6. Is it foreseeable that a BOP would encounter a sudden 
introduction of cement or other foreign substance from a well that has 
either lost or failed to establish its integrity, or is such a scenario 
so unlikely that it had not previously been contemplated?
    Answer. As noted above, the BOP is designed to close around or cut 
through, drill pipe to restrict the flow of oil; it is not designed to 
cut through cement, casing, tool joints, or significant debris. Failure 
of well integrity of a cased and cemented well and the possible 
subsequent introduction of cement and casing into a BOP is extremely 
unlikely.
     Responses of Steven Newman to Questions From Senator Menendez
    Question 1. What other redundant mechanisms are available to the 
industry for preventing with deep blowouts that were not present on the 
Deepwater Horizon, and why were they not present?
    Answer. The primary industry means of controlling reservoir 
pressure during drilling operations is drilling mud and cement and 
casing. The BOP serves as a secondary means of controlling reservoir 
pressure if the drilling mud proves inadequate during drilling 
operations. The BOP function is to seal the wellbore in the event of a 
blowout during drilling operations. I am not aware of any available 
mechanism other than a BOP for sealing the wellbore in the event of a 
blowout during this phase of operations.
    In contrast, the sole means of controlling reservoir pressure after 
the drilling phase is complete and the well has been plugged or 
abandoned are the casing and cement. The BOP is removed from every well 
when the abandonment phase is complete, and at that time the B0P is no 
longer intended to serve as a redundant control mechanism. Therefore, 
the well design must be able to secure the well and seal it from 
hydrocarbon ingress and transport to the surface.
       Response of Steven Newman to Question From Senator Lincoln
    Question 1. In media reports following this disaster, I keep 
reading over and over again that certain devices and technologies being 
discussed to stop the leak have never been used in water this deep. Do 
you believe the depth of water presents more challenges in containing 
the leak? Do you believe more testing, research and technologies are 
needed to ensure the safety of deepwater and ultra-deep water drilling?
    Answer. In the course of our support of BP and the Unified Command 
in attempting to contain the leak and based on media reports, it 
appears that the depth of the water has presented more challenges than 
anticipated. We cannot say, however, with any certainty what additional 
testing, research and technologies might be warranted to ensure the 
safety of deepwater and ultra-deep water drilling until what caused the 
accident is known. Once the causes have been identified, Transocean 
will certainly support development of any additional technologies that 
may be necessary to ensure that the April 20 events do not occur again.
     Responses of Steven Newman to Questions From Senator Sessions
    Question 1. What is Transocean's safety record in the Gulf of 
Mexico and worldwide?
    Answer. Transocean has maintained a strong safety record in the 
Gulf of Mexico and throughout the world. Transocean has never--and will 
never--compromise on safety. In 2009, Transocean recorded its best ever 
Total Recordable Incident Rate (TRIR). Thirty-eight (38) rigs had zero 
TRIR (no recordable incidents) and sixty-seven (67) rigs had zero 
serious injury cases. Four (4) rigs achieved our safety vision of zero 
incidents. In addition, MMS awarded one of its top awards for safety to 
Transocean in 2009. The MMS SAFE Award recognizes ``exemplary 
performance by Outer Continental Shelf (OCS) oil and gas operators and 
contractors.'' The Deepwater Horizon had a seven-year history with no 
loss time accidents. The Deepwater Horizon set the record for deepwater 
operations for a semi-submersible drilling rig and achieved the record 
for the deepest well ever drilled.
    Question 2. What purpose does the Blow Out Preventer (BOP) serve?
    Answer. A blowout preventer (BOP) is a series of large valves that 
are positioned on top of a well to provide secondary pressure control 
of a well. BOPs are designed to quickly shut off the flow of oil or 
natural gas in the case of a kick or blowout during drilling 
operations, which is a sudden, uncontrolled release of pressure from 
below the sea floor. BOPs are made in a variety of styles, sizes and 
pressure ratings. Sometimes, several different units of a BOP are 
combined into a single device, often called a BOP ``stack.'' A BOP 
stack is a set of two or more preventers used to provide pressure 
control of a well. A typical stack might consist of one to six ram-type 
preventers and, optionally, one or two annular-type preventers. A 
typical stack configuration has the rani preventers on the bottom and 
the annular preventers at the top. The configuration of the stack 
preventers is optimized to provide maximum pressure integrity, safety 
and flexibility in the event of a well control incident. Deepwater BOP 
stacks weigh as much as 700,000 pounds and stand five stories tall.
    Question 3. How many rams are there within the BOP stack and could 
you please explain the purpose of each ram?
    Answer. The Outer Continental Shelf Lands Act (``OCSLA'') requires 
that subsea BOP stacks (those positioned on wellheads on the ocean 
floor like the Deepwater Horizon) include at least four remote-
controlled, hydraulically operated BOPs consisting of an annular BOP, 
two BOPs equipped with pipe rams, and one BOP equipped with blind-shear 
rams. The Deepwater Horizon BOP exceeded these regulatory requirements 
by maintaining five rams and two annular preventers in its stack: two 
pipe rams, one blind shear ram. one casing shear ram, and two annulars. 
The BOP also had one test ram. The individual rams are pictured and 
explained more fully in the Cameron Manuals that will be provided. They 
are generally described as follows:

   Pipe rams consist of two blocks of steel with a half-circle 
        hole on each edge sized to fit around the drill pipe upon 
        closure.
   Blind shear rams are similar to pipe rams but without a hole 
        for the pipe. When blind shear rams close, they form a solid 
        surface in the center of the wellbore and contain pressure.
   Casing shear rams are rams outfitted with steel shearing 
        devices designed to cut through drill pipe and other tubulars, 
        if all other barriers fail.
   An annular B0P is another type of valve, this one featuring 
        a sealing element that weighs more than one ton. Annular BOPs 
        work by mechanically squeezing a rubber element inward to seal 
        on either a pipe or the open hole itself.

    Question 4. When did the last safety test occur for this particular 
BOP and what were the results of the test?
    Answer. The Deepwater Horizon BOP was tested on April 10, 2010, and 
April 17, 2010. In accordance with standard procedures, all rams except 
the shear rams were assessed during these tests, and each passed 
successfully. The blind shear rams of the Deepwater Horizon BOP were 
pressure tested and passed on April 20, 2010.
                                 ______
                                 
      Responses of Tim Probert to Questions From Senator Bingaman
    Question 1. Please provide any and all data and documents, 
including technical specifications, describing the well plan and its 
casing and cementing program as well as any modifications to that plan 
provided by BP or any other source for Halliburton's work on the Deep 
water Horizon Macondo well.
    Answer. Halliburton does not have the actual well plan document, 
and thus has not had access to it in answering this question.

   Halliburton developed the cementing proposal based on well 
        information provided by the well owner. Halliburton had no role 
        in developing the casing program. Decisions regarding the final 
        cementing procedure, including the number of centralizers and 
        the cement volume, were made by the well owner. See the 
        following documents:
   Macondo--MC252--97/8x7 Prod Casing--V6--CustomerCopy.pdf, 
        HAL--0011047-HAL-0011058
   9.875 x 7 Prod. Casing Design Report--21 Cent.PDF, 
        HAL0010699-HAL0010720
   9.875 x 7 Prod. Casing Design Report--6 Cent.PDF, HAL--
        0010988-HAL--0011020

    Question 2. Please provide any and all documents or data to or from 
Halliburton or BP concerning the equipment or material to be used 
during Halliburton's activities on the Deepwater Horizon and in the 
Macondo well. Please state the type of cement, type of casing, extent 
of cementing, plugs and numbers of centralizers used in this well and 
provide all documentation of these specifications, and any 
modifications made to the original plan.
    Answer.
   The cementing system designed for the Mississippi Canyon 
        Block 252 Well Number 1, 9 7/8'' x 7'' casing job contained the 
        following:

     Lafarge Class H Cement + the following chemicals
       B WOC (by weight of cement) EZ-Flo,
       BWOC D-Air 3000
       Potassium Chloride Salt
       BWOC SSA -1 (fine silica sand)
       BWOC SSA-2 (100 mesh silica sand)
       BWOCSA-541
       GPS (Gallons per sack of cement) ZoneSealant 2000
       GPS SCR-100 Liquid
       GPS Fresh Water
   See specifically the following documents:

     Macondo--MC252--97/8x7 Prod Casing--V6--CustomerCopy.pdf, 
            HAL0011047-HAL-0011058
     9.875 x 7 Prod. Casing Design Report--21 Cent.PDF, 
            HAL0010699-HAL0010720
     9.875 x 7 Prod. Casing Design Report--6 CentPDF, 
            HAL0010988-HAL0011020

    Question 3a. Please state how the decision was made regarding the 
number of centralizers to be used in this well, and whether you believe 
the number used is industry best practice.
    Answer.
   Halliburton conducted computer software simulations using 
        input provided by the well owner to determine the optimum 
        number of centralizers for the 9 7/8'' x 7'' casing. The 
        results of the computer simulations were communicated to the 
        well owner prior to performing the cement program for the 9 7/
        8'' x 7'' casing.
    Question 3b. Were there changes made to the original well plan and 
casing program that reduced the number of centralizers?
    Answer. The well owner did make changes to the recommended number 
of centralizers for the 9 7/8'' x 7'' casing.
    Question 3c. If so, please state whether you believe that was 
adequate to maintain the integrity of the casing and cement program.
    Answer.
   The computer software simulations predicted the effects of 
        reducing the number of centralizers. The results were 
        communicated to the well owner. The results indicated that 
        cement would channel in the annulus. Cement channeling does not 
        in itself create a safety concern. When cement channeling 
        occurs, it is typically remedied by pumping additional cement 
        as a subsequent additional step in the well program.
    Question 3d. What reasons would the Operator have for changing the 
number of centralizers in the well design?
    Answer.
   Halliburton cannot speak for the well owner. The well owner 
        is in the best position to respond to this question.
    Question 3e. Please provide any and all data and documentation 
regarding the decision on the number of centralizers to be used.
    Answer. Please see the following documents:
       9.875 x 7 Prod. Casing Design Report--21 Cent.PDF, HAL--
            0010699-HALOO10720
       9.875 x 7 Prod. Casing Design Report--6 CentPDF, 
            HAL0010988-HAL0011020
       April 15, 2010 email exchange between Halliburton's BP 
            account cementing representative and BP's cementing 
            engineer, HAL0010648-HAL0010650
       April 18, 2010 email from Halliburton's BP account 
            cementing representative and BP's cementing engineer, 
            HAL0011088-HAL 0011090 3
    Question 4a. Halliburton has stated that BP as the well Operator 
would provide all specifications for the cementing and other activities 
carried out by Halliburton. Would Halliburton question specifications 
provided to it if it believed they were inadequate or unsafe?
    Answer.
   Yes
    Question 4b. Was that done here?
    Answer.
   Halliburton communicated to the well owner that based on 
        their decision to use a reduced number of centralizers, the 
        cement would likely channel. As noted above, cement channeling 
        does not in itself create a safety concern. When cement 
        channeling occurs, it is typically remedied by pumping 
        additional cement as a subsequent additional step in the well 
        program.
    Question 4c. If so, provide any and all data and documentation.
    Answer. See the following documents:
       9.875 x 7 Prod. Casing Design Report--21 Cent.PDF, 
            HAL0010699-HALOO10720
       9.875 x 7 Prod. Casing Design Report--6 CentPDF, 
            HAL0010988-HAL--0011020
       April 15, 2010 email exchange between Halliburton's BP 
            account cementing representative and BP's cementing 
            engineer, HAL0010648-HAL0010650
       April 18, 2010 email from Halliburton's BP account 
            cementing representative and BP's cementing engineer, HAL--
            0011088-HAL--0011090
       Macondo--MC252--97/8x7 Prod Casing--V6--
            CustomerCopy.pdf, HAL0011047-HAL-0011058

    Question 4d. If not, please state whether Halliburton would proceed 
with a well if it believed the specifications given it were unsafe or 
inadequate, and whether Halliburton believes the specifications given 
to it by BP for the Macondo well were adequate and safe.
    Answer.
   As stated above in B, Halliburton communicated to the well 
        owner that based on their decision to use a reduced number of 
        centralizers, the cement would likely channel. As noted above, 
        cement channeling does not in itself create a safety concern. 
        When cement channeling occurs, it is typically remedied by 
        pumping additional cement as a subsequent additional step in 
        the well program.
    Question 4e. Also state whether Halliburton believes that the 
specifications for the well ? both original and modified--were industry 
best practices.
    Answer.
   The cementing program was developed based on well 
        information provided by the well owner and in accordance with 
        MMS requirements.
    Question 4f. Provide any data and documentation in your possession 
relevant to your answer.
    Answer.
   See documents referenced above in response to subparagraph 
        C.
    Question 5. In the Macondo well, the cementing was required to 
extend up the well for 500 feet above the lowest casing shoe. Please 
state whether you believe that was adequate for the Macondo well based 
on the casing program that was implemented, and provide any data and 
documentation or other basis for that belief.
    Answer.
   The cementing program was designed in accordance with well 
        information supplied by the well owner and cement volumes were 
        calculated to meet the well owner's specifications.
   See the following documents:
       Macondo--MC252--97/8x7 Prod Casing--V6--
            CustomerCopy.pdf, HAL--0011047-HAL-0011058
       9.875 x 7 Prod. Casing Design Report--21 Cent.PDF, 
            HAL0010699-HAL0010720
       9.875 x 7 Prod. Casing Design Report--6 Cent.PDF, 
            HAL0010988-HAL--0011020

    Question 6. Please list all data or documentation from the 
deepwater Horizon operation now in Halliburton's possession. Please 
state whether all of that data has been made available without 
exception to Federal government investigators, and identify those 
investigators. If it has not been made fully available, please describe 
all data that has been withheld and the reason for the withholding.
    Answer.
   Engineering reports
   Real time data stream
   Emails
   Well schematics

    All such documents related to the Deepwater Horizon operation have 
been made available, without exception, to the Oversight and 
Investigation Subcommittee of the House Committee on Energy and 
Commerce, the House Natural Resources Committee, the House Judiciary 
Committee, and the U.S. Coast Guard.
    Question 7a. Please list all contacts with, and witness statements 
from, Halliburton witnesses with information relevant to the Deepwater 
Horizon operation and explosion.
    Answer.
   Halliburton made available to the well owner the four 
        Halliburton employees who were on the Deepwater Horizon at the 
        time of the explosion. Those employees have given interviews to 
        the well owner. No written witness statements have been given. 
        Two of those employees have been subpoenaed to testify before 
        the joint U.S. Coast Guard and MMS hearings in New Orleans May 
        26-29, 2010.
    Question 7b. Please state whether these witnesses and statements 
have been made available to Federal government investigators without 
exception, and identify the investigators who have received this 
information or interviewed these witnesses.
    Answer.
   These Halliburton employees are available to the Federal 
        government investigators and two of them have been subpoenaed 
        to testify before the joint U.S. Coast Guard and MMS hearings 
        in New Orleans May 26-29, 2010.
    Question 7c. If they have not been made fully available, please 
describe the extent of any limitation or withholding and the basis for 
that limitation
    Answer.
   As stated in B above, these Halliburton employees are 
        available to the Federal government investigators and two of 
        them have been subpoenaed to testify before the joint U.S. 
        Coast Guard and MMS hearings in New Orleans May 26-29, 2010.

    Question 8. Please describe the Halliburton policy for retention of 
data and documents applicable to information related to the Deepwater 
Horizon operation at the Macondo well.
    Answer.
   Following the explosion on the Deepwater Horizon, 
        Halliburton issued a document retention notice to employees 
        within Halliburton who would have data and documents relating 
        to Halliburton's operations on the Deepwater Horizon. Those 
        documents and data will be retained for six years following the 
        close of all investigations and litigation arising from the 
        explosion.
      Responses of Tim Probert to Questions From Senator Murkowski
    Question 1a. What is Halliburton's current role and outlay of 
personnel and resources in the containment and response effort?
    Answer.
   Halliburton is working with BP on well control solutions and 
        mobilizing assets and resources at the direction of BP.
   Halliburton is providing services on the following relief 
        well rigs:

    i. On the Development Driller III, Halliburton is providing Baroid 
            Drilling Fluids, Cementing, Sperry Directional Drilling and 
            Surface Data Logging; and
    ii. On the Development Driller II, Halliburton is providing Baroid 
            Drilling Fluids, Cementing, and Sperry Surface Data Logging

   For the well kill operations on the vessel HOS Centerline 
        #14, Halliburton is providing Cementing Services and Production 
        Enhancement for high rate/pressure pumping.

    Question 2. Has Halliburton ever questioned or refused its clients' 
orders on a well cementing job due to concern over the order's 
integrity?
    Answer.
   Yes, Halliburton maintains stop work authority for our field 
        crews and technical staff if there is a concern of an imminent 
        safety hazard.
       Response of Tim Probert to Question From Senator Menendez
    Question 1a. Halliburton is in the unenviable position of having 
worked on the two most recent major spills-the Montara in Australia 
last year and now the ongoing disaster in the Gulf. Neither 
investigation is complete, but some have speculated that both accidents 
may have been caused by Halliburton's cementing process. After each 
accident has Halliburton thoroughly reviewed all of its procedures, its 
training, its equipment and its materials?
    Answer.
   Yes
    Question 1b. And has Halliburton made any changes in light of these 
reviews?
    Answer.
   Until the root cause of the Mississippi Canyon Block 252 
        Well number 1 and the Montara incidents are identified, 
        Halliburton will continue its process of working at the 
        direction of the well owner in accordance with industry and MMS 
        standards.
        Response of Tim Probert to Question From Senator Lincoln
    Question 1a. In media reports following this disaster, I keep 
reading over and over again that certain devices and technologies being 
discussed to stop the leak have never been used in water this deep. Do 
you believe the depth of water presents more challenges in containing 
the leak?
    Answer.
   Yes
    Question 1b. Do you believe more testing, research and technologies 
are needed to ensure the safety of deepwater and ultra-deep water 
drilling?
    Answer.
   Such advances could be most beneficial but until the root 
        cause of the Mississippi Canyon Block 252 Well number 1 
        incident is identified, Halliburton cannot speculate on the 
        specific objectives for such additional testing, research and 
        technologies.
      Responses of Tim Probert to Questions From Senator Sessions
    Question 1a. Is it true that Halliburton had completed pouring the 
cement that lines the well 20 hours before the blow out?
    Answer.
   Yes, Halliburton had completed cementing at locations in the 
        wellbore as required by the well owner. We had not as yet been 
        instructed to pump cement for the final plug at the time of the 
        blowout.
    Question 2. Was this particular well properly cemented?
    Answer.
   The cement program was executed according to the procedure 
        directed by the well owner.
    Question 3. Were all the appropriate tests run on the cement and 
casings?
    Answer.
   Pre-job laboratory testing of cementing materials was 
        conducted in accordance with industry standards.
   Post-cementing evaluation (bond log) is the responsibility 
        of the well owner. Halliburton is unclear whether the well 
        owner included the bond log test in the well plan. Halliburton 
        understands the well owner did not conduct a bond log test.
   Following placement of the cement slurry, the well owner 
        conducted a positive pressure test to demonstrate the integrity 
        of the production casing string. Halliburton did not conduct 
        the test, but understands that based on the result of that 
        test, the well owner chose to proceed with the well plan.
   Halliburton understands that a negative pressure test was 
        then conducted by the drilling contractor and/or the well 
        owner. The negative pressure test tests the integrity of the 
        casing seal assembly. Halliburton is unclear of the results of 
        the negative pressure test.

    Question 4a. There have been reports that mud was being extracted 
from the riser before the top cement cap was in place. Is this true?
    Answer.
   Halliburton understands that the mud was displaced from the 
        riser. The top cement cap was never placed in Mississippi 
        Canyon Block 252 Well Number 1.
    Question 4b. If so, why would you remove the mud prior to securing 
the pressure with cement?
    Answer.
   The order of all well construction activities are at the 
        direction of the well owner. Halliburton did not take part in 
        the decision making or the execution of the mud displacement.
    Question 5. A 2007 study by three U.S. Minerals Management Service 
officials found that cementing was a factor in 18 of 39 well blowouts 
in the Gulf of Mexico over a 14-year period. That was the single 
largest factor, ahead of equipment failure and pipe failure. How many 
of those 18 blowouts did Halliburton serve as the lead subcontractor 
for cementing?
    Answer.
   Review of the 18 loss of well control incidents (LWC) 
        referenced in the article titled ``Absence of Fatalities in 
        Blowouts Encouraging in MMS study of OCS Incidents'' published 
        in the July/August 2007 issue of Drilling Contractor and in the 
        original MMS study as ``associated with cementing'' in the 
        1992-2006 period, indicate that rig and/or operator activities 
        shortly following cementing operations contributed to these LWC 
        incidents.
   14 of 18 incidents resulted from post cementing rig 
        operations, including:

           removal of the BOP (Blow Out Preventer) by the 
        drilling contractor before the cement was set;
           the drilling contractor inserting a wash string in 
        the casing annuli which prevented the BOP from sealing the 
        wellbore during the LWC event; and
           the drilling contractor cutting the casing or 
        removing a casing valve to set casing in the wellhead.

   4 of 18 incidents resulted from well owners not utilizing 
        industry recognized best cementing practices.
   The MMS report states that in nine LWC incidents, the cement 
        service company is not specified, Halliburton is specified in 
        six, BJ Services is specified in two, and Schlumberger is 
        specified in one.
                                 ______
                                 
                                 
                                 

                                    

      
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