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62–344 PDF 2010

S. HRG. 111–653, Pt. 4 

OIL RIG DISASTER IN THE GULF 

HEARING 

BEFORE THE

COMMITTEE ON 

ENERGY AND NATURAL RESOURCES 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

TO

RECEIVE TESTIMONY ON ISSUES RELATED TO THE DEPARTMENT OF 

THE INTERIOR’S MAY 27TH REPORT: INCREASED SAFETY MEASURES 

FOR ENERGY DEVELOPMENT ON THE OUTER CONTINENTAL SHELF, 

INCLUDING OVERSIGHT OF RECENT ACTIONS RECOMMENDED BY 

THE DEPARTMENT TO ADDRESS THE SAFETY OF OFFSHORE OIL DEVELOPMENT 

JUNE 9, 2010 

( 

Printed for the use of the 

Committee on Energy and Natural Resources 
(II) 

COMMITTEE ON ENERGY AND NATURAL RESOURCES 

JEFF BINGAMAN, New Mexico, Chairman 

BYRON L. DORGAN, North Dakota 

RON WYDEN, Oregon 

TIM JOHNSON, South Dakota 

MARY L. LANDRIEU, Louisiana 

MARIA CANTWELL, Washington 

ROBERT MENENDEZ, New Jersey 

BLANCHE L. LINCOLN, Arkansas 

BERNARD SANDERS, Vermont 

EVAN BAYH, Indiana 

DEBBIE STABENOW, Michigan 

MARK UDALL, Colorado 

JEANNE SHAHEEN, New Hampshire 

LISA MURKOWSKI, Alaska 

RICHARD BURR, North Carolina 

JOHN BARRASSO, Wyoming 

SAM BROWNBACK, Kansas 

JAMES E. RISCH, Idaho 

JOHN MCCAIN, Arizona 

ROBERT F. BENNETT, Utah 

JIM BUNNING, Kentucky 

JEFF SESSIONS, Alabama 

BOB CORKER, Tennessee 

ROBERT M. SIMON, Staff Director 

SAM E. FOWLER, Chief Counsel 

MCKIE CAMPBELL, Republican Staff Director 

KAREN K. BILLUPS, Republican Chief Counsel 
(III) 

C O N T E N T S 

STATEMENTS 

Page 

Bingaman, Hon. Jeff, U.S. Senator From New Mexico ........................................ 1 

Murkowski, Hon. Lisa, U.S. Senator From Alaska ............................................... 3 

Salazar, Hon. Ken, Secretary, Department of the Interior .................................. 5 

APPENDIXES 

APPENDIX I 

Responses to additional questions .......................................................................... 43 

APPENDIX II 

Additional material submitted for the record ........................................................ 47 

(1) 

OIL RIG DISASTER IN THE GULF 

WEDNESDAY, JUNE 9, 2010 

U.S. SENATE, COMMITTEE ON ENERGY AND NATURAL RESOURCES, Washington, DC. 

The committee met, pursuant to notice, at 9:36 a.m. in room SD– 

366, Dirksen Senate Office Building, Hon. Jeff Bingaman, chairman, presiding. 

OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. 

SENATOR FROM NEW MEXICO 

The CHAIRMAN. OK. The hearing will come to order. The committee will come to order. 

Today, we are holding the fourth committee hearing here in the 

Energy and Natural Resources Committee on the devastating oil 

spill in the Gulf of Mexico. As large volumes of oil continue to 

wreak havoc in the Gulf, our thoughts are first with the people on 

the forefront of the disaster—the families of those who have lost 

their lives in the explosion, those who are working day and night 

to protect the places and the wildlife they care about and often 

their livelihood as well. 

I know all Americans are thinking of the residents of the Gulf 

region and are grateful to them and to the other responders for 

their work under these most difficult circumstances. 

It is clear that prior to the explosion of the Deepwater Horizon 

rig neither the companies involved nor the Government adequately 

appreciated or prepared for the risks involved in a deepwater drilling operation of this type. The results of that failure to properly assess risks and prepare for risks have been disastrous. Lives have 

been lost. The livelihood and way of life of many Gulf residents has 

been interrupted and in some cases destroyed. The environmental 

damage has been immense. Since BP has so far failed to stop the 

oil gushing into the Gulf, the extent of the further damage that will 

be suffered is not known. 

Our purpose today is to review near-term actions that have been 

taken and are planned to correct this longstanding failure to properly assess risk and to ensure the safety of this and other ongoing 

and future energy operations in the Outer Continental Shelf. According to the Department of the Interior, the Gulf of Mexico has 

nearly 7,000 active leases on the Federal Outer Continental Shelf, 

64 percent of which are in deep water. As a result, there are now 

about 3,600 oil and gas-related structures in the Gulf. 

In 2009, 80 percent of all U.S. offshore oil production, 45 percent 

of natural gas production occurred in water depths in excess of 
2 

1,000 feet, and industry had drilled nearly 4,000 wells to those 

depths. Operators have drilled about 700 wells that—like Deepwater Horizon’s well—are in water depths of 5,000 feet or greater 

on the Outer Continental Shelf. 

In 2009, production from the Gulf accounted for 31 percent of 

total domestic oil production and 11 percent of total domestic natural gas production. Offshore operations provided direct employment estimated at 150,000 jobs. 

We are all aware of our country’s demand for oil. As a result of 

this accident, we are aware perhaps in a way that we were not before of the true potential costs of that demand. 

The challenge for regulators, and for Congress in enacting statutory responsibilities and authorities to those regulators, is to put 

appropriate requirements in place ensuring that this horrible price 

is not paid again. At the same time, we are reminded that we must 

continue with renewed vigor to find ways to reduce our dependence 

on oil for both national security, economic, and environmental reasons. It is particularly challenging to do so while we are still in the 

midst of a crisis. 

Investigations are ongoing into the cause of this disaster. We do 

not have certainty about what happened. The best minds in the 

country must be focused on stopping this oil leak and cleaning up 

the affected areas. Yet we must make sure, as an urgent matter, 

that ongoing operations are safe. 

Today, we hear from the Secretary of the Interior about the administration’s actions in this regard. At the President’s direction, 

his team has produced a report, on a 30-day timeline, to identify 

near-term safety measures that need to be taken. The regulators 

have acted quickly to impose some of these new safety requirements immediately on ongoing operations. In addition, the administration has taken measures to halt certain operations to ensure 

their safety, while allowing others to continue. 

We appreciate the Secretary’s efforts and his work to ensure that 

there is an adequate response to the environmental and safety crises presented by this accident. We also appreciate his presence 

here today, look forward to working together with the administration on our shared and urgent goal of ensuring the safety of these 

operations. 

Let me turn now to Senator Murkowski for her opening remarks. 

[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. I begin each hearing remembering those who lives were lost in this terrible accident. Our nation lost 

11 men and our thoughts and prayers remain with their families of those lost and 

injured. 

Today we are here to discuss the Department of Interior’s May 27th report that 

was requested by the President on April 30th. Only 10 days after the Deepwater 

Horizon explosion, the President requested a thorough report on additional safety 

mechanisms that could be put in place immediately to improve the safety of oil and 

gas exploration and production operations on the OCS. 

The intent of this report was to improve the safety of oil and gas production in 

the Gulf of Mexico, not shut it down. Unfortunately, the recommended 6 month 

drilling moratorium on deepwater leases, including shutting down the 33 rigs that 

were already in the process of drilling new wells, has halted all future production. 

And currently, no one knows when companies will be allowed to drill again. 
3 

As such, this moratorium will exacerbate, rather than alleviate, the impacts of 

this spill upon Louisiana’s economy and the environment. 

The immediate impacts to the economy are devastating. The idled 33 rigs employed approximately 36,300 crewmen, deck hands, engineers, welders, ROV operators, caterers, helicopter pilots, etc. Many of these offshore crewmen and women are 

from Louisiana and the neighboring states. 

That’s like closing 12 large motor vehicle assembly plants at once—with the impacts disproportionately in my state. 

In addition, all the service jobs will also be impacted. Losing tens of thousands 

of jobs will be a catastrophic blow to an already tragic situation. 

I know that many in the environmental community believe that shutting down 

offshore oil and gas production will protect our coastlines from oil washing ashore, 

but this is contrary to the facts. 

The reality is our country will continue to rely on oil and gas for years into the 

future as we move to more renewable and less carbon intense sources of energy. If 

we are not going to produce oil and gas domestically, then we will have to get it 

from somewhere else and transport it by tanker. 

On average, today’s tankers carry about 2 million barrels of oil each, and according to the National Research Council, are four times more likely to be the cause of 

oil in the sea vs. an offshore drilling facility. Increasing tanker traffic will only increase this risk—and put our coastlines at greater peril—the opposite intent of the 

report. 

I agree that we must ensure that we are doing everything possible to increase the 

safety of OCS oil and gas production. I am supportive of a pause on drilling to ensure that all the right safety mechanisms are in place, but I do not believe a 6 

month moratorium achieves the results intended. 

Once these drilling rigs get moved to international locations, they will not return 

immediately. It could be years before they return, leaving the U.S. more dependent 

on foreign oil, exporting jobs abroad, weakening our economy and putting our shorelines are greater risk. 

That is why I have asked the President to immediately reconsider the six-month 

moratorium on deepwater drilling. 

I hope for the sake of Louisiana’s economy and shoreline, he listens. 

Thank you Mr. Chairman 

STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR 

FROM ALASKA 

Senator MURKOWSKI. Thank you, Mr. Chairman. Good morning. 

Good morning to you, Secretary. It has been a couple of weeks 

now since you have been before the committee. I think last time 

you were here, the oil from the spill had not yet reached—— 

[Interruption from audience.] 

Senator MURKOWSKI. Mr. Chairman. 

The CHAIRMAN. Let me ask the protesters to please exit the room 

and allow us to proceed with our hearing. 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

Mr. Chairman, again, as I was saying, it has been several weeks 

now since you have been before the committee. At that time, the 

oil had not yet reached the shores and marshes of southern Louisiana. A couple of weeks ago, we had the opportunity, along with 

the chairman, to go, fly over that spill. I think we all recognize the 

gravity of the situation and the nightmare that it has become for 

the residents of the Gulf region. 

Today, we are examining the measures that the Interior Department has recommended and implemented so far in response to the 

Deepwater spill. We are examining not only the 4-page report on 

immediate recommendations for improved safety and environmental protections, but also we need to discuss the moratorium 

that the Interior Department has implemented for all deepwater 
4 

exploration and the additional requirements and suspensions for 

some shallow water exploration as well. 

There can be no doubt, most certainly, that the public outrage 

and the political pressure has mounted for the Government to do 

more about this still-worsening situation, and I think we are all 

sympathetic to those demands. Yesterday, I had an opportunity to 

meet with an Alaskan—he is going to be testifying this morning in 

another committee here on the Hill, speaking on the long-term impacts of oil spills on fisheries as we experienced after the Exxon 

Valdez. Unfortunately, his story is familiar, very familiar to me 

and my constituents. 

But our conversation wasn’t just about the fisheries. It was about 

the constant struggle in finding a balance between the exploration 

and the production of oil, which our State depends upon for the 

majority of its economy, against the critical and very compelling interests of maintaining our ecosystems, which support the remaining building blocks of our fisheries and our tourism economies. The 

Gulf is certainly faced with a stark picture of the associated tradeoffs right now. 

So I applaud the Interior Department for its efforts, as you have 

stated in the report, to address the fact that America’s energy security is likely to carry exploration increasingly into very deep water 

environments, and how to reevaluate whether the best practices for 

safe drilling operations developed over the years might be adjusted 

for the unique challenges of drilling so very far under the sea. 

These are not just technical challenges, but they are human challenges as well, which we recognize can be difficult to regulate without successfully creating a culture, both at the regulatory and the 

industrial level, that prioritizes safety and, in turn, protects from 

anything like Deepwater Horizon ever happening again. 

I am sure that we will look back at the lessons that have been 

learned not only from what happened on April 20th, but from the 

various operational responses to the spill, and most certainly, we 

will learn lessons from our policy responses as well. I think we just 

need to look to the news yesterday that one of the largest independent offshore operators announced that it is packing up and 

moving three of its rigs to foreign waters. 

So, I think the question that needs to be asked is, is this consequence unintended? Is it something we are willing to accept? 

Mr. Chairman, there is certainly a lot to talk about here. I want 

there to be no effort or expense spared to bring the well under control and see to it that the victims of this spill are compensated fairly and expeditiously, and I am certainly working to make that happen. As we look at the policy moving forward, I simply reiterate 

that we carefully consider the impacts of this spill on long-term energy policy. We have got to get it right. 

Energy Secretary Chu announced yesterday that the department 

is providing online access to diagnostic results and other data 

about the malfunctioning blowout preventer. He said, and I quote, 

‘‘Transparency is not only in the public interest, it is part of the 

scientific process. We want to make sure that independent scientists, engineers, and other experts have every opportunity to review this information and make their own conclusions.’’ 
5 

Mr. Chairman, I would echo Secretary Chu’s statements. Let us 

reform policy in a transparent, reasoned manner where the public 

and the scientific community and all interested parties can review 

it. We certainly have a lot of work to do. 

With that, I appreciate the opportunity and look forward to the 

comments from the Secretary. 

The CHAIRMAN. Thank you. As Senator Murkowski said, we welcome you back to the committee, Mr. Secretary. Of course, your 

deputy David Hayes and your counselor Steve Black, we welcome 

them as well. So please go ahead with your statement. 

STATEMENT OF HON. KEN SALAZAR, SECRETARY, 

DEPARTMENT OF THE INTERIOR 

Secretary SALAZAR. Thank you very much, Chairman Bingaman 

and Ranking Member Murkowski and all the U.S. Senators, and I 

think all of you are former colleagues on this committee. So it is 

always good to come to this committee, even when we are dealing 

with difficult challenges that are facing our Nation. 

I have prepared a statement for the record that we will submit 

for the record. But I think in the interest of having a dialog with 

you, what I want to do this morning to is to focus in on a couple 

of key issues. The first is the status of offshore drilling and the 

safety program which the President has directed, which we are in 

the process of implementing. The second is the reform that we have 

underway at the Department of Interior with respect to the Minerals Management Service and moving forward with efforts to develop a new organization there. 

It may be useful at the outset, before I speak to those two central 

points here, to also just give you a quick overview of what is happening even this morning. We are in a position where we are directive of BP relative to making sure that they are doing everything 

humanly and technologically possible to stop the leak, to fight the 

oil on the seas, and to fight the damages as they occur on shore. 

This morning, Secretary Chu and I had our morning call with BP 

executives. We were informed that the Enterprise vessel, which is 

what they call the vessel that is doing the short-term containment, 

is capturing about 15,000 barrels of oil a day. At our insistence, 

they have moved forward with additional capacity to be able to capture additional amounts of oil and to make sure that the 

redundancies are built in over time so that at the end of the day, 

as much of the pollution as is leaking can be captured, will be captured. 

Our goal is to get to zero pollution emanating from this well and 

doing so in the interim, while they get to the final effort, which will 

be to kill the well through the relief wells which are penetrating 

the subsea and which now are close to 8,000 feet below the surface 

of the sea. So those efforts continue. They are continuing in parallel, not in sequence, and nothing is being spared to bring this 

problem under control. 

In the headquarters at Houston, where I have now spent probably 10 days in the last 3 or 4 weeks, the scientists from the 

United States of America, from Sandia Labs, from Livermore, and 

from Los Alamos Laboratories, along with scientists from the 

United States Geological Survey, the Department of Defense ex-
6 

perts are all assembled there, making sure that the best minds are 

being brought to focus in on the problem. That is at the direction 

of the President. 

Let me comment just then on two of the issues, and I know that 

the committee will have many questions on these matters. First, 

Deputy Secretary David Hayes has been involved on this effort— 

now I think we enter day 51 or 52—nonstop, like the rest of us. 

We are relentless. We haven’t taken a day off from the beginning, 

and we will continue to work at this same level until we get this 

problem under control and we figure out the future with respect to 

oil and gas and the Outer Continental Shelf. 

Steve Black, who is the counselor to the Secretary, has been involved in all the energy issues at the Department of Interior and 

was one of the key architects of the safety report that was submitted to the President at his direction. So, he may have answers 

to some of the questions with respect to the safety report. 

Let me speak to the status of offshore drilling because I think 

that is something which many of you on this committee are very 

interested in, wanting to find out where we are. No.1, the President, following the Deepwater Horizon, directed the Department of 

Interior to develop safety recommendations within 30 days. 

The goal is simple. If we are going to move forward with any 

kind of oil and gas production in the Outer Continental Shelf, it 

must be done in a safe manner, and assumptions that were made 

about safety in the past are not assumptions that will be made in 

the future. To the extent that offshore drilling will continue, it has 

to be done in a manner that we can assure that it can be done in 

a safe way. So, the multiple recommendations that came out to the 

President in the report are now in the process of being implemented at the Department of the Interior. 

Those recommendations include additional enforcement and safety measures. They include requirements, which essentially amount 

to a recall of blowout prevention mechanisms and the recertification of those blowout prevention mechanisms in the Outer Continental Shelf. 

They include requirements with respect to cementing and with 

respect to casing, with respect to rig safety and a whole host of 

other safety initiatives. They are being implemented through Notices to the Lessees, which we implemented yesterday by sending 

a Notice to Lessees that affects both deep water and shallow water. 

So there is a panoply of safety measures which are significantly enhanced from what had existed in the past that are already being 

implemented as we speak here. 

No.2, with respect to the status of offshore drilling, I wanted to 

comment on the moratorium and also what we are doing with respect to shallow water development. First of all, with respect to the 

moratorium that the President and I have put into place, it was 

our view that we needed to get to the bottom, that we needed to 

find out exactly what it is that happened out at the Deepwater Horizon so that as we move forward with any kind of deepwater exploration that we can assure the American public and we can assure everyone who is watching that, in fact, it can move forward 

in a safe way. 
7 

The President’s commission, which will take a look at all of these 

issues, will have a recommendation based on the President’s directive within 6 months. Those recommendations will then be incorporated into how we move forward with Outer Continental Shelf 

drilling. 

But between now and then, it was our view, it was the President’s directive that we press the pause button. That is important 

for all of you on this committee to know that word. It is the pause 

button. It is not the stop button, but it is the pause button. It is 

a pause button so that we can make sure that if we move forward 

with OCS drilling in the Outer Continental Shelf that it can be 

done in a way that is protective of people and protective of the environment as well. 

With respect to the shallow waters, which I defined essentially 

at a 500-foot level, we have allowed those oil and gas shallow water 

production efforts and drilling efforts to move forward if, in fact, 

the operators can certify to us that they can meet the safety requirements. For most good operators, they will be able to give us 

the requirements that we have imposed on them, including certification that their blowout prevention mechanisms, that their 

redundancies, that their cementing procedures, that their casing 

procedures are all working. 

So, we wanted to allow shallow water drilling to move forward 

if it could be done in a way that can assure safety, and the Notice 

to Lessees that went out yesterday hopefully will achieve that. 

Let me then speak to the second point I wanted to cover this 

morning, and that is with respect to the Minerals Management 

Service and the changes that we are undertaking within that agency. It is important to reflect back also at the work that has gone 

on with MMS over the last 16, 17 months at the Department of Interior, and there has been massive work that has gone on. 

From day one, we imposed ethics requirements on MMS that had 

not existed before. We made ethics requirements a part of the performance plans of supervisors within MMS. Those who were involved in wrongdoing were referred to prosecution, or other personnel action was taken with respect to people who had been involved in wrongdoing. 

Our purpose in taking those reforms was to change the culture 

at MMS, and I believe that we have made significant progress in 

moving on that agenda. Second, we also move forward with a whole 

new agenda with respect to renewable energy, recognizing oil and 

gas is important. We also have recognized that there is tremendous 

opportunity with respect to wind power in the offshore. 

Yesterday, I signed a memorandum of understanding with 10 

Governors along the Atlantic coast because we believe that a very 

significant amount of the electricity needed along the eastern seaboard can, in fact, be generated from wind power off of the Atlantic, and the States along the Atlantic coast are very interested and 

supportive of those initiatives. So we have moved forward with a 

major renewable agenda, energy agenda within MMS. 

Finally, on reform efforts, the plans which we announced at the 

end of March were a culmination of a very significant amount of 

work taking into account and consideration two different plans that 

have been put forward by the prior administration, the 2007–2012 
8 

plan, as well as their 2010–2015 plan. The plan that we came out 

was very different from what had been proposed. 

We ended up postponing leases that had been planned in the 

Chukchi and the Beaufort Sea, as Senator Murkowski well knows, 

in large part because of the fact that we felt we needed additional 

science and we needed additional information with respect to oil 

spill response capability. We looked at places like Bristol Bay in 

Alaska, and we said it was too special and had the kind of ecosystem values there that needed to be protected for the long term. 

But we were also looking at making sure that those areas where 

you had the right infrastructure, where you had the support of, 

say, governments, where we had the geophysical information, that 

we allowed oil and gas production to move forward. Certainly, that 

was what we put forward with respect to the Gulf of Mexico. 

There are other places on the Atlantic, and I know Senator 

Menendez and others have been very interested with respect to the 

Atlantic. In the North Atlantic, we took that off the table from any 

drilling exploration. In the Mid-and South Atlantic, what we said 

we would do there is essentially develop additional information so 

that we can make thoughtful decisions relative to the future of the 

OCS. So that a plan that we came up with, in fact, was a part of 

what I consider to be one of the most significant changes that we 

came up with MMS. 

Now, moving ahead, how do we take this very critical function 

of the Department of the Interior of the United States of America 

and organize it in a way so that we can make sure that the functions of Government are being performed and being performed 

well? 

We have, through Secretarial Order, ordered the dismantling of 

MMS as we knew it into what now will be three components going 

forward. You all know on this committee that MMS exists by virtue 

of a Secretarial Order. The Secretarial Order that I have signed envisions the creation of a new direction forward in terms of how we 

are organized, and let me just quickly walk through that, and I will 

conclude my testimony. 

The first is that we are separating the revenue collections of 

MMS totally away from that part of the department. MMS has historically been located within the Assistant Secretary of Land and 

Minerals Management. There are approximately 900 people who 

work in that part of the department. Their job is to go out and collect the money on behalf of the American citizens, which they have 

done in good ways for a long time, including an average of $13 billion a year. 

Thirteen billion a year that comes into the Federal Treasury 

from oil and gas, and most of it coming from offshore. They do that 

day in and day out. Those functions of revenue collections will be 

moved away from Land and Minerals and put over into the Assistant Secretary of Policy Management and Budget, who is an Assistant Secretary appointed by the President, confirmed by the Senate. 

So, that will be a complete separation of the revenue collections 

from the permitting and the enforcement side. 

Then what we will do with the rest of the agency is we will divide it into two bureaus. One will be the Bureau of Ocean Energy 

Management, which will have the responsibility for moving forward 
9 

with the lease sales, moving forward with the environmental analysis, and moving forward with making sure that the resource in 

the Outer Continental Shelf, both with respect to conventional energy and renewable energy, is being managed in the appropriate 

way. 

We will also create a Bureau of Safety and Environmental Compliance, which will be separate and apart from the agency that has 

the responsibility for giving out the leases. That will allow essentially the police function of Government to operate independently 

of the part of the Government that will be providing the leases and 

the planning with respect to the OCS. 

Now, how did we come up with this plan? I mean, we have been 

working on a new reorganization for MMS for several months. This 

plan, in large part, reflects what has happened as well in places 

like the UK and Norway, where after horrific incidents that they 

also had in their outer continental shelf, they reorganized their departments relative to how they oversee the outer continental shelf. 

So as we move forward with the reorganization, Chairman 

Bingaman and Senator Murkowski and the distinguished members 

of this committee, I want to work closely with you to make sure 

that the organization that we put into place will ensure the goals 

which were articulated by you, Senator Bingaman, and that is that 

we have safety and environment as a critical concern of how we 

move forward with development in the OCS. 

With that, Mr. Chairman, I would be happy to take your questions. 

[The prepared statement of Secretary Salazar follows:] 

PREPARED STATEMENT OF HON. KEN SALAZAR, SECRETARY, DEPARTMENT OF THE

INTERIOR

Thank you, Chairman Bingaman, Ranking Member Murkowski, and Members of 

the Committee for the opportunity to be here today. I appreciate the opportunity 

to discuss our ongoing safety and management reform efforts related to offshore energy activities. 

Since I last appeared before you several weeks ago, we have continued our aggressive response to the BP oil spill in the Gulf of Mexico and efforts to improve the 

Department of the Interior’s ability to respond to help prevent such events in the 

future. 

I will discuss these reforms in more detail later in my statement, but I want to 

be clear from the beginning that the changes that we have been making are substantive and systemic, not just cosmetic. These reforms are critical to help us prevent future occurrences of events like the Deepwater Horizon drilling rig explosion 

and the subsequent BP oil spill. 

SUSTAINED EFFORT IN THE GULF

At the direction of the President, Department of Energy Secretary Chu and I returned to Houston last week. Secretary Chu and I spent most of the week with BP 

officials and engineers and federal scientists continuing our work on ways to leverage the best science and engineering minds from across the federal government, academia, and the private sector to contain the BP oil spill. We have been monitoring 

BP’s containment operations, conducting independent analysis of the data and operational plans to help maximize the chances of success. 

Under the command of Admiral Thad Allen, I directed Dr. Marcia McNutt, Director of the U.S. Geological Survey, to lead the effort for an independent estimate of 

the flow rate for the out-of-control well. We carried out this effort because we wanted our own assessment, independent of the estimates provided by BP. This preliminary scientific assessment, performed in collaboration with federal scientists and respected members of the academic community, is an independent estimate of the flow 

rate that will ensure that BP and other responsible parties will be held accountable 

for the oil spill, and will inform the response effort that is underway. The Flow Rate 
10 

Technical Group, chaired by Dr. McNutt, is now in the process of determining a revised estimate of flow that takes into account the cutting off of the riser. 

Deputy Secretary David J. Hayes has continued to work virtually around the 

clock on Gulf-related response activities, coordinating the many efforts undertaken 

by the Department in responding to the spill, both in terms of capping the well, implementing new safety measures included in my recent report to the President, and 

in working to protect our trust resources from damage from the spill. 

Recently I named Bob Abbey, Director of the Bureau of Land Management, as the 

acting director of the Minerals Management Service (MMS) while we transition to 

new leadership. Bob has been one of our leaders on onshore energy reform and I 

believe he has the kind of experience we need as we continue moving forward with 

our reform and restructuring of the MMS offshore leasing and development and revenue collection programs. 

My top natural resources and science leadership continue their collective efforts 

on the Gulf Coast. Tom Strickland, Assistant Secretary for Fish and Wildlife and 

Parks; Jon Jarvis, Director of the National Park Service; and Rowan Gould, Acting 

Director of the U.S. Fish and Wildlife Service are working hard and leading the efforts to protect and assess damage to the complex ecology of the Gulf Coast in our 

National Wildlife Refuges, National Parks, and National Seashores. They and their 

bureau staffs are helping to develop and provide data and information for use by 

the Unified Command. 

A BACKDROP OF REFORM

When I appeared before you last time, I reviewed the major changes that we have 

made at MMS. Since January 2009 we have taken the bureau in a bold new direction, as exemplified by our massive undertakings to tackle the ethics challenges at 

MMS, develop a new plan for oil and gas development on the Outer Continental 

Shelf, and create the renewable energy program. 

We have worked to reform the MMS’s culture of doing business by issuing new 

ethics standards for all MMS employees during my first weeks here at the Department in January 2009. I terminated the Royalty-in-Kind program. I have implemented recommendations to improve MMS’s royalty collection program that came 

from the Department’s Inspector General and a committee chaired by former Senators Bob Kerrey and Jake Garn. 

We have also made major changes to the way that the offshore program does business. I cancelled lease sales in the Chukchi and Beaufort Seas because of concerns 

about the sensitivity of the Arctic and its unique vulnerability to oil spills. I cancelled the oil and gas lease sale scheduled for the magnificent fishing grounds of 

Bristol Bay in Alaska. The President formally withdrew Bristol Bay from any oil 

and gas leasing through June 30, 2017. 

Taking a similar, bold approach to change the direction at MMS, I extended the 

public comment period by 180 days on the Draft Proposed 5-year Program for the 

OCS produced by the previous Administration. I held regional meetings with thousands of stakeholders in Alaska, California, Louisiana, and New Jersey. 

The information and input gained from these additional meetings led to our announcement, on March 31st, of a new and balanced strategy for exploring and developing our oil and gas resources on the OCS. This plan is intended to focus on development in the right ways and in the right places, provide order and certainty to 

industry and investors, and deliver a fair return to American taxpayers for the use 

of their resources. 

As we evaluate new areas for potential exploration and development on the OCS, 

we will conduct thorough environmental analysis and scientific study, gather public 

input and comment, and carefully examine the potential safety and spill risk considerations. 

Even before this occurred, I directed the National Marine Board, an arm of the 

highly respected National Academy of Sciences, to conduct an independent review 

of MMS’s inspection program for offshore facilities. And our fiscal year 2011 budget 

request provides funding to increase the number of inspectors available for the offshore oil and gas program by more than 10 percent. 

This tragedy has also served to underscore the need to develop clean, renewable 

sources of energy. Since the beginning of the Obama Administration, the Department has been focused on these issues and has set priorities for the environmentally 

responsible development of renewable energy on our public lands and the OCS. As 

we have moved forward to implement the President’s clean energy goals, we have 

expanded the scope of the MMS’s portfolio to include a stronger and more effective 

renewable energy program. 
11 

On March 11, 2009, I issued a Secretarial Order that made facilitating the production, development, and delivery of renewable energy on the Outer Continental 

Shelf and on public lands top priorities at the Department. These goals are being 

accomplished in a manner that does not ignore, but instead protects our signature 

landscapes, natural resources, wildlife, and cultural resources, and working in close 

collaboration with all relevant federal, state, Tribal and other agencies with natural 

resource stewardship authority. 

In April 2009 Chairman Wellinghoff of the Federal Energy Regulatory Commission and I signed an agreement clarifying our respective agencies’ jurisdictional responsibilities for leasing and licensing renewable energy projects on the OCS. This 

agreement allowed us to move forward with the regulatory framework for OCS renewable energy development that standardized the process and brought certainty to 

the application process for OCS wind, solar and hydrokinetic resources. This framework is important as it provides the ‘‘rules of the road’’ for states and companies 

to pursue development of projects on federal submerged lands. 

I also approved the Cape Wind project off Massachusetts’ coast, and we have 

taken the first steps to stand up major wind projects off the coasts of New Jersey 

and Delaware. I am working with the Atlantic Coast Governors to give renewed impetus to developing the potential for offshore wind projects. In keeping with this 

goal, yesterday I announced that the governors of East Coast states and I signed 

a Memorandum of Understanding formally establishing an Atlantic Offshore Wind 

Energy Consortium to promote the efficient, orderly, and responsible development 

of wind resources on the Outer Continental Shelf through increased federal-state cooperation. Under the MOU, the consortium will develop an action plan setting forth 

priorities, goals, and specific recommendations and steps for achieving the objectives 

outlined in the agreement. 

I also announced the establishment of a regional renewable energy office, located 

in Virginia, which will coordinate and expedite, as appropriate, the development of 

wind, solar, and other renewable energy resources on the Atlantic Outer Continental Shelf. 

The effort that we have put forward at the Department since January 2009 has 

been a massive effort to chart a new direction for the Department of the Interior, 

including MMS. 

SUBSTANTIVE AND SYSTEMIC IMPROVEMENTS

The tragedy and the massive spill for in the Gulf have made the importance and 

urgency of this reform agenda clear. I have issued Secretarial Order No. 3299 announcing the reorganization of the MMS and the establishment of the Bureau of 

Ocean Energy Management; the Bureau of Safety and Environmental Enforcement; 

and the Office of Natural Resources Revenue. 

Under the supervision of the Assistant Secretary for Land and Minerals Management, the Bureau of Ocean Energy Management will ensure the environmentally responsible and appropriate development of the Outer Continental Shelf for both conventional and renewable energy in a predictable and effective manner. The Bureau 

of Safety and Environmental Enforcement will ensure that all production operations 

are safe and that potential negative impacts on marine ecosystems and coastal communities are appropriately considered in each phase of development and mitigated 

to the fullest possible extent through its independent regulation, oversight, and enforcement powers. 

Under the supervision of the Assistant Secretary for Policy, Management and 

Budget, the Office of Natural Resources Revenue will be responsible for the royalty 

and revenue management function ensuring the full and fair return to the American 

people for the utilization of these resources. 

I have asked the Assistant Secretary for Policy, Management and Budget, Rhea 

Suh, the Assistant Secretary for Land and Minerals Management, Wilma Lewis, 

and one of my Senior Advisors, Chris Henderson, to oversee these reorganization 

and reform efforts. They all have strong organizational skills and outstanding experience and expertise in strategic planning, business administration, and performance management in the public and private sectors that will be invaluable assets 

as we move forward to implement this effort, which will ensure the independence 

of the agency’s inspections and enforcement mission. 

Mr. Chairman, I have testified before your Committee in support of organic legislation for the functions now performed by MMS. The OCS currently provides 31 percent of the Nation’s domestic oil production and almost 11 percent of its domestic 

natural gas production. The MMS is one of the largest collectors of non-tax and nontrust revenue for the Treasury, and has collected an average of more than $13 bil-
12 

lion annually for the past 5 years. Agencies with responsibilities of this magnitude 

should be governed by thoughtfully considered organic legislation. 

The President submitted to Congress, along with other Administration proposals 

to address the BP oil spill, legislation requesting additional funds for the Department to inspect offshore oil and gas platforms, draft enforcement and safety regulations, and carry out studies needed in light of this event. The legislation would also 

extend the time allowed by statute for MMS to review and approve oil and gas exploration plans from 30 to 90 days. 

A STEADFAST FOCUS ON SAFETY

Following the tragic and unprecedented explosion of the Deepwater Horizon drilling rig, I ordered immediate inspections of all deepwater oil and gas drilling operations in the Gulf of Mexico, and we issued a safety notice to all rig operators reminding them of their responsibilities to follow our regulations and to conduct full 

and thorough tests of their equipment. 

I also established an Outer Continental Shelf Safety Oversight Board comprising 

top Departmental officials charged with strengthen safety and improving overall 

management, regulation, and oversight of operations on the Outer Continental 

Shelf. 

On May 27th I delivered to the President the results of the 30-day safety review 

that he ordered us to undertake. The purpose of that Safety Report was to evaluate 

oil and gas safety measures that could be put in place on an interim basis before 

the on-going investigations to identify the root cause of the BP oil spill disaster have 

been completed. We consulted with a wide range of experts from industry, government, and academia in drafting this report, and the draft recommendations contained in it were reviewed by independent engineering experts. 

The report recommends a number of specific measures that can be taken on both 

a short and longer term basis to improve the safety of offshore oil and gas activities, 

including aggressive new operating standards and requirements for offshore energy 

companies. Key recommendations include a recertification of all Blowout Preventers 

for new floating drilling operations; stronger well control practices, blowout prevention and intervention procedures; tougher inspections for deepwater drilling operations; and expanded safety and training programs for rig workers. 

After reviewing the report, the President ordered us to immediately implement a 

number of actions, including a continuation of the existing moratorium and a suspension of the issuance of new permits to drill new deepwater wells until the Presidential Commission investigating the BP oil spill has completed its six-month review. We are taking these immediate actions now, and we are laying the groundwork for additional measures in the future. Just yesterday, for example, I announced the release of a ‘‘Notice to Lessees’’ that provides an initial set of new safety requirements that all offshore operators must meet, based on the Safety Report. 

CONCLUSION

Mr. Chairman, I look forward to working with you over the coming weeks as we 

continue to implement real reform to improve the safety, transparency, and efficiency of oil and gas exploration and production operations on the Outer Continental 

Shelf. 

The CHAIRMAN. Thank you very much. 

Let me just start, ask about the moratorium that you put in 

place. You have referred to it as ‘‘pressing the pause button.’’ How 

does that affect producing wells in the Gulf? Are there requirements you are putting on the wells that are currently producing 

wells, not those that are being developed, but those that have been 

in production and closed in and operating? 

Secretary SALAZAR. Senator Bingaman, with respect to the moratorium and its application, we have the moratorium in place, including with respect to the 33 deepwater drilling operations that 

were underway. What we have ordered those drilling rigs to do is 

to continue drilling to the point where they can get to a safe place 

and then secure the well. At that point in time, drilling will stop 

until we complete the safety reviews and the Presidential commission reports and we can make a determination about how we are 

going to move forward. 
13 

With respect to your question on production, production continues in the Gulf of Mexico. There has been very little interruption 

because of the Deepwater Horizon on production from the Gulf of 

Mexico. We continue to do inspections and have asked for additional inspectors through the request to the Congress so that we 

can continue to inspect those facilities, including those production 

facilities. 

The CHAIRMAN. Let me ask on the—you mentioned the 15,000 

barrels per day that were captured, I believe you said, by BP in 

this effort they are making yesterday. Obviously, the key question 

is not how many barrels are captured, but how many barrels are 

coming into the Gulf that are not captured and how much oil is 

there that is continuing to add to the environmental damage and 

economic damage that that part of our country is suffering. 

Can you give us any more insight into how large that number 

is? 

Secretary SALAZAR. Senator Bingaman, I hope that in the next 

several days we will have a number that is based on science and 

includes pressure readings and the visuals of the plume that is 

coming out. We have, at my direction and under the command of 

Admiral Thad Allen, had Marcia McNutt, the Director of the 

United States Geological Survey, come up with our own independent numbers. We did not want to rely on BP to come up with 

their numbers. 

Before the riser was cutoff, the scientific group had come up with 

an estimate that was between 12,000 and 19,000 barrels per day. 

Now that the riser has been cutoff, there is an additional effort to 

take a look at what is coming out of the leaking well, and we hope 

to be able to have the scientists that are looking at that issue have 

some numbers that we will share with the American public and obviously with the members of this committee relatively soon. 

The CHAIRMAN. Is there any thought that perhaps the procedure 

that BP went through to cutoff the riser added to the quantity of 

oil coming out? 

Secretary SALAZAR. You know, Chairman Bingaman, I will say 

this and something that you might want to confirm with Secretary 

Chu and the scientists from the labs that have been involved in 

this. But their view, as it has been communicated to me, is that 

the range of increase may have been somewhere between 4 and 5 

percent over what it was before. 

The CHAIRMAN. OK. All right. Let me ask what do you expect 

this other report, the one the President continues to refer to, which 

is this 6-month report, what do you expect that to yield in the way 

of is it going to make another series of recommendations similar to 

the recommendations that came out of your 30-day report? Or is it 

going to be trying to do something different? 

Secretary SALAZAR. I will have the Deputy Secretary David 

Hayes respond to that because he is in charge of the investigations 

and helping with the setting up of the commission. But there are 

multiple investigations that are going on, many reports that are 

coming in, and we are getting to the root causes. Everything that 

is happening here and will happen over the next several months 

will be fed into the Presidential commission. 
14 

So, at the end of the day, there will be one report. But I will have 

the Deputy Secretary provide some additional information on that 

question. 

Mr. HAYES. Senator, could I ask you again which report is—— 

The CHAIRMAN. The President has said that the moratorium will 

be in place until he gets his 6-month report, and that is the one 

that I am just interested in knowing what are we going to learn 

from that report, or is it going to be another series of recommendations in addition to an investigation, or what is it going to be? 

Mr. HAYES. Yes. Yes, thank you. 

That is a report from the new commission that has been established with Senator Graham and Bill Reilly. That commission we 

will be working with closely, per the Secretary’s comments, to fold 

in everything that is going on so that they have in front of them 

the full record. 

There is, of course, a Minerals Management Service-United 

States Coast Guard joint report that is going on right now, joint 

investigation that will be fed into the Presidential commission. 

There is an independent evaluation by the National Academy of 

Engineering that will be fed into the commission, and the commission itself will be undertaking its own investigation. So we will be 

looking to the commission ultimately, and we expect to be in dialog 

to make sure that they have every piece of information potentially 

important for their deliberations on what their long-term recommendations are. 

The CHAIRMAN. Senator Murkowski. 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

Secretary Salazar, you mentioned the decision as it related to the 

Chukchi and the Beaufort and your request for additional science 

and information. I don’t know whether you have had an opportunity to review the white paper that has been presented by the 

U.S. Arctic Research Commission. They essentially are advocating 

for additional research in sub Arctic conditions. 

It is something that this commission has been focused on for 

some time, spent a fair amount of study on. It is a final draft, but 

I want to make sure that you have had an opportunity to at least 

review that. So we will make sure that you get a copy if you and 

your staff haven’t. 

I wanted to ask you about the study or the review that was conducted, this 30-day review, prior to the new deepwater ban. There 

was an immediate inspection ordered by you to review all the deepwater OCS facilities. Can you give any more detail in terms of the 

results of those inspections, and did you unearth anything that was 

particularly revealing in terms of possibly a culture of unsafe activities? 

I know it was a very quick review, and you are now going into 

the longer term review. But was there anything that was noticeable in that initial review? 

Secretary SALAZAR. No, we ordered the immediate inspection of 

all 33 operations that were underway, and as I recall, the information that came back to us is that they were all in compliance with 

the requirements of the regulations and with the exception of two 

or three. The incidence of noncompliance were relatively minor. 
15 

I will say this, Senator Murkowski, that one of the things that 

has been learned here is that there is much more that can be done 

with respect to what we are doing concerning the safety requirements imposed on companies. For example, the testing of blowout 

prevention mechanisms, one of the things that I think has already 

been learned by the Deepwater Horizon incident as they have 

moved forward and started to drill the relief wells, the two relief 

wells, which are the ultimate solution to this particular spill, they 

have done the testing of these blowout preventers in the subsea in 

ways that they haven’t done before. 

So, the new requirements that we imposed through the Notice to 

Lessees that we sent out yesterday has significant additional requirements, and so there will be a whole panoply of those requirements that will now have to be met. 

Senator MURKOWSKI. Let me ask you specifically about that because it was my understanding that the blowout preventer with the 

Deepwater Horizon had actually undergone a couple of tests only 

days before it failed, and those tests actually were successful. So 

how are we going to—I mean, I understand the purpose and don’t 

disagree with additional testing. But do we really believe that recertification of the BOP would have done anything to enhance the 

reliability of that testing? Are we doing the right test I guess is the 

question? 

Secretary SALAZAR. There is a whole host of things that are going 

to come out with respect to blowout preventers, including the kinds 

of redundancies that are built in, additional casing shear rams 

which we will be requiring and additional redundancies in their actuation. So the safety report sets out a number of recommendations, and I will ask Steve Black to comment just briefly on the report because he was the principal author of the report on the safety 

recommendations. 

Senator MURKOWSKI. When you do that, Mr. Black, in addition 

to understanding that, I am curious to know there is going to be 

a lot of new technical requirements that will be required going forward, and I understand that. But what about instituting some minimum training standards? For instance, if you are going to have 

new standards on certification, will you also require certification of 

people on the rig that are working in these areas that are related 

to safety and control? 

So you have got the technological side, but you also have the 

human side. I think we recognize that there has been human error 

here as well. So how does that integrate as well, if you can address 

that? 

Mr. BLACK. Thank you, Senator Murkowski. Mr. Chairman, 

thank you for the courtesies of sitting here today with the Secretary. 

To your first question, Senator Murkowski, with respect to the 

blowout preventer and the testing, I think it is important to remember that this safety report doesn’t presuppose any investigation or the outcome of any investigation that is currently ongoing. 

It instead attempts to identify safety measures that can be taken 

immediately and improve the margin of safety with respect to offshore drilling. 
16 

The blowout preventer on the Deepwater Horizon was, in fact, 

tested. But I think what we have learned is that those tests, as you 

suggest, didn’t reveal perhaps modifications to the blowout preventer equipment or incompatibility between the ROV hot stabs 

and the ROV interface panel on the blowout stack. 

So we want to make sure that all blowout preventers, all subsea 

BOPs and surface BOP stacks, are reinspected in accordance with 

the original manufacturer specifications and that any repair or 

modification that has been made to the BOP stack is properly reported and understood so that in the event of an emergency, an 

intervention can occur. 

With respect to training, the report does, in fact, recommend that 

MMS, in conjunction with other stakeholders, develop new guidance and new regulations with respect to training, inspections, and 

a variety of other safety measures. So those, in fact, will occur. The 

department will lead that effort through workgroups that we set up 

at the department, but we do very much intend to work with industry, work with other stakeholders to develop that kind of requirement. 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Udall, is he here? I don’t see him at this 

point. 

Let me go to Senator Shaheen. 

Senator SHAHEEN. Thank you, Mr. Chairman. 

Mr. Secretary, I appreciate the efforts that you have taken and 

that you have talked about this morning to reform the culture of 

corruption that has existed within MMS and recognize that this is 

a culture that has been created over a number of years, that you 

inherited when you took over this job. But I continue to be concerned about whether reorganization efforts will really address 

some of the corruption that exists there and the individuals who 

may have been part of that. 

Whether it is a reshuffling of the deck or whether it will really 

allow you to deal with that culture and get rid of the folks who 

have not been operating in a manner that they should be as they 

are looking at what needs to be done to regulate this industry. So 

can you talk a little bit about how confident you are about the reorganization that you have underway? 

Secretary SALAZAR. Senator Shaheen, it is a very good question, 

and let me say our reorganization is not cosmetic. Our reorganization is essentially blowing up MMS and putting it into different 

parts of the department and separating functions to avoid both perceived and real conflicts of interest. So it is an overhaul of this 

function of the Government in every complete sense of the way. 

Now it doesn’t mean that things that we did before will be taken 

away. For example, still requiring ethics training and having ethics 

counselors and having ethics part of the performance standards, 

that all will be done as well. But what we have done under the Secretarial Order and will be implementing is a complete reconstruction of the MMS function. 

Deputy Secretary David Hayes would like to comment on that as 

well. 
17 

Mr. HAYES. Senator, you raise a point that is central to our 

thinking in terms of the reorganization effort, and our view is that 

what is most necessary is a clarity of mission. 

Under the current structure, where you have the folks forward 

leaning under the statute leasing and being encouraged to do more 

and more leasing, more and more permitting, almost by virtue of 

the statutory structure, you have the employees accepting that mission and executing it. There has not been as clear a mission on the 

enforcement and safety side, candidly. We think that, structurally, 

by separating these functions, creating a clear mission, there will 

be execution. 

It has become evident to us, frankly, in the last 50 days that the 

employees can execute a mission. We have asked them to turn on 

a dime, to put in place some significant new safety requirements, 

and they are doing it. So we have some views that we can do this 

if we get clarity of mission by separating these functions. 

Senator SHAHEEN. Thank you. 

I want to switch the topic a little bit. I know that everyone is 

focused right now on ending the current spill and dealing with the 

cleanup. But one of the things that struck me when we had the 

principals from BP, Halliburton, and Transocean here before this 

committee was their response when I asked them what they were 

doing to address research on deepwater spills and cleanup. The answer from all three was zero. They are committing no resources to 

doing anything about how we deal with these kinds of situations 

in the future. 

As I am sure you all know, right now, we are spending about $50 

million a year as the Federal Government to fund R&D for exploration and production of oil and gas in ultra deep waters, but we 

are not spending nearly that amount to address cleanup and containment and what happens when we get into the kind of situation 

that we are in right now. 

We are fortunate at the University of New Hampshire to have 

the Coastal Response Research Center, which is one of the premier 

centers in the country that is looking at these issues, and in talking to their director, Dr. Nancy Kinner, one of the points that she 

made to me is that right now what we really lack is any funding, 

either in the industry or from the Federal Government, to address 

this kind of research. 

So can you talk about whether you think we should be spending 

at least as much on cleanup and containment as we are spending 

right now on how to drill in deep water and if you have thoughts 

about how we should be looking at this issue in the future and 

where the resources should come from? 

Secretary SALAZAR. Senator Shaheen, this will be and is one of 

the questions that will be addressed by the Presidential commission and we are addressing as well. The fact is that BP did have 

an oil spill response plan. The fact is that that plan contemplated 

the ability to respond to a spill of several hundred thousand barrels 

per day. The fact also is that that plan has not been effective in 

protecting the sensitive ecology of the Gulf of Mexico and the people of the Gulf of Mexico. So, there will be a review of all of these 

issues to determine what is it that is needed. 
18 

There is research underway with respect to oil spill issues all of 

the time. In fact, in Senator Menendez’s State of New Jersey, there 

is an oil spill laboratory which looks at oil spills and how to contain 

oil spills. So, this is an area, obviously, which will be one of those 

lessons to be learned. 

Senator SHAHEEN. But would you agree that, in fact, the resources to really look at this issue have not existed? 

Secretary SALAZAR. The answer to that is yes. I mean, the resources in terms of looking at spill response and dealing with some 

of the deepwater issues I don’t think have been there. 

Senator SHAHEEN. Thank you. 

The CHAIRMAN. Senator Sessions. 

Senator SESSIONS. Thank you, Mr. Chairman. 

Thank you, Mr. Secretary, for your directness. You have talked 

to us directly. You haven’t used notes. You obviously have got your 

head straight on the challenges you face, and we appreciate that. 

I want to work with you to deal with this crisis. 

We are now in the 51st day, and the people I talk to in my State 

are concerned. They are concerned that we are not doing enough 

to stop the flow, and they are concerned about the effectiveness of 

our barriers and so forth. 

I will say that Thursday and Friday of last week, I was in Mobile 

and met with the Coast Guard and BP officials. We met Friday 

with local mayors, county commissioners, State representatives 

under the leadership of Governor Riley, who has personally been 

committing much of his time to this effort, and the mood was not 

good. People felt like that there had been a lot of promises made, 

a lot of uncertainties there that they still haven’t gotten true facts 

about. But I believe our people are determined. They want to 

bounce back from this, and I am confident that we will. But we 

don’t need to make any more mistakes. We need to be as effective 

as we can. 

So with regard to particularly a problem that I believe resulted 

from a violation of an agreement with the Governor of Alabama 

concerning the boom material that was removed from our State, I 

do believe that you have responded to that, and there has been 

some progress in restoring at least some of that. I think that is important. It is just a matter of good faith. 

If you are working with the Governor and you make commitments, you need to try to make sure that that happens. I guess this 

was a Coast Guard decision, but it is a matter that was important 

as we build the kind of State, local, and Federal teamwork that we 

need to deal with this crisis. 

To follow up on the chairman’s question about the flow, first of 

all, I would like to get a little better picture about the flow, how 

much is coming out. You have indicated that it was originally projected to 12,000 to 19,000 barrels a day? Is that correct? That is 

the last report you have, and you have another report coming out 

soon? 

Secretary SALAZAR. Yes, and I will speak more to it when you 

finish your question. 

Senator SESSIONS. That would be my question. What is the status of the flow today? Do you expect to see any changes in your 

report in the future, and I would like to follow up on about how 
19 

much is being captured and how much there has been a reduction 

in the flow, if any? 

Secretary SALAZAR. Let me make a comment, and then I will 

have David Hayes, who has been working for most of the night on 

this issue of the flow rate, also comment on it. 

It was important for us to have our own independent assessment 

with respect to the flow rate because there are legal consequences, 

as you well know, from every barrel that is spilled. So we have not 

relied on BP for the flow rate analysis that has been done. Under 

the command of Admiral Thad Allen, there has been a flow rate 

group that has been established, which is headed by Marcia 

McNutt, the Director of the U.S. Geological Survey. 

A group of scientists came up with those initial ranges of 12,000 

to 19,000. There is additional information that has been developed 

now, post riser cut, which those scientists are working on very hard 

to try to come up with a clear answer so that the American public 

knows what the flow rate is and so that we can make sure that 

we are as prepared as possible to carry out the response—— 

Senator SESSIONS. Can I interrupt you? The information is so different. For example, you indicated that after the cut of the riser, 

we may have had a 4 or 5 percent increase in flow rate, but originally, I think there was a projection from some official source of a 

20 percent increase. I see some people have projected far more than 

that. How confident are you that we have sustained just a 4 to 5 

percent increase? 

Secretary SALAZAR. Let me say that it is important for us to have 

the right number, and that is what is being worked on right now. 

In fact, Secretary Chu and Marcia McNutt and I have a meeting 

on this coming up today to make sure that we get to the right number. 

We will get to that right number because the American people 

need to know it. It has been difficult to get to the right number because of the subsea conditions that have been operated, and I am 

going to have David comment on that. 

But I want to just respond, Senator Sessions, my friend, that the 

issues relating to Alabama and the issues of boom, the President 

and Thad Allen, who is the national incident commander on this, 

he calls it as he sees it, and I think he has resolved those issues 

with the Governor, including putting in writing what was supposed 

to happen. 

So let me just say that on the part of Thad Allen with whom I 

work with multiple times every day, no effort is being spared to 

make sure that the people of the Gulf coast are being protected. If 

you find that there are things that are not going on, Senator Sessions, in your State, please give me a call, and we will get to Thad 

Allen immediately. 

I would like, just because he has been working on it all night and 

may have more recent information on the flow rate, maybe to kind 

of give you a sense of what is going on because I think it is of interest to the chairman, as well as to all the members of the committee. So if that would be OK with you, Mr. Chairman? 

Senator SESSIONS. While you do that, Mr. Hayes, my question is 

over. I would just hope that you would talk about how much is 
20 

being captured and what you project is a reduction, if any, in the 

flow. 

Mr. HAYES. Certainly, Senator. Let me sort of paint the picture 

here of the Government’s effort to identify the flow rate. As the 

Secretary testified, a flow rate technical group was formed, and Dr. 

Marcia McNutt, the Director of the USGS, is in charge of that. 

There are seven independent scientists that are on that group. 

A couple of weeks ago, they—before the riser was cut, looked at 

a variety of data streams to do an estimate of how much might be 

leaking out. At that time, there were some leaks in the kink of the 

riser and then at the end of the riser. Also at that time, there was 

a tool that was bringing some of the material up from the end of 

the riser, you will recall, and collecting some of that material. 

They had several different work streams. They had video that 

they ordered, the Government required BP to provide the video so 

they could look at the video and attempt to calculate how much 

might be coming out. They also did a mass balance based on aerial 

work and subsea work to try to estimate how much was on the surface, how much had evaporated, and sort of back-calculate how 

much might be coming out. Those were the primary approaches. 

What they came up with was a range. Two of the workgroups 

came out with a range of 12,000 to 19,000 barrels a day. The video 

workgroup came up with 12,000 to 25,000 barrels a day as the potential estimate with a lot of uncertainty because there was not 

good information about what the oil-to-gas ratio was. So when you 

are looking at the video, it was difficult to figure out, essentially, 

how much would be oil versus the gas, which behaves differently. 

They also were asked to estimate—this is to your question, Senator—how much if we cutoff the riser would there be an increase 

in the amount of flow. The Government scientists in Houston, including Dr. McNutt, with the BP folks did a variety of calculations 

and came up with a range of 6 to 20 percent as a potential increase 

by virtue of losing some of the resistance in the riser. 

The Government scientists came out and said it could be as 

much as 20 percent. That is not something BP wanted to say. In 

fact, they did not say that. The Government said it could be as 

much as 20 percent. The decision was made to do the riser cut anyway because of the potential to capture more of that oil through the 

top hat, which is now occurring. 

What is happening now is a reevaluation of all of this, both in 

terms of the original estimates and also we have new information 

now that the riser is cut. We have ordered BP to give us high-resolution video that the same group that looked at and estimated the 

flow based on the video looked at. It is much harder, frankly, to 

discern and evaluate leaks in the kink and at the end of the riser, 

they are now looking at a single point with high-resolution video. 

We now have much better information on the oil-to-gas ratio because of the material that has been coming up to the riser. So we 

think that that group that is now looking at the video and applying 

a gas-to-oil ratio will come up with a much better estimate of how 

much is coming out of the riser. 

As the Secretary alluded to, we are also getting additional data. 

We have more information about relative pressure points, and 

there is a lot of speculation, frankly, that the increase may have 
21 

been substantially less than 20 percent from the cutting off of the 

riser. But we are going to find out very soon from this group that 

is looking at this issue very hard. 

In fact, all seven of these scientists just received what they required of BP; very specific segments of the video from the post riser 

cut. They actually had to take it—they got the whole hard drive 

from BP, we required it. They got some specialists to take the segments that they needed to look at. They are now reviewing it. We 

expect to have additional information very soon on that point. 

They are also relooking at the earlier estimates. So you will see 

a new Government estimate very soon on the flow rate. In terms 

of the amount collected, we want that new flow rate, and we will 

have it very soon and then can back-calculate essentially how much 

we believe, therefore, has been out from day one. I don’t have that 

number, Senator, right now, but we expect to have a much better 

number very, very soon. Thank you for your patience. 

Senator SESSIONS. You said 4 to 5 percent increase. Is that some 

sort of an estimate to date that you think is accurate? Is that Secretary Chu’s—— 

Mr. HAYES. I think there is in terms of the group of Government 

scientists that are looking at this, they are seeing some data that 

suggests that the increase that occurred when the riser was cutoff 

was less than we were afraid it might be. So we hope to confirm 

that soon. 

Senator SESSIONS. Soon? Soon, this is almost 2 months—— 

The CHAIRMAN. Let me move on to other questions here. You 

have had more than 10 minutes. 

Senator SESSIONS. Over time, I know. 

The CHAIRMAN. Yes. Senator Menendez, go ahead. 

Senator SESSIONS. I think they need a good number soon. 

Senator MENENDEZ. Thank you, Mr. Chairman. 

Mr. Secretary, let me start off by applauding the administration’s 

decision, at least at this point, to cancel lease sale, Virginia lease 

sale 220. I opposed it from the very beginning. It puts the New Jersey shore directly at risk. You know, that risk I think is more palpable today, as we have tried to make the case for some time that 

oil cannot be contained in neat little boxes in the ocean. It is certainly not being contained in the Gulf of Mexico. 

Now that we are entering hurricane season, even the natural 

loop current and where the projections of the trajectory of that oil 

is, is subject to mother nature. If you have hurricane season and 

the hurricane hits the Gulf, the consequences of where that oil goes 

for those of us on the east coast is increasingly of concern. So I 

think it was smart at this point. 

I appreciate the administration’s decision to support moving toward unlimited liability as it relates to the responsibility of oil 

companies. It seems to me that if you take and create unlimited 

consequences that you should have unlimited liability. I think it is 

an opportunity for oil companies to also have discipline knowing 

that if that is their liability obligations that they will discipline 

themselves not to take short cuts or to cut corners, as some have 

suggested happened in this particular incident. I think that is important as well. 
22 

But I heard when you said we are only having a pause button. 

For those of us along the Atlantic, we want to see much more than 

a pause button. We want to see an effort that clearly makes it clear 

that we are not looking to put multi-billion dollar—just New Jersey 

alone is a $50 billion coastal tourism industry. So I hope that we 

understand that. 

Let me just ask two questions that I think are critically important. All the regulations in the world are good, but if they are not 

enforced, it doesn’t mean much. I know you know that as a former 

Attorney General. The reality is, is that when I look at BP’s response plan, it doesn’t take a rocket scientist to know they couldn’t 

have been very serious because when they had sea otters, walruses, 

and seals as part of the response that they would have to animals 

in the Gulf, last time I looked, we don’t have those animals in the 

Gulf. 

Obviously, they didn’t really have a plan to deal with the worstcase scenario. It is something we have to look going forward as to 

what, in fact, we permit. I mean, I don’t understand who reviewed 

that plan and saw those elements in their plan and said you can’t 

be serious. Maybe in the Arctic, but not in the Gulf of Mexico. It 

doesn’t take a rocket scientist to figure that out. So you really have 

to question who is reviewing these things. 

Second, MMS—a Houston Chronicle review of accidents investigated by MMS found that of nearly 400 offshore safety investigations, MMS collected only 16 fines of 400 investigations. So I know 

that you are reforming MMS. The question is are we going to have 

the right regulatory oversight and vigorous oversight so that we 

don’t relive this, including on response plans? 

Last, are we—in challenge, there have been some reports that 

there is another drilling rig near the Deepwater Horizon called the 

Ocean Saratoga that appears to be leaking with a 10-mile long 

slick visible from satellite images. It was only discovered because 

of the images of the Deepwater Horizon. Do you have any information on whether that is, in fact, a spill that is occurring? If so, what 

is being done to stop it? 

Secretary SALAZAR. Let me, Senator Menendez, I appreciate your 

comments and I know your passionate views on these issues for a 

long time. Let me assure you that they are taken into consideration. 

With respect to the other spill that you speak about, my understanding is that it is a remnant left over from Hurricane Ivan and 

that it is leaking, I guess, at approximately about a third of a barrel a day. But we will get some additional information for you on 

that. 

With respect to your—— 

Senator MENENDEZ. Can you get for the whole committee, but 

certainly I would like to know—— 

Secretary SALAZAR. Sure. 

Senator MENENDEZ [continuing]. How long that has been going 

on as well? 

Secretary SALAZAR. Sure. We will—— 

Senator MENENDEZ. What is the intent to close it down? 

Secretary SALAZAR. We will get that information to you. 
23 

With respect to the enforcement of regulations, it is precisely the 

reason why we are moving forward with the creation of a Bureau 

of Safety and Environmental Enforcement. It needs to have the 

kind of police power to make sure and the personnel and the culture to make sure that regulations are, in fact, enforced. So, that 

is part of the reorganization and overhaul of MMS that we are undertaking. 

The goal is one which I very much share with you, Senator 

Menendez, and that is we must have vigorous and complete enforcement mechanisms in place with respect to any oil and gas activities in the Outer Continental Shelf. 

Senator MENENDEZ. I will close. My time is finished. But let me 

just say you can’t be coach and referee. MMS has, as it was constituted before, been both an advocate for the industry and supposed to be the referee of making sure that safety and soundness 

and a whole host of other things were observed. That simply didn’t 

happen. We had a police officer that was asleep at the switch. 

If you look at the response plan and see that it doesn’t make any 

sense, then alarm bells should have risen that, in fact, these people 

really are not prepared for the worst-case scenario. I hope we learn 

from that as we move forward. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Corker. 

Senator CORKER. Thank you, Mr. Chairman, and thanks for having this hearing. 

Mr. Secretary, I welcome you back. I am struck by the dignity 

and directness with which you have presented today. I thank you 

for that—and your two colleagues who are with you. It actually has 

raised a question as I have watched you. I watched, on the other 

hand, the White House, which seems to exhibit some characteristics of adolescence or something like that. I am wondering what is 

the relationship that we have at present with BP? 

I know you talked about the fact is that you don’t have the 

equipment. They have the equipment. What is that true relationship? Do the machinations that come out of the White House, do 

they contribute in a positive way toward that relationship? Where 

are we with BP as far as carrying it out? What is the actual direct 

relationship that you have with them in causing this crisis, which 

is a national tragedy? 

For what it is worth, I have said no critical comments regarding 

that because it is just a national tragedy. We need to all figure out 

the best way of dealing with it, and we can, after the fact, do some 

quarterbacking. But what is that relationship, and how are you 

carrying out these daily operations? 

Secretary SALAZAR. Thank you, Senator Corker. 

The relationship is one in which we, the U.S. Government, are 

directive of the things that are going on with BP. There is a structure which is part of the national framework and the national contingency plans, which are required by law which have been effectuated. So, we have a commander, a unified commander in Thad 

Allen, who is overall responsible for everything that is going on. 

But I think perhaps, to answer your question, even over the last 

several days, what we have done is crafted orders that have gone 

to BP that require them to move forward with leak containment 
24 

mechanisms, expanded beyond the amount that they had contemplated initially. So they are responsive to the orders and directives that we have given them. 

Related in part to Senator Sessions’s questions on flow rates, for 

example, we are requiring them to provide additional pressure information and take additional pressure readings so that we can 

have better estimates with respect to flow rate. So the relationship 

under the law and under the President’s direction has been to be 

one of being directive to BP, and we have been carrying that out 

every day, whether it is in Houston, whether it is in any of the 

Gulf States, or whether it is—— 

Senator CORKER. So, on a daily basis, do you get up and you direct BP as to what to do? 

Secretary SALAZAR. On a daily basis, 51 days into this spill, let 

me just say we are on top of it with everything that we have, and 

that is the President of the United States. It is the White House 

personnel who have been involved in this effort with us. It is my 

colleagues on the Cabinet, including Secretary Napolitano, who 

oversees the Coast Guard. 

Senator CORKER. But let me just—and again, I really respect 

you, and you know that. We have had a good friendship. Do you 

all like tell them on a daily basis what activities to engage in? 

Secretary SALAZAR. We—— 

Senator CORKER. I mean, that is what I am taking from this. I 

am just—— 

Secretary SALAZAR. I receive, and it was at my order and Thad 

Allen’s order, a review from BP of what their work streams are, all 

running in parallel because we didn’t want them to run sequentially. Those are received daily. That is at our direction. 

I have a personal conversation with Andy Inglis, who is the head 

of BP running the operations out of Houston, to get an update 

every morning. Secretary Chu joins me on some of those meetings. 

When we find deficiencies, such as looking at the fact now that we 

believe they need to have additional redundancies in place, as you 

look at hurricane season before you get to the ultimate sealing of 

the relief wells, we order them to provide those additional containment capacities and redundancies. 

So it is a dynamic relationship, but it is a directive relationship 

between the United States and BP, which is what is contemplated, 

Senator Corker, by the law. I mean, the law is very clear. BP is 

the responsible party. 

They are responsible with respect to dealing with the oil spill. 

They are responsible for dealing with all the damages that flow 

from the oil spill. They are responsible for compensating those that 

are damaged from the oil spill, and the President has been very 

clear and very direct, as all his team has been, that we will hold 

BP accountable. 

The CHAIRMAN. Are you through with your—— 

Senator CORKER. I have more questioning, but I will opt to honor 

the time. Again, thank you for the way you conducted yourself 

today. I appreciate that very much. 

The CHAIRMAN. Senator Stabenow. 

Senator STABENOW. Thank you, Mr. Chairman. 
25 

Welcome, Secretary Salazar. It is always wonderful to see you, 

although these circumstances are ones that we all wish we were 

not having to be involved in. To all of you, thank you for your service. This is a horrendous situation. 

I appreciate the efforts that you are taking and have taken since 

the beginning of your term to focus on reforming what has clearly 

been a broken process. I think it is important that we learn lessons 

from history, from the past. Otherwise, we are condemned to repeat them. That is certainly a very famous phrase, and I think it 

is very, very true today in terms of the way we approach the public 

interest in our jobs as it relates to overseeing what is done in the 

private sector when it relates to public risk. 

In my judgment, this has been a perfect storm of a particular 

company that has had, according to the records, 97 percent of all 

of the egregious and willful safety violations being brought by this 

company, coupled with a philosophy that has been in place for the 

last decade and other times in our history that basically said step 

back and let industry police itself, even when there is tremendous 

risk to the American public if they cut corners. 

We have seen that on Wall Street. We saw it with miners’ lives 

being lost. We are now seeing it with oil companies. So, I would 

like you to respond to how we move forward to correct that a little 

bit more. 

But I do want to enter into the record something, a piece of what 

was in the Washington Post yesterday because I think it is very 

important. The headline was ‘‘BP Had A History of Problems.’’ This 

goes to how we go forward on these kinds of situations with companies with these kinds of histories. ‘‘A series of internal investigations over the past decade warned senior BP managers that the oil 

company repeatedly disregarded safety and environmental rules 

and risked a serious accident if it did not change its ways. The confidential inquiries, which have not previously been made public, 

focus on a rash of problems at BP’s Alaska oil drilling operations. 

They describe instances in which the management flouted safety by 

neglecting aging equipment, pressured employees not to report 

problems’’—and we have heard the same thing here with this instance—‘‘cut corners, delayed inspections to reduce production 

costs. 

’’Similar themes about BP operations elsewhere were sounded in 

interviews with former employees in lawsuits and little-noticed 

State inquiries, as well as emails. Taken together, these documents 

portray a company that systematically ignored its own safety policies across its North American operations from Alaska to the Gulf 

to California. Executives were not held accountable for the failures. 

In fact, some were promoted despite them.‘‘ 

It is pretty outrageous. Pretty outrageous. So, my question relates to knowing that this landed in your lap. I mean, I understand 

with the new administration, whether it was trying to put us back 

from the edge on the financial crisis or millions of people unemployed that landed in the laps of this administration or whether it 

is this situation, the reality is we have got to make sure that going 

forward we are changing the philosophy. 

The philosophy that got us here doesn’t work in the public interest. Just it hasn’t worked. Millions of people are paying the price— 
26 

taxpayers, people who have lost their jobs, the environment, and so 

on. 

So, Secretary, as we look at going forward, the ethics reform you 

have put in place, the March plan that you put in place to begin 

to review permits and so on, the dismantling of MMS, dividing it 

up, all of the important work that you are doing now, do you see 

these kinds of things, a company like this with their track record, 

coming forward that there will be the new tools in place for you 

and for MMS or for the new entities to be able to say no, to be able 

to stop these kinds of things that have gone on in the past? 

Secretary SALAZAR. Senator Stabenow, the answer is yes. That is 

what our full intent and purpose is as we move forward. I would 

respond in two ways. First, the Presidential commission that has 

been formed and the investigations that are underway will get to 

the root cause of what happened here. We have preliminary information that points some to human error, some to signs that were 

not caught, problems with cementing, problems with casing, problems with some of the backup redundancy systems, the safety systems, and so on. 

So all that is going to be made public, and the American people 

and the U.S. Government will know what exactly happened here. 

With the root cause known and the actors known, it will lead to 

whatever results they will lead, including whatever culpability 

under the laws of the United States of America. So that is our intention there. 

We, in our overhaul of MMS, understand the importance of the 

critical missions of MMS and the importance of separating out the 

functions from the revenue collector from the part of the agency 

that gives out the leases. So the Bureau of Safety and Environmental Enforcement, which we are creating, will provide us with 

that kind of vigorous enforcement, which you want and which the 

American people want. 

Senator STABENOW. Thank you. 

The CHAIRMAN. Senator Burr. 

Senator BURR. Thank you, Mr. Chairman. 

Mr. Secretary, welcome. I am not going to ask you about what 

went wrong because I truly believe that the President understands 

that this is going to take a great deal of review, and that is the 

purpose of the commission. I want to commend you because I think 

that you have stayed focused on the 3 most important things—one, 

to stop the leak; 2, start the cleanup; three, then assess what went 

wrong and, more importantly, what changes we need to make. I believe I have consistently heard that out of you. 

Let me ask you, can you comment on the agency’s involvement 

in preparing the Atlantic coast for any potential oil fallout from the 

loop current? 

Secretary SALAZAR. Let me just say that Thad Allen, who is the 

commander on this, has been working tirelessly on making sure 

that we are anticipating for the problems that will occur. Right 

now, in terms of the States that are at risk are the ones that are 

in the Gulf coast, but we are prepared for the worst-case scenario. 

He is preparing for the worst-case scenario. 
27 

Senator BURR. I would encourage at the earliest point that you 

can share that with the Atlantic coast States, we would be happy 

to hear that and, more importantly, prepare as well. 

Do you believe the areas in which you have implemented new 

safety requirements cover the issues that caused Deepwater Horizon’s accident? 

Secretary SALAZAR. I think that the areas where the safety recommendations are being implemented will help have a safer environment for drilling activities in the Outer Continental Shelf. 

Those recommendations, which Steve Black led on my behalf, came 

about through input, including from the National Academy of 

Science’s arm of engineering. So, my view is that they are very 

good, and we are headed in the absolute right direction. 

Whether there will be additional requirements that will come forward from the Presidential commission, we are open to ideas. The 

goal is here that we need to have assurance of safety whenever we 

are conducting any kind of OCS operations. 

Senator BURR. Sure. Let me ask you for a very candid answer, 

and David is closer to it, in case he wants to comment. Has BP at 

any point refused to do what the Government has asked? 

Secretary SALAZAR. We have had a directive relationship with 

them. So, we have wanted them to do something, it is ordered 

and—— 

Senator BURR. Have they ever refused? 

Secretary SALAZAR. They have not refused anything that I have 

ordered them to do. Now, whether—but I am not running the operation, and this is a national incident. So, it is—— 

Senator BURR. If you would like to check back on that and—— 

Secretary SALAZAR. I will check with Secretary Napolitano and 

with Thad Allen. 

Senator BURR. I was told by an industry technician that I called 

in that didn’t work for BP what steps the entire industry and the 

science community were attempting, and he said, Senator, everybody, every smart person is at the table. Everybody from industry, 

regardless of the company, everybody from the science community 

that might have input is at the table making the decisions, evaluating the steps forward. Is that an accurate statement? 

Secretary SALAZAR. Let me just respond to that because I have 

spent—the last 51 days on this and it has consumed most every 

waking moment that I have had. I will say this, that in the day 

or days after the explosion, I pulled together all of the CEOs of 

companies that have operations in the Outer Continental Shelf, directed BP to take their input and to make sure that they were 

reaching out and getting the best science of the world. 

The President directed Secretary Chu and the Federal labs also 

to be involved in making sure that those minds were being brought 

to bear on the problem. So, from the point of view which I have 

the best minds of the world are focused on this issue and stopping 

the leak and resolving the problem. 

Senator BURR. I appreciate the confirmation of what I have been 

told. 

The last question, Mr. Chairman, is the purpose of the Graham 

commission to determine what failed and to make recommendations on what changes should be made for the future? 
28 

Secretary SALAZAR. Yes. 

Senator BURR. All right, thank you, Mr. Secretary. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Senator Cantwell. 

Senator CANTWELL. Thank you, Mr. Chairman. 

Secretary Salazar, good to see you. I wanted to ask you a couple 

of questions about your recommendations today and just to make 

sure that I am clear about them. Many of the recommendations 

that are in your report apply to floating vessels and floating drilling operations. But I think this could potentially leave out about 

one-third of what are called mobile offshore drilling units because 

only about one-third of these are considered floaters and would be 

under this definition of regulation. 

So are you considering that definition and how to have a tighter 

consideration and make sure we don’t have a loophole there, or is 

there something I am missing about the difference between these 

facilities? Maybe Mr. Black is better to answer this, I don’t know. 

Secretary SALAZAR. Let me just say we are aware of the distinction, and the moratorium in place applies to deepwater drilling. 

The Notice to Lessees that I talked about earlier that imposes safety requirements for drilling that will occur is now in the shallow 

waters that we define to be 500 feet or less. 

I will have Steve Black comment on the concept of the floating 

vessel because that was a central component of the report. 

Mr. BLACK. Senator Cantwell, thank you. 

If I understand your question correctly, floating rigs are rigs that 

are not either jack-up rigs and anchored on the sea floor or moored 

rigs, but instead mobile rigs that are dynamically positioned and, 

therefore, have different risks, a different risk profile and usually 

a subsea BOP stack. So the recommendations are intended to cover 

all of the mobile drilling rigs. 

We may need to get more information from you just to clarify 

that answer, but that is our intent. 

Senator CANTWELL. Yes, I think that in the term and in definition I think you are missing some of those mobile offshore drilling 

units. So I think a big number. So we should look at that. 

Then also I wanted to clarify the report has recommendation to 

include third-party verification and validation of technology in use 

and aspects of blowout preventers, but it doesn’t include a requirement for a full top-to-bottom look at a system or classification by 

somebody like ABS, the American Bureau of Shipping. So why not 

do that? 

Mr. BLACK. Senator Cantwell, the third-party verification requirement is an attempt, it is sort of one of the principles of the 

safety recommendations. In addition to ensuring redundancy, the 

Secretary recommended to the President, and the President agreed, 

that with respect to recertification of blowout safety equipment 

that those inspections should be verified by a third party not affiliated with the company or the drilling contractor. 

That third party and the qualifications of that party, you know, 

in the Notice to Lessees that the Secretary put out yesterday, we 

specified that the company needs to hire a qualified third-party 
29 

verifier. So it may very well be that someone with those qualifications would meet that test. 

Senator CANTWELL. I think we need to be more specific here, too, 

on your recommendations because you don’t want somebody looking just at a blowout preventer and whether that works. You are 

looking at the blowout preventer as part of a system, and you want 

to understand whether the system is going to fail. 

Or I am just going off of some of the testimony we have had before us from the various people involved, and everybody down the 

line pointed the finger at somebody else. ’’Oh, well, it was supposed 

to work, but you didn’t have the right hydraulic fluid,‘‘ or this was 

supposed to happen. 

So we want to make sure that we are looking at a validation of 

this, I believe, by third parties. So, we would like to suggest some 

language to you on that as well. 

Secretary SALAZAR. Senator Cantwell, if I may, we are obviously 

open to whatever recommendations that you might want to give us. 

The safety recommendations dealt with much more than just the 

blowout prevention mechanisms. They dealt with cementing. They 

dealt with casing. They dealt with training and a whole host of 

other things. 

So there is a panoply of recommendations that we are implementing at this point. If there are things that we have missed, 

please let us know, and I am sure that as we go forward, including 

getting the recommendations from the Presidential commission, 

there will be additional requirements that will have to be imposed. 

Senator CANTWELL. I think the American Bureau of Shipping has 

provided a good third-party validation of these various technologies, and I think we should continue to use them. But I think 

getting the definition right so that people don’t just do a cursory 

look at it, but actually a systematic operation that is going to be 

critical for moving forward. 

So I thank the chairman and also the Secretary. 

The CHAIRMAN. Thank you very much. 

Senator Barrasso. 

Senator BARRASSO. Thank you very much, Mr. Chairman. 

Mr. Secretary, I want to thank you for all of your hard work on 

this. As you said, you have been working relentlessly, and I think 

every member of this panel, both sides of the aisle, think absolutely 

you have been working relentlessly on this national tragedy. So I 

want to thank you. 

A couple of questions, and you referred specifically to pushing 

the pause button with regard to the 6-month moratorium. I am 

concerned about jobs and the economy and want to visit with you 

a little bit about that. 

According to the Houston Chronicle, there are about three dozen 

deepwater drilling rigs that are affected by the moratorium that 

are expected to exit the Gulf and have new multiyear contracts in 

Brazil, other deepwater hot spots. That could lead to costly delays 

of projects and endanger jobs that would otherwise be there for 

folks in the Gulf. 

I think the Interior Department’s May 27 report highlights the 

importance of offshore oil and gas production. It said that the OCS 
30 

oil and gas industry provides high-paying jobs in drilling and production activities. It estimated 150,000 jobs. 

So there was an editorial in the Wall Street Journal today called 

’’A Second Oil Disaster,‘‘ and it talked specifically about the specifics of the economics of those jobs. I am wondering if, in any way, 

you are looking at or giving consideration to lifting the moratorium, 

pushing that pause button sooner than the 6 months in order to 

help protect the jobs and the economy of that region from suffering 

a second hit? 

Secretary SALAZAR. Senator Barrasso, the importance of the jobs 

that are at stake here has been very much on the mind of the 

President and my mind as well. What we want to assure is that 

as we move forward with programs on the OCS, that they are 

going to be safe and that this circumstance that we are facing with 

the Deepwater Horizon never happens again. 

If it can be done before 6 months, then there is a possibility that 

we could take a look at it before then. But right now, we have multiple investigations that will culminate through the President’s 

commission, and I think it would be unwise for us to move forward 

with deepwater drilling until we have those recommendations that 

are in front of us that we can then implement. 

Senator BARRASSO. Just looking at the BP 58-page oil spill response plan for the region that was approved, I am trying to think 

how long it is going to take to work through all of this. For this 

specific well, the plan includes how to protect walruses, sea lions, 

and seals, none of which actually live in the Gulf. There was really 

minimal discussion on how to actually stop a worst-case scenario 

oil spill. 

So, I look at that and say can we be assured that at 6 months 

that the pause button will be pushed, or do we look at possibly having a stop button and extending this even a longer period of time, 

again focusing on the economics in that region. 

Secretary SALAZAR. Senator Barrasso, the frank answer to that 

question is I don’t know today, and that is because information is 

still being developed as to the root cause of this particular incident, 

as to recommendations that we will implement with respect to safety, as to the reorganization of parts of the Department of Interior 

which I think are essential, which I hope to work with the members of this committee on so that we have organic legislation for 

these functions. 

But we are not waiting. The 30-day report that we submitted to 

the President, we worked on that very hard and included outside 

experts, including the engineering academy that was very helpful 

with their recommendations. So we are not waiting. We are moving 

forward to developing information and the implementation of programs even in the interim as we speak. 

Senator BARRASSO. You had mentioned Admiral Thad Allen and 

his involvement. He had said that BP has the means to fix the 

problem, and they need to be held accountable to do it, but with 

proper oversight, he said, and that is our job. 

I was struck yesterday to hear that the CEO of BP said he had 

not actually talked directly to the President of the United States, 

and the President of the United States confirmed that in an interview I think with Matt Lauer yesterday. I think a lot of Americans 
31 

were surprised because you would think that there would be some 

value in the two of them talking. 

Senator Burr a little earlier asked had BP refused to do anything 

that the Government asked? Kind of a follow-up to that is has the 

Government refused to do anything that BP has asked in terms of 

trying to be helpful to stop this leak? 

Secretary SALAZAR. I am not aware that the Government has refused any request in terms of science from the labs, in terms of Department of Defense capabilities if they are needed. Thad Allen has 

the power and the ability to call on those resources. 

Let me respond to your first question, if I may, Senator Barrasso, 

and your comment on the President. The fact of the matter is from 

the very beginning of this, we have been having a directive relationship with BP. Whether it is Tony Hayward or Andy Inglis or 

Lamar Alexander, I met with them on multiple times. I pushed 

them to give the statement they have made to the America people 

that they will not hide behind liability caps and that they will pay 

for every cent of response cost, as well as any damages that occur 

from this national tragedy. 

So we have had the directive relationship, which I characterized 

at one point as the Buddha on the neck of BP. I told BP at the beginning that that was what the relationship was going to be, and 

we will continue to have that kind of relationship until we get a 

conclusion of this incident. 

Senator BARRASSO. Thank you, Mr. Secretary, for your hard 

work. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Landrieu. 

Senator LANDRIEU. Thank you, Mr. Secretary. I appreciate your 

focus and attention on this issue, which is, of course, extremely important to the people of Louisiana and the Gulf coast in a very particular personal and emotional way because of what is happening 

right off of our shore. 

But it is what is happening on the shore that has me concerned 

right now. You know what my question is going to be, and it is one 

that everyone in Louisiana is asking, as well as people from Mississippi, Texas, and Alabama. 

In the appendix of this report, May 27, it lists the names of 15 

experts that you consulted with on your report. I received a letter 

yesterday from 8 of them, a majority, that say they disagree with 

your decision to impose the 6-month moratorium. 

In their words, ’’The report does not justify the moratorium as 

written. The moratorium as changed will not contribute measurably to increased safety and will have an immediate and long-term 

economic effect.‘‘ 

These experts believe, and I agree, that this report includes some 

important recommendations. But I don’t believe, like they don’t believe, that this temporary pause, if it lasts very much longer than 

a few months—not 6, just a few months—it could potentially wreak 

economic havoc on this region that exceeds the havoc wreaked by 

the spill itself. 

I am going to submit to the record testimony from companies 

that no one on this panel will recognize because they are not oil 

companies. Aker Solutions employs 750 employees in Texas and 
32 

Alabama. Bollinger Shipyards has been in business for 64 years. 

They have testified to us they have never experienced such an uncertain future. They could be laying off thousands of workers. 

Broadpoint, Inc., 27-year-old privately held company, 100 employees based in the Gulf coast, their operations will be 99 percent 

affected almost immediately. C&C Technologies, they provide mapping. They are not even an oil company. They expect layoffs immediately. 

The consequences of this moratorium on the 33 deepwater rigs 

where 100 to 200 people work on each one, and for every one on 

the rig, there are four or five jobs directly supporting that job, not 

counting the 10,000 jobs, this could be devastating to our State and 

to the Gulf coast, an area that is fragile economically from the ravages of the storms just recently. 

So, on behalf of the people I represent, I am asking can you give 

any time certain, can you give any confidence that we can keep our 

people at work, get our people back to work, understanding there 

are some safety issues. If not, what are you going to tell the potentially—according to the documents that I am going to submit to the 

record, Mr. Chairman, it could affect 330,000 people in Louisiana 

alone. I don’t have the Mississippi numbers. I don’t have the Texas 

numbers. I don’t have the Alabama numbers. 

Three hundred thirty thousand people, that is 13.4 percent of 

Louisiana’s work force. Now I know not this whole work force is focused on deep water. It is on shallow. But if not a time certain, a 

shorter time than 6 months, some confidence that you are doing everything and the President is doing everything they can to get to 

the root of safety implemented so we can produce the oil not just 

for ourselves, Mr. Secretary, but for the country that needs it. 

Secretary SALAZAR. If I may, Senator Landrieu, respond to the 

question in three ways. First, the experts that were involved in 

crafting the report gave us their recommendations and their input, 

and I very much appreciate those recommendations. It was not 

their decision on the moratorium. It was my decision and the President’s decision to move forward with the moratorium, but I do appreciate the experts and their involvement and their point of view. 

Second, the jobs are a concern to us. But we want to make sure 

that as OCS development takes place that it is going to be done 

in a safe way. That is why the Notice to Lessees that went out yesterday will allow the shallow water development programs still to 

continue. 

The third point I would make, Senator Landrieu, to frame the 

discussion perhaps in this committee, it seems to me that we have 

three options. One would be to say full speed ahead. The 33 drilling 

rigs that are out there—— 

Senator LANDRIEU. Nobody is suggesting—— 

Secretary SALAZAR [continuing]. Just go, don’t stop. Move forward. Another option would be what some Members of the Congress would want us to do and other members of the public, and 

that is just to stop and say no more drilling or exploration activities in the Outer Continental Shelf. 

The place where the President of the United States and I have 

arrived at this issue is we have put the pause button until we can 

have a sense of safety that this is never going to happen again. 
33 

Now when we lift our hand from the pause button will be dependent on when we can get to that point. 

Senator LANDRIEU. OK. Let me ask this and submit one thing to 

the record, and I appreciate the chairman’s leeway here. But for 

the record, Texas uses, just the State of Texas, 1.1 billion barrels 

of oil a year. California uses 750 million. New Jersey uses 226 million. Connecticut is the least. It is 795. 

Now, nobody is suggesting these consumption numbers are going 

to go down any time soon. So there are some economic risk, some 

national security risk in terms of less oil being produced domestically, as well as environmental risk. I am just saying that needs 

to be balanced, and I know that you understand that. 

Then, finally, the question is, and you can answer it now or in 

writing, if these long list of companies that are not oil companies, 

but oil service companies have to either go out of business or take 

bankruptcy or lay off thousands of works, are you going to ask BP 

to pick up their salaries and to make them whole? 

Secretary SALAZAR. The answer to that is, yes, we will. BP is responsible, and BP is responsible for all the damages that flow from 

the BP oil spill, and these are some of the consequences from that 

oil spill. 

Senator LANDRIEU. Thank you. 

The CHAIRMAN. Senator Bennett. 

Senator BENNETT. Thank you very much, Mr. Chairman. 

I have listened through the testimony waiting to ask my question, and no one else did until Senator Landrieu just covered all 

of the issues I had in mind. She did it very eloquently. So I won’t 

take my full time, but simply call your attention, which Senator 

Landrieu has done, to the comments made by the outside experts 

that you turned to. 

Specifically, the National Academy of Engineering recommended 

a group of people as contributors and reviewers of the department’s 

30-day review of the oil spill. A group of them have signed a statement saying we were chosen because of our extensive petroleum industry expertise and independent perspectives. 

Then they quote the report, say we broadly agree with the detailed recommendations in the report and compliment the Department of Interior for its efforts. However, we do not agree with the 

6-month blanket moratorium on floating drilling. The moratorium 

was added after the final review and was never agreed to by the 

contributors. Then they quote the report as they reviewed it and 

then quote the report as it was changed. 

You are correct, Mr. Secretary, you made the decision, and it is 

your legal and proper right to make that decision. I am not questioning that in any way. But simply quote the comments of these 

folks, they say, ’’We believe the moratorium as defined in the draft 

report addresses the issues evident in the case. We understand the 

need to undertake the limited moratorium and actions described in 

the draft report to assure the public that something tangible is 

being done. A blanket moratorium is not the answer. It will not 

measurably reduce risk further, and it will have a lasting impact 

on the Nation’s economy, which may be greater than that of the oil 

spill.‘‘ 
34 

So this is signed by Kenneth E. Arnold, Dr. Robert Bea, Dr. Benton Baugh, and Ford Brett. Along with the material—oh, I am 

sorry—Dr. Martin Chenevert, Dr. Hans Juvkam-Wold, and Skip 

Ward, and Thomas Williams. I would ask unanimous consent that 

their statement be included, along with that of Senator Landrieu 

as presented. 

Mr. Secretary, I join with the comments of all of my colleagues 

in thanking you for your diligence and recognizing the kind of burden that this has put upon your department. You didn’t sign up to 

deal with an oil spill. You thought you were going to be worrying 

about jack rabbits in the West and an occasional wilderness issue, 

and you have had to take this on, and you deserve all of the compliments that you have received from this committee. 

I don’t want to add to your burden, but I do want to put this in 

the record as my own observation with respect to the issues that 

Senator Landrieu has raised. 

The CHAIRMAN. We will be glad to include whatever you have 

there in the record and what Senator Landrieu offered as well. 

Do you wish to respond to anything there, Secretary Salazar? 

Secretary SALAZAR. Just very quickly. I think I answered the 

question already. I appreciate the comment on the role that the engineers played and will continue to play as we try to move forward 

with the new safety regime for OCS. 

Let me also just comment, Senator Bennett, that when I signed 

up for this job, I signed up for it in large part because it is, in my 

view, the Department of America, and I often describe it as going 

from sea to shining sea as well as the 1.75 billion acres of the 

Outer Continental Shelf. We have a job to do all over this country, 

and one of the jobs that we have to do right now is to deal with 

this spill and to deal with the future plans for the OCS, and we 

will get it done. 

The CHAIRMAN. Senator Johnson. 

Senator JOHNSON. Thank you, Mr. Chairman. 

Welcome, Secretary Salazar. You have been doing a great job. I 

associate myself with the remarks of Senator Stabenow, and the 

last decade has been a hands-off policy, and you are responsible for 

changing that policy. 

Do you know whether the moratoriums and other actions will 

have any effect on U.S. oil production? If so, what effects do you 

anticipate? 

Secretary SALAZAR. Senator Johnson, there will be, I think, a report from the Energy Information Agency indicates that there will 

be an economic consequence and a production consequence that 

rises from this moratorium that we have imposed. So we are aware 

of the fact that there will be some reduction in oil and gas production. I don’t have this document in front of me, but I recall reading 

it sometime late last night. 

I think it said that there could be about a 5-day amount of production that is consumed in the United States that would be affected by the moratorium. So there will be an effect, and I would 

be happy to get back to you with a more specific number. 

Senator JOHNSON. What percentage would that accrete to, daily 

production of the United States? 
35 

Secretary SALAZAR. I don’t have those specific numbers in front 

of me, but I would be happy to get those to you, Senator Johnson. 

I don’t know if Deputy Secretary David Hayes or Steve Black, 

whether you have those numbers? 

We would be happy to get those to you, Senator Johnson. 

Senator JOHNSON. Are any shallow water production operations 

halted as a result of Mr. Abbey’s June 2 memorandum, or does the 

action only affect wells currently in development and not yet producing oil? 

Secretary SALAZAR. Senator Johnson, the shallow water drilling 

activities still have to comply with these safety requirements, and 

our view is that companies that are out there that are doing a good 

job will be able to comply with these safety requirements to make 

sure that we have this added level of safety which we must have 

with respect to OCS. So our view is that shallow water development will be able to proceed and that the safety requirements are 

ones that will be able to be met by most of the companies. 

Senator JOHNSON. Would you explain which oil and gas operations are continuing in the Gulf of Mexico and which have been 

halted by your moratorium? 

Secretary SALAZAR. The oil and gas operations in the Gulf of 

Mexico that continue are in large part all the production activities. 

Production from the Gulf of Mexico has not been significantly affected. It has only been minimally affected by the Deepwater Horizon spill. So the production that was online continues to produce 

much of the energy that we are using here in this Nation today. 

What has been affected, as Senator Landrieu and others spoke 

about, has been the continuation of drilling activities, especially in 

the deep water. Those have been halted, including the wells that 

were being drilled from the 33 deepwater drilling rigs that were 

out there. We ordered those companies to get to a place where they 

could secure the well and then to stop until we give them further 

orders. 

Senator JOHNSON. Will you be revisiting the MOUs to confirm 

that each operation has been temporarily suspended and complies 

with the system regulations for a temporary plug and abandonment? 

Secretary SALAZAR. Senator Johnson, we will be making sure 

that the orders that we have given to lessees are, in fact, followed. 

The latest of those notices was one that was sent out yesterday, 

and that went to all lessees in the Gulf, including those in shallow 

and deep water. 

Senator JOHNSON. Thank you, Mr. Secretary. 

Secretary SALAZAR. Thank you very much, Senator Johnson. 

The CHAIRMAN. Senator Dorgan. 

Senator DORGAN. Mr. Chairman, thank you very much. 

Let me just say my colleague Senator Corker, I don’t think he 

meant it quite as harshly as it sounded with respect to the issue 

of adolescence and actions by the White House. You know, my 

sense here is I agree with Senator Corker that this is a natural disaster. The President didn’t punch that hole in the planet. He can’t 

plug it either. 

But this President, the administration, you, Mr. Secretary, the 

Secretary of Energy, Dr. Tom Hunter, who I met with this morning 
36 

are all working hard. There is a seriousness of purpose here that 

has brought together the best minds we have in this country to 

work with all of you, and I know this is very tough. You are as 

frustrated as we are on this committee that that hole hasn’t been 

plugged yet. I wish it had been plugged the next day. 

But this proves to be very difficult and raises questions about 

regulations with respect to particularly deepwater drilling and so 

on. But I don’t think it was meant as harshly as it sounded to me. 

I don’t think there is any adolescent behavior here at all. I think 

there has been a seriousness of purpose by this administration and 

by everybody that is interested in trying to stop this gusher in the 

Gulf of Mexico. 

Let me ask a couple of questions. No. 1, you talked about BP, 

their responsibility, their pledge and their commitment. The fact is 

there is nothing legally binding in that. I asked the Justice Department if the fact that BP made a pledge was that binding on them? 

The answer is no. 

I think it is time now, and I think BP should be standing behind 

their pledge, as they have indicated they will. But who knows 6 

months or 16 months or 6 years from now whether that will remain the commitment. I think it is time to ask for a portion of 

funds. I propose $10 billion, which is a bit more than the first quarter profits of BP, $6 billion or $7 billion, be put in a Gulf coast recovery fund that is run by a master who would be selected and perhaps a counselor from BP so you would have joint management of 

that designated fund. 

But in any event, I think it is time to move from a pledge to 

some sort of binding requirement by BP. If BP would say, no, we 

are not at this point going to direct money in a Gulf coast recovery 

fund, then I think Congress ought to be considering what we would 

do to secure that funding from BP, which is a possibility. 

There are people now who are sitting on an empty dock in a 

small town on the coast who own a boat, a fishing boat that is not 

being used, and they have got to make a payment at the end of the 

month. That is a substantial cost. There is a person perhaps there 

that is running a small cafe and nobody is going there, and they 

have got to make payments. 

So my point is I think it is time to start finding a way to create 

a binding requirement here, and I won’t ask your evaluation of 

that. But I will ask you to consider that, and I have passed that 

recommendation along to Justice and the administration as well. 

Let me ask two other things. One is this issue of shallow water 

versus deep water. My guess is this gusher is going to change everything about underwater drilling and probably certainly for the 

better because there will be more regulations and more requirements that have a greater margin of safety as we do these things 

in the future. 

Is there a substantial difference in shallow versus deepwater 

drilling with respect to this type of accident? Had this accident occurred in water of 500 feet or 750 feet, do you think that the flow 

would have now been stopped? 

Secretary SALAZAR. The answer to that is yes because it is much 

easier to deal with these kinds of issues in shallower water than 

in deep water. When you are 5,000 feet below the sea, you can see 
37 

the effort that BP has put together to try to stop this leak, and we 

are now 51 days into the continuing leak. It speaks for itself just 

the difficulty of operating at those depths. 

Some ask the seriousness of BP in stopping the leak. I have seen 

the multiple plans that are running parallel in nature to stop or 

contain this leak. As I have said before publicly, it is an existential 

issue for BP. So I do believe that they are throwing everything that 

they have at the problem and trying to contain it. 

We also believe that we ought not to allow BP to do it by themselves, and that is why the President’s directive has been to bring 

people like Tom Hunter and other scientists to make sure that we 

are riding herd, as the President has said, over BP. 

Senator DORGAN. There is a public interest here. BP has its interest. Clearly, its interest must be to shut down this gusher. I understand that. But it also, in terms of evaluating various alternatives, is going to find a way to make certain on behalf of its 

shareholders its interest is met. There is also a public interest. 

They may well run parallel in all cases, but at times maybe not. 

But that is why there needs to be this concerted effort by those 

who represent the public interest. I want to—— 

Secretary SALAZAR. If I may, just on that point? 

Senator DORGAN. Yes. 

Secretary SALAZAR. Because you mentioned Tom Hunter. I have 

gotten to work with people like Tom Hunter a lot over the last 51 

days. They are truly the best of scientists that America has, and 

as it is at the President’s direction that you have people like Secretary Chu and Tom Hunter and Marcia McNutt, a whole host of 

others essentially that are overseeing these efforts. 

Senator DORGAN. Dr. Tom Hunter, for those that don’t know, is 

the Director of Sandia National Laboratory, an extraordinary 

American. But he is just one of a group of the best thinkers in our 

country brought together by the administration to try to figure out 

what do we do here. 

If I have just another moment, and let me just say that you all 

look like you could use like 10 to 15 hours of sleep. I know the 

hours that you are likely working, and we thank you for that. 

Let me ask about when a hurricane enters the Gulf of Mexico, 

in normal times rigs and production platforms are prepared, are 

shut down, and personnel are evacuated to land. Is there now a 

written plan for that? Because we are now going into that season, 

and you have got a catastrophe out there with this gusher. Yet, we 

may well have during hurricane season something come along, and 

companies normally have had procedures to deal with that situation. Is there a written plan at this point for this circumstance? 

Secretary SALAZAR. The answer to that is, yes, Senator Dorgan, 

with respect to hurricanes that when they happened in the past 

there is a shutdown that occurs within the Gulf of Mexico. The answer also with respect to this particular leak is that it is one of the 

issues which Secretary Chu and I have insisted there be the capacity to deal with these issues even as this leak continues in the 

month or two ahead as they get to the relief well. So it is part of 

the program. 

Senator DORGAN. Let me say I don’t mean that the three of you 

look awful—— 
38 

[Laughter.] 

Senator DORGAN [continuing]. When I said you need sleep. But 

I know that you are weary because this has been a long period of 

time, and you have not had a day off, I guess, in 51 days. So, 

thanks for your work, good for you. I think this Congress wants to 

do everything possible it can do to be supportive. 

The CHAIRMAN. Senator Wyden. 

Senator WYDEN. Thank you, Mr. Chairman. 

Mr. Secretary, the folks in the Gulf are hurting. As Senator Dorgan noted, you all are putting in prodigious numbers of hours at 

this point. I just want to ask you about two policy questions that 

relate to the report that you are making actually are, in my view, 

areas that the report doesn’t get into. 

I feel very strongly that for the future, it is going to be absolutely 

critical to close the revolving door between the Interior Department 

and the oil and gas industry. There is a specific law governing officers and employees of the department involving the Outer Continental Shelf oil and gas program, but it sure doesn’t look to me like 

it is closing the revolving door. Let me give you two examples. 

The first comes from the Bush administration. An MMS inspector applied for, got a job with the company that he was inspecting. 

The second one I think concerns me even more. That is, as of 

March 1, 2010, the previous Director of MMS is now the president 

of the Ocean Industries Group. This is the offshore oil and gas industry that he used to regulate. This is as of March 1, 2010. 

Now I am not saying this is breaking the law, but it sure suggests to me that the rules to block this revolving door are not tough 

enough. The report doesn’t go into this. My question, the first question is would you be willing to work with me—we have worked together often—to toughen the conflict of interest and ethics requirements in this area to finally, once and for all, shut the revolving 

door? 

Secretary SALAZAR. Senator Wyden, the answer to working with 

you, absolutely. If there are things that need to be done to enhance 

the ethics mandates which we have put into place since I became 

Secretary of Interior and they can be enhanced, we obviously would 

want to do that. 

You know the history of MMS perhaps better than I think almost 

anybody else that I have worked with, and there were huge problems there. That is why people have been terminated. People have 

gone to jail. People have been reprimanded. Ultimately, what is essentially this blowup of MMS and the reconstruction of it and the 

way that we have ordered under the new Secretarial Order I think 

is essential, and the revolving door issue is an issue which we need 

to make sure doesn’t happen. 

Senator WYDEN. Let us follow up on it, Mr. Secretary, and particularly look at this one that I cited involving March 1, 2010, because that is an example to me where my initial take is that the 

law may not have been broken. But for somebody who is the previous director now at the offshore oil and gas industry, let us follow 

it up. 

Here is my second question. With respect to the emergency response issue, I think there is a general consensus now that the 

emergency response has not been adequate. The Federal Govern-
39 

ment doesn’t have the equipment to stop a gusher or deal with it 

as fast as you and I would like. BP doesn’t either. 

What do you think about the idea of Congress requiring the oil 

industry, not on a company by company basis, to establish a permanent oil spill response capability. I am just putting this out by 

way of trying to get an initial assessment of it. The Congress has 

looked at previous approaches. The industry has a check-off program for R&D, for propane, the oil heat industry. There are other 

approaches that resemble this. 

But if it is going to be important to strengthen the oil spill response capability, do you think that this is an issue that ought to 

be examined? 

Secretary SALAZAR. Senator Wyden, it is an issue that needs to 

be examined and will be examined. I know the President himself 

has an interest in this and that we will look at the report from the 

Presidential commission that I think will very much address this 

issue. 

Senator WYDEN. So that would be—I appreciate the answer, and 

I think what you have told me, it is on the table. That is what I 

was hoping for. Let us go to work, as you and I have so often in 

the past. Let us toughen up the conflict rules, particularly as it relates to the revolving door. Let us work on the emergency response 

capability, and we will look forward to talking to you some more 

after you get some sleep. 

Thank you, Mr. Chairman. 

Secretary SALAZAR. Thank you, Senator. 

The CHAIRMAN. That completes one round of questions. I have no 

questions in addition to that. 

I think Senator Murkowski indicates she does not have additional questions. 

Senator Corker, do you have—— 

Senator CORKER. I have just one. 

The CHAIRMAN. Go ahead. 

Senator CORKER. Just I wasn’t going to bring up the issue again. 

I know Senator Dorgan has elaborated. I want to say that I was 

trying to contrast what appears to me to be a very professional response from your department and other professionals to the political responses that occur, and that is all I was trying to do. I was 

trying to say that I appreciate the maturity that it seems that you 

have displayed. 

I realize on the political side people sort of move around, try to 

figure out where best to be. I do think, for what it is worth, that 

does affect the chain of command. It does affect how professionals 

end up dealing with a crisis when, in fact, the political side of it 

is trying to figure out where to be. I think that creates some issues, 

and I think I may talk with you offline about that. But if there are 

concerns about how you carry out a rescue mission like this with 

all the flitting around that seems to be taking place through the 

political side. 

But my question is one of Senator LeMieux—and he may have 

already talked to you about this—has been on television I know a 

couple of times and talked in our caucus a little bit about a story 

that appeared in the Mobile Register on April 29, and it talked 

about having nonflammable boom available so that when a spill 
40 

like this occurs—and apparently, there was a preapproval process 

that took place so that when an emergency happens, you burn off 

the oil immediately. But you have to do that within 24 hours, or 

the oil ends up being mixed up with the water, and you cannot 

burn it. 

That didn’t occur in this case, and I know he has raised that several times with Admiral Allen, and I think he has written a letter 

to the Administrator of NOAA. But since you are here and since 

I know he has been talking about that publicly, I am sure you have 

a point of view on that, and I wondered if you might share it? 

He seems to think that 90 percent of the oil could have been 

burned if that process—I am just repeating, OK? I hope I am not 

repeating inaccurately. But much of it could have been done away 

with very quickly if that had occurred in the first 24 hours. 

I have heard people talk about the weather and other kinds of 

things that may have been impediments, and I just thought I 

might give you the opportunity to respond since I know it is out 

there moving around in the public. 

Secretary SALAZAR. Senator Corker, Secretary Napolitano in so 

many ways, with Admiral Allen, has really moved forward to do everything within human capacity to deal with the boom issue. I 

know that they are doing everything that they can with respect to 

the boom. 

In terms of burns and booms that could contain oil close to the 

vicinity of the blowout and then having burns conducted, there 

have been literally dozens, in fact, I think over 100 burns that have 

already been conducted to basically burn the oil on the sea. So it 

is a very active part of the leak containment program that is underway. 

As Admiral Allen often says, we are fighting the battle on multiple fronts. We are fighting it in the subsea to stop the leak. When 

the oil comes to the surface, we are fighting it on the surface. 

When the oil comes close to the shore, we are fighting to keep it 

from coming onshore. When it has come onshore, we are fighting 

it there as well. 

So, it has been a relentless effort. I would only comment on this 

last point, Senator Corker, with respect to the President’s own involvement in this, I can tell you because I work with him a lot. He 

has been relentless in terms of pushing not only BP, but also the 

U.S. Government to do everything possible to protect the people of 

the Gulf coast and to protect the environment of the Gulf coast, 

and I can tell you that from Cabinet meetings to meetings that I 

have had with him in the Oval Office. 

He is the reason some people may say I am tired today. It is because there is a 51-day march that we have been on, and we will 

continue on this march under the President’s direction until this 

problem is fixed and we figure out the way forward. 

Senator CORKER. Back to the question at hand then, what you 

are saying is that is absolutely not an issue, that having flammable 

boom available to jump on that right away, for somebody to make 

a comment in that regard you are saying is totally off base? 

Secretary SALAZAR. Let me do this, Senator Corker. I will have 

either Secretary Napolitano or Admiral Allen get back directly to 

Senator LeMieux on the issue. 
41 

Senator CORKER. That would be good. But since I have raised the 

issue, too, I would love to hear about that. 

Secretary SALAZAR. I will have them get back to you as well. 

Senator CORKER. All right. Thank you. 

The CHAIRMAN. Secretary Salazar, thank you very much for your 

time, and Godspeed in getting this problem solved. 

That concludes our hearing. 

Secretary SALAZAR. Thank you, Senator. 

[Whereupon, at 11:44 a.m., the hearing was adjourned.] 

(43) 

APPENDIXES 

APPENDIX I 

Responses to Additional Questions 

RESPONSES OF HON. KEN SALAZAR TO QUESTIONS FROM SENATOR MENENDEZ

Question 1. Relief wells are the only proven effective way to stop major oil spills— 

should operators be required to drill a relief well alongside and at the same time 

they drill exploratory wells in case a major accident happens? If not, why not? If 

the Department has determined that costs outweigh the benefits, where can I access 

that analysis? 

Answer. Regarding the drilling of relief wells, it may seem reasonable to assume 

that relief wells reduce risk, and that we could save time responding to any blowout 

by requiring operators to drill a relief well alongside each well drilled in the Gulf 

of Mexico. However, the risk of a blowout in the relief well may be the same as the 

risk of a blowout in the initial well. This increased risk is a direct result of drilling 

twice as many wells into a formation. Each well drilled increases the risk of a blowout simply because each well presents its own unique geologic and engineering 

risks. Relief wells have historically been an effective method to stop the flow of oil 

from the bottom of a well blowout and begin the process of pumping cement to abandon the well. However, both the risk and costs of drilling relief wells dictate that 

they are typically only drilled when necessary to respond to a well blowout. As demonstrated with the Deepwater Horizon response, there are other deepwater well containment options that may be faster and equally effective in reducing or stopping 

the flow of oil into the ocean. BOEMRE is in the process of establishing enforceable 

mechanisms to ensure the availability of blowout containment resources. And industry commitments have been made for new investments in designing and developing 

a multi-scenario, multi-component containment system. 

In fact, on July 21 four of the nation’s largest oil companies announced that they 

have committed $1 billion to set up a rapid oil spill response system to deal with 

deep-water blowouts in the Gulf of Mexico. Exxon Mobil Corp., Chevron Corp., 

ConocoPhillips and Shell said the system of underwater capture devices and surface 

containment vessels will be similar to those used by BP to control the Macondo well 

and will be designed to capture up to 100,000 barrels of oil a day before it spills 

into the sea from wells sitting in water as deep as 10,000 feet. 

The reality of future wells and production from the Gulf of Mexico is that most 

of the remaining oil and gas resources are located in deep formations with high 

pressures and temperatures, and exploratory and development wells as well as any 

potential simultaneously drilled relief wells all carry a risk of a blowout. 

Question 2. Has the Interior Department been submitting all government expenses to BP for reimbursement, including travel, lodging, and even meals, for all 

federal employees who have gone to the Gulf to respond to this spill? Is BP paying 

for your personal travel to Louisiana? Your meals? Your lodging? If not why not? 

Answer. Costs which fall within the statement of work under the Pollution Removal Funding Agreement (PRFA) the Department has with the U.S. Coast Guard 

are being reimbursed through a coordinated department-wide process. Every bureau 

and office with a Deepwater Horizon related PRFA is tracking these costs according 

to the USCG’s PRFA reimbursement guidance. Currently efforts to prepare and 

process reimbursement packages for costs incurred beginning on April 21, 2010 

within the various PRFA agreements throughout the Department are underway. 

These packages will be prepared and submitted to the USCG on a regular basis 

until all Deepwater Horizon work is complete and expenses under the PRFA’s are 

reimbursed. The Administration regularly bills responsible parties for oil removal 
44 

costs, and has sent seven bills, to-date, of which the first six have been paid in full 

by BP, totaling $518.4 million.More information about oil spill costs and the reimbursement process—including copies of the bills that have been sent to responsible 

parties—is available here: http://www.restorethegulf.gov/release/2010/10/13/oil-spillcost-and-reimbursement-fact-sheet. 

Departmental costs that are identified as not currently being reimbursed through 

one of the various PRFAs will be tracked in accordance with interagency guidance 

and provided to DOJ for their determination of whether to pursue reimbursement 

from the responsible parties. 

Question 3. What specific, near-term actions are being taken at MMS to ensure 

that all existing oil response plans accurately describe operators ability to respond 

to a worst-case scenario spill? 

Answer. BOEMRE has been proactive in assuring that operators of offshore facilities are able to respond to such an event in the Gulf of Mexico. Relevant, near-term 

actions taken by the bureau include the following: 

• On May 19, 2010, BOEMRE inspected the Marine Spill Response Corporation 

and the National Response Corporation spill response equipment stockpiles in 

Tampa, Florida to ensure its operational status and contractor training. • BOEMRE continuously tracks the spill response equipment inventory for the 

three major equipment providers here in GOMR. • BOEMRE worked with USCG concerning allocation of response assets in the 

event of another spill. • BOEMRE consulted with USCG and the Environmental Protection Agency regarding the emergency rule for Temporary Suspension of Certain Oil Spill Response Time Requirements to support the Deepwater Horizon Oil Spill Response. This temporary interim rule allowed release of response equipment and 

vessels from around the country for response to the Deepwater Horizon Spill of 

National Significance. The USCG and EPA encouraged an increase in available 

response resources for this response by temporarily releasing these facilities 

and vessels from USCG and EPA regulatory response time requirements, and 

EPA response equipment identification and location requirements, if they have 

had their own or contracted response resources relocated to the Gulf of Mexico 

in support of the response to the Deepwater Horizon spill. Additional information on this can be found at: http://edocket.access.gpo.gov/2010/pdf/2010- 

15853.pdf • BOEMRE developed a method to verify the worst case discharge volumes for 

wells through the Exploration Plan/Development Operations Coordination Document (EP/DOCD) review process as prescribed in NTL 2010-N06, Information 

Requirements for Exploration Plans, Development and Production Plans and 

Development Operations Coordination Documents on the OCS that became effective on June 18, 2010. 

• BOEMRE is reviewing its ability to plan, implement, verify, and adjust Oil Spill 

Response Plans given existing regulations, in particular 30 CFR 254.30(e)(2), 

when relevant staff has identified potential inadequacies based on the Deepwater Horizon response. 

Question 4. At the hearing, I asked you to confirm reports of a second oil spill 

from another drilling rig, the Ocean Saratoga, near the Deepwater Horizon, which 

you confirmed, and said may have begun with Hurricane Ivan, in 2004. I request 

that you expeditiously provide follow-up information about this spill to the Committee, including when it began, the estimated flow rate, plans to clean up and investigate the spill, and future monitoring plans of the Department to ensure all oil 

spills are detected and addressed in a timely manner. 

Answer. The oil leaks in the vicinity of the Diamond Ocean Saratoga drilling rig 

are from wells originally drilled from a now downed platform destroyed by Hurricane Ivan in September 2004. The platform is located in 440 feet of water approximately 15 miles southeast of the Mississippi River delta. The Ocean Saratoga is 

under contract to Taylor Energy LLC, as operator of the Mississippi Canyon Block 

20 (MC020) platform destroyed by Hurricane Ivan, to drill relief wells and set plugs 

in the destroyed wells to prevent future oil pollution. 

The Mississippi Canyon Block 20 Project is managed under a Unified Command 

consisting of the USCG, BOEMRE, and Taylor Energy, which holds monthly operational meetings with Taylor Energy and contractors to manage the well abandonments and site clearance operations for the MC020 platform. Taylor Energy no 

longer operates active oil and gas leases in the Gulf of Mexico, but is the operator 

of the MC020 Project under a trust agreement created with the then-Minerals Management Service in March 2008. Taylor Energy is reimbursed for well abandonment 

and site clearance work from the trust fund after review of completed work by the 
45 

Unified Command. The oil leak flow rates in MC020 are generally measured in gallons (i.e. less than one barrel per day). While the wells have periodically discharged 

volumes exceeding several barrels per day, the leaks have subsided due to the plugging of six wells and the installment of an oil containment system. Taylor Energy 

LLC and contractors designed, fabricated, and installed a containment system of collection domes and a collection tank for containment of these leaks. Under the direction of the Unified Command, Taylor Energy has also contracted with an oil spill 

observer contractor to fly over the MC020 site and report estimates of oil leak volumes to the Unified Command. 

(47) 

APPENDIX II 

Additional Material Submitted for the Record 

THE PRIMARY RECOMMENDATION IN THE MAY 27, 2010 REPORT, ‘‘INCREASED SAFETY MEASURES FOR ENERGY DEVELOPMENT ON THE OUTER CONTINENTAL SHELF’’ GIVEN BY SECRETARY SALAZAR TO THE PRESIDENT MISREPRE- SENTS OUR POSITION

The National Academy of Engineering recommended us as contributors and reviewers of the recent Department of Interior ‘‘30 Day Review’’ of the BP Oil Spill. 

We were chosen because of our extensive petroleum industry expertise, and independent perspectives. The report states: 

‘‘The recommendations contained in this report have been peer-reviewed by seven 

experts identified by the National Academy of Engineering. Those experts, who volunteered their time and expertise, are identified in Appendix 1. The Department 

also consulted with a wide range of experts from government, academia and industry.’’ 

The BP Macondo blow out was a tragedy for eleven families, and an environmental disaster of worldwide scale. We believe the blowout was caused by a complex 

and highly improbable chain of human errors coupled with several equipment failures and was preventable. The petroleum industry will learn from this; it can and 

will do better. We should not be satisfied until there are no deaths and no environmental impacts offshore—ever. However, we must understand that as with any 

human endeavor there will always be risks. 

We broadly agree with the detailed recommendations in the report and compliment the Department of Interior for its efforts. However, we do not agree with 

the six month blanket moratorium on lfoating drilling. A moratorium was added 

after the final review and was never agreed to by the contributors. The draft which 

we reviewed stated: 

Along with the specific recommendations outlined in the body of the report, Secretary Salazar recommends a 6-month moratorium on permits for 

new exploratory wells with a depth of 1,000 feet or greater. This will allow 

time for implementation of the measures outlined in this report, and the 

consideration of information and recommendations from the Presidential 

Commission as well as other investigations into the accident. 

In addition, Secretary Salazar recommends a temporary pause in all current drilling operations for a sufficient length of time to perform additional 

blowout preventer function and pressure testing and well barrier testing for 

the existing 33 permitted exploratory wells currently operating in deepwater in the Gulf of Mexico. These immediate testing requirements are described in Appendix 1. 

We agree that the report and the history it describes agrees with this conclusion. 

Unfortunately after the review the conclusion was modified to read: 

The Secretary also recommends temporarily halting certain permitting 

and drilling activities. First, the Secretary recommends a six-month moratorium on permits for new wells being drilled using floating rigs. The moratorium would allow for implementation of the measures proposed in this report and for consideration of the findings from ongoing investigations, including the bipartisan National Commission on the BP Deepwater Horizon 

Oil Spill and Offshore Drilling. 

The Secretary further recommends an immediate halt to drilling operations on the 33 permitted wells, not including the relief wells currently 

being drilled by BP, that are currently being drilled using floating rigs in 

the Gulf of Mexico. Drilling operations should cease as soon as safely practicable for a 6-month period. 
48 

We believe the moratorium as defined in the draft report addresses the issues evident in this case. We understand the need to undertake the limited moratorium and 

actions described in the draft report to assure the public that something tangible 

is being done. A blanket moratorium is not the answer. It will not measurably reduce risk further and it will have a lasting impact on the nation’s economy which 

may be greater than that of the oil spill. 

The report highlights the safety record of the industry in drilling over 50,000 

wells on the US Outer Continental Shelf of which more than 2000 were in over 1000 

feet of water and 700 were in greater than 5000 feet of water. We have been using 

subsea blowout preventers since the mid-1960s. The only other major pollution 

event from offshore drilling was 41 years ago. This was from a shallow water platform in Santa Barbara Channel drilled with a BOP on the surface of the platform. 

The safety of offshore workers is much better than that of the average worker in 

the US, and the amount of oil spilled is significantly less than that of commercial 

shipping or petroleum tankers. The US offshore industry is vital to our energy 

needs. It provides 30% of our oil production, is the second largest source of revenue 

to the US Government ($6 Billion per year), and has a direct employment of 150,000 

individuals. The report outlines several steps that can be taken immediately to further decrease risk as well as other steps that should be studied to determine if they 

can be implemented in a way that would decrease risk even more. 

This tragedy had very specific causes. A blanket moratorium will have the indirect effect of harming thousands of workers and further impact state and local 

economies suffering from the spill. We would in effect be punishing a large swath 

of people who were and are acting responsibly and are providing a product the nation demands. 

A blanket moratorium does not address the specific causes of this tragedy. We do 

not believe punishing the innocent is the right thing to do. We encourage the Secretary of the Interior to overcome emotion with logic and to define what he means 

by a ‘‘blanket moratorium’’ in such a way as to be consistent with the body of the 

report and the interests of the nation. 

The foregoing represents our views as individuals and does not represent the 

views of the National Academy of Engineering or the National Research Council or 

any of its committees. 

Kenneth E. Arnold, PE, NAE; Dr. Robert Bea, Department of Civil and 

Environmental Engineering, University of California at Berkeley; Dr. 

Benton Baugh, President, Radoil, Inc.; Ford Brett, Managing Director, Petroskills; Dr. Martin Chenevert, Senior Lecturer and Director 

of Drilling Research Program, Department of Petroleum and Geophysical Engineering, University of Texas; Dr. Hans Juvkam-Wold, 

Professor Emeritus, Petroleum Engineering, Texas A&M University; 

Dr. E.G. (Skip) Ward, Associate Director, Offshore Technology Research Center, Texas A&M University; Thomas E. Williams, The Environmentally Friendly Drilling Project. 

SERVICE COMPANIES IMPACTED BY DEEPWATER HORIZON MORATORIUM

Aker Solutions 

• Aker Solutions is a leading global provider of engineering and construction services, technology products and integrated solutions to the offshore oil and gas industry. 

• The moratorium will impact Aker Solutions’ offshore related operations on the 

Gulf Coast which include about 750 employees in Texas and Alabama. 

• The company has already started to refocus their efforts to international 

projects that hopefully can replace some of the void. 

• Some of their offshore services work is coming to a halt already; and unless 

they can refocus that workforce, including vessels and tools, to international 

projects they are at risk of losing jobs in Texas over the next few months. 

• Manufacturing jobs in Alabama are at risk from early 2011, as the backlog runs 

out with no new orders of deepwater subsea equipment coming in. 

• Engineering jobs in Houston are at risk of being reduced, but may be able to 

be refocused internationally. 

• In summary, part of their workforce will be affected directly or indirectly by the 

moratorium. Their goal is to try to mitigate this by securing international 

projects. 
49 

ATP Oil & Gas Corporation 

• ATP Oil & Gas Corporation is an independent oil and gas producer 

headquartered in Houston, Texas. 

• The moratorium has caused ATP to stop the drilling of a natural gas development well (the Mississippi Canyon 305 # 2 well) and release the deepwater 

drilling rig. The MC 305 #2 well would have produced approximately 40 million 

cubic feet of gas per day with a very small amount of condensate. 

• Additionally, ATP will not be able to drill and complete two development wells 

(MC 941 #4 well and MC 942 # 2 well) using a drilling configuration with two 

blowout prevention (BOP) stacks, one on the seafloor and one at the surface. 

This is a new design for improved safety, a first in the US Gulf of Mexico and 

one that the company planned 3 years ago. 

• These wells were originally planned to be completed and placed on production 

in 2010 at a combined rate of approximately 14,000 barrels of oil per day using 

a platform drilling rig attached to the ATP Titan platform. 

• As a result of the moratorium and the suspension of operations, ATP expects 

to incur additional costs of approximately $30,000,000 that otherwise would not 

have been spent. 

• Additionally, ATP will defer revenues of more than $1,000,000 per day as a result of not being able to drill and complete the development wells planned for 

2010. 

Bollinger Shipyards, Inc. 

• Bollinger Shipyards, Inc. and its affiliated companies are the leading provider 

of quality marine construction, repair and conversion products, servicing both 

the military and commercial marine industry. They also own and operate a fleet 

of Offshore Supply Vessels that service the deepwater activities of the OCS. 

Family owned and operated since 1946, Bollinger Shipyards employs 3,000 people. 

• ‘‘In the 64 years of our existence, we have never been faced with such an uncertain future. This moratorium has created an environment leaving Bollinger 

Shipyards no choice but to downsize our company thereby eliminating good paying jobs.’’ 

Broadpoint, Inc. 

• Broadpoint is a 27 year old privately held company with a 100 employees based 

along the Gulf Coast with its headquarters in Houston and a Network Operations Center in New Orleans with an additional office in Lafayette, LA. 

• Their operations are 99% directly related to providing telecommunication services in the Gulf of Mexico through satellite communications and the ownership 

and management of a 100,000 square mile GSM/GPRS/Edge network operating 

in the Gulf. 

• Broadpoint and its clients will be adversely affected as a result of this shutdown 

and it will directly affect their ability to operate. Reliable communications is essential for the health and safety of individuals in the Gulf of Mexico. 

CapRock Communications, Inc. 

• CapRock Communications is a 29 year old privately held company employing 

750 employees globally with headquarters in Houston and operational offices in 

Lafayette and New Orleans, LA. 

• Their operations are related to providing satellite communication solutions that 

enable the oil and gas industry to operate more efficiently in today’s environment, serving the communications needs of rig owners, service companies and 

operators working on drilling rigs, production platforms and other assets in the 

Gulf. 

• They currently have over 50 field service and operations personnel supporting 

clients in the Gulf of Mexico and this shutdown will directly impact their ability 

to maintain operations. 

• Their field service personnel install and manage communication systems onboard drilling rigs and energy support vessels throughout the Gulf of Mexico. 

As their customers are now required to cease or limit their operations, the 

amount of business their company receives and the work they have for their 

personnel in the region significantly declines. 

• They will be forced to redeploy personnel to different regions or support them 

in finding other opportunities. 
50 

C&C Technologies, Inc. 

• C & C provides a wide range of survey and mapping services for the land and 

offshore oil and gas industry, the telecommunications industry and the U.S. 

government. • C&C expects to lay off approximately 10 employees as a result of the moratorium, and will not be hiring the dozen or so workers they expected to hire in 

the coming months. 

Cobalt International Energy, Inc 

• Cobalt International Energy, Inc. (Cobalt) is an independent oil and gas exploration and production company focused on the deepwater U.S. Gulf of Mexico 

and the deepwater offshore Angola and Gabon. • Cobalt was formed in 2005 and is headquarters in Houston, Texas with an operational base in Port Fourchon, L.A. for their deepwater GOM exploration activities, and an (soon to be established) operational base in Luanda Angola for their 

Angola exploration activities. At present Cobalt have some 65 employees and 25 

consultants. • The GOM Drilling Moratorium has significantly impacted Cobalt’s GOM deepwater 2010 exploration and appraisal program from a multitude of perspectives: 

—Cobalt’s exploration and appraisal drilling program for the remainder of 2010 

(3 wells of which 1 had all of the necessary permits/insurance in place) is now 

on hold. Thus, the exploration drilling rigs, services, vessels, tools, people etc., 

that were contracted to support the drilling programs have been released. 

—Cobalt invoked the Force Majeure provision in a recent rig contract, thus the 

company is paying capital for a period of time while the rig is idle as well 

as the associated key services (e.g. vessels). Cobalt has also experienced unanticipated legal costs as a result. 

—There is a follow-on impact in the form of delay in executing their 2011 exploration and appraisal program (approx 9 wells) in the deepwater GOM. Thus 

the program has been extended further/delayed into the future which will affect the timing and thus cash flow they would have anticipated sooner. 

—As the deepwater GOM is a key focus area for Cobalt in light of the position 

established (some 227 deepwater leases) in the last few years, the company 

stock has been significantly impacted (dropped 40%) amid concerns regarding 

the GOM Drilling Moratorium; the value of the company has thus been impacted by some $1.5 billion in the market. 

—Cobalt will shift its capital spending program and resources to their West Africa business. Resumption of their investment program in the United States 

is completely dependent on the termination of the GOM Drilling Moratorium. 

Davis-Lynch, Inc. 

• Davis-Lynch is a privately owned company founded in 1947 that manufactures, 

sells, and services down-hole equipment for the offshore oil and gas industry. 

• They employed over 300 people in 2009, but reduced their workforce by approximately 100 people as a result of an industry downturn. In 2010 with an upswing in business they have recalled some of the people released in 2009. 

• Approximately 20% of their business is dedicated to providing products and 

services to the offshore drilling industry in the Gulf of Mexico, with a large portion associated with water depths greater than 500 feet. 

• The moratorium leaves them no alternative other than to implement another 

reduction in their workforce in locations including Lafayette, LA; Houston, TX; 

and Corpus Christi, TX. 

Delmar Systems, Inc. 

• Delmar Systems, Inc. is a leader in offshore mooring, providing mooring solutions for the offshore oil and gas industry. 

• Delmar is a 42 year old privately held company employing 300 employees based 

along the gulf coast with a technical office in Houston and large operational 

base at Port Fourchon, LA. 

• Operations are 100% directly related to mooring deepwater semi-submersibles 

in the Gulf of Mexico and as a result of this shutdown, will directly affect ability 

to operate. 

• Thirteen of the thirty three deepwater wells involved ‘‘moored’’ or anchor semisubmersible rigs owned by four drilling contractors. 

Heerema Marine Contractors 

• Heerema is a 48 year old privately held Dutch company who has been working 

in the Gulf of Mexico for 32 years and has installed approximately 75% of all 
51 

deep water facilities currently producing in the Gulf . They own and operate 

three of the four largest construction vessels in the world and the US Gulf has 

always been a significant part of the revenue stream of their company. 

• They currently employ 50 people between offices in Houston, TX and an operational base at Port Fourchon, LA. 

• Their U.S. operations are directly related to installation of new facilities and 

sub sea infrastructure in the deep water Gulf of Mexico and as a result of this 

shutdown, their business future is in a state of uncertainty here in the US. 

Laborde Marine, LLC 

• Laborde Marine is a family-owned business headquartered in New Orleans 

which owns and/or operate 21 vessels, all built in U.S. shipyards; while employing over 300 people with a $14 million annual payroll. 

• They invested over $150 million to build or acquire this fleet. 

• The moratorium is essentially telling them to ‘‘park’’ their vessels for six 

months. 

• For Laborde to move internationally, they would have to compete with vessels 

built in foreign ship yards at a much lower cost and often subsidized by foreign 

governments. 

• ‘‘The moratorium may well be the death-knell for U.S. businesses engaged in 

the energy service sector.’’ 

J. Ray McDermott, Inc. 

• J. Ray McDermott is a Houston headquartered Company with approximately 

1,200 employees in Morgan City and New Orleans, Louisiana and Houston, 

Texas. 

• The company provides engineering and construction services to the offshore energy sector worldwide as well as in the Gulf of Mexico through the engineering, 

construction and offshore installation of the infrastructure necessary to develop 

and produce offshore oil and gas fields. 

• According to the company, the shutdown of deepwater drilling in the Gulf of 

Mexico will create a domino effect (movement of rigs and other equipment out 

of the area, loss of jobs, etc.) that will no doubt affect the timing of future developments and the economic recovery of the region for years to come. 

Oceaneering International, Inc. 

• Oceaneering is a global oilfield provider of engineered services and products, 

primarily to the offshore oil and gas industry, with a focus on deepwater applications. 

• Oceaneering reduced its 2010 earnings forecast on expectations that the U.S. 

government’s moratorium on deepwater drilling activity in the Gulf of Mexico 

will hurt demand for its deepwater services. 

• The oilfield-services and products company said it expects the moratorium will 

cut second-half earnings by 45 cents a share and is now looking for 2010 profit 

of $2.80 to $3.10 a share. 

• Nearly one-quarter of Oceaneering’s remotely-operated vehicles operate in the 

Gulf, with about half of those in drilling support services. 

• The company anticipates some early terminations and revised contracts. 

• The stock is down 27% this year amid concerns about the Gulf oil spill. 

Otto Candies, LLC 

• Otto Candies is a marine transportation company started 68 years ago with a 

fleet of 40 vessels. 

• 500 of their 600 U.S.-based employees could be impacted by the moratorium, 

with some possibly needing to be relocated to Brazil, Mexico, or West Africa. 

Stone Energy Corporation 

• Stone Energy Corporation is an independent oil and natural gas exploration 

and production company headquartered in Lafayette, Louisiana, with additional 

offices in Houston, Texas and Morgantown, West Virginia. 

• Stone has already experienced a 40% drop in the value of their company in anticipation of punitive legislation and regulation. 

• They will be forced to reduce jobs as will other operators. 

• Stone has a shelf platform rig at MC 109 which has been shut down, wasting 

over $10 million dollars by having an idle rig sitting there doing nothing. 

• This cash cost will be far exceeded by the lost revenue of the five wells being 

drilled from the facility. 
52 

• The 5 wells were anticipated to each produce approximately 1,000 barrels per 

day, assuming $70 per barrel, resulting in $350,000 per day in potential lost 

revenues. 

• Stone also has a half-dozen exploratory wells that will be delayed a year or 

more. This hurts their ability to sustain reserves to convert to future production 

and growth. 

• One rig that was going to be used in this exploratory program, the Deepwater 

Mariannas, is expected to be leaving the Gulf for opportunities in foreign countries. 

Southern States Offshore, Inc. 

• Southern States Offshore, Inc. is a privately held company incorporated in 1996 

and wholly owning and operating seven offshore service and supply vessels, six 

of which were built and delivered in Louisiana and Alabama in 1998, 2005, 

2007, 2009 and 2010 at a cost of 48 million dollars. 

• They employ 53 mariners who live in Texas, Louisiana and Alabama; with an 

office staff in Houston, Texas of ten employees, all Texas residents. 

• According to the company, their employees, their families, the ship yards, vendors, tax authorities, etc. that depend on this industry to pay their mortgage, 

health care bills, cloth their families and send their children to school all are 

at risk of losing everything. 

Zupt, LLC 

• Zupt is a privately owned, international service and manufacturing company 

specializing in the integration and application of inertial technologies to onshore 

and offshore survey and positioning services to make operations more efficient. 

• Were under contract with an operator who was 8 to 12 days away from completing a well and Zupt was preparing to conduct the metrology survey work 

when the operator was told to shut the well. No metrology survey was conducted, an immediate loss of revenue. 

• One of Zupt’s engineers was laid off due to the near term lost revenue. 

• During the moratorium the company is forced to seek work in West Africa and 

the North Sea, and if unsuccessful they anticipated being out of business within 

four months. 

REPORTS AT BP OVER YEARS FIND HISTORY OF PROBLEMS 

By Abrahm Lustgarten and Ryan Knutson 

Tuesday, June 8, 2010; A01 

PROPUBLICA

A series of internal investigations over the past decade warned senior BP managers that the oil company repeatedly disregarded safety and environmental rules 

and risked a serious accident if it did not change its ways. 

The confidential inquiries, which have not previously been made public, focused 

on a rash of problems at BP’s Alaska oil-drilling operations. They described instances in which management flouted safety by neglecting aging equipment, pressured employees not to report problems and cut short or delayed inspections to reduce production costs. 

Similar themes about BP operations elsewhere were sounded in interviews with 

former employees, in lawsuits and little-noticed state inquiries, and in e-mails obtained by ProPublica. Taken together, these documents portray a company that systemically ignored its own safety policies across its North American operations—from 

Alaska to the Gulf of Mexico to California and Texas. Executives were not held accountable for the failures, and some were promoted despite them. 

Tony Hayward has committed himself to reform since becoming BP’s chief executive in 2007. Under him, the company has worked to implement an operating safety 

system to create ‘‘responsible operations at every BP operation,’’ said Toby Odone, 

a company spokesman. BP has used the system at 80 percent of its operations and 

expects to bring it to the rest by the end of the year, he said. 

Odone said the notion that BP has ongoing problems addressing worker concerns 

is ‘‘essentially groundless.’’ 

Because of its string of accidents before the April 20 blowout in the Gulf of Mexico, BP faced a possible ban on its federal contracting and on new U.S. drilling 

leases, several senior former Environmental Protection Agency department officials 

told ProPublica. That inquiry has taken on new significance in light of the oil spill 
53 

in the gulf. One key question the EPA will consider is whether the company’s leadership can be trusted and whether BP’s culture can change. 

The reports detailing the firm’s Alaska investigations—conducted by outside lawyers and an internal BP committee in 2001, 2004 and 2007—were provided to 

ProPublica by a person close to the company who thinks it has not done enough to 

fix its shortcomings. 

A 2001 report noted that BP had neglected key equipment needed for an emergency shutdown, including safety shutoff valves and gas and fire detectors similar 

to those that could have helped prevent the fire and explosion on the Deepwater 

Horizon rig in the gulf. 

A 2004 inquiry found a pattern of the company intimidating workers who raised 

safety or environmental concerns. It said managers shaved maintenance costs by 

using aging equipment for as long as possible. Accidents resulted, including the 

200,000-gallon Prudhoe Bay pipeline spill in 2006—the largest spill on Alaska’s 

North Slope—which was blamed on a corroded pipeline. 

Similar problems surfaced at BP facilities in California and Texas. 

California officials alleged in 2002 that the company had falsified inspections of 

fuel tanks at a Los Angeles area refinery and that more than 80 percent of the facilities didn’t meet requirements to maintain storage tanks without leaks or damage. Inspectors had to get a warrant before BP allowed them to check the tanks. 

The company eventually settled a lawsuit brought by the South Coast Air Quality 

Management District for more than $100 million. 

Three years later, a Texas City refinery exploded, killing 15 people. An investigation found that a warning system failed, and independent experts found that ‘‘significant process safety issues exist at all five U.S. refineries, not just Texas City.’’ 

BP spokesman Odone said that after the accident, the company adopted a plan 

to update its safety systems worldwide. But last year, the Occupational Safety and 

Health Administration fined the firm $87 million for not improving safety at that 

same Texas plant. 

‘ENVIRONMENTAL CRIMINAL’ 

BP has had more high-profile accidents than any other company in recent years. 

And now, with the disaster in the gulf, independent experts say the pervasiveness 

of the company’s problems, in multiple locales and different types of facilities, is 

striking. 

‘‘They are a recurring environmental criminal and they do not follow U.S. health 

safety and environmental policy,’’ said Jeanne Pascal, a former EPA lawyer who led 

its BP investigations. Since the late 1960s, the company has pulled oil from under 

Alaska, usually without problems. But when it pleaded guilty in 1999 to illegal 

dumping at an offshore drilling field there, it drew fresh scrutiny and set off a cycle 

of attempted—and seemingly failed—reforms that continued over the next decade. 

To avoid having its Alaska division debarred—the official term for a contract cancellation with the federal government—the firm agreed to a five-year probationary 

plan with the EPA. BP would reorganize its environmental management, establish 

protections for employees who speak out about safety issues, and change its approach to risk and regulatory compliance. 

Less than a year later, employees complained to an independent arbitrator that 

the company was letting equipment and critical safety systems languish at its 

Greater Prudhoe Bay drilling field. BP hired independent experts to investigate. 

The panel identified systemic problems in maintenance and inspections—the operations that keep the drilling in Prudhoe Bay running safely—and warned BP that 

it faced a ‘‘fundamental culture of mistrust’’ by its workers. 

‘‘There is a disconnect between GPB management’s stated commitment to safety 

and the perception of that commitment,’’ the experts said in their 2001 report. 

The report said that ‘‘unacceptable’’ maintenance backlogs ballooned as BP tried 

to sustain North Slope profits despite declining production. The consultants concluded that the company had neglected to clean and check valves, shutdown mechanisms and detection devices essential to preventing explosions. 

In May 2002—less than seven months later—Alaska state regulators warned BP 

that it had failed to maintain its pipelines. Alaska struggled for two years to make 

the firm comply with state laws and clear the pipeline of sedimentation that could 

interfere with leak detection. 

Soon after, BP hired another team of outside investigators to look into worker 

complaints on the North Slope. The resulting 2004 study by the law firm Vinson 

& Elkins warned that pipeline corrosion endangered operations. 

It also offered a harsh assessment of BP’s management of employee concerns. According to the report, workers accused the company of allowing ‘‘pencil whipping,’’ 
54 

or falsifying inspection data. The report quoted an employee who said employees felt 

forced to skip key diagnostics, including pressure testing, pipeline cleaning and corrosion checks. 

The report said that Richard Woollam, the manager in charge of corrosion safety 

in Alaska at the time, had ‘‘an aggressive management style’’ and subverted inspectors’ tendency to report problems. ‘‘Pressure on contractor management to hit performance metrics (e.g. fewer OSHA recordables) creates an environment where fear 

of retaliation and intimidation did occur,’’ it said. Woollam was soon transferred. 

MORE ACCIDENTS

Two years later, in March 2006, disaster struck. More than 200,000 gallons of oil 

spilled from a corroded hole in the Prudhoe Bay pipeline. Inspectors found that several miles of the steel pipe had corroded to dangerously thin levels. 

When Congress held hearings later that year, Woollam pleaded the Fifth Amendment. He now works in BP’s Houston headquarters. Reached at his Texas home last 

week, he referred questions to the BP media office, which declined to comment. 

In August 2006, just five months after the Prudhoe Bay spill, a pipeline safety 

technician for a BP contractor in Alaska discovered a two-inch snaggletoothed crack 

in the steel skin of an oil transit line. Nearby, contractors ground down metal welds, 

sending sparks across the work site. Technician Stuart Sneed feared that the sparks 

could ignite stray gases, or that the work could worsen the crack, so he ordered the 

contractors to stop working. 

‘‘Any inspector knows a crack in a service pipe is to be considered dangerous and 

treated with serious attention,’’ he told ProPublica. 

Sneed said he thought the Prudhoe Bay disaster had made BP management more 

amenable to listening to worker concerns about safety. The company had replaced 

its chief executive for North America with Robert Malone, who focused on reforming 

BP’s culture in Alaska. 

But instead of receiving compliments for his prudence, Sneed—who had also complained that week that pipeline inspectors were faking their reports—was scolded 

by his supervisor, who hadn’t inspected the crack but believed it was superficial, according to a report from BP’s internal employer arbitrators. 

The next day, the report said, that supervisor criticized Sneed at a staff briefing, 

then solicited complaints from colleagues that could be used to justify Sneed’s firing. 

Two weeks later, Sneed was gone. 

During the investigation, BP inspectors substantiated Sneed’s concerns about the 

cracked pipe. The arbiter also confirmed his account of what happened when he reported the problem. His dispute with the company is unresolved. 

The following year saw another BP shakeup. The company had replaced its chief 

executive of Alaskan operations with Doug Suttles—who is now in charge of offshore 

operations and cleanup of the gulf disaster. In May 2007, it also named Hayward 

its new global chief executive. 

But worker harassment claims continued in Alaska and elsewhere, and more 

problems with the Alaska pipeline systems emerged. 

In September 2008, a section of a gas line on the slope blew apart. A 28-foot-long 

section of steel—the length of three pickup trucks—flew nearly 1,000 feet through 

the air before landing on the Alaskan tundra. Sneed had raised concerns about the 

integrity of segments of the gas line system. 

Three more accidents rocked the same system of pipelines and gas compressor 

stations in 2009, including a near-catastrophic explosion. According to a letter that 

members of Congress sent to BP executives, obtained by ProPublica, the near-miss 

resulted from malfunctioning safety and backup equipment. 

Odone said that BP is continuing to roll out a company-wide operating management system to help track and implement maintenance. He said the company reduced corrosion and erosion-related leaks in Alaska by 42 percent between 2006 and 

2009. 

NONCOMPLIANCE

As BP battled through the decade to avoid accidents in Alaska, another facility 

operating under a different business unit, BP West Coast Products, had similar 

problems. 

For years, the subsidiary that refined and stored crude oil was allowed to inspect 

its own facilities for compliance with emission laws under the South Coast Air Quality Management District, the agency that regulates air quality in Los Angeles. 

In 2002, inspectors with the management district thought BP’s inspection results 

looked too good to be true. Between 1999 and 2002, BP’s Carson Refinery had nearly 

perfect compliance, reporting no tank problems and making virtually no repairs. 
55 

The district suspected that BP was falsifying its inspection reports and fabricating 

its compliance. 

According to Joseph Panasiti, a lawyer for the management district, the agency 

had to get a search warrant to conduct inspections required by state law. When the 

regulators finally got in, they found equipment in a disturbing state of disrepair. 

According to a lawsuit the management district later filed against BP, inspectors 

discovered that some tanker seals had extensive tears, tank roofs had pervasive 

leaks and there were enough major defects to lead to thousands of violations. 

‘‘They had been sending us reports that showed 99 percent compliance, and we 

found about 80 percent noncompliance,’’ Panasiti said. 

The district sued BP for $319 million. After lengthy litigation, the firm agreed to 

pay more than $100 million without admitting guilt. Colin Reid, the plant’s operations manager, was later promoted to a vice president position in the United Kingdom. He recently left BP and did not respond to requests for comment. 

Allegations that BP or its contractors falsified safety and inspection reports are 

a recurring theme. Similar allegations were attributed to workers in 2001 and 2004 

internal reports on Alaska, but the internal auditors did not confirm that fraud had 

occurred. 

Among the safety equipment that BP was criticized for not having in place in its 

Alaska facilities, according to its own 2001 operational integrity report, were gas 

and fire detection sensors and emergency shutoff valves. 

Now investigators are learning that similar sensors and their shutoff systems 

were not operating in the engine room of the Deepwater Horizon rig that exploded 

in the gulf. 

In testimony before a Deepwater Horizon joint investigation panel in New Orleans 

last month, Deepwater mechanic Douglas Brown said that the backstop mechanism 

that should have prevented the engines from running wild apparently failed—and 

so did the air-intake valves that were supposed to close if gas entered the engine 

room. 

He said the engine room wasn’t equipped with a gas alarm system that could 

have shut off the power. 

Minutes later, the rig exploded in a ball of fire, killing 11 workers before sinking 

to the seafloor, where it left a gaping well pipe that continues to gush oil and gas. 

Fax to: GOV. JINDAL: 225-342-7099 

SENATOR LANDRIEU: 202-224-9735 

SENATOR VITTER: 202-228-5061 

From: Kenneth E. Arnold, PE, NAE, 

3031 Shadowdale, Houston TX. 

A group of those named in the Secretary of Interior’s Report, ‘‘INCREASED 

SAFETY MEASURES FOR ENERGY DEVELOPMENT ON THE OUTER CONTINENTAL SHELF’’ dated May 27, 2010 are concerned that our names are connected 

with the moratorium as proposed in the executive summary of that report. There 

is an implication that we have somehow agreed to or ‘‘peer reviewed’’ the main recommendation of that report. This is not the case. 

As outlined in the attached document, we believe the report itself is very well 

done and includes some important recommendations which we support. However, 

the scope of the moratorium on drilling which is in the executive summary differs 

in important ways from the recommendation in the draft which we reviewed. We 

believe the report does not justify the moratorium as written and that the moratorium as changed will not contribute measurably to increased safety and will have 

immediate and long term economic effects. Indeed an argument can be made that 

the changes made in the wording are counterproductive to long term safety. 

The Secretary should be free to recommend whatever he thinks is correct, but he 

should not be free to use our names to justify his political decisions. 

Æ