Ben casselman, russell gold

The White House strove Friday to assure coastal residents it was responding swiftly to the Gulf of Mexico oil spill, as both Democrats and Republicans braced for fallout from what could be one of the worst U.S. environmental disasters in decades.

The imminent threat of oil fouling Gulf coast fisheries and beaches comes as a political embarrassment to drilling proponents, from President Barack Obama to former Alaska Gov. Sarah Palin, who had argued that offshore oil platforms pose few environmental risks.

Mr. Obama told a town-hall meeting just weeks ago that "oil rigs today don't generally cause spills," which critics are now turning against him.

The "Drill, Baby, Drill" slogan Ms. Palin and other Republicans adopted as a shorthand for their energy policy is likewise being thrown back as a taunt.

"Instead of 'drill, baby, drill' they're looking at 'spill, baby, spill,' " the liberal MoveOn.org said. Environmental group Greenpeace called on Mr. Obama to impose a ban on new offshore exploration.

Ms. Palin wrote Friday to followers on Twitter: "Having worked/lived thru Exxon oil spill, my family & I understand Gulf residents' fears. Our prayers r w/u. All industry efforts must b employed."

The deadly April 20 rig explosion and subsequent spill have set off a wave of second-guessing in Washington over whether to forge ahead on administration plans to open new areas of the Atlantic and Gulf to offshore oil exploration and drilling.

The Obama administration said Friday it would put on hold its plans to expand offshore drilling until the cause of the explosion is known.

Environmental and liberal groups called for President Obama to reimpose a moratorium on offshore drilling and to shelve an Arctic oil-exploration project set for this summer.

Republicans and some Democrats said offshore exploration should go forward once the Gulf spill's causes are understood.

As some local officials in Louisiana voiced complaints about a slow federal response to the catastrophe, Mr. Obama used a Rose Garden economic speech Friday to list the steps his administration has taken to help combat the spill, including dispatching the Navy and Coast Guard. The president said he had ordered Interior Secretary Ken Salazar to review what caused the blowout and to report back in a month on steps needed to prevent future mishaps.

"Let me be clear: I continue to believe that domestic oil production is an important part of our overall strategy for energy security," Mr. Obama said. "But I've always said that it must be done responsibly."

White House spokesman Ben LaBolt said the president is not backing off his recent proposals to open new areas of the outer continental shelf. But none of those recommendations, he said, meant immediate drilling. All require technical and environmental studies, which will take the accident into account.

Republican leaders, including former House speaker Newt Gingrich, have for years urged the opening of nearly all coastal areas to drilling, and many are continuing to do so.

"In America, what we do when we face disasters like this is we investigate, we fix, we move forward," said Vince Haley, an aide to Mr. Gingrich at American Solutions, a group that the former speaker founded in part to promote offshore drilling.

"It's a significant incident, one we should learn from and study," Republican Minnesota Gov. Tim Pawlenty said, "but it should not stop or slow down responsible efforts to find and develop oil and gas supplies."

Prominent Democrats pushed the other way. Senate Majority Leader Harry Reid said the spill will "require us to re-examine how we extract our nation's offshore energy resources." House Speaker Nancy Pelosi said she supported reimposing the drilling ban, even before the spill.

But other Democrats are urging the president not to overreact. Despite the threat to her state, Sen. Mary Landrieu (D., La.) compared the disaster to the space-shuttle Challenger explosion. "The horror of that disaster shocked us all and it haunts us to this day," she said. "However, what we did not do was end the space program."

—Stephen Power
and Elizabeth Williamson contributed to this article.

Within hours of the news on March 23, 2005, that 15 workers had been killed by an explosion at BP's refinery in Texas City, Texas, John Browne, BP's ambitious chief executive, dashed across the Atlantic from London on his private jet. A spot check had already blamed human error for the explosion. Ever since the Exxon Valdez oil spill in Alaska in March 1989, the industry knew, Big Oil's enemies were always ready to pounce on any environmental calamity. The corporation's fate, Mr. Browne told BP executives, depended on avoiding the manner adopted 16 years earlier by Lawrence Rawl, Exxon's chairman.

Soon after arriving in Texas City, Mr. Browne was moving among the bereaved and the survivors. Tactfully, he engaged in conversations with the workers, large men with calloused hands and sunburnt faces. Then he emerged to address the media.

To defuse the antagonism towards BP, he adopted unusual candor. "We will conduct a full investigation," Mr. Browne announced.

"The dead are contractors not employees," a reporter said. "What can you do for them?" His reply was disarming. "In BP we are responsible for what happens within our facilities, and we will make amends. We cannot repair the past, but because of BP's resources we can make the future a bit more secure." In the end, BP paid compensation to all the contractors.

Once the background to the negligent maintenance of the Texas City refinery emerged, BP was lambasted not only by the government's safety agencies and in Congress, but also by the former engineers and directors of Amoco who had previously operated the plant.

As the head of BP's production during the Texas City saga, Tony Hayward, Mr. Browne's successor, has already visited the Houston command centers monitoring the explosion at the Mocando site in the Gulf of Mexico. As the oil spill now hits the Louisiana coast, Mr. Hayward may be mindful of his predecessor's eventual failure to limit the repercussions of successive accidents.

Mr. Browne had bought Amoco, an ailing corporation, in 1998 as part of his inspired dash for growth. Over the previous seven years, as BP's oil reserves declined in Alaska and the North Sea, Mr. Browne talked about his plan for a succession of bold acquisitions and championing of risk to save BP from gradual extinction. By 2005, Mr. Browne's ambition to transform BP into a powerful challenger to Exxon itself seemed to be materializing. To cut costs, Mr. Browne had not replaced hundreds of engineers who had left and committed BP to rely more on sub-contractors. Brilliantly, he had simultaneously rebranded BP with the sunburst logo as "Beyond Petroleum," an environmentally friendly corporation blessed by a green destiny. The explosion at Texas City endangered that dream.

In the aftermath of the explosion, a blame game erupted. BP was the biggest oil producer in America and the most successful operator in the Gulf of Mexico, and its reputation was at risk. The company was accused by the U.S. Chemical Safety Board, an independent federal agency, of cutting the costs for safety and maintenance to increase profits. His response was rapid. Amoco's engineers and executives, the British executive told his fellow BP directors, were themselves responsible for negligence and "cultural misunderstanding." Former employees of Amoco, which was now part of BP, rejected any suggestion of their personal culpability.

In July 2005, in the wake of Hurricane Dennis, Thunder Horse, BP's $1 billion development in the Gulf of Mexico, listed 20 degrees. BP cited design and engineering problems, rather than the hurricane, for the listing. Worse followed. In March 2006, 267,000 gallons of crude oil leaked out of a 34-inch pipe linked to the TransAlaska Pipeline System, maintained by BP. Some Alaskans were devastated about the gift to environmentalists opposed to opening up the protected Arctic National Wildlife Refuge to further oil exploration.

The spill was mild compared to a catastrophic pipeline split on the same oil field five months later. On Aug. 8, 2006, the U.S. government ordered the temporary closure of Alaska's entire oil production, and 8% of America's daily oil supply was cut off. "Severe corrosion," caused by BP's cost-cutting and poor maintenance of the pipelines was responsible, according to the U.S. Department of Transportation's inspectors. The corporation agreed to replace 16 miles of pipeline and to increase maintenance spending.

The company's reputation was hurt, and among the casualties was Mr. Browne. Criticized by an associate for "going for sizzle, not substance," he retired early. He departed in 2007. Since then, BP has sought to reverse Mr. Browne's cost-cutting and outsourcing of engineering to contractors.

BP's misfortune will likely secretly delight its rivals. Across Houston, oil men will whisper that the British mavericks, as usual shooting from the hip, have ignored past lessons. Mr. Hayward will be accused of being too slow in reversing Mr. Browne's devolution of responsibility. Indeed, three years is insufficient to create the glue of a common culture and to improve corporate skills, but Mr. Hayward can expect to be roasted during his inevitable appearance before Congress. BP declined to comment.

Robert Wine, a BP spokesman in London, says the responsibility for the drilling on the Deepwater Horizon was entirely Transocean's. "It was not appropriate to second-guess Transocean," says Mr. Wine. "It's not BP's role to oversee the safety of the rig." Like many of its peers, BP did not require Transocean to install the acoustic back-ups used in the North Sea to trigger the blow-out preventer in the Gulf, which is not required by American law. Past experience shows that BP's erection of a smokescreen to shift the blame will not survive scrutiny. Retreating to comfort zones could prove to be unsustainable.

Transocean spokesman Guy Cantwell says the company is "continuing to coordinate with everyone involved" in the investigation, and that "Transocean has a recognized safety record."

No one has yet revealed what stage the drilling at Mocando had reached, nor what could have triggered the explosion. The possible absence of a reliable cut-off switch to automatically seal the well would be an indictment of Transocean. Yet that possibility does not excuse BP from insisting on the installation of reliable back-up systems. Inevitably, the investigations now starting in the Gulf will at a later stage return to the previous calamities in Texas City, Alaska and Thunder Horse and note BP's earlier failure to adequately supervise its sub-contractors.

Almost all oil men acknowledge that ExxonMobil's method of operations is the industry's gold standard. Since the Exxon Valdez polluted the Prince William Sound, Lee Raymond, Mr. Rawl's successor, made oil drilling the corporation's core business. After 1989, ExxonMobil's strait-laced executives have imposed excruciating requirements, not least on all contracted oil rigs. Around the clock, ExxonMobil's engineers, based on the rigs, second-guess every plan and deed undertaken by its sub-contractors, especially related to safety.

BP has acknowledged criticisms of "systemic lapses" leveled by a Chemical Safety Board report for its past sins. In 2006, the Chemical Safety Board's report about Texas City warned that BP's managers, scarred by "a cultural issue," posed "an imminent hazard" to safety. Then, after the Alaskan oil spills, Congressional investigators heard testimony by a former BP engineer in Alaska complaining, "There is no doubt that cost-cutting and profits have taken precedence over safety and the environment." He asked rhetorically whether, rather than "Beyond Petroleum," BP actually stood for "Beyond the Pale." Mr. Wine says that since Mr. Hayward became CEO, BP has been rolling out a new system for developing and maintaining operating standards across the company, including safety standards, as a response.

The price of the historic inherent flaws in BP's culture is currently at least $6 million every day for the clean-up operation. Repairing the environmental disaster will cost a fortune. Politically, the consequence for past cost-cutting is incalculable. Yet, BP's recovery and success is important to the world's oil supply.

Producing oil is an old, dirty and hazardous business. Easy oil—"the low hanging fruit"—is now the preserve of the traditional producer countries like Russia and Venezuela whose short-sighted self-interests are preventing efficient production from their oilfields. Western corporations have been compelled to switch their search under the Atlantic seabed and breaking technical frontiers. "Cracking the Gulf" is at the cutting edge of the industry's technical expertise.

In the rush to find more oil, BP's explorers in Houston, blessed by skills admired by rivals, have been remarkably successful. But the operating conditions are brutal. The constant stream of inventions to allow Big Oil's masters of the underworld to remotely guide a drill through a mile of water onto the seabed and then squirrel a 12-inch path through five miles of sand, salt, clay and rock towards a potential bonanza depends upon remarkable scientific calculations. Finding elegant solutions to seemingly intractable problems causes oil men's hearts to beat faster. Risk is the oxygen of oil companies.

At best, only one out of three tests in the Gulf strike oil and each costs $100 million. Even the best geologists tend to use just three words, "possibly," "probably" and "regrettably." Mistakes and bad luck eventually strangled Amoco, Arco, Texaco and Mobil. Like other stricken, the former giants were forced into mergers. BP's continuing survival depends on avoiding the agony of pinpointing a potential reservoir only to discover that the oil seeped away 60 million years earlier. That depends on calculating the risks, and winning.

But with every gamble comes the reckoning. The Mocando blow-out could terminate oil companies' hopes for drilling the easy oil off Florida. That temporarily aborted plan will depend on the images from the Gulf coast. Exxon was crucified 21 years ago by TV pictures of oily seabirds, floating salmon and the devastation of pristine shores. Robustly, Lee Raymond refused to accept that Exxon bore the responsibility. Eventually, he trampled the original $5 billion damages awarded by the court down to $507.5 million. Ever since, Exxon has been cursed for its insensitivity but it remains the world's biggest private oil corporation. Mr. Hayward is now facing his baptism of fire—to limit the damage and ensure BP's survival. Few CEOs will envy his challenge.

—Tom Bower is the author of "Oil: Money, Politics, and Power in the 21st Century," to be published in June.

BP's chief executive is coming under mounting pressure over the vast spill spreading in the Gulf of Mexico, which was caused when a giant drilling rig there caught fire and sank, with the loss of 11 crew members. The oil, still spewing from the well on the ocean floor, threatens to blacken the Louisana shoreline, and BP's reputation.

From the moment Mr. Hayward learned of the disaster—in a 7:24 a.m. phone call over breakfast on April 21—he has been faced with the reality that this incident could erase his rehabilitation of the British oil giant.

On Sunday, President Barack Obama, who has said BP would be held ultimately responsible for the clean-up, arrived in Louisiana to hold crisis talks with local officials. Strong winds hurt clean-up efforts as the slick drifted closer to the Louisiana coast.

When Mr. Hayward took over BP's leadership from John Browne three years ago this week, the company was at one of the lowest points in its history: badly run, accident-prone and accused in the aftermath of a deadly explosion at its Texas City refinery of putting profits before safety. Mr. Hayward turned BP around, boosting production, cutting costs and significantly reducing on-the-job injuries. Last month, he was confident enough to talk of an irreversible "change of culture" at BP.

None of that seems to matter now, as BP heads into the crisis grinder that has chewed up big names like Toyota and Goldman Sachs. And with about 5,000 barrels of oil leaking from the damaged well each day, Mr. Hayward knows it.

In an interview at BP's St. James' Square headquarters, Mr. Hayward, 52 years old, concedes the disaster off Louisiana will "undoubtedly" overshadow his achievements as CEO. BP's share price has fallen 12% since the crisis started.

He expressed confidence BP will prevail. "We are going to defend the beaches," he says. "We will fix this."

Federal and state officials are starting to gripe about BP's response. Louisiana Governor Bobby Jindal expressed "concerns that BP's current resources are not adequate" to stop the leak, protect the coast and clean up the mess. The British oil giant also faces fierce criticism on Capitol Hill and a slew of investigations by federal agencies.

The incident casts a harsh light on BP's business strategy, which is predicated on being a leader at the industry's frontiers—drilling the world's deepest wells in the Gulf of Mexico, scouring for oil in the Arctic, squeezing natural gas from the rocks of Oman.

Yet governments fearful of a repeat of the Louisiana catastrophe may be more reluctant to let the oil giants drill in their offshore waters, potentially robbing BP of some of its richest opportunities.

Accentuating that risk: On Friday, the White House banned oil drilling in new areas off the U.S. coast pending investigations into the cause of the oil spill.

Mr. Hayward, a "BP lifer," joined the company in 1982 after earning a doctorate in geology at Edinburgh University. He started off as a rig geologist in the North Sea, and was a member of the team that discovered the huge Miller oilfield on Christmas Day, 1982. He later tested rocks around the world, from North Yemen to the jungles of Papua New Guinea.

"I spent eight years with my hammer jumping out of helicopters and trucks," he says. "There's nothing like when you first drill into a reservoir."

Successes like Miller brought him to the attention of John (later Lord) Browne, who was at the time BP's head of exploration and production. In 1990, Mr. Browne offered him the job of executive aide, a role later dubbed "turtle" after the 1980s comic book heroes, the Teenage Mutant Ninja Turtles. Mr. Hayward's manager warned him not to take it, saying he'd end up being a "glorified secretary."

He ignored that advice, a decision that advanced his career. "When I went into that role I knew a lot about geology and almost nothing about business," he says.

Lord Browne was a controversial figure. Promoted to BP chief executive in 1995, he transformed the company from also-ran to titan with a series of megadeals, such as the 1998 takeover of Amoco Corp. But he failed to integrate the companies he acquired and reform BP's bureaucratic management.

The last years of his tenure were plagued by problems. In 2005, the blast at the Texas City refinery killed 15 people and injured more than 170. A U.S. Chemical Safety Board investigation found the explosion was in part due to cost-cutting and poor maintenance.

Also in 2005, a big production platform in the Gulf of Mexico, Thunder Horse, began listing 20 degrees due to a defective control system. In 2006, BP had to shut down part of its Prudhoe Bay oilfield in Alaska after oil leaked from a corroded pipeline. That same year, federal officials said they were pursuing allegations that BP traders manipulated the propane market in 2004.

In December 2006, in a meeting for his Houston staff, Mr. Hayward, at the time BP's head of exploration and production, lambasted BP's way of working, including himself in the criticism. "We have a management style that has made a virtue out of doing more for less," he said.

Soon he got a chance to change things. Lord Browne resigned in May 2007 over a scandal involving allegations about his private life. Mr. Hayward was named his replacement.

Investors cheered the choice. Mr. Hayward was seen as a no-nonsense, nuts-and-bolts man who would put the company back on track.

"This is a business that had swung too far in the direction of pixie dust," says Robert Talbut, chief investment officer at Royal London Asset Management, a BP shareholder. "John Browne was a superstar CEO. Hayward sees himself as someone who's getting on with the business."

At last month's annual shareholders' meeting, Mr. Hayward decried the glitz of BP's previous culture, saying: "We thought it was all about doing deals and the latest flashiest viewgraph presentation."

One of the first things Mr. Hayward did upon becoming CEO was commission Bain & Co., the management consulting firm, to "hold a mirror" up to BP. "They said: 'This is the most complicated enterprise we've ever come across," he says. "They had mapped 10,000 organizational interfaces—one for every 10 people."

His next job was to instill his staff with an urgency about the need for change. In March 2008, he held a meeting for BP's top 500 managers in Phoenix, and invited a Morgan Stanley analyst, Neil Perry, to give an outsider's view.

Mr. Perry said BP "might not be here in a couple of years' time" unless it did something different, according to managers who attended, hinting it could become a takeover target. Mr. Perry didn't respond to a request for comment.

The figures spoke for themselves. The oil price was shooting up, but unlike the other oil companies, BP wasn't benefiting. Its share price had risen only 16% over the past three years, while crude oil had soared nearly 250%. Of the six supermajors, BP was bottom in terms of earnings growth between 2000 and 2007.

Mr. Hayward set about radically simplifying the company and cutting costs. Senior executives were cut by a quarter. In all, 6,500 people, or just under 10% of its work force, lost their jobs.

Gradually, delayed projects like Thunder Horse and refineries under repair like Texas City and Whiting, Ind., were brought on-stream. The new CEO also dialed back on Mr. Browne's Beyond Petroleum mantra, in which he emphasized BP's push into renewable energy sources.

Mr. Hayward's cost-cutting appeared to work. The inflection point came in October 2009, when BP announced $4.7 billion in profit for the third quarter, smashing analysts' expectations.

In September of that year BP announced a new, "giant" oil find, Tiber, in the Gulf of Mexico. The well, the deepest ever at 35,000 feet, was drilled by Transocean's Deepwater Horizon—the same rig that blew up in recent days. BP also entered Iraq and offshore Brazil, one of the world's hottest exploration areas.

In January this year, BP overtook Royal Dutch Shell PLC in market capitalization for the first time in more than three years. BP said it increased production in 2009 by 4%, while Shell's output fell.

But BP continued to run afoul of U.S. regulators. In October last year, the Occupational Safety and Health Administration hit BP with $87 million in penalties for failing to fix safety hazards at Texas City, the site of the 2005 explosion. A few months later, it slapped on another fine over lapses at another refinery, in Toledo, Ohio.

"The most shocking thing is that more than four years after the blast, BP still had very serious problems not only in Texas City but in other refineries as well," said Jordan Barab, deputy assistant secretary of labor for OSHA. "There is a systemic safety problem across the company."

BP has contested the fine and says it is in "constructive" discussions with OSHA on a settlement.

Then, late on April 20, disaster struck. Early the next morning Mr. Hayward took a call from Andy Inglis, BP's head of exploration and production. There had been an accident on Deepwater Horizon, which had been drilling a well for BP in the Macondo prospect, 5,000 feet below the surface of the water in the Gulf of Mexico.

As the extent of the disaster unfolded, Mr. Hayward's crisis team gathered on the sixth floor of BP's London headquarters. "Tony just had this icy stare," says one person present. "At one point he said: "What the hell have we done to deserve this?"

BP's initial reaction was measured. It was a Transocean rig, and the blast was the contractor's responsibility. Responding to that, Transocean said in a statement it was investigating the explosion: "We can't get ahead of ourselves with respect to the facts of this incident and to do so would be speculation."

But as news of the burgeoning oil spill trickled in, the mood changed. BP, as owner of the oil, was liable for the clean-up, and bore responsibility for the environmental catastrophe that might result.

The next day Mr. Hayward jumped on a plane to Houston, where his team had sent submarine robots to the seabed in an attempt to activate a shut-off switch on the well. He flew from there to the Gulf Coast where BP and the Coast Guard were coordinating a joint response to the crisis.

BP is now preparing for the worst, installing marine protection booms along the coast of Louisiana, Mississippi, Alabama and Florida to keep the oil at bay.

Acknowledging the damage the spill could cause to BP's reputation, Mr. Hayward flew to Washington, D.C., to meet federal officials such as Ken Salazar, Secretary of the Interior.

BP says it will honor any legitimate claims for damages. Still, the risk for Mr. Hayward is that the Louisiana oil spill could come to define his legacy, just as Lord Browne's place in history was defined and ultimately tarnished by the Texas City explosion.

Mr. Hayward says BP is bracing for a rough ride on Capitol Hill and the White House. "We have the wherewithal and capability to weather this storm," he said.

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"We're dealing with a massive and potentially unprecedented environmental disaster," President Barack Obama said during a short visit Sunday to Venice, La., the small town closest to the sunken rig Deepwater Horizon.

He promised that the government would spare no effort or expense to address the damage.

But Mr. Obama reiterated that BP PLC, the British oil giant, would ultimately be responsible for the costs of the spill stemming from the sinking of the Deepwater Horizon, a drilling rig it had hired.

The rig caught fire April 20 and went down two days later about 50 miles from the Louisiana coast. Eleven of its 126 crew members are missing and presumed dead. Oil is leaking from three spots in the twisted pipe that once connected the rig to the well. While recent estimates have been that 5,000 barrels a day were leaking, administration officials said Sunday that they feared as much as 100,000 barrels a day could pour into the Gulf if the well infrastructure deteriorates further.

BP has said the well may contain tens of millions of barrels of oil, but Bob Fryar, a BP executive working on the response to the spill, said Sunday that the company doesn't know how much oil is pouring into the Gulf. "We don't have any physical way to measure this," he said.

Bad weather complicated the president's visit, just as it has confounded everything about the 10-day-old spill: efforts to assess its growing footprint, to project its erratic path and to rein it in.

High winds and rough seas prevented the president from flying to Venice, forcing his motorcade to zoom along the two-lane road between Venice and New Orleans, 80 miles to the north. Along the coast near Point Celeste, workers piled sandbags.

The weather also hobbled efforts to keep the crude away from the coast; shifting winds put Mississippi and Alabama in the slick's path. Workers in those states scurried to protect their shores, as Louisiana is doing.

The National Oceanic and Atmospheric Administration projects the oil slick could make landfall somewhere on the long coastline stretching from the tip of southeastern Louisiana all the way northwest to Alabama's Mobile Bay.

When the winds and seas do die down, "this thing is going to appear to triple in size," said Doug Helton, an NOAA official. This is not necessarily because more oil than expected is leaking, he said. "It just means that, on a very calm day, you can see the barest minimum of a sheen."

The agency said Sunday it was barring fishing for at least 10 days in the federal waters most affected by the spill, largely between the mouth of the Mississippi River in Louisiana and Pensacola Bay in Florida. That announcement came after Louisiana officials on Friday closed fishing and shell fishing in a big swath of state waters east of the Mississippi River.

The fishing industry along the Gulf is increasingly worried that the spill will damage the reputation of the area's seafood regardless of how much it damages the seafood itself. "There should be no health risk in seafood currently in the marketplace," Jane Lubchenco, NOAA's administrator, said Sunday in a statement.

Authorities across the Gulf region are trying a widening array of tactics, some untested, to fight the growing slick, which is being buffeted around the Gulf like a toxic raft covering thousands of square miles.

Underwater, at the leaking well, BP is injecting chemical dispersants to break up the oil, a tactic that is proving "highly effective," Mr. Fryar said.

Dispersants also are being spread onto the top of the slick, though that operation, too, is struggling in the bad weather. Federal authorities said they have talked with the companies that make the dispersant to ramp up production.

BP has found three leaks near the sea floor. The company plans to install a valve it hopes will let it shut off the flow from one of the leaks, Mr. Fryar said. To address the other two leaks, BP is working to install what amount to two upside-down funnels to suck up the oil as it springs from the well and send it up through pipes to be collected.

The company also plans to drill two additional wells to relieve pressure on the one that's gushing. Drilling on the first well could start whenever the weather clears, Mr. Fryar said. Drilling on the second well could start in a couple of weeks, he said. Completing those wells could take two to three months.

Authorities also are exploring the idea of adjusting hydroelectric dams to send more water down the rivers leading to Mobile Bay in Alabama in hopes of helping to flush the oil slick away from the coast.

Along the coast of the Gulf, workers have laid hundreds of thousands of feet of protective piping, or "boom," in an effort to keep the approaching oil at bay. But the bad weather has been tossing around and tearing up much of the boom, and it is hobbling efforts to lay more down.

In the fishing villages nearest the slick, frustration and anger boiled over among people who already felt neglected and mistreated after Hurricane Katrina devastated the area in 2005.

"This is a disaster that's going to be worse than Katrina," said Russell Prats, 50, who works at a seafood distributor in Delacroix, on the Gulf. "I could understand if this was a natural disaster—something you couldn't control. But this was a man-made disaster."

The board's decision followed the deaths of four Transocean workers in 2009, according to documents filed with securities regulators just weeks before the drilling rig disaster in the Gulf of Mexico.

The Swiss-based company's board took the unusual step to "underscore the company's commitment to safety" and to give executives an incentive to prevent future accidents, according to the company's April 1 proxy.

Transocean spokesman Guy Cantwell said the board made the decision on the recommendation of management.

In a letter to shareholders accompanying the annual report in March, Chairman Robert Rose and CEO Steven Newman said the company had "embarked on a thorough review of our safety systems across our fleet."

Transocean declined to make board members available for comment.

The company's safety records are likely to come under new scrutiny as investigators probe the explosion and fire aboard the Deepwater Horizon that lead to its sinking. The deep water well is spewing thousands of barrels of oil a day into the Gulf.

Across the industry, seven workers died on offshore drilling rigs in 2009, according to the International Association of Drilling Contractors. But it wasn't clear if those seven fatalities included the four mentioned in the Transocean filing.

Transocean said it couldn't comment on how the associate keeps its records; the association couldn't immediately be reached for comment.

Association records show nine workers died in 2008 and five in 2007. Transocean said it had no fatalities in 2007 and two in 2008.

Overall, Transocean's safety record in 2009 was better than the industry average, as measured by the number of incidents per hour worked, according to data from the trade group.

The company in 2009 had 0.77 injuries per 200,000 hours worked—a standard industry measure—compared to the industry average of 0.91 injuries.

Mr. Cantwell, the Transocean spokesman, said he couldn't immediately provide details on the circumstances of the four fatalities in 2009, except to say they involved four separate incidents in different locations.

He confirmed that one fatality occurred in Azerbaijan, where a 37-year-old worker was blown overboard during a storm, according to press reports.

None of the deaths in 2009 were aboard the Deepwater Horizon, which had gone six years without a serious accident as of February 2009, according to a company newsletter.

The rig is one of about 140 operated by Transocean, the world's biggest deepwater driller.

Until the board decided to eliminate all bonuses for the year, the company's safety record was meant to account for 20% of executives' bonuses in 2009, according to the company's proxy and annual report; the board has since raised safety to account for 25% of the bonuses in 2010, according to the filing with the SEC.

Apart from last year's four fatalities, Transocean turned in a mixed safety performance.

It set a company record for the fewest injuries per hours worked, according to the filings.

However, it missed its targets for two other safety standards.

The company's record worsened by 31% in 2009 compared to 2008 in an internal assessment of potentially dangerous accidents, according to securities filings.

And the company failed to reduce the number of incidents in which heavy falling objects could have injured workers, despite improvement goals in 2009, the filings show.

Transocean last year received a safety award from the Minerals Management Service—which regulates the offshore oil industry in the U.S.—for its safety performance in 2008 concerning one area of the Gulf of Mexico, and was a finalist for a national award.

The 2009 awards were scheduled in Houston this week, but the Minerals Management Service postponed the ceremony because of the Deepwater Horizon explosion.

BP and the Obama Administration say they are focused on stopping the flow of crude from the damaged well nearly a mile below the surface. But already lawmakers and interest groups are firing the first shots in what could be a lengthy fight over financial liability and political blame.

The Gulf disaster is ratcheting up congressional scrutiny of the Minerals Management Service, the federal agency charged with regulating the nation's offshore oil-and-gas industry.

Rep. Darrell Issa (R., Calif.), announced Monday that Republicans on the House Committee on Oversight and Government Reform would investigate whether the MMS has pushed for regulations necessary to ensure the safety of offshore operators in the Gulf of Mexico. Citing a report in The Wall Street Journal, Mr. Issa expressed concern in a letter to Interior Secretary Ken Salazar that the MMS "may have sidelined regulatory efforts that would have brought the U.S. oil industry in line with prevailing industry safety standards."

The Journal's article revealed that the Deepwater Horizon oil rig, which caught fire and sank into the Gulf in April, didn't have a remote-control shut-off switch used in two other major oil-producing nations as a last-resort protection against underwater spills.

White House Chief of Staff Rahm Emanuel said he brought concerns over the failure of BP to use a remote-control shut-off switch to President Obama, showing him the newspaper's coverage. That suggests one of the administration's focuses is on regulatory lapses and potential technological fixes that would allow drilling expansion to move forward.

In response to Mr. Issa's letter, the MMS said that while it doesn't require the use of remote-control shut-off switches, it does require operators to employ at least one backup control system to shut off the well in an emergency.

White House officials stressed again Monday that BP would be held liable for the cost of the cleanup and economic compensation for losses on the Gulf Coast. But Democratic senators said the Oil Pollution Act of 1990, passed in the wake of the Exxon Valdez, caps economic damage liability at $75 million. Democratic Sens. Bill Nelson of Florida and Robert Menendez and Frank Lautenberg of New Jersey introduced legislation to raise that cap to $10 billion.

The law, dubbed the Big Oil Bailout Prevention Act, would eliminate a cap of $1 billion per incident on claims against the Oil Spill Liability Trust Fund.

If damages exceed the size of the trust fund—$1.6 billion—claimants would be able to collect damages from future revenues, with interest. The bill would also eliminate a $500 million cap on natural resources damage. "BP says it'll pay for this mess. Baloney," Sen. Nelson said. "They're not going to want to pay any more than what the law says they have to."

White House budget office spokesman Ken Baer said Monday night the president supports efforts to raise the cap "based on the information we currently have."

California's Republican Gov. Arnold Schwarzenegger withdrew his support Monday for a plan to drill off the California coast as part of a strategy to narrow the state's budget gap.

In Washington, House minority leader John Boehner said the U.S. shouldn't put new limits on undersea exploration, "as such limits will only make us more dependent on foreign oil, slow the development of clean-energy alternatives, increase fuel costs, and destroy American jobs."

Along the Gulf Coast, frustration flared as workers scrambled to lay booms to protect the fragile and economically important marshes. Fred Everhardt, an official in St. Bernard Parish, southeast of New Orleans and on the Gulf, said contractors hired by BP to lay booms declined to venture into the water Sunday because of inclement weather. "They didn't want to put their guys in harm's way," Mr. Everhardt said.

Officials from BP and the federal government said they are doing everything possible to lay booms to protect the coast.

BP sent confusing messages. Jeff Childs, a deputy incident commander for BP, told a Fox television affiliate that the company activated part of a failed blowout preventer and slowed the flow of oil. Later in the day, BP said that was wrong. While an underwater robot successfully triggered a device on the sea floor, a BP executive said, it failed to seal the gushing well.

The National Oceanic and Atmospheric Administration projected that the massive slick, now floating north, will spread out in the Gulf over the next couple of days as winds shift.

By the middle of the week, NOAA expects, winds will resume pushing the slick toward the Louisiana coast. Later in the week, NOAA expects, the winds will push the slick more toward Mississippi and Alabama.

An agency official said Monday that oil already may have landed along Louisiana's jagged coast in areas authorities haven't found.

The Deepwater Horizon rig sank April 22 about 50 miles off the Louisiana coast. Eleven workers were killed.

Estimates of the amount of oil leaking have risen, with some projecting the spill could surpass the Exxon Valdez disaster that poured 260,000 barrels of crude into waters off Alaska in 1989. BP officials say there's no way to know the volume yet.

BP said it began Sunday night drilling the first of two additional holes that it expects will ease pressure on the damaged well leaking and thus bring the spill under control. BP said it expects to begin drilling a second relief well—essentially a precaution in case the first relief well doesn't work—in the next couple of weeks. It says the effort could take three months.

His destination is a spare trailer he shares with a Croatian welder in this tiny Louisiana community where trash bobbles in the murky canals and oyster boats line piers still sagging from Hurricane Katrina.

Mr. Maticevic, who was born here in Empire, captains one of those boats, the Chicago. In years past he has made far more money than he could in Croatia, enough to support his wife and two small children, cover the $1,200 airfare and the beer, cigarettes and other staples that fuel him during the eight-or-so months he is gone fishing for oysters.

But the oyster harvest may be over before it begins here because of the giant oil slick gushing from the wreck of the Deepwater Horizon drilling rig. State and federal regulators have closed much of the Gulf of Mexico to fishermen, and there seems little hope that the spill will be contained soon, much less stopped.

"The oil spill can shut this down for a couple of years," said Mr. Maticevic, a soft-spoken 33-year-old with blue eyes and a tanned face who goes by the nickname Tony.

His family is panicking at the loss of income; captains can make more than $1,000 on a good day at sea.

"My wife keeps calling me every five minutes," he said. "We don't know what to do."

If Mr. Maticevic and his friends and family abandon Empire they will take with them a piquant part of the variety of cultures here. Along with Portuguese, Vietnamese, Italian and Irish families, among others, Croatian families have added their own flavor to the Creole and Cajun communities southern Louisiana is known for.

At the Morovich Canal here, Croatians have formed a tight-knit community and are known as "takos." Local lore traces the nickname to a Croatian fisherman who was asked how the sea had treated him. "Tako-tako," he answered, "so-so" in Croatian.

Croatian fishermen here developed the modern method for harvesting oysters, the dredge, in 1905, state officials said. Boats sweep up oysters by towing a V-shaped iron frame that has a yard-long metal-mesh bag attached.

Their community—and this little town—were already teetering after the pounding of Hurricanes Katrina in 2005 and Gustav and Ike in 2008, which destroyed boats, buildings and oyster beds, the underwater surfaces to which oysters cling. Now, the oystermen are again looking to the Gulf with dread as an oil glob approaches the coast.

"This is more agonizing than a hurricane, not knowing what to expect," said John Tesvich, a fourth-generation Croatian oysterman and chairman of the Louisiana Oyster Task Force, which represents the oyster industry.

The state closed a big swath of the waters where the oystermen work on Friday.

Mr. Maticevic can't afford to remain out of work. He has two kindergarten-aged children back in Ston, a town near Dubrovnik, where his wife is studying to be a tour guide.

He has collected only three days of wages since he flew in from Croatia at the beginning of April; the most lucrative part of the oyster harvest was just about to begin when the slick started threatening.

With officials banning oyster fishing in the affected area, the Chicago, the 51-foot oyster boat Mr. Maticevic captains, has remained docked, as have many others owned and operated by dozens of Croatian and Croatian-American families.

Many of the oystermen were born here, descendants of a wave of Croatian sailors that came here in the 1800s. Others followed in the 1970s, escaping the communist regime in Croatia, which at that time was part of Yugoslavia, and subsequently ravaged by war.

Mr. Maticevic's grandfather fished the Gulf's waters for oysters in the 1950s, and years later convinced his son-in-law, Mr. Maticevic's father, to follow, which is how Mr. Maticevic came to be born in Empire. His family returned to Croatia when he was 13 and he began coming back to the area at 22 for oyster season.

Meantime, Mr. Maticevic is trying to get back on the water, this time as an oil-spill cleaner. He just took a course offered by BP and Plaquemines Parish that certified him to transform the Chicago into a cleaning vessel at a rate of $2,000 a day.

If he gets the job, that money would have to be divided among the boat's owner, deckhands and Mr. Maticevic after paying for expenses, such as food and fuel. He said he expects to earn about the same amount he usually does when he goes out to harvest oysters, although he doesn't know if he will be able to work as often.

If he doesn't get the clean-up work, he plans to head back to Croatia. While he relishes the thought of returning to his family, he doesn't expect to find work that pays as well.

"This is all I know," he said as he sat with other fellow Croatians at a local bar. "Such bad luck!"

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The lawsuits threaten to exact a steep toll on a handful of companies, including Transocean Ltd., the owner of the Deepwater Horizon rig that exploded and sank last month, and BP PLC, the British oil company that leased the rig. Damage claims could also deplete a $1.6 billion federal fund set up in 1990 to compensate those hurt by offshore oil spills.

Already, a number of prominent plaintiffs' attorneys have filed suits on behalf of individuals, businesses and others who expect to lose millions of dollars as a result of the spill. On Friday afternoon, a handful of lawsuits were filed in New Orleans federal court.

The offices of Mark Lanier, a prominent plaintiffs' lawyer in Houston who handled much of the litigation concerning the painkiller Vioxx made by Merck & Co., filed one of the suits on Friday against several defendants, including BP and Transocean. The Lanier suit alleges the defendants were negligent or reckless, and violated "numerous statutes and regulations."

The defendants haven't commented on the suits.

The complaint seeks class-action status on behalf of all Louisiana residents who "live or work in, or derive income from, the Louisiana 'Coastal Zone,' " and have suffered losses. It doesn't ask for a specific amount in damages, but states that Louisiana's fishing industry stands to lose as much as $2.5 billion, and that the state's tourism industry "faces…catastrophic losses" as well.

The regime for compensating those hurt by offshore oil spills is complex, governed by a handful of intersecting federal laws.

Individuals can file traditional lawsuits in court and receive money by proving liability. Or injured parties can make use of a claims process established under the 1990 Oil Pollution Act, in which the federal government makes payments from a fund collected through a tax imposed on the oil industry.

The process allows those harmed to recover funds without going to state or federal court, which can take years.

Under the act, BP is responsible for $75 million in damages, though the law allows "unlimited" liability in certain situations, like a finding that the defendants was "grossly negligent" or violated other federal laws.

On Monday, Democratic Sens. Bill Nelson of Florida and Robert Menendez and Frank Lautenberg of New Jersey introduced legislation to raise the $75 million cap to $10 billion. The bill also proposes that claimants would be able to collect damages from future revenues for the fund, with interest, if damages exceed the $1.6 billion held by the trust fund.

BP has said it would pay for the clean-up of the spill and for "legitimate and objectively verifiable" claims of property damage, personal injury and commercial losses, according to a fact sheet on the BP website. BP began drilling a relief well Sunday night in hopes of stopping the gush of oil from the leaking well in the Gulf.

A Transocean spokesman said, "We will await all the facts before drawing conclusions, and we will not speculate."

Lawyers expect the private litigation to unfold in the same way as the lawsuits against Toyota Motor Corp. over problems tied to unintended acceleration.

The cases will get consolidated and sent to one judge, who will then pick a steering committee made up of a group of plaintiffs' lawyers to direct the litigation.

Lawyers said that those claiming damages related to the oil spill couldn't recover funds through both private litigation and the federal claims process.

The degree to which victims will use the claims process under the 1990 act is unknown. But "there's no reason not to use" the Oil Pollution Act, said Barry Hartman, an environmental lawyer in Washington, D.C. Mr. Hartman said he used the claims process following an oil spill off of Rhode Island in 1996.

"Some people got money within weeks," he recalled. "Pretty much everyone was resolved in about two years."

Speed of recovery is vital to some plaintiffs, who operate fishing operations, restaurants and other businesses that can't afford operations to dry up, even for a season, said Dana Taschner of Mr. Lanier's law firm.

—Dionne Searcey
and Jonathan Weisman contributed to this article.