KENNER, La.—More details emerged Wednesday about a disagreement between employees of rig operator Transocean Ltd. and oil giant BP PLC over how to begin shutting down the well just hours before it exploded in the Gulf of Mexico last month.
Testimony on Wednesday about the disagreement, in a hearing held by the U.S. Coast Guard and the Minerals Management Service, which jointly regulate offshore drilling, was likely to bring increased scrutiny to the decisions BP made aboard the rig the day of the explosion, April 20.
There was also likely to be more focus on whether Transocean should have done more to ensure proper procedures were carried out.
Douglas H. Brown, Transocean's chief mechanic on the Deepwater Horizon rig, said key representatives from both companies had a "skirmish" during an 11 a.m. meeting on April 20. Less than 11 hours later, the well had a blowout, an uncontrolled release of oil and gas, killing 11 workers.
Mr. Brown said Transocean's crew leaders—including the rig operator's top manager, Jimmy W. Harrell—strongly objected to a decision by BP's top representative, or "company man," over how to start removing heavy drilling fluid and replacing it with lighter seawater from a riser pipe connected to the well head.
Removing heavy drilling fluid prior to temporarily sealing up a well and abandoning it is normal, but questions have emerged about whether the crew started the process without taking other precautionary measures against gas rising into the pipe.
It wasn't clear what Mr. Harrell objected to specifically about BP's instructions, but the rig's primary driller, Dewey Revette, and tool pusher, Miles Randall Ezell, both of Transocean, also disagreed with BP, Mr. Brown said. However, BP was in charge of the operation and the BP representative prevailed, Mr. Brown said.
"The company man was basically saying, 'This is how it's gonna be,' " said Mr. Brown, who didn't recall the name of the BP representative in question.
Mr. Harrell "pretty much grumbled in his manner, 'I guess that is what we have those pinchers for,' " Mr. Brown testified. He said it was a reference to the shear rams on the drilling operation's blowout preventer, which are supposed to sever the main pipe in case of a disaster.
The blowout preventer failed to stop gas from rising to the surface, causing the explosion, BP has said.
Mr. Harrell hasn't testified and declined repeated requests for comment. Donald Vidrine, listed on Transocean's documents as BP's "company man" on April 20, couldn't be reached. Mr. Revette was among the 11 workers who were killed.
Mr. Vidrine was supposed to testify Thursday but dropped out, citing an undisclosed medical issue, according to a Coast Guard spokeswoman. Another top BP official who was scheduled to testify Thursday, Robert Kaluza, declined to do so, asserting his Fifth Amendment right against self-incrimination, the Coast Guard spokeswoman said.
Mr. Kaluza's lawyers, in a statement, said: "Bob did no wrong on the Deepwater Horizon, and we will make ... sure that this comes out at the appropriate time."
BP declined to comment on the testimony.
A Transocean spokesman said in a written statement: "The testimony certainly seems to suggest that [Mr. Harrell] disagreed with the operator's instructions, but what those were and why he disagreed are matters that will ultimately be determined during the course of investigations."
Mr. Brown, who suffered head injuries during the accident and had to be airlifted to a hospital in Mobile, Ala., also described his own version of the fear and disorder that overtook the rig after the explosion. The blast knocked him into a hole and left him dazed, he said.
When Mr. Brown traveled to the bridge to notify top officials about an injured co-worker, he said, the room was in chaos.
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00379614 'Top Kill' Operation Under Way
BP's Tricky Maneuver to Stanch Oil Flow at the Source
Holds Both Environmental and Political Risks
By ANGEL GONZALEZ And GUY CHAZAN The Wall Street Journal, Online Edition, Thursday, May 27, 2010.
Officials reported encouraging signs—but not success—Wednesday night in BP PLC's latest effort to stop crude oil from gushing into the Gulf of Mexico from the site where the Deepwater Horizon oil rig sank more than a month ago.
The hopes of the company—and of residents and local officials along the Gulf Coast—have been pinned on the success of the "top kill" procedure, which involves injecting the well with drilling fluids that are heavy enough to counteract the pressure of oil and gas surging upward. If that works, the well would be sealed in cement.
Top kills were used to plug wells in Kuwait that were sabotaged by the withdrawing Iraqi army during the Persian Gulf War of 1990-91. But the technique has never before been attempted in waters of such depth; the mouth of the Deepwater Horizon well lies nearly a mile beneath the ocean's surface.
"Over the next 24 hours I believe we will know if it is successful," Doug Suttles, BP's chief operating officer, said at a press conference.
Coast Guard Rear Adm. Mary Landry said she was "very encouraged" but added, "I do not want to express optimism until I know for sure" that the leak has stopped.
BP has come under increasing pressure as globs and pools of crude oil started washing up on beaches and marshes along Louisiana's fragile coastline, threatening wildlife and putting fishermen out of work. The Obama administration has also come under fire for what critics say was an inadequate response to the oil spill. A successful operation could mark a turning point for BP and its CEO, Tony Hayward, who has been pilloried for the oil giant's handling of the disaster.
If the effort fails, oil could continue to gush into the Gulf for at least another two months, when a relief well might be completed. BP said it would drill that well even if the top kill works so that cement can be pumped in to seal the well permanently. It also has a new plan to siphon oil from the well if the top kill fails.
BP says it did not try the top kill procedure earlier because it wanted to make sure it was not doing anything that would make the spill worse. There is a risk the operation could increase the volume of oil escaping the well rather than slow it, or even cause a pipe to burst. As of Wednesday night, there was no sign of new leaks, BP said.
The operation is being scrutinized by the White House and Congress—as well as by uncounted viewers of a live video feed of the well the company is streaming from the seabed.
While cameras show clouds of liquid continuing to surge upward, BP said it appeared to be nontoxic drilling liquid, known as mud, not oil.
The plume of mud is "a good sign," suggesting that the fluid is exerting enough pressure to stem the flow of crude and natural gas, said Don Van Nieuwenhuise, a professor of petroleum geosciences at the University of Houston.
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00379615 Interior's Salazar Takes Heat From All Sides
By STEPHEN POWER The Wall Street Journal, Online Edition, Thursday, May 27, 2010.
Interior Secretary Ken Salazar signaled Wednesday he was taking a second look at
Royal Dutch Shell PLC's plans to explore for oil off Alaska's coast, the latest sign of the pressure on Mr. Salazar to scale back offshore drilling in the wake of the disaster in the Gulf.
The huge spill in the Gulf of Mexico has put Mr. Salazar on the political hot seat. He is under pressure from some on the Democratic Party's left wing to scale back drilling in federal waters. Many Republicans, on the other hand, are urging him not to use the Gulf spill as a reason to curb domestic oil production.
At the same time, disclosures of lax federal oversight of the offshore drilling industry by the Interior Department's Minerals Management Service have forced Mr. Salazar to explain whether he moved fast enough to overhaul the agency after he took office in early 2009.
The administration could reveal more of its thinking on offshore drilling policy Thursday, when Mr. Salazar is expected to deliver a report to President Barack Obama on what can be done to prevent future spills involving offshore oil rigs.
Mr. Salazar's comments about Shell's plan for new arctic drilling came during a hearing Wednesday before the House Natural Resources committee, when Democrats on the panel asked whether
BP PLC's accident in the Gulf warranted a pause in Shell's plans in the arctic. Shell's proposal has come under fire from some environmental groups. "Adjustments will be made," Mr. Salazar said.
He didn't elaborate on what adjustments he planned to make to Shell's development plans. Shell has said it would heighten safety measures for its planned exploratory drilling in Alaska's Arctic Ocean, including testing a critical piece of safety equipment, the blowout preventer, every seven days instead of every 14 days, the industry standard.
As oil from the BP spill has spread across a wide area of the Gulf, Mr. Salazar, a former senator and attorney general of Colorado, has had tough words for the British oil giant.
"We will keep our boot on their neck until the job gets done," he said earlier this week.
On Sunday, Mr. Salazar said that if BP officials were "not doing what they're supposed to be doing," the government could "push them out of the way appropriately."
But the next day, the administration backtracked, as the head of the federal spill response, Coast Guard Adm. Thad Allen, dismissed the idea that the government could take over from BP as "more of a metaphor."
Mr. Salazar has upset oil-industry interests and their Congressional backers with a series of actions to put the brakes on oil development plans. Announcing tougher leasing rules in January, he described oil and gas industry executives as "kings of the world in the prior administration"—a comment that drew criticism from Democrats in oil-producing states.
One of Mr. Salazar's first acts as secretary was to visit the Colorado office of the MMS that had been the subject of a 2008 investigation by the department's inspector general, who concluded that workers there had created "a culture of ethical failure" by partying and, in some cases, having sex with oil-industry representatives. Mr. Salazar ordered a stricter code of conduct for MMS employees.
Last week, Mr. Salazar announced he would break up the agency and divide its duties across several new offices, within the Interior Department. His action followed a Wall Street Journal report that examined how the agency has often deferred to industry on determining what safety practices and equipment are sufficient.
Mr. Salazar's department has also angered some environmentalists by continuing to approve offshore drilling permits, despite having said in early May that it would temporarily halt the issuance of drilling permits for "any new offshore drilling activity."
Mr. Salazar's aides said the department continued to grant permits that allowed companies to modify existing wells or previously approved permits, if the proposed actions were determined to be appropriate by the MMS and if the original permits were issued prior to April 20. Some of the permits that have been issued since April 20 were needed for safety reasons, they said, or because a company encountered an unexpected obstacle during an operation.
Mr. Salazar said his department's ability to assess the environmental impact of oil companies' exploration plans has been hobbled by a federal law that requires the agency to approve or reject such plans within 30 days of being submitted. Earlier this month, the administration proposed that Congress change the law to give the government at least 90 days.
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00379616 BP Aims to Avoid Fresh Restrictions on Drilling
By ELIZABETH WILLIAMSON The Wall Street Journal, Online Edition, Thursday, May 27, 2010.
Aiming to blunt a regulatory and political backlash as oil continues to gush into the Gulf of Mexico, BP PLC has revved up its influence machine, relying on heavy hitters with deep Democratic roots.
BP is one of the biggest spenders on lobbying in the oil and gas industry, which as a whole has spent a total of $625 million since 2004 to represent its interests in Washington. After the Obama administration took office in 2009, BP's annual spending grew by half, to $16 million.
During the first quarter of 2010, it spent $3.5 million on lobbying, second to ConocoPhillips, according to figures compiled by the nonpartisan Center for Responsive Politics.
Since the April 20 oil rig explosion that started the Gulf spill, BP's lobbyists and crisis communications experts have helped to shore up congressional opposition to measures punishing oil companies, and moved to position BP as an ally with the government to manage the crisis.
After the spill, the company brought on crisis communicator Hilary Rosen, former Democratic congressional staffer, former chief of the Recording Industry Association of America, and a current editor-at-large for HuffingtonPost.com. Ms. Rosen heads the Washington-based office of U.K. communications firm the Brunswick Group. Public records are not yet available on the new Brunswick contract. Ms. Rosen declined to be interviewed on the record.
BP expects a dramatic and expensive tightening of rules governing offshore drilling. But the company wants to avoid curbs on new drilling, say its lobbyists.
So far, most action in Congress has focused on raising the limits on civil liability under federal law from the current $75 million. Maintaining that focus could in itself prove a victory for BP, say people involved in the debate. A higher liability cap could hobble small independent oil companies, easing competition for their bigger rivals.
Earlier this month, BP assured administration officials it planned to shoulder all costs associated with stopping and cleaning up the spill, expected to run into billions of dollars.
"The first couple of proposals on the floor [related to liability] would not impact the big companies at all," said Matt Dempsey, a spokesman for Sen. Jim Inhofe (R., Okla.), the ranking Republican on the Environment and Public Works Committee.
Even before the Gulf disaster, BP has faced tough scrutiny from federal regulators, starting in the aftermath of a 2005 explosion that killed 15 workers at a Texas refinery, a 2006 oil spill in Alaska and allegations of safety lapses at a Toledo, Ohio, refinery.
Despite this history of safety problems, BP has made allies of some Democrats and environmentalists with its support for climate-change legislation, which company lobbyists helped write.
Among BP's lobbyists is Tony Podesta, who heads the Podesta Group, a lobbying powerhouse founded by Mr. Podesta and his brother, former Clinton chief of staff John Podesta, who headed President Barack Obama's transition team. John Podesta now leads the Center for American Progress, the liberal think tank whose scholars have presented the White House with ideas like forcing BP to devote its first-quarter profits, or some $5 billion, to a fund for Gulf cleanup.
Tony Podesta confirmed Podesta Group was working for BP on the Deepwater Horizon issue, but responded by email that "they have asked us not to talk to press." BP paid the Podesta Group $320,000 a year in 2008 and 2009, and $60,000 this year through March 31, said the Center for Responsive Politics. "We don't talk business, are often on opposite sides of an issue, and still maintain peace at the dinner table," John Podesta said.
Before the spill, Mr. Obama voiced support for expanded offshore exploration in some geographic areas. But now, he is under pressure from some members of Congress and environmental groups to back away from that stance. Mr. Obama is expected Thursday to announce tough new safety and inspection measures for the industry.
Other major oil companies that have courted Mr. Obama and Democrats, such as Royal Dutch Shell PLC, are fuming at the damage done by BP to the industry's reputation. But they are in lockstep with BP in opposing drilling limits.
On Capitol Hill, "a lot of [BP's lobbyists] come up and try to educate, but they've all been very careful as far as speaking to the specifics of this case," said a congressional aide working on oil industry legislation. BP has circulated links to videos explaining its efforts to stop the well leak.
"The blame game is not necessarily going to help the White House get this solved," said a Washington lobbyist for BP.
# 00379617 Yes, the Gulf Spill Is Obama's Katrina
By KARL ROVE The Wall Street Journal, Online Edition, Thursday, May 27, 2010.
As President Obama prepares to return to the Gulf Coast Friday, he is receiving increasing criticism for his handling of the oil spill. For good reason: Since the Deepwater Horizon rig blew up on April 20, a lethargic Team Obama has delayed or blown off key decisions requested by state and local governments and left British Petroleum in charge of developing a plan to cap the massive leak.
Now the slow-moving oil spill threatens Mr. Obama's reputation, along with 40% of America's sensitive wetlands. Critics include some of his most ardent cheerleaders, who understand that 38 days without an administration solution is unacceptable.
Obama officials have it backwards: They talk tough about BP's responsibilities but do not meet their own responsibilities under federal law. They should not have let more than a month go by without telling BP what to do. And they should avoid recriminations against their partner in solving the problem until after the leak is sealed.
Interior Secretary Ken Salazar sounds whiney when he rails against BP. It didn't build confidence when his opening statement to a congressional hearing Wednesday focused on future safety and inspections requirements, and not on what the administration will do now to end the leak.
Initially, Team Obama wanted to keep this problem away from the president (a natural instinct for any White House). It took Mr. Obama 12 days to show up in the region. Democrats criticized President George W. Bush for waiting four days after Katrina to go to New Orleans.
Now the administration is intent on making it appear he has engaged all along. But this stance is undermined by lack of action. Where has its plan been? And why has the White House been so slow with decisions?
Take the containment strategy of barrier berms. These temporary sand islands block the flow of oil into fragile wetlands and marshes. Berm construction requires approval from the Corps of Engineers and the U.S. Fish and Wildlife Service. Louisiana officials asked permission on May 11. They have yet to hear back. The feds are conducting a review as oil washes ashore.
The federal government was even slower on the question of dispersants, chemicals used to break up the oil and hasten its evaporation from the surface of the water. On May 8, Louisiana sent a letter to BP and the EPA begging BP not to use dispersants below the surface of the water. Subsurface use of dispersants keeps oil slicks from forming. But when it doesn't come to the surface to evaporate, the oil lingers below, gets into underwater currents, and puts at risk fisheries that supply a third of America's seafood.
On May 13, EPA overruled the state and permitted BP to use dispersants 4,000 feet below the surface. Then, a week after BP released 55,000 gallons of dispersants below the surface, EPA did an about-face, ordering BP to stop using the dispersant and to "find a less-toxic" one. Louisiana officials found out about this imprecise guidance in the Washington Post. BP refused, EPA backed off, and Louisiana's concerns about their marine fisheries remain.
Last weekend, as winds and currents drove oil towards particularly sensitive wetlands, the state asked Washington to mobilize all available boats to deploy booms and containment devices. Federal officials didn't act. Local officials were forced to commandeer the boats. Even then some equipment went unused.
State officials believe their federal counterparts don't have a handle on the resources being deployed and are constantly overestimating the amount of booms, containment equipment, and boats being used.
Could this be Mr. Obama's Katrina? It could be even worse. The federal response to Katrina was governed by the 1988 Stafford Act, which says that in natural disasters on-shore states are in charge, not Washington. The federal obligation is to "support . . . State and local assistance efforts" by providing whatever resources a governor requests and then writing big checks for the cleanup. Mr. Bush had to deal with a Louisiana governor and a New Orleans mayor who were, by federal law, in charge.
But BP's well was drilled in federal waters. Washington, not Louisiana, is in charge. This is Mr. Obama's responsibility. He says his administration has been prepared for the worst from the start. Mr. Obama's failure to lead in cleaning up the spill could lead voters to echo his complaint in Katrina's aftermath: "I wish that the federal government had been up to the task."
Mr. Rove, the former senior adviser and deputy chief of staff to President George W. Bush, is the author of "Courage and Consequence" (Threshold Editions, 2010).
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00379618 Advice for BP's Reputation Crisis
By PETER D. HART AND DAN MCGINN The Wall Street Journal, Online Edition, Thursday, May 27, 2010.
Pop artist Andy Warhol predicted in the 1960s that "in the future everyone will be world famous for 15 minutes." Well, the future turned Warhol's prediction on its head: 15 minutes of shame has replaced 15 minutes of fame.
Consider oil company BP, which is now watching the halo created by a decade of smart advertising vanish as a mammoth oil slick makes its way across the Gulf of Mexico. BP's "Beyond Petroleum" campaign had positioned the company on the green side of energy development. But its sunken drilling platform—and the resulting environmental catastrophe—has sent it firmly back into dirty carbon company territory. Current polling results show BP has a devastating 4-to-1 negative-to-positive ratio on feelings about the company. From the top to the bottom in nanoseconds.
And that's where it's likely to stay for some time. No matter how great the fame, 15 minutes of shame can determine how you're going to be judged for the next 20 years. For Exxon, the Valdez shipwreck some 21 years ago still is the first mention by many when they are asked about this oil giant.
Recent examples of sudden, all-consuming shame can be found in every sector of society, from Tiger Woods to the Catholic Church. Each is a victim of self-created problems handled so poorly that their 15 minutes stretched into 15 days or 15 months of public relations torment. And each will be hard-pressed to recapture the pristine image they once enjoyed: The Web and the 24-hour news cycle have exponentially expanded the speed, scale and intensity of shame's spread.
In a crisis, every audience takes a step back to reassess the company, organization or person in trouble. Observers are looking not just for specific actions, but for a sense of the values that are driving the response. If that response is slow, defensive, or, worst of all, arrogant, then the damage will be profound and long-lasting.
To avoid this fallout, famous companies and individuals should understand the new rules of public life:
1) Listen to the warnings. In almost every reputational disaster in recent memory, the warning signs were known and ignored by key figures beforehand. Accepting the path of least resistance often creates the biggest danger.
2) Speed counts. Situations can blow out of control instantly. Those caught in a shame cycle typically are too slow to react, and their reactions are too often not honest or transparent. By hesitating or stonewalling, you allow yourself to be defined by the likes of Jon Stewart, Glenn Beck and YouTube.
3) Be authentic. Tell your story as if you are talking to the person whose opinion you value most in the world, not like a lawyer talking to a judge. Today's audiences are too sophisticated to buy spin, or bloodless statements. People have the capacity to forgive, but only when forgiveness is truly sought. You must show that you get it.
4) Tell the full story. Always assume that the full story will emerge. In an age of ubiquitous cameras, microphones and global social networks, there aren't many secrets. The bigger problem is that in case after case, stories are told in chapters, prolonging pain and undermining credibility. When confronted by a catastrophe, don't hold back. No matter how unpleasant, get the whole story out fast.
5) Think three steps ahead, and about the end of the process. Most everyone involved in a scandal thinks about the issues they are dealing with that day or week. Few take the time to think about how it is going to look months or even a year from now. Making short-sighted decisions is like putting a band-aid on a wound. The media will tear it off regularly, and the wound will never heal.
6) Be prepared to change. Today's public assumes the worst from the elite in our society, believing that the most privileged, the most powerful, the best educated and the richest play by a different set of rules. So you have to be ruthless in critiquing yourself and your institution. Recognize that you need to be proactive and be willing to take difficult steps, because that will be the price for salvaging your reputation.
In the end, reputation is the most important asset a public figure, a company or an institution owns. There is no doubt that in this era of digital transparency more companies will face relentless exposure for their misdeeds and mistakes. The question is whether they will figure out that the only thing worse than the crisis itself is bungling the response.
Mr. Hart is a public opinion pollster. Mr. McGinn is CEO of TMG Strategies, a communications company.
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00379708 Spill Tops Valdez Disaster
BP Pauses, Then Resumes Pumping 'Mud' Into Broken Well; Regulator Resigns
By JONATHAN WEISMAN, GUY CHAZAN and STEPHEN POWER The Wall Street Journal, Online Edition, Friday, May 28, 2010.
As authorities waited Thursday to see whether BP PLC's "top kill" operation would stop the oil gushing from the company's broken well in the Gulf of Mexico, a federal panel of scientists released estimates of the spill's size that would rank it the worst in U.S. history, surpassing the 1989 Exxon Valdez disaster.
BP said late Thursday it temporarily halted, then resumed, the pumping of heavy drilling fluid, or "mud," into the well. The pause was partly to assess the results of the first phase of the operation, the company said, and to restock the vessels ferrying mud to the disaster site.
Fallout from last month's explosion on the Deepwater Horizon drilling rig reverberated in the U.S. capital Thursday, as members of Congress accused BP of deliberately downplaying the size of the leak and President Barack Obama slammed the brakes on off-shore deepwater oil drilling, in a policy pivot from just two months ago.
Mr. Obama also accepted the resignation of his top oil regulator, and accepted blame for failures before and after the sinking of the Deepwater Horizon.
"I take responsibility," Mr. Obama said at an hour-long news conference. "It is my job to make sure everything is done to shut this down."
Oil has been spewing from the damaged well since the rig sank on April 22. Eleven workers died in the initial explosions that doomed the rig. Crude has washed up on 100 miles of Louisiana shoreline, threatening the livelihood of thousands of fishermen and shrimpers.
Between 12,000 and 19,000 barrels per day are estimated to be spilling into the Gulf, said U.S. Geological Survey director Marcia McNutt, the leader of an inter-agency team created to measure the spill following criticism that a previous estimate of 5,000 barrels a day was inaccurate.
The White House said it had canceled the sale of oil-exploration leases in the western Gulf and off the Atlantic Coast of Virginia, and had delayed a major Arctic drilling project until at least 2011. The administration said it would place a moratorium on issuing any new permits to drill wells in deep water for six months, until an independent commission delivers its report on the disaster.
Less than three weeks before the explosion, Mr. Obama had called for the expansion of offshore drilling in the Gulf, and said he would consider allowing it on parts of the Atlantic coast.
He said Thursday the U.S. would remain dependent on oil for the foreseeable future, and that much of it should be domestically produced. But he conceded he had accepted too readily the industry's assurances about drilling safety. "Where I was wrong was in my belief that the oil companies had their act together when it came to worst-case scenarios," he said. "I don't have that confidence right now."
Interior Secretary Ken Salazar said the announced moratorium would apply to any rig drilling in more than 500 feet of water. Deepwater drilling is often identified as an operation in at least 1,000 feet of water.
The federal government will require more rigorous certifications of blow-out preventers, the massive emergency units that failed on the Deepwater Horizon, tougher inspections for deepwater drilling rigs and expanded safety training for workers.
"We are pausing deepwater drilling and examining our systems to ensure this type of disaster does not happen again," Mr. Salazar said.
He also announced the resignation of S. Elizabeth Birnbaum as director of the Minerals Management Service, the regulatory agency described by Mr. Obama as "scandalously close" to the oil industry it is supposed to police.
Mr. Obama's about-face on offshore drilling is likely to have political consequences. Lawmakers in oil states from both parties decried the shift, saying it would cost jobs and was overly broad. The shelving of Shell Oil's major investments in the Chukchi and Beaufort seas off Alaska's coast touched off cheers from environmentalists and objections from the state's Republican and Democratic senators.
"All of us are committed to protecting Alaska's waters," Sen. Lisa Murkowski (R., Alaska) said. "I'm also committed to protecting Alaska's economy."
In a gesture to one of his most vocal critics, Mr. Obama said Thursday he approved construction of part of a system of massive, offshore berms in Louisiana. Republican Gov. Bobby Jindal lashed out this week at the administration's reluctance to approve the berms, which are intended to protect marshes.
Efforts at halting the oil by pumping heavy drilling fluid into the well—known as the "top kill" procedure—had showed early signs of success. But Doug Suttles, BP's chief operating officer, said Thursday afternoon, "the operation has not yet achieved its objective." He said BP was hoping to stuff material into the top of the well to block leaks, and expected the procedure to last another 24 hours or more.
The top kill was widely viewed as the company's best hope for plugging the leak before new relief wells, currently being drilled, can be used to shut down the leak permanently—a process that will likely take months. The top kill procedure has been used for decades, but never a mile underwater.
"If this had been onshore or in inland waters, shallow waters, this would have been a two-week deal at the outside," said Bill Abel, a veteran well control expert in Houston.
Success with top kill would surely bring some measure of relief to both BP's chief executive, Tony Hayward, and to Mr. Obama, both of whom have come under withering criticism.
Mr. Obama tried to make the issue personal, saying his elder daughter, Malia, had interrupted his shaving one morning to ask if he had plugged the hole yet. "This is what I wake up to in the morning, and what I go to sleep thinking about," he said.
— Ben Casselman and Angel Gonzalez contributed to this article.
# 00379710 New Rules in an Old Tug-of-War
By GERALD F. SEIB
The Wall Street Journal, Online Edition, Friday, May 28, 2010.
In the messiest way possible—quite literally—America is rethinking and remaking the relationship between government and business.
Only the latest example is unfolding in Louisiana. Even as oil laps ashore there after leaking from BP PLC's well, souls are being searched in Washington about why regulators didn't prevent the disaster or have a good answer for coping once it hit.
President Barack Obama's announcement Thursday of an extended moratorium on new deep-water drilling and suspension of exploration and lease sales elsewhere is only the beginning of a government re-evaluation of its relationship with the offshore oil industry. A presidential commission soon will put the relationship in full therapy.
Mr. Obama declared that the whole relationship has been marred by a "cozy and sometimes corrupt relationship" between the oil industry and government regulators, and there's bound to be much discussion of whether there was too little regulation. The better question, though, isn't about quantity but quality: Were regulations and regulators smart and up to date?
More on that in a minute. The broader point is that the oil spill is just the latest in a series of traumatic events forcing a rethink of government's relationship with business. Bank bailouts, energy plans, auto-maker rescues, Toyota accelerator problems: All have forced both politicians and average Americans to rethink the proper role of government in a private economy.
The issue has been the subject of some of the capital's most vicious debates in recent months, notably during the mud wrestling over health care. To some extent, the question of government's proper relationship with business will never be fully settled, because it goes to the core of the philosophical divide between the two political parties.
Yet some points of consensus actually may have been reached. For example, we can be fairly confident the U.S. isn't into nationalizing industries. If there ever was a time when the government would nationalize a bank, for instance, it would have been last year, when the financial system was in free-fall, when Great Britain took some steps toward nationalization, when some serious voices suggested the same here, and when an activist Democratic administration was in place. Yet it didn't happen.
Similarly, the government bailout of General Motors, controversial as it has been, made government a majority owner of a company—a huge step, to be sure—but stopped short of a nationalization. And we've learned anew that the country likes a bit of industrial policy, but not very much. The notion of using government to encourage and stimulate alternative energy has become a bipartisan item on the energy agenda, but not much more.
There's also agreement that, just as regulation can go too far, deregulation can go too far in key areas, and that antiquated regulatory systems may be worse than no regulation at all. Behind the arguing over financial regulations was a bipartisan consensus that the market meltdown showed a need for a better system to oversee financial markets.
Now the BP spill ushers in a new debate, over the government's role in policing offshore drilling. Everyone from the conservative Republican governor of Louisiana to the most liberal Democrat in the House agrees that the system failed.
And within that failure lay some basic factors to explore anew. For starters, the law that governs the reaction to and responsibility for an oil-pollution disaster was passed two full decades ago, and was designed mostly to handle the risk of another Exxon Valdez oil spill coming from a giant tanker. The kind of deep-water drilling that goes on now, and the dangers within it, were barely imagined then.
"The offshore oil technology stuff has just completely whizzed right on by" the law, said Coast Guard Adm. Thad Allen, the man in charge of containing and cleaning up the BP mess. That, he says, may be "a regulatory issue that needed to be raised."
At the same time, Adm. Allen noted in a conversation with a group of columnists this week, the law has helped produce a system in which the resources needed to clean up a mess if things don't go right lie almost entirely in private-sector hands. While Mr. Obama, striking a take-charge posture Thursday, asserted that the federal government is steering BP's efforts to cap the well while "also directing the effort" to clean up the spill, the government, it turns out, has relatively little equipment or manpower to run a cleanup.
Adm. Allen says the "great majority" of cleanup equipment "is in the hands of the private sector," while the government has "what I would call almost emergency triage equipment." That, he said, is yet another area for the new commission to explore, as it searches for that elusive correct line between private rights and government responsibilities.
