any government is to protect its people from crime. and that's one of the things that's obviously on the agenda of any president. and i am sure on president obama's as well. host: steve, tell us about the institute of peace. guest: it's a great organization and funded by the congress and it's basic premise is that you won't eliminate disagreements in the world but you can prevent them from resulting in violence. and there are a series of things to be thought to prevent that violence. and they focus on resolution of conflict, and they develop the literature and ideas and work programs. it's a great organization and worth the taxpayers' money.

every dollar of it. host: we thank you for your time and we go live to the resource committee: . .

>> this hearing is related to offshore drilling and the blowout that happened in the gulf. on the evening of april 20, that is the first of what i expect to be several hearings on these issues. next week, we will receive testimony from the secretary of the interior on these events and issues. our goal in the hearings is to informed discussion of the very important questions presented by the disaster raised here, both technological and regulatory questions. we have an obligation to bring a level of seriousness to this endeavor and to determine as quickly as possible and to the best of our ability the appropriate next steps. as those steps become clear through the testimony we receive

and the investigative work of our committee staff, i intend to work with senator mccowskey and other members to develop and introduce any necessary and appropriate legislation through the senate. at the heart of this disaster are three interrelated systems. the technological system of materials and equipment, a human system of persons who -- a person to operated, the technological system, and a regulatory system. those injured or less the -- those into related systems failed in a way which many thought was impossible. we need to investigate where these systems failed what -- built to do what they were supposed to do. it is insufficient to label this a as an accident week.

not just say accidents do happen. whether it was the sinking of the titanic, three mile island, of the or the loss of the challenger, we will likely discover there was a cascade of failures and technical and human and regulatory powers. --errors. we will put in improved systems to ensure this type of catastrophe never happens again. we will also be looking to identify any problems or risks that might exist for operations that are ongoing so that we can ensure they are at rest with all -- they are addressed to protect the environment. we will begin to process -- will begin the process with two panels. the first panel is composed of

one has a long history in the industry as well as an independent view is a highly regarded university professor. the other is a retired expert from the minerals management service. of the department of interior with long experience in overseeing safety of offshore oil and gas operations. after our first panel has given us a baseline of information and perspective on best practices for controlling oil and gas wells and overseeing their safety, we will hear from a second panel composed of leaders of the three companies involved in this accident. bp, trans ocean, and halliburton are the companies. they will provide information currently at their disposal on the disaster and the steps being taken in view of the aftermath and their future plans for continued investigation and remediation. let me turn now to senator

mikulsji for her opening statements. >> it has been 21 days since the explosion of the deep water horizon reg. all of us have been intensely following the news. we hoped to hear that the 11 missing workers had been found and now each day, we watched the battle to shut off the flow and contain the oil spill. i have said before that this incident is a tragedy on many levels and our prayers continue to be with those who have lost loved ones in the explosion and with those who were injured. you mentioned the resolution honoring the crew of the deep water horizon. i am honored to be a co-sponsor of that. we continue to hope that this bill can be stopped and cleaned up as soon as possible in order to minimize the impact on the gulf coast, its residents, and the marine environment. american joins every gulf coast

president and hoping for all the factors to work in their favor right now. it is everything from the weather cooperating, the technology to work, and the judgment of those in charge to be decisive and correct. this accident has reminded us of a cold reality. that the production of energy will never be without risk or environmental come to class. last november, we heard testimony that left us with a similar conclusion that offshore development does carry risks to both human and marine life as well as a livelihood of our coastal citizens. government and industry must never grow complacent and always try to minimize those risks. the reasons are simple -- we all agreed that we need to steadily minimize the percentage of all -- of oil in our energy mix. our nation will make a lot of oil for a long time to come.

for the sake of our nation's economy, for the sake of our national security, this incident notwithstanding, for the sake of the world's environment, we need to safely produce the maximum amount of that energy here at home. i talked to someone recently about why those lessons can be painful for very expensive. unfortunately, we know this incident has been both. we need to make sure we take the right lessons to heart. i will have questions today for our technical panel and for bp, trans ocean, and halliburton on what they have learned and how we can produce oil while minimizing future risk. i haveyxy a host of questions at what caused the initial blowout, well designed and other things. i have questions about sources of ignition, the challenges of very deep oil exploration and production and the newly learned

issues that are mitigating a still that originated 1 mile underwater. i've questions about the interaction and authority between the different parties with varying degrees of control over this oil rig and the wells. i have more questions than will fit at this hearing. i am committed to getting full answers to all of them. we often cite our nation's strict safety and environmental laws for oil and gas development as a means to reassure americans that we can responsibly develop our resources this argument will rig hollow -- ring hollow if these are not done objectively. i have said there are words and actions. actions necessarily have consequences. hopefully, all the actions associated with the deepwater horizon incident were in good

faith and compliant with their loss. if that is not the case, there will be no excuse. next week, this committee will hear from secretary salazar and we will talk about america's energy policy. this event will affect the process. we cannot look at this sad chapter and conclude that we should increase the billions of dollars we're spending on on foreign governments who run a greater risk and use our own money against our interests. according to several polls released last week, it appears americans understand this. the american people are not yet ready to turn their backs on offshore production and neither should we. our nation already has some of the strongest environmental standards in the world. those protections will only grow stronger in the wake of this tragedy. that fact does not make our jobs on this committee easier.

it makes our job harder. we are cast with figuring out how to deliver america's energy resources to americans in an imperfect system where lives can be lost and environments and lifestyles put at risk. what is worse, we must find the right balance and a global economy where so many other nations that compete for our energy dollars by relaxing their workers say the environmental standards rather than strengthen them. the deepwater horizon will teach us here today and perhaps for many years to come about how america can strengthen our standards for producing the energy that we need without compromising our economy or energy security. the question is how and when we might are right at constructive and realistic agreements. we know where to start. we must figure out what happened to the deep water horizon, what caused the apparent blow out, what started the fire on the oil rig, and what caused so many

safety mechanisms to fail. above all else, after this pain and expense and tragedy, what are the lessons that we need to take to heart? i look forward to the testimony this morning from all gathered. i appreciate the opportunity. >> why don't we go ahead with the first panel? we have two witnesses, dr. f.r. beck. and mr. elmer danenberger retired in january as the chief of regulatory programs for the minerals management service. if those two gentlemen would come forward -- because of the gravity of this hearing we have as that all witnesses testify under oath so i would ask that if each of you would stand please and raise your right hand -- do you solemnly swear that the testimony you are about

to get to this senate committee on energy and natural resources should be the whole truth and nothing but the truth? thank you and please be seated. let me mention a couple of housekeeping matters. first of all, your written statement will be made part of the record. we would ask you to take six or eight minutes to summarize the main points that you think we need to understand from what you have developed testimony. depending on the number of senators who come to ask questions, we may want to have only one round of questions. this is a so we can also hear from the second panel before we have to adjourn for the weekly lunches we take. we will see how many people arrived. if there is no great attendance, we will have to limit it that way. the other point i would make as

a housekeeping matter is that we have been abolished by the -- advised by the majority leader that there will be two votes on the senate floor starting at 11:30. it would be my intention to try to keep the hearing going and ask that senators who are not asking questions and to can go to vote early and come back and then they can keep it be hearing going while others go. dr. back, go ahead and tell us what you can to inform us as to what the circumstances, not just of this accident, but of the whole process that goes on with regard to deepwater drilling. >> members of the committee, good morning and thank you for allowing me the opportunity to provide this testimony today. i have come here in hopes of providing some basic blowout

prevention knowledge that i think each of you will find useful as you investigate the events which occurred on the deep water horizon drilling oil rig. i am an associate professor o. before that, i work in the industry for over 20 years and had academic experience prior to that. during my industry career, i have safely drilled numerous high pressured natural gas wells. i do not point to be an expert in deep water drilling. i do not see that this is a hindrance. perhaps it is even an advantage as i have no preference for any process, practice, or equipment package occlusive to deepwater drilling. in any deepwater or onshore drilling, that employs a common strategy for pressure. i believe that understanding the strategy which i will call the

multiple barriers strategy will be critical in order for you to dissect the advances that led to the deep water horizon disaster. as i continue my discussion this morning, i will refer to oil and gas collectively as guests. for simplicity . gas occurring in a subsurface is pressurized and it will naturally seek to flow to the atmosphere once it is penetrated by a welter of barriers are used to protect gas from flowing to the atmosphere. a barrier provides a means by which gas is prevented from entering the well bore from continuing to enter the well bore and moving up to the surface. in the context of barriers, a pet occurs when a primary barrier such as drilling fluid becomes ineffective and gas unexpectedly flows into the well bore.

this is not an uncommon event and there are time proven techniques for preventing a cake from a sliding to a blowout. a blowout occurs when flows -- against los uncontrollably to this service because all barriers have failed. in the drilling business, it is standard practice to have multiple barriers in place in the well bore at all times. if one barrier fails, another barrier is already in place to be used to stop the well from flowing in an uncontrolled manner. there are numerous barriers that are routinely used for pressure control. many of them you have already heard about in the accounts of this disaster. common barriers or drilling fluids, casing, will head steels, flood cabals, and a blowout preventers. the diagram before you chose of these barriers would exist in a typical well bore. note that the pathway for gas to travel from the subsurface to

the service must cross multiple barriers. this simple principle assures that multiple barriers is the cornerstone for say drilling the high-pressure gas well. routine test procedures confirm the effectiveness of a given barrier. barriers must be tested to be effective oftentimes repeatedly as in the case of blowout preventers. as we all know, we do not live in a perfect world and there remains a possibility that human error can create conditions whereby the design limits of a barrier are exceeded or where a barrier is not put in place correctly or in a timely manner. if the barrier is lostemê or becomes ineffective end date ki ck occurs, it is critical that crews recognize when that is occurring and immediately take corrective action to prevent ki ck from turning into a blowout.

mons is critical. occur, multiple barriers must fail, be removed, or rendered useless through human error. as you seek to determine what has happened on the deep water horizon, there will be many highly technical and complicated discussions related to equipment and processes involved. i encourage the committee to stay focused on determining the barriers that were in place in the well bore how they were tested and how they failed. many of the best and brightest people in the drilling industry have been working diligently for years to insure that a disaster like the deep water horizon never happens. now that the unthinkable has happened, the industry will now need to take the lessons to be learned from the deep water horizon and move forward to ensure that an accident such as this never happens again. the industry needs to know the precise well conditions, will configurations, and operational

decisions which led to the blowout on the deep water horizon sooner rather than later. thank you very much. >> thank you very much. mr. danenberger, don't you go ahead? >> i want to extend my sincere condolences to the family and friends of the 11 workers who lost their lives. i talked to a lot of people associate with offshore drilling operations and everyone of them has taken this personally. they are committed to do everything they can to make sure this does not happen again. in the gulf of mexico, elsewhere in the u.s., of canada and the north sea, west africa, brazil, arabian gulf, south east asia, australia, and anywhere that oil and gas operations are conducted. i will also want to express my disappointment with some of the

comments that have been directed at my former colleagues in the minerals management service. i can tell you without hesitation that everyone and that regulatory program is fully committed to safety and pollution prevention. inspectors, engineers, geologists, scientists, and others and the inspectors, they have exposed themselves to considerable risk every day when they fly off shore. they go around platforms. every day. after hurricane ivan, katrina, even when their personal lives were affected, they were on the job the next day to do everything they could to get production restored in a safe and timely manner.

ethics, these people will not take a doughnut from industry. i have tried to set them up. that said, i want to get to my main point here. my written statements summarizes the history of offshore deepwater drilling, compliance record, and i have suggestions i would like to offer to the committee. on history -- deepwater drilling goes back to 1965. that was offshore california first being drilled in 1979 off newfoundland. over 3000 rolls were -- over 3000 rigs were drilled in thousands of feet of water.

there is a flawless record for the deep water operations. blow of history is better for deepwater operations -- blow out history is better for deep water operations than shallow. i took a look at the issues that have been raised since april 20. i provided some comments on those for your consideration. i want to spend the rest of my time talking about the path forward. i think there should be an independent commission that takes a look at all aspects of this regulatory and other was they should draw from the details and investigation that the mms and coast guard has given today. we need technical and regulatory experts on this committee.

i think they should consider looking at whether we should streamline the ocs regulatory regime with gaps, overlap and confusion that exists from too many organizations. the amount of time that is dedicated to court nation should be focused on safety and preventing accidents. i do not have any study to confirm this from -- but from my experience, a less complicated authority, the more effective. we cannot have the regulator investigating themselves. i think there needs to be an independenthhç investigation authority for major offshore accidents like this. this was first recommended by a former colleague of mine who is a professor at the university of oklahoma and it was after the santa barbara blowout. that was in the early 1970's and it's not really got traction but

i think it is an excellent idea. we should expand the role of the coast guard's national offshore safety advisory committee. we should consider technological advances, performance, data and make recommendations to the regulators, congress and others on standards and procedures. there should also be some sort of annual forum so that everybody can be presented the latest information on research and technological advances. i think there should be a system, preferably a private one, for collecting and assessing failure data for blowout prevention. we may also want to look at standardized manufactured testing programs for some dop components. this data should be publicly released so that everyone sees it. beyond that, i think we should

conduct a thorough review of blowout preventive performance considerations including redundancy, independent functioning, sharing capability, backup options, and riser disconnect and drywall sequence, intentional and otherwise. existing wall control training program should be expanded to end below the wall integrity, casing, and cementing. these are aspects that have been promising not only in this blowout but in the recent motera blowout in australia. i think we should develop standards that address best practices with decisions that describes safeguards inappropriate response. we also need to give consideration to other options for insuring the integrity of the redundancy.

there could be some extra oil packers in some situations. -- external packers in some situations. we need to facilitate the prompt publication of safety rules. this was a frustration of mine in many others when i worked in the federal government to try to get a rule out in a timely way when it is urgent for our safety. we cannot accomplish everything would prescriptive rules. there is no number of people, no number of volumes that will tell people precisely what they have to do in every situation. it really has to fall back to operate responsibility. that has to be clearly established for safety and environmental management. these programs should also indicate what you will do for the industry as a whole. what will you do to participate and standards? what will you do in research? after katrina and return, we had an important hurricane conference in new orleans and

less than half of the operator showed up. how you operate in the gulf of mexico without paying attention to hurricane issues? lastly, i believe we need to recognize the importance of international cooperation on safety issues. it is an international industry and we have the same issues and concerns. we need to work together and a good example for that has been the informal work of the international regulators forum. thank you forz?y your time andi appreciate the opportunity. >> thank you very much. let me start the questions. one of our witnesses on the second panel, steven newman is the chief executive for trans ocean and he has in his testimony a statement i wanted to ask you two gentlemen about. he says the one thing we know with certainty is that on the evening of april 20, there was a

sudden catastrophic failure of the cement and casing or both. there in lies the root cause of the occurrence. without a disastrous failure of one of these elements, the explosion could not have occurred. do you agree with that? >> i agree but i think it must be supplemented with a statement that the well head step but -- system at the top of the casing is suspect. if you consider the seals of the top of the casing part of the casing, then yes, that as a likely scenario and where the failure was. >> what occurs to me just reading through your testimony that needq't things to be done n order to ensure that a blowout not occur, it seems that although the failure of the cement or casing may well be

proximate cause, a cause that led to this disaster, you can cite others as well but are also proximate causes. the failure of the sheer rams on this blowout protector to work properly, had they work properly, i assume that would have prevented the blowout from occurring. is that an accurate assessment? >> that is not totally accurate because in the context of a failure at the well head system, it is possible in my opinion that that could create a situation across the blowout preventers that would render them useless. they are attempting possibly to close on a piece of casing for which they were not intended to close or shear. in my opinion, with what i read about the situation, while it seems obvious that the sheer ramps did not cheer, they may

have been asked to function on may peace that they were never asked to function on to begin with. it is possible there was something blocking the blowout preventers that kept them from punching correctly. >> let me ask about -- your testimony also talks about the importance of properly responding to a kick. this is so this does not become a blowout. i would assume that an adequate response to a kick in this circumstance might well have prevented this accident. >> it may have prevented it. it really depends on the failure that occurred. if there was a sudden catastrophic failure, for instance at the well head that somehow blocked the bop's, recognition of the kick would not have prevented this.

it may have given them more time for people to evacuate in that situation. >> another issue that has been raised is the question of whether or not there should be censors in the well, as i understand it, to detect changes in temperature, changes in pressure, and whether or not the lack of those centers -- centers could of been a cause. what is your thinking on that? >> typically, putting a sensor in that situation is desirable. whether we could continually since temperature is difficult. sensing pressure is routine practice on shore. some of the systems that are used for hanging the casing in the well bore prevent monitoring the pressure behind the casing. that would be a desirable

addition to the well head systems that we use in drilling. >> mr. danenberger, you have a list of 10 changes that should occur that you briefly describe to us. why has not be mms put some of these in place prior to this accident occurring? is it that the need for this has only become obvious since april 20 or it should this have been something that should have been required previously? >> regulations are anti- pollution reprocess. -- regulations are an evolutionary process. we have looked a lot of these issues and changes have been made over time in the regulations.

more needs to be made. i think it has been a process that perhaps needs to be and could have been accelerated some of these -- were some of these issues looked at morewn) carefuy mms has made a consistent effort over the years to address the technological issues. >> senator mikowski. >> dr. beck, you stated in your testimony that for a blowout to occur, multiple barriers that failed through human error. you outline the multiple barriers process. trying to understand where it failed is obviously going to be an ongoing process.

will the eventual removal of the bop so that we can literally dissected, well let necessarily give us the answers that we are looking for in terms of what has happened? >> i think that will definitely address whether or not some external blockages occurred a big bop prevented them -- that caused them to fail, that prevented them from function. recovery of the bop's will be hugely beneficial to the investigation. >> >ddnenberger -- danenberger, you think the testing every 15 days is sufficient. what about the test itself? is there a way to fully execute

the sheering of a pipe each time a test is done without cutting off that well entirely? are we testing what we need to test to get us that certainty that we need? >> that is an excellent question. i think the test is very good from the standpoint of measuring the ability of the different ramps and chokes and other elements of the presenter system. i think there probably needs to be a better program, as i indicated in my testimony, for testing blind shares independently to better understand what forces being generated and would force is required to shear some of these different components. >> so it is not just an issue of doing the monitoring on a regularly scheduled basis. it is making sure that you need to test all you can. these other tests would not

be by weekly tests, they would be independent laboratory track -- tests. minutes as essential as well. >> how often should that happen? in terms of regular schedule commitments, what is suggested there? >> an atomic component fails during a protest, -- any time a component fails during a test, there should be a thorough inspection of the entire stack on the surface. >> let me ask you doctor beck about the pressures. can you give us some kind of indication as to what pressures the deep water rise and may have been contending with leading up to the event? jájei have read that it is betwn 10,000 psi to 40,000 psi.

what we're dealing with? >> i had a chance to review quickly as some of the data in the second panel's discussion. it was not complete enough for me to make direct calculations. a very well educated guess would be the the bottom hole pressure would be in the neighborhood in a subsurface formation of about 14,000 psi. i am working once again. this is an assumption but with a 10,000 pound wellhead system that failed, it is clear that that much pressure occurred at the service. pressure of 10,000 psi was able to be generated probably all the way up but the sea floor at the wellhead to. >. >> as we push out and go deeper

in making additional reservoirs will we encounter these reservoirs'? will this be the norm as we continue to push for that out? will we see pressures like this? >> the deeper the wells that we drill, the higher the pressure we will encounter. i think our industry is capable of handling surface pressures of 15,000 psi almost routinely. if we start trying to handle 20,000 psi or higher, the reliability of those systems will need to be tested when we deploy those. >> reliability need to be tested but it sounds like we need to make sure we need to do the right kind of testing. >> senator dorgan. >> it is likely the one thing

that unites us is that we don't know very much about the details of this for the purpose of the first panel. the chairman indicated that there is technology and the human factor and there is the regulatory factor. it was suggested that all of the potential to see failures. as i understand it, the platform is 1 mile above the ocean bed. the drilling goes 18,000 feet below the ocean bed. that is the kind of sophisticated exploration that most of of -- most of us have very little understanding of. i appreciate the testimony you have given us. mr. beck, let me ask you -- dr. beck, is the equipment and

technology used in this circumstance when and how different or similar or identical to the equipment and technology used in other drilling going on around the world? >> the technology used in deep water drilling is developed specifically for deepwater drilling. the work that is done in the gulf of mexico is similar to the work that is done in other areas of the world. it is supplied by the same companies. it is quite a bit different from my world which would be on shore drilling. the same small components on a small-scale but on a large scale, the complexity of the deep water systems are extreme. >> dr. beck, the kind of well we are talking about, because of its depth and the nature of it,

are there hire risks trying to access that oil? >> i don't see that the conditions that as well was drilled into, while severe, are extreme relative to what the industry capabilities are right down. it is a difficult well but it is not the most difficult well the industry has drilled by any means. our capabilities -- we are capable of handling much higher formation pressures than what the data tells us we encountered. >> dr. danenberger, this is not different technology and equipment -- i was in norway where they have massive numbers of offshore drilling and production and so on and we have done this for years.

clearly, this has to be a failure of systems, is that correct? is the chairman correct that it could be the human factor or the regulatory side or the technological side? >> absolutely correct. at the time that this blowout occurred, the production casing was set and it should have been totally sealed with no potential for accidents. >> mr. chairman, i will discontinue questions. i am anxious for the second panel. these two witnesses have provided a substantial amount of information. let me apologize for my telephone ringing. i have a relative back in bismarck going through surgery so i kept my phone on. thank you very much. >> senator grasso. >> there is no coastline in wyoming but we know quite a bit about energy production and

about treasured landscapes and wildlife protection. the tragedy unfolding in the gulf of mexico is heart wrenching and the communities and economic livelihoods are in jeopardy. our first priority is to stop the leak and containing the spell. reading the written testimony for today's hearing, reading the written testimony, i hear one message and the message is don't blame me. that does not get us very far. i am hopeful we can learn from this experience to better prevent another massive spill and also to ensure we have an immediate and effective response. it is important to remember that this tragedy does not change america's energy needs and our continued dependence on foreign oil. blocking future offshore exploration only means we will import more from foreign countries. i am confident that america can do a better job of developing offshore energy than other parts of the world. if there is a way to make the

process say for and the response more effective, is important that we implemented immediately. mr. danenberger, 38 years of experience with the department of the interior, nonpartisan, working as you have, i was wondering about the suggestion by secretary salazar recently that he is considering proposing splitting mms into two. one agency would be in charge of inspecting the oil rigs and enforcing safety regulations and the other would oversee leasing's and royalties. do you think that would be more effective for managing offshore exploration and improving safety? >> let me just say that that tends to be the trend internationally to separate the resource management agency from agency. -- and prevention agency. >> it would be viewed as being

more independent under those circumstances. >> in the last congress, i introduced a bill to encourage and make the director of mms be someone who would be confirmed by the senate. right now, that position is not a senate desk confirmed position. by doing such a thing, that lets the senate investigate that person and ask these tough questions during the conference -- during the confirmation process. what you think about that idea? >> i don't have an opinion on that. >> dr. beck, you said that something blocking the blowout preventers -- there might have been something blocking them that prevented them from working properly. are these systems vulnerable to sabotage and terrorist attack? are these systems vulnerable prior to installation or by

someone plotting against us who was working on the oil rig? >> that is a very difficult question to determine. somebody would be capable of doing damage in that manner. the fact that there are multiple people on the reagan multiple people -- you cannot do any single operation on an oil rig like this single-handedly. a single person would have a hard time. you need multiple people. when you're working on the bop's , that is not one person. the incidents of terrorism on an oil rig like this would be extremely minimal. >> you are shaking your head. >> i agree totally. >> thank you, mr. chairman.

>> senator landrieu. >> thank you park noting that when this hearing started the loss of the 11 worker and those that are still struggling with injuries. several of those were from my home state of louisiana and other gulf coast states. our thoughts and prayers continue to be with them. i want to make a short statement and ask my questions. i think it is important to keep this in perspective. there are over 300,000 men and women that work in the oil and gas industry in louisiana alone and almost every state in the nation contributes in some way, shape, or form to this industry. , both of onshore and offshore for the work done by offshore crewman is particularly difficult and dangerous at times. they are separated from their families weeks at a time, usually two weeks on an two weeks off. we owe a debt of gratitude to the people that work in this

industry. i believe some of these facts are important. i would like to put some of these into the record. in 1947 until today, there has been 42,645 wells drilled in state and federal waters in the gulf of mexico. the first deep well was 31 years ago in 1979. bagwell was 1,022 feet deep. until that time until now, there have been 2250 wells drilled and that averages about 133 wells per year. these wells accounts for only 4% of all production in the gulf in 1990 but today, they are responsible for 60%. we need their production. we must find a way to do this more safely. since 1971, not a single spill and the gulf -- in the gulf

exceeded 1,000 barrels of oil. we are exceeding 7,000 barrels of oil every day and a half with this current uncontrolled flow. from 1947 until 2009, 175,830 battles -- barrels have been spelled out of 16 billion produced. that is 1/1 thousand% of the total production. i'd think it is important to keep that in perspective. is important to understand that america uses 20 million barrels of oil per day. we produce less than half of that. any construction of domestic oil and gas production either onshore or offshore will only further put us in a perilous situation and overreliance of foreign oil and in addition, will export some of these problems to countries less

equipped and less inclined to prevent this kind of catastrophic disaster. my question to you is about this shear ram. there was a report done in 2004 that recommended there be some changes because it was noted that sometimes the shear rams would not work in terms of multiple prevention. can either one of the comment on why that was not taken more seriously and should we continue to go forward with deepwater production when we know now that blowout preventers may not function if there is something jamming the casing? >> thank you. there were changes made in the regulations to require that operators write data to show that the shear ram would

effectively shear the drill pipe that was being used under the well in the worst possible conditions. however, we know that tool joints and other types of piping that might be in a whole cannot always be sheared. more work is needed there to minimize the amount of time that such equipment -- that you are exposed to that risk. we need to get more data on performance of shear rams and their performance. we almost need a little safety assessment with each well right now until things are more comfortable. >> senator, in the context of that report, i am not familiar with that. in the context of shear rams is important to realize that the use of them is a rare occurrence. this is not something that is

going on daily, weekly, or monthly. it is possible that oil rigs have never used their shear rams a serious event such as this. that is the last line of defense. that is something we definitely need to look at. they will not shear all piping elements. it is subject to human error for incorrectly spacing the pipe across the bop's. you have to physically measure and not place a tool joint across a shear ram. they are designed to shear a specific tube. >> i want this committee to re- look at the revenue sharing proposal that a been put before this committee -- before this committee. these are resources belonging to the federal government of louisiana and the gulf coast states are sending almost 100%

of the risk to our web labs which is why we needed new look at that provision. thank you, mr. chairman. >> thank you, senator obsession's. >> thank you for having this hearing. i was able to fly over the gulf recently. it is a very disturbing scene. people are very wary. we think we may be getting -- we may be beginning to see signs along the alabama gulf coast but they say it is ok so far. it is at the whim of the tides and wind. it has a ramification that goes beyond almost everything i have seen in terms of the economics of this situation. i worry about it and i believe

we need to have some questions answered. we need to review our policies. only then can we feel confident that we can go forward effectively. the production of oil and gas off our shores is so important to this nation and our economy that most people i don't think fully recognize it. that is something i have supported for a long time. i hope and pray that we can get this situation straight. i believe it takes a full review of what we are doing and how we do it. we have had such a success record in the gulf that maybe there was laxity or complacency or overconfidence. i don't know but it is time to find that out. dr.beck, you talked about the shear rams and how often they are activated.

you know how long -- sometimes to have been activated? >> no, i don't know that. >> you said almost never. >> there are many oil rigs drilling in the gulf of mexico that have never experienced a blowout. it just does not happen to every oil well or oil rig that we drill. these people will not have experience. perhaps in a situation where you are evacuate for a hurricane, they might use them but not always in the context of a blowout. we just don't have that number of blowouts to test every -- >> that does not diminish the necessity that they work, does it? >> not at all. they need to be tested and known to work. >> one of you indicated the unusual pressure. there is a 2004 study by the mms

which raised significant questions about the ability of the rams to cut through stronger pipes in deepwater drilling. these are thicker pipes, apparently. these great depths have additional pressure on them for it in your opinion, was that mms finding correct and can we depend on shear rams to operate at 5,000 feet of water? >> once again, all i can state is that a shea ram as designed to cut a specific to, is very dependable. it is when it attempts to cut something other than that to bet it is no longer dependable. >> mr. danenberger, we have any assurance that these shear rams are being used so we can depend on them to work when people have raised questions about whether

or not it is safe to drill in the gulf? i am under the impression that we can depend on them. i understand that it may not be workable. what do you think? >> the data that they are reliable from a functional standpoint and they are reliable as dr. beck indicated in cutting pipe they are designed to cut, we need to take more of a look at the situation where there might be -- >> does mms regulations require that the shear rams be used on a pipe they would work on? today except the fact that it just won't work? >> they require the drill pipe that will primarily be in the well, that'd be able to shear that. there will be time periods where

something else in the well bore that needs to be examined more closely. >> with that kind of pipe be in the well after it is being brought on line after the drilling is complete as in this situation? >> i don't think so but i am not sure exactly what activity was going on at the time of the blowout. >> you would acknowledge there is uncertainty. would you say too much uncertainty that needs to be eliminated? >> as i mentioned in my testimony, we need a little bit better standardization on the performances of certain bop components and theshear ram be one of them. >> is that what they mms is supposed to do? >>mms sponsored the study that

you reference. they are attentive to these issues. they have made changes in regulations. whether they are sufficient at this time time >> could they have mandated changes so they could be certain to work? >> we need to know better the potential for problems and the extent of the problems. we need to know the options in terms of solutions. >> i would agree. thank you, mr. chairman. >> senator mendes. >> thank you. despite what i have heard for quite some time from the industry that we are absolutely safe under all circumstances, i think it does not take a rocket science to figure out there is no such thing as too safe to spell. . .

mr. dannon burger, and i understand you left mms? >> january. >> the montero will head -- well head explosion off australia lleyton up to 9 million gallons of oil. based on the testimony we received from mms last year, it seems mms simply dismissed the oil spill as something that could not occur in u.s. waters.

now it has happened. did mms learn anything from this accident? >> that investigation is still going on. they just finished a hearing four days before this incident occurred. still lessons to be learned there. there are similarities. there was a failure of well integrity in both situations. i think there needs to be renewed emphasis on well integrity work. >> you submitted on a voluntary basis to the commission a statement, is that correct? >> yes. >> you said among other things, "to this incident appears to have been highly preventable if internationally accepted practices were followed." is that true in the case of the situation here?

>> it may be. we have to find out more. the main point with the australian blowout was they did not have a secondary barrier in the production casing. that is internationally recognized and was going to be in place here, but never happened. >> dr. beck, the blowout preventer had multiple redundancies, right? >> correct. >> yet none of them worked for. >> i think that is a fair statement. >> multiple redundancies, not just a single thing that will work to create safety. multiple redundancies. we are told that if one does not work, then another one will and none of them worked. none of them worked. so, when mms goes ahead and does testing, can you give me a sense of the testing? how is it the testing always seems to pass and yet when it is

needed, it fails? >> all of the components of the blowout preventer have told pressure, they are tester -- they are pressure-tested. charts are made that show the pressure holding and if they are certified. >> this is a test in retrospect? is that and a protest to really judge whether or not under these set of circumstances it will operate as it is supposed to? >> jpra protest, yes. >> a final question, dr. becker? >> cohen safety and environmental regulations do not differentiate between deep and shallow water developments? should there be more stringent regulations for deep

water development? >> i would defer to mr. dannon burger. >> can you answer that? >> if the operations are similar in many circumstances, particularly with regard to we ll integrity. there are some differences in the regulation. whether there should be a separate set of regulations or separate section for deep water , that would merit consideration. >> thank you. >> senator rich. >> thank you. thanks for holding the hearing. i have one question, gentlemen. we're going to continue to develop oil wells in the gulf. i don't think there's any question about that. it is necessary. 40 years ago on the first earth day of the big issue was stopping nuclear power. they were incredibly successful in stopping nuclear power. as a result, we are much more reliant today on fossil fuels.

we will continue to be like that as we drift away from that. everyone on this committee is committed to moving from fossil fuels. but it will take some time. there is no question. when you have human activity like this where you have a highly technical and sophisticated process of developing the deep water well, accidents are going to happen. the thing that has struck me aside from the tragedy of this and i think everyone would concur this is an awful situation, but it seems to me we have been totally unprepared to respond to this. knowing the federal government as i do and the bureaucracy, that does not surprise me that the government is not able to respond to this. it seems to me that the industry itself has the expertise and the technology and the engineers

that they should be able to respond to this better. i know that there was some concerted effort to get the best minds together to try to resolve this, but it would seem to me that some type of an agency -- i am thinking of a private agency -- that brings together all the companies that are doing this kind of exploration and production would be very beneficial to them. this is a problem. this is not just bp's problem. this is an industry problem that everyone will pay the price for, for a long time, along with the american consumer. what do you think about some type of private agency overseeing by the federal government that -- overseen by the federal government that provides technical help when something like this happens, to respond quickly and to put the best minds together they can't resolve this. let's start with mr. beck. >> in terms of a private agency,

senator, there are so many operators drilling wells in the gulf. each of them needing a staff to be able to do types of responses we are talking about. i think a private agency will turn into an extremely large organization to be able to service all of those individual companies, if i understand your premise in terms of a centralized response unit. the industry is very good at sharing technical information. we have technical societies that published large amounts of papers that people read and digest what is happening technically. but there is no central clearing house for assuring that everybody knows that information. >> it seems to me the central clearing house might work better. the response right now, i don't think anybody is satisfied with the way the industry is

coordinating the response to this. mr. danenberger? >> in terms of the response, i have a hard time finding a lot of flaws. every option in terms of trying to stop the flow has not worked. every possibility in terms of actuating the existing equipment and trying new equipment in concert, i think that has been very good. >> what is the exit strategy? what is going to work? what is the path to get there? obviously you can't tell me what works. but there has to be an end game. >> the relief well will work. i think the chances are good that the relief well will complete the job.

>> gentlemen, thank you very much. mr. chairman? >> thank you. senator widen. >> you spent decades at the minerals management service in terms of oil drilling offshore for your retirement in january. they allowed deepwater horizon and other oil rigs to deal with near certainty that blowouts' whitaker without adequate backup devices. why? >> i am not really sure about the question. there were a good backup capabilities. >> they were not required, were they? >> they were required to have a becca evacuation system, which in this case was a remotely operated vehicle. it performed its functions.

it's just there were other issues. >> the agency required these, enforce the regulations, but they just did not work? >> they were required to have a backup at chelation capability. not an acoustic back up. they were required to have a backup actuation capability. >> but they were not required to have a backup that worked, or a date? >> the back of worked. it did its job is just that these that was either damaged or unable to perform the function when it was operated by the backup. >> in 2007 you co-author of a study of blowouts that entitled "absent fatalities and blowouts encouraging in studies of incidents in the previous decades." it strikes me that title is

instructive because although not every blow out ends in tragedy, it turns out that blowout fatalities are not exactly out in oil and gas drilling. again, my question is, when you areeputting out these studies, how can one conclude that the middle management is doing its job to ensure that adequate preventive activities are taking place, when you are saying, "absence of problems are what people ought to be think about"? >> the studies showed an improvement in the blow out a record and performance. i think that is what that title reflected. >> was it fair to say there was an absence of these problems? that is a signal, from the lead federal agency that people don't really have to sweat it in this

area. mr. chairman, i would like to put into the record as well, this particular study, because it looks at the number of blowouts in these deepwater situations, for example. you cannot conclude that there is an absence for wells and water deeper than 1,000 feet there is a blowout for one in every 499 wells. i don't think people traveling in an airplane with think it would be safe for a tire blowout every once in awhile. by the way, when you talk about the question of financial oversight, the inspector general did a report that i asked for with respect to financial improprieties. it seems to me there was significant safety gaps in this

agency the need to be corrected as well. all want to give you the last word, mr. dannon bergenberger. >> the purpose of studies like that is not to say there are not problems. it was a 15-year study. there was one fatality. it did not have anything to do with deep water drilling. most of the blowouts are not blow outs that you would consider -- that the average person would think of as a blowout. it's just a short loss of well control. in less than a day it was prevented with equipment or other immediately available options. >> i hope my colleagues will take a look at this study because this study is about sending a message that there really are not safety concerns in this industry. the american people now know full well that it does. thank you, mr. chairman. >> we have four other senators

who have not ask questions of this panel yet. let me call on senator lincoln. >> thank you, mr. chairman. and thanks to senator mccaskill for holding a special hearing on the tragedy that has taken place in the gulf of mexico. while i think it is clear to many of us that the mystical production is critical to our national security, so is the safety of our domestic oil production. that is what we are here to talk about. it is imperative that we get some answers as to what happened, what the response has been, and how another accident like this one in the gulf can be prevented. we appreciate you gentleman being here with us today to help answer those questions. we appreciate your expertise. i don't know how many of my questions have been addressed because i was absent for a little while. for public like to ask dr. beck. use of the valves were operated by hydraulic pressure and

applying that pressure at a water depth of 5,000 feet can be very complicated and is an engineering marvel. what are the differences in how blowout preventers are installed and tested as well as operated at deep water levels? do you believe the blowout preventers are any less reliable in deep water than shallow water? >> senator, as i said in my introduction, i do not portray myself as the deep water drilling experts. if the issues with specifics on the deep water issues i have not dealt with in my career. i would decline to speak about specific going on in the testing and installation of those. they are much better experts than me. are they tested at those levels? >> the stacks are tested repeatedly along 14-day intervals. >> at 5,000 feet? >> on the seafloor, i believe. once again, i am stretching out

of my expertise. it's a very difficult task to retrieve a stack off the sea floor. >> but you don't know the specifics? >> i don't know the specifics of how it's accomplished. >> we would imagine they would have been tested in the circumstances that they are being used. now to a report that mms recommended deepwater drillers be installed with remote-control shut off devices in 2002. in 2003 mms determined these devices were not essential and therefore not required. some reports claim that mms based the decisions on complaints from some of the drilling companies in terms of the cost. not always reliable and expensive. in your testimony you dispute the costs were discussed in the

decision from ms and state and other concerns. do you believe the promotion of control limit a difference in this accident? should mms review this decision and make remote shot off switch is mandatory as they do in norway and in brazil? >> they have backup capabilities on the deepwater horizon that should have caused the blowout preventers system to work. i don't think the problem was the absence of acoustic back up. however, i think that is something that merits further review as to whether it would provide any advantages in the future. the ro systemv has been liable when tested and attempted. >> the remote shot off? >> yes, with the remote operated vehicle, which is presently used by most of the oil rigs in the gulf. >> you are not necessarily saying that it would have been a

difference in this case, but you think it should be reviewed further? >> yes. >> thank you. in the testimony as well you stated that 18 of 39 blow outs from the year 1992 through 2006 involved some missing operations. i don't know. senator wyden brought up some issues from the letter. you say that an industry standard should be developed to address the printing problem, how they should be prevented and actions that should be taken. would you care to elaborate on the need for industry standards for cementing in offshore drilling and what role do you believe cementing may have played in this accident? >> possibly played a significant role. we don't know what happened yet. but that should have been secure with no influx possible at that point. so there was some failure and quite possibly the cement.

the record on well integrity point to some problems with cementing operations that require further review and perhaps standardization. >> there are no standards currently? >> there are standards for the makeup or composition. it's not about what happens and then if this happens then that should happen next. but thank you. >> i would ask one question in the interest of time. i would first preface that we all understand this was a horrible disaster. the most important thing to remember is 11 lives were lost as well as the catastrophe economically and environmentally. i just had one question. you had a series of recommendations regarding independent commission, to streamline the recommendations so they can focus more on safety, expanding training. denny's said we need standards for best practices.

i am very surprised that today we don't currently have standards for best practices. are you suggesting we don't have standards for best practices? >> there are many standards for best practices over 100 incorporated in the mms regulations. there are couple of areas where there -- we're more work should be done. cementing is one of those areas. maybe some more work on certain bop components. >> probably the american people would have assumed we would have had standards for best practices in all these areas. if we don't, we need to. thank you. >> mr. chairman, i do associate myself with all the remarks this morning with my colleagues on both sides of the aisle. i appreciate your comments in your written statement. i look forward to reading it more thoroughly.

your defense of most of the employees of mms as well. that is true. but there have been a couple of cases where mms has demonstrated sometimes inappropriate relationship with industry. most notably the denver office, the colorado senator comes to mind. mms collects billions of dollars and royalties from oil and gas fields every year. it also charges the charged with regulating the safety and environmental practices of the industry. you could argue those two rules contradict each other. can you comment on this mixed role that mms played as the advocate and the regulator for the oil and gas industry? >> i think it is something that is probably going to be looked at and that is a reasonable -- something that is reasonable for

your committee to look at, whether we should have a truly independent safety and pollution prevention regulator, simply from the research management function. i think that concept might merit further attention. >> senator? >> thank you, mr. chairman. i would like to thank our panelists for being here. your knowledge of mms is very helpful to this committee. my question, i would like to follow up on the issue raised by senator lincoln. she was asking about the cement used to keep oil and gas from dublin to the service and exploding during drilling. it is my ander standing that in 2000, mms after the industry for advice on how to deal with problems with the cement used in

the drilling -- it is my understanding. do you think it should take a decade or longer to fix a problem mms has identified? in your experience with the agency, are these types of delays, or have they occurred more recently since mms has begun relying more on industry self-regulation? >> i think that the issues associated with cementing have been under discussion for a while. and there have been some changes made in practice is and in regulations. clearly more needs to be done and that should be the focus of attention right now. >> can you -- do you know what the regulation is governing that cement used and how the industry was involved with developing that regulation? >> it was developed by mms. that regulation tells when you

have to cement and how much you have to use and how high up and how long you have to wait on the cement, how to pressure test the casing after the cement has set. so that is well covered -- well-covered. looking at the montero blowout, there was not a good understanding on the part of some of the workers as to what actions they should take when certain signals were given that maybe they did not have a good cement job. that is kind of an assessment we might need in the standard. >> given that the training is now done by the industry, is that something that should be incorporated into the industry training? >> yes, i think there should be -- there are certain specialist that do the cementing. i think the primary operators

represented, the drilling contacting people should have pretty good familiarity with those operations. cementing is not currently required as part of the overall well control training program. >> thank you. >> i believe that everyone has had a chance to ask questions. we appreciate most of you testifying today very much. we may call on you in the future for additional expert advice on this issue. our second panel is composed of witnesses from the three companies that are most immediately involved in the operation on the deepwater horizon drilling rig in the days and hours leading up to this catastrophic failure. bp is the integrated exploration and production company that was ultimately the primary operator of the oil well being drilled. his representative is lamar mckay, president and chairman of bp america.

transocean ltd. was the owner and operator of the deepwater horizon drilling rig that exploded on april 20. it is the primary offshore drilling contractor in the deep water of the gulf of mexico providing of rigs to many of the deepwater exploration and development oil wells. its representative on this panel is steven newman, its chief executive officer. halliburton is the oil-field services provider that was subcontracted to provide a range of services on the deepwater horizon, including the cement and casing program of the oilwell that experience to the disastrous blow out. its representative on this panel is temperate, the president of global business lines and chief health safety environment officer. -- tim propert. -- probert.

if you will stand i will administer the oath. do you solemnly swear the testimony you are about to give to the senate committee shall be the truth, the whole truth, and nothing but the truth? >> i do. >> please be seated. as with the previous panel, your entire statement, written statement will be made part of the record. we would ask that each of you take five or six minutes to make the main points that you think we need to understand, starting with mr. mckay and then mr. newman and then mr. probert. >> thank you. members of the committee, my name is lamar mckay. i am the chairman and president of bp america. we have experienced a tragic series of events. three weeks ago tonight, 11 people were lost in an explosion and fire aboard the transocean deepwater horizon.

17 others were injured. my deepest sympathies go out to the families and friends who have suffered a terrible loss and to those in the gulf coast communities whose lives and livelihoods are being impacted. over the last few days i have seen the response firsthand and i have spoken with the men and women on the front lines. there's a deep and steadfast resolve to do all we humanly can to stop the oil leak, contain the spill, and to minimize the damage suffered by the enormous and the people of the gulf coast. as a responsible party under the oil pollution act, we will carry out our responsibilities to mitigate the environmental and economic impacts of this incident. our efforts are part of a unified command that was established within hours of the accident and provides a structure for our work with the promise of a homeland security and interior as well as defense,

energy, osha, and other federal agencies, as well as affected state and local governments and transocean. we are grateful for the involvement of president obama and members of his cabinet and for the leadership, direction, and resources they have provided. we are also grateful to the governors, congressional members, state agencies, and local communities of mississippi, alabama, louisiana, texas, and florida. i want to underscore that the global resources of bp are committed to this effort. they have been from the outset. nothing is being spirit. everyone understands the enormity of what lies ahead and is working to deliver an effective response at the well head, on the water, and at the shoreline. before i describe our round-the- clock efforts to respond to this event, i want to reiterate our

commitment to find out what happened. figuring out what happened and why it happened is a complex process. we are cooperating with the joint investigation by the departments of homeland security and interior and investigations by congress. in addition, bp has commissioned an internal investigation whose results we plan to share so we can all learn from these terrible events. i want to be clear, it is inappropriate to draw any conclusion before all the facts are known. as we speak, our investigation team is locating and analyzing data, interviewing available witnesses, and reviewing and assessing evidence. if today i think it is important to give you and the american public an idea of the questions we are asking. there are two key sets of questions. we are actively exploring both of them. first, what caused the explosion and fire on board transocean deepwater horizon rate? -- rig?

second, why did the fail-safe mechanism failed to work and release the oil rig? with respect to the first question, the key issue we are examining is how the hydrocarbons could have entered the well? bp hired transocean to drill the well. transocean had responsibility for the safety of drilling operations. we don't yet know precisely what happened on the night of april 20, but we do know that there were anomalous pressure test reading prior to the explosion. these could raised these couldwell control prior to the operation -- these could have raised concerns prior to the operation. we hope to learn more about what happened and what was done in the hours before the explosion. apart from looking at the causes of the explosion, we are examining why the blowout

preventer did not work as the ultimate failsafe to seal the oilwell and prevent an oil spill. clearly it remains a critical piece of equipment throughout all operations to ensure well control until the time it is sealed with a cement plug and is temporarily abandoned. we will continue full speed ahead with our investigation, keeping all lines of inquiry open until we find out what happened and why. at the same time, we are fully engaged in efforts to respond to these events. our subsea efforts to stop the flow of oil involved four parallel and concurrent strategies. activating the bop would be the preferred course because it would stop the flow at the source. this proved unsuccessful so far. we are working on a containment system which will place largemé

we have developed a technique to stop leaks. to protect the shoreline we are implementing the most massive shoreline protective effort ever. 13 staging efforts are in place. 4000 volunteers have already been trained. we recognize that there are environmental and economic impacts. bp will pay all unnecessary cleanup costs and is committed to pay legitimate claims for other losses caused by. the by tragic and unforeseen at this accident was, we must not lose sight of why bp and other energy companies operating in the gulf. the gulf provides one out of four barrels of oil produced in the united states. if that is a resource our economy requires. bp and the entire energy industry are not under illusions

about the challenges we face. we know that we will be judged by our response to this crisis. we intend to do everything in our power to bring this under control and mitigate the environmental impact of the oil spill and to address economic claims in a responsible manner. no resource available to this company will be spirit. i can assure you that we and the entire industry will learn from this terrible event and emerged from a stronger and safer. thank you for the opportunity to speak before you today. i would be happy to answer questions. >> thank you. mr. newman, go ahead. >> members of the committee, thank you for the opportunity to speak with you today. my name is steven newman. i am the chief executive officer with transocean ltd. it's a leading offshore drilling contractor with 18,000 employees worldwide. i am a petroleum engineer and

have spent years working with and on drilling rigs. i've worked a transocean more than 15 years. i am incredibly proud of the contributions are company has made to the energy industry during that time. today i sit before you with a heavy heart. the last few weeks have been a time of great sadness and reflection for our company and for me personally. nothing is more important to me and to transocean than the safety of our crew members. our hearts ache for the widows, parents, and children of the 11 crew members, including nine transocean employees, who died in the deepwater horizon explosion. these. were exceptional these we are committe -- these were exceptional men. over the last few weeks we have seen great acts of courage and

kindness in our colleagues and in our communities. that was embodied by the 115 crewmembers who rescued from the deepwater horizon and were as worried about the fate of their colleagues as they were about their own safety. it was embodied by the brave men and women of the u.s. coast guard who provided on-site response and search and rescue efforts, and by medical professionals and family and medicalwho received the injured crew members when they arrived on shore. it is embodied by our friends and colleagues at transocean and across the industry who have rallied to help the families of those lost. this has been a very emotional time for all of us at transocean. it has also been a time of intense activity in effort who. immediately after the explosion, transocean began working with bp and the unified command in the effort to stop the flow of

hydrocarbons from the oilwell. our finest engineers and operational personnel have been working with bp to identify and pursue options for stopping the flow as soon as possible. our drilling rigs are involved in drilling a relief well and the drillship called the discover enterprise is standing by on location to carry out the unique oil recovery operations in the gulf. we will continue to support to bp and the unified command in all of these efforts. at the same time we have been working hard to get to the bottom of the question that this committee and the american public want and deserve an answer to. what happened on the night of? april 20 how do we assure the american public it will not happen again? -- what happened on the night of april 20? transocean has assembled an independent team that includes

dedicated transocean and industry experts. they will be interviewing people who have potentially helpful information and studying the operations and equipment involved. because the drilling process is a collaborative effort among contractors, and subcontractors, the process of understanding what led to the april 20 explosion and how to prevent such an accident in the future must also be a collaborative. our team is working side-by-side with others, including bp and governmental agencies, and the investigative efforts will continue until we have satisfactory answers. while it is early to know exactly what happened on april 20, we do have some clues about the cause of the disaster. the most significant clue is that these events occurred after the well construction process was essentially complete.

drilling had been finished on. april 17 the oilwell had been sealed with casing and cement. for that reason, the one thing we do know is that on the evening of april 20 there was a sudden catastrophic failure of the cement, the casing, or both. without a failure of one of those elements, the explosion could not have occurred. it is also clear that the drill crew had very little, if any, time to react. the initial indications of trouble and the subsequent explosions were almost instantaneous. what caused that sudden violent failure? was the oilwell properly designed? were there problems with the casing and the fuel assembly? was the casing properly cemented? and the oilwell effectively sealed? were all protests run on the

cement and the casing? nor the blowout preventers damaged by the surge that emanated from the well? did the search put debris into the bop, which prevented them from crossing the pipe? these are some critical questions that need to be answered in the coming weeks and months. until we know exactly what happened on april 20, we cannot determine how best to prevent such tragedies in the future. but regardless of what the investigation uncovered, ours is an industry that must put safety first. we must do so for the sake of our employees, for the sake of their families, and for the sake of people all over the world who use and enjoy and rely on oceans and waterways for their sustenance. thank you again for the opportunity to speak today. i am happy to answer any questions. >> thank you very much.

mr. probert? >> members of the committee, thank you for inviting halliburton to testify. we will continue to work with you and your staff to collect the factual data that will enable an understanding of what took place and that we can -- and what we can collectively do to ensure domestic oil and gas production is undertaken in the safest and most environmentally possible manner possible. if the catastrophic blow out and spread of oil in the gulf of mexico or tragic events for everyone. on behalf of the entire halliburton family, we extend our heartfelt sympathy to the families, the friends, the colleagues of the 11 people who lost their lives and those workers injured in the tragedy. as we hope you can appreciate, neither halliburton or any other party can make a judgment or offer any credible theories about what happened until at a

minimum the oilwell owner has interviewed everyone on the deepwater horizon to recreate the daily log of activities on april 20. in absence of that, we should not be making a rush to judgment. the weber, two things can be said with some certainty. -- however. the casing was put in place. had the it bop functioned as expected, the catastrophe might not have occurred. for more than 90 years holabird has provided a variety of production -- halliburton has provided a variety of products and services to ensure the life cycle of reservoirs. with respect to the mississippi canyon to 52 well, halliburton was contacted by the owner to provide cementing, directional

drilling, real-time data acquisition and data delivery services for t personnel on board the oil rig and on shore. since the blowout, halliburton has been working at the direction of the owner to assist in efforts of bringing the oil well under control. this includes intervention support to help secure the damaged oilwell and assistance in dealing one or more relief wells. at the outset i need to emphasize that halliburton is a service provider and is contractually bound to comply with the oilwell owner's instructions immolated to work activities. the construction of a deep water well is a complex operation involving the performance of many tasks by many parties. while the owner has ultimate responsibility for planning and approving, much of the daily activities are directed. cement can be used to prevent

movement of fluids between formations and to bond and support the steel casing. there are many external factors which affect the design. and the execution. these include variability of the geometry, the relative location of hydrocarbon reserves, and hydrocarbon content of associated drilling fluids. the centralized replacement on the production casing, the drilling fluids, a conditioning program, and the cement replacement design used for the well were implemented as directed by the owner of the oilwell. as shown on the diagram which is attached to my prepared remarks from a design so there was no continuous cement column throughout the entire well board. 24 hours prior, halliburton had completed the cementing of the ninth and final if production casing in accordance with the program.

following the placement of the slurry, the casing ceiling was done in the tazing hangar. as required by mms and as directed by the oilwell owner, a pressure test was conducted to demonstrate the integrity of the production casing strength. results of the positive test were reviewed by the owner and the decision was made to proceed with the well program. the next steps include the performance of a negative pressure tests which tests the integrity of the casing assembly. it is conducted under the direction of the owner and mms requirements. we understand halliburton requires a pressure applied during the test. after the negative test was completed, halliburton cementing personnel were placed on standby. we understand the drilling contractor replaced the dense drilling fluid in the riser with

seawater prior to the planned placement of the final cement plug. if the drilling fluid being transferred directly to a workload standing by. the final cement plug would have been installed inside the production stream and enabled the planned temporary abandonment of the oilwell. but prior to that point in the oil well construction plan, the halliburton personnel would have set the cement plug, the catastrophic incident occurred. as a result, the final cement plug was not set. halliburton is confident the cementing work on the mississippi the252 was completed in accordance with requirements. thank you for the opportunity to share with you. i look forward to answering your questions. >> thank you very much. i just note for all senators we are in the middle of a vote.

i guess we are halfway through a vote. so we will plan to keep the hearing going. if senators want to go ahead and vote and then return to ask questions, you are encouraged to do that. let me start with some questions. mr. probert, in one of your last statement said you understand the drilling contractor proceeded to displace the riser with seawater prior to the planned placement of the final cement plug. is that standard operating procedure? >> that is an operating procedure which is commonly used. >> there is no safety problem in doing that as a normal matter? >> what that effectively does is it reduces the density of fluid in the riser. as a result of that, it reduces the hydrostatic head which is

bearing down on the well head. >> i would have thought that you would want as much pressure in the oilwell, tao would pressure, as possible until you have the plug in place. am i wrong? but there's no question that question hydrostaticshead would of been reduced during the course of that process, but it is a process undertaken prior to the setting of the final cement plug. >> ok. let me ask a very general question about it. i think you make reference to the need to recreate the daily log of activities that occurred on the oil rig. i think that was your comment. is all of the data that was available on the oil rig prior

to the explosion, is all of that information -- has that been preserved and is it information that is being made available to the government investigators at this time, mr. mckay? >> as in the stand, there's quite a bit of data located on a remote server from the oil rig onshore. that data has been preserved. all data, everything we can get our hands on and turnover is being turned over, yes. >> mr. newman if, is that your view? but that there would be some amount of written data that would've been on the oil rig at the time of the event, obviously that data is no longer available to us. whatever there was has been transferred electronically or sent into our offices prior to the event is being preserved and provided to the government. >> did you have a remote server that was capturing this data away from the oil rig just as

mr. mckay indicated bp did? >> the only distinction i would draw is that bp data would have been real time. our data has some delay in the replication of our data, so are sequence of events ends at 3:00 in the afternoon on the 20th. >> do you have all that data preserved? >> yes, all that data has been preserved and made available as requested. >> ok. one of the issues that is going to be focused on probably when we have secretary salazar next week is whether there were efforts made to improve or to strengthen the safety requirements for this type of drilling operation that mms made that were not successful,

that the industry resisted. are there any aspects of this that you are aware of, mr. mckay, where the mms was urging additional safety precautions to be taken that the industry was not in compliance with? >> no, i am not aware of any. some people of reference to a letter that went to comment to the mms about safety regulations where we were providing comment as to the nature of, a prospective nature of regulations. we suggested that performance standards should be set off, companies should be made to adhere to those performance standards. we made recommendations for on how we thought regulations could be made better, but we have not submitted anything that would try to slow down or limit safety regulations. >> mr. newman, do you have any knowledge of circumstances where your company or industry

more generally has been resistant to efforts by mms to impose stricter safety requirements? >> senator, i would draw a distinction between discussions with regulatory authorities and regulation. we have participated in discussions when the topic being discussed would have specific applications to our business or where we would have expertise that we could bring to bear on those discussions . when regulations are passed, we stand in full compliance. >> did you have a comment? >> we also work closely with the mms in developing standards for certain processes which are undertaken. >> ok. thank you all. senator mikulski? >> thank you, mr. chairman. in reading through the testimony of each of the three of you -- and this was alluded to by senator menendez, that he

suggested there is the transference of liability or finger-pointing. i have stated that there is going to be plenty of time to try to figure out who is to blame. that will go on. i think we appreciate and recognize that. you suggested, mr. mckay, that, as the owner and operator of the deepwater horizon, that transocean -- not suggesting that the liability is there, but you are transferring it. mr. newman is suggesting it is not the bop at all, that that was not the cause. and that we should be looking to something that could cause a catastrophic failure such as the casing or cementing. mr. probert take all the way back to the owner of the oilwell

at bp. i would suggest altria view that we are all in this together, because this incident is affecting -- it will have an impact on the development of our energy policy for this country. if we cannot continue to operate and convince people that we can perform safely, then not only will bp not be out there but the transoceans will not be out there to drill and halliburtons will not be there to provide cementing. mr. mckay, i want to ask you some questions about what is happening right now. we have been watching with fascination the containment dome and whether it's going to work. it's not encouraging. it's disappointing to many. we are now watching the ongoing efforts with the drilling of the two relief wells, recognizing that is two months away. now discussing the nowhitop hil.

we're not certain how much volume is coming out on a daily basis. the issue with the disbursement, i would like to understand from you whether or not we have the supply of dispersants that we need, whether we are getting them out there not only at the surface but at the seabed in a manner that is aggressive. when the exxon valdez incident happened, we delayed some critical methods that we've perhaps could have contained it, whether it was burning or dispersants. i would like to think there have been no delays, th. can you give me some assurance we are moving aggressively to break up as much as we can't?

>> yes, we have two levels of dispersant that we are utilizing. one is that the surface. it is phone every day when the weather permits. that has been very impact will so far. >> did you have enough of that? >> yes. what we have done is worth the supply chain such as our chemical supplier, which supplies 75 thousands a day sustainably. that amount should cover the amount using at the surface on the water as well as what we hope to do. we have just done a subsea test yesterday. it ended at 4:40 this morning. bp is making sure the correct monitoring is in place or will be in place. we hope to be getting approval pretty soon for further dispersant.

>> is this the first time epa has done this testing and the deep water levels, testing dispersants for safety and effectiveness? >> i believe this is the first use at 5,000 feet and the first test. >> it stuns me that we know we need to use dispersants in the event of an oil spill, but we have not put in place the testing necessary. we have probably lost days where we could have been acting while we are waiting for the testing to play out. that's more than frustrating. litani ask you, -- let me ask you, you just indicated the final cement plug was not yet placed prior to the blowout. this is contrary to a certain media accounts out there. the question is why is that significant? i want to make sure i am clear.

the we --was the oilwell case and completined when the blowout occurred? but there are conflicting reports in the media. i can confirm the final plot was not said. as we heard this morning, the concept of multiple barriers is very important. that blood would have been the final barrier before the oilwell would have been temporarily suspended, as was the plan for completion at a later date. >> be have a vote that we have to get off to, but there's one question. what tests were conducted? what kind of maintenance logs are in place for the cement works? >> in fact there is no direct test that was performed on the cement. >> do you usually do a direct

test? >> the direct tests were to be performed would be called a temperature log or a cement bond log. that's the only test to determine the actual effectiveness of the bond between the cement sheets, the formation, and the casing. when is that typically conducted? >> that is conducted after two prior tests. the first test is a positive pressure test which is conducted to test the integrity of the casing itself. the second is a negative test which is designed to test the integrity of the casing hangar seals or the seal assembly which contains the casing. .

were. that seems to be pretty key to what could have taken place. >> and i think that everyone is working very hard to make sure that the data is made available so a reconstruction of events can take place so that determination can be -- >> mr. mckay or mr. newman, do you have that data? >> i have not had a chance to review any data. i know it's all being gathered. >> you do believe you have it?

>> i believe there should be some data, at least from some interviews, if not physical data from the servers. that will be a large part of the investigation to understand that sequence. >> we're going to take a short recess until we can return from these votes. we'll just stand in recess a few minutes. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> let's subsidize alternative energy.

[inaudible]

>> and this senate energy committee taking a break. there's a series of votes on the senate floor. amendments on the financial regulations bill. if they come back before 12:30. the u.s. house comes in at that time for morning hour. general speeches. we'll have that live for you here on c-span. so while we wait for the house or for this senate hearing to resume, we'll bring you a look at items in the news and viewer

phone calls from today's "washington journal." you ao se- mail, or a quarter. -- twitter. i want to look at mrs. kagan's on words. she was reviewing a book that was called "the confirmation." this is what she says about the ocess. this says, if this is so, the consideration of the nominee --

this is just some of what she was talking about, as far as we want to get your thoughts on specifically how much a nominee should review on specific issues and cases. again, if you want to join us pour this discussion, here's how you can do so this. -- do this. if you want to send us something eelectronically, you can do us by email. journal@c-span.org. and off of twitter this morning, if you use that technology, twitter.com/cspanwj. linda greenhouse, before she became a columnist for "the new york times" was a longtime

supreme court correspondent. just answer the question is the headline. and this is something at she writes. the confirmation hearing should reveal the vision of the court. privacy rights and free speech, race and gender discrimination, everything should be on the table for analysis. and she has her own thoughts. she says, i hope that the nominee believes now what she wrote about back then. i believe the white house handlers muscled her when they said that they should not leave the minimalist approach. there were 31 votes against sonia sotomayor. what was gained by this strategy? i would say that this is a loss

for the public, and for progressives in particular. conservatives were able to claim a moral victory. again -- we will take your thoughts on what should be revealed by the supreme court nominees. we will start in maryland. this is on the democratic line. >> good morning, and thank you for taking my call. i believe that the supreme court nominees have to give us more. they have become so handled, you cannot get a real perspective. i understand the reason that they do this. this is because they do not want to say anything that will cause

problems in washington. one of these crazy moments. this is unfortunate because at every hearing, the questions never get to the heart of anything. this is just unfortunate for the whole process, and this does a disservice to the court and the american people. host: what kind of questions would you like to hear people asking? >> i would go to the constitution question. i would go to the questions on the large end, freedom of speech, with the internet. the things that are cutting edge, where the legislation has not been formulated. i would go to the patriot act, questioning the powers that have changed, recently, and see what this person is thinking.

they have not seen all of the briefs of the other justices. find out their thinking on these questions. host: we go to the decrats' line, in tucson, arizona. >> i just want to say that i feel that she is very capable, and i trust the judgment of barack obama. some of these phone calls, this morning, ts has not been so bad. but sometimes this is so hateful. and i wish that more americans would be americans before they are democratic or independent, before they have the republican point of view, just be the american first. we're walking a little bit more unity. >> canou tell me how much should be revealed by these

nominees before they get befor the senate? what do they need to be talking about? >> the opinion matters, but more so, what matters is the background and what she has done the past. what has she done for the americans to bring people together. what will make her good. and there were severalpinions going one way or the other. is she going to do america >> richmond, virginia. good morning. >> thank you for taking my call. i think that this is difficult to imagine these people giving you everything in the confirmation hearings. the history speaks to what they are all about. when these people speak to them, they know what they think about things. i think you have to respect that

if they are nominated, they have done great service to the country, and you will not get everything that you want in a compromise -- a cop -- a confirmation hearing. >> because she came from the academic field, does this matter more this time around, that she will talk more about certain issues? and that she should give that evidence? >> i believe that you do. having not have been a judge, that is one area where she will be able to give us more. but these are the questions people ask. these are the questions that i believe that she wl answer. she appears very forthright. >> the headline says that there

is no lightning rod. it goes on to talk about her scholarship and the harvard law review describes and endorses the presidential powers in different areas such as domestic energy policy. she said the policy-making, was bingham's or by the white house. -- was being made by the white house. she says -- hostwe are talking about how much should be revealed by the nominee. patricia, go ahead. >> i would like to know if the nominee is a zionist.

if so, i think that disqualifies her. we have too many zionists in the government. the supreme court should be free of extreme religious views. ho >> and you can watch all of "washington journal" in our library, c-span.org. the senate energy committee has gaveled back in. >> the national contingency plan. one gulf and the b.p. and m.m.s. approved spill response plan which i think has worked foundationly really well. -- foundationally really well. the thing you bring up is subsidy intervention. we've not dealt with a situation like this before. there are -- obviously it's a specific difficult situation in 5,000 feet of water. i think after this is, you

know, under control and thought about in hindsight there will be some ideas about how to make the subsidy intervention response better. i think we're learning right now as we go. i think that is something that meeds to be looked at. >> and maybe each of you could answer, how much research and development does your company do on deepwater spills? and is this an area where there should be more focus? right now, can you quantify how much money's being spent on that kind ofrd to address deepwater -- kind ofrd to address deep -- of r&d to address deepwater? >> i can't quantify. >> is b.p. doing research in that area on how to respond to deepwater spills? >> well, i think we have worked very hard on our spill response. as i said, i think what we're

learning here is subsidy intervention capability is something that needs to be looked at further. >> mr. newman? >> transocean is not currently engaged in any research and development with respect to deepwater oil spills. >> mr. probert? >> halliburton's focus, really, has reinvolved to this point around the intervention of wells, which require some kind of remedial activity, either a relief well or some other kind of activity associated with that. >> and are any of you aware of anyone in the industry who is researching on how to handle deepwater spills? or anybody in universities, for example, is there anybody in the industry, first of all? >> i think the industry has a lot of knowledge about handling deepwater interventions. the question is in the specific situation. we are dealing with fluids and depth of water that hasn't been

dealt with before in actuality. so what we're doing is utilizing the industry experts all across the world. we have 160 companies working on this as well as government agencies. i think -- i really do think what we learn from here will impact the industry and how we ought to do this. >> and i appreciate that, and i think we all understand the enormous response and the commitment that b.p. now has to try and respond to this accident. i guess my question really is, should we not be more proactive about recognizing that when we're drilling at these depths that despite all of the precautions that there is the potential for this kind of a disaster and, therefore, having research under way that would show us how to respond in case of a disaster is something that we ought to figure out how to do. you can take that as a

statement rather than a question. >> i guess the normal routine is to go back and forth. senator sessions, do you have questions? >> yes. thank you, mr. chairman. the matters we are dealing with are exceedingly important. if we don't produce oil off our shores, we'll be importing oil that was produced offshore somewhere else in the world. we do it today. huge reserves there. it's important to our economy. it's important to jobs. it's important to our nation's ability to be competitive. i think in the world marketplace. but it's got to be done safely. and perhaps, as i repeat, maybe we have become a bit too complacent in the work that we're doing here. to follow up on the chairman's -- well, first, let me follow up on senator she houston's

question. -- shaheen's question. i'll ask you, mr. mckay. immediately after this blowout occurred and we began to have -- see the leaks, the idea came that we needed a coffe down, a containment that will go over the leak and take the oil out. that took several weeks to construct. while -- why was it not so that that had already -- something like that had already been constructed and those kind of ideas are thoroughly examined when you say you're dealing with this deepwater and the unusual circumstances? >> this situation is extremely, as you may imagine, extremely hard to predict, the specifics of the situation. what we have in this case is we have a blowout preventer that didn't work for whatever reason. we don't know why. and we've bot the lower marine

reiser -- and we've got the lower marine riser package. and the disconnect did not activate the blowout preventer or release that disconnect. so we have a disconnect connected on top of the blowout preventer and a riser coming off the top of that. that then impacts what type of solution -- >> would you pull that microphone a little closer there? it's hard for everybody to hear. >> that impacts what solution we have to use to address the problems. so this situation where we have a lower marine riser package that hasn't come off and a riser bin over the top of it and over the top of the seabed, extremely difficult to predict that. so the intervention activity we're doing, it's been focused on trying to get that blowout preventer actuated and shut. that's not been successful. >> all i was asking basically was, shouldn't you have anticipated that these kinds of things could occur and that

this kind of coffer dam would be needed and shouldn't we have some already constructed or at least the designs tested? >> i think what i would say, as we learn from this incident we have to understand what type of capability we will. i think it's difficult to have predicted that a coffer dam would have been needed. >> the wall street journal" has the article today, i believe, about what the chairman asked you about the removal of the mud. first, i'll ask you, mr. mckay, did b.p. direct that the reverse procedure would be undertaken and ask mineral management service to alter the normal requirements and to displace the mud before the plugging operation began?

>> i've not read that article so i can't comment directly. i do know that the investigation -- >> you work for b.p.? >> i do work for b.p. >> all right. but it said according to a worker b.p. asked permission from mineral management service to displace the mud before the plugging operation, final plug operations had begun. which mud weighs about, what, 50% more than water. and as the heavy mud was taken out and replaced by the much lighter seawater, "that's when the well came at us basically," is what the worker said. >> the investigation is going to look at every piece of the procedure, the directives, the decisions and the processes that was used. and that investigation is under way. so i've not had a review of that yet. >> mr. newman, what would be

your answer? what do you know? i'd ask you to tell us what you know. this is important. do you know whether b.p. made that decision or did transocean make that decision? >> because b.p. or the operator of the well and b.p. or the permit holder and b.p. have the relationship with the m.m.s., if there was a discussion between somebody and the m.m.s. about whether or not it was appropriate to proceed in a particular fashion, that conversation would have taken place between b.p. and the m.m.s. >> mr. probert, i'll ask you what you know about that situation. >> i concur with mr. newman's view. >> well, his view but what do you know? >> we have no knowledge of that discussion. however, if a discussion took

place it would be with the lease holder and the m.m.s. >> well, what knowledge do you have about a decision being made to remove the mud before the plug was finished? >> the only information that we have that it was part of the well program. >> but it's an unusual thing, was it not? >> i cannot say that it -- it's not a procedure that is being utilized -- not utilized previously. it is a process which has been undertaken previously. i'm afraid i can't tell you how many times. >> but it would not be the mormal procedure, would it not? yes or no? normally? >> it's a procedure which has been used on multiple occasions in the gulf of mexico. >> would it be used less than 10% of the procedures? >> i'm afraid not to be in position -- >> well, you do this business, do you not? you are under oath. what percentage in your best judgment is it that they remove

the mud before the final plug is -- >> i do not know, senator. >> is it less than 50%? >> i do not know, senator. >> you don't know? >> i do not know. the obligation for that decision lies between the lease holder and m.m.s. and that's -- >> i didn't ask about that. i simply asked you what the procedure -- do you know, mr. newman? >> i couldn't be able to -- i wouldn't be able to quantify the percentage of wells that are handled in this particular manner. >> well, this article indicates it's unusual. are you aware of anytime that this has been done before? >> could you withhold until we get -- >> i'm out of time. >> thank you, senator sessions. senator landrieu. >> thank you very much. as you all can imagine since this has happened i've been down to the state on every occasion that i can get there.

just as late as yesterday was visiting with elected officials and fishermen that are extremely concerned about what's actually happening on the ground today. as you all can imagine. and my first question is to b.p. because this is the question, mr. mckay, that i get more than any other question. will b.p. pay? and let me ask it in this way. it's my understanding that you are the lease operator, that you are the responsible party under the 1990 act. it is also my understanding that if you're found to be gross low neglect you can -- will automatically be pressed by the law to exceed the $75 million liability cap. but my question is, if you're not found to be grossly neglect -- neglect, is b.p. prepared to pay -- negligent, is b.p. prepared to pay, not just for

the individual businesses, but for parishes and our governmental entities that are spending huge amounts of money to try to contain this incident? >> we've been very clear. our c.e.o., tony hayward, has been very clear and we are going to pay all legitimate claims. all legitimate claims. >> and define legitimate for us ? >> substantiated claims. i can't define the term. here's the intent. the intent is to be fair, responsive and expeditious and to -- as to the $75 million that you mentioned, we think we're going to exceed that, obviously, and that is irrelevant. so we have been very clear we're going to pay the claims and entire resources of b.p. is behind this. >> and, mr. chairman, i may announce because i'm happy we made this step yesterday but at

least for the small businesses and there are many small and large affected by this catastrophe along the gulf coast that the small business administration yesterday has made clear that on an individual basis the 6,000 small business disaster loans that are still pending in this same area from the last disasters we had can be deferred and new loans can be given until these claims can come, you know, full circle. because the last thing we want to do for a region that's been hammered by storms and other disasters for this to be another economic disaster for the people of this region. so knowing that gives some confidence. my next question, mr. newman, is to you. are you all the largest drilling operator in the world? and if not, who is larger than you and what rank are you? >> senator, we are the largest offshore drilling contractor. >> can you speak right into the mike, please? >> we are the largest offshore

drilling contractor in the world. >> to your knowledge, has a blowout of this magnitude in terms of volumes spilled in an uncontrolled fashion for this length of time ever happened in the offshore waters in the united states or anywhere else to your knowledge? >> the only incident that comes to my mind, senator, is the well in mexico, which i believe happened in the 1970's. >> and do you know how deep that well was? do you have any recollection? >> i have a vague recollection that that operation was conducted from a jackup so it would have been shallow water. >> ok. >> i think, mr. chairman, for the record that incident, which is well documented in shallow water, the monterra incident, that my colleague from new jersey said, was in 200 feet of water. this is in 5,000 feet of water, 18,000 feet deep.

now, given that, what are the regulations for these -- >> we are going to break away from this hearing now for live house coverage. just a note, our live coverage continues online at c-span.org. the house is about to gavel in for morning hour speeches. they'll break again before starting legislative work at 2:00 eastern. we'll try to get you back to the oil spill hearing if it's still going on. this afternoon, members will work on eight bills including one honoring the late detroit tigers baseball announcer who recently passed away. and now live to the house floor here on c-span. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] [captioning made possible by the national captioning institute, inc., in cooperation

with the united states house of representatives. any use of the closed-captioned coverage of the house proceedings for political or commercial purposes is expressly prohibited by the u.s. house of representatives.]

the speaker: the house will be in order. pursuant to the order of the house of january 6, 2009, the chair will now recognize members from lists submitted by the majority and minority leaders for morning hour debate. the chair recognizes the gentlewoman from arizona, mrs. kirkpatrick.

the gentlewoman is recognized for five minutes. mrs. kirkpatrick: thank you, madam speaker. madam speaker, over the past months we have witnessed firsthand the potential consequences of allowing the national debt to continue growing out of control. greece borrowed heavily during the last decade, during the boom and the bubble, and found itself at risk of default when global credit dried up. now the country is facing financial disaster. the crisis should serve as a warning to washington. this country's debt is now $12.9 trillion and is approaching unsustainable levels. we must address the fiscal imbalance here before it's too late. washington must start by making major changes to the budget, changes that go beyond freezing

spending and instead look to make significant budget cuts. that means we have to crack down on the consequence free-spending culture in congress, washington needs to put a priority on eliminating waste and finding cost-effective ways to achieve this country's goals. budget cuts are not always easy or popular, but business as usual in washington is not working. greece's rapid spiral shows it is past time that we start to take serious steps both big and small to address our fiscal health. i yield back. the speaker pro tempore: the gentlewoman yields back. the chair recognizes the gentleman from florida, mr. stearns for five minutes. mr. stearns: i ask unanimous consent to revise and extend. the speaker pro tempore: without objection. mr. stearns: madam speaker, a recent announcement by the f.c.c. chairman to impose new burdensome regulation on the

internet -- on the internet transmission appears to me to be a political maneuver. to regulate the internet. several weeks ago he indicated he was not going to push for net regulation. now he is. there's no economic or legal justification for this move and the result will be a freeze in the investment and innovation we have seen over the past 20 years. the internet is the most powerful platform for innovation ever created and by his actions the chairman is endangering the internet's employment and ultimately its inknow case. our current free market pro-investment policies has served us well. according to the f.c.c.'s own national broadband plan, 95% of all americans have access to broadband and approximately 200 million subscribers have broadband at home today, up from eight million just 10 years ago. by comparison, it took 90 years

to go from eight million voice subscribers to 200 million under the old title 2 common carrier regulations. ironically the chairman's laudable goal of maximizing broadband's aadoption will be host harmed by his announcement. will rogers once said that, quote, things run in our country in spite of the government not by the aid of it, end quote. he was not talking about the internet but his words still ring true today. the rise of the internet itself is a truly great deregulatory story which started as a government-run network for sharing research has now explode food a force for mass communication, entertainment, and commerce. when we turn it over to the private sector and lifted restrictions on commercial entities and the public. the unregulated internet is now starting to help spur a new technological innovation in

this country. where there were once separate phone cable, wireless, and other industries providing distinct and separate services we are now seeing a confluence and a blur of providers all competing against each other for consumers offering broadband, voice, and video services and much more. the apple ipod is the perfectly example of the confluence of the internet, tv, and computer which will then be followed by other exciting products. lines of technology are being blurred all the time. in fact, a few years ago you had to have separate platforms for each additional individual tv technology. now your computer becomes your tv, your tv doubles for your computer, and your wireless device becomes your tv and your computer and your phone and your camera. we'll see more of this convergeance in the years to come if we remain on the current deregulatory path. however the f.c.c. appears to

want to change course. in response to the f.c.c.'s announcement i plan to introduce a bill that would prevent the f.c.c. from regulating the internet or internet transmission absent a market failure. my bill would require the f.c.c. to conduct a rigorous market analysis before mandating new network regulations. the f.c.c. would need to prove that regulations are indeed necessary. the chairman has said on numerous occasions he wants to make sure that the f.c.c. is the most data driven agency. let's see the data, let's see the data showing there is a need for regulation before you do it, mr. chairman. with our economy still struggling, now is the worst time to impose new regulations on the internet and internet service providers. yet this is exactly what the f.c.c. is going to try to do. communication companies are among the few companies still investing billions of dollars into our economy in the very

difficult financial times. it will kiss courage investment precisely when we need it the most and when we need to push the broadband in this country. the announcement is a perfect example how regulation meant to help can actually hurt our policy goals while take more money out of the american taxpayers' pockets. i'm reminded again, madam speaker, of another will rogers quote when he said, be thankful we are not getting all the government we are paying for, end quote. our history of communication policies with examples of the best regulatory intentions going awry. more off than not, advances come despite regulation or as with our internet policy over the past couple decades, from our decisions not to regulate. with that i yield back. the speaker pro tempore: the gentleman yields back. . toipjat mr. connolly: the

current economic crisis may have begun in the united states but it rapidly spread throughout the world. now as we stand on the cusp of sustained economic recovery we must be mindful of the ripple effects and guard against our further threats to our economy. last thursday's historic stock market plunge pretip tated by greece's -- precipitated by greece's economic uncertainty is what happened when you don't have adequate protections in place. without proper oversight, madam speaker, our markets are exposed. shares soared from $40 to one penny and back to $40. shares of proctor gamble traded at $39 on nasdaq. those aren't market forces at work. those are market forces that are broken.

almost 300 trades made into questionable circumstances had to be subsequently canceled by trading houses. such wild disparities shows a marketplace left largely to its own devices and the tremendous risks posed to our economy and those who invest in it. american households lost $7.75 trillion in aggregate household wealth in the recession. now, it's true, madam speaker, that we're seeing signs of an economic recovery. the nation's gross domestic product is once again growing at the rate of 5.6% in the first quarter of 2009 and last quarter of 2009 and another 2 b.p. 3% the first -- and 2.3%

the first quarter of this year. and we're finally in the midst of our fourth straight month of job growth. even though the other side of the aisle can't accept good news when they see it. more than 290,000 jobs were created last month, the most since january of 2006. the stock market is up more than 50% since their march, 2009 lows. but it's that lingering uncertainty that we have sought to address with our actions in this congress. similar financial sector problems came to a head in 2007 leading to the worst economic recession since the great depression. as last thursday reminded us, we're still at risk to financial sector uncertainty. responsible wall street reform remapes one of the critical components of a sustained economic recovery. madam speaker, with such an obvious need for reform, why hasn't it been implemented already? why, for example, is the more than 700 trillion, that's trillion with a t, derivatives

market still completely unregulated? why must we ensure that the highly speculative market is brought out of the she'd oast and operates with transparents -- shadows and operates with transparency and oversight? why is the american people bailing out the financial institutions deemed too big to fail? never again should public risk become a private responsibility. i supported passage of wall street reform last december to address these systemic problems and protect american families and their savings. we provided for regulation in the shadowy derivatives market. we brought accountability and transparency to the financial sector. we ended the practice of too big to fail. we established safeguards to the abuses of the past and never again make. madam speaker, congress made wall street reform a priority. although the senate began its own deliberations a few weeks ago, the process has been slow.

i'm encouraged to see bipartisan notions in the bill after a failed filibuster attempt by the minority. after last week, can there be any doubt that we need wall street reform now? every day of delay is one more opportunity for recurrence of economic uncertainty and even collapse. last thursday's role other coaster in the -- roller coaster in the stock market is a reminder that we cannot allow a willful lack of responsible oversight to expose american families, american businesses and our whole economy to such potential risk. madam speaker, wmust have wall street reform now. i yield back. the speaker pro tempore: the gentleman yields back. pursuant to clause 12-a of rule 1, the chair declares the house in recess until 2:00

>> you know, b.p. is saying maybe the fault lies with the rig operate -- are you saying

that any legitimate claim to this will be paid by b.p.? >> let me be really clear. liability, blame, fault, put it over here. we are dealing with -- we are the -- we are the responsible party. our obligation is to deal with the spill, clean it up and make sure the impacts of that spill are compensated and we are going to do that. >> no matter if that's $14 billion? >> i am not going to speculate on numbers. we said every legitimate claim of b.p.. >> there are cost estimates by experts that say could be as high as $14 billion. are you saying you'll pay all claims? >> i'm saying we will pay all legitimate claims, yes. >> well, mr. chairman, i think

that that is the question before us is this is a panel and discussion about how we're going to move forward from this and i think we're, you know, it reminds me when we had in this very hearing, i guess you have this room for big investigative hearings butt last time i think i was in here was when the challenger blew up and we had a big discussion about what was the faults behind the challenger system and we found out there were system failures. yes, there was a freezing of the temperature in the o-ring but we found out there were many, many problems. there is too cozy of relationship with m.m.s. and the oversight with the very things my colleagues have been talking about with the blowout preventers. there is much more oversight and detail that needs to be made here. but i think the question that's going to remain is, how are we going to clean up $14 billion of oil spill or whatever the

number is and that we really have an accounting here of how this is going to work because we have to move forward with preserving that area. mr. newman or mr. -- i don't know if you have any comments about that because i do feel that the case for defense here is being built here this morning. >> i guess i would agree with the way mr. mckay characterized it. liability and culpability and ultimate responsibility for the events that resulted in the incident are one thing and responding to the economic impact of the event is another thing. and i think the way senator landrieu said it corresponds with my understanding is as the lease operator and well owner, that falls on b.p. >> i would simply add that well owners, drill contractors and service providers like ourselves really do work very closely to try and create a

safer environment to develop oil and gas resources. and it's in the interest of all of us and the industry in general and the nation's energy security that we learn from this and continue to take those learns and build them into our future operating procedures and technology. >> well, for one opinion, what i've learned from this situation is i think it's time for us to diversify off of oil. so thank you, mr. chairman. >> mr. chairman. >> senator landrieu wished to put something in the record. go right ahead. >> thank you. i just have some documentation about the value of the louisiana seafood industry, which is more than $3.4 billion. i just want to put it in the record. thank you, mr. chairman. >> ok. i think all senators, at least all who are here, have had a chance to ask one round of questions. let me start on another round. senator murkowski, do you have a question?

>> i'll be very brief, mr. chairman. mr. mckay, there was an associated press article that referenced the comprehensive blowout plan for the deepwater horizon, and the article states that b.p. had not filed a specific comprehensive blowout plan, and indicated that it was not required to file scenario for potential blowout because it didn't trigger certain conditions cited in the m.m.s. report. the article goes on to speculate whether or not if there had been a specific -- cite a specific plan it would help to facilitate a quicker response. can you comment on this? was there in fact an exemption? did you file a site-specific

comprehensive blowout plan? >> i believe that is in reference to the exclusion that's granted by the m.m.s. for specific wells in a given area. >> what is the exclusion? >> when the lease sale is conducted, environmental impact statement is done, which is a very extensive environmental study. that's done for the lease sale. then there are grid and environmental assessments that are done in areas within that lease sale. that environmental assessment and the e.i.s. are utilized as the environmental assessments for drilling wells. and you essentially apply for exclusion because they've already been done. and that's what we do. and that's industry practice and m.m.s. practice. >> do you believe that it would have helped b.p., transocean, halliburton in this instance had there been a specific

blowout prevention plan? >> i don't think it's called a blowout prevention plan. >> i'm going off an a.p. article so i apologize for that. >> i honestly don't believe that this -- we filed our scenarios around this well and the environmental assessments that were done impact, those are still response plans. those are clear. those are worked with m.m.s. they are very extensive. i don't think the individual well location within an area, environmental assessment, would have made any difference. i don't know that for a fact, but that's what i believe. >> but you maintain because m.m.s. did not require it there was no necessity from b.p.'s part in doing anything? >> i don't believe so. i believe we were under normal industry and m.m.s. practice. >> and then the question to all three of you and it's the same question. given where we are after the deepwater horizon incident, have you ordered any additional

safety measures or modified procedures for operation outside the u.s. based on this incident? >> yes. we have requested that all of our rig contractors provide an update on any modifications that may have been made to blowout preventers. we have instituted some incremental testing on blowout preventers worldwide and have sent notices to all our businesses around the world that are doing deepwater drilling. we have also communicated with m.m.s. everything we understand about that and they are incorporating what we're learning here into new and i think new testing and new -- well, i don't know what will come out, but new ideas about how to ensure safety around these type of events. >> let me ask you. you've indicated that you're asking for information on any modifications. do you have any reason to believe that the deepwater believe that the deepwater horizon