we need to find out, number one, what was in the inspection in 2008, why was a fence post drilled within inches of the pipeline, what is the monitoring equipment fail, and i am trying to work with this and look at these issues to find out why this happened and lastly how we define when claim is in terms of cleanup. i know that chevron is taking responsibility. i appreciate that. that is an aggressive position to reach out to the people saw like city. i know this is more about the bp situation in the gulf but this incident was worth mentioning to show that issues about the infrastructure and safety can touch anywhere along the supply chain. .

the broad ingenuity that allowed them to drill under the ocean's floor has outpaced commitment to safety and that is unacceptable. b.p. ignored a simple rule, if you can't plug the hole, don't drill the well. what concerned me, mr. chairman, is whether b.p.'s mistakes are unique to them or are indicative of industry wide practices. regardless, we must ensure adequate cleanup practices are

in place. it is assumed this type of disaster would never happen but it did. i hope this tranlic event illustrates the need for action. many of us on this side of the aisle have advocated a fundamental overhaul to our energy policy stressing a broad portfolio of energy sources and efficiency. it can be market driven if we apply a real cost to carbon and its effect on our economy, our quality of life and our environment. this disaster demonstrates that we cannot delay in acting comprehensive energy and climate change legislation to diminish our dependence on oil, both foreign and domestic. today's hearing will provide unambiguous answers, i hope, on what to expect in the days, weeks and years to come. millions of people who face this nightmare, we must demand transparency and a clear assessment of the future. i thank the witnesses for being with us today and let me join my good friend mr. welch in

requesting b.p. to consent to an escrow fund that will provide a modest recommend eddie for those who have been -- recommend eddie -- remedy for those who have been harmed. >> the chair recognizes the gentleman from texas, mr. gonzalez. >> thank you very much, mr. chairman. i will be very brief. i don't usually make opening statements but think i can read the minds of the witnesses and think they're all saying all these individuals are stating the obvious and the political and you're absolutely right but i think when we get into the questioning it will be a different world as far as the political to be honest with you, all those that are blaming the president for not meeting with b.p.c.e.o. immediately, had the president done that, i assure you today the statements would be what was the president thinking of meeting with the b.p. executives at the outset without first visiting the areas or meeting with the coast guard and first responders.

that's what would have happened. what i hope to achieve today is to hear from the witnesses, what are the energy needs of america, how our transportation fuel's obviously based on oil and what we're going to do moving forward, the difference 3 exploration and drilling and how we meet the immediate needs of our public, our constituents, the citizens of this country, and the fact that meeting those needs in the interim will be transition to something different can be done in a responsible fashion. we can meet the needs responsibly and thht they're not mutually exclusive. thank you very much. i yield back. >> we thank the gentleman from texas. and that completes the period for opening statements from all of the members of the subcommittee. the chair does not see any other members. i will first make a -- before

we go to the witnesses i will first make a unanimous consent chairman stupak and representatives blackburn, castor to get weiner and question witnesses following questions by members of the subcommittee. without ok generation, the chair -- without objection the chair hears no objections of the subcommittee so it is so ordered. it is the policy to swear you in before you testify, so i would ask each of you to please rise and raise your right hand. do you each solemnly swear to tell the truth, the whole truth, and nothing but the truth?

let the record reflect that each of the witnesses responded in the affirmative. now we turn to our first witness, in rex tillison, the chairman and chief executive officer of the exxonmobil corporation. he is also a member of the business roundtable and the american petroleum institute. we welcome you, mr. chillison. >> thank you, chairman markey. ranking member upton, members of the subcommittee. the many issues on the energy agenda, none is more pressing than the accident and the spill unfolding in the gulf of mexico. as someone who has spent his entire career in the energy industry, it is deepening sadening to see the loss of life, the effect on the

economic livelihoods, and the loss of the public trust in an energy industry that has resulted. clearly the incident will have consequences for the environment, the citizens and businesses of the gulf coast and for the nation's energy policy. it is essential that we understand the events that led to this unprecedented accident and take corresponding steps to further reduce the likelihood of a similar event ever occurring again. an expert, impargs will and thorough approach -- impartial and thorough approach to understanding what happened because it represents a dramatic departure from the industry norm in deep water drilling. understanding the facts surrounding this incident is critical in informing the long term policy and operational response. we are eager to learn what occurred at this well that did not occur at the other 14,000 deep water wells that have been successfully drilled around the

world. it is critical we understand exactly what happened in this case, both the drill well design and operating procedures, and the execution of the drilling plans which led to such severe consequences. we need to know if the level of risk taken went beyond the industry norms. based on the industry's extensive experience, what we do know is when you properly design wells for the range of risk anticipated, follow established procedures, build in layers of redund enzi. -- redundancy, proper i had inspect equipment, train operators, conduct test and drills and focus on safe operations and risk management, tragic incidences like the one we're witnessing in the gulf of mexico should not occur. for many, current events bring back the memories of the exxon valdez tanker spill. the accident was the low point

in exxonmobil's history but also a turning point in the aftermath we lost a full scale top-to-bottom review of our operations and implemented far-reaching actions that today guide every operating decision we make on a daily basis. an overriding commitment to safety excellence is imbedded in everything we do with a daily commitment by our employees and contractors to a culture that nobody gets hurt. in the early 1990's we began development of our operations integrity management system or oims. a rigorous regime of 11 separate elements the measures mitigate safety, security, health, and environmental risk. it is significant the first element of oims is management leadership and accountability. this management system applies to every operation we undertake. it is our common global

language for safety and accountability and when we do have incidents, we seek to learn from them so we continuously improve our performance and this system. it ii a system which requires internal and external assessment of each business unit in its progress towards complying with all the 11 rments -- 11 elements. with respect to drilling, exxonmobil has drilled almost 8,000 wells worldwide in the last 10 years. of these, 262 have been in deep water, including 35 in the gulf of mexico. the standards and requirements that operate within oims dictate our approach to drilling as they do for all of our other operations. we have documented standards for equipment and well design, we utilize proprietary technology to predict pressures and model resource flow and we carefully analyze that information to both understand and reduce the risk.

we ensure everyone onboard the rig, contractors included, know their roles and responsibilities and that all operations must be in compliance with exxonmobil's expectations and standards. and we test this knowledge through regular drills and exercises. sticking to this system has required us to make some difficult decisions. we do not proceed with operations if we cannot do so safely. the american people have shown their support for deep water drilling but they expect it to be done safely and in an environmentally sensitive way. they have supported it because they understand it is important. in the gulf of mexico, it accounts for about 24% of u.s. oil production. oil and gas activity in the gulf, including deep water drilling, accounts for approximate 170,000 direct and indirect jobs, worldwide, deep water productions is estimated to equal in a few years the

entire production of saudi arabia, and it is a vital part of an industry that supports more than nine million full and part-time american jobs and adds $1 trillion to our gross domestic product. ttese facts show how critical it is that all industry participants have the trust of the american people. we can secure this trust if we take the time to learn what happened and develop our response appropriately to ensure every participant acts responsibly, learns the right lessons and upholds the high standards. the american people deserve nothing less. thank you. >> we thank you, mr. tillerson. our next witness is john watson, the chairman and exeef executive officer of the chevron corporation . he is a director and member of the american petroleum institute as well as a member of the national petroleum council. we recognize you, mr. watson.

>> thank you, mr. markey. >> turn on your microphone and move it in a little closer. >> thank you chairman markey and ranking member upton. >> move the microphone in just a little closer. >> ok. very good. thank you, mr. chairman and ranking member upton. my name is john watson and i do lead chevron. as we meet today the tragedy in the gulf of mexico does continue to unfold. our thoughts are with the families who lost loved ones. workers who were injured and communities that are dealing with the economic and ecological damage. for chevron this tragedy is very personal. our employees knew people who died on the deep water horiion. more than 13,000 chevron employees live and work in the gulf region. we have a very personal stake in operating saaely but it is our home, to. for our industry, this is a

humbling experience. the american people expect that the energy we need will be produced safely and reliably aad that did not happen here. this morning i'll focus our comments on what chevron did immediately following the accident and why i believe deep water development can be done safely. after the deep water horizon accident, chevron provided the full support to its response and deployed experts to assist b.p. and advise the coast guard on marine transportation planning and we also have been working with communities and organizations across the gulf region. we helped lead the joint industry task force which made recommendations to the department of interior to raise standards to an even higher level. a majority of these standards are already imbeded in chevron's operations. within hours, chevron held safety stand-downs on the rigs around the world to review drilling processes and procedures and examined our blowout incontinuing enzi

plans and we also stressed the responsibility every single employee and contractor has, and that's the authority to stop work immediately if they see anything unsafe. at chevron we reward people who exercise this authority. at chevron, one goal overrides all others, making sure everyone goes home safe every day. we have multiple systems to prevent a tragedy like the deep water horizon. our drilling policies and procedures are rigorous. we require continuous training. we certify our drilling personnel to ensure they're call tied for manage unusual circumstances and verify the execute well control. kills to - our internal review confirmed what our regular audits have told us, chevron's deep water drilling and well control practices are safe and environmently sound. since our first year of deep

water exploration in 1987, chevron has successfully drilled 375 deep water wells around the world. but we know we can always learn and improve, so we welcome any new standards ann safeguards that improve safety and prevent future accidents. to that end, we must act quickly to recommend those standards and make sure they're operating with the same standards offsafety and reliability. chevron will accept any new standard and adopt new standards it doesn't already apply. we must also expedite the work of two new industry task forces, one focused on subc well control and the other on spill response and cleanup. we also committed to work with the president's independent commission and will contribute to improve safety in every way that we can. now we must restore the country's confidence in deep water drilling. i believe the independent

investigation will show this tragedy was indeed preventable. this is not a tradeoff of energy for safety. i strongly believe the responsible deep water development must continue. america needs the energy and we can produce that energy safely. our nation would lose more than it has already lost if this accident becomes the bbsis for reversing the many benefits of offshore development. today production in the gulf of mexico accounts for 15% of our natural gas, 27% of our domestic oil supply. the mexico production is a foundation of local economies, providing significant jobs, economic development and revenue. the deep water horizon tragedy reinforces all companies must operate with the same high standards of safety and reliability. it's clear that failure to do so does have dire consequences.+ we must learn from this accident and make sure it never

happens again. my commitment to you is chevron will do everything in its power to see that it doesn't. thank you. >> thank you, mr. watson o. our next witness mr. james mulva, the chairman and chief executive officer of the conoco phillips company. he's also a member of the national petroleum council. and has ssrved as chairman of the american petroleum institute. rewelcome you, mr. mulva. whenever you feel comfortable, pleese begin. >> thank you, chairman markey, ranking member upton and committee members, thank you for the opportunity to appear before you this morning. all of us at conoco phillips extend our condolences to the family and friends of the 11 workers lost on deep water horizon. thoughts and prayers are with those injured or who have been impacted by this spill. the deep water horizon incident is a matter of national urgency. as americans we have a long history of joining together in

times of need. we've got work to do to find observations in our national interest. in that spirit and in support of the people on the gulf coast whose lives and livelihoods have been affected, conoco phillips is providing manpower, materials and resources to responders and emergency personnel there. we will do so until the spill is contained in the affected areas have been restored. we are not in a position to know about what went wrong at the deep water horizon. the companies involved and the reeulators certainly will do that. but as an industry, we must commit ourselves to learning lessons from this tragedy, ensuring nothing like deep water horizon ever happens again. so any necessary changes undertaken by congress, the executive branch and industry broader national energy policy. that's a policy that recognizes

we have a robust oil and gas industry which generates vital u.s. jobs as well, substantial state and federal revenue from tax and royalty payments. one that guarantees a security of the energy that drives our national economic well-being. also policy that assures the safe, environmentally responsible production of all forms of energy along with its wide use. healthy and growing economy. another key element of the comprehensive energy policy should be federal action to address global climate change. as you're aware conoco philliis supports package of a comprehensive federal law establishing a clear and transparent price for carbon. a federal legislative framework that must provide a program to manage transportation emissions while protecting consumers and

encouraging investment in lower carbon technologies and also must address the energy intensive trade exposed nature of our domestic refineries and create new mechanism, especially for regulating greenhouse gas emissions. this would be in place of the clean air, clean water and endangered species acts and other federal and state programs. you must recognize the sense am role of natural gas in achieving a lower carbon energy future. lastly, in order to achieve our national energy goals, u.s. energy policy must create supply, diversity, promote technological innovation, encourage energy efficiency and environmental stewardship. today our country is working towards an energy future featuring a broad portfolio of sources and by include renewable sources and cleaner fossil fuels.

broader conservation and more energy efficient technologies. each of those approaches will provide a part of long-term solution. as a nation we are on our way. we will get there but it is going o take us some time. until 's until then we must provide fuel that enables people to travel to work and back, moves goods around the world, powers the electricity and machinery in which our homes and factories and hospitals depend. and provides the fertilizer that enables us to feed a growing population. in doing this p, even with strong growth, the fuels must carry the energy load far into the future. unfortunately, we have -- and fortunately we have natural gas. one of the most important domestic resources available for our country in reaching the climate and energy security objectives. it's clean, it's affordable, it's reliable, abundant and

available here at home. with believe through a natural spirit to a mutually beneficial outcome, america can achieve its energy goals. as a company, conoco phillips is committed to doing so. so thank you very much for this opportunity. i look forward to responding to questions that you may have. >> thank you, mr. mulva. our next witness is mr. marvin odom who is the president of the shell il company. he is also on the board of the american petroleum institute. we welcome you. please begin when you are ready. >> thank you, chairman markey, ranking member upton and members of the committee. i'm marvin odom. i'd like to acknowledge the situation in the gulf of mexico which is on the minds of every american. pll of us at shell are deeply saddened by the deep water horizon explosion and the aftermath. a terrible tragedy for the families of those who lost

their lives or were injured. and many of our employees and customers live along the gulf coast and feel that pain firsthand. getting to the root cause of this incident is critical. we want to know what went wrong with the well and the execution of this well design. as a investigation, findings are available, shell will incorporate any learningso into our operations worldwide. since the beginning shell made expert equipment and facilities available to b.p. and the responders, including our robert training center outside of new orleans as a site for unified command. we took immediate steps to operations globally including a review of operating practices, testing frequencies, and training protocols. we remain confident in our expertise and procedures and that comessfrom focus on five critical and integrated areas to ensure safe well design and

drilling in the deep water. and those are our global standards were our rigorous training and certification of the engineers, a safety case approach with our contractors to identify the risks and mitigate those risks, ensuring robust and multiple barriers in our wells and 24/7 remote monitoring by skilled professionals who provide immediate support on critical issues such as well pressure changes. safety and environmental protection are and always will be shell's top priorities. we have welcomed the rmingses outlined in secretary salazar's may 27 report to the president and the june 8 notice to leaseholders. and many of these elements that were included align with our global practices and will work to incorporate all of them. in the context of this tragedy we acknowledge the reason for the president's decision to pause deep water drilling but

it is not without consequences. thousands of jobs lost and billions in lost wages and spending. an no and not only in the gulf coast but places like alaska. it brings me to the topic you asked us to he speak about today, america's energy future. at shell we believe the population and economic growth will drive global energy command to potentially double today's use by 2050. even more strong efficiency gains. energy supply from all sources, nuclear and others will struggle to keep up with this demand. environmental stresses will grow making the transition to lower carbon economies even more urgent. with this as a backdrop, it's clear the world needs a more sustainable energy system. alternative and renewable energies could be 30% of the new energy mix by 20/50. the global energy system does

mean it takes time. at shell we believe our industry can contribute by making more energy available by reducing emissions and increasing our lower carbon energy share in generating jobs and doing so safely and responsibly. natural gas is not a renewable but it is abundant to the u.s. and a lower co 2 energy source. increased natural gas for electricity is by far the quickest and least expensive route to cleaner air. within a couple of nears years, shell will be producing more in north america. biofuels are one of the best opportunities for reducing co-2 from transportation in at least the next 20 years. shell is the largest supplier of renewable blend fuels and we're investing in lowest co-2 i wouldo fuels made from sugar conttin ethanol through a $12 million joint venture proposed for brazil. up investment and technologies

such as these are creating jobs. one out of every $5 pent some the u.s. supporting new energy jobs comes by investments made in our industry which already supports more than 9.2 million american jobs. we need to retain these jobs and create new ones to fuel the economy of the future. society, government and business must all do their part. absence of a robust energy policy has been a disadvantage of to this nation. shell supports legislating a solution to energy and climate issues as a means to create a secure u.s. energy future, to reduce dependence on imported oil and decrease greenhouse gas emissions. this requires setting a price for carbon. shying away from oil and gas development, during the transition is not the answer. oil and gas development is too important to the u.s. energy supplies and economy to move forward. shell stands ready with skilled people in state-of-the-art

technology to continue meeting american's needs. thank you for your time and should forward to addressing your question. >> thank you, mr. odom. our final witness is mr. lamar mckay, the president and chairman of b.p. america. mr. mckay, please begin when you are ready. >> thank you. chairman markey, ranking member upton and members of the committee, i am chairman and president of b.p. america. before addressing the main topic of today's hearing, i would like to reiterate the profound sorrow and regret all of us at b.p. feel for the loss of life and the oil spill horizon explosion and fire. this is very prnlbole to me and b.p. i am from mississippi. i grew up in mississippi. i spent summers on the gulf coast. most of my family's in new orleans. anha