>> over the next three hours, the commission that is overseeing the oil spill. . >> c-span is now available and over 100 million houses. bringing you a link to public

information. >> you are looking at a live picture of the well that has been spilling oil into the gulf of mexico. several tests will be conducted. this could take from six hours to two days. meanwhile, the national commission investigating the disaster held its first public meeting today in new orleans. president obama established the bipartisan commission to recommend ways to prevent future oil spills. members heard from the senior vice president of bp north america and from the incident commander. this portion is a little more than an hour. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> thank you to the commission for the opportunity to speak today. i have a brief presentation which will cover roughly the timeline of the response and what has been taking place since then. i provided you with two pieces

of information it -- one is a timeline today as well as an outline of the current organizational structure for the command. i believe those copies were provided but i brought extras. and i do have a presentation, but i am not sure how that pops up on the screen. there is. i think i can control it from here, i am told. as noted, i am the deputy national incident commander. i was named as such by admiral thad allen. my primary responsibility is to ensure there are strong linkages between the federal, state, local authorities, as well as reaching out to the public and non-governmental organizations and private community individuals. we ensure that the response organization had the appropriate strategic -- objectives --

and this response is the most complex and our nation's history, with the most complex i have dealt with in my 29-year career. it is complicated by the lack of a human access to the source. the fact that the oil is spreading out in all directions and that you have a new major oil spill every single day. it is not a single, monolithic spill but rather, thousands of smaller spills that threaten all five of the gulf states. so if i can pull up that presentation again, please? this is an initial timeline. i will walk quickly through this, because i am interested in questions you may have, given the time you spend down here. as snow, on the 20th of april, there was an explosion on board the deepwater horizon. it sank on the 22nd with a loss of 11 lives. the initial response was

primarily search and rescue and we spent a fair amount of time looking for those 11 -- those 11 individuals were never found. on the 21st of april, the first incident command post was louisiana, whichhe we is the was expected to be a $700,000 oil spill. it was unknown with respect to the wall itself. thehe 23rd of april, command post was moved to new orleans because it was rapidly seen as a major event that would require an larger brokerage of resources, perhaps, and the potential to affect more than one area of operation. the 29th of april, it was declared a spell of national significance by the secretary of homeland security.

what that declaration did was establish the procedure for assigning and national incident commander, among other things, to broker national-level resources. prior to that, there had been some confusion as when the drill rig initially sank as to whether not there was a spill coming off the well head. the assumption was made that the blowout preventer had worked toward the debt of 5,000 feet meant that it took some time for oil to reach the surface. some time for oil to reach the surface and be seen, as well as a fair amount of p turbidity that was stirred up as a result of the sinking of the rig. took 24 to 36 hours the nays are turbidity to set and remote vehicles to what was happening down there. and so the initial efforts were to start at the drill rig itself and follow the riser pipe, the 5,000 feet of riser pipe back to the source of the well.

and it was at that point that three separate leaks were discovered over the course of that 24 to 36 hours. subsequent to that, of course, was that declaration of the spill of national significance. immediately following that was the naming of admiral thad allen as the national incident commander. then commandant, now retired, but still the national incident commander. and then there were a number of initial attempts to secure the source that as those of you who followed this know were not successful. those included a containment dome that was placed over one of the largest of the three leaks. just to describe very briefly what those leaks were. you had the leak at the riser itself coming off the top of the laurene riser package, the -- on top of the blowout preventer. and that was the so-called kink. and there was a leak there. there of a very large leak at about 3,000 to 4,000 feet down, the riser pipe. and then the very end of the riser pipe was leaking. engineers were able to install a

valve at the end that left two leaks. the largest of the two about 80% of the remaining volume of oil coming out was coming from that leak in the riser itself. and that's where the containment dome was attempted to be established. it did not work. there was a fair amount of hydrate, ice crystal formation. so they were unable to use that. following that, they used something called the riser insertion tube tool, which was simply a straw inserted into the end of that leaking pipe. they were able to pull at that time on average of 2,000 barrels a day from the pipe. commenced the second -- they commenced a relief well drilling on may 2 as well. that was rapidly seen as the ultimate solution for shutting in the well or for killing the well. however, there was an attempt to kill the well through a top kill procedu procedure, and on the 29th of may that of deemed unsuccessful despite about two days of attempts. so source control activities

continue, and i know that there's -- there is a presentation from bp following this. i won't go into a lot of detail on source control because i think you're going to get a lot of detail from bp on that. and what i will focus on instead is the response moving forward and our role as the emergency responders. so if i could have the next slide, please. so the response objectives are fairly straightforward. first and foremost, of course, is to secure the source. we want to fight the oil as far offshore as possible. so we have a fair amount of skimming capacity, large skimmers, offshore skimmers working around the source. we want to protect natural resources and set conditions for recovery. and we want to ensure overall unity of effort. and i'd like to spend a little time on that last empty for unity of effort because i know that there's been some concern or confusion regarding the overall organization of the response. and what i'll say is that, first and foremost, is to ensure that you have input from federal,

state, and local levels. this is a federal -- the law requires or mandates that there be a federal on-scene coordinator. that on-scene coordinator in the offshore or maritime environment is the united states coast guard. it also mandates that you work closely with state and local governments and the responsible party to ensure that the -- that all efforts are brought to bear on this. and that you understand the needs. to that end, one of the lessons we learned out of exxon spill and coming out of the oil pollution act of 1990 was the need to plan for catastrophic events like this. what you'll find is that no plan can necessarily anticipate everything that might arise. and most plans do not anticipate an event with a beginning but no middle or end. and so this is an ongoing response, but the plans do anticipate what you might need to do in a continuing response. and those plans are -- are formed in conjunction with -- or in collaboration with state and

local governments, under the guidance of the national contingency plan. so from the beginning, there have been -- there was an area committee, there are committees that have worked together over the years, particularly since the exxon spill. and there's strong participation by the states with the federal government and the various trustees. so the unity of effort piece is to ensure that you take those pre-existing relationships, those people that you've already worked with to establish plans and to set priorities and that you pull those people together as quickly as possible to begin to look at now what are we going do in this particular event. so next slide, please. so with this particular event, the concept of operations are, as i said, to secure the source first, to fight the oil as far offshore as possible, and then to progressively work inland. what this slide simply is meant to illustrate is you have the well site where they're doing source control operations, and you're going to hear about some of the complexities associated

with that. there's also a fair amount of offshore work being done. the offshore zone, if you think of that as being in about the five to ten-mile radius around the well site itself, where you hope to get the greatest collection of surface skimming, as well as the -- the freshest oil so that what you do collect you hope you can collect in a relatively large pool. so you'll see a fair amount of those are where the largest and most complex and capable offshore skimmers are located. then there's the near shore environment which was roughly defined as that radius from about 10 to 30 miles or thereabouts. and in that near shore environment you'll see the oil break up into streamers and start to break up into though many thousands of smaller spills that i described. and then in the near shore environment or in shore, the bays, beaches, and marshes, that's largely what you've been watching on the news media. those are the beach cleanup

teams, the booming operations, the small, in-shore skimmers. some of the independent skimming work that in of the parishes and counties have been doing, as well as a lot of the vessels of opportunity. i think you've seen some of those. these are primarily fishing vessels or other commercial vessels, not normally associated with spill cleanup, but they've been rerigged to carry boom, to carry skimming equipment, to do sentinel work, looking for evidence of spill and so forth. and then the beach teams are -- anything from shoreline cleanup teams, these are assessment teams that will go on, respond to reports of oil shoreline and determine the best method for cleaning it up and dispatching the teams associated with that. the challenge associated with this concept of operations is that in a normal experience is that you're dealing with one or two small jurisdictions in an oil spill. maybe one or two counties. you might be dealing with a

single state. this encompasses the entire gulf region. so you have multiple jurisdictions, multiple authorities, multiple levels of government. you have lots of affected individuals, a public that's extremely concerned, and worried about the long-term health of the region, and because of that, you have to be extremely responsive and aware of that. we have to work closely with the local governments. and i will say that one of the lessons that we've learned over time is that we needed to be much more involved with the -- particularly the local mayors and the local officials than we were initially in the response. and some of those early criticisms i think were well taken, and we pushed a great deal of authority as well as a number of liaison officers out to those local levels. and i think that we've gotten better at that every day as we've gone along.

but i would say that any spill this magnitude that goes on for this length of time -- and again, remember that it is a new, major oil spill every single day -- is going to create some significant challenges with respect to that. and you will have shoreline impacts under the best of circumstances. we've also been challenged by weather. we had a tropical storm system come through. became a hurricane, alex, down in the southwestern gulf. that precluded the onshore or offshore and surface operations for some period of time, and as a result of that, there was a significant amount of additional oil that was present on the surface. next slide, please. this next slide is just -- i won't go through this in detail. i think that -- kent wells from bp will be doing this in his presentation. but this is just to illustrate that there's a very complex subsurface operation going on that is almost a separate response in and of itself. but yet, it directly affects how much we have to do on the surface, in the near shore environment, and the beaches and

marshes. and so this is of great interest to us, and it -- it has been watched very carefully. we are -- we approve of every step along the way. we, meaning the national incident command under admiral thad allen, he's been working very closely with our government scientists who are in houston as well as the bp engineers and technicians for every step of what's going on. but my purpose in showing this slide is simply to illustrate that that is a very complex amount of work going on. you have hundred of vessels working in that vicinity. that -- the number that you see there is just a small number of the vessels that are operating within a very small, geographic footprint. next slide, please. so let me illustrate quickly what some of those operations entail. it's essentially skimming, dispersing, and burning. those are the three primary means of surface control of oil spills. ideally the closer you can get to the actual release, the

better your chances are of collecting a significant amount. i will say this -- that those vessels operating around the source have done a -- have collected a very high ratio of oil to water in their skimming operations. sometimes in excess of 60%, 60%, 70% oil in the oil/water mix that they're recovering. obviously that gets, that ratio starts to decline as you move further from the source. dispersing and burning are the other two efforts. we burned -- there have been 315 burns since the beginning of this, about 720,000 barrels -- i'm sorry. that's how much skimming we've done. about 720,000 barrels of oil/water mix recovered and dispersants. although they have their own issues associated with their long-term use. they've been very effective at reducing the impacts on shore. our next slide, please. near shore operations. i've described these already.

you have these fishing vessels that were rigging to carry boom. and you've got vessels of opportunity that are carrying skimmers and the like. we use vessels of opportunity because they tend to have greater knowledge of the local waterways, these are people who have been operating here their entire lives. and they've been a great deal of help with respect to that near shore -- those near shore operations and directing us to areas of concern. next slide, please. this is, again, the same type of thing, bays, beaches, and marshes, operations. here you see examples of wildlife rescue, some types of barriers that have been erected by -- one in the upper right-hand corner is actually erected by the louisiana national guard. that's a barrier, cleanup team. and just booming operations. next slide, please. and finally, i think our ongoing operational priorities and this will be my last slide, it really is source control, aggressive management of critical

resources, and those are primarily defined as boom, skimmers, and personnel. and then effective command and control. and so with that, mr. co-chair, i will stand for any questions this you may have. >> thank you, admiral. i have a question and then i'm going to turn to mr. terry garcia for further questions. it's hoped that within the next period that the oil spill will be contained and then we will begin to move to the response to that oil which is already in the system. what is your estimate of the oil response initiative after the spill has been capped, and how long do you think that response is going to be required in order

to optimize the cleanup? >> well, i don't know that i can put an outer bound on it. i will tell you that i think it's going to go on for some period of time. there's a fair amount of oil, residual oil, that's in the environment right now. obviously capping that well will be a significant benefit to us because then you're just dealing with -- then you have an end to this event. and then you're dealing with the residual oil in the environment. but there has been a significant amount of oil spilled. the -- that oil will weather very rapidly, as you know. rapidly evaporates off, i think some 40% of the oil is lost through evaporative process to begin with. the high ends, the volatiles. and it will rapidly weather into tar mats, tar balls, and the like, which are in relative terms easier to respond to than fresh oil is when it hits the beach. and in relative terms, does relatively less damage than a fresh oil will do when it comes ashore, particularly in the

sensitive marshes. although more challenging in some respects to clean up because it -- it's small, it's widely dispersed, and it's unpredictable as to how it's going to come ashore. i suspect that we'll be seeing tar balls, tar mats, and things like that for some period of time to come. with respect to the enormity of the response, i think you would rapidly stop seeing effectiveness of offshore skimming as that oil begins to weather and deteriorate. skimmers are only effective up to a certain point, at which point you can't scoop the oil up. i think you'll see a lot of those large, offshore skimmers and the like start to be pulled out because we won't need them anymore. but i think you're going to a subsequent increase in the amount of shoreline activity that will have to take place as we prepare for what we would expect to be many weeks or perhaps months of tar balls and the like coming ashore. >> admiral, as senator graham

said, he and i toured several cities in florida yesterday. and met with a number of the local emergency management officials. and they expressed some frustration with how the oil pollution act of 1990 works. and specifically, they indicated that while they have considerable experience with responding to disasters in this region, specifically hurricanes, that the oil pollution act has a much different approach to how these disasters are handled. specifically it's more of a top-down approach as opposed to a bottom-up approach. would you care to comment on that? are there aspects of open 90 that need to be changed so that there can be a more effective and coordinated response? >> well, i think that we're learning a lot in this response itself about assumptions that were made as a result of open 90. and that were built into the national contingency plan.

i think that the oil plaug act of 1990 and its -- and the ways in which it was put into policy established a state presence with the federal government for oil spill response. i think what we've discovered is sometimes that doesn't go deep enough. and you need to reach down to the local communities. so i -- i know of the concerns that you've mentioned, and one of the things that we had discovered a few -- in the early weeks of this response is that we needed to involve the local communities much more than we did initially. that was -- i think that we make an assumption that if you've involved the state, you've involved the low communities. this is not saying anything against the states. it's just that sometimes those local communities need to have a direct voice. so we've given them that. throughout the gulf. it's more or less effective depending upon some of the concerns of the local communities. but i think -- i do think that we need to look at the way in

which we have actually responded to this spill as it's evolved. the evolution of our understanding of involvement of local officials and local -- and the public. and then look at whether or not that means that we need to codify that in some way in the law. so for example, we've -- we've written an implementation strategy that is simply -- it just takes the national contingency plan and says what did we actual dee in this event. and are there thing that we can then learn from that with respect to the open 90. so i guess that's a long answer to your question. but my short answer would be yes, i do think there are things that we would want to go back and clarify. but i don't know that there's a fundamental change needed to the law. i think the structure is there. it's simply -- simply defining that structure a little bit more clearly. >> i have one other question if i could. i know from my experience when i was at noaa that the coast guard

and noaa work very well together. and that in a -- an oil spill that noaa acts as the science adviser, and you're in the position of the responder. how well has that worked? are there instances where the advice from the scientists at noaa have not been taken? or vice-versa? >> well, actually, my experience over the years vz in this spill had been it's worked exceptionally well. in fact, there's not a day goes by that when you talk to the federal, on-scene coordinator, coast guard, federal on-scene coordinator, he or she doesn't have the science adviser right there with them. we rely on noaa for spill trajectories, for actual sampling of the waters, for information with respect to fisheries, closures. for weather report. we work very closely, for example, with the national hurricane center and dr. bill

reed down there during the build-up and aftermath of the tropical storm systems that came through. so i would say that that's one of the strongest relationships in the unified command right now is the noaa and coast guard relationship. and i know that dr. lipchenko is on the phone every day with admiral allen at a principal level to discuss issues going forward. they've been closely involved in the sampling of dispersed oil columns. they've been looking at the questions surrounding whether or not there is a subsurface issue with oil dispersed and so forth. so i don't know if that's responsive to your question, but i would say that noaa's been a superb partner, federal partner in this. >> thank you. >> miss meineke? >> i have a question about the dispersants. that's been a very controversial issue over the last 2 1/2

months, as the volume of dispersants has increased as the spill continues. so has your approach to using dispersants changed as far as the volume and what the impact on the water column might be? i mean, it is obviously, you use it because the purpose in this case is to protect the shorelines. but what -- how has your thinking evolved on the impact on the deep ocean environment? >> as you know, i think you make a good point. it is a tradeoff. and the use of dispersants -- i think initially there was no expectation that you would be using dispersants over this extended period of time. and as we began to recognize that there was -- that this was going to go on for some period longer than anticipated, there was a real desire to reduce the total volume of dispersants used. to that end -- and we worked very closely with the environmental protection agency on development of dispersant protocols. and there was a memorandum

signed between the coast guard primarily and the epa on how that would be done. and so there's a general desire to keep the volume down to -- as low a level as possible, the subsea use of dispersants was one of the early questions. there's a general belief that you can usefier dispersants, lesser quantity of dispersants if you inject it subsea because you can get a better mix and break it up before it hits the surface. it's a more controlled release of dispersants if you can do it through a nozzle rather than through aerial spraying. but there have been times when the amount of dispersant used has been higher than -- than -- some days are higher than others, i should say. to that end, i know that there's a fair amount of work being done to sample the water column. i think the general belief is that there's not a persistence in the environment with dispersants. the question is when you are

injecting dispersants over time -- [ background noise ] [ inaudible ] >> there will be an opportunity -- there will be an opportunity -- there will be an opportunity for public comment. >> no. i can't sit here -- >> well, if you would -- >> and listen to all this when the facts are -- >> please, ad lllow the admiral complete his answer. >> they're not telling us. bp's blocking lsu from doing any kind of research to establish -- >> you can help the commission if you would make your presentation in an organized manner during the public comment period as opposed to interrupting the invited admiral to give us his professional assessment. i apologize. >> no -- [ inaudible ] >> let me say i understand that concern. i mean, i think that's shared by all. it's -- this is a very difficult

tradeoff. the question is, is the use of dispersants is to avoid significant shoreline impact. if you have a good day of skimming and burning, then you can reduce the volume of dispersants. so you'll see that on those days in which the weather allows for significant skimming and burning operations. there's very little dispersant applied. so to your -- directly to your answer, the desire is to use as little as possible and only when absolutely necessary to avoid shoreline impact. i know that the epa is conducting significant sampling and significant environmental testing. they're quite concerned about the long-term effects of dispersement use, and i would defer directly to epa for specific questions with respect to toxicity and the like. but from an operational standpoint, i can tell you that it is not the desired first choice, but it is a -- it is a tool that you sometimes turn to when you don't think you have another option. >> thank you.

>> any other questions? yes? >> admiral, are there -- you did speak about the vessels of opportunity program, and we in our travels this weekend did talk to a number of people, fishermen, and just locals about how it was organized. i was wondering if you could tell us, have you any lessons learned on how to coordinate things like the vessels of opportunity? >> yes. and i'll start by backing up to the beginning so i can start with now and say that i think what we have now is a -- is a much more effective command and control structure for them. so across the gulf, it's slightly different whether you're looking at the -- the eastern gulf, the mobile area of responsibility, and the homa area of responsibility. but it's roughly organized as strike teams and task forces.

so you have small groups of five vessels. those five vessel groups are organized into larger task forces of 25 to 30 vessels. then they are directed and distributed and tasked according to overarching objectives set by the command post. but then they're given a lot of autonomy. in mississippi, for example, you have mississippi national guard members that are actually on the task force, either writing the task forces or working with the task forces for local control. and we got a lot of requests for local control of those task forces. what we do, going back to the unity of effort piece, is to set some overarching objectives, give them an area to operate, and let them go operate. that didn't happen right away. so what happened initially, we probably set higher expectations for what they would be doing than they initially saw.

we signed up a lot of vessels and didn't have a real structure in place to put them together into specific types of task forces. again, that's probably because many more showed up than you originally thought, and we didn't necessarily know who were the best operators. what we learned was if you work with the states and the local -- and particularly the local governments, you can find out who's really effective. and we turned it over to the locals to help us choose which vessels should be used. there's a fair amount of training that's involved. you need do hazardous materials training. the other thing we needed to do ultimately was get positioning equipment so we could fure out where they were. we put automatic systems on. that has evolved or time. it was not effective initially. it has become much more effective. there are still thing that could be done better. but i know now that it -- we're getting excellent results from

them. you can look at a real-time geographic information system picture of where they're located. and the aircraft are able to almost 00% direct and track those task forces that are assigned. there are still quite a few vessels of opportunity that have not yet been activated. some of that is because you always want reserve resources. you're not going to be able to activate all 3,000 or so vessels across the gulf. but we activate them as we can build those task forces so the building block now is the strike team to task force to unit. >> thank you. >> admiral, there's a good deal of confusion i think, around the country about how the responsibilities and the authorities of the federal government related to those of the industry and what's asked of the industry. without asking you to go into any kind of detailed explanation of how those responsibilities are allocated, may i just ask -- has the coast guard made any requests of bp that they have not complied with?

>> no, sir. >> thank you. that's all. >> one of the concerns that we heard yesterday in florida was the attitude that this organizational plan is a one-size-fits-all approach and that there needs to be a greater degree of flexibility to respond to the individual circumstances of a particular event or a particular geographic area within that event. do you think the current federal legislation that establishes the organizational responsibility should be modified to create some greater range of flexibility as to what is the most appropriate governance structure? >> well, i think that's a really good question. going back to my comment earlier, what i've learned -- i think what we've all learned is that there has to be much more local participation, not just

state-level participation on area committees, for example. now the area committees do have local participation in the form of nongovernmental organizations, and municipalities. but i think that as you look at the plans that are developed in anticipation of an oil spill, the area contingency plans, they typically look broad brush stroke and don't necessarily take into account the specific things that might have to happen along the coast. that's to be expected. these are broad brush plans. but what you find is that when you have an event of this magnitude, again, remembering that this -- the unprecedented nature is that it involves five states. we've never dealt with something like that before. what you find specifically to your point is that there are real differences amongst those states, not just with respect to the types of shoreline or environmental concerns that they have, but with respect to how the -- how local officials

interact with the public versus the federal and state levels. so i think what i would say is i don't know if the legislation need to be changed, but i think you node definitive policy that further clarifies that need. that's something we've learned and something we've implemented, and that evolved over the course of the first few weeks of this response. and it's still evolving. i think you'll still find people that have some concerns about their direct input, but we provided as much opportunity as we can -- i spend, for example -- every day i'm on a telephone call, seven days a week, with the five gulf coast states. the governors themselves. and typically three to four governors on the call in any given day. and that's one of the things we look to is their feedback as to whether or not it's working. and they will tell you they've given direct and specific feedback, much of which we've incorporate bod the way they've gone forward on this response. >> when we turn to the part of

our responsibility which is to make recommendations for the future, i would anticipate one of the topics will be this issue of effective governance of an incident such as this. i appreciate the comments you've made today, and i would like to request that you continue to monitor that issue so that when we reach that point we'll have the benefit of -- the optimum amount of your experience and insights as to what structure might be the most appropriate to respond to future emergencies of this character. >> yes, sir. i'd be happy to help you. >> are there any other -- yes? >> thank you very much. admiral, first of all, i'd like to thank you and the men and women of the coast guard for the jobs that you are doing. don and i had the opportunity to visit the incident command centers at homa and grand isle and out in venice yesterday.

and i would just have to say that the people that we met were knowledgeable, dedicated, hard working, just exactly the kind of people this you would hope you would meet. we were very, very impressed and grateful. and i will say that with the opportunity to also meet with local government officials, business leaders, et cetera, the feedback that we received was that over time there has been a significant improvement in the relationship between the coast guard and the response and local people. at least in the places where we visited. we certainly received that feedback. so progress has clearly been made in this region, at least in this state, based on our experience in evolving an effective way of working together with local officials. and as you point out, given the diversity of jurisdictions and governance units, that's no small task. so i just want to say

personally, thank you very much, and understand that we have now a lid more insight into exactly how challenging this responsibility is. i have a question regarding resources. you have obviously deloyed many resources -- spill response capacity both in terms of individuals and equipment and all of the knowledge and expertise at the coast guard to this region, which is perfectly appropriate given the scale of this tragedy. however, there are concerns that i have heard in other places about the extent to which other areas are now left vulnerable in a way that they weren't previously vulnerable because of the requirement to move resources to sfond the spill. so i would just like you to speak a little bit to the coast guard deployment of resources. i am also more generically concerned about whether the coast guard still has the capacity that it used to have in

terms of marine protection, pluz protection, fisheries management, and the whole array of other responsibilities. we've heard some feedback that since 9/11 a number of the coast guard capacity and resources that previously were directed to things like being ready for a major oil spill aren't there anymore. and i'm concerned about whether as a nation we are resourcing the coast guard appropriately for the wide variety of responsibilities that you have. and this spotlight that has been shown upon you right now really forces us, i think, to ask hard questions about what changes need to be made. not just in the laws, but in the resources available. i'd like you to comment on that. >> well, let me take the last point first and then move to the question of risk elsewhere. you know, i always say, well, as an operational commander which is what i've spent most of my career doing, i'll never turn down an extra body. but i will say that what the

coast guard is probably best at is surge capacity. so we have the ability to surge short term for many types of events, whether it's things like hurricane katrina, the earthquake in haiti, a major event places else in the country. what is challenging for any organization and particularly an organization the size of the coast guard is to sustain that surge over extended periods of time. so this has been a very challenging event for us in that respect. this has gone on for a significant period of time. and we have quite a few people in the gulf region. we pulled people from elsewhere in the country. now we do that with a very strong eye to the risk that that puts us in elsewhere. so we can't pull all the helicopters out of cape cod, for example. you can't take all the aircraft out of sacramento, california. you can take a few. and that's what we've done. and then over time, we look to what's happening elsewhere in the country to ensure that we don't inadvertently risk some

other location. we also have agreements that we can activate with other resources, whether it's a department of defense, national guard, or even sometimes our foreign partners in the case of canada, for example. we can ask them to help cover special of our search and rescue responsibilities for a short period of time on the great lakes. i say that having just come from the great lakes as the district commander up there. and that's something that we would do through a joint agreement. but i think that -- i don't think that anybody in the coast guard would argue that, you know, we'd always enjoy having a few more people around. i think the larger question is can you bring a whole of government response to bear on something that's this massive. i'm not sure any agency is ultimately resourced to handle something that goes on for a long, extended period of time. so it's really a question of how much surge capacity do you want in an organization. we do have a fairly broad suite of -- fairly broad suite of

missions, broad portfolio. we want to make sure that we're able to address all of those. with respect to the risk throughout the rest of the country, you know that we did issue a joint emergency rule with the environmental protection agency to reduce the equipment planning requirements to what is considered a most probable discharge. so we didn't -- we were able to pull some -- we gave the ability to pull equipment from elsewhere in the country. and we have moved some spill resource equipment from elsewhere in the country. we've tried to do so with the -- with the full agreement and knowledge and concurrence of the state and local entities that would be -- that would be the ones to lose the equipment. so you sit down with the area committees and work with them and say can you live with this equipment moving to the gulf region. and so some entities have done that, other states have said no, we're not going to let anything go. so what we've tried to do is

allowed the states to have a strong voice in that. where that voice had been strong and said no, we have not moved that equipment. instead, have looked elsewhere for those resources. i don't know if that's responsive to your question. >> that's helpful. thank you. >> and chairman, that does conclude our time for questions for this panelist. >> thank you very much. admiral, i join in the admiration for the coast guard and its men and women and the greatest service that they have and are particularly in this time of emergency providing to the nation. thank you for your leadership. >> thank you. thank you to the commission for the time. thank you, sir. >> and our next panelist is going to be mr. kent wells, senior vice president for bp, north america. >> i would say as mr. wells approaches the panel desk that shortly after our appointment, the co-chairman and my appointment, i called the chief executive officer of bp, tony hayward. we

hayward. we had a conversation in which he assured us that the company would provide full cooperation with the commission as we go forward. we will have many opportunities, i think, to interact over the coming months. we very much appreciate evidence of that cooperation and your attendance here this morning, mr. wells. and we look forward to your remarks. >> good morning. chairman graham and chairman riley, thank you for your invitation to appear before you today. and bp was asked to give you a status update on our sub c collection efforts and our relief wells and i'm pleased to do so before i start, i want to echo some of your comments. this has been a tragic event. 11 men lost their life. some of them have worked in this industry as long as i have and some of them are the same age as my son. this is a difficult and

everlasting memory. as you go out there and you see the oil on the gulf, it is not a pretty picture and we know it has had had tremendous impact on people's lives and livelihoods and that is also an emotion to deal with. but what you can assure you is b will bp and the men and women i'm working with every day are fully committed and are submitted to doing everything we can to stop the flow of oil to clean it up, to learn from this event and share our learning so that something like this never happens again in this country, or quite blank frankly anywhere in the world. i became involved in this response the second day after it happened. my normal job, as i lead our north america gas onshore business, but i was asked as a member of a small group of senior leaders in bp to come and be an active part of this

response. and since that time, i've done nothing else but do that. so today, i'm here to talk to you about what we've been doing in terms of our subsea collection, what we're doing in terms of our relief wells, where we are today and what our plans are going forward. now i also have some presentation. i don't know who's -- whether i'm in charge of the slides are or someone else. thank you very much. i've shown this picture to try to give you an example of what it's like out at the site. and what you see in the middle of the slide with the trawl drill ship with the flair on it, that's the ship enterprise sitting directly over top of the macondo well. then in the foreground, another

drill ship similar to the "enterprise." that's a sister drill ship and it's involved in the installation of our ceiling cap that we're presently doing right now. then on the far left, we have the q 4,000 which is collecting oil from the macondo well as we speak. now, there's a number of other vessels not in this picture that are also involved with adding additional capacity, which i'll talk about. and then we also have about 50 vessels right out at the site doing skimming and burning. as admiral neffenger said, the closer we can have that skimming and burning to the source, the more effective we are, but it's just off to the left in this picture. but i think this gives you some idea of the magnitude of the response that we have going. i'm not sure anyone has ever seen this many large vessels this close together in operation. could i have my next slide, please? so, we've had a strategy in our -- what we call source control. so, what are we doing to control

the flow of oil out of the well? and we really have three objectives. first and foremost is to make sure we run a safe operation throughout. we have a large number of people work there, somewhere between 1,000 and 1,500 people every day making sure everything is planned and procedures in place so that it can be done safely. our long-term objective is to kill the well through the relief wells and in the meantime, we're focused to collect every barrel of oil we can. that's our short-term containment. then we have three principles of working. first, we work within the unified area command. i would echo what admiral neffenger said. we have worked together extremely well. we have members of the coast guard and the mms in all of our meetings. they're intimately involved in everything we do. then there's the formal channels that things go from our houston command center to the command center in new orleans here.

but there's interconnections all the way. we're trying to do this as efficiently and effectively as we can. we've also tried to leverage our industry in terms of we have not only the best experts from bp from all over the world, but we brought the best experts in from our competitors. we brought the best experts in from the service providers to us, and we have numerous government scientists. secretary chu has been very helpful in bringing in the national laboratories to help us and brining in external people. that has provided us additional expertise and challenge that we end up with a better product. there's been real collaboration here. and then we always try to pursue everything in multiple parallel paths. you'll hear me talk about this. we're not looking for one way of solving the problem. we're trying to come up with numerous ways and pursue them all at the same time. if one doesn't work, we're immediately onto the second option.

can i have my next slide, please? so, what i'm going to try to show you here is the status of what it is. in this graphic, it tries to show you what's going on at the surface out at the well site and also at the sea floor. and i think i have a pointer. i'll just try to describe where i'm talking about. if you look in the middle bottom where it says b.o.p., that's actually the macondo well, the well that's flowing. today, from that, through a series of hoses and off to the right and up to the surface, we're collecting 8,000 to 10,000 barrels a day through the q 4,000. a couple days ago, we moved off the drill ship "enterprise,"

which is also collecting that many barrels a day. also as i speak now, we're in the process of ramping up the first ever free-standing riser in the gulf of mexico that will allow us to collect oil from the well up through this free-standing riser up to a vessel called the helix producer, which is then attached to a large tanker called the lockronic, which can hold 750,000 barrels. now, this free-standing riser has been used in other places in the world, and what's important about it, this is what we call hurricane efficient. if a hurricane were to come through and we need to move all the vessels out, that free-standing riser because it's some 300 to 400 feet below the surface, would remain there and we would move the vessels off and reconnect quickly. this is an important step. and the ceiling cap, which we're in the process of installing and if you watched any of the rov

footage in the last few days, that's what we're doing as we speak, will allow us to connect more of these free-standing risers and hurricane efficient capability so that we can ultimately be collecting all of the flow. now, we have this activity going on at tremendous pace right now because we have a real weather window. if you recall over the last couple of weeks, we've had a couple of tropical storms, depressions that come through that wave conditions, but we have very good weather right now and we're going after it very significantly with our activity. what we're been able to do so far is we've actually been able to collect a little over 750,000 barrels of oil. that's oil that has not gone into the gulf of mexico. of course, that's only progress. the fact that oil is still going on is an unacceptable event. the graphic kind of explains the big picture but it doesn't give you a feel for the size of it, so i've pulled together a few

pictures just to help you understand what it is we've been doing. and if i start in the bottom right corner, that free-standing riser had to be anchored to the sea floor and anchor is what's called a suction pile. it's 90 feet high, it's 14 feet in diameter. we had to actually put that into place to hold it. then on the bottom left, the sub sea manifold is something we had to construct. well, first, we had to build it and put in place. it weighs 40 tons, so you can imagine the construction work. the riser is 14 inches in diameter. it's held in place by an air can that actually floats and holds it and that air can is some 45 feet tall and 26 feet in diameter. and that all connects to the helix producer where the oil is brought to the surface and transferred to the tanker. and that's a vessel that's some 500 feet long.

the point i'm just making, the previous picture makes it look like small stuff, but it's actually significant equipment and it's the reason we have had to be very careful in our design, construction and implementation, to make sure it's done properly. if i can have my next slide, please. so one of the things that's been frustrating for all of us over the last few weeks is we were collecting with what we call the lmrp cap, was watching that oil going around the side, is because we didn't have the ability to seal properly. we've been work on a sealing cap essentially from day one, but to actually do all the proper analysis and design and get it built and put in place has taken some time and we're in the middle middle of doing that right now. yes, these are the steps that we've had to do in the last couple of days as the weather has improved. the first thing we had to do was remove six bolts from a flange, which sounds easy until you realize we're at 5,000 feet of

water. these bolts are 3 1/2 inch in diameter and weighs 52 pounds. then this flange is some 40 inches in diameter and we had to bring in the drill ship "inspiration" to pick that off. that went extremely well. then the really delicate operation, which we've successfully now done, was to put this transition spool in and that was to convert from a flange connection to a connection that we're used to using in the offshore, which allows to us put this sealing cap on top that will allow to us -- us to shut it in. that was the connection we were missing from before. so, we've successfully done that and hopefully over the next day to two day we'll be putting that three ram stack on top, but that total spooling -- transition spool and capping stack is some

40 feet high and weighs about 160,000 pounds. and so that will be put in place and it will be -- it's very important as we go forward -- excuse me, in that it's going to help us with our long-term containment efforts. everything comes off of that in the future. it will help us as we go in when the relief wells intercept and start our kill operation. i'll talk to you about how that helps simplify that. it's imperative to what we call our quick hurricane quick disconnect/reconnect process. and when we finally have that installed, then we will do a well integrity test that will give us information that will allow us to jointly, with the unified command, to make a decision if it's even possible to shut in the well. okay. so if i go to my next slide. here's where we're headed to continue to ramp up our ability

to collect oil. i've already talk about the first free-standing riser that will be going to the helix producer. it will be moving forward, adding the second free-standing riser off to the right of the well that goes up to another vessel called the pisces that can also hold 750,000 barrels and then we'll be connecting through a slightly different concept. the discover enterprise, which we've used previously and the clear leader and they can both collect up to 150,000 barrels a day. somewhere over the next two to three weeks or so we'll bring that online. i've got a signal that i may be running short of time so i may have to move faster here. let me now move from containment to relief wells. the purpose of relief wells -- thank you. is that what we do is we drill a well down and down just above the reservoir, we intercept the

existing well and what we're going to do is through the relief well, we'll pump heavy drilling mud down. it will come up with the flow of oil and gas through the macondo well and by doing that, it will create a hydrostatic head that restricts the flow of the well and then pump cement into it and permanently plug it off, just above the reservoir. so, this is a technique that's been used many times around the world. it sounds very complicated when you're talking about, you start a half mile away horizontally, you drill three and a half miles and somehow you get a nine-inch hole to match another nine-inch hole, but we have the technique to do and that's what i'll try to describe with you. so, if you turn the next slide. this kind of shows our technique. we start some 3,000 feet away, we drill down to a certain depth, and we now get to a point, i'm giving a 30 second.

have i got the latitude to go just a couple more minutes? >> yes. >> thank you. we get in the neighborhood of the well when we get down to depth. now we get into what we call precision drilling. so, we do have the ability in our industry to drill directionally. and you can see in this picture, the well goes straight down and we turn it towards the original well. we have a technique, which i'm going to show you in a minute, called ranging that allows us through electromagnetic field find the other well when we get close enough to it. what this picture shows is what we want to do is absolutely drill right down beside for a period of time so we're very, very clear where we are in relationship to us. and so you can see by our diagram here, basically, we have found the well. we drilled parallel to it for almost 1,000 feet. and now we're actually within five feet of it. we know where we are and we've got a few more feet to drill before we set our final string of casing.

so, let me go to our last slide and i'll show that. so, basically, we are going to drill another 40 or 50 feet and we will have positioned ourselves five feet away from the macondo well and within another 100 feet, we'll be in the intersection of the well. we have to run casing and cement it. that all takes time. we have to drill that last 100 feet, we have to be very carefully because we could easily miss a nine-inch hole with a nine-inch hole. we'll do a number of ranging runs. it's my anticipation we'll intercept the macondo well with the first relief well toward the end of july. at that point, we have to do the kill procedure. there's three possible scenarios. it could be flowing up the annulus, the casing or both.

the kill procedure will be slightly different under each one and some goes in a series and we have planned for all three possible scenarios. and the kill procedure and cementing could take anywhere from a number of days to a few weeks, just depending on what that is and how that goes. so, as you heard us talk about we expected to kill the well during august, that's it. we intercept it towards the end of july and the kill procedure goes into august. the second relief well we have as a backup to the first one. we've drilled it down to a casing point which we're now stopping to wait for. what we don't want it do is have two relief wells at the same place interfering with the electromagnetic ranging, i didn't describe, i'm trying to catch up time here, i'm sorry. and what we also want to do since the second relief well is a backup for the first, if there's something we need to change in that bottom part of the well, we don't want it to be at a point we can't change it. so we want to stay where we are. so, we drilled down to the casing point just above the one we're about to set on the first well and we'll wait. depending on how that goes, if we need it do something different we'll do that that's where we are today in terms of

relief wells. that's where we are today in containment. now open for questions. >> thank you, mr. wells. i appreciate your presentation here. a great many people are depending on the success of your endeavors. we certainly wish you well in those. i have a question that's prompted by -- originally by my experience in prince william sound in 1989 when i was not impressed by the effectiveness of skimmers and booms, dispersants. we didn't allow them to be used everywhere there. on the open ocean, they seemed wholly ineffective to address this serious nature, much lesser spill than the largest in the country's history, but nevertheless nothing like what we're now dealing with. and as you describe what you currently can do in exploring for deepwater offshore oil and gas, the technology that you describe has advanced so much in the last 20 years. it's really dazzling. the response capability looks to

me about the same as it was 20 years ago. does it seem that way to you? is there -- are there plans that we should consider recommending to put more research and development into better skimmers, better capture, oily water separator devices, containment booms and things of that sort? is that one of the lessons that we should learn from this experience? >> well, i absolutely think we need to learn everything we can possibly learn from this event. we are very much focused right now, if i'm honest with you, on getting this one. i think there's some learnings that we'll want to do after the fact that look at what we could have done different. i think the thing that was unique about this situation was not only did the b.o.p. not work, but the emergency disconnects didn't work that would have given us the connection that we're used to how we could have come in and done something. that combination of those two

things really created an unprecedented event for us and we have had to respond in a way that we hadn't planned to before. so, a lot of the equipment that we're using, we've had to design and build and make as we go, because that wasn't an envisioned event. i think we need to learn from that. i think we need to learn from -- i think we're collecting a lot of information, we're doing a lot of monitoring on what's being effective, whether it's dispersants or whatever, and i think we need to reflect on all that when this is over and make sure that we've done everything we can so it never happens again, and if it does, we know exactly how we're going to deal with it. >> dean murray? >> mr. wells, it is very impressive the technology that you're talking about, and we certainly understand that this is being designed and built right on the spot and on top of

what -- the multiple parallel paths to containing this well. can you say something about what is the next parallel path that you're working on, because we would very much like to see the relief wells work. we understand there are two relief wells, but what's the next step after this? >> okay. so let me go through it. this is how do we kill it? with the first relief well, we're very close, we expect that will work. we've got the ability to -- we're coming in above the reservoir, so that if it missed it the first time, we still have the opportunity. so there's multiple ways we can still intersect, we're got the second relief well. if the relief wells for whatever

reason fail, the other option we're working on is how do we install what i would call a permanent collection system? we're working on pipelines to other facilities and we've -- we're securing the pipe, we were working on all the designs, working on where it would go. we've got some possibilities. we believe these would be things that we could implement by late august or early september, if the relief wells didn't work. so we are thinking beyond if the relief wells don't work, but we do have confidence in the relief wells. the expert that we brought out there, i visited with him offshore. he's done 40 relief wells and he's been successful 40 times. i want his record to be 41 out of 41. >> so do we. >> i know we all do. >> any other questions, members of the commission? mr. garcia? >> thank you very much. can you comment or do you information on the well

structure, subsurface, the integrity of the structure? >> the integrity -- the reason we want to do the integrity test is during the top kill procedure, we couldn't get the mud to go where we wanted it to go. and what we couldn't tell was it all just coming out through the top of the riser or was there some lack of integrity in the well somewhere? it was going somewhere but it wasn't going down towards the reservoir. that's an unknown. there's two theories on what that could be. so this integrity test we've set up the next two days we should be able it do in the next few

days is designed to the shut in the well and measure pressures and that, it will tell us what the integrity of the well is. i hope in a few days we're going to know that. >> thanks. >> other questions? tom. >> yeah, thanks very much. >> professor boesch. >> thanks very much, mr. wells. i think you described first of all, the remarkable technology we use to explore for, drill and recover oil and gas in deep water. it's truly amazing technology. you also described the fact that we were caught short. and when the preventative technologies, the blowout preventer and the reconnect device that you described didn't work. our job is to think about the deep path that is the institutional conditions that led to this inability that we were caught absent that capability and to make recommendation to the future. so it seems as you describe, you were designing and building in real-time. why didn't the industry anticipate this potential and make appropriate investments in r&d and response capability in the past leading to this point? and what can be done going forward and who's responsibility is it? is it individual companies? is it the industry? is it government r&d? can you give us some thoughts about that? >> well -- >> specifically speak about the subsea containment issue, if you

want to just focus on that. >> so clearly, we need to learn a lot from this. i do i believe more research needs to be done and i know bp has contributed a significant amount of money for future research to be done. we will sit back and reflect on that. i have to stress again the unprecedented use of the b.o.p. and the way it failed. the fact that the emergency disconnects really just created a unique situation that we're going to have to sit back and say, okay, if that happened again, what would we do? we've learned so much now about. but what would be the other unique situations that could happen to see if we need to do something different? i do know as an industry we will work hard to come up with what's the ways we can collectively do that. we need to have a collective response to how to deal with this. the industry needs to be prepared. this isn't something for each

individual company to do. we want to have one best way that we can respond to a situation like this happens. i think we'll reflect on that more. if i'm on it, right now, i'm totally focused on the response of this well. >> thank you. other questions? senator graham? >> one of the issues that came up yesterday in florida was the fact that bp is at its core vertically integrated oil and gas company that it was called upon to undertake some tasks that were outside of that core responsibility, everything from dealing with the myriad of local officials, fishermen, setting up a complicated cash management and accounting system to reimburse legitimate claims are just some examples of that. how well equipped do you think bp was to take on those nontraditional responsibilities

that this accident and your role as the responsible party thrust upon you? >> the way we've handled our response, i'm very focused on the containment and have not been involved in the claims part. so, my knowledge is more of what i sort of hear versus that. so there's other better able to talk about that. but what i do know is that i do know what our commitment from our company has been, and we're determined to do this as best -- we said we're going this right. we're going do the right thing as best we can. i know we've made some mistakes along the way, but we're committed to doing everything we can to earn back our reputation on that and we're trying to do that, but i think it's fair to say that claims was not our competency but we put everything we could possibly think of to make sure that would work well. >> thank you, mr. wells.

thanks very much for your >> we have a special web page with our coverage of the gulf oil spill. it includes two dozen hearings in washington. plus, all of the briefings, speeches and web pages. there is access to live bp video from a mile below the surface of the gulf. we have set up a twitter section for your comments. you will find it all at c- span.org/oilspill. the first day of the national commission investigating the disaster included discussion of the economic effect of this bill. this is two hours. program after katrina. previous to that i ran a business relief program in new york after 9/11. the bp oil spill is a tale of

two impacts from the spill itself and the impact from the moratorium on deepwater drilling. i would like to leave you with this impression. that from a pure economic standpoint and this is recognizing the human and ecological impact, i i'm going talk from a economic and financial spand standpoint. the oil spill, rather is going be dwarfed possibly by the impact of the moratorium. the spill will hit some industries and be felt by many. but the deep drilling moratorium, and i will go through the numbers has the potential to turn a catastrophe today into a economic calamity. so let me talk about the oil

spill. an early read after it occurred, we found that i quarter of the businesses 24%, thought they were going to be directly and negatively impacted. about 26% thought they would be negatively impacted by the perception. going forward, this brand issue is very important. and then an equal number said they were in a position to help remediate the spill. we have to talk about that, there can be a short-term economic benefit but it doesn't necessarily last. when we talk to industries, we expect -- and you will hear about this from the panel, an acute impact on fisheries which account for 2% in the economy in the state of louisiana. impact on tourism recreation when you have individuals

canceling conventions because they are concerned about air quality. an air line saw their numbers drop month by month. it was a perception that people didn't want to come here at that time. in terms of shipping and the chemical industry, we thought there was not going to be that much impact and they have not been. in the short-term there can be positive impacts. from the beginning we saw the biggest impact. let me tell you what you are doing, geno inc is executing an anl sis analysis of the impacts on things like the hospitality industry and we are going to look at the data to date on the ground. but also use modeling to look

into the future. the results will not be available until the rd. however, i would be happy to share those results with you. one of the mistakes that we made as a region is that we didn't do this and have a good objective analysis of the impact. that was a hindrance when we determined how we would set our strategy. >> -- offer and very much like to receive that and subsequent information that you develop. >> as a personal disclaimer. you try to determine the objectives and facts as best we can so that we can all act on th them. i think we all have the same end goal. i said what can i tell them so far and they said we don't have the numbers yet but do know relative to the valdez and alaska, the economic impact is

going to be greater because of the spill itself and the nag anitu magnitude of economic on the coast is more intense and we know how devastating alaska was. on the moratorium, i want to rst stress something critical. the first is that there is no one i don't think in law lou ou not fishermen nor iustrialists who does not want to protec the environment of the state. this is where we live. we all snull know that we have it. but the moratorium is real. we are talking about up to 38,000 jobs throughout the gulf region. each rig supports about 230 jobs on average. the average wage for those jobs is $98,000 a year and you put that together and you are talking about close to $2

billion of lost wages a year and tax revenue losses which could surpass $700 million and those are tax dollars, tt is lost money we can't spend on hospitals, roads or schools. and so, i would like to say that we are advocating for a solution. a way to mitigate the impact on the moratorium. in a way that protects our environment and allows us to retain our jobs and keep working. we are advocating for solutions that continue adherence and clarification of the ntl 06 and development of containment plans. we finemerefinement of our clea plans and men on the rigs to make sure that the regulations

are being followed. we feel if we do this, there is a more refined solution to our problem. and i guess i think this is a question about our country and whether we have the wisdom and ability to protect our people and to protect our environment. while at the same time preserving our economy. i have to believe that we have that ability. i wanted to pledge our support of your effort to help reach the solution that helps preserve our economy and our people. thank you for the opportunity to speak. >> we are going to hold our questions until the panelists have spoken and then we will ask questions to individual participants. our next speaker is mr. keith overton who is here as the reprentative of the louisiana shrimp association. >> chairman aham, i think they

have the order of speakers changed. i am keith overton and i think they have moved me up. i wanted to make that note. >> i apologize to you. >> not a problem. >> we like the shrimpers too. i'm happy to stand in. my name is keith overton and i'm the ceo of trade winds island resorts. trade winds is the largest resofrt on the west coast of florida. i'm chairman of the board for the florida restaurant and ledging associatioledge ingassociation. i am going to present you with facts today on the impacts that florida is feeling today. florida is the vacation capital of the country and has been for

generations. variety to visitors envision warm sunshine, fresh seafood and a natural environment like no other. for many people, they are pro t poemted to look at photos of their last florida vacation. nine out of ten visitors have been to florida before and many come twice a yeefrar. this oil spill is unlike any we have seen, it is different from tornados, hurricanes, wildfire and red tid this crisis began like any other, but no one knows how long it will take for a full recovery given the strong negative perception around florida as you see the gulf spilling into the oil. we hosted over 80 million

visitors in 2009 and captured 17 million vacations by floridians and our visitors spent over $60 billion on travel last year generating nearly $4 billion in tax collections. that means that 1/5 of florida's sales tax dollars are paid by visitors. it also means jobs. we employ almost one million people in florida. let me give you some statistic from my own company. call volume is down 25%. the losses are staggering. my company has 800 of the county's 35,000 hotel rooms. bp is asking us toake an average and compare it to how we are doing today. we are down about $1.7 million.

and that is a $70 million loss in revenue just in pinelus county. i'm not talking about restaurants, or anything like that. and then you credit the impacts on the panhandle and the effects on their hotel rooms and it is easy to see that we are into the billions of losses. it is a staggering number and i think it simpois important that committee understands the impact of that. these losses have occurred in the tampa bay area without a single drop of oil hitting our area. the rest of the panhandle is in good shape, but you wouldn't know that if y looked the national media or looked at the newspaper each day.

this exerpt indicates that florida was at the top of the list. 95% of people thought that florida was going to be covered in oil. we have a significant perception problem, but the reality is no that it is not there today. the complete why partnership survey is in your packet. i'm not going to go through that. prior to speaking on the neal cavuto show, i was viewing a monitor on another news broadcasts. on the ticker below, it said, "oil finally reaches florida's beaches". plural. in the background the station had superimposed oil running down the monitor behind the

president. what the rest of the world is seeing is that floridis covered in oil. it is not the case and we are dying as a result of that. our economy is being stifled because of these perceptions. i urge this committee to consider and address five concerns today please if you would. one, the media must be held accountable to factual reporting. they have a responsibility to do so but many continue to put ratings ahead of accuracy. i urge you to charge a federal agency within the government to review reports and address all reporting and have swift action and appropriate sanctions for that. two, once the aisle leak is stopped, we all fear claims will cease for future losses beyond the end of the clean up. ken fineberg's comments with bp

not being compensible for legitimate becaus oil did not reach their beaches is a humg conce huge concern to us. we employ th committee to not allow such an aprof to the process to occur. bp has not taken a position ke this thus far and we don't need the federal government's oil spill czar giving them anything to hide behind. our tourism businesses rey on bed-tax dollars. we need to make sure that those agencies are made whole. theseafood and wild life industries are critical to florida's economy. i have enclosed facts in there to help you understand that. lastly, we must continue to spend money on our marketing efforts. we are appreciative for the $25 million that bp has provided

this. as long as there is a high definition camera, over the gulf, we will need to spend more dollars. i urge this committee to take that into consideration. thank you for the opportunity to speak with you today. >> thank you. i apologize for the mis sintducti misintroduction. >> thank you for the opportunity. i will be presenting the viewpoint of louisiana oystermen. first and foremost, we are affected directly. the oyster doesn't move much as you well know. so we don't have a choice in this at all. the others do have that opportunity to move around. keep that in mind. along with my brother, i'm co-ownner of the oldest continually operating oyster

processing company in america. since 1876, we are a fifth generation family operation. we no longer process the premier oysters that we bought from families who have harvested oysters from these louisiana waters for many, many generations. we are important to the historic and social dynamic of the food culture of new orleans and the state of louisiana. many restaurants throughout the area place our brand name on their menus to promote the creditbili credibility and quality of their oysters that they serve. louisiana, i don't know if you guys know this, but louisiana is the number one producer of oysters in america. we provide over 45% of all oysters consumed. due to this unnatural, unnatural

catastrophe in our waters, p and j may forever be ex contintinct. we have individual that are calling crying and saying what are we going to do for our christmas and thanksgiving family gatherings? this is a critical componnant of what this culture is all about. the oyster. the louisiana oyster. we are the most scrutinized and regulated seafood in america. we have incurred expenses just to stay in business. we have helped stet the standars for the shell fish industry throughout the nation and

oystermen, of one of the most productive areas in the world, we have been stewards of the sea, ceating a bounty for the oyster itsel but all the fisheries to thrive. without the precise management of our oysters for well over a kent t century, we would have already been presented with waterfront property and losing the communities that we have. on that note, one thing, one lesson that we shall learn from this is how important our coast line is, how important the fisheries are to not only the nation but the world. and that we over the past many decades should have been putting moneys into instead of research and development putting money into our coast line, rebuilding

the barrier islands and presenting smaller fresh water diversions to mimic how it used to be. to build up the marsh with silt movement and to plant the grasses and trees. to mimic how it used to be. that is one thing that is specific to this challenge that we need to accomplish and solve. it is too important to the united states and to the world. the process of capping containing and cleaning this disaster has taken too long and our livelihoods have been drastically jep arrized. i am normally hopeful, but i don't see a future in the oyster business as it once was. tidal movements in alaska waters experienced some of the highest tidal waves in the world. they still find oil from their

disaster after 21 years weon't have that same natural forceful cleansing here. some say oh, nature is going to take its course. with the oil flumes and the toxins and along with the fresh water abundance of water, that we've placed in our waters, has been a direct affect on who we are, and where we are going to be. we don't know what the future entails. you and i both know that we don't know what is going to happen. we've also lost our spawning season this year. so with that, and with the dispersants and xins, we have no idea what the future will hold. our family has provided the finest oyster product on the

market for over 140 years. and we an miticipated continuin this for year to come. we have a family. many of our co-workers have been with us for over 30 years. most have been with us for their entire work life. we have had to layoff 11 of the 19 already. the ones left are very much part-time. this is what we know. p and j oyster company need to be compensated from this disaster for know and in our future. the question remains has the governnt and bp done everything possible to cut through the red tape to fix this mess and compensate the people whohave been directly affected by this catastrophe? thank you very much for your time, consideration and action

to solve the issues. >> thank you very much. mr. hunjay? >> mr. chairman, i'm the president of the center for coastal conservation. we include the american sport fishing association, the coastal conservation association, the international game fish association, the big fish foundation and many other institutions and individuals from across the country. fishing, produces over $160 billion annually fort american economy. in 2006, salt water angler expenditures along contributed to $82.3 billion and supports

534,000 jobs. the gulf is one of the most popular areas for recreational fishing in the country. catching red fish, red snapper among others. recreational fishing contributes $41 billion annually and supports 300,000 jobs. i toured the mississippi delta a few weeks ago and like thousands of others who enjoy our coast i was shaken and i am heart broken. the massive oil spill is on track to develop state the gulf's recreational fishing businesses for years to come. the spill has impacts far beyond these fish and anglers. it is having devastating impacts on the businesses. 2300 bait and tackle shops in gulf states are directly

impacted. these economic impacts will be far reaching affecting a variety of businesses including equipment and tackle manufactures, the boating industry, sport fishing clubs, motor sales and repairs, hotels, motels gas stations and restaurants. if the entire gulf wer closed from y through august the region would lose $1.1 billion and 19,000 jobs. expenditures on fishing related durable goods have slowed dra matically. if all durable goods expendit e expenditures were to come to a halt. $14 billion in revenue would be lost. this supports 262,000 jobs, 55,000 are here in louisiana. another casualty of deepwater

horizon, fishing, and management. although the vast majority of state and federal waters are open to anglers. the disaster has chilled participation in reg rational fishing. it has cut the need for salt water fishing licenses by 41%. it translates for a big hit uona state department. the non profits that advokate for the radiation when anglregi anglers are kept off of the water.egion when anglers are

kept off of the water. many will choose other vacations for their fishing trips and family vacations raer than risk any encounter with the effects of the spill. the fiths nancial resources it take to overcome there, are far beyond the ability of the area. the economic impact of this disaster can seem distant and cold. let me offer a different description. weeks ago, i traveled to venice to speak to victims i will never forget the helplessness and it's despair in the eyes and on the faces of good, descent, hard working americans. i want to tell you about captain ryan lambert. he is the owner of cajun fishing

adventu adventures. he has daughters and grand kids. for 15 yrs he moon lighting fishing clients by day and working full time at night at the cohemical plant 15 miles up river from here. he decided to build a lodge so he could house and feed these clients in addition to carrying them to some of the finest fishing. that first turned into two and then four. the lodges could slp, fish and feed 40 anglers a day. he employed 14 fishing guides, 8 support staffers. if you could get on ryan's calendar a year out, you were lucky. his average sales were $1.3 million. first quarter of 2010 he was up over 60% of last year. when i visited him a few weeks

ago he was a couple days of pulling the plug. he didn't have a trip on the books forthe next 100 days. i spoke to ryan this past weekend. his 14 guides are mostly working in the cleanup. he has 12 acres, clean and available for warm bodies. he is invested in coastal, louisiana, that investment is not performing welg. ryan's story is one of many that we are living every day across the gulf. the center is xhikted to rebuilding our coast. and construction of fish hash hashries andesearch centers but we can't do it alone. th greatness of this country will prevail and we will recover but it will not be quick or

easy. ryan and the others may be able to hang on until then or they may not. how successful we are in our commitment to recover from this disaster will be measured from their ability to resume their lives as they once new them. thank you very much. >> thank you, sir. i would like to ask two questions, first, to mr. overton. mr. overton, youisted five concerns areas of possible action. the last of which was marketing. we were in pensacola yesterday and i was impressed with how clean the beaches are. those tv shots you saw weeks ago are history. and they are back to normal.

we talked with governor cryst who said they now have a request for $50 million. what has been your experience in terms of how effective that initial wave of marketing was in terms of disspelling the perceptions in florida? >> it is too soon to tell. i will tell you that we know that giving people a guarantee isn't good enough. we can't offer them a iscount or their money back. because people are time police ficer we have to convens them that what they are tv is

not what florida is experiencing today. >> you mentioned that is of the problems that you are dealing with were a result of some failures in the past to invest in rehabilitation and restoration of damaged area. i know senator landrew haseen aggressive in trying to get support for the coast of louisiana. it is likely that out of this disaster, there is going to be some resources available maybe through the form of fines and other sanctions that will be the

result of action which has caused so many immediate problems. how do think resources might be most effectively deployed to deal with the longer term health of the areas upon which the fishing industry and oyster indury of louisiana depend? >> you realize that we should have been getting the federal roy royalties since 1937. so that in itself should be in play. i think we are supposed to wait another three or four years. what is amazing to me is that we e not on the same level as other oil producing states. if we have had the moneys since 1937, we could have handled everything that you see in front of us on our own. the state of louisiana produces

more seafood than any other main-land state. alaska and we are an important dynamic to the entire united states. oil and gas produces over 25% of producti production. thisoast line is vital. but we should have had those fundings, we should -- i think it is three years from now, instead of delaying that, it should be done today. >> by the way, one other point if you don't mind, in reference to the restaurant association, i serve as a board member in the new orleans chapter and one major factor that we already see

is the genuine question of whether or not our product is good. everything that we draw from t seas is more scrutinized but for the future, our restaurants are in trouble. they rely on louisiana seafood and it is critil for our future. >> mr. bosh? >> yes, i think mr. heck started off mentioning this term about brand. and it started me thinking that you no as much as this commission would like to step in and stop the spill and the impacts, we can't do it. physically we are not smart enough and it is not our main responsibility. we are looking at the long-term. what i'm concerned about, is

that and this goes not just for louisiana, but other parts of the gulf as well, this brand issue, people are skeptical of eating gulf of mexico seafood. they are skeptical of coming down, why should i go fishing in the gulf? so, after assuming what we heard earlier from the bp spokesmen, we are successful and we stop the spill, the oil that is out there we collect it and we can open up the zones and have the proper safety precautions but we still have a probm because of the concern, this -- it is hard to shake that. could you give us some recommendations about what the commission might be prepared to recommend to our government on how it can help you recover that

confidence of the american consumer that the resources of the area are safe? >> sure, once again, we are known for our food here. and eerything that is sent from the processing facility and distributed to the restaurants is certified through stit heate health fda, and now we are the lab for this envinment right now. we are the laboratory and we will dictate from this point forward on how things may change. in reference to the truth any of seafood. now what we need is to be able to market our product and have more marketing dollars to present what we are and what our

culture is all about. that is what we are known for, is our food. >> jeff from the sport fishing? >> yes, thank you. >> the downfall that you described? >> sure. let me tell another short story. ivisted a man named kenny who owns coastal tackle across the river here. he has a small tackle shop and sells rods and reels and crickets for a segment of the clientele and when i walked into the small, empty shop, he held up his hands and gestured and said jeff, this is my life savings. it was -- hard to not cry in a situation like that. you know, commercial fishermen and seafood processors can be compensated for their losses. bp can't compensate me because i can't take my kids fishing i'm a recreational fisherman.

but there are businesses like kennies ay kenny's and ryan's businesses and the hotels and motels by the coast that recreational fishermen want to make sure will be there when we return to normal. and we will one day return to normal. but we want to make sure th those little satellite businesses that cater to the volumes of fishermen that go through there will be there when we get back. there is a marketing campaign that is out there -- our mutual friend mike nussman, the president of the american sport fishing association andob kramer from igfa, those kguys ae coming down to fish with me later this month. we want anglers around the country to know that the

majority of our waters a open. i scouts speckled trout an made trout almondine at home and it was the best ever. we want people to know that our resources are vibrant and safe and that the protocols are bein governments are being followed to make sure that open areas are left open when they can be and closed when they must be. t that we are going to get back to a normal. so any council that you all could offer -- counsel that you all could offer as we get to that marketing campaign would be very much appreciated. >> thank you. i think there's also a long-term player. if we talk about the idea of brand, i think what we'll have to do have brand ourselves, credentiale the region. and if we speak on what mr. senseri said about the

acceleration of the gulf coast security act, which according to our estimates could generate between $40 million and $160 million annually, funds that could be reinvested in coastal protection and remediation of the wetland and other aspects like that, i think we have an opportunity in the entire gulf coast to become the world hub, world center of sustainable industries of conservation. to become what some have described as the netherlands of the u.s. if we do that we'll get the double win of saving our coast as well as diversifying our economy. i think that to the degree at the federal level we can institute programs and policies to help encourage things like coastal restoration, that make us a -- the best in the world, that's a long-term opportunity to have some good come out of this disaster. >> may i take a shot at your comments if i may? >> sure. >> please. the first thing that this could committee could do -- and your comments were right on point. there's not a lot we could do about the spill. it's in the hands of

professionals. let's hope, as you said, that it gets done. make sure we get paid. i mean, it isn't any more complicated than that. i think our lose are going to be, you know, scrutinized. how do you demonstrate whether you would have been up or whether you would have been down? let's don't make it an argument or a long debate. let's give us the benefit of the doubt because i will assure you this. our claims will stop before the losses themselves stop. there's no question about that. this will take years for us to recover. so if we canet made whole through the whole process, i think that will make a tremendous difference in getting back on track. lastly, and i know there are better experts here, but this is a real opportunity to get some baseline measures of the water columns that are out there. there are three major bodies of water that provide commerce to the u.s. -- the chesapeake bay, the great lakes, and the gulf of mexico. a fraction of the money spent on the water quality and the research done on the natural environment within the gulf of mexico is spent to that of the

other two producing economic bodies of water. and so we have an opportunity here today to take advantage of this, and make the gulf of mexico a better place long term. it is an opportunity, and we ould seize that. thank you for allowing new speak. >> mr. senseri? i had lunch on saturday with a number of fishermen in gulfport. and heard stories very similar to those that you are expressing, impacts both real and perceived that have diminied their economic returns. one of the concerns they have is with respect to dispersants. they don't likethem. they view that that gets the hydrocarbons into the water column, where they're available, they're unavoidable by fish life. i'd be interested in your views on that. how do dispersants if at all affect oyster beds do, they keep the -- beds, do they keep the

substantial hydrocarbons from falling on them and smothering them, or do they make things worse? how do they affect bivalves, for example? >> well, every indication shows th it is a detriment to the growth of the oyster, the spawning which is -- we're just going through that spawning season. and once again, the future of these dispersants -- i mean, i thought there was a natural dispersant that was available that has been offered. and due to the bureaucratic issues and i don't know -- i can't go into all the specifics on why they're not doing it. but if there is a natural dispersant, why aren't we using that to protect our fisheries for the future? but yes, it's a definite detriment to the initial growth.

as a matter of fact, nick jursich, one of our farmers that wee dealt with forever, went out the other day -- he has a small area. i don't know if you guys have seen the wildlife and fisheries lines for the state of louisiana, but this is how we base our closures on. there are two small areas within barrier nine and ten, the basin. they're small areas of nine and ten. he is not going into those areas because he sees new, brown foam -- i'm not talking about when the salt water, when the waves hit the beach andwhatnot and there's a saltwater foam or anything like that, hee experiencing something he's never -- he is experiencing something he's never seen bef e before. he is not about to draw oysters from those leases that are open due to that fact. and it can be the dispersant. we don't know. we don't have the answers, the

scientific answers from all of this right now. it all goes to the future of what's going to happen, how we're going to address it, d how we're going to be compensated because we don't know. i mean, if i'm trying to produce oysters, and the state and federal and noaa and epa are not allowing us to draw from these waters because of the effects of everything that's taken place right now, you know, we're not going to be here. and so many other -- >> presumably people are analyzing the oysters for contamination and trying to determine whether that has

there are a few areas that are open. the most productive areas for oysters are closed, and that's the basis of all fisheries, by the way. those closures. of all fisheries in louisiana. >> thank you. >> any other questions? >> yes. >> terry -- >> thank you. i'd like to return to the compensation issue for a moment, and maybe mr. senseri or overton could answer this question. and it has to do with the experience of your employees with the claims process. yesterday, i heard from one employer who told us that his employees have had problems getting compensated because they're being required to submit two years worth of pay stubs. can you -- can you fill us in on what's happening with your

employees. >> that has not been an issue for us at all. as a matter of fact, the first day that we really started being a spokesperson for the oystermen, bp came to our location. and it was our first day, i think we were on cnn or something, and letting people know that we were laying off ten shuckers and that we are not going to be processing shucking oysters any longer at our location i the french quarter. well, anywhere. that's our only location. and they came that day, and we had all the documentation ready for them. i don't knowpecifically in reference to other companies and whether or not, you know, they don't have all the right information. i do know that we had provided that for them that day, and we speak to our shuckers each week. and we've not had an issue. but i mean, how long is that going to last?

you know, how long is that going to last? this is what these people know. they know how to process oysters. and their livelihood has been taken away. >> thank you. mr. garcia, i'm not aware of any individual employees in the travel or tourism industry in florida that have been able to make a claim. those individuals that have been affect read those that have been laid off from their job. i assume they'd have to demonstrate at they were laid off as a result of the economic situation from the oil spill. our concern really lies more with the small business owners, particularly the small restaurant owners, where their margins are already very thin. you know, they're going to hang on to their employees as long as they can in this situation. but that's at the expense of missing multiples like their debt service coverage ratios, and their bank payments, and banks today are not willg to work with them on these terms. and i think that's going to be more of the issue for florida

than it is the individuals that are affected by it. >> thanks. >> and one other question maybe for mr. andrews. are there specific actions th the federal or state regulatory authorities could take to ovide relief to recreational fishermen -- and we don't have a commercial fisherman on the panel, but if you could enlighten us. >> you know, as a said earlr, mr. garcia, tre is nothing that federal or state regulators can do to compensate me for not being able to take my kids fishing. the one thing i think that all of us who are recreational fishermen are the most interested in is making sure that all of those little satellite businesses, that the place where we used to buy our bay at the minnow paws will still be open. you know, that all those little places will be there.

and i know that many of those places can't make it. can't make it even through july. >> can i follow up on that question, jeff? >> yes, sir. >> one of the things we heard a lot yesterday was about these federal moratoriums on fishing in federal waters. >> yes, sir. >> are you awar of what is being done to evaluate the fish that are in the near gulf coast areas as to whether they have been infected by either oil or dispersants and, therefore, are some risk to the consumers? >> i can only speak to -- to the interest of recreational

fishermen. but unlike mr. senseri, who deals in oysters, the critters that our folks are interest in are finfish. and typically when a finfish swims into some ugly water or toward some ugly watered, he thinks better not go there. i should go elsewhere. it is my understanding that in all of the tissue samplings done by louisiana department of wildlife and fisheries that they have not found a level of toxicity that presents any problem whatsoever in -- in any of the open areas or any of the closed areas, which is why i'm so comfortable in fishing a eating the fish that we catch here in louisiana's coastal waters. you know we talk a lot about this dispersant.

it's sad because we just don't know. there is not a body of scientific evidence to explain to scientists what's going on when you've got 1.4 million gallons of dispersant or more when it's never been used at depths like it's been used currently. all of the pre-eminent scientists in the country are looking for a body of science. frankly, the gulf is a big periment station now. and i think people are learning and, of course, you know the dispersant keeps the oil prett much out of sight. my visit to the mississippi delta a few weeks ago, i found it interesting because behind the floating orange boom that was oil ed was the white

absorbent oil that was boomed. behind it was all of the reeds that you see in the marshes there, and they were oiled from about six inches booch the water line to 12 inches above the water line which i thought was odd because i didn't see a sheen of oil on the water that morning. i was told later when i came in that they had sprayed dispersant overnight so folks wouldn't see the sheen of the oil. but the slime of the oil w certainly left on the marsh grasses that are so important to thee estuary and the place wher all the baby critters can hide in the nurseries. we don't know. >> are there other questions? if not i want to thank you very much for what has been an

extremely valuable and informative and insightful series of presentations. we gained a lot from what you contributed, and mr. hecht, we're going to be back in touch with you on your economic analysis. we'd like this to be the beginning of an ongoing dialogue. if there are things that we could provide to you, we will give you a point of contact and conversely as we continue our work and maybe need some additional information from people with the level of expertise that you represent, i hope that you will be receptive if week -- receptive to this. thank you very much, we will take a break until 2:00 p.m., and we'll reconvene with the second portion of the economic impact panel. thank you. >>

we are going to lead off with mr. collins, i think. >> i appreciate the opportunity

to testify before this committee today. devastating event. however no, impact of this event is greater than the tragic loss of 11 workers. their loss will be forever felt by families, loved ones and co-work co-workers. the impact were also highly evident. i will focus my remarks on the administration's current uncertainty of the review and permitting process. as example of how this uncertainty is impacting our industry, i would like to tell you about the effect on my company ocean nearing. ocean nearing is a global provider of engineered services and products, primarily to the offshore oil and gas industry with the focus on deep water applications.

in 2009, we had revenues o$2009 1.billion. about a 10% profit margin and net income of $188 million. we employed 3800 people in the u.s. and about 25 people focused on the gulf of mexico. we own and operate industry's largest fleet of remotely operate vehicles. at the end of may, we operated 255 vehicles around the world, 70 in the gulf of mexico, 35 were engaged in drill rig support services. ocean nearing which services 29 of the 35 floating rigs in the gulf of mexico. we are working hard at the well site. i assume you've seen our yellow rovs and others working around the well site and on the ocean floor in 5,000 feet of water. we're providing two vessels, 16 rovs, sub c control systems, engineering, project management. with 300 people supporting this project hopefully to a positive outcome soon.

these vehicles are manufactured in morgan city, louisiana, less than 100 miles from where we are here today. this is u.s. technology. as is most of that employed by the deep water drilling industry. these rovs are manned by a crew of three to six people. these are great jobser anding 60,000 to $1200,000 a year. look at the timeline. back in 1 april, ocean nearing had an excellent outlook for 2010, looking for our second best year ever, about the same as last year, slightly below our record year of 2008. blowout on 20 april, 6th of may, an announcement of no new offshore permits would be granted. on 27 may, a six-month moratorium was announced. 7th june, we announced a reduction income forecast earnings for the second half of 2010 due to the moratorium. a $25 million reduction in net income. i tell you this not because you should be concerned about ocean

nearing's amount of profits but with a 25% profit margin this $25 million represents $250 million of revenue. ocean nearing will not be spending $225 million it for payments to employees, suppliers, local state and federal taxes in the second half of 2010. by last friday, eegs nearing was providing services not on 29 rigs but on nine rigs. four of those actually engaged in exploration and production activities, the other are five working on other relief wells. ocean earring's stock price dropped to $45 as of the end of june. the stock analysts who really determine the price of our stock are expecting the market to be severely badge damaged by the moratorium for several years. this $1.1 billion of market cast lost by shareholders down 30% while the s&p was down 12%, we can allocate $700 million of lost value strictly to the

moratorium. who owns the stock? our stock is 95% owned by snaugsal investors. 401(k), pensions, mutual funds, investments of individual americans. what about the 20 rigs not now working in the gulf of mexico snell our analysis says five of those are likely to move out to foreign locations soon. this has already begun to happen. one rig the ocean endeavor owned by larry dickerson's company is enroute from the gulf to work in egypt. the longer the moratorium and surrounding regulatory uncertainty continues, the more rigs we will see leaving the gulf of mexico perhaps for good. as rigs leave the gulf of mexico, the ocean nooering jobs will follow. we will trial to stay on the rigs and provide services but i should tell you in all foreign krunds where we operate, these countries are pushing hard for local workforce. eventually the americans will be

replaced by local workers already in india, we are almost 100% indian. in brazil, we were 100% a couple of years ago. we have reduced personnel needs in the u.s. and surely we'll have layoffs. these highly trained ocean nearing workforce will be among the estimated 50,000 who may be out of work as estimated by tudor pickering. on april 1st, 35 flowing rigs were out of 225 floatinging rigs under contract in the world, this is 16%. a relatively small part of the global deep water market. if this declines further, why will deep water companies keep their head quarters in the u.s.s? what should we be doing? reducing capital spendures for 2011. this impacts our manufacturing operation in morgan city. we'll be reducing u.s. manpower. layoffs will be likely bill september. we'll begin to shift our focus to foreign operations brarks zil, west africa, india, north sea and look for opportunities

to make foreign investments to grow our business. in summary, what should we do? i suggest a commission immediately little recommend against the imposition of a new moratorium and further recommend the administration and those of us in the industry sit down and find an acceptable solution to provide safety assurances and continuation of exploration and development. third party verification, increased inspections, better communications, well designed as contained in the new ntls will all contribute to enhanced safety and allow companies to continue to explore in a caution timely manner while keeping our u.s. workers employed. thank you very much. >> thank you, mr. collins. mr. duffy? >> yes, thank you, ladies and gentlemen of the commission. i appreciate the opportunity to speak as a representative of the maritime industrial and specifically the deep draft industry which for ease refers to ships versus shallow draft which refers to tugs and barges

and offshore supply vessels. i'm the president of the gulf states maritime association and also the president of the national association of maritime organizations. we have on the mississippi river, which i like to refer to as the world's economic superhighway connections, water ways, that depending on whose sticks you use connect 26 states from 26 to 30, i guess depending on what you consider navigation. and as much as two canadian provinces. the world is fed out of the mississippi river through the grain coming down from the midwest. the mississippi river as was discussed earlier, we've been impacted by crisis after crisis. the maritime transportation system professionalsthon waterway represent a team that i would put up against any other around the world.

we rely heavily on our government partners, the coast guard, the corps, noaa, the pilot associations, national weather service, and in times of crisis, we come together through conference calls. this system started after hurricane ivan and i believe it allows to us deal with just about everything by putting the right people in touch with each other and by working with our delegation and our government partners. there have been operational changes on the mississippi river and that vessels that would usually anchor off a southwest pass are now being brought into anchorages in the lower river through cooperation of the coast guard and customs to screen vessel crews for security purposes. vessels that have submitted entry documents and have not allowed their time limit to come into the port are being brought in to anchorages in the lower

river to keep them out of the spill, to move them from the gulf. up till recently, we've had what we consider very minimum it will impact that we can tell. vessel calls are down. it's very hard as far as making a claim to identify why vessel calls are down. there have been very few vessels that we knew diverted because of the oil spill. to this day, i continue to get calls from around the world asking if the mississippi river is open. while my association has put out close to 400 messages all saying we're open with minimal impact. we have cleaning stations set up off of all the gulf coast ports. we've had very few vessels especially on the mississippi river that have had to be cleaned. the standard practice we see is that vessels that stay under way calling the river through the gulf, they do their best to done the heavy areas and they keep under way. when they arrive at southwest pass, only to my knowledge, only

two vessels in deep draft and trade foreign commerce have had to be cleaned. only a minimal delay. those two, one of them anchored off of southwest pass and the other was involved in response. the cleaning system that we have on the mississippi river is a model that should be followed in other ports and it's a little different. through the work of the transportation team that works on this river and through help of the coast guard and direct negotiations with bp, all extra costs related to cleaning are handled directly billed to bp. the extra costs for the cleaning kraenz also for the pilots that would have additional time, thus additional expenses. this is not the model across the gulf and we believe it should be. a vessel agent filing a claim has many issues to deal with, considering he has a different charter on a vessel. he may be an owner's agent, a

vessel agent, a protective agent or cargo agent. it's a very complicated matter to file a claim on. one of the other concerns we see on the mississippi river is specifically related to dredging. with the state's berm plan presently on going, i believe there's topper dredges off of the coast working to facilitate the berm plan. the corps has one dredge working in the mississippi river, a hopper dredge in the lower river at present. the hopper dredge is in the past was in southwest pass which was about 22 miles long, below about the midpoint which is about mile 11, below head of passes. the dredges working above that area, they usually don't go much it higher than about six above head passes dump at the pasaloosa dump site pop those below there dump in what is called the ocean dredge material disposal site. last week, we were informed that the epa has rule that had

disposal site off limit. it's a big concern. one of the things that has helped us is the mississippi river has been at an elevated stage for quite some time, going back to october, being above 10 feet the majority of the time. about this time year, the average would probably be about three or four feet. it's just under ten feet as we speak today. we believe the flow of the river is keeping oil out. except around berwood bay why, which is mile 14.25 below head of passes on the east side or what we refer to as the left descending bank. with the weather systems the last couple of weeks, oil has entered at berwood bayou. small sheens have been reported. those sheenz will be filed in hoppers potentially. our belief is that the water picked up by the hopper dredge is what will be fouled. that the sediments themselves

are not contaminated. the corps has a testing kit that can quickly show whether they're contaminated or not. part of the epa rules which are complicated and i don't attest to be an expert on them is if material is possibly contaminated, it cannot be dumped in these dump sites. that's dump sites all across the gulf where you're taking water or oil that came from the gulf and unable to dump it back there. this could shut down the world's economic superhighway. it's a grave concern. we would like to see engagement, discussions with on this matter before we lose the river. as the river starts to drop, showing up to ten feet in a day or two can occur. thank you. >> thank you, mr. duffy. mr. dickerson? >> thank you, mr. chairman. on behalf of diamond offshore, we would like to express our and share with others the shock that

such a terrible environmental disaster could occur from within our industry. additionally, we especially grieve for the lost lives of our fellow drilling contractor employees. as i said, my name is larry dickers dickerson, president and chief executive officer of diamond offshore, america's largest driller and the second largest operator of the deep water fleet in the world. we have 46 rigs currently at work in 12 countries. as of the date of the disaster, we had ten rigs active in the gulf of mexico. i've led this organization as president for 12 years, and i've been employed here for 30. in 2001 and 2003, i served on the u.s. commission on ocean policy. so i've been on your side of the little curtain that's in front of there. i know you've got a lot of hard work. i wish you very good luck and wisdom in implementing what needs to happen. but rather than talk about me, let me focus on the 1120 gulf of mexico employees that we have and tell you about just three of

them. there's steve deshotel, a rough neck from louisiana, lewis leggett, a marine roust ta bout from mississippi and mitch harterburr from stair rit you the, alabama who's a welder. all three of these guys are long-term employees, make somewhere between $55,000 and $59,000 a year and their jobs are threatened as a result of the moratorium. it is not possible for us to retain our assets idle with an uncertain return to work. we've been told six months. we know you need to spend six months. we know that it will take some time to be implemented. we have no real idea when we'll be able to return to work. week we announced through a process that had been in place for some time that the ocean endeavor, a 10,000 foot unit was headed to egypt. incidentally, the ocean endeavor was the closest rig to the horizon blowout. we provide some assistance and

some survivors and some staging areas were used in the immediate aftermath of the disaster. another deep water unit left this weekend headed for west africa. additionally, we have a jack up the ocean scepter is currently scheduled to go to brazil later in the year. that rig has been drilling in the u.s. but is idle currently as our operator customer cannot get a permit, despite the fact that there's no shallow water moratorium in place. we would think that through these three rig moves that we'll lose approximately 200 jobs will be lost. the good news is that we will take with us about 215 jobs that we have for americans as they will go to these overseas locations. however, i see a slow motion domino fall new place. first rigs will depart, shedding certain of the jobs with them. then over time, as we no longer

have a base of u.s. operations to train people and promote up as our workforce in the supervisory positions age and retire, those positions will increasingly be filled by brazilians, by egyptians by uk nationals in the other countries that we operate in. then finally, a third step, we have to ask ourselves as will many in the industry if we no longer have u.s. operations and the bulk of our employees and field operations are conducted overseas, why do we maintain a u.s. employment basis in houston, new iberia, louisiana and new orleans. so we will in a position that we will have effectively given away a hi-tech, high wage anniversary that is u.s. dominated. we can't help but contrast this with the automobile industry which is another high wage industry. and as i talk to my employees, i was asked by a guy on the ocean monarch, he said how come they

get bailed out and we get driven out. the industry stands ready to implement changes because we understand that we cannot just return to normal. we think we have an excellent safety record. the 50,000 wells drilled safely in the u.s. gulf of mexico are something we think can continue but know the seriousness of this disaster means we need to implement new procedures and we stand ready to do that. i think that when you look at the record, i think that ultimately, the horizon event will be determined to have occurred as a result of reckless operating mistakes. just as we cannot wait for an undetermined work stoppage to resolve itself before planning our future, we also cannot wait for final determination to look at our own operations because we have rigs operating around the world and we have to assure ourselves, customers, the foreign nations we will not have this type of event. as we kukd a series of reviews we came to the conclusion that

this disaster shares one clear commonality with the two previous large scale pollution events. i'm refer together 1969 san tap barbara uno cal disaster antics tock mexican blowout. in all three cases there was not drilling mud sufficient to hold the pressure in the hole. that will to us says that there's a very simple fix here. we looked at our existing procedures which we thought were fine but decided to make changes to make them even more robust. subsequently we've held four meetings around the world in lafayette, louisiana, aberdeen scotland and brazil. i hate to think that as i move to the future that that balance will probably be much more foreign and much less representation in the u.s. when we hold those meetings but we went through and reviewed with everybody to make sure that they were prepared to control the

wells than we would not have a recurrence of this event. we would love to be able to show the rest of the world that we can doing this. i hope that as we're able to demonstrate that that people will come to the conclusion that we can safely return to work before the majority of the u.s. fleet leaves for international locations. thank you. >> thank you, mr. dickerson. we appreciate these presentations. and they prompt a number of questions. i'd like to start with you, mr. dickerson. the moratorium, which this commission had no role in designing or deciding for is now in effect. it has roughly 4 1/2 months to run. it strikes me just without knowing the details it must take a month or more to take one of these very large rigs and move it to egypt, brazil, or west africa. is the decision for those three riggs to go the conclusion it's not just a matter of a few months but we're going to have a different energy economy in the

gulf? is that what the calculation is? >> it physically takes about 60 days to go to these locations. we don't endure a 60-day trip for a short-term commitment. most of our commitments are about a year. in a stronger market, may be three or four years. we have options that may follow along with that. the planning to get that exec e executed has been in place for some period of time. >> you say have you ten riggs in the gulf? >> we had ten riggs as of the date of the disaster. we're down to seven. >> are those in deep water? >> we have four of the seven are in deep water and three are shallow rigs. >> so four are acheded by the moratorium, the other three are not? >> the moratorium was actually lifted through a judge's order but effectively with uncertainties and atlantic permits our customers have shown a real hesitancy to return to work. so they are -- we find that our

shallow water rigs also cannot get permits presently. >> they cannot get permits. let me ask a question that occurs on the basis of some information that's been shared with the commission. that the status of drilling for the 33 current wells is such that it will be sometime at current rates of drilling or resumed rates of drilling before they actually intersect with the well field, with the hydrocarbons. is that correct? >> i wouldn't say so. i think efficient wells were in different stages. we were drilling for one customer fairly small customer who i believe had gotten down about 14,000 feet, another 2,000 feet to go to hit their target. and they just had to shut that in. so we were fairly close in that instance. we had another rig that had shut down that had just run anchors and that well was expected to

last i think about 75 days. so it would be a variance. >> so to lift the moratorium with respect to some of those would still run the risk of some kind of problem wit moratorium was designed to correct or at least the moratorium we take it was designed to allow for a change in policies, reainsurance about both the regulations that would be administered by the interior department, the best practices that would be respected by the industry and also the response plans that the industry would develop which we've seen are not specifically not particularly realistic. if you will did lift the moratorium, it sounds like we have not -- or do you think we have had reinsurances in any of those three areas sufficient to permit us to reconsider the moratorium? >> well, i am comfortable speaking for my own company and i believe for the majority of operations that go on out there

that those operations are safe and can be safe. of prevention is the primary tool. it clearly, i think we've all seen that the ability to control a spill and to capture oil is not where it should be. ultimately, i'm a little skeptical that once you get oil into the ocean, skimming and booming really does much good at all. it's like putting a pool noodle out there in the ocean and that's very difficult. but people are certainly working hard on it and improvement needs to be made there. government regulation there were regulations in place. i'm not sure that they were fully followed. they obviously need to be beefier. i would think that some interim step on regulation should be put in place and that i would feel comfortable and i think we could convince america we'd feel comfortable that we could return to work. the still containment technology, i think that's going to take some time. i don't think that needs to be rushed to make sure that it

works appropriately. >> mr. collins, do you have any observations in response to those questions? >> one comment i would make is with regard to the risk of a particular well, i think the geology of all these different fields is quite different. drilling in 5,000 feet of water may be no more risky than drilling in 1,000 feet of water. in the industry, weonsider 5,000 feet to be relatively a mid water depth. drilling the second or third or fourth or eighth well in a field i would think would be much less risky than a exploratory well. .. in terms of trying to assess the risk, i think this is something that mms or now the bovm should be doing and should be looking at on a permit by permit basis. i think that's the proper area to assess risks but with experts and dealing with the op rartz wanting to deal with those wells. i think many of those wells

would be considered to be relatively low risk and as larry said, we should feel confident going ahead with some of the new requirements and double checks that have been put in the system as well as some new issues with regard to bop and sub sea operation. >> are there already new requirements? >> yes, ntl 5 and 6 have been issued. ntl 5 was the result after industry task force that made recommendations to the interior department and those recommendations i understand it were reflected in tl 5. i think the industry's already moving and started moving initially to say what can we do better, where were the gaps without knowing ought the facts. it was obvious some things could be done better. those i think are reflected in the ntl 5. again, i'm not an expert. we're not an oil company. >> senator grim. >> mr. collins were, you familiar with the deep water horizon drilling platform?

>> not in detail. i knew a large semi water depth capabilitie capabilities. we had an rov on board with three personnel. so we were certainly cognizant of what was going on in general but not in the details of it, yes. >> was it considered to be the norm of that kind of facilities in the gulf, or was it an outlying? >> i think we considered transocean to be a top flight drilling company. it was their rig. we consider their procedures to be world class, top of the line industry. so we had no reason to think it was anything other than a top flight operation. >> including the blowout protector that was underwater. was it considered to be the best practice or standard of the industry? >> i didn't know northwest details of that, but i had no reason to think otherwise.

i've seen records in the past that it was tested routinely, these are tested routinely, frequently. no indication i would have had that it would be anything other than standard. >> mr. dickerson,ing what do you feel should be the prerequisite for lifting the moratorium in terms of dealing with some of the concerns about the safety of the industry that of became intensified with the deep water horizon disaster? >> well, i think our company and i'm sure a number of our competitors and other participants and offshore have tried to glean what we can from the limited data that's out there. i think bp has done a really good job of releasing records that they have so we know quite a bit about the well design. we will know about the pressures that they were seeing on that

rig. that will that would cause us to question why bop wasn't activated earlier. we don't have any knowledge maybe it didn't work. we're missing that piece. so we're working off in effect, we're working off the data to make sure it couldn't recur and we want to not just look at that but broaden it to all of r operations. we don't want to solve this problem and have another one pop up. with our experience in the north sea where we developed safety cases where you review all of your operations this came out of the piper alpha incident in the north sea, we find that's an excellent tool and we're applying that standard in a number of things around the world to make sure we're comfortable. so i think that needs to happen. obviously, this shouldn't be okay, we've done it. somebody needs to look over what needs to happen. i think there needs to be big changes. as my testimony indicated, i'm very concerned if we shut down for six months or more, there won't be much of a u.s. industry

left. now and certainly as it evolves into the future to be able to reserve that. i would like to see some sort of interim standards. perhaps members of the government regulatory agency or coast guard on board reviewing what's going on. i mean, i can tell you that everybody in this industry is so focused right now on safety. it would tremendously surprise me if not anybody would on the to some sort of interim strengthening of what we do. >> since the moratorium was established about a month and a half ago, has there been any -- what efforts have been initiated to try to do the things that you think should be done before the moratorium is lifted? mr. riley listed three or four items that he thought would be on that list.

are you aware of. >> he mentioned regulation, which we've seen regulation come out. jay referred to ntl 5 and 6. and there was a safety statement, as well. so there's been three pronouncements which are fairly significant and we, the instry, made a number of suggestions at the request of the sect of what do we need to do to show that we can operate safely. so we responded. those have been incorporated. i'm not -- i'm not in contact with everybody exactly what they've done. i know what our company's done and i think we've done a very thorough review of our procedures, strengthened them and made them more robust. on the spill containment area, that's outside of my expertise but it strikes me that's something that's going to require some pretty big scientific study to go on on certainly spill containment and

then the capture of oil at the pipeline as bp indicated or at the rupture. they've got lots of lessons there ready to roll out. >> one last question, if i could. there's -- there has been a at least the statement made, we have not independently verified it, that this, the site upon which the deep water horizon rig was operating was thought to be an unusually challenging site for a number of geological reasons. to whategree do you think the site upon which the drilling is going to occur should be individually assessed in terms of its unique properties and potentially unusual risks that would have to be accommodated

beyond what would normally be required? >> well, as jay indicated, there should be a way to rank riskiness of the wells from some expertise. we've been asked, met with the secretary salazar and was looking for a water depth line that would be green, red, kind of stuff. and unfortunately, we didn't feel like we could give that. but i think, senator, you've touchdown upon some sort of review we could certainly, certain development wells are fine, certain exploration wells should be fine. i don't know on this well to what extent they knew the difficulties going into it, but they had lots of problems, lost circulation where the drilling mudfl flows out of formation an had to be constantly working with that well to get it where it needed to be. so yeah, those kind of things, either it comes up up front or would come up throughout the well. and there's precautions that you

need to take. as you see those circumstances develop. >> thank you. >> chancellor elmer? >> mr. chairman, do i have a few follow-up questions. mr. dickerson, you mentioned the question i guess that a lot of people have asked why the bop wasn't activated earlier. the question i have, is ordinarily, not in this case, but just generally speak on exploration rigs, who makes that decision as to when to activate the bop, and are there standard safety protocols associated with when that decision gets made? is it review snowball how does that normally work? >> well, on rigs, we insist in the part of this review process we had was to make sure we did follow up with our field personnel that the driller which is the man on the drill floor who is in effect in charge of the drilling of that well has his hand on the brake.

needs to be monitoring the philosophy what he puts in the well and what comes back out. anytime there's more coming out than is going in, then you've got a problem. there's various steps of what he needs to do as to what indication ta problem might be, whether he shuts a variable bore ram around the drill pipe or he throws the switch and gets the sheer ram and cuts through. those are all questions. but we believe and i think most of the industry believes that it needs to be made by the driller. that you don't need to check permission with other people. i don't know what transocean policy was or what took place, whether bp was involved in that. i just don't have any of that data. i've read various pieces that have come out that doesn't make a lot of sense to me. >> it strikes me as a very important decision that someone gets to make under a lot of pressure. and i'm just trying to understand within the normal operating business of that decision that

operations so that there is a higher standard of decision-making or perhaps more than one person that gets to make that choice under the kinds of pressures that i assume happens when there are lot of things going on. >> well, i think that it's important enough and it can be so timely that it needs to be made at the rig floor by the driller. and i think that's important. there are times where we have pressures where a customer is trying to get certain things

done and i don't think i've ever had heard of a customer saying don't shut that in, but the general tone might be said on the rig of you -- we need to be productive. we've got to get to x step and shutting a well in would certainly make you fall behind schedule. it's our job for these guys to understand that. you've read in the press reports and again, i don't know how true that is, that there was a disagreement on board the rig between drilling contractor personnel and operator personnel. we have procedures where we try to kick that into town so we can settle that in here. that happens from time to time. you know, this is not one of these instances where you just dream of okay, should this happen, this is what we we'll do. we have not events that we've not had this sort of c catastrophic event but we've had serious well control issues where we have to take action and i'm comfortable that

sufficiently reassuring the people you've got out on the gulf floor that if they should it in, you're going to defend them whether they're right or wrong is what it takes. >> it's a big opportunity for error here. i'm just trying to consider the extent to which you know, we like to think that our technology and our engineering is so good that it won't -- it can't ever happen but because of the kinds 6:human judgment that has to interplay with sophisticated equipment, i noticed, mr. collins, you mentioned some sort of other safety things, third party verification perhaps other ways in which you might add another pair of eyes, another judgment perhaps. i mean, some drillers probably come to the job with a lot of experience and some are probably not so experienced. i'm just wondering, is there something here that you might help us think through as a way of increasing safety in this kind of a situation?

>> i was referring to i guess some of the additional certifications and looking over the shoulder of the oil companies that are going on and that are coming out of the ntl five and perhaps six. i do believe there is more double-checking and going on in that with regard to well design, particularly with regard to well design and certification of the bop, two areas that were looked at initially. i don't know that either one really focused on your issue of the guy on the brake making a decision. but i think those were focused really on the subsidy bop and the well design itself. >> >> go ahead. >> other questions? mr. boesch. >> following up on commission areas question about this divide responsibility between the driller and the company, the oil company, plaintiff dickerson, you mentioned the three cases of these blowouts. santa barbara,ism tox and this

incident and the common -- common characteristic is the inefficient quantity and application of drilling fluid to maintain to keep the well under control. are there requirements that you would think going foorld should be made in terms of making sure that the interaction between the driller and the company who has to manage their resources and provide the drilling fluid and so on should be put in place to assure that this insufficiency of capacity of drilling fluid and maintaining the well pressure, maintaining it is not -- doesn't happen again? >> well, if you look at the three, the first one, they were drilling under california regulations and doing the initial part of the well, which as you spud in, you don't have a bop or drilling mud in the hole at all till you get it down to a sufficient depth. they kept going with that depth

beyond what somebody given if you've been in santa barbara and seen the natural seepage you would be concerned about that. in mexico, as i understand it, they ran out of bay right, which is what you mix mud out of and just kept on going. in this case, it was -- it was time to shut down the well and there's a point that you will take out the drilling mud. but again, well design, and commissioner olmert's point, all these things are just as important to make sure that you're not solely depending upon that driller making that decision. that's your last case. what we examined and said we -- there may have been an inefficient negative pressure test, which we think might have told that you will it's not time to take the drilling mud out of the hole that you needed to deal with all of those. but once you get even past that, we decide that had we thought the holes would be closed in. and that's our new policy with

variable bore rams to secure the well that the point. and we will evacuate the sea water from the well borl below first, monitoring everything carefully to make sure that the flow, you're putting in a gallon of sea water, you're getting back a gallon of mud. all that is balanced out. check see where you are and then do the upper section of the hole. i mean, i don't think we had invented anything. this may already be done by some other folks out there, but these are the type of care and standards that needs to be handled in that particular incident. >> it's -- but it's a relationship that has to be done between the company, the operating company and the driller. and i was struck when christian olmert and i did some aerial overflights this weekend. and we had a pilot and co-pilot and they very mick meticulous lili we waited on the ground while they went through the checklist. it was clear that everything had to match. the two partners had to

agreeing. i'm wondering whether there's a similar arrangement between the driller and company, if you didn't have sufficient drill mud, you were going beyond the depth that you were safe, that the other party, the driller in this case would say no, can't do? >> well, i don't think it's a, you know, those landings, those helicopters each thing is almost the same. so you're trying to check that out. well, these are -- there are similar cases i guess that should be there. but. >> but they're designed. >> ultimately somebody's got to make the decision. we will view our responsibility as the safety that have rig. we don't have expertise for down but we know there should be mud in there and know certain other things that need to be completed. we know you have to monitor the pressure as you evacuate the well. that's one of the reasons that we're really looking for -- we had an industrial accident here. we need an industrial accident review even ahead of dealing

with all the other issues so we can fully adapt to it. but it appears that there may not have been somebody, may not have adequately monitored what was coming out of the hole, probably under the idea that they thought the well was fully secured and that they will really didn't need to do that. so we can identify those things. you're right there needs to be relationship between the company man and the driller, but the best thing is to have everybody on the same team totally committed to safety. >> thank you. >> further questions? >> yes, thank you. >> mr. dickerson, you're operating your rigs around the world, and could you just -- are there different operating standards in different countries? do you operate, you know, according to different regulations in different places? if so, how different are they? we like to think in the united states we do operate under best practices. we have the tightest regulations and standards in our investigation, we're going to

evaluate whether or not indeed that's true. but how do the operating regulations that you're operating in the united states differ from what you might be operating on in other countries if they do? >> the operating standards do vary from country to country. norway is perceived as being particularly tough to operate in. the uk, when they had their piper alpha disaster, they went about resolving that issue much differently than we have here. they weren't dealing with a lot of oil that was flowing everywhere, but they came and came up with a safety case regime where you -- where it is your responsibility, not a prescriptive you will do this, this, and this, buttal examine all of your operations to assure that you can achieve safe operations across the board. and we've seen that, that regime spread to australia. we've seen it spread to parts of the third world.

a version of it is is appearing in brazil. that is not present in the united states. we do it four rigs that work for shell in the u.s. but we don't do it everywhere else. do have g standard because we can't change from place to place and we try to work with that standard, but there are different standards and different countries. i know the nns as it was known did communicate with these other agencies to exchange ideas, but it probably struck me that everybody had some pride in what they did and probably the u.s. as much as anybody else. further questions? mr. garcia? >> well, i was going ask the question that francis just did, but if we could pursue that in a minute.

are there regulatory schemes that you should mention. you mentioned norway is tough to operate in. i don't know whether that means they have a tough regulatory environment or that they're particularly efficient at it. what could you tell us? i would say that -- we operate there so i'm not being critical. they are -- i'm looking for a synonym for dikt dictatorial, and i don't mean that in a pejorative way. i don't know that i would say that that's the safest operation that we have in the world. we think we can get there and other places. examining what they do there, canada is also a very stringent regime. brazil, that's the big growing

province right now, and i think they've had -- you will often see that a country that has had a disaster and they haven't had the pollution disasters, but you had the b-36 sink in brazil. you've had some events in the north sea as well that has dealt with the uk and the same thing with nor way that those are probably the countries that you see. some of the other countries in the pacific, they will go out and adopt very stringent rules and we'll find ourselves in a country like indonesia modifying our heliport to deal with north sea wind conditions that don't exist. so there is some of that that does go on there. mr. collins, do you have anything to add? you thought you would be able to leave without answering a question, but i'm going to try to remedy that. you mentioned the vessel calms

it down. can you elaborate on that? how far down? you said you can't pinpoint the exact cause, but do you think there is a connection? i do think there is a connection although it is very hard to quantify. i know two weeks ago through the statistic report and on the mississippi river there were 157 vessel calls for that time of year compared to 2009. i also know that the port director or a suftant port director at the port of mobile estimated they were down by about 25%. those were the only two numbers that we have a handle on. i have seen things that i'm always careful and would assume that's correct and i've assumed grain companies in the midwest and maybe sending grain and rail cars to either east or west

coast ports out of fear that the mississippi river would be closed. i'm not sure if that's accurate, but it was advertised by a grain consortium in the midwest. i don't know how we account for how many rail cars and how many vessel calls that wood reduces. i would point out that last year i was impacted by the economic downturn in shipping. so being 157 vessels down on the world's economic super highway is a big deal. i think the average for the mississippi river going back the last five years would be 5,000 and 6,000 vessel calls per year. >> thank you. >> yes. chancellor? mr. duffy, if i might. yesterday we were actually on the mississippi. we were down in venice, and we happened to see on one of the