Angry U.S. lawmakers hammered BP Chief Executive Tony Hayward at a congressional hearing on Thursday, accusing his company of taking extreme risks that triggered the worst oil spill in U.S. history.
In his first appearance before Congress since the start of the 59-day-old crisis in the Gulf of Mexico, a tired-looking Hayward sat alone and hunched over the witness table as lawmakers took turns to lambaste the energy giant.
Under your leadership BP has taken the most extreme risks, Democratic lawmaker Henry Waxman told Hayward, who sat impassively during the lawmakers' barrage.
BP cut corner after corner to save a million dollars here and a few hours or days there, Waxman said, his comments reflecting the public anger over BP's handling of the crisis.
Hayward, who has a reputation for blunt speaking, replied cautiously and repeatedly declined to go into detail pending the results of investigations into the well blowout. He said it was too early to conclude that the company had cut corners.
That drew a sharp rebuke from Waxman, who accused him of failing to take responsibility for the spill. Several congressman accused him of stonewalling the panel.
Investors meanwhile welcomed a BP deal with the White House a day earlier that set up a $20-billion fund for compensation claims arising from the spill. It gave them a clearer picture for the first time of the potential costs of the spill for BP.
In London, BP's stock price closed up nearly 7 percent on the back of the news, while the company's U.S.-listed shares were flat in midday New York trading.
BP might try to sell $5 billion to $10 billion in bonds next week -- not because it needs the money but to boost investors' confidence by showing it can pull off a big deal even amid the political storm, CNBC reported.
Hayward's opening statement to the hearing, in which he said he was deeply sorry for the spill, was interrupted by a protester with her hands painted black and who yelled, You need to be charged with a crime Tony. She struggled vigorously with police before she was hustled out of the chamber.
Hayward told lawmakers BP was doing everything possible to contain the oil spill, which was triggered by an explosion on an offshore rig on April 20 that killed 11 workers and ruptured a deep-sea well, unleashing a torrent of crude into the Gulf.
The Obama administration's point man for the disaster, Admiral Thad Allen, told reporters on Thursday that BP was ahead of schedule in drilling a relief well to cap the blown-out well. But he said he could not guarantee that it would be finished before its completion date of August.
The spill has soiled 120 miles of U.S. coastline, threatened multibillion dollar fishing and tourism industries and killed birds, dolphins and other sea life.
BP IGNORED WARNINGS
Lawmakers have said BP ignored warnings from contractors and their own employees and chose faster and cheaper drilling options that increased the danger of the well rupturing.
We have learned that time and again BP officials had warning signs that this was -- as one employee put it -- 'a nightmare well,' Democratic congressman Bart Stupak said.
Executives from other major oil companies distanced themselves from BP at an earlier congressional hearing this week, saying BP had failed to adhere to industry standards in the construction of its Macondo well in the Gulf of Mexico.
But under harsh questioning from lawmakers on Thursday, Hayward urged them to await the outcome of an investigation into the spill and defended his tenure as CEO, saying he had made dramatic safety improvements since 2007. But he conceded more could be done.
Hayward, a geologist, has spent the last three years as CEO focused internally on turning around BP's operations, which when he took over were flagging after a series of project delays and safety failures.
As he spoke, a live video feed on BP's website showed black crude continuing to gush into the Gulf from under a containment cap that has been placed on top of the leak to try to siphon off the oil and channel to a ship on the surface above.
A day earlier, Hayward took part in talks between BP and President Barack Obama at the White House. After four hours of intense talks, the company bowed to Obama's demand to set up the independently managed $20 billion fund for spill claims.
FROM OIL-PRODUCING STATE
But Republican congressman Joe Barton of Texas, a major oil-producing state, took issue with the deal, telling Hayward he was ashamed of what happened in the White House yesterday.
I think it is a tragedy of the first proportion, that a private corporation can be subjected to what I would characterize as a shakedown, a $20 billion shakedown. It's got no legal standing and sets a terrible precedent for the future.
Barton is the biggest recipient of oil and gas industry campaign contributions in the House of Representatives, according to the nonpartisan Center for Responsive Politics.
Wednesday's White House deal was seen as a much-needed victory for Obama, who has faced criticism that he has not been tough enough on BP, while easing political pressure on the British company.
Investors were seriously worried that BP as we know it was under threat and that the company could be broken up or forced into liquidation. What we see now for the first time is that Obama is not going to bring BP to its knees, said Tom Nelson, co-manager at the Guiness Atkinson Global Energy Fund, which owns BP stock.
The cost of insuring BP debt against default, which hit record levels ahead of the deal, fell 145 basis points to 400 basis points, according to data from Markit. This is still a level corresponding to a sub-investment grade company.
While Hayward was testifying in Washington, BP continued to siphon off oil from its ruptured well in the Gulf.
BP is boosting its oil-containment effort after activating a new oil-burning system on Wednesday. Siphoning capacity will hit 28,000 barrels per day early next week, versus the 18,600 barrels that BP trapped on Wednesday, Allen said..
(Additional reporting by Deborah Zabarenko, Timothy Gardner, Alina Selyukh in Washington, Kristen Hays in Houston, Raji Menon and Sarah Young in London, Writing by Ross Colvin, editing by Philip Barbara)