GULF SPILL:

BP chief sends mixed messages on economic damage payments

BP PLC's global chief executive, Tony Hayward, privately balked at committing to paying all claims for economic damage caused by the company's oil spill, Sen. Bill Nelson (D-Fla.) disclosed after the two met yesterday. That directly contradicts Hayward's public statements, including the ones he made moments before Nelson spoke.

"When I said 'Will you be responsible for the economic damages?' he said, "That's something we'll have to work out in the future,'" said Nelson, a longtime foe of drilling who has co-sponsored legislation to raise a $75 million cap on BP's legal liability for economic damages, retroactively, to $10 billion.

Just minutes before, in front of the same bank of television cameras outside Nelson's office in the Hart Senate office building, Hayward had said, "BP is taking very seriously its responsibility. ... All legitimate claims will be paid."

He added that the $75 million cap would "inevitably be exceeded."

But Nelson twice said that Hayward would not commit to paying damages. The two met for about 30 minutes yesterday evening in Nelson's Senate office at Hayward's request, and each went before the microphones afterward. Hayward gave a brief statement and answered a handful of questions. Nelson gave a detailed account of their meeting, at the time reading from notes of the session that had wrapped up minutes before.

Nelson said Hayward did not offer a position on raising the $75 million liability cap. The senator said he would consider trying to add the legislation as an amendment to the financial regulatory overhaul now before the Senate, while noting it is possible that such an amendment would be ruled out of order.

Nelson could not say that any senators have changed their position on offshore drilling, or switched on supporting the filibuster he would likely mount against any pro-drilling legislation. But he said an "absolute panic" spreading across the Gulf Coast will change the minds of members of Congress, blunting the political momentum that offshore drilling has enjoyed even as Congress moved to clamp down on greenhouse gas emissions.

"Privately, I've gone up to some senators who've been for drilling and almost sarcastically said to them in a whisper, 'drill, baby, drill,'" Nelson said.

"They rolled their eyes as if in mock horror at the possibilities of what could happen as a result of this disaster," he added.

Nelson said he did expect Congress to raise the liability cap retroactively. Other supporters have noted that Superfund legislation made polluters liable years after they polluted.

Other details of the conversation provided by Nelson include:

  • Hayward said the rig did not have a remote-controlled, shut-off valve called an "acoustic system" to close off the giant safety valve on the sea floor which failed, allowing oil to flow out. "He said acoustic systems are not expected to be reliable at these kind of depths; that is why it wasn't used," Nelson said. Hayward told Nelson the indications are that the rig workers who were killed "flipped the switch" to shut the valve, as did crew on the bridge who survived. There were two other safety mechanisms for shutting off the valve.
  • Hayward acknowledged a British press report that BP filed a formal complaint with Transocean Ltd. 10 years ago because of problems with the safety valve, called a blow-out preventer. Asked what happened in the dispute, Nelson said he was told, "we worked it out."
  • BP has stopped exploration in the Gulf of Mexico, but not elsewhere in its global operations.
  • Asked what assurances he could give that such an explosion and spill would not happen again, Nelson recalled, "his answer basically was that statistically, the chance of failure was so minimal that it is unlikely this was going to occur in the future."
  • When Nelson asked about Halliburton's work on casing the well with cement, Hayward said, "We don't know the answer."

Hayward himself told reporters that BP is working with the federal government in "an extraordinarily cooperative and collegial way," even though Obama administration officials have repeatedly said it is their job to keep their "boot on the neck" of the oil giant.

He also said that BP plans to "put in place" tomorrow a giant containment dome intended to funnel the oil to the surface, and will be "hooking it up" on Friday and the weekend. He stressed that the funnel method is commonly used in 300 to 400 feet of water, but has never been done at 5,000 feet.

"We shouldn't expect perfection," Hayward said. "There will be issues to deal with."

Sen. Mary Landrieu (D-La.), possibly the Democrat most outspoken in defense of the oil industry, lashed out yesterday at the liability bill that Nelson is co-sponsoring with New Jersey's two Democratic senators, Frank Lautenberg and Robert Menendez.

"I literally never had one senator from these anti-oil and gas states and come to me and offer to help one fisherman after [Hurricanes] Katrina and Rita, when their boats were literally shattered in pieces, their nets were torn up and their homes were destroyed," Landrieu told reporters after a briefing with Obama administration officials. "Now, when it's in their political interest on this environmental thing, they're all concerned about the fishermen. Well, some of us have been concerned about them for a long time."

Reporter Darren Samuelsohn contributed.

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