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BP, Drillers Unprepared for Oil Leaks, Senator Says

Regulators under Interior Secretary Ken Salazar failed to require deepwater drillers including BP Plc to show how they would control leaks like the well gushing at least 5,000 barrels of oil a day into the Gulf of Mexico, U.S. Senator Joseph Lieberman said.

A spill-prevention plan filed with the department’s Minerals Management Service anticipates using booms, skimming vessels and chemicals to collect more than 490,000 barrels a day, mostly on the surface, Lieberman said yesterday at a Senate hearing. The plan doesn’t address dealing with an undersea plume like that from the BP leak, which may be 10 miles long, 3 miles wide and 300 feet thick, he said.

“That’s what really concerns me, angers me, about what the Minerals Management Service did not ask of British Petroleum, and presumably aren’t asking of any other oil companies before giving them a permit to drill,” Lieberman, a Connecticut independent, said at the Senate Homeland Security Committee hearing. “They have to file oil response plans. They don’t contain any specifics.”

Salazar today will make his first appearance before Congress since Transocean Ltd.’s $365 million Deepwater Horizon rig, leased by BP, exploded April 20 and sank two days later, killing 11 workers and unleashing a spill that threatens the Gulf Coast. The Senate Energy Committee meets this morning and the Environment and Public Works Committee convenes in the afternoon.

MMS Split

President Barack Obama has vowed to end the “cozy relationship” between companies and industry regulators. Obama is splitting MMS into separate units to inspect rigs and enforce safety rules and to oversee leases and royalties. The agency generates about $13 billion a year for the U.S. Treasury by partnering with companies to develop oil and natural gas, trailing only the Internal Revenue Service in revenue.

The president also plans to create a commission to investigate the Gulf rig accident, an administration official said yesterday. The panel’s work will focus on rig safety, government regulations and oversight, the official said, requiring anonymity before the announcement.

BP America Inc. Chairman Lamar McKay, who also testified in the Senate yesterday, said there is “no major government regulation” requiring plans to deal with subsea intervention in the event of a spill.

“Maybe we’re going to have to spell it out,” Lieberman said. MMS has “wide latitude under existing statutes to require oil companies to require certain things in their oil spill emergency response plans. They just didn’t use it.”

Capturing Oil

The well is leaking at an estimated rate of 5,000 barrels a day, according to BP, the U.S. Coast Guard and the National Oceanic and Atmospheric Administration. BP said today it is capturing about 2,000 barrels of oil a day, double the estimate yesterday, using a mile-long pipeline connecting the well to a ship on the surface.

An initial plan to place a steel dome over the leak to capture the oil and funnel it to a ship on the surface failed when gas hydrates clogged the device.

“To me, the tragedy of this is when that dome was first lowered over the leak and it was rendered ineffective by high pressure,” Lieberman said. “If you had been asked by our government to test that system before an actual blowout, you would have known.”

BP will be accountable for the costs and damages associated with its leaking well, including government employees working on the cleanup, Homeland Security Secretary Janet Napolitano said. More than 17,000 federal, state and local government employees are involved in protecting the Gulf Coast, Napolitano said at yesterday’s hearing. In addition, more than 550 vessels and dozens of aircraft have been called into the cleanup.

Middle of Crisis

“We’re in the middle of this crisis,” Napolitano said. “Our job is to just keep moving, just keep assembling, deploying, preparing, cleaning and keeping tabs of what we’re spending because ultimately the taxpayer shouldn’t have to pay for this.”

BP’s plan to deal with spills contemplates a scenario in which more than 250,000 barrels would be discharged every day, much more than the current leak, Lieberman said. BP said it could collect more than 490,000 barrels a day, mostly from the surface.

“Those methods don’t effectively deal with the enormous accumulation of oil forming now underwater in the Gulf,” Lieberman said.

BP Letter

Napolitano and Interior Secretary Ken Salazar sent a letter May 14 to BP Chief Executive Officer Tony Hayward saying BP is required to provide compensation to claimants even if it exceeds a $75 million statutory cap, and that the company shouldn’t seek reimbursement from U.S. taxpayers.

BP has paid more than $13 million out to individuals and small business owners hurt by the spill, McKay told the panel. The company said it has spent $625 million on its response.

Separately, Chris Oynes, the chief oversight official for offshore oil drilling at the MMS, resigned yesterday, four weeks after the rig sank. Oynes was associate director of the offshore energy and minerals management program for Minerals Management Service.

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