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Documents Show BP Opposed New, Stricter Safety Rules

By GUY CHAZAN And BEN CASSELMAN, Wall Street Journal, April 28, 2010

As BP PLC defended its handling of the oil spill in the Gulf of Mexico, documents show it argued against new, stricter safety rules proposed last year by the U.S. agency that oversees offshore drilling.

The British oil giant was one of several companies that wrote to the U.S. Minerals Management Service this past September saying additional regulation of the oil industry was unnecessary. In a letter, BP said the current voluntary system of safety procedures was adequate.

A photo from a NASA satellite showed the silvery swirling oil slick in the Gulf of Mexico on April 25. (European Pressphoto Agency)

BP said Tuesday that the scale of its emergency response to the crude spill was unprecedented in the history of the oil industry. "All accidents are avoidable and when they occur you are judged by how you respond," BP's chief executive, Tony Hayward, told reporters.

The oil spill was caused after a Transocean Ltd. rig that drilled a well for BP in the Gulf of Mexico southeast of Louisiana caught fire and sank. Eleven crew members are still missing and presumed dead in what is being seen as the worst such accident in the Gulf in more than 25 years.

Mr. Hayward said BP was working "extremely aggressively" to contain the spill. "Our approach is to massively over-respond," he added.

But he admitted that the incident had overshadowed BP's strong first-quarter results. The company's profit for the latest quarter more than doubled to $6.1 billion from a year earlier, on the back of higher oil prices and better operational performance.

Replacement cost profit, which strips out gains related to rises in the value of inventories, was $5.6 billion, up from $2.39 billion a year earlier.

The well, 5,000 feet below the surface of the ocean, is leaking about 1,000 barrels of oil a day and scientists from the National Oceanic and Atmospheric Administration believe it could reach land by the weekend, threatening an environmental disaster on the Gulf Coast. BP says the oil spill is stable and had actually moved farther away from the coastline over the past 24 hours.

As BP touted the scale of the cleanup, documents showed that it was one of several companies that opposed efforts to tighten up safety procedures offshore. Last year, the MMS studied more than 1,400 offshore incidents that led to 41 deaths and hundreds of injuries between 2001 and 2007. Many of them, the MMS found, were linked to factors such as communications failures, a lack of written procedures and the failure of supervisors to enforce existing rules, and proposed mandatory requirements to reduce the number of incidents. That would have replaced a system under which many safety procedures were voluntary.

In a letter published on the U.S. government Web site, Richard Morrison, BP's vice president for Gulf of Mexico production, wrote that while BP "is supportive of companies having a system in place to reduce risk, accidents, injuries and spills, we are not supportive of the extensive, prescriptive regulations as proposed in this rule."

He added: "We believe the industry's current safety and environmental statistics demonstrate that the voluntary programs..have been and continue to be very successful."

Mr. Morrison noted that BP had already adopted policies that complied with the MMS's proposed new rules. But he challenged the need for companies to file regular audits of their safety programs with the agency, saying that would be "an administrative burden."

Other companies and trade groups also wrote letters objecting to the rule. Many argued that regulators underestimated the cost of implementing the new requirements, because they didn't take into account the cost of bringing subcontractors into compliance.

BP has been in crisis mode for days as it mobilizes to stop the oil leak and limit the reputational fallout from the disaster. Mr. Hayward has spent four days in the Gulf Coast region and was in Washington, D.C., Tuesday to meet federal authorities.

As part of their initial response, BP and Transocean sent five remote-control robots to the seabed to try to activate equipment that is supposed to shut off the flow of oil from the well. That operation has so far failed.

BP is now planning to cover the well with a large umbrella-like canopy. But that will take as many as four weeks to install.

BP also has moved another Transocean rig to the site to drill a relief well, that would bypass and close off the flow of oil from the original well. But that could take two to three months, and cost $100 million to drill-by far the most expensive element of the cleanup operation.

Meanwhile, on the ocean surface, BP has sent 32 ships to deal with the spill and has five planes in the air, including two C-130 Hercules transport planes, to spray chemical dispersants on the slick. It says 1,000 people are now involved in the spill response effort.

Write to Guy Chazan at and Ben Casselman at


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