BP Chief Hayward 'Not Involved' in Gulf Well Decision

BP CEO Tony Hayward faces heat from angry congress.

June 16, 2010, 1:17 PM

June 17, 2010 — -- When Tony Hayward became CEO of energy giant BP in 2007, he promised to "focus like a laser" on safety. Members of Congress today repeatedly reminded Hayward of that promise as they lambasted the British executive for his and BP's actions preceding the mammoth spill in the Gulf of Mexico.

"As the entire country now knows, an uncontrolled blowout can kill rig workers and cause an environmental disaster," House Committee of Energy and Commerce Chairman Henry Waxman, D-Calif., told Hayward, who testified before the House today.

After reviewing 30,000 documents, Waxman said, the committee could "find no evidence that you paid any attention to the tremendous risks BP were taking" with respect to the drilling of the well that would become the source of the spill.

"BP cut corner after corner to save a million dollars here, a few hours or days there," he said. "And now the whole Gulf coast is paying the price."

During his questioning of Hayward, Waxman accused the CEO of "stonewalling" after Hayward said he "wasn't involved in any of the decisionmaking" in the development of the well's design and declined to comment on whether BP made a risky decision in its choice of well design.

Other oil company executives have criticized the well's design, while BP documents show, according to Waxman, that BP could have spent several million more dollars on the well to implement a safer design.

"Why were the safety recommendations of your own engineers ignored?" Waxman asked.

Hayward countered that BP documents also showed that "the long-term integrity" of the well was best-served by the design that BP ultimately chose. The government's Mineral Management Service, he added, approved the well design.

"I'm just amazed at this testimony," Waxman responded. "Mr. Hayward, you're not taking responsibility. You're kicking the can down the road and acting as if you have nothing to do ... with the decisions."

Hayward later defended against committee members' assertions that BP had put cost savings ahead of safety in establishing the well, saying that he'd seen no evidence that that had happened. But Hayward also said he would not draw any conclusions about the accident until investigations into the disaster were completed -- a statement he reiterated several times throughout the hearing, much to the consternation of the congressmen questioning him.

"You're really insulting our intelligence, with all due respect, by not giving us any answers and telling us you have to wait for some investigation," said Rep. Eliot Engel, D-N.Y.

Congressmen also blasted BP and Hayward for safety issues that came to light before the April spill. Rep. Bruce Baley, D-Iowa, noted that since the beginning of Hayward's tenure as CEO, the Occupational Safety and Health Administration found 760 "egregious and willful" safety violations at BP refineries in the U.S.

"That doesn't sound like a company that is commited to safe and reliable operations," Baley said. "...There's a complete disconnect between your testimony and these OSHA findings."

Though most congressmen directed their criticism at Hayward and BP, Rep. Joe Barton, R-Texas, also faulted the Obama administration, calling the $20 billion damages fund that BP recently agreed to a "shakedown" and apologized to Hayward.

"I'm ashamed of what happened in the White House yesterday," Barton said, referring to the meeting between President Obama and Hayward on Tuesday that led up to the $20 billion announcement. "I do not want to live in a country where anytime a citizen or a corporation that does something that is legitimately wrong is subject to some sort of political pressure which ... amounts to a shakedown."

The White House immediately issued a statement slamming Barton's comments.

"What is shameful is that Joe Barton seems to have more concern for big corporations that caused this disaster than the fishermen, small business owners and communities whose lives have been devastated by the destruction," according to the statement.

Hayward, 53, has become the face of the oil spill and the explosion of the Deepwater Horizon oil rig, which killed 11 men and devastated Gulf shores. In a letter to Hayward earlier this week, from Waxman and Rep. Bart Stupak, D-Mich., Hayward was warned that he should come prepared to address BP's "questionable decisions."

Just a few words into his opening statement, Hayward was interrupted by a protestor who was eventually subdued by Capitol police.

Later identified as Diane Wilson, the co-founder of the activist group Code Pink , she shouted "I think you need to be charged with a crime, you need to go to jail."

Hayward, who restarted his statement after Wilson was carted away by police, apologized to those hurt by the spill but added that it was "simply too early to say what caused the incident."

"There is still extensive work to do. A full answer must await the outcome of multiple investigations" by both BP and the government, he said.

Hayward said that, in the meantime, BP is concentrating on cleanup efforts and on stopping the flow of oil by drilling two relief wells. The company, he said, also has deployed equipment that has allowed BP to collect 20,000 barrels of oil per day. BP expects to increase its collection to between 60,000 to 80,000 barrels a day by mid-July, he said.

Hayward said the company has paid out more than $95 million in damage claims and noted that Obama administration pay czar Ken Feinberg will now oversee the claims process, which he said will ensure payments will be as "fair, transparent and rapid" as possible.

The CEO acknowledged, however, that there's little he can say to quell public anger about the spill.

"I understand the seriousness of the situation and the concerns, frustrations and fears that have been and continue to be voiced. I know that only actions and results, not mere words, ultimately can give you the confidence you seek," he said. "I give my pledge as the leader of BP that we will not rest until we make this right."

Hayward has been excoriated in recent weeks not only for his role as head of the company blamed for the spill, but also for his public statements, including the now-infamous, "I'd like my life back," -- a comment Hayward made while explaining his desire to quickly resolve the disaster, which killed 11 men and devastated Gulf shores.

Hayward's life before the Deepwater Horizon explosion was an enviable one. Last year, the British native's compensation totaled $14.3 million, according to the research firm Equilar, some of which he's spent on vacations sailing through the tropics and skiing in Vail, Colorado, with his wife, a former BP geophysicist, and their two children. He's also an avid sports fan and enjoys watching games of rugby, soccer and cricket.

"I don't work weekends. ... And I take all my holidays," he once told a BP publication.

But Hayward's defenders point out that while the often tie-less CEO has a noticeably laid-back demeanor, he asserted his commitment to safety long before the Gulf spill. In another past interview, Hayward recalled an incident that killed a young BP employee in Venezuela. Hayward attended his funeral, where he was confronted by the young man's mother.

"At the end of the service his mother came up to me and beat me on the chest," he said. "'Why did you let it happen?' she asked. It changed the way I think about safety. Leaders must make the safety of all who work for them their top priority."

From BP Reject to Ninja Turtle

BP's leader for more than three years, Hayward took over the company at an inauspicious time. In 2007, BP was still dealing with the aftermath of a 2005 Texas refinery explosion that killed 15 workers and a 2006 oil spill in Alaska's North Slope, its profits were plunging thanks to weak U.S. gas prices and other problems and its last CEO, the highly-respected John Browne, had resigned amid a salacious scandal: A judge had found Browne lied in court over a long-running gay relationship with a Canadian student.

While he kept mum on the Browne scandal, Hayward was vocal and aggressive in his efforts to turn around BP, both from a financial and safety standpoint. Under his tenure, BP simplified its company structure and slashed thousands of jobs -- moves that BP officials insisted did not compromise BP's increased focus on safety.

"What I learned was that we'd become far too introspective at the top. In particular, we weren't listening to the operating people on safety and reliability," Hayward told a BP company magazine in 2008. His predecessor, he said, built "a fantastic company. ... Our task now is to demonstrate that we can run it."

Hayward almost never got the chance to work for BP, let alone run it.

His beginnings were humble: Hayward was the oldest of seven from Slough, England, a blue-collar town that serves as the setting for the British version of "The Office." After he earned a degree at a midtier college, his initial application to BP was rejected.

A Ph.D. in geology from Edinburgh University prompted BP to take a second look. Hayward joined the company in 1982 at age 25, beginning his career there as a rig geologist in the North Sea, where he helped discover a new oil field.

"Drilling into the reservoir for the first time at 4 a.m. on Christmas morning 1982 (was) one of my better Christmas presents," he recalled in a speech before a Scottish oil club in 2006.

Hayward went on to work in seven different countries -- his daughter, the younger of Hayward's two children, was born in Colombia -- and hold a number of different roles. Browne took notice of Hayward at a 1990 BP conference in Arizona and Hayward soon became part of a group of young, promising executives nicknamed the "Teenage Mutant Ninja Turtles."

Enemies in America

Hayward drew from his geological expertise to help BP expand its oil reserves.

"When Hayward came in, he was felt to be a pretty good guy from the point of view of doing the most important thing that oil companies worry about: trying to find more oil to add to the reserve list," said Paul Hodges, chairman of International eChem, a London-based chemical advisory group.

Hayward continued BP's global expansion earlier this year by shepherding his biggest deal as CEO: the $7 billion purchase of assets, including off-shore oil blocks in Brazil, from a U.S. energy company in March.

Hayward knows that BP can gain an edge over smaller energy companies through big, complex international projects, said David Aron, the managing director of London-based Petroleum Development Consultants.

Aron, who has worked with BP in the past, said that Hayward's willingness to admit shortcomings may ultimately hurt him the eyes of the American public, particularly those accustomed to hearing from less modest CEOs. Hayward recently admitted that BP "did not have the tools you would want in your tool kit" to cope with the Gulf disaster.

"It's actually true, but maybe it's not the thing to say to an American audience," Aron said.

Hayward made enemies in the United States a month before the Deepwater Horizon explosion, when he criticized the continued construction of coal plants in a speech before a D.C. think tank. Hayward said Congress should promote natural gas use, which emits less carbon than coal.

In response, the United Mine Workers of America called for a boycott of BP, which is one of the world's largest natural gas producers. In a message sent to its members, the labor union said Hayward was "advocating putting an end to coal, the jobs that go with it and the retiree pensions and health care that coal pays for."

Today, the adversity Hayward faces is wider-ranging and, from his family's point of view, more frightening. The British media has reported that local police have launched an operation to protect the Haywards after the family was targeted with hate mail and upsetting phone calls.

"Members of my family have had nasty phone calls and we have also had mail from groups," Hayward's wife, Maureen, told The Daily Telegraph. "Tony is obviously away and we are miles away from him so it's upsetting."

It's unclear whether Hayward will be able to weather the fallout from the Gulf disaster with his job intact.

Phil Weiss, a senior energy analyst at Argus Research, said he believes Hayward will be shown the door once the spill is contained.

"One of the things people thought he was going to do was to help clean up the company's operations and make it safer," Weiss said. "And yet here we have the biggest environmental disaster in U.S. history under his watch. ... It doesn't sound to me like he's done what he was expected to do."

ABC News' Alice Maggin, Andrew Miller and John Parkinson contributed to this report.

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