Major US oil firms 'no better ready to deal with large spills than BP'

OTHER oil firms drilling off the US coastline are as unprepared as BP for a large-scale spill, a panel of US Congressmen has heard.

As oil executives testified at a House of Representatives hearing, the companies were accused of having disaster response plans which were "paper exercises" that mirrored BP's failed plan.

Their strategies to plug a spill deep beneath the sea are the same failed strategies that have stymied BP, Henry Waxman, a California Democrat, said. The other companies "are no better prepared to deal with a major oil spill than was BP."

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Another Congressman, Edward Markey, told the House energy and commerce sub- committee that Exxon-Mobil, Chevron, ConocoPhillips and Shell all have identical response plans to BP.

But the executives sought to distance themselves from BP, telling the politicians they would not have drilled the Deepwater Horizon well in the same way as BP, suggesting some of BP's design decisions and actions may have jeopardised well integrity.

Many of those giving evidence expressed frustration at BP's inability to stop oil gushing from its stricken well.

The hearing began as President Barack Obama walked on a beach near Pensacola, Florida, as onlookers chanted: "Save our beach, save our beach."

Mr Obama at one stop pledged to "fight back with everything we've got" against the spreading oil.

A US opinion poll released yesterday found a majority of Americans disapprove of how the president has handled the spill.

Mr Obama is due to make a TV address later from the White House in which he will outline the next steps his administration will take.

Meanwhile, BP won permission to start burning oil and gas piped up from its broken seafloor well as part of a pledge to more than triple how much crude it stops from spewing into the Gulf of Mexico.

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Federal authorities gave permission for BP to use a new method that involves pumping oil from the wellhead to a special ship on the surface, where it would be burned off rather than collected.

BP said it hopes to trap as much as 2.2 million gallons of oil daily by the end of June as it deploys additional containment equipment, including the flaring system.

Oil has been spewing into the sea since a drilling rig leased by BP exploded on 20 April killing 11 people and sinking two days later. The US Coastguard estimates about 35,000 barrels of oil are gushing out every day.

Q&A

Who could be subject to penalties?

The United States Justice Department has launched a criminal and acivil investigation into the oil spill, but officials have not identified the targets. However, the likely companies that will be the focus of the investigation include BP, Transocean Ltd, which operated the drill rig, Cameron International, which provided the blowout preventer, and Halliburton Co, which was in charge of the cement for the oil well.

What are the possible total fines?

The White House has already estimated that the costs for the response, clean-up and penalties will reach into the billions of dollars.

Based on the latest estimate that 84 million gallons of oil may have spilled, the range of civil penalties could be between $2.5 billion and $9.8bn under the Clean Water Act alone. Penalties could be applied to each company found responsible for the leak, although one expert said they would be likely to share the burden instead and tthere would probably be a limit to those penalties imposed.

How does this compare with past cases?

The closest comparison is the Exxon Valdez incident in 1989, when 260,000 barrels of oil spilled into Alaska's Prince William Sound. Exxon ended up paying $125 million in criminal penalties, as well as $900m in civil penalties and damages.

Can the companies afford it?

Most experts consider the chances of default to be small.

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