BP's Hayward faces MPs on oil safety
Updated on 15 September 2010
Outgoing BP chief executive Tony Hayward tells MPs safety is the oil giant's "number one" priority, despite the Gulf of Mexico oil spill disaster, as he puts the company's case to be allowed to drill for oil in UK waters, as Tom Clarke reports.
Mr Hayward appeared in front of a parliamentary select committee to defend BP's safety record.
The Energy and Climate Change committee is investigating the implications of the BP oil spill in the Gulf of Mexico for offshore drilling in the UK. It is also looking at whether the UK regulatory regime is fit for purpose.
Oil companies, including BP, want to drill for oil in fields west of the Shetland Islands and need government approval to do so.
In his first appearance in the UK since the Deepwater Horizon rig disaster - the worst oil spill in US history - Mr Hayward defended BP's record, but admitted the spill was a "terrible tragedy".
He said: "In the last three years we have made safety our first priority at BP... but of course that is about more than just rhetoric.
"Safety involves three things: plants, people, and process. We have investigated £14bn into integrating the operations of our plants globally. We have established a safety operations integrated group, recruited... and established new processes across the company.
"And that's why this incident was so devastating to me personally because we have done so much over the last three years."
He was also quizzed by MPs on fresh allegations, which appeared in the Financial Times this morning, that all but one of its five North Sea installations failed to comply with emergency regulations on oil spills in 2009.
He said the reports did not point to any kind of "fundamental weakness" in the company's North Sea operations, and stressed that the company had a better than the industry average record in the area.
Mr Hayward has already been quizzed on safety by US congressmen in the wake of the Deepwater Horizon explosion in April off the coast of Louisiana in the US. Eleven people died in the explosion, and hundreds of thousands of gallons of oil were spilled into the nearby waters.
The Gulf of Mexico spill has raised questions about the safety of deep sea drilling globally, and in the United States President Barack Obama put a temporary ban on the practice after the Deepwater Horizon disaster. It was, however, overturned by federal court judges after appeals from the oil industry.
BP's chief of staff Steve Westwell told the World National Oil Companies Congress that oil found in deep waters is needed because the world will need 45 per cent more energy by the year 2030.
North Sea drilling
At the committee hearing, Mr Hayward said that while lessons had been learned from the Gulf of Mexico spill, drilling in the North Sea was a different thing entirely.
"It is important that all the lessons we learned need to be applied to the North Sea," he said. "But we need to recognise important differences."
Oil in the North Sea is located in different types of area - the reservoirs with high pressure and high temperatures are in shallow waters, Mr Hayward said, while reservoirs in deep water do not have these factors.
"It's a very different engineering challenge," he said. "The North Sea had its own disaster - Piper Alpha [an oil rig fire disaster in 1988]. As a consequence, the safety regulations fundamentally changed."
He said BP had already been drilling in the area for 20 years without any major incidents.
Lessons to be learned
However he said the oil industry generally would learn lessons from the Gulf of Mexico disaster, both on its working relationships with its contractors and on the mechanics of the rigs themselves. He said that he expected changes to be made to "blowout preventers" - the piece of technology which failed in the Gulf of Mexico spill.
BP's report on the US oil spill disaster shared the blame for the explosion and spill between itself and its partners, saying there had been a "sequence of failures".
In July, BP announced that Mr Hayward would be stepping down as chief executive on 1 October this year. American Bob Dudley will replace him. The company's bill for the BP spill stands at £20bn.