Obama Rebukes Companies on ‘Spectacle’ of Spill Blame (Update4)

Updates with Transocean declining to comment in 13th paragraph. For more on spill, see {EXT4 }.)

By Nicholas Johnston and Kate Andersen Brower

May 14 (Bloomberg) -- President Barack Obama singled out executives from BP Plc, Transocean Ltd. and Halliburton Co. for blaming each other in a “ridiculous spectacle” at congressional hearings on the oil leak in the Gulf of Mexico.

“The American people could not have been impressed with that display,” Obama said at the White House. “It is pretty clear that the system failed, and it failed badly.”

The president said he still views oil exploration and drilling as part of the nation’s energy strategy, while announcing a review of procedures to assess the environmental impact of offshore drilling and vowing to end the “cozy relationship” between oil companies and federal regulators.

He made the remarks after meeting with Cabinet officials and advisers to discuss efforts to cap the damaged well and address the environmental and economic impact of the spreading oil slick. He vowed the government would continue “relentless efforts to stop the leak and contain the damage.”

The well, about 40 miles (64 kilometers) off Louisiana’s coast, began spewing oil after the Deepwater Horizon rig exploded on April 20 and sank two days later, killing 11 workers. Government officials have estimated that the well is spewing about 5,000 barrels a day of crude, or about 210,000 gallons, into the Gulf.

Higher Estimate

Another assessment, reported by National Public Radio, said as many as 70,000 barrels a day may be pumping into the Gulf, one of the country’s largest fishing grounds. Efforts to end or contain the leak by London-based BP so far have failed.

Executives from BP, Transocean, which owned the drilling rig, and Halliburton, the contractor involved in cementing the well on the day of the explosion, testified this week before congressional panels investigating the spill.

BP America Inc. Chairman Lamar McKay blamed Transocean’s blowout preventer for failing, while Transocean’s Chief Executive Officer Stephen Newman said responsibilities for the project “begin and end” with BP.

Halliburton’s president of global business lines, Tim Probert, said his company was following BP’s orders, as it was “contractually bound” to do.

Obama said he “did not appreciate” seeing the executives “falling over each other to point the finger of blame at somebody else.”

“There’s enough responsibility to go around, and all parties should be willing to accept it,” Obama said.

‘Sense of Urgency’

BP CEO Tony Hayward said in a statement that the company shares Obama’s “sense of urgency” about the time it is taking to halt the leak. BP is “participating fully in investigations that will provide valuable lessons about how to prevent future incidents of this nature,” he said.

Cathy Mann, a Halliburton spokeswoman, declined to comment. A spokesman for Transocean, Guy Cantwell, declined to comment.

Obama said the federal government also shares some of the blame. He faulted the Minerals Management Service for having too close a relationship with the industry it regulates. BP got an exclusion from a National Environmental Policy Act review by the agency for its damaged well in the Gulf.

“It seems as if permits were too often issued based on little more than assurances of safety from the oil companies,” Obama said. “That cannot and will not happen anymore.”

‘Thorough Investigation’

He ordered Interior Secretary Ken Salazar to “conduct a top-to-bottom reform” of the agency, including a review of its procedures for assessing the environmental impact of an offshore drilling plans.

Salazar said in a statement that will be “an important part of the ongoing comprehensive and thorough investigation of this incident.”

Obama previously announced plans to split the service’s responsibilities, which now include both enforcing rig safety rules and joining with companies such as BP and Exxon Mobil Corp. to develop oil and gas reserves while collecting royalties.

The president has ordered a halt to any new offshore leases until an Interior Department review determines whether more regulation is needed. He also ordered inspections of existing rigs.

The president supports raising the limit on liability for oil companies for economic damages from a spill. Under current law, economic liability is capped at $75 million. A measure that would raise the limit to $10 billion failed to win expedited approval in the Senate yesterday because of objections from Republican Senator Lisa Murkowski of Alaska.

In addition, the administration has asked Congress for $118 million of emergency funding to cover costs related to the spill. Most of that expense will be recouped from BP.

--With assistance from Edwin Chen and Lisa Lerer in Washington, Jim Efstathiou Jr. and Jessica Resnick-Ault in New York and Edward Klump in Houston. Editors: Joe Sobczyk, Mark McQuillan.