Special Reports

Obama prepares to address nation on spill

THEODORE, Ala. — Kicking off a week of high-stakes maneuvering around an oil slick threatening to bog down his first term, Barack Obama returned to the Gulf region Monday, touring the oil-stained waters by boat and warning of hard times to come, but touting the region’s continued viability for tourists.

“There’s still a lot of opportunity for visitors to come down here; a lot of beaches that are not yet affected or will not be affected,” Obama told reporters after a meeting with Republican governors Haley Barbour of Mississippi, and Bobby Jindal of Louisiana in Gulfport, Miss. “And we just want to make sure that people who have travel plans down to the Gulf area remain mindful of that, because if people want to know what they can do to help folks down here, one of the best ways to help is to come down here.”

That balancing of boosterism and acknowledged tragedy is not the only delicate calibration facing Obama this week, as he plans a first address to the nation about the disaster from the Oval Office on Tuesday and prepares to meet face-to-face with the leaders of oil company BP on Wednesday.

Many Americans may want Obama to be harder on BP, but many others are alert to any hint of anti-business sentiment amid lingering high unemployment. Some Americans will simply want to hear his plans for plugging the well, while others expect Obama to seize the opportunity to boldly re-imagine the nation’s energy future.

And then there is the question of BP, which the administration must pressure to repair lives, business and wetlands — but not so hard as to put it out of business, leaving behind a whopping cleanup and compensation bill.

“You don’t want this horse to collapse in the middle of the race,” said Fadel Gheit, an energy analyst at Oppenheimer & Co. “You want a healthy BP, not a crippled one.”

The president’s visit, the fourth since the April 20 Deepwater Horizon rig explosion, comes amid mounting calls, even among allies, that Obama appear more in command. It also comes amid mounting pressure on BP, from both the administration and Congress, to do more to fix the well and compensate the victims of the catastrophe.

The administration has taken a more aggressive stance toward the company of late, announcing Sunday that it hopes force BP to create an independently administered escrow account to fund compensation claims.

In remarks on the coast Monday, however, Obama refrained from chastising BP. Instead, he said he has already had “constructive” talks with the company, and hoped the two sides could arrive at some kind of structured plan at their White House meeting.

A significantly more fiery reception may await BP CEO Tony Hayward on Thursday, when he appears before a panel of the House Energy and Commerce Committee, which has been investigating the company’s actions prior to the April 20 well blowout that killed 11 crew members and began the worst oil spill in U.S. history.

In a letter to Hayward on Monday, Rep. Henry A. Waxman, D-Calif., the committee chair, and Bart Stupak, D-Mich., alleged that BP appears to have made a number of short-sighted, penny-pinching decisions because the well was significantly behind schedule — -decisions that could have increased the chances of catastrophe.

The blown deadline for the drilling project “appears to have created pressure to take shortcuts to speed finishing the well,” they wrote. “ ... Time after time, it appears that BP made decisions that increased the risk of a blowout to save the company time or expense.”

In several instances, they said, BP’s decisions appear to violate industry guidelines and were made despite warnings from BP’s own personnel and its contractors.

Wall Street has taken note of the pressure and uncertainty facing the company this week. On Monday, BP shares fell $3.30, or 9.7 percent, to $30.67.

Gheit, the energy analyst, noted that BP had already lost about half its market value, or $90 billion in market capitalization, since the April blowout.

BP directors met Monday in London to explore a number of options, including the possibility of deferring the company’s $10.5 billion dividend to shareholders. As of late Monday, no decision had been reached, and BP was unwilling to discuss the matter.

Many on Wall Street were beginning to come around to the idea of canceling or postponing the dividend.

“If they were to set aside $20 billion in an escrow account, it wouldn’t break BP. Suspending the dividend would generate about $1 billion a month for the company. BP is among the three largest oil companies in the world. They generate $8 billion to $9 billion every quarter and they only spend $5 billion to $6 billion a quarter,” Gheit said. “The difference is what they would have left over to spend.”

So far, at least one administration attempt to ratchet up the pressure on BP appears to have paid off: In a letter released Monday, BP acceded to a recent Coast Guard demand to move faster in deploying its oil-containment strategy.

In a letter to Coast Guard Rear Adm. James A. Watson, BP Chief Operating Officer Doug Suttles said the company had revised its oil-capture plans to allow it to collect more than 50,000 barrels of oil a day by the end of June — about two weeks earlier than the company had originally planned.

The company has been collecting about 16,000 barrels per day from the broken well using a containment cap that funnels the oil to a processing ship. But federal experts have estimated that the well has been spewing at least 40,000 barrels per day.

BP said the maximum capacity of its current system is 18,000 barrels per day. An additional plan set to go live Tuesday will siphon up to 10,000 barrels a day more, using pipes and equipment from BP’s failed “top kill” plan, which sought to stem the flow of oil with drilling mud.

For a number of days, the company has planned to scrap those two systems, eventually replacing them with a new system of floating risers. The revised plan, however, calls for all of these plans to work concurrently, said David Nicholas, a BP spokesman.

The company said that in mid-July or later, it will have the capacity to take up 60,000 to 80,000 barrels per day.

Thursday’s congressional hearings promise to shift the focus away from the troubled and still-unfolding attempts to contain the oil, and onto what appear to be the equally tragic days before the blowout.

The letter from Waxman and Stupak points to a number of “crucial” choices BP made at the time that in hindsight proved tragic.

They charge the company decided to use a “risky” well-casing plan in an attempt to save up to $10 million; declined to conduct a time-consuming tests of the well’s cement job; failed to use a device called a “lockdown sleeve” that “would have prevented the seal at the wellhead from being blown out”; and rejected the advice of subcontractor Halliburton to use extra devices called “centralizers” to make sure the casing of the well was properly aligned.

Halliburton, the letter states, warned of a “SEVERE gas flow problem” if the extra sensors weren’t used, but the letter said one BP official worried that it would take too long to install them.

On April 16, the letter states, another official recognized the risks, but commented, “who cares, it’s done, end of story, will probably be fine.”

The administration’s response to the leak has generated tension at times with the Gulf’s Republican governors. In an interview Sunday on CBS’s “Face the Nation,” Barbour urged the White House to lift the six-month moratorium on deepwater drilling it imposed in the aftermath of the spill.

On Monday, Obama lunched with Barbour and others at the end of a pier, where they feasted on mini crab cakes, fried shrimp, shrimp salad sandwiches and sweet tea.

Later, in 95 degree heat, Obama walked down the pier with Barbour to get snow cones. Both men ordered lemon-lime.

Setting aside larger differences for the moment, Barbour was heard telling the president, “See, that’s something else we agree on.”

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