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REP. DIANA DEGETTE (D-CO): Thank you so much, Mr. Chairman. Mr. Hayward, in your initial testimony, you testified that BP has drilled hundreds of wells around the world, how many are deep water wells?

HAYWARD: I don't know the precise number, but we drill a lot of deep water wells in various parts of the world.

DEGETTE: Okay, you don't know how many?

HAYWARD: No.

DEGETTE: Do you think that BP's wells, irrespective of where they are drilled should be drilled to the highest of industry standards?

HAYWARD: I believe that's what we try and do.

DEGETTE: So your answer would be yes?

HAYWARD: Yes.

DEGETTE: Okay. And as this well was being drilled, were you informed as CEO of the company of the progress of the well?

HAYWARD: I was not.

DEGETTE: You were not? Okay. Now, before I continue, I know you've had difficulty answering some of the technical questions members have asked you. So I know you brought a technical expert with Mr. Xian he. Would you like us to swear him in to see if he can answer some of my technical questions?

HAYWARD: I think that depends on the question, I guess, ma'am.

DEGETTE: All right, well let's see how it goes. Now, Mr. Hayward, you said that you received the Chairman's June 14 letter to you which talks about five decisions that compromised the safety of this well -- well design, centralizers, cement bond log, mud circulation and lockdown sleeve.

I want to ask you in my questioning about one of those issues, and that's cement bond log. First thing I want you to do, if you can take that notebook that's to your left, open it up, and in the front flap, there's a memo which was written from Brian Morell to Richard Miller on Wednesday, April 14.

And that memo says, "This has been a nightmare well which has everyone all over the place." Did anybody inform you as CEO of the company in April of this year that this was a nightmare well?

HAYWARD: They did not.

DEGETTE: OK. Did you subsequently seen this memo? Have you seen this memo?

HAYWARD: I saw this memo when it was raised by your committee.

DEGETTE: And that's the first you've ever heard of it?

HAYWARD: That is the first time I --

DEGETTE: Is that the first you ever heard of it being a nightmare well?

HAYWARD: When I first saw this memo.

DEGETTE: Okay. Now, let's talk for a minute about the cementing job. Because all of the testimony that we've had in this committee through our hearings, also in the Natural Resource Committee through their hearings indicates that the choices that BP made, and its subcontractors, in order to save money led to blind faith and a successful cementing job.

Let me just walk through it first so that you can understand. First of all, BP chose a riskier well design, and the Chairman -- Chairman Waxman talked about this for a moment. The best practice would have been to use a liner and a tieback which provides four barriers to prevent the flow of dangerous hydrocarbons to the well head.

Instead, BP, as the Chairman said, chose a long string approach which has only two barriers. An internal document of the company warned that this approach was not recommended because quote, "cementing simulations indicate it's unlikely to be a successful cement job," and you can look at Tab 6 of the notebook that you have in front of you to see that, Mr. Hayward. It says "cement simulations indicate it's unlikely to be a successful cement job due to formulation breakdown." This is an internal BP confidential document from mid-April. Have you seen this document before?

HAYWARD: I saw it as a consequence of the letter that I received.

DEGETTE: But you did not see it at the time?

HAYWARD: I did not see it at the time.

DEGETTE: But there were BP folks who saw it, correct? To your knowledge?

HAYWARD: There were certainly BP people who saw this.

DEGETTE: Okay. Secondly, so the document says there would be potential need verify with a bond log and perform a remedial cement job, but BP chose the riskier approach.

Secondly, BP chose the riskier centralizer option. Experts have told us in testimony to this committee that the best practice would have been to use 21 centralizers, but BP only used six. If you take a look at Tab 8, it says on Page 18, it says you did this even though your cementer, Halliburton, said this would create a, quote, "severe risk that the cement job would fail."

It says that it would be a severe risk and the BP operations drilling engineer wrote about this decision, who cares, it's done, end of story. We'll probably be fine and gate good cement job.

Were you aware of that document at the time, Mr. Hayward?

HAYWARD: I was not aware of any of these documents at the time.

DEGETTE: And when did you learn about that memo?

HAYWARD: That memo was, again, when I was made aware of it by your committee.

DEGETTE: But you wouldn't deny that BP employees and supervisors were aware of that document at the time, correct?

HAYWARD: There were people in BP who were aware of that document.

DEGETTE: Now, would you say it's the best business practice to say who cares, it's done, end of story. We'll probably be fine and get a good cement job?

HAYWARD: I think that e-mail is a cause of concern.

DEGETTE: I would think so. Thank you.

HAYWARD: I would like to understand the context in in which it was sent, and as I've said a number of times, if there's any evidence that people put cost ahead of safety, then I will take action.

DEGETTE: I understand. Let me finish with the cement bond. Now, BP failed to perform the most effective test that was known to determine whether the cement was properly sealed, and that's the cement bond log test. There was a contractor onboard, Schlumberger, on board hired to perform this test, but they were sent away 11 hours prior to the explosion.

This test was described by Halliburton's chief safety operator Tim Probert as, quote, "the only test that can really determine the actual effectiveness of the bond between the cement sheets, the formation, and the casing itself."

Now the committee has consulted an independent expert who said that cement bond logs should always be used. Another expert said it is unheard of not to perform this test. He called your decision, and I'm quoting, "horribly negligent."

So I want to ask you a question. Do you think as CEO of this company, it was a mistake not to conduct this cement bond log test?

HAYWARD: That is what our investigation will determine, as I understand it.

DEGETTE: So your answer would be yes it was a mistake, correct?

HAYWARD: I didn't -- I'm not able to answer yes or no until the investigation is complete. When we --

DEGETTE: Because your lawyers told you not to or what?

HAYWARD: Simply because I wasn't involved -- I'm sorry.

DEGETTE: But you just said you think that all the evidence shows that it was a mistake, correct?

HAYWARD: That is not correct. That's not what I said.

DEGETTE: OK. Do you think it was all right not to conduct the --

HAYWARD: I think we need to complete the investigation --

DEGETTE: OK. Well --

HAYWARD: -- and determine whether running a cement bond log or not would have created a major difference to what happened here.

DEGETTE: Okay.

HAYWARD: There are --

DEGETTE: Let me ask you this. Are you aware of the fact it would have cost about $128,000 and taken 9 to 12 hours to complete the cement bond log test.

HAYWARD: I am aware of that fact, yes.

DEGETTE: Yes, okay. OK. I yield back. Thank you, Mr. Chairman.

WAXMAN: Thank you. Mr. Doyle for questions, please.

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