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Another Oil and Gas Rig Explosion in Gulf of Mexico Renews Calls for Offshore Drilling Ban

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Another oil and gas rig exploded yesterday in the Gulf of Mexico, renewing calls for the government to impose a ban on offshore oil drilling. The fire broke out on a rig operated by Mariner Energy Thursday morning about 100 miles south of the Louisiana coast. The rig was anchored in 340 feet of water, relatively shallow compared to the BP Deepwater Horizon, which exploded in April setting off the worst oil spill in US history. [includes rush transcript]

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This is a rush transcript. Copy may not be in its final form.

JUAN GONZALEZ: Another oil and gas rig exploded yesterday in the Gulf of Mexico, renewing calls for the government to impose a ban on offshore oil drilling. The fire broke out on a rig operated by Mariner Energy Thursday morning about 100 miles south of the Louisiana coast. Thirteen rig workers had to jump into the Gulf of Mexico to avoid the fire. They were rescued after floating for more than two hours. The rig was anchored in 340 feet of water, relatively shallow compared to the BP Deepwater Horizon, which exploded in April setting off the worst oil spill in US history. Coast Guard and company officials said there is no evidence of leaks, but there were reports yesterday that an oil sheen could be seen near the site.

This is White House Press Secretary Robert Gibbs.

    ROBERT GIBBS: I’m told this is a production platform, about a hundred miles off the coast. I am told the depth of water is about 340 feet, so this is not a — this is not a deepwater facility. As I understand it, the well was not in active production. I will, in some ways, reiterate what I think the Coast Guard has said in a statement that they’ve released, and that is that they responded to the preliminary reports of a fire onboard an oil platform in the Gulf. The initial report that we got word that thirteen persons — thirteen people were on the platform. They are accounted for. One is injured and is on his way out of that area.

JUAN GONZALEZ: In other oil drilling news, the New York Times is reporting today that BP has warned Congress that if lawmakers pass legislation that bars the company from getting new offshore drilling permits, it may not have the money to pay for all the damages caused by its oil spill in the Gulf of Mexico. The company says a ban would also imperil the ambitious Gulf Coast restoration efforts that officials want BP to voluntarily support.

To talk more about this, we’re joined in Washington, DC, by Tyson Slocum, director of Public Citizen’s Energy Program. Last month, he wrote to the White House expressing concern about allowing BP to use revenue from its existing 149 Gulf of Mexico oil and gas wells as collateral for the $20 billion Oil Spill Victim Compensation Fund.

Tyson Slocum, welcome to Democracy Now!

TYSON SLOCUM: Great to be here, Juan.

JUAN GONZALEZ: Your reaction to this latest news of another accident on an oil rig in the Gulf of Mexico?

TYSON SLOCUM: Well, first, I’m relieved to hear that no workers died in this catastrophe. But it really underscores that even with all eyes focused on the safety of offshore oil extraction and production, that this accident still occurred. And thankfully, it occurred in shallow water. And if there is an oil leak, it should be relatively easy to plug it, as opposed to the deepwater accident with BP, where getting down a mile under the water proved to be extremely difficult. But that said, it underscores the rationale for the continued moratorium on deepwater drilling that the Obama administration has enacted through the end of November, because, again, we lack any sort of technology to effectively plug a catastrophic blowout in very deep waters. And so, thankfully, again, this accident was in shallow water. I don’t foresee that this is going to have the kind of environmental devastation that the BP accident had. But it really underscores that the offshore oil and gas industry isn’t ready yet to deal with offshore drilling and that we need heightened regulations, and we need the Senate to follow the House legislation that was passed July 30th to strengthen regulations over the entire offshore drilling industry.

JUAN GONZALEZ: Now, Mariner Energy is not well known compared to the giant BP. Do you know anything about its safety record in the past or its role in drilling, generally, in the Gulf?

TYSON SLOCUM: Yeah, its safety record doesn’t appear to be out of line with many of its competitors. Just an interesting fact about Mariner Energy, it was a unit of Enron until 2004, when two private equity firms purchased it for $271 million. They then took it public. But the top three executives at Mariner Energy were all top executives at Enron during the California electricity crisis of 2000 and 2001. And a couple months ago, a large independent oil and gas operator named Apache Corporation offered to buy Mariner for over $2 billion, and that deal is still in the process of being closed.

JUAN GONZALEZ: Now, we also have this report coming out of the New York Times today now that BP is warning Congress that it may have some problems paying for this victims compensation fund if it’s not allowed to get permits and to continue its drilling and exploration of the Gulf. Could you — now, you’ve raised questions about this in the past, about how it used its operations in the Gulf as collateral for this victims compensation fund. Your reaction to this new report?

TYSON SLOCUM: Yeah, we’ve written about this extensively on our website at Remember that President Obama got a voluntary agreement with BP to set up this $20 billion escrow fund to compensate victims of the accident. And everyone thought that was a great idea. We were encouraged by it, until we actually got a copy of the contract. Public Citizen was the first organization to actually see a copy of the contract between the Obama administration and BP. We reviewed it. Our legal analysts reviewed it. And it’s on our website.

And this is a deeply flawed contact, because, for the first thing, is that the agreement between the Obama administration and BP is not with the parent company BP. Remember, BP is a gigantic multinational corporation with its headquarters based in London. They’ve got about $250 billion worth of assets all over the world. But the Obama administration chose to enter into the escrow agreement with a distant remote subsidiary called BP Exploration & Production Inc., that only has assets and revenues from offshore oil and gas drilling in the Gulf of Mexico. And in our letter to the President earlier this summer, we raised concerns that by linking the financing of the $20 billion victims fund directly with offshore oil and gas production, it compromises the government’s continued criminal probes of the company’s possible criminal negligence in its offshore oil drilling, but it also ensures that BP is going to have to remain a robust presence in offshore drilling. A far more advantageous approach that the administration should have taken was to have linked the escrow fund to the entire corporation’s assets. Therefore, the government would have had access to a diverse array of assets, not all concentrated in the Gulf of Mexico.

So, this is a deeply flawed contract. And now, it offers BP the opportunity to threaten lawmakers with backing off of tougher regulations, with threatening lawmakers to not bar BP from getting future leases in the Gulf of Mexico, because BP is dangling this threat that, well, if you deny us the opportunity to continue offshore drilling, despite our terrible track record, we’re not going to have the money to finance this escrow fund. So, the Obama administration did not engage in effective negotiation tactics with BP. BP really has the upper hand here, which is an outrage, considering the potential crimes that BP committed. Eleven people died. Six million barrels of oil were dumped into the Gulf of Mexico. And we’ve got tens of thousands of people that may never financially recover from this harm.

JUAN GONZALEZ: So, in essence, this new report confirms your concerns expressed earlier. Now also, as I understand it, BP’s — of its total worldwide production, only about ten percent of it comes from the Gulf, so, in essence, it has segregated its liability, in terms of this compensation fund, just for that oil revenue coming from the Gulf of Mexico.

TYSON SLOCUM: Exactly. And this is what we were afraid of. We see corporations do this all the time, where they have sprawling operations, thousands of subsidiaries, and whenever one component of the company has a problem, they isolate that entity legally from the rest of the corporation. And that’s exactly what BP has done here. They had a huge liability with the Gulf disaster, and BP entered into a voluntary agreement with the Obama administration to isolate that liability only in its Gulf of Mexico operations, leaving the rest of this enormously profitable and powerful corporation completely intact.

And we’re not seeking an end to BP, but we need to make sure that BP lives up to its pledge that it pays all money that is owed and that it makes everything right for the harm that it created in the Gulf. It is going to take generations and tens of billions, maybe even hundreds of billions, of dollars to try and restore the Gulf. And by only entering into an agreement with an isolated subsidiary of BP that only is engaged in offshore drilling in the Gulf of Mexico, we’ve really put ourselves at a disadvantage. We need to get access to all of BP’s assets, so that we can have a diverse array of assets to draw upon to pay what is owed the American people.

JUAN GONZALEZ: Well, I want to thank you for being with us, Tyson Slocum, the director of Public Citizen’s Energy Program.

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