This is a rush transcript from "Your World With Neil Cavuto," July 22, 2010. This copy may not be in its final form and may be updated.
NEIL CAVUTO, ANCHOR: Anger over the White House’s drilling ban is growing. Jobs are leaving. Oil companies are scrambling.
Today, one of the oil giants is talking. And ConocoPhillips CEO, James Mulva, today is talking to us — and only us — on whether that ban will hike gas prices, on whether the BP disaster was preventable, and on the billion-dollar plan to deal with the next disaster.
I sat down with Mulva a short time ago.
CAVUTO: The Four Horseman thing, was BP invited?
JAMES MULVA, CHAIRMAN AND CEO, CONOCOPHILLIPS: Well, we — BP will, we believe, ultimately join our group, but we thought it was important to not to divert attention that BP is directing towards the Macondo incident.
So, the four companies have been working on this for about six weeks. And we have talked with BP. We want to learn from the findings of the Macondo incident that BP has experienced.
But we expect that when the Macondo incident is completed that BP will join our group.
CAVUTO: So, then BP would then presumably kick in for the cost of getting something like this up and running?
MULVA: Well, we haven’t really discussed that.
The four companies felt that it was important to get this going. Our people over the last six weeks, our engineers and project people, have looked at what — the estimated cost. And we believe it will be around a billion dollars.
CAVUTO: So, you each are going to pony up $250 million?
MULVA: Each of us for $250 million. We know it’s an initial estimate, but we want a robust containment system that we would put in place. And we will be building this over the next 12 to 18 months.
CAVUTO: This moratorium is all about making sure we don’t have another incident. What do you think of that?
MULVA: Well, it’s understandable, given the incident, why there would be a moratorium.
When we look at the incident, I think we will find, after the investigation is complete, that — that the incident was preventable. The other thing we found is that the...
CAVUTO: Well, what was preventable, that BP botched it maybe?
MULVA: Well, I wouldn’t say that, but, I mean, that it was preventable. A number of decisions were made, judgments were made that we will find in hindsight...
CAVUTO: Where they botched it — they botched it.
MULVA: ...was preventable.
But the other situation that we have seen from the incident is that the response capability was inadequate. So, there are three things that we will be working on, as the industry and all — and also with the regulatory authorities, one, to improve drilling standards, raise those standards. Second is a containment system that we just announced amongst the four companies. And the other is a response capability of handling oil should it get to the water.
CAVUTO: But is the Washington response, Jim, overdone? In other words, to put a moratorium on it in the name of safety, when a number of judges — at least one crucial one — have said this was a bit draconian? I’m vastly oversimplifying it.
But the administration can keep coming out with executive orders to keep running the clock. So, I’m wondering if the intent here is actually to stop drilling or at least stall it to the point that you guys sort of are dying on the Gulf vine in the meantime.
MULVA: Well, hopefully, the intent is not to stall or delay what the industry can do. And that is development of indigenous resources, a great deal of investment and jobs.
CAVUTO: You had mentioned not too long ago in an interview — and I hope I’m quoting you correctly, Jim — Gulf — "The Gulf spill will have only a modest impact on our company’s crude supplies."
Do you still stand by that, because it seems relatively staggering? Because that whole area seems frozen for the time being. But update me.
MULVA: In the short term, the production continues from existing fields. So, it won’t have an immediate large impact on production.
But, as a result of not continuing exploration, over time, it will amount to a more substantial amount of production — impact on production coming from the Gulf of Mexico. And we have seen over time that slight impacts of production and supply, because supply-and-demand situation in a period of time, can — is still pretty tight. It can be tight. Just a few hundred thousands barrels a day can have quite an impact on supply and demand and on price. So, in the short-term, I don’t think it has a great deal of impact, but, longer term, it will.
And the other thing that is important is not just the amount of production. But this is United States indigenous resources, oil and gas that we have that we should develop because it’s for our energy security, but it also leads to investment and to jobs.
CAVUTO: Well, not now, right? I mean, now China’s coming in, in a big way, and a number of other foreign players are coming in, in a big way. The number of our big players, maybe for fear of Washington or that it’s become hazardous legally, P.R.-wise, they’re going abroad.
What’s going on here?
MULVA: In terms of what’s going abroad?
CAVUTO: Gulf-related activities and drilling?
MULVA: That’s right.
With a moratorium, if it continues for an undue period of time, we will see basic facilities and drilling ships leave the Gulf of Mexico and to other places. And the concern is, if it doesn’t come back quickly, we lose our capability...
CAVUTO: Is that your fear?
MULVA: We lose our capability to be drilling and to producing ultimately...