| Transcript |
may come from any and all sources, we believed
that the agricultural treaty was a legitimate
source: and hence, this water was not being delivered contrary to the treaty, but rather, that
Mexico should accept it under the treaty. That
began the problem.
Wright: The treaty of which Martin speaks was
concluded by the United States and Mexico in
1944. According to the treaty, the U.S. is obligated to deliver to Mexico 1.5 million acre-feet
of water a year from the Colorado River.
T. R. Martin: Mexico contended that it had a
deleterious effect, almost from the very beginning. And in the note in which it made complaint about the quality of the water, it sought
damages. We, of course, having denied the
grounds for complaint, did not acknowledge
our liability.
Jose Lopez Portillo: Mexico suffered grave
damages in the Mexicali valley due to the actions taken on the Colorado River to wash the
American soil. ... I stress it: they used this
water to wash the American soil, and [the]
water included in the treaty, [that] they delivered to us was highly salinated which made the
fertile valley of Mexicali very salty. This implied two things to us: they simply transferred
the salt from one side to another, and they did
not deliver usuable water to us that was foreseen in the treaty. When we made a claim the
United States refused to do anything about it.
Now the situation has changed. It is possible
that the oil that came out of Ixtoc would have
polluted some of the American coastline, and
perhaps it caused some damage. In the first
case in Mexicali we had reasons, but these were
not turned into a right. In the case of Ixtoc and
the shoreline there might be reasons, but there
is also no right.
Robert Krueger: We're prepared to sit down
and discuss these matters with Mexico. If Mexico wants to sit down and discuss them with us,
we're prepared to open up environmental questions, past as well as future, with the Mexican
government.
Jose Lopez Portillo: We can solve any problem
of this type in the future, that is what is desirable. But at the present moment, it does not
seem desirable: it is undue and not dignified to
assume that we are forced to do something that
our American friends did not wish to do when
it was their turn. The right, after all, is a recognition of the Golden Rule: don't ask from another something that you are not willing to give.
Wright: Now that the shoe is on the other foot,
the State Department is virtually powerless as
far as compensation is concerned. As a result,
south Texas coast residents have had to fend
for themselves.
Paul Cunningham: We had no other alternative,
we've tried to pursue every course of relief that
we could think of, and everywhere we turned,
we ran into a brick wall. And so the lawsuit was
more an act of frustration on our part, of something we need to do, kind of like the last step.
This was the last remedy we knew of, not necessarily the ideal one, the only one left to us. And
the beaches have basically been cleaned within
the town of South Padre Island, I think you
have seen that yourself, and so that part of it is
over, and now what do we do to recover the
economic damages that we've received, and the
lawsuit's the only way I know of, because Mexico isn't up here handing out checks. The federal
government's not out here handing out checks,
the state government's not down here handing
out checks. The local town, of course, has
suffered economic loss, also, because if my
business is hurt, so goes the town's revenue, because they collect their revenue from sales tax,
hotel occupancy tax, in fact, their major source
of revenue is from tourism. It's not from ad
valorem tax. And everybody's been injured as a
result of it in terms of economic losses.
Wright: The city of South Padre Island is one of
several interests that has filed intent to sue the
companies involved with the drilling of Ixtoc I:
PEMEX, owner and operator of the well;
PEMARGO, the private Mexican company contracted by PEMEX to drill the well; and
SEDCO, the oil-rig leasing firm founded by
Texas Governor Bill Clements some 30 years
ago. But it is SEDCO's actions that prompted
the most controversy. Harry Hubbard, President of the Texas AFL-CIO has stated that
SEDCO may be involved in a cover-up. The
union has indicated it will sue all three parties.
Harry Hubbard: I think that, and I think that
most people believe that there has been an effort to cover up the liability of SEDCO. From
the very beginning, I've said before, from the
very beginning the governor said, aw, nothing
to cry about, don't cry over spilt milk, and all
those kind of things. Most recently, I saw a
quote in the paper where he was blaming the
attorney general and myself and probably the
state Democratic Party chairman of trying to
make a political issue out of a very serious disaster. So, from the time it started until today,
in the words of our governor, there was nothing
to talk about, now it's a very serious disaster.
So I think it's very obvious. Why did they pull
the rig out and sink it, you know, so? Why did
they go and while they were saying we're not
responsible, we're not liable, and get a limitation on liability, get a deadline on the date that
anyone can sue for liability?
Wright: Following the blowout of Ixtoc I, SEDCO maintained that it was exempt from any liability. But subsequent events throughout the
summer challenged the credibility of SEDCO's
claim. First, company officials authorized the
disposal of the suspect rig in the waters 200
miles east of the well site. Next, doubts arose
concerning the actual number of SEDCO employees aboard the rig at the time of the blowout. And finally, in September, SEDCO asked a
Houston federal court to limit any liability that
might be found to $300,000 dollars. By asking
the court for this limitation, SEDCO forced
parties wanting to sue to file their intent to do
so before the court-determined cut-off date of
October 23,1979.
Wright: Texas Attorney General Mark White
has monitored the situation very closely all
summer. On Thursday, October 18th, the state
of Texas formally announced plans to sue
PEMARGO and SEDCO.
Mark White: That's a decision that was made ...
due to the fact that the rig was so terribly damaged and so unseaworthy that they sank the
rig. Later, we discovered that they pulled the
rig 200 miles before they sank it, and they sank
it in the very middle of the Gulf of Mexico. We
thought this was an unusual decision.
Steve Mahood, Vice-president and General
Counsel, SEDCO, Inc.: The vessel was structurally damaged, it was structurally unsound. All
of the drilling equipment had been lost and fallen overboard, and the vessel was apparently a
total loss the day after the fire occurred. However, our insurance underwriters and we ourselves sent surveyors and engineers, structural
engineers, down to the site, and all of these
people boarded the unit and studied it and ran
metal and discovered what equipment had been
lost, and after a two or three week study thereafter, the conclusion was drawn by not only us,
but by independent parties and our insurance
underwriters, that the vessel had no value, and
it was, in fact, a derelict wreck. And since it
had no value, [and] we were spending about
$16,000 a day in tugboats and personnel just
standing by to make sure that it didn't get away
or, if in the event of a tropical storm, . .. that
the vessel didn't break up in some fashion, we
wanted to get rid of this liability: it was no
longer an asset to anyone, it was merely a liability, and it was a threat to navigation. Certainly a hazard if it did break up, might run into
another rig that was down there, or might run
ashore and would be very expensive to remove.
So the best thing for all parties was to take it
out into very deep water where it couldn't be a
hazard to anyone and sink it, which is what we
did.
Harry Hubbard: SEDCO has said we're not liable. In fact, they said in the beginning that they
didn't have any employees on the rig, then they
had three, and in the final analysis, they had
seven, so where does negotiations begin, when
you can't even get a straight answer out of the
people that at least seemingly are responsible
for it?
Steve Mahood: I can take personal responsibility for that . . . because back in early August, I
was sitting in my office and received a telephone call from a newspaper reporter-I've even
forgotten which reporter it was. He asked me
how many people we had on board the SEDCO
vessel involved in Mexico, and at that time, I
honestly didn't know how many, but I thought
there were about four. And I told him that
there were about four... And the next day, he
printed the story, and printed it that it was exactly four, and other newspaper articles picked
up on that and from then on, it was exactly
four until very soon thereafter: we had a head
count and determined that it was exactly seven.
So that's how the discrepancy began.
Mark White: I certainly think that there are
many unanswered questions ... as to the condition of the rig [and] who had actual control
over the rig. There's also this delay for apparently two days, in which they were trying to make
a decision about what to do about the loss of
circulation in the well. All these things, and the
decisions that were ultimately made, which
were disclaimed by SEDCO. SEDCO has certain
responsibilities that overshadow the contractual
relationships they're trying to sustain behind it.
Steve Mahood: Our people on board were basically there to maintain our equipment. That was
their basic charge, to be sure that our equipment was properly maintained, and taken care
of, and certainly they were there to be available
to provide any assistance that might be asked of
them in the way of advice or consultation. And
that's primarily the role they had there.
Wright: The city of South Padre made its intention know shortly after SEDCO asked for a limitation of liability.
Kirby Lilljedahl: With the filing of that suit by
SEDCO, then we could no longer sit and take
no action. If the federal court established their
liability at the $300,000 level, at their request,
obviously our losses are much greater than that.
So the board here felt that a suit was necessary
to protect everybody's interests. We joined the
suit involving Willacy County, a class-action suit
whereby the city represents the classes of the
government, be it navigation, district, city or
whatever. That was filed approximately three
weeks ago. In the suit, in numbers, as I recall,
was $100 million.
Wright: On Thursday, October 18th, Attorney
General White announced that the state of
Texas is suing SEDCO and PEMARGO for $10
million in damages to the Texas ecology and for
clean-up costs. Governor Clements' only reaction was to say, "I don't think his suit is good
against anybody." The governor's response
came as no surprise. Throughout the summer,
he and White have clashed repeatedly over the
advisability of suing the parties involved. The
governor feels very strongly that the situation
might be best handled by federal officials.
Governor William Clements: I have consistently
and constantly and forever more say it, let's be
quiet and let the State Department and the
Foreign Ministry of Mexico negotiate: and all
this chest-thumping and talking about suing
Mexico is not constructive and helpful in that
regard.
Wright: On August 9th, the governor said it
would be "inopportune" for the state to sue
Mexico over possible oil damage. The attorney
general maintained that this and similar remarks
made by the governor spoiled the chances for
out-of-court negotiations with Mexico. In short,
he said, the governor had taken away the state's
trump card.
Mark White: I think that was the whole reason
for my request that he not continually repeat
to officials in Mexico that Texas would not sue
over an oil spill. This is simply not the way to
engage negotiations over the payment of damages. I felt it was both unfair to the Republic of
Mexico and to the people of Texas, and that
misleading information should not be issued
through an official source; and I think it directly resulted in positions that would not have
been taken by Mexico.
Governor Clements: Let me make one thing absolutely clear, to you and everybody else. By
the Texas Constitution, I am the chief executive officer of the State of Texas, and the
attorney general is my counselor, or lawyer, so
to speak. I have been in the business environment now for some forty years, as chief executive officer to express my opinion on any subject that I deem appropriate for me to have an
opinion. And I also reserve the right to take the
advice, or not take the advice, of my lawyer.
That's what a lawyer is for, to give advice. The
chief executive officer is in his office to make
decisions. And so when I decide that I will
either accept his opinions and agree with him,
I'll say so. And when I don't accept his opinions and advice, and I don't agree with him, I
reserve the right to say so. So you know I'm
not going to be in default to him on that, or
anything else.
Wright: Many people speculate that the Governor's reaction is motivated in part by his connections with SEDCO. Before his election, the
governor was president and chief executive officer of the drilling firm. The company is currently headed by his son, Gill.
Governor Clements: When I divorced myself
from the company that I founded actually over
thirty years ago and had always been the chief
executive of that company, when I left my
company and put my stock in a blind trust and
resigned, I did it totally. And it's not the sort of
thing you can dip in and dip out of. People
don't seem to understand that. It's kind of like
a surgeon being halfway through an operation
and then leaving to go off and play golf, or do
something else, and then come back a week
later and say, well, I'm going to take up the operation again. You can't do that. And so I don't
have anything to do with the operation of the
company, and I don't know what they're doing,
and I don't know how they're doing it. And I
really am not interested.
Steve Mahood: After Governor Clements had
made his trip to the south Texas coast to investigate personally, he came to the office here
one day-he happened to be in town—and came
by here and I was in a meeting with him and
three or four other people for about ten, fifteen
minutes. Most of that time was really spent
talking about what we understood to be
PEMEX's plans to put the funnel or the cone
over the well to stop the flow of the oil onto
the surface of the ocean. But that was the only
meeting I've had with him in connection with
this matter.
Wright: Perhaps the greatest lesson from this
experience is that the United States and Mexico
need to formulate a bilateral agreement to prevent future misunderstandings. Offshore blowouts are nothing new. Mexico has indicated that
it intends to pursue a rigorous hydrocarbon
program in the Bay of Campeche. The probability of future spills in southern Gulf waters will
increase proportionately.
Robert Krueger: It is my understanding that we
first approached Mexico a number of years ago
suggesting that the two nations might try to
work out a treaty, doing something of this kind.
We presented language on this subject to the
Mexican government on, I am told, April of
1978 as initial language that we would propose
for a treaty between the two countries. We have
not, to my knowledge, as yet heard from them.
Jose Lopez Portillo: We are willing to agree on
future cases in order that both countries may
be obligated to take preventive measures to correct damage whenever this should occur, and to
have systems which would formalize ways of
making the claim.
Wright: The amount of Mexico's oil reserves is
staggering. Figures for proven, probable and
potential reserves are constantly on the increase.
Jorge Diaz Serrano: Our last expression of reserves was made by President Lopez Portillo in
his speech the first of September of this year.
And we have 45 billion in proven reserves, 45
billion in probable reserves, and 200 billion of
potential reserves.
Wright: Jorge Diaz Serrano is the director general of PEMEX. He explains how Mexico's oil
development prospects have changed since December, 1976.
Jorge Diaz Serrano: What we had in those days
was a tremendous expansion program: from six
billion, we were expanding our reserves to 11
billion that particular month, and we announced
that we were going to reach a production from
900,000 barrels per day that we had to two million and a quarter, two million, 250 thousand
barrels per day in 1982. We started our program, we found the geology discoveries more,
let's say, abundant, more prolific, and we decided to expand further with our program by
bringing the production of 1982 to 1980.
Wright: While Mexico's oil industry has progressed more swiftly than perhaps even he had
imagined, President Lopez Portillo has been
careful not to minimize his country's other resources.
President Lopez Portillo: We don't want to turn
HOUSTON BREAKTHROUGH
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FEBRUARY 1980 |
