Oil Giants Create $1 Billion Rapid Response Venture

Four of the world's largest oil companies are forming a joint venture to create a rapid-response system to capture and contain oil spills in the deep waters of the Gulf of Mexico.

Exxon Mobil (XOM), Chevron (CVX), Shell (RDS) and ConocoPhillips (COP) will initially put $1 billion into the venture, called the Marine Well Containment Company. The new company's goal is to develop response plan and technology that will be able to capture and contain up to 100,000 barrels of oil from deep-water rigs in the event of an accident.

The move is in direct response to BP's Deepwater Horizon rig explosion on April 20. BP is not part of the venture, but may be able call on the company in the event of another leak.

"If we all do our jobs properly, this system will never be used," said Rex Tillerson, chairman and chief executive officer of ExxonMobil. "The extensive experience of industry shows that when the focus remains on safe operations and risk management, tragic incidents like the one we are witnessing in the Gulf of Mexico today should not occur."

The companies plan to take 18 months to get the containment venture up and running. Exxon told the Journal that the response team will be able to mobilize within 24 hours of a spill.

It's clear the venture by the world's largest oil companies is a reaction to the BP spill, but also a way to ensure confidence by investors and the White House that another spill will be staunched much sooner. Earlier this month, the White House issued a revised moratorium on deepwater drilling.

During hearings after the BP spill, oil company executives admitted that they are unprepared to handle such disasters. Oil was pouring out of the Deepwater Horizon rig unabated until last week.