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Hindsight can be a terrible thing.
President Obama’s commission investigating the disastrous BP oil spill quietly issued a draft report on the response last week, and within that document, largely unnoticed, emerged a damning finger pointed directly at Congress for failing to heed the lessons of the Exxon Valdez.
Specifically, in 1990, shortly after Exxon’s 750,000-barrel Alaska catastrophe, Congress passed the Oil Pollution Act to funnel up to $28 million in research money annually to pre-empt and respond to possible disasters, as the oil industry "pushed the frontier of deepwater drilling." This money wouldn’t come from the general coffers, but rather a trust fund, covered by a 5-cent per-barrel tax collected from the oil industry.
But over the ensuing 20 years, the report states, the piggy bank got raided: Congress never appropriated even half the $28 million, shifting the money elsewhere, leaving the the Coast Guard, Minerals Management Services, the National Oceanic and Atmospheric Administration, and the Environmental Protection Agency—the four agencies charged by the law to combat the spill threat—with technology that hadn’t been updated much in nearly two decades.
The commission’s report also pointed fingers at private-sector R&D efforts, and found similar fault in terms of dedicating resources to response and clean-up technology. But Congress, in passing the law, had seemingly done the right thing. Year after year, through, it starved that initiative by refusing to appropriate the money called for.
From the report itself:
[Section II] Federal Agency Response R&D Funding: Authorized But Not Appropriated:
The Oil Pollution Act of 1990 establishes an Interagency Coordinating Committee on Oil Pollution Research to "coordinate a comprehensive program of oil pollution research, technology development, and demonstration among the Federal agencies, in cooperation and coordination with industry, universities, research institutions, State governments, and other nations, as appropriate, and... foster cost-effective research mechanisms, including the joint funding of research." The Committee is chaired by the Coast Guard and includes representatives from fourteen federal agencies. The Committee produced the first Oil Pollution Research and Technology Plan in 1992, and a second plan in 1997. There has been no update of the research plan since 1997.
The Oil Pollution Act authorizes up to $22 million in annual funding for the Interagency Committee’s "comprehensive program of oil pollution research" and an additional $6 million annually for a Regional Research Program. The Act also specifies that this funding is "subject to appropriations." As the following chart illustrates, not even half of the authorized $28 million has been appropriated in any single year since the passage of the Oil Pollution Act.
Congress enacted the Oil Pollution Act in August of 1990, and in October of the same year, the Omnibus Budget Reconciliation Act of 1990.
Although Congress always intended the Oil Pollution Act’s oil spill research funding provision to be subject to the appropriations process, it also intended that research appropriation to come out of the Oil Spill Liability Trust Fund, not out of the general treasury — so that oil spill research funding would be essentially "assured money." The Budget Reconciliation Act, however, applied budget caps to all agencies and all agency funding. Oil spill research was then forced to compete with other priorities within each agency for budget dollars, even though the research funds were from the Oil Spill Liability Trust Fund, and not the general treasury.
In part because the Budget Reconciliation Act forced a change in how oil spill research would be funded, contrary to the original intent of the Oil Pollution Act, Congress has never appropriated anywhere near the authorized amount for spill research funding. Total oil spill research appropriations for the Coast Guard, the Minerals Management Services (MMS, now BOEMRE), the National Oceanic and Atmospheric Administration (NOAA), and the Environmental Protection Administration (EPA) —the four agencies that have received the vast majority of Oil Pollution Act-authorized R&D funding — have averaged only roughly $10 million per year since 1992, and have never exceeded $14 million per year.
A. Coast Guard Oil Spill Research
The Coast Guard conducts oil spill research through its Research and Development Center in Groton, Connecticut. Coast Guard’s budget for oil spill research was $5.6 million in 1993, held constant at $3.5 million from 1998 through 2004, but fell to $500,000 in 2007 and has stayed at $500,000 for 2008, 2009, and 2010.
The limited Coast Guard R&D budget has been allocated to four main areas: spill response planning and management, spill detection and surveillance, vessel salvage and on-board containment, and spilled oil clean-up and countermeasures.
B. MMS/BOEMRE Oil Spill Research
The MMS budget for oil spill research has held steady at $6.3 million for the last four years. MMS’s Oil Spill Response Research Program focuses on improving technologies used for detection, containment, and clean-up of oil spills that may occur on the Outer Continental Shelf. More than forty percent of MMS’s R&D projects "are Joint Industry Projects, where MMS partners with other stakeholders to maximize research dollars."
MMS also operates OHMSETT [further details in document], the National Oil Spill Response Test Tank Facility in Leonardo, New Jersey. Under the Oil Pollution Act, the agencies "represented on the Interagency Committee shall ensure the long-term use and operation of the Oil and Hazardous Materials Simulated Environmental Test Tank (OHMSETT) Research Center in New Jersey for oil pollution technology testing and evaluations." The Committee delegated this responsibility to MMS.
C. NOAA Oil Spill Research
Although the Oil Pollution Act does grant NOAA the authority to carry out oil spill response R&D, NOAA does not currently have a funded oil spill R&D program. From 2004 to 2008, the base appropriation for its Office of Response and Restoration, whose responsibilities include developing scientific tools to support oil spill preparedness and response, steadily declined to approximately thirty percent below the amount budgeted by the President in 2008.
From 2004 to 2007, an earmark from Senator Judd Gregg of New Hampshire allocated $2 to $3 million per year to an oil spill response partnership involving NOAA and the Coastal Response Research Center at the University of New Hampshire. NOAA has not funded spill response R&D since 2007.
D. EPA Oil Spill Research
EPA’s oil spill response R&D budget was $2.5 million in 1992 and 1993, but has averaged less than $1 million annually for the last decade. Because EPA is the lead federal response agency for spills in the inland waters, its limited research addresses mitigation, fate and effects, and spill flow characteristics, and is conducted through the Office of Research and Development’s National Risk Management Research Laboratory. The program’s objective is to provide environmental managers with the "tools, models, and methods needed to mitigate the effects of oil and biofuel spills on ecosystems."
Oil spill research provided for in the Oil Pollution Act has never been appropriated to even half the authorized levels. Indeed, NOAA— which played a major role in the Deepwater Horizon response — currently receives no funding for oil spill research. The Commission may wish to consider recommending that the Oil Pollution Act be amended to ensure that federal agency oil spill R&D efforts are fully funded to levels authorized by the Act, as intended by Congress. Oil Pollution Act spill research funding, including funding for OHMSETT, could become a mandatory appropriation, rather than one subject to the normal appropriations process. Such a legislative change would be complicated: A mandatory appropriation would qualify as direct spending, meaning it would be "scored" and thus require a corresponding budget offset under pay-go rules. That is, if Congress were to add a mandatory appropriation of $28 million for oil spill research to the budget, it would have to subtract $28 million somewhere else. Nevertheless, the Commission may determine that a mandatory appropriation is worth these additional complications.
"Since Exxon Valdez, we’ve replaced brick-sized cellphones with iPhones," says Garret Graves, Governor Bobby Jindal’s chairman of the Louisiana Coastal Protection and Restoration Authority. "Yet little has changed in oil-spill technology."
[T]he the big question going forward is whether Congress will restore the funding carved out in the 1990 law. The commission report suggests that a mandatory appropriation might be in order—but that’s not any easy sell when you’re battling a $1.3 trillion federal deficit, even if the money has already been dedicated.
"We constantly get small inside looks at how dysfunctional the Beltway has become," says Mike Papantonio, an outspoken Gulf environmental attorney. "This document is just another indicator that the clown car simply unloads a new bunch in D.C. every election cycle."
While Congress's failings were being brought to light by the Committee, BP was busy buying influence in D.C.
BP spent $1.86 million in the third quarter to lobby the federal government on legislation related to its massive oil spill in the Gulf of Mexico and other issues, according to a disclosure report.
That's a drop from the $3.73 million that the British oil giant spent in the year-ago period, but more than the $1.72 million it spent in the second quarter. BP also lobbied the federal government on legislation involving greenhouse gases and ethanol blending in motor fuels, according to the report filed on Oct. 20.
BP was widely blamed for a failed deep-sea well that ruptured in April and pumped 172 million gallons of crude into the Gulf. The oil killed countless birds, fish and other wildlife, and harmed numerous industries that depended on the Gulf for survival. The company expects to pay almost $40 billion to handle the spill.
And how unpleasantly strange is that paragraph? "Widely blamed"? How about "responsible for"? And they mention, in an incredibly creepy choice, the loss of wildlife... but not the loss of the eleven lives on the Deepwater Horizon.
In the July-September period, BP lobbied Congress, the Environmental Protection Agency, the Office of Management and Budget, the National Security Council, and the State Department, according to the report filed with the House clerk's office.
Very thorough. Too bad their safety protocols are anything but.
Houston Chronicle columnist Loren Steffy brings this alternately amusing and horrifying news:
Remember when Tony Hayward vowed that BP would stay on the Gulf Coast for "as long as it takes" to clean up the company's offshore mess? Apparently, the time's up.
...BP shareholders filed what's known as a derivative lawsuit against the company in state court in Houston... [also naming] former CEO Hayward and current CEO Bob Dudley... [and l]ast week, BP filed its response. It claims it shouldn't be sued here because it's based in England and therefore governed by English law.
"England is the more convenient forum for this action," BP claims. So, basically, BP is arguing that it can set up operations here, get a listing on the New York Stock Exchange, employ thousands of people and unleash the worst offshore oil spill in our nation's history, but it doesn't have to answer to investors in a U.S. court. It would prefer to be sued someplace it finds more convenient, thank you.
BP also argues that Hayward can't be subject to legal action in Houston because he's not a U.S. citizen and the court has no jurisdiction over him. His only connection with the city, BP argues, is that his role as CEO brought him here from time to time. "The assumption of jurisdiction by the court over Mr. Hayward and his property would offend traditional notions of fair play and substantial justice," BP said in its filing.
In this case, BP is hoping to pull off a legal two-step. Its argument that it shouldn't be sued here is exactly the opposite of one it used last summer as it tried to convince a federal judge that some 180 spill-related cases of a different nature should be consolidated and heard in Houston. It argued that Houston was the logical locale for litigation that included businesses hurt by the spill and families of victims killed aboard the Deepwater Horizon because BP executives "are headquartered in Houston and maintain their key witnesses and documents there."
BP will stick around just long enough, and shell out just enough money, to maintain its access to its lucrative oil fields in the Gulf.
But when it comes to BP officers facing claims they betrayed their responsibility to shareholders, BP's accountability has already left town.
Steffy's open hostility toward BP would seem to promise that his new book, Drowning in Oil, is a thoroughly satisfying account of the Deepwater Horizon disaster.
And this review seems to assure just that:
A NARRATIVE style permeates Loren Steffy’s polemic against BP. Opening with colourful first-hand accounts from workers about the disaster at Deepwater Horizon in the Gulf of Mexico earlier this year that led to 11 deaths and catastrophic environmental damage, the author’s distaste for the oil giant is never hidden.
He paints a damning picture of a corporation that, he argues, was prepared to compromise the safety of its workers for corporate greed and whose concern for the environment amounted to little more than public relations spin.
Oil spills occupy a prominent position in America’s rogues gallery of corporate villainry, he notes, with only the clubbing of baby seals more detested by the public. BP’s record is scandalous, he says, with the disaster in the Gulf of Mexico the most devastating in a long line of accidents at company sites.
The author spends much of the book examining the influence of former chief executive John Browne. Browne championed what was billed as "the largest ever industrial merger" when it completed a $52 billion deal with exploration company Amoco in 1998. He planned to save $2 billion a year by adopting Amoco’s strategy of concentrating exploration on "elephants" – the giant oilfields that involved taking big risks but that paid big rewards when they succeeded. Further savings would come from firing thousands of workers including many of the company’s engineers, whom he saw as costs centres. Engineers were replaced by accountants, determined to help Browne meet and beat his promises to Wall Street.
The Gulf Coast Claims Report finds some not-so-even-handedness in the distribution of claims.
University of West Florida Haas Center Director, Dr. Rick Harper, who's been following the oil spill's economic effect, compiled some of his own numbers.
According to Harper, the average bay county employee received around $10 thousand, Gulf workers got around $23 thousand, Franklin’s claimants received about $15 thousand and [sic] did Okaloosa County and Walton workers received around $13 thousand.
Despite the fact the oil spill's only direct impact on Florida was here in the panhandle, some south Florida counties received more money.
Even Jackson and Washington counties, which are not on the gulf, received money, but the amount per worker is significantly less.
"Orange county for example the home of Disney World they're receiving about $5 per job in tourism, Hillsborough also Tampa area $75 dollars per tourism, so Northwest Florida is receiving the bulk of payments given that we are a smaller part of the Florida economy," said Harper.
And an Alabama condominium developer will be getting a nice fat BP check, with their usual strings attached:
BP PLC will pay an Alabama coastal developer $37.2 million under a deal made public Tuesday to settle claims that the Gulf of Mexico oil spill damaged a major beachfront condominium project, but condo buyers and lenders still must agree not to sue the petroleum company.
The agreement, negotiated between the oil giant and the Brett/Robinson firm, will allow the Gulf Shores-based realty company to complete work on a massive luxury project on the Alabama coast, the 31-floor Phoenix West II condominium at Orange Beach. The 358-unit, 1.9 million-square-foot complex is one of the largest condo developments ever in Alabama.
A lawyer with the firm, Jim Thompson, said each of the 188 owners who purchased pre-sold condominiums must agree not to sue BP and associated companies, including Transocean and Haliburton. "There will be no payment from BP until these releases are obtained," Brett/Robinson said in the statement. The company said it hoped to finish the agreement by Dec. 31.
Suddenly (and suspiciously) acting like some other corporation... say, Exxon/Mobile... BP has temporarily halted construction of their Liberty rig in Alaska, wanting to... this is just too strange... "take time to evaluate the [rig's] safety systems."
The rig, reportedly costing over $1 billion, would be set in a Beaufort Sea oil field said to contain more than 100 million barrels. Drilling was supposed to begin next year, but BP now says they haven't set a new timeline.
The decision to halt construction of the drilling rig was made after "a number of engineering and design issues arose," during construction, which began after parts of the rig reached Alaska’s North Slope in the late summer of 2009, [BP spokesperson Steve] Rinehart said. He declined to provide further details.
"It’s the first rig like this ever built and after the issues arose we decided to stop construction, not the project, and go through all the safety systems to ensure we have what we need," Rinehart said. During the engineering evaluations, the focus will include "safety critical systems, power systems, and high pressure mud pumps."
The decision to suspend work on the Liberty rig was made on Tuesday. "When we first announced the Liberty project we anticipated drilling in 2010 and the first oil in 2011, now we are going to wait until and see what the engineering schedule shows," said Rinehart. "In the course of this review we can apply everything we’ve learned from the Deepwater Horizon rig."
Rinehart says "While the rig has unique capabilities to match these deep wells, we need to make sure going forward that every single piece has had a second look."
I don't know. Maybe the past six (seven?) months have made me even more cynical. But I can't think of anything but catastrophic design flaws that would make BP -- the company that set the Atlantis down in 10,000 feet of water without ever having her inspected -- actually halt work on a rig headed for a field that enormous.
And ever widening their purview, BP is making inroads into Canada, Indonesia, and Brazil.
BP has committed to develop its Canadian oil sands project in a move likely to provoke further criticism from environmental groups that have targeted the company over the Gulf of Mexico oil spill.
It has also emerged that BP is to fund the first $2.5bn spent on the Sunrise oil sands project in northern Alberta, even though it owns only 50 per cent of the venture.
A contract to exploit an onshore oil and gas field in Indonesia confirms BP's long-term interest in working in the country, an executive said.
The Indonesian government announced it awarded British energy company BP with a contract to control all of the interests in the North Arafura oil and gas assets in onshore Papua Province.
"This award is further evidence of BP's commitment to a long-term presence in Indonesia, working in partnership with the government of Indonesia both centrally and regionally," he added.
Brazil, on the other hand, is showing some appropriate caution:
Brazil's state oil regulator, ANP, will wait until 2011 to decide whether to approve BP's proposed purchase of Devon Energy's offshore oil blocks, the agency's director said on Monday.
BP said at the beginning of this year that it had reached a deal with Devon to take over its Brazilian oil assets for $7 billion, but the ANP wants more information from the British firm about its plans before giving approval.
Haroldo Lima, director general of the ANP, told Reuters in an interview it was still awaiting specific information it had sought from BP, chiefly, about its strategy and intentions in Brazilian oil as well as more details about the recent oil rig disaster in Gulf of Mexico.
Lima said the ANP wanted to know whether BP, which
currently has no oil assets in Brazil, was intent on a
long-term commitment in the country, which is set to become one of the world's major energy providers.
After state oil company Petrobras announced massive deep-water oil discoveries over the past three years, Brazil has become the world's new oil frontier and will attract hundreds of billions of dollars in exploration, production and refining investments in the coming decade.
Them that's got shall get, them that's not shall lose...
Billionaire John Fredriksen’s Seadrill Ltd. invested $2 billion in the past two months on oil rigs, leading a jump in orders as safety concerns after BP Plc’s Gulf of Mexico disaster spur demand for newer platforms.
Seadrill, owner of the second-largest fleet of deepwater rigs, and others such as DryShips Inc. have ordered 20 deepwater and shallow-water rigs since BP’s Macondo well was plugged in July, raising global orders by 22 percent, according to data from Sanford Bernstein & Co. Deepwater rig rates have stabilized after a 30 percent plunge, and may return to pre-recession records within three years, consultant ODS-Petrodata said.
"No oil company wants to be the new BP," said Kim Andre Uggedal, an analyst at Agilis Securities in Oslo. "The new order cycle is partly driven by Macondo, increased demand and favoring of newer assets."
"The entire drilling market is improving," Alf Thorkildsen, Seadrill’s chief executive officer, said in telephone interview on Nov. 19. "There might be a bigger risk attached to being first out, but there’s also bigger potential."
"There’s still upside potential as the long-term outlook is very, very good," Gillesdal said on the phone from Oslo. "There’ll be new demand for deepwater rigs in 2012, so it’s good that we’re starting to get new ones built now."
Maersk Drilling, a unit of shipping company A.P. Moeller Maersk A/S, plans to order a rig every six months over the next year and a half, CEO Claus Hemmingsen said this month.
Petroleo Brasileiro SA, Brazil’s state-owned company, has leased 20 foreign rigs to start in the next two years as it seeks to pump oil from its so-called pre-salt fields, the biggest oil finds in the Americas since the 1970s. The U.S. has lifted the post-spill moratorium, allowing the restart of deepwater drilling there next year.
There are two hearings coming up this week and next:
Thursday, December 2, 9:00 a.m. to 5:00 p.m. and Friday, December 3, 9:00 a.m. to 4:00 p.m.
National Oil Spill Commissioners will deliberate on preliminary findings related to the root causes of the BP/Deepwater Horizon disaster and options to guard against and mitigate the impacts of future spills.
Commissioners will meet in a private room to hear reports from staff and discuss an array of issues pertaining to the Gulf spill. Interested press and members of the public will be able to watch the deliberations live from a TV-viewing room at the meeting facility or via the webcast available at the Commission's site, www.OilSpillCommission.gov.
Media Advisory: The Bureau of Ocean Energy Management, Regulation and Enforcement (BOEM) and U.S. Coast Guard (USCG) to conduct sixth session of the Joint Investigation into the Deepwater Horizon Incident
Who: The BOEM/USCG Joint Investigation into the Deepwater Horizon Incident
What: Sixth session of the Joint Investigation
When: Dec. 7 - 9, 2010 from 8 a.m. to 5 p.m. (CST) daily
PLEASE visit Pam LaPier's diary to find out how you can help the Gulf now and in the future. We don't have to be idle! And thanks to Crashing Vor and Pam LaPier for working on this!
Previous Gulf Watcher diaries:
11-29-10 04:56:01 Gulf Watchers Monday - Fire Feinberg says one Gulf newspaper - BP Catastrophe AUV #433 - shanesnana
11-28-10 08:04:42 Gulf Watchers Sunday - More Agencies Point Fingers at BP - BP Catastrophe AUV #432 - Yasuragi
11-24-10 06:01:01 Gulf Watchers Wednesday - Critical Commission Document Pulled - BP Catastrophe AUV #431 - peraspera
11-22-10 04:21:52 Gulf Watchers Monday - Change in Oil Spill Fund Rules: Will BP Benefit? - BP Catastrophe AUV #430 - shanesnana
11-21-10 09:35:21 Gulf Watchers Sunday - New Charges Against BP; Barton Eyes Energy Chair - BP Catastrophe AUV #429 - Yasuragi
Gulf Watchers Block Party - Traveling Boomers - ursoklevar
Gulf Watchers Friday - Criminal Negligence - BP Catastrophe AUV #428 - Lorinda Pike
Gulf Watchers Wednesday - BP Bribes Schools to Brainwash Kids & NOAA Helps - BP Catastrophe AUV #427 - peraspera
Gulf Watchers Monday - Afternoon Edition - BP Catastrophe AUV #426 - shanesnana
Previous motherships and ROV's from this extensive live blog effort may be found here.
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