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Topics: Bonuses for Transocean execs, despite deaths of eleven people and much of the life in the Gulf of Mexico. Fed says Transocean is stonewalling on investigation, and Michael Bromwich grows a pair. Lawyers for BP plaintiffs outline strategy. BOEMRE approves deepwater well number eight. NYTimes says no to pipeline from Canada. Alaska gov. wants expidited offshore drilling.

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Despite the deaths of eleven people on the Deepwater Horizon, and the decimation of huge swaths of the Gulf of Mexico, Transocean this week awarded substantial bonuses to its executives, and lauded 2010 as a pinnacle of safety.

The deaths of the workers on the rig were noted, but said the company still maintained an "exemplary safety record" because internal safety targets had been "met or exceeded" in certain areas, according to a filing with the Securities and Exchange Commission.

Safety accounts for a quarter of the executives' total cash bonuses. The total bonus for CEO Steve Newman last year was $374,062.

According to calculations by The Associated Press, the total value the company assigned to Newman's compensation package was $5.8 million.

That figure includes an $850,000 base salary -- a 34 percent increase from the prior year; perquisites of $622,057, which includes housing and vacation allowances, among other things; and the $374,062 bonus. Also included in the figure are stock options valued at $1.9 million and deferred shares valued at $2 million when those awards were granted in March 2010.

The investigative commission appointed by the Obama administration found that time and cost-saving measures utilized by BP, Transocean, and Halliburton created a dangerous and unacceptable amount of risk in the months leading up to the blowout.

In the regulatory filing, the company said its bonuses were appropriate as a way to recognize its executives' efforts in "significantly improving the company's safety record" and implementing a new internal planning system.

Those efforts have "enabled the company to maintain its financial flexibility during a challenging period, while, at the same time, positioning the company for sustained growth in the future."

The filing does not completely spell out how the bonuses were tied to safety performance. The top executives received the following compensation:

   Steve Newman, president and CEO: $374,062

   Ricardo Rosa, chief financial officer: $150,528

   Eric Brown, president, legal and administration: $113,612

   Arnaud A.Y. Bobillier, executive VP, asset and performance: $131,040

   Ihab M. Toma, executive VP, global business, $109,040

   Robert L. Long, former CEO: $86,912

   Cheryl D. Richard, former VP of human resources, technology: $39,245

Transocean explained its stance in the SEC filing:

Safety Performance. Our business involves numerous operating hazards and we remain committed to protecting our employees, our property and the environment. Our ultimate goal is expressed in our Safety Vision of “an incident-free workplace—all the time, everywhere.” The Committee sets our safety performance targets at levels each year that motivate our employees to continually improve our safety performance toward this ultimate goal. Twenty-five percent of the total award opportunity is based on the overall safety metric.

The Committee measures our safety performance through a combination of our total recordable incident rate (“TRIR”) and total potential severity rate (“TPSR”).

      • TRIR is an industry standard measure of safety performance that is used to measure the frequency of a company’s recordable incidents and comprised 50% of the overall safety metric. TRIR is measured in number of recordable incidents per 200,000 employee hours worked.
      •TPSR is a proprietary safety measure that we use to monitor the total potential severity of incidents and comprised 50% of the overall safety metric. Each incident is reviewed and assigned a number based on the impact that such incident could have had on our employees and contractors, and the total is then combined to determine the TPSR.

The occurrence of a fatality may override the safety performance measure.

Transocean is also involved in a dust-up with BOEMRE head Michael Bromwich, who charges that the company is "stonewalling" on subpoenas for three of its employees to testify at hearings in New Orleans next week.

"In my judgment, this is less a legal issue than one of whether Transocean recognizes its moral and corporate responsibility to cooperate with an investigation into the causal factors of the most significant oil spill in United States history," Bromwich wrote. "From my perspective, this is what is at stake with the attendance of the Transocean witnesses."

Two of the subpoenaed Transocean employees, James Kent and Jay Odenwald, are being represented by private counsel and "their participation is, therefore, beyond Transocean's control," said Transocean counsel Steven Roberts, in a letter to Bromwich.

And this is not the first time that Transocean and investigators have disagreed on procedures during the probe of the blowout.

In October, members of the joint panel accused Transocean of thwarting their efforts to get to critical documents and a witness. The co-chair of the panel said at the time that members had been trying for two months to get Transocean to turn over materials related to its compliance with international safety management codes. The panel also said it had been unable to get a specific Transocean manager to come in and testify about safety.

Transocean lawyers said at the time that the document request was too cumbersome. And, they said that whether that witness testified wasn't within their control, striking a similar note as in Thursday's response to the current dispute.

"Like you, everyone at Transocean views the company's cooperation with investigations into the Macondo incident as both a corporate and a moral imperative," said Roberts.

Bromwich replied in no uncertain terms...

"Indeed," Bromwich said, "you have a range of incentives and actions available to you to influence that decision, including the threat of personnel actions up to and including termination for failure to cooperate. In my experience, senior corporate executives committed to a culture of compliance and cooperation make creative and aggressive use of those incentives and sanctions."

Bromwich reminded Transocean's boss, "As we continue to review the criteria for allowing companies to operate offshore, their record of commitment to compliance and cooperation will play an important role."

Matt Hennessy, the Houston attorney for Kent, called the government's position "outrageous", and that a corporation should not consider firing someone who was engaged in a "legitimate exercise of his rights".

"To have BOEM (sic) threatening Transocean to threaten my client to get him to testify is sort of unbelievable," said Michael Walsh, the Baton Rouge lawyer representing Odenwald.

The Joint Investigation Team of BOEMRE and the Coast Guard issued subpoenas for Kent and Odenwald. But, according to their attorneys -- and contrary to Bromwich's assertion in his communication with Transocean -- those subpoenas were not, and could not, be served because both men live outside the New Orleans area in which they could legally be delivered.

The lawyers said that the testimony from their clients is no longer necessary or relevant.

The testimony of key witnesses is no longer necessary or relevant? Maybe because they have to tell the truth under oath?

Kent is an asset manager for Transocean, whose zone of responsibility included the Deepwater Horizon rig. Odenwald is a senior subsea engineer, who was in charge of the blowout preventer on the Deepwater Horizon.

One would think that the duties performed by Kent and Odenwald seem damn "necessary" and "relevant", and testimony from either is vitally important. I, personally, would like to hear testimony from both of them, especially Odenwald.

In his letter to Bromwich, Roberts noted that the testing of the Deepwater Horizon's BOP has confirmed that it was in "proper operating condition" and "functioned as intended," but that "high pressure from the well created conditions that exceeded the scope of BOP's design constraints."

Nonetheless, he assured Bromwich that Transocean will be sending Mike Fry, a BOP expert, to the hearings in the New Orleans.

"He did his job," Walsh said of Odenwald, noting that he could not recommend his client travel to New Orleans so the investigators "can beat up on him some more."

"Based on the way the hearings have been run -- more spectacle than fact-finding -- on my advice he is not going to participate in that spectacle," Hennessy said of Kent.

But in his Thursday letter to Transocean, Bromwich wrote "this is less a legal issue than one whether Transocean recognizes its moral and corporate responsibility to cooperate with an investigation into the causal factors of the most significant oil spill in Untied States history."

Let's hope that this indicates that Bromwich has indeed grown a large brassy pair, and will be Terminator-like in his pursuit of the truth.

When Transocean’s general counsel responded instead of Newman, explaining it was up to the employees’ individual attorneys to decide if they would appear at the hearings, Bromwich threw down the gauntlet. The message: Either help out or this could affect your work before BOEMRE when it comes to offshore drilling.

I'll believe it when I see Tony Hayward frog-marched off his yacht in handcuffs...

And attorneys for the plaintiffs in the BP chaos - fishermen, business owners, and residents claiming physical debilitation after the spill outline their strategy against the company, charging that BP and drilling contractor Transocean conspired to defraud the Minerals Management Service concerning the safety of drilling such a deep well, and that their clients were injured by the use of dispersants. U.S. District Judge Carl Barbier allowed both documents to be filed by attorneys representing victims of the spill.

The MMS became the Bureau of Ocean Energy Management, Regulation and Enforcement last June after a revamping by the Obama administration.  

BP and other defendants will provide Barbier their responses to the allegations in both documents. The companies have contended that the oil spill was an accident, and while BP repeatedly has said it will pay all responsible claims stemming from the accident, it and the other defendants are contesting the allegations contained in the lawsuits.

The criminal conspiracy allegation is contained in a case statement that lays out the plaintiff's arguments that BP and Transocean violated the Racketeer Influenced and Corrupt Organizations Act, also known as the RICO Act, through wire and mail fraud stemming from their applications for permits for the Deepwater Horizon to drill BP's Macondo well.

If a jury were to find the companies liable under the civil RICO provisions, they could be subject to a tripling of damages related to actions taken in support of the conspiracy.

"The scheme to defraud involves misrepresentations and omissions to the regulators regarding the ability of BP and its subcontractor, Transocean, both to prevent and contain oil spills," the case statement said. "BP and Transocean's fraudulent scheme has not just involved the Macondo well offshore-drilling project that utilized the Deepwater Horizon, but has also involved other well sites in the Gulf of Mexico and indeed around the world."

The paper contends BP represented at least 10 percent of Transocean's business dating to 2000, and that the two companies conspired to provide false information about BP's ability to contain major spills during that same time.

A number of the allegations, including whether any MMS employees participated in the illegal activities, are likely to rely on evidence the attorneys hope to receive from BP and other defendants during pre-trial discovery.

In the second document, residents and contract workers who say they have been physically harmed by the spill, and by the chemical gumbo used to dissipate the surface oil, filed an amended complaint stating that they were injured by the use of dispersants "in an ill-conceived effort to contain and to clean up the spill. ..."  

The complaint contends that BP and companies hired by BP to clean up the oil often prohibited oil-spill workers and those on "vessels of opportunity" from using protective clothing and equipment, unless they were working in the immediate area around the Macondo well.

It also contends that BP delayed "detoxification" of small boats used as vessels of opportunity until they were no longer being used in the spill fight, while larger ships were repeatedly cleaned during the fight.

The defendants in this part of the case include BP and its contractors involved in drilling the well, the clean-up contractors and Nalco Co., the manufacturer of two dispersants used during the clean-up.

It points out that BP refused to stop using the two versions of Corexit manufactured by Nalco in May, a day after EPA administrator Lisa Jackson asked BP to use a less-dangerous chemical.

Nalco has repeatedly insisted that its dispersants, which are used offshore to break up oil on the surface and at the ocean floor into tiny droplets, are not harmful.

BOEMRE Approves Operations for Eighth Deepwater Well. Approved on April 1. Not a joke...

The Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) approved a deepwater permit for the drilling of an eighth well that complies with rigorous new safety standards implemented in the wake of the Deepwater Horizon explosion and resulting oil spill. This includes satisfying the requirement to demonstrate the capacity to contain a subsea blowout. The approved permit is a permit to sidetrack for ENI U.S. Operating Company, Inc.’s Well #SS001 in Mississippi Canyon Block 460 in 2,823 feet water depth, approximately 57 miles southeast of Venice, Louisiana.

“This is the eighth deepwater well permitted to drill since February 17, when industry demonstrated that it had the capacity to handle subsea blowouts and spills,” said BOEMRE Director Michael R. Bromwich. “The progress in permitting deepwater drilling is directly related to industry’s ability to meet and satisfy the enhanced safety requirements associated with deepwater drilling, including the capability to contain a deepwater loss of well control and blowout.”

ENI’s Well #SS001 is a sidetrack well. A sidetrack well is drilled to a new geologic target or a new location within the original target from the existing wellbore. The operator had a rig on location when drilling preparation activities were halted due to the temporary drilling suspensions imposed following the Deepwater Horizon oil spill.

As part of its approval process, the Bureau reviewed ENI’s containment capability available for the specific well proposed in the permit application. ENI has contracted with the Helix Well Containment Group (HWCG) to use HWCG's capping stack to stop the flow of oil should a blowout occur. The capabilities of the capping stack meet the requirements that are specific to the characteristics of the proposed well.

For a list of approved permits, go to the BOEMRE website here.

As of late, I have not placed much confidence in the editorial stance of the New York Times but sometimes even they get things know, blind pig and all that. They think that a tar-sands pipeline from Canada to the Gulf is a bad idea, for many reasons.  Good on them.

Later this year, the State Department will decide whether to approve construction of a 1,700-mile oil pipeline from Canada to the Texas Gulf Coast called Keystone XL. The underground 36-inch pipeline, built by TransCanada, would link the tar sands fields of northern Alberta to Texas refineries and begin operating in 2013. The department should say no.

State is involved because the pipeline would cross an international boundary. Secretary Hillary Rodham Clinton first said she was “inclined” to support it, but has lately sounded more neutral. An environmental assessment carried out by her department last year was sharply criticized by the Environmental Protection Agency for understating the project’s many risks. The department has since undertaken another environmental review that will soon be released for public comment. It needs to be thorough and impartial.

Advocates of the Keystone XL, which include the Canadian government, the oil industry and its allies in Congress, argue that a steady supply of oil from a friendly neighbor is the answer to rising oil prices and turmoil in the Middle East. But the Energy Department says the pipeline would have a minimal effect on prices, and there is already sufficient pipeline capacity to double United States imports from Canada.

The environmental risks, for both countries, are enormous. The first step in the process is to strip-mine huge chunks of Alberta’s boreal forest. The oil, a tar-like substance called bitumen, is then extracted with steam or hot water, which in turn is produced by burning natural gas. The E.P.A. estimates that the greenhouse gas emissions from tar sands oil — even without counting the destruction of forests that sequester carbon — are 82 percent greater than those produced by conventional crude oil.

Alaska Governor Asks Government to Expedite Offshore Drilling Projects.

Alaska's governor asked federal regulators to move ahead in allowing new oil development in the Arctic Ocean, as the state looks for ways to shore up declining production.

In a letter sent Thursday to U.S. Interior Secretary Ken Salazar, Gov. Sean Parnell wrote that "Alaska is the United States' most important and abundant domestic source of future oil and gas." He cited a 2008 U.S. Geological Survey report that estimated more than 10 billion barrels of oil and more than 100 trillion cubic feet of natural gas lay beneath the surface of Alaska's Beaufort and Chukchi Seas. Parnell seized on current concerns in the U.S. about the stability of foreign sources of oil, amid turmoil in the Middle East and rising oil prices.

"We need to develop and increase our domestic supply of oil and gas," Parnell wrote.

Parnell and other Alaska officials have been working to streamline oil production taxes and take other measures to attract more onshore and offshore oil and natural gas development in Alaska. Parnell has introduced legislation, currently working its way through the state legislature, that would slash oil production taxes put in place by his predecessor, former Alaska Gov. Sarah Palin.

Parnell said Wednesday that he had set a "new goal for Alaska" of 1 million barrels of oil production per day through the Trans Alaska Pipeline System within ten years. Current oil production shipped from Alaska's North Slope 800 miles to the port of Valdez through the pipeline system is about 600,000 barrels per day, down from its peak of about 2 million barrels a day 20 years ago.

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:

4-01-11 06:13 PM Gulf Watchers Block Party: Déjà Vu edition -- again BlackSheep1
4-01-11 08:25 AM Gulf Watchers Friday - They Want It All and They Want It Now - BP Catastrophe AUV #495+ Lorinda Pike
3-30-11 06:00 AM Gulf Watchers Wednesday - DOJ Cornering BP for Prison Orange - BP Catastrophe AUV #494 peraspera
3-28-11 06:30 PM Gulf Watchers Monday BP Catastrophe #493 Same old BP Phil S 33
The last Mothership has links to reference material.

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