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BP spill deal possible this week after Mitsui, analyst says. BP settles with injured Deepwater Horizon worker. U.S., Mexico, reach accord on drilling below maritime border. UGA scientists to study effects of Gulf oil spill. Cleanup prep continues at Alaska well blowout site.

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The partners with BP in the Deepwater Horizon enterprise are getting their legal ducks in a row this week, in preparation for "The Trials" scheduled to begin this coming Monday in New Orleans.

As the operator of the well, BP/PLC may reach a settlement for the disaster after Mitsui and Co. agreed on fines. Mitsui & Co. as MOEX Offshore will pay $90 million to the U.S. and five states to settle pollution violations. BP will probably have to accept different terms as operator, but the initial settlement has BP paying $585 million for violations, which is less than 20 percent of what the company has provisioned, said Fadel Gheit, an analyst at Oppenheimer in New York. BP had a 65 percent interest in the Macondo well, MOEX had 10 percent and Anadarko Petroleum Corp. (APC) had a 25 percent stake. The settlement suggests that Anadarko will be liable for about $225 million in Clean Water Act fines if the terms are the same, Gheit said.

“This is only the civil part and does not include possible criminal charges and penalties,” Gheit said in an e-mailed response to questions. “The trials will begin later this month and all parties are eager to settle before then. So there could be very important decisions this week.”

BP shares remain 26 percent below their level in London before the spill and the company has claimed about $40 billion in charges to cover the costs of litigation and cleanup. Chief Executive Officer Bob Dudley said Feb. 7 that the company would like to reach a settlement if the terms are right.

The MOEX settlement doesn’t affect claims against or potential recoveries from other companies over the spill, the U.S. Justice Department said Feb 17. MOEX, a unit of Tokyo-based Mitsui, no longer owns a share of the lease.


“We can’t really read across anything with certainty,” said Jason Kenney, an analyst at Banco Santander SA (SAN) in Edinburgh. “But this implies that a settlement is possible and perhaps more likely for others, too.”

The settlement is the first of what may be a series of agreements with the U.S. as lawsuits over the 2010 spill approach a trial set for Feb. 27. The U.S. Justice Department sued MOEX, BP, Anadarko and Transocean Ltd. (RIG), which owned the rig that exploded, in December 2010, seeking fines for each barrel of oil discharged.

U.S. District Judge Carl Barbier in New Orleans, who’s overseeing much of the spill litigation, has scheduled a non- jury trial to determine liability and apportion fault for the disaster.

A U.S. motion to hold BP, Anadarko and Transocean liable by law for Clean Water Act violations is pending before Barbier. A ruling against the defendants would allow the U.S. to seek fines against each company of as much as $1,100 per barrel of oil spilled, without having to prove the issue of liability at trial.

The Clean Water Act also allows the government to seek fines of as much as $4,300 for each spilled barrel on a finding of gross negligence. The government estimates that 4.1 million barrels were spilled before the well was capped, putting BP at risk of fines of as much as $17.6 billion.

But a total settlement is seen as very unlikely...

BP seen unlikely to settle spill case before trial.

BP believes it is highly unlikely to settle the tangle of litigation related to the Deepwater Horizon explosion before a trial scheduled to start Feb. 27, according to analysts who met with CEO Bob Dudley and other BP executives earlier this week.

“What BP has said is that they would love to settle, but it has to be on favorable terms,” said Pavel Molchanov, an analyst with Raymond James.

The non-jury trial before U.S. District Judge Carl Barbier of New Orleans incorporates civil suits involving scores of individual, corporate and government parties.

Don’t hold your breath for an over-arching settlement,” Molchanov wrote in an analyst’s note summarizing the presentations BP executives made to investors. “The management’s view is that an over-arching “global” settlement is looking highly unlikely.”

In a conference call earlier this month to discuss quarterly financial reports, Dudley said the company is “ready to settle, if we can do so on fair and reasonable terms,” but is preparing for trial.

The company had no further comment this week on a possible settlement strategy or timeline, BP spokeswoman Ellen Moskowitz said.

BP management also believes that the $37 billion that it has set aside as a provision for all liability-related costs is more than will be needed to settle the case, Molchanov wrote. BP declined to comment on the provision.

Calling it "amicable", an injured Deepwater Horizon worker accepts BP's settlement.

Oleander Benton's lawsuit was among at least 40 actions filed by survivors or relatives of the 126-member crew that was aboard the rig when it exploded.

Benton, who was employed as a seaman, had sought $5.5 million in damages for the injuries she suffered as a result of the explosion, according to her statement of claim. Benton blamed the defendants’ negligence and unseaworthiness of the rig for the injuries.

Benton also said she settled claims against Cameron and Halliburton Energy Services Inc. Details of the settlement weren’t disclosed in the court document.

Hundreds of lawsuits by fishermen, tour operators and state and local governments are being handled by Barbier. The judge is to determine whether BP or any of the other companies engaged in gross negligence or willful misconduct. He won’t consider criminal allegations.

The Justice Department previously said it was investigating possible criminal violations related to the blowout and spill. None of the companies has been charged with a crime.

Aahhh, don'tcha just love it? Many more accidents waiting to happen...

U.S., Mexico, reach accord on drilling below maritime border.

The U.S. and Mexico reached an agreement yesterday to engage in oil and gas development in waters along the maritime borders in the Gulf of Mexico.

The agreement, signed at a G-20 meeting in Mexico will start a process by which U.S. companies and Mexico’s state-owned Pemex would jointly develop waters that straddle the border. It would also provide for joint application reviews and safety inspections in cases of transboundary drilling, in areas where oil spills could affect both nations.

U.S. and Mexican officials said the agreement would give companies easier access to waters — including 1.5 million acres on the U.S. outer continental shelf — considered attractive for-oil and-gas development but long unexplored because of legal uncertainties over who has rights to the resources.

“This enables us to responsibly expand our domestic energy development,” US Interior Secretary Kenneth Salazar said. “U.S. companies can now move forward with legal certainty which has been missing in this area.”

The agreement announced today also would lift a moratorium on waters in a buffer area known as the Western Gap that both nations put off limits for 10 years in a 2000 treaty. That moratorium was extended through 2014 after the Deepwater Horizon oil spill.

It stems from a May 2010 commitment between U.S. President Barack Obama and Mexican President Felipe Calderón. They said it would include safety insight from the 2010 spill, which started a month earlier. It wouldn’t take force until both nations’ legislatures, the Senate in the case of the U.S., sign off.

“We ought to be able to gather necessary political forces to get the ratification that is needed,” Salazar said

Mexico still faces the problem of how to get at the deepwater oil on its side of the Gulf border. Pemex lacks much of the technology needed for ultra-deep exploration and production.

Also Mexico’s constitution prohibits foreign companies from actually owning any of the oil they produce in the nation’s waters and on its lands, making many less eager to get involved.

“With this we all win, and we guarantee that our oil will be used to the benefit of Mexicans,” Mexico's President Felipe Calderón said Monday.

Tommy Beaudreau, director of the Bureau of Ocean Energy Management, said the accord would “respect” Mexico’s constitution.

If Pemex and U.S. countries can’t agree on how to jointly develop a boundary-straddling resource, another process would determine how each side could develop its share, Salazar said.

Sean Shafer, analyst with Sugar Land-based Quest Offshore Resources, said companies will need a few years to get permits and more leases and start drilling. But he said the area holds vast promise and some infrastructure is already in the vicinity, as evidenced by Shell’s already-producing Perdido hub project nearby.

The waters, concentrated in the western Gulf, are more oil-heavy than eastern Gulf waters, Shafer said.

This is good news...

UGA scientists to study effects of Gulf oil spill.

Three University of Georgia scientists have received a three-year grant to study the effects of the 2010 Deepwater Horizon oil spill on the Gulf of Mexico ecosystem.

University of Georgia marine scientist Samantha Joye and UGA colleagues Patricia Medeiros and Christof Meile have received a $1.3 million grant from the Gulf of Mexico Research Initiative.

The university said in a statement the grant will allow scientists and emergency responders to better predict and respond to future spills if they occur.

Joye will serve as the associate science director for the project, “Ecosystem Impacts of Oil and Gas Inputs to the Gulf.” Raymond Highsmith, executive director of the University of Mississippi’s National Institute for Undersea Science and Technology, is the lead investigator.

Oh, well...accidents happen, don't they?

Crews prepare Alaska well blowout site for cleanup.

Crews in Alaska’s North Slope have removed some drilling fluid and contaminated snow from areas near a rig involved in a petroleum well blowout.

State environmental regulators said Monday the removal of 200 cubic yards of material will improve access for the cleanup and rig repairs.

A crew drilling on a lease held by Repsol E&P USA Inc. penetrated a pressurized pocket of natural gas at 2,523 feet Wednesday. The resulting kickback spewed out natural gas and an estimated 42,000 gallons of freshwater-based drilling fluid — or drilling mud — onto three acres.

Officials say cleanup will begin after the well is under control.


BP fire at refinery in Washington state is out.

A fire at BP’s Cherry Point oil refinery in Washington state that forced some process units shut and prompted a partial evacuation of the plant has been extinguished, according to a company spokesman.

The fire began at about 2:30 p.m. local time and was under control by 4 p.m., Scott Dean, a BP spokesman in Warrenville, Illinois, said in an e-mail. Some process units in the area affected by the fire were shut, said Mike Abendhoff, another company spokesman at the refinery, in an earlier telephone interview.

“There have been process units in the area that are certainly shut down,” Abendhoff said. “It’s hard to say whether the fire happened on a tube or a line or a small storage tank, so it’s way too early for us to tell exactly what units are affected.”

Okay...this is probably a diary in and of itself. Click on the link to read the whole thing...

EPA official leaves eye of political storm.

On the wall of Paul Anastas' office at the EPA headquarters in the Ronald Reagan Building was a framed certificate from President Richard Nixon -- "an Award of Excellence for outstanding achievement in environmental protection services." What drew Nixon's favor was an essay that Anastas wrote on the occasion of Nixon's 1971 executive order creating the Environmental Protection Agency. Anastas was 9, a grade-school student in Quincy, Mass., who waxed indignant at the destruction of his hometown's wetlands.

"I was so irate about what had happened," Anastas said. "The beautiful wetlands that I grew up overlooking are now entirely banks and insurance companies."

Four decades later, Anastas has just completed his second stint at EPA, serving the past two years as the agency's science adviser and assistant administrator for research and development, perhaps the most important job in the agency after that of the administrator, Lisa Jackson.

As he prepared to depart Washington to return to Yale University, where he directs the Center for Green Chemistry and Green Engineering -- his last day on the job was Friday -- Anastas was upbeat about EPA's mission and accomplishments.

"I think few agencies have a better story to tell than the EPA, on the positive impact they make on people's lives every single day," Anastas said.

Okay. That's what is so often confusing...Even with a program, sometimes I can't tell who is friend or foe, or who just flip-flopped.

Mr. Anastas, I do not know which you are... and if I should be glad you are gone, or should I be wishing for you to stay.

My brain hurts...

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:
2-17-12 06:30 PM GW Friday Block Party: Sports Edition Phil S 33
2-14-12 05:51 PM Gulf Watchers Tuesday - Subpoena Battles and Hiding Key Witnesses - BP Catastrophe AUV #579 Lorinda Pike
2-06-12 03:00 PM Gulf Watchers Monday - Experts speculate BP case will settle before trial - BP Catastrophe AUV #578 peraspera
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