Topics: Feinberg gets a raise. Gag order imposed on reporting dolphin deaths. The American Petroleum Institute claims the Obama administration is blocking oil and gas production, even as another drilling permit is issued. Norwegian producer gets sixth permit issued. More tests on the BOP may be performed. Chevron spokesman says permitting process is not really a "black hole". Number of drilling rigs in US increases. Rosneft tries to save BP Arctic drilling alliance. BP declares force majeure on Libyan refiner.
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While reports that damage claims from the BP disaster are being denied right and left, claims czar Kenneth Feinberg has apparently been doing such a bang-up job that he has gotten a raise. Monthly compensation for his law firm has been upped from $850 thousand a month to $1.25 million...retroactive to January.
Documents released Friday include a letter from former U.S. Attorney General Michael Mukasey to claims czar Kenneth Feinberg. Mukasey stated his belief that the extra money was warranted because Feinberg's duties had grown. Mukasey was asked by Feinberg to weigh in on how reasonable his compensation was.
Feinberg has been criticized for the pace of processing the roughly 500,000 claims that have been filed since he took over handling claims for individuals and businesses from the $20 billion fund in August. Fishers and others have complained that the money they have received is inadequate, and that in many cases their claims have been denied with little explanation.
An AP review published in February that included interviews with legal experts, government officials and more than 300 Gulf residents found a process beset by red tape and delay. At its center is a fund administrator whose ties to BP have raised questions about his independence.
Under Feinberg's plan for making final payments to victims, claimants would receive twice their documented 2010 losses. Oyster harvesters and oyster processors would be offered four times their losses.
Fishermen and others have complained the money they have received is inadequate, and that in many cases their claims have been denied with little explanation.
Feinberg has said that he believes that the Gulf of Mexico will recover from the damage from the BP gusher by the end of next year, and the $20 billion from BP should more than cover the losses to claimants.
Many on the Coast disagree...
"He has performed poorly, and I'm being polite, and yet they are giving him a raise," said Orange Beach, Ala., Mayor Anthony Kennon, whose community was hard hit by the oil spill. "The real question is, how does BP view his performance? They are giving him a raise, so they must think it's good. That speaks for itself."
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No news is not good news in this case...
The U.S. government is keeping a tight lid on its probe into scores of unexplained dolphin deaths along the Gulf Coast, possibly connected to last year's BP oil spill, causing tension with some independent marine scientists.
Wildlife biologists contracted by the National Marine Fisheries Service to document spikes in dolphin mortality and to collect specimens and tissue samples for the agency were quietly ordered late last month to keep their findings confidential.
The gag order was contained in an agency letter informing outside scientists that its review of the dolphin die-off, classified as an "unusual mortality event (UME)," had been folded into a federal criminal investigation launched last summer into the oil spill.
"Because of the seriousness of the legal case, no data or findings may be released, presented or discussed outside the UME investigative team without prior approval," the letter, obtained by Reuters, stated.
A number of scientists said they have been personally rebuked by federal officials for "speaking out of turn" to the media about efforts to determine the cause of some 200 dolphin deaths this year, and about 90 others last year, in the Gulf.
Some researchers designated as official "partners" in the agency's Marine Mammal Stranding Network complained such constraints undermine the transparency of a process normally open to review by the scientific community.
"It throws accountability right out the window," one biologist involved in tracking dolphin deaths for more than 20 years told Reuters on condition of anonymity. "We are confused and ... we are angry because they claim they want teamwork, but at the same time they are leaving the marine experts out of the loop completely."
Some question why the Marine Fisheries Service, a branch of the National Oceanic and Atmospheric Administration, or NOAA, has taken so long to get samples into laboratories.
"It is surprising that it has been almost a full year since the spill, and they still haven't selected labs for this kind of work," said Ruth Carmichael, who studies marine mammals at the "independent" (partially funded by BP) Dauphin Island Sea Lab in Alabama.
"I can only hope that this process is a good thing. I just don't know. This is an unfortunate situation."
NOAA officials expressed sympathy but insisted the control and confidentiality measures were necessary.
"We are treating the evidence, which are the dolphin samples, like a murder case," said Dr. Erin Fougeres, a marine biologist with the Fisheries Service. "The chain of custody is being closely watched. Every dolphin sample is considered evidence in the BP case now."
Gag order, because it is evidence... Lab funded by the culprit. Scientists told to shut up. Dead dolphins... and more dead dolphins... Do you get the feeling we'll never know the truth about anything?
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The American Petroleum Institute- you remember them; the lobbying group that now controls policing of safety issues on deepwater rigs in the Gulf - is complaining that the Obama administration is restricting domestic oil and gas exploration and production.
The document is the latest attack by API, which, when given the safety police role once held by the now-defunct Minerals Management Service (which was disbanded after accusations of being "badly mismanaged and at times corrupt") had said that the lobbying function of the trade group would not impact their ability to maintain human and environmental safety standards for drilling and production.
Well, apparently they lied...
API is arguing that the administration has "taken specific steps to stop or delay the development of domestic oil and gas natural resources", including:
* The Interior Department’s decision not to proceed with a Bush-era plan for leasing the outer continental shelf that would have opened broad swaths of coastal waters for oil and gas development. The Bush plan would have run from 2010 through 2015 and replaced an existing leasing blueprint that runs through the middle of 2012.
* The suspension in early 2010 of 61 oil and natural gas leases issued in Montana as part of a settlement with several environmental groups that had challenged them in court. The Bureau of Land Management ultimately lifted suspensions on 45 of the leases but maintained suspensions for six of them.
* The Bureau of Ocean Energy Management, Regulation and Enforcement decision last November to prepare a supplemental environmental impact statement for the Gulf of Mexico — effectively a post-spill update of an earlier environmental study of the region — before selling more leases there.
* Delays in the permitting of offshore drilling projects. Since new safety and environmental mandates were imposed last year, the ocean energy bureau has approved 38 new wells in shallow water and five drilling projects that were blocked by a ban on deep-water exploration.
* The State Department’s decision to do more environmental studies before choosing whether to approve the Keystone XL pipeline that would deliver oil sands crude from Alberta, Canada to Gulf Coast refineries.The State Department indicated it would make a final decision on the project this year.
Michael Bromwich, the head of BOEMRE, says his agency is moving as “expeditiously” as it can to examine proposed drilling projects and ensure they satisfy new safety mandates. Bromwich also has stressed that until recently, the oil and gas industry was unable to prove it could swiftly tame a blowout in deep Gulf waters, which is a requirement for those projects to be permitted.
Well, duh... (API's little snarky graphic is here.)
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While API is trying to convince us the President is trying to stifle our god-given right to cheap gas (safety be damned...) yet another drilling permit is granted.
Statoil received the sixth deepwater drilling permit on Friday. The Norwegian company can begin drilling a well in the Cobra prospect in the Gulf, about 216 miles off the Texas coastline, in 7,134 feet of water in Alaminos Canyon Block 810.
Again, that is deeper by more than 2000 feet than Macando 252...
The company made news in 2007 by bidding $37.6 million for the tract — the highest bid in the western Gulf of Mexico lease sale.
Statoil was close to drilling the well last year — and had a key permit in hand and a rig under contract for the work — but those plans were halted by the oil spill and the administration’s subsequent ban on deep-water exploration.
Michael Bromwich, the ocean energy bureau director, noted that this was the sixth permit issued since Feb. 17, when the oil industry proved it had equipment and resources that could swiftly trap crude at a blown-out deep-water well.
“Some say we are now proceeding too quickly; some say we are still proceeding too slowly,” Bromwich said. “The truth is, we are proceeding as quickly as our resources allow to approve permit applications that satisfy our rigorous safety and environmental standards. We will continue to do so.”
Statoil is contracted with Helix Well Containment Group to use its (as yet untested in real-world situations) equipment and vessels to capture oil in case of a blowout at the site.
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Another counterpoint to API's claims of "thwarting" oil and gas development is Gary Luquette, president of Chevron’s North American exploration and production business, who says the permitting process is not a black hole, where permits are sucked in and never seen again...
Some in the industry have charged that the Bureau of Offshore Energy Management, Regulation and Enforcement staff sat on permit applications and didn’t communicate with companies about their status. It was like a black hole, some said.
Luquette says in his experience the communication with regulators has been a constant back-and-forth as both sides try to work their way through the new rules for drilling.
The interim drilling rules implemented last year in the wake of Deepwater Horizon disaster were drafted in a hurry, Luquette notes, not through the usual rule-making process that moves much more slowly and involves many rounds of feedback.
“They were issued and the industry did not know what exactly they meant,” Luquette said.
Apparently, regulators didn’t always know what they meant, either.
BOEMRE director Michael Bromwich told the Chronicle during interviews last month his agency has never just sat on permits. In some cases industry has been slow or unwilling to file for permits, he said, though he acknowledged that at times BOEMRE field-personnel may have been reluctant to make final decisionsfor fear of the legal consequences of not making the right call.
“So you have to show them another possible answer and they would have to say ‘yea’ or nay’ before you could move on to the next question,” Luquette said. ”It was not a ‘black hole’ where you were not hearing anything. They were genuinely trying to get answers to our questions.”
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And does this sound like "thwarting" to you?
The number of oil and gas rigs drilling in the US rose by 18 this week to total 1738.
Rigs drilling for oil rose by 12 this week to total 851 while those drilling for gas rose by five to total 880, according to a report today by Houston-based oilfield services company Baker Hughes.
Texas gained 12, bringing their total to 766, while Louisiana gained eight to total 176, and Colorado gained five to total 71.
Arkansas and North Dakota each gained two to total 34 and 155, while California and Pennsylvania each gained one rig to total 42 and 104.
Wyoming lost 10 rigs this week to total 38, Oklahoma lost three rigs to total 156, Alaska lost two rigs to total six and New Mexico lost one rig to total 77.
West Virginia remained the same with 16.
'Nuff said...
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More tests to be allowed on the BOP from the Deepwater Horizon.
A federal judge on Friday granted BP PLC's request to have more tests performed on the critical safety device that failed to stop oil from gushing out of its well during last year's Deepwater Horizon disaster.
U.S. District Judge Carl Barbier, who is presiding over more than 350 lawsuits and thousands of claims spawned by the deadly rig explosion and oil spill, gave BP and other parties in the litigation until April 9 to propose protocols for another battery of tests on the rig's blowout preventer.
On Wednesday, Det Norske Veritas concluded its official examination of the device by issuing a report that said it failed because of faulty design and a bent piece of pipe.
Shall we see if Det Norske Veritas (a firm with impeccable credentials, from what I can gather) is tasked with more analysis, or will an affiliate of, say, API be told to negate everything reported earlier about design flaws by cobbing up something that proves everything is just fine... Nothing to see here. Move along, and let us get back to destroying the planet...
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It is not over in Russia as Rosneft tries to salvage a potentially lucrative Arctic drilling alliance with BP, after billionaire financiers blocked the deal.
BP and Rosneft scrambled Friday to salvage their landmark alliance after BP's Russian partners in its TNK-BP Ltd. joint venture blocked it. But it is unclear how a deal so mired in legal challenges and high-stakes Russian power struggles can now be rescued.
Rosneft still appears determined to implement its tie-up with BP, despite Thursday's decision by a Stockholm arbitration panel to effectively put it on ice. The Russian company's chairman, Igor Sechin, noted the arbitrators did not block the deal completely, but simply extended an injunction temporarily freezing it.
Sechin, who is also Russia's deputy prime minister, told Russian newswires that Rosneft was "satisfied" with BP as a partner, and was working on a series of measures to allow it "to defend its interests."
The panel's move marked a setback for the architects of the deal, Sechin and BP Chief Executive Bob Dudley, and both are bound to lose face as they seek to navigate a way out of the impasse. Some analysts worry the dispute could harm BP's overall position in Russia, which accounts for one-quarter of its global oil and gas production and close to a fifth of its reserves.
"On the face of it this looks a messy situation and one where we think BP will do well to emerge with all of its investment in TNK-BP, reputation in Russia and Arctic oil deal intact," Citigroup said in a note.
In opposing the BP-Rosneft tie-up, AAR argued that it violated their shareholder agreement with BP, which stipulates the U.K. company must pursue all business opportunities in Russia exclusively through TNK-BP. The deal was sent to independent arbitrators after AAR won a court injunction last month freezing it.
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BP Declares Force Majeure on Supplies to Libyan Refiner.
BP PLC said Thursday it has declared force majeure on supplies to Libya-owned refiner Tamoil Group and that the latter is challenging the move in a German court.
The decision by the oil company underscores how legal uncertainty over U.S. and European sanctions against Libya is starting to bite deeper into the global oil business.
Turmoil in Libya has shut down virtually all oil exports, leaving foreign oil assets and investments there in limbo.
The European Union Thursday unveiled a list of Libya-owned oil companies under sanctions, following similar designations Tuesday by the U.S. Treasury. Neither listed Tamoil, which owns refineries and pump stations in Europe, as an entity under sanctions.
A spokesman for BP said "what we need is absolute clarity on the legislation as it applies in the jurisdictions where we operate."
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