Topics: This is so wrong - the foxes (the lobbyists of the American Petroleum Institute) are really going to be allowed to guard the henhouse? Federal investigation re: allegations of possible stock manipulation/insider trading perpetrated by BP officials before and after the Deepwater Horizon blowout. The push is on to speed up drilling, and it's not the GOP. Cameron International says don't let BP investigate the BOP. US approves first floating oil storage facility in the Gulf. Royal Dutch Shell may have its eyes on buying BP. And finally, eljefebob explains why we must be adults when discussing energy, especially nuclear power.
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| This is so wrong on a hundred different levels...and exactly what got us into trouble with the old Minerals Management Service.
The American Petroleum Institute establishes safety division to police offshore drilling.
If you watch television, you have seen the smarmy blonde telling us how absolutely wonderful the oil and gas industry is - how many jobs it creates, and how is makes our lives so comfortable and snug. Well, boys and girls, the American Petroleum Institute is the "third party" designated by the BOEMRE to oversee safety issues in oil and gas drilling. That's right, they are the unbiased entity that will protect us from blowouts and environmental degradation.
API President Jack Gerard said in a statement the center would “promote the highest level of safety for offshore operations, through an effective program that addresses management practices, communication and teamwork.”
Details on how the institute will be staffed and funded are still under discussion, according to an API spokesman, but it will most likely have its own full-time staff and offices and won’t be housed with one of the many local member companies.
The institute would be subject to independent, third-party auditing and verification to ensure its integrity, API said.
The safety institute was one of many recommendations made by The Presidential Spill Commission earlier this year, although API has said it started looking at the issue itself soon after the spill.
This is not to be believed. This begs sanity. The safety division is to be "walled off" from the trade group's lobbying interests? This seems as impossible as being a little bit pregnant. API will do the hiring of the "safety" personnel, so the division will, of course, be laden with paid shills for the industry.
Spill panel co-chairman William Reilly personally championed the idea of a safety institute independent from existing industry groups like API because of the potential conflict of interest.
“In our view it’s very difficult for the institute to play the role we envision if it’s also involved in advocacy,” Reilly said in an interview in Houston earlier this year. “API’s history of taking positions contrary to those who want to have higher standards or more rigorous regulation would naturally make if very difficult to have full confidence in its evaluations of its own members.”
But the oil industry resisted the stand-alone model from the beginning. In hearings API and others argued what works for the nuclear industry – which has just 104 reactors around the country — might not be well suited for the offshore drilling industry which has thousands of operators, contractors and suppliers working on hundreds of constantly changing work sites.
Reilly praised the creation of the safety institute in a prepared statement on Thursday, but he didn’t address the independence issue.
Frances Ulmer, a panel member and chancellor of the University of Alaska at Anchorage, said she can understand why some in the industry wanted to keep the institute tied to API.
A standalone institute might have been difficult to fund and challenged at attracting full participation and buy-in from companies.
“But you know that old saying, ‘the proof is in the pudding’? That’s what it will be,” said Ulmer. “Over time it will become clear to the people in the industry, to the public, to regulators, to the media whether or not this is a successful approach.”
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A small editorial comment... This story is one of the reasons why the Gulf Watchers are still doing what we are doing. You would never see the API story in the mainstream media. I don't think it even hit the AP or Reuters. It was buried in the FuelFix section of the Houston Chronicle.
But now you know. That is why we are still here.
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A Federal probe is looking into BP's spill reports for signs of insider trading.
Federal authorities have actually gone to the homes of BP officials over the past several weeks to question them on what they knew about how much oil was gushing from the blown-out Macando 252, and how their knowledge seemed to differ from what the government and the public were being told. President Barack Obama had said that BP had not been "fully forthcoming" about the amount of the spill, and congressional investigators uncovered documents showing that BP, while telling the public that 1,000-5,000 barrels were escaping each day, actually knew that as much as 14,000 barrels could have been coming out every 24 hours.
Government scientists eventually determined the flow reached as high as 62,000 barrels a day. The amount of oil released is a defining factor in how much BP and the companies involved in the spill can be legally and financially liable. The difference has apparently piqued the interest of Justice Department Criminal Division investigators. Giving false statements to a federal agency is a felony, carrying a possible five-year sentence.
Two sources familiar with the Justice Department's investigation say the feds have been trying to determine if BP officials used their knowledge of non-public information about the spill to engage in illegal insider trading.
BP itself has acknowledged for months in public securities filings that the Justice Department and the Securities and Exchange Commission are "investigating securities matters arising in relation to the incident."
There are no public records indicating that BP executives took advantage of inside information to beat the stock market, where BP shares lost more than half their value in the six weeks after the April 28 disclosure that BP's initial estimate of a 1,000-barrel-a-day spill was wrong. But major BP investors allege in a civil case in Houston that the company low-balled the spill's effects to artificially buttress the stock price.
The interest in possible manipulation of BP's stock price after the April 20 spill may be part of a major change last week in the way that Justice is running its criminal and civil probe of the incident.
Separate class-action lawsuits in federal court in Houston by some of BP's largest investors allege that BP leaders manipulated stock prices after the Deepwater Horizon oil rig exploded, but they do not accuse the insiders of taking advantage with their own stock trades.
The states of New York and Ohio have taken the lead in that case because of the large investments in BP stock made by their public employee pension funds. They claimed in a complaint last month that BP officials made a series of public statements in April and May 2010 that low-balled the amount of oil gushing from the well, which in turn artificially propped up the company's plummeting stock price.
They also allege that before the April 20 incident, BP leaders made false statements to investors overstating the safety of the company's operations. The New Orleans Employees' Retirement System and the Louisiana Municipal Police Employees' Retirement System lead what's called a shareholder derivative lawsuit against 17 BP insiders. Mark Lebovitch, an attorney representing the plaintiffs in that case, said the Louisiana police pension fund held around 400,000 shares of BP stock at the time of the spill.
BP declined to comment and Justice and the SEC declined to confirm or deny that such an investigation exists.
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Feds push stricter timeline to speed up drilling, taking a "use it or lose it" approach to current leases. The measure promoted by Sens. Robert Menendez of New Jersey, Charles Schumer of New York and Bill Nelson of Florida,would impose the new $4-per-acre fee on leases that are not being developed.
The director of BOEMRE, Michael Bromwich, said the approach could make companies move more quickly.
Options include shortening the term of offshore leases — which is customarily 10 years — and lowering the royalty rates that companies pay for production that happens early on.
“With a shorter period of time, there is obviously incentive for them to do it faster,” said Bromwich. “Another possibility we have talked about and explored is changing the royalty rate and charting a lower rate if the property is developed very quickly.”
Under that scenario, Bromwich said, companies would still pay an annual rental rate while a leased area is not developed — as they do now. But to encourage quicker producers not to let the leases sit idle, “you could reduce the royalty rate in the first couple years of development.”
Other options also could be on the table, as the Interior Department conducts a broad review at the request of the White House of how many federal oil and gas leases are undeveloped.
Although 41 million acres of public lands now are leased for oil and gas development, just 12 million acres are producing. Offshore, 38 million acres of the outer continental shelf are leases for oil and gas drilling, but just 6.5 million acres are producing.
Oil industry leaders who oppose the proposed $4-per-acre fee say they already have plenty of incentives to diligently develop the acreage they are renting from the federal government, including existing rental rates they pay on undeveloped leases and the time limit imposed by their leases.
President Barack Obama announced the Interior Department probe at a March 11 news conference on oil prices; he set a March 25 deadline for the study.
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Cameron: Don't allow BP to test blowout preventer.
The maker of the blowout preventer that failed to stop last year's Gulf oil spill says oil company BP shouldn't get access to the device to conduct its own testing.
Cameron International says in federal court papers Wednesday that if any more testing is done, a neutral third-party should do it, not one of the defendants in lawsuits over the disaster.
BP requested March 8 to do its own testing to help determine why the blowout preventer didn't work as intended during the April 20 oil rig explosion. The U.S. Chemical Safety Board previously objected to the government's decision to halt its official testing.
Investigators who oversaw the testing in New Orleans have said a report by the firm that conducted the tests is expected to be submitted by Monday.
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The Interior Department has given final approval for Brazilian-based Petrobras to use the first ever deepwater floating production storage facility in the Gulf of Mexico.
The floating facility has a daily production capacity of
80,000 barrels of oil and 16 million cubic feet of gas. It can be disconnected and moved out of the path of a storm, unlike permanently moored production platforms, preventing long-term supply disruptions because of storms.
"These regulatory approvals pave the way for safe, new production of oil and gas resources in the Gulf of Mexico," said Michael Bromwich, who heads the department's agency that oversees offshore drilling.
Such vessels are common for offshore production in other countries without seabed pipelines to transport oil and gas to shore, such as West Africa and Brazil. Petrobras has a fleet of them off Brazil's shores, and Exxon Mobil uses one of the largest units in the world at one of its fields in offshore Angola.
Gulf operators so far have had little use for the units because the basin has such an extensive pipeline network. Even companies that operate in deeper waters where that network doesn't reach have had new pipelines built that hook into an established system, such as Royal Dutch Shell's Perdido project.
Cascade-Chinook is 165 miles off the Louisiana coastline in 8,200 feet of water, while Perdido is 220 miles south of Galveston in 8,000 feet of water.
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Beleaguered BP could make a tempting target for Royal Dutch Shell.
From the Telegraph/UK - Peter Voser, the chief executive, earned £4.8m in 2010, four times as much as his rival Bob Dudley at BP.
But then the companies' fortunes could not have been more different over the past couple of years. BP workers were killed yet again after a fatal safety lapse and the company's Macondo well created a fissure in the earth's surface that spewed pollution into the Gulf of Mexico.
BP's shares have underperformed the All Share by 60pc as a result while Shell has lagged by 22pc, although it has outperformed its oil peers by 9pc. BP has underperformed the same group by 30pc. Shell's total market capitalisation across its two classes of share is £132bn and BP £86bn - a gap I doubt Dudley will close in his time as chief executive and it will be beyond his successor too.
Only a self inflicted disaster by Shell will change that. Shell had its moment back in 2004 with its reserves scandal but from 2005 embarked on a reconstruction involving a big increase in investment. Those projects are beginning to flow through now but Voser is keeping his foot firmly on the floor with $1bn in cost savings by the end of next year and $100bn of investment over the next three years to secure growth through to 2020.
These are ambitious plans but the company is enjoying huge cash flow benefits from strong crude prices so can afford it and such re-investment should be encouraged. Political upheaval in the Middle East and the constant threat of natural disaster, as we've seen in Japan, make it all the more urgent to secure energy supplies.
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And from the Daily Hurricane, and our own eljefebob, Bob Cavnar...
The Adult Conversation About Nuclear Power Needs to Start.
The earthquake and resulting tsunami in Japan shocked us this weekend as we watched with horrified fascination as walls of water destroyed thousands of homes and killed countless people. In a country that experiences dozens of earthquakes a year, this particular disaster was beyond any scale ever contemplated by the compulsively disciplined and always prepared Japanese people, but they never lost their stoic presence and seemingly unlimited patience even as their well ordered lives and basic services disappeared before their eyes. That stoicism, though, has begun to fade as the nuclear disaster at the Fukushima Daiichi plant continues for a a sixth day. Evacuations of the area around the plant have now spread to 20 kilometers with warnings out to 30 kilometers. As the reality of the unfolding disaster became apparent, many people fled as far as Tokyo to escape the still developing crisis.
~snip~
Here's our particular problem: The United States, through weak leadership, short sightedness caused by our 2 year re-election cycle and the influence of corporate money, has utterly failed to establish a long term vision for our energy future. Band aid solutions, special interest legislation, and poor judgement have taken us into the 21st century with 60 to 100 year old technology and energy sources, and no one has the courage to call this insanity, well, insanity. The result is predictable, clearly demonstrating that our dependence on foreign oil from countries who hate us is suicidal. The ongoing unrest in Egypt, Bahrain, Libya, and even Saudi Arabia has highlighted this risk. Our dependence on oil has driven us into the deepwater of the Gulf of Mexico and into the Arctic to feed our gluttony. At the same time, de-regulation and industry complacency led to the inevitable result of the blowout of the BP Macondo well and the ongoing environmental catastrophe that the media and politicians are happy to ignore.
~snip~
So what do we do? This is where being an adult comes into play. As adults, we need to consider that our world has limited resources, limited atmosphere, and limited space. And it's getting more crowded and dirty. Hydrocarbons simply can't fill all of our energy need. Renewables can't fill enough of our energy need. Natural gas, which is becoming more abundant, has become a great answer for a lot of our needs, but for the long run we still need non-carbon based energy to make our hydrocarbon resources last longer and be more environment friendly. Nuclear fills that place, but clearly we're not to the point where it is fool-proof safe.
Call your Congressperson, your Senator, your Governor, and your mayor. Tell them you want a comprehensive energy policy that's neither Drill, Baby, Drill, or sticking their heads in the sand. Only when pressure from the People is unrelenting will they perhaps get off their collective backside do something courageous. They won't do it by themselves.
Please go the The Daily Hurricane and read the entire piece. It is a righteous rant...
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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:
The last Mothership has links to reference material.
Previous motherships and ROV's from this extensive live blog effort may be found here.
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