From the British Pen

A lot of folk have been trying to convince me that pension funds are dividing Americans from their friends across the pond. I think a lot of it is media driven, a common phrase I don’t use very often. Maybe I should.

If you ask me, you shouldn’t gamble with retirement. If your savings are investing, that isn’t the same as a savings account. Risk is risk. Anyhow, have fun reading the Guardian,

In the 59 days since the oil leak in the Gulf of Mexico, Hayward has been transformed into one of the most hated men in the US, and the ferocity of the encounter between him and the House of Representatives committee on energy and commerce was much-anticipated. As one committee member noted: “The anger at BP is at fever pitch. It’s almost palpable.”

The committee has been conducting an aggressive inquiry into the gusher, and called Hayward in to answer specific charges of suspected safety lapses and shortcuts in the design plan of the well in the days before the explosion on the ill-fated Deepwater Horizon rig.

But Hayward, who had been carefully coached by legal and media teams and was testifying under oath, failed to satisfy.

“The committee is extremely frustrated with your lack of candour,” Bart Stupak, who is leading the investigation told him. “You are the CEO. You have a PhD. We hope you have more candour in your responses.”

The reprimand was just a taste of the rancour towards Hayward. He was told by angry committee members that BP had a history of cavalier disregard for environmental rules and workers’ safety.

Hayward’s claims to have ushered in a new regime of safety after taking over as chief executive of the company in 2007 were plainly ridiculed.

“When I heard of the explosion in the Gulf, the name that immediately popped into my mind was BP,” said Stupak.

read more.

Holy Crap That’s a Lot of Money: 34 Billion in Fines

The Guardian reports quite a heavy bill for BP, and this may really set a buzz for the President’s fist Oval office speech tomorrow.

BP is facing a bill of up to $34bn from the Gulf of Mexico disaster after US senators demanded the oil company deposited $20bn into a ring-fenced account to meet escalating compensation costs.

The sum dwarfs many analysts’ previous estimates, shared by BP, that put the cost of the clean-up effort and payment of damages to affected communities, such as fishermen, closer to a total of $5bn.

Shares in BP nose-dived by more than 9% today as investors took fright at the demand by the 54 Democratic senators, who represent a majority in the US upper house. The company is now worth almost half what it was before the accident of just under two months ago.

BP already faces up to $14bn in civil penalties, payable under US environmental law, assuming the leak is plugged in August. These punitive damages are directly linked to the size of the spill – already estimated at being up to eight times worse than the Exxon Valdez disaster in 1989 – with BP liable for up to $4,300 for each barrel-worth spilt.

Senate leaders insisted the $20bn ring-fenced account should be exclusively for “payment of economic damages and clean-up costs” and should not be seen as a cap on BP’s other legal liabilities. With punitive damages pending too, the theoretical total of $34bn is equivalent to more than half the corporation tax paid by all British companies last year.

Tony Hayward, chief executive of BP, and other directors of the company, will meet Barack Obama at the White House on Wednesday prepared to offer concessions in the hope of taking the sting out of mounting political attacks on the company.

BP will be in “listening mode”, willing to cut its next dividend, worth about $2.5bn, possibly paying the cash into the clean-up fund. It will also reiterate its commitment to paying all legitimate claims arising from the disaster. But the company does not believe that the demand by the senators to stump up $20bn is justified.

read the rest at the Guardian

Offshore Oil Back in Business, With a Few New Rules

Looks like somebody read Gov. Bobby Jindal’s letter. President Obama is soon to announce the new rules for moderate depth off shore drilling as early as this week, lifting the freeze on coastal exploration. You may recall a spokesperson for BP this weekend called the halt on exploration sensible, but hoped for a quick prognosis and reform in order for the industry to plan for the future. The White House didn’t miss a beat. Let’s hope when it comes to the bigger depths they include a mandatory relief well to accompany production as they do in some parts of Canada. Response Coordinator Admiral Thad Allen suggested that was a good idea just yesterday.

WASHINGTON—The Obama administration, facing rising anger on the Gulf Coast over the loss of jobs and income from a drilling moratorium, said Monday that it would move quickly to release new safety requirements that would allow the reopening of offshore oil and gas exploration in shallow waters.

Gulf Coast residents, political leaders and industry officials said delays in releasing the new rules, along with the administration’s six-month halt on deepwater drilling—both issued amid public pressure—threatened thousands of jobs.

Well-owner BP PLC, meanwhile, faces penalties “in the many billions of dollars,” for the Deepwater Horizon drilling disaster that has been spewing an estimated minimum 12,000 to 19,000 barrels of oil a day into the Gulf, said White House Press Secretary Robert Gibbs. The costs of the spill will “greatly exceed” the amount BP could recoup by selling any of the captured oil on the market, he said Monday.

read more at WSJ

Take Overs, Bond Values, Stock Drops, and BP’s Future

With all this oil in the Gulf, all the terrifying pictures, footage, and reports its easy to forget the real victim here. That’s right, I’m talking about a sensitive affluent little business with a previously bright future, British Petr-  I mean Beyond Petrolium. Once the most profitable company in the entire history of the world, BP now faces stock slides, falling credit and bond ratings, and a possible death by cannibalism.

The downturn began on Tuesday, after BP’s “top kill” plan failed to block a massive leak in the Gulf of Mexico by pumping mud into the well.

But BP’s bonds continued to fall even as its shares recovered on Wednesday.

Meanwhile, rating agency Fitch has cut the firm’s credit rating marginally, and threatens further downgrades if the cost of the oil leak rises further.

Fitch cut BP’s rating by one notch, from AA+ to AA, although this is still one of its highest investment grade credit ratings.

Borderline junk

The other two main rating agencies – Moody’s and Standard & Poor’s – also still rate BP’s creditworthiness highly, at Aa1 and AA respectively.

Yet bond markets are now pricing BP’s debts at levels comparable with much riskier “junk” rated companies.

The oil company’s main five-year dollar bond was trading on Thursday at a yield of 5.5% – some 3.25% more expensive than the interest rate that the US government would have to borrow at.

Yet before the weekend, the same BP bond was trading at a yield of 3.5%, meaning its borrowing cost has jumped by 2% as a result of the failure to plug the oil leak.

One City analyst told the BBC that the bond markets’ fears made no sense, because BP has so little debt.

BP owes £14bn in total debts, whereas stock markets currently value the company at £84bn.

read more at the BBC

With a looming bills, suits, and fines to stack on the one billion dollars the company hs already spent on the disaster, and a 1-5 thousand dollar fine per barrel, one has to wonder how this company could fend off its competitors who would like nothing more to consume their business. Check out their new ad, and take a good look at it’s narratar, BP CEO Tony Hayward, because he might not be the face of the company for long.

Vow What?

After several reports of its demise, the Climate Bill is back on the burner. The president made a speech in its support today at Carnegie Mellon University . If Obama passes this one, he will be known as the President of reanimated zombie bills. Speaking of familiar, Republican support for the bill is no where to be found since Sen. Lindsey Graham backed off from Sen. Kerry’s shadow, but there are a pack of moderates targeted for swinging sides. Mentioning them, Obama said, “The votes may not be there right now, but I intend to find them in the coming months,”

While he had the microphone, he took the time to outline some of his ideas for the legislation. The President said he would like to roll back the oil tax breaks and use that money to invest in our energy independence. This is something that has been talked about during drum circles for over four decades, but this time the talk may become law in the wake of the disaster in the Gulf.

Here is an excerpt from his speech,

And the time has come to aggressively accelerate that transition.  The time has come, once and for all, for this nation to fully embrace a clean energy future.  (Applause.)  Now, that means continuing our unprecedented effort to make everything from our homes and businesses to our cars and trucks more energy-efficient.  It means tapping into our natural gas reserves, and moving ahead with our plan to expand our nation’s fleet of nuclear power plants.  It means rolling back billions of dollars of tax breaks to oil companies so we can prioritize investments in clean energy research and development.
But the only way the transition to clean energy will ultimately succeed is if the private sector is fully invested in this future — if capital comes off the sidelines and the ingenuity of our entrepreneurs is unleashed.  And the only way to do that is by finally putting a price on carbon pollution.
No, many businesses have already embraced this idea because it provides a level of certainty about the future.  And for those that face transition costs, we can help them adjust.  But if we refuse to take into account the full costs of our fossil fuel addiction — if we don’t factor in the environmental costs and the national security costs and the true economic costs — we will have missed our best chance to seize a clean energy future.
The House of Representatives has already passed a comprehensive energy and climate bill, and there is currently a plan in the Senate — a plan that was developed with ideas from Democrats and Republicans — that would achieve the same goal.  And, Pittsburgh, I want you to know, the votes may not be there right now, but I intend to find them in the coming months.  (Applause.)  I will continue to make the case for a clean energy future wherever and whenever I can.  (Applause.)  I will work with anyone to get this done — and we will get it done.

read more at the Atlantic

What Obama’s Speech Means for Shell in Alaska

ENN THRUSHJOSH GERSTEIN write for Politico,

What he said: While announcing that he was extending a 30-day moratorium on new offshore drilling for six months, Obama mentioned, almost in passing, that he was pausing plans for new test wells in Alaska. “We will suspend the planned exploration of two locations off the coast of Alaska,” he said before moving to discussion of other actions.

What he meant: You wouldn’t have known it from Obama’s presentation but his decision to block drilling in Alaska may be the most politically significant of any of the actions he took on Thursday.

A coalition of major environmental groups has been pressing the administration in newspaper and TV ads to halt the planned drilling by Shell near the Arctic National Wildlife Refuge.

The groups were watching Obama closely on this. Some analysts said they had been holding back criticism of the government’s response to the Gulf spill as they awaited word from the White House about whether the drilling planned for this summer would go forward.

“The environmental groups have been saying: if Obama allows Shell to drill, we’re abandoning his presidency. But if he says no to Shell, it’s a turning point,” said Douglas Brinkley, a presidential historian at Rice University who closely follows the environmental movement.

Postponing the Alaskan drilling, which can take place only over a short season each summer, buys Obama some time, but likely avoids the expense and legal battle of yanking Shell’s permits altogether. “He pauses the issue until after this election season. That will keep the environmental community at bay,” Brinkley said.

As recently as two weeks ago, Shell wrote to the Interior Department arguing that its Alaska plans should be allowed to proceed because conditions are “much different” than the deepwater drilling that led to the Gulf spill. Shell said it would be drilling not a mile underwater, but 150 feet below the water’s surface and that divers could intervene at that depth.

The company had a muted reaction to Obama’s move scuttling their drilling hopes for the year. “We respect and understand today’s decision in the context of the tragic spill in the Gulf of Mexico, but we remain confident in our drilling expertise, which is built upon a foundation of redundant safety systems and company global standards,” Shell said Thursday.

Read more at Politico,

Topkill Might Be Sorta Kinda Maybe Working? Part II Adding Junk

So it turns out that viewers at home marveling at how much ‘mud’ was spewing from the leak were right, apparently something wasn’t working. The force of the mud was not enough to bring down the well pressure, which is the bench mark that starts the application of concrete. They have resumed pumping the mud, but are now injecting junk, or ‘bridging material’ into the mix. They have also been introducing junk and various other jamming materials into the BOP hoping to lower the pressure that way.

So it sounds like BP wasn’t able to force the mud deep enough into the well to plug it, but due to risks they probably started this process with the lowest estimated pressures to keep the pipe intact. Let’s see what happens when they put some weight on the pedal.

CNN Wire Staff writes,

“This whole operation is very, very dynamic,” Doug Suttles, the company’s chief operating officer, told CNN’s “John King, USA.”

“When we did the initial pumping (Wednesday), we clearly impacted the flow of the well. We then stopped to monitor the well. Based on that, we restarted again. We didn’t think we were making enough progress after we restarted, so we stopped again.”

The light-brown material that was seen spilling out of the well throughout Thursday was the previously pumped fluid from the “top kill” procedure mixed with oil, he said.

read more at CNN

Require Relief Wells From the Start

It appears some countries are aware of the dangers involved in off shore drilling. Canada has a standing policy for some of these wells that require a relief well to be dug before a disaster so that during an event like the BP well in the Gulf, sealing the well via the relief would be ready at a moment’s notice. Citizens of the Gulf have already waited a month, and expect to wait until August before one of BP’s relief wells reaches the leak. Officials in Canada are currently trying to reverse such laws, but recent events may be too hard to ignore. Hopefully President Obama will announce a similar requirement today during his speech.

Paul Watson writes for TheStar,

In the western Arctic, oil companies are pressing federal regulators to ease demands for relief wells that might help avert disasters like the one unfolding in the Gulf of Mexico.

Oil firms operating in the Beaufort Sea must be able to drill relief wells, and if necessary, safely shut them down with original wells during a single Arctic drilling season.

Imperial Oil, BP, which owns the well leaking in the Gulf, and the Canadian Association of Petroleum Producers have asked the National Energy Board to suspend the regulation, which has been in effect for more than three decades.

Canadian areas of the Beaufort and the Mackenzie River delta are rich in oil and natural gas in 53 known fields. At least 183 exploration wells and 66 development wells have been drilled since the mid-1960s.

read more,

Topkill might be sorta kinda maybe working?

Reuters reports,

BP remained cautious about the outcome of the much anticipated “top kill” procedure, as did President Barack Obama, whose credibility stands to suffer if one of the country’s worst environmental catastrophes does not end soon.

But the fact that the London-based energy giant was able to launch the complex maneuver around midday and keep it on track in the first hours was a welcome respite from a string of failures and setbacks in the 37 days since a rig blast triggered the disaster.

Undersea robots were helping to inject heavy fluids and ultimately cement pumped down about a mile to the sea-bed well, while BP chief executive Tony Hayward and U.S. Energy Secretary Steven Chu monitored operations together in Houston.

“The operation is proceeding as we planned it,” Hayward said in a media briefing four hours after launching the top kill strategy.

“It will be another 24 hours before we know whether or not this has been successful,” he added.

The embattled CEO stood by BP’s 60-70 percent odds of success. But top kill, a routine procedure on the surface, has never been attempted at such depths, prompting one industry expert to predict less favorable odds.

“You have got some of the smartest guys in the business trying to figure this out, but it has never been done before,” David Pursell, partner at Houston investment bank Tudor, Pickering, Holt & Co, told Reuters Insider.

“I think the odds have to be 50 percent or less,” he added.

Obama said that if successful, BP’s plan to cap the well should greatly reduce or eliminate the flow of hundreds of thousands of gallons (liters) of crude billowing into the Gulf.

If it fails, “there are other approaches that may be viable,” he said on a trip to California.

Obama, who has told aides to “plug the damn hole,” will head to Louisiana on Friday for the second time since the April 20 rig blast that killed 11 and unleashed the oil.

If the top kill fails, the next approach would be to install a containment device over the broken blowout preventer, a structure at the top of the well on the ocean floor, said BP chief operating officer Doug Suttles said at a briefing with the Coast Guard Wednesday.

It is still unclear how much oil is flowing from the well, but it is already shaping up to be the worst oil spill in U.S. history and a long-term threat to a rich ecosystem.

The disaster is also reshaping the U.S. oil industry. Obama is expected to announce on Thursday that he will continue to hold off issuing deep water drilling permits off the Gulf of Mexico, but allow permits to be issued for shallow water drilling, a government source told Reuters.

The oil’s destruction of critical habitats continued to spread, with Louisiana Governor Bobby Jindal saying that more than 100 miles of the state’s 400-mile coastline were now affected.

PIVOTAL DAYS FOR OBAMA, BP

These days may be critical for BP and Obama.

BP’s reputation and its big presence in the United States is at stake and investors, who have wiped $50 billion off BP’s market value since the start of the spill, will watch closely to see whether the latest attempt to seal the well works.

BP shares seesawed in London trading on Wednesday, with investors boosting the share price about 2.6 percent at one point before it closed up 1.4 percent. BP’s announcement that it had launched top kill came after London markets had closed.

read more at Reuters

Topkill Underway

It looks like BP will go ahead today with it’s Topkill option in an effortt to plug the oil geiser in the Gulf of Mexico that has been leaking millions of gallons (42 gallons makes a barrel) of oil for over a month now. They plan to use ‘mud’ and concrete to create 400 tons of force to contain the leaking pipe. Bill Nye gives a pretty good description of the process on CNN.

After a congressman intervened, BP has agreed to allow the live video feed to continue as they attempt the procedure. In related news, the LA Times reports a series of health risks related to the cleanup, and a new leaked memo from BP based upon the 3 little pigs paints a picture of a company that values profits over safety.

And finally, Sen. Bill Nelson of Florida is demanding that the President seize control of the disaster response if BP is unable to perform the Topkill. Let’s all cross our fingers for the coast.

Landfall: Oil Slams Louisiana Coastline

JEFFREY KOFMAN, MATT GUTMAN, RYAN OWENS, SARAH NETTER and BRADLEY BLACKBURN write for ABC News,

The heavy, black oil that people along the Gulf Coast have feared since the start of the BP spill exactly a month ago finally has arrived on shore, Louisiana Gov. Bobby Jindal said today.

Following a boat tour of Pass a Loutre, La., today, Jindal reported seeing thick oil in the sensitive marshlands.

“The heavy oil is here,” Jindal said. “This was the day everybody was worried about, everybody was concerned about. That day is here, that heavy oil is in the marshes.”

“This was not the weathered, the emulsified oil,” Jindal said. “It wasn’t tar balls. This wasn’t sheen. … This is oil that is going to be very, very difficult for them to clean up.”

read more, and watch Gov. Bobby Jindal’s remarks

Top MMS Official Chris Oynes Steps Down

Juliet Eilperin writes for the Washington Post,

Chris Oynes, who oversaw oil and gas leasing in the Gulf of Mexico for 12 years before being promoted in 2007 to associate director for offshore energy and minerals management, informed colleagues in an e-mail that he will step down. He has come under fire from former MMS officials for being too close to the industry he regulated.

The news came as Interior Secretary Ken Salazar unveiled a series of reforms to change the way the department conducts onshore oil and gas drilling.

He said they would “establish a more orderly, open, and environmentally sound process for developing oil and gas resources on public lands. The BP oil spill is a stark reminder of how we must continue to push ahead with the reforms we have been working on and which we know are needed.”

read more at the Washington Post

‘Concept can now be considered proven,’

MSNBC reports,

Following a setback Saturday in its tube strategy to contain the flow of oil in the Gulf, BP was giving it another shot on Sunday.

Natural gas was siphoned out Saturday and then burned off when it got to the surface. Oil also entered the tube but a glitch stopped the strategy before any oil could make it all the way to the surface.

“The concept can now be considered proven,” a source close to the operation said shortly before BP said a new attempt was under way.

The fix involves guiding undersea robots to insert a 4-inch tube into a 21-inch pipe, known as a riser, to funnel the oil to a ship at the surface.

BP said Saturday it was confident its latest experiment using the mile-long tube would capture much of the oil flowing into the Gulf of Mexico.

read more at MSNBC

BP Has a Fix?

JASON DEAREN and JEFFREY COLLINS write for the Associated Press,

Oil has been spewing since the rig Deepwater Horizon exploded April 20, killing 11 people and sinking two days later. The government shortly afterward estimated the spill at 210,000 gallons – or 5,000 barrels – a day, a figure that has since been questioned by some scientists who fear it could be far more. BP executives have stood by the estimate while acknowledging there’s no way to know for sure.

BP said Sunday it had a glimmer of success in its latest effort to stem the leak. The company said engineers used a mile-long tube to funnel some oil to the surface from the gushing well before it became dislodged.

In a news release, the company said it halted the process early Sunday after the setback, but a tanker at the surface managed to capture some oil and gas brought up by the tube. Engineers were trying Sunday to get the tube to work again deep beneath the ocean.

read more

Some Call it Groundhog Day… We Call it WHEN HISTORY ATTACKS!

Lots of things get recycled. Like our historical amnesia.

From Timothy Egan in the May 5 New York Times‘ Opinionator:

On energy, amnesia is the American way. Things lumber along, 300-million-year-old fossil fuels are pulled from deep inside the kingdoms of desert despots and shipped to our shores. It’s slow-motion suicide, of sorts, to the planet — and I’m no worse or better than anyone else who uses oil for everyday comforts — but we don’t see the wounds until a spill brings it all home.

Totally. As you may remember from our About Us page,

Santayana said: “Those who do not learn from history are doomed to repeat it.” This may be truer for America than anywhere else, because we pride ourselves on dismissing the past, moving forward, progress. In America, the past just gets in the way, and has to be torn down like an old building.

We think this time is different. This time, the past has blocked our way, and is threatening to tear us down instead. We chronically bubble our economy, import our energy and use it inefficiently, and waste our water resources.

Egan is absolutely right when he says:

Suddenly, alarms are sounded. Brows are furrowed. Promises are made. This time, with fears that the Gulf spill will be even larger than the one in Alaska, lessons will be learned, yesiree. But soon enough, we’ll go back to planting trees on Earth Day, feeling good about recycling — Hooray for us! We’re green and cool — while resuming the old routine. That is: a nation with five percent of the earth’s population consuming about 23 percent of the world’s oil output, glug, glug, glug.

That’s what we said:

But crisis is nothing new to Mankind: every couple of generations, the same portents of Apocalypse gather – only to be swept under the carpet when the warnings of imminent destruction are perceived to be from the radical fringe, crying wolf.

Let’s face the music and dance.

But don’t fret! You and Timmy are the lucky ones – now there a lot more ways to make things go.

Oceans’ Chemistry Changing Rapidly

The fish might need these one day.

Not too long ago we reported that the oceans are farting out a lot of methane. Today’s special Earth Day report confirms that the chemical makeup of the world’s oceans is changing – fast – because of  increased CO2 absorption from the atmosphere.

The pH of the oceans is declining, i.e. our seas are growing more acidic. In fact, since the Industrial Revolution to today, the rate of increasing acidity is greater than at any time in the last 800,000 years. And that’s really bad news for coral, and for photosynthesis.

The full story in the AP is located below the fold, since the story comes to me over Yahoo!’s network, and it destroys links after a certain time.

Continue reading “Oceans’ Chemistry Changing Rapidly”

Go Ahead, it’s your Earth Day

It’s kind of a silly holiday to our minds, especially when the New York Times – of all the things it could report – concentrates on the fact that at 40, Earth Day has reached its middle age and is focusing on making a profit.

“This ridiculous perverted marketing has cheapened the concept of what is really green,” said Denis Hayes, who was national coordinator of the first Earth Day and is returning to organize this year’s activities in Washington. “It is tragic.”

Do us a favor. Keep away from the tribal drum circles, forget about the Earth Day Brand green plushie tree-frogs, and don’t feel deliriously enthusiastic that PepsiCo is installing recycling kiosks around Manhattan for its plastic bottles. We’ve now got an Atlantic plastic vortex to compete with the Pacific version.

No, what we want you to do this Earth Day is rummage in your sock drawer, get your loose change together, and invest in something like wind turbines. That’s the economics of Earth Day we want to see.