Drilling Santa Fe

Monday, June 21, 2010

Show Me the Oil Money

Posted by Charles Ellison in The District4 hours ago

"In the wake of controversial comments made by Rep. Joe Barton (R-TX) during a recent House Energy and Commerce subcommittee hearing, angry partisan reactions from both Democrats and Republicans on Capitol Hill were expectedly fierce. But the senior Texas Republican’s open apology to British Petroleum (BP) Chief Executive Officer Tony Hayward also threw a glaring spotlight on the influence of campaign contributions from the oil and gas industry in Washington. The ranking Republican member on the House Committee overseeing regulation of the energy industry issued an unusual apologia to Hayward during the embattled CEO’s testimony before irate legislators probing the Gulf of Mexico oil spill. Barton, before a standing room only crowd of staffers, spectators and journalists, described the Obama Administration’s recent deal with BP to pay $20 billion for an oil spill victim escrow fund as “… a shakedown.”

“I’m ashamed of what happened in the White House,” Barton said in opening remarks to an otherwise subdued Hayward. “I think it is a tragedy of the first proportion that a private corporation can be subjected to what I would characterize as a shakedown. I apologize. I do not want to live in a country where anytime a citizen or a corporation does something that is legitimately wrong is subject to some sort of political pressure that is, again, in my words, amounts to a shakedown. So I apologize.”

While reactions to Burton’s apology were immediate, as swift were the reactions of many political observers who noted the Texas Congressman’s ties to big oil. “Ordinarily, it’s not that shocking to see a Republican from Texas defend the petroleum industry,” says Nate Silver, a political polling analyst and founder of FiveThirtyEight.com. “But Rep. Barton’s comments to Tony Hayward obviously touched something of a raw nerve, with Republicans seeking to distance themselves from the comment while Democrats look for ways to exploit it.”' More>>>>

New Mexico v. Val Kilmer: Payback Time

(Image: Associated Press: Alleged trash talk is holding up a permit Val Kilmer wants for his ranch.)

(Edit, June 22, 2010: The irony of this article is that San Miguel County "backed up" the locals on these allegations cited, but did not back up the citizens to be on the San Miguel County oil and gas task force. See related San Miguel County posts below.)

Wall Street Journal
June 21, 2010
By STEPHANIE SIMON

"Bygones are not always bygone amid the limestone cliffs and piñon groves of northern New Mexico.

When actor Val Kilmer recently applied for permits to turn his 6,000-acre ranch outside Santa Fe into an upscale bed-and-breakfast, several of his neighbors protested.

They weren't worried about traffic or noise or the prospect of intruding tourists. They were incensed about comments attributed to Mr. Kilmer in magazine articles dating to 2003 and 2005. And they didn't want him to get his way on the ranch unless he apologized.

"That's all he has to do, come and apologize," said Jose Garcia, who runs horses on a 50-acre ranch next to Mr. Kilmer's. "We're not intimidated by him."

Mr. Kilmer, who starred in "Tombstone," "The Doors," "Batman Forever" and, more recently, "MacGruber," was quoted—misquoted, he says—describing his rugged corner of New Mexico as "the homicide capital of the Southwest."

He went on to avow that "80% of the people in my county are drunk," requiring him to carry a gun for protection. That was in a 2003 interview with Rolling Stone.

In Esquire two years later, Mr. Kilmer was quoted—again, misquoted, he says—opining that he understands Vietnam better than its veterans, because most of them were "borderline criminal or poor … wretched kids" who landed in the military because they "got beat up by their dads" or "couldn't finagle a scholarship."

At a hearing last month on Mr. Kilmer's application, a half-dozen locals and veterans demanded the star apologize before being allowed to welcome paying guests onto his Pecos River Ranch. The county attorney, Jesus Lopez, backed them up. Mr. Kilmer's quotes were "incendiary" and, dated as they may be, created a "clear and present danger threatening public safety," he said.

Taken aback by the outrage, the San Miguel County Commission opted to postpone debate on the permits. The next day, Alex Tafoya, the planning and zoning director, wrote Mr. Kilmer's ranch manager to explain that "your application will remain tabled until Mr. Kilmer appears personally before the Board of County Commissioners" to answer questions about his alleged remarks.

Commissioners later clarified they weren't demanding the star appear in person. That is beyond their legal powers. But they suggested it would help his cause if he'd stop by.

"It's a situation that's pretty volatile," said David Salazar, the commission chair. "The opportunity is there for him to come and set the record straight."' More>>>>

San Miguel County is targeted for exploratory drilling. See related San Miguel County and County Commissioners posts:

Panel's makeup in dispute

Letter: A defining time for the area (San Miguel County NM)

San Miguel County Oil & Gas Ordinance Task Force

Susana Martinez running for Governor by bashing the Santa Fe County Oil and Gas Ordiance & the OCD Pit Rule?

(San Miguel) County enacts drilling moratorium

San Miguel County Board of County Commissioners Pass Oil and Gas Drilling Permit Moratorium

(San Miguel) County Wants Drilling Rules

(San Miguel) County moves toward oil and gas moratorium

ONE-YEAR MORATORIUM ON THE EXPLORATION AND EXTRACTION OF OIL AND GAS IN SAN MIGUEL COUNTY?

(San Miguel) County wants oil and gas regulations

Santa Fe (Oil and Gas) Opera Pork to be Frozen?

Opera Chic: Santa Fe Opera Drill for Young Singers

Possible drilling enrages some

Drilling lease gets Santa Fe Opera in hot water

Apparent Santa Fe Opera Standard Email Response

Rio Arriba County vs. Wildcatters

Lucrative Deal Has Sparked Criticism

Sunday, June 20, 2010

The Daily Show -- Josh Fox Director, "Gasland"

The Daily Show
Comedy Central

June 21, 2010
Guest, Josh Fox, Director, "Gasland"

Read his bio

Watch the trailer

"The writer and filmmaker discusses his latest documentary about the environmental and social impact of the largest natural gas drilling boom in history."

Drill, Baby, Drill Video

Click the play button(s) above or double click on video for link.

Markey: Internal BP Document Shows Worst Case Scenario for Spill Could Be 100,000 Barrels Per Day

The Select Committee on Energy Independence and Global Warming

Rep. Edward J. Markey, Chairman

"WASHINGTON (June 20, 2010) -- Today Representative Ed Markey (D-Mass.) released an internal BP document showing that the company's own analysis believed that a worst-case scenario, based on damage to the well bore, could result in 100,000 barrels of oil per day.

In the document, BP stated: If BOP and wellhead are removed and if we have incorrectly modeled the restrictions – the rate could be as high as ~ 100,000 barrels per day up the casing or 55,000 barrels per day up the annulus (low probability worst cases)

To read the document, CLICK HERE."

Link to website>>>>

Oil spill: BP to sue partner in Gulf oil well

Telegraph
Legal action aims to share clean-up costs as Anadarko is accused of 'shirking' responsibilities over spill
By Rowena Mason and Damian Reece
Published: 10:34PM BST 19 Jun 2010

"BP is preparing to sue its main partner in the leaking Gulf of Mexico oil field for its share of clean-up costs after the company, Anadarko, said BP's behaviour revealed "gross negligence" and that the accident was preventable.

In a fundamental split between the two companies with lead responsibility for the well, a senor BP source told The Sunday Telegraph that Anadarko was "shirking its responsibilities", not accepting its liabilities and that legal action in the US was now likely to follow.

Anadarko, which has a 25pc stake in the well, signalled this weekend that it will refuse to pay up.

BP has already sent the company one demand for payment but, the BP source said, had yet to receive any costs for the multi-billion dollar clean-up operation.

Jim Hackett, Anadarko's chief executive, launched a damning attack on BP, the majority owner and operating partner, alleging there were signs of "gross negligence or wilful misconduct".

"The mounting evidence clearly demonstrates that this tragedy was preventable and the direct result of BP's reckless decisions and actions," said Mr Hackett. "BP's behaviour and action is likely represent gross negligence or wilful misconduct."

Mitsui, the 10pc owner of the well, has made no decision on whether to admit liability for its share of costs, but is likely to join Anadarko in its refusal to contribute. BP could then also take legal action against that company as well." More>>>>

~~~ Poor, Joe. To whom does he apologize now? Oil and gas companies suing each other. Say it ain't so, Joe.

Anadarko considers suing BP over ‘reckless’ actions

Saturday, June 19, 2010

Stephen Jones: Stand Up Against the Oily Black Tide

Democracy for New Mexico
June 18, 2010
"This is a post by contributing writer, Stephen Jones, who is a progressive political activist and a resident of Las Cruces, New Mexico."

Excerpt:

"At the heart of this concern for BP and other too-big-to-fail multi-national corporations are the very insidious philosophies that Benjamin Franklin and the rest of our nation’s founders warned us about. Rather than representing the voters that elected them to serve in a representative form of government, the GOP has sold its soul to the unaccountable international corporate-combines that own them and grease the pockets of their willing puppets with obscene amounts of cold cash. To paraphrase GOP leader Grover Norquist, we are in mortal danger of the Republican Party drowning our cherished democratic republic in a bathtub." Link>>>>

See related post:

Oil & Gas Extremists Attack Obama, et. al. and Defend BP

EXCLUSIVE: BP Funds Front Group Claiming Oil Spill Jobs Are Better Than ‘Normal’ Ones, Storm Will Clean Up Oil

Think Progress
By Lee Fang, June 18, 2010, 4:10 pm

"Shortly after BP’s catastrophic oil spill in the gulf, the New York Times spoke to Quenton Dokken, the executive director of the Gulf of Mexico Foundation, about the environmental impact. “The sky is not falling,” Dokken told the paper, adding “it isn’t the end of the Gulf of Mexico.” ProPublica dug into the Gulf of Mexico Foundation, and reported that the Times had failed to disclose that Dokken and his group are funded by a consortium of oil companies with business in the gulf, including companies involved in the Deepwater Horizon rig, Transocean and Anadarko. Today, the Times reported that the Foundation has been downplaying effects of the spill, possibly because of its funding from oil companies.

ThinkProgress has obtained more documents and evidence that the Gulf of Mexico Foundation has operated as a front for the oil companies involved in the spill. In addition to Transocean and Anadarko, this 2008 “Guardians of the Gulf” award ceremony hosted by the Foundation shows that BP is also a “CEO council member” of the nonprofit. View a screenshot here" and above. More>>>>

Oil & Gas Extremists Attack Obama, et. al. and Defend BP

GOP House candidate rips Luján for 'assault' on BP
Steve Terrell | The New Mexican Posted: Friday, June 18, 2010

"U.S. Rep. Joe Barton, R-Texas, caused a big stink in Congress this week when he accused President Barack Obama of "shaking down" BP for damages caused by the terrible oil spill in the Gulf of Mexico. Even Republican Congressional leaders winced, forcing Barton to apologize for using the word "shakedown."

But here in New Mexico, Republican Congressional candidate Tom Mullins said in an interview Friday that Barton's controversial statement had some valid points.

While he didn't use the word "shakedown," Mullins, a Farmington oilman, stood by recent comments he made in his campaign blog in which he accused his opponent, U.S. Rep. Ben Ray Luján, of "personally reaching into the pockets of corporations" because Luján was one of 40 members of Congress signing a letter demanding BP not pay shareholders dividends this year.

"Luján's words and actions along with this administration have not been helpful to the people on the Gulf Coast nor the many New Mexicans who are shareholders in British Petroleum (BP)," Mullins wrote.

Earlier this week, at a meeting with Obama, BP executives agreed to set aside $20 billion for damage claims from the Gulf of Mexico oil spill. Tens of thousands of barrels of oil a day have been spilling into the Gulf for nearly two months from a BP well that exploded. " More>>>>

Another of Mullins' fringe ideas:

"But political inexperience can rear its ugly head and did so this week for longshot 3rd Congressional District candidate Tom Mullins. Mullins, in a May radio interview, suggested putting land mines on the border to stop illegal immigration, saying it is something that he heard.

Democracy for New Mexico has the audio, and the transcript is below the fold. Mullins quickly realized that he had went too far and backtracked, but it shows what happens when unvetted and unknown candidates make gaffes.

It also shows the dangers of playing too much to the fringe of your base. There have been suggestions about putting mines on the border, but never from a candidate for Congress (at least not in my knowledge). It's usually something that is reserved for anonymous internet chatroom people and commenters on internet stories." (Tom Mullins' landmines-on-the-border proposal FBIHOP by: Matt Tue Jun 15, 2010 at 18:19:04 PM MDT)

~~~ It is bewildering since post financial deregulation and subsequent Lehman's bankruptcy and financial crisis, and post the Energy Act of 2005 that subsidizes the oil and gas industry while exempting the industry from many regulations and the subsequent BP disaster, extremists are jumping into the political arena to promote deregulation and extol the virtues of corporatism. In such a climate, Adam Smith would be branded a Socialist.

Related post:

Anadarko considers suing BP over ‘reckless’ actions

Friday, June 18, 2010

Anadarko considers suing BP over ‘reckless’ actions

FT.com
By Sheila McNulty in Houston
Published: June 19 2010 00:39 | Last updated: June 19 2010 00:39

"Anadarko Petroleum, which owns 25 per cent of the ruptured oil well in the Gulf of Mexico, on Friday accused BP of “reckless decisions and actions” and indicated it might sue for actions that it said “likely represent gross negligence or wilful misconduct”.

Anadarko is responsible for 25 per cent of the clean-up costs. Yet while those costs are more easily absorbed by BP, which had revenues of $239bn last year, they could be significant for Anadarko, with revenues of $9bn. Moody’s, the credit rating agency, yesterday cut its rating on Anadarko to junk status and indicated that it could cut further owing to uncertainty over the costs it would incur from the spill.

EDITOR’S CHOICE

BP chief quits role in oil leak response - Jun-18

In depth: BP oil spill - Jun-18

Interactive timeline: BP disaster - Jun-18

Editorial Comment: A clean-up that goes beyond BP - Jun-18

Christopher Caldwell: Too high on oil to hear Obama - Jun-18

Personal Finance: BP alternatives - Jun-18

“The mounting evidence clearly demonstrates that this tragedy was preventable and the direct result of BP’s reckless decisions and actions,” said Jim Hackett, Anadarko’s chief executive.

BP said it “strongly disagrees” with Anadarko’s statement.

“These allegations will neither distract the company’s focus on stopping the leak nor alter our commitment to restore the gulf coast,” said Tony Hayward, BP’s chief executive.

Anadarko has signaled several times that it may take action to limit its liabilities and did so again." More>>>>

~~~ Does this mean that US Representative Joe Barton (TX) will apologize to BP about Anadarko, too? In fact, he could make a career apologizing to BP....

An interesting fact from the Washington Post relating to US Rep Joe Barton published in the same year as the infamous "Dick Cheney lobbyist energy bill," as referred to by Hillary Rodham Clinton -- the Energy Act of 2005: "Since 1997, oil, gas, electricity, nuclear, coal and chemical companies have contributed $1.84 million to Barton, more than to any other House member. In the 2000 and 2004 elections, these same energy interests gave Bush $9.2 million, more than to any other presidential candidate." -- Washington Post (April 13, 2005)

House members spar over BP fund at hearing

Is Using Dispersants on the BP Gulf Oil Spill Fighting Pollution with Pollution?

Scientific American
June 18, 2010

"Roughly five million liters of dispersants have now been used to break up the oil spilling into the Gulf of Mexico, making this the largest use of such chemicals in U.S. history. If it continues for 10 months, as long as Mexico's Ixtoc 1 blowout in 1979 in the same region, the Macondo well disaster has a good chance of achieving the largest global use of these chemicals, surpassing 10 million liters.

And there is no doubt that dispersants are toxic: Both types of the dispersal compound COREXIT used in the Gulf so far are capable of killing or depressing the growth of a wide range of aquatic species, ranging from phytoplankton to fish. "It's a trade-off decision to lessen the overall environmental impact," explained marine biologist Jane Lubchenco, director of the National Oceanic and Atmospheric Administration (NOAA), at a press conference on May 12. "When an oil spill occurs, there are no good outcomes."

The trade-off in this case is the addition of toxic chemicals in a bid to protect the marshes of Louisiana and the beaches of Florida. But the U.S. Environmental Protection Agency (EPA), for one, has become concerned about the toxicity of the most-used dispersant at the Gulf of Mexico spill—COREXIT 9500—and ordered BP to look at alternatives. (COREXIT 9527 was used earlier during the spill, but it was discontinued because it was considered too toxic.)

The problem? The EPA's industry-generated data is unclear as to the relative toxicity of various dispersants. "If you think the data on COREXIT is bad, try to find any decent toxicology data on the alternatives," says toxicologist Carys Mitchelmore of the University of Maryland's Chesapeake Biological Laboratory, who helped write a 2005 National Research Council (NRC) report on dispersants. "I couldn't compare and contrast which one was more toxic than the other based on that."' More>>>>

Global military spending to outpace GDP growth in 2010

June 18, 2010, 1:58 p.m. EDT

Last year marked another budget-busting record; U.S. accounts for lion's share

By Christopher Hinton , MarketWatch

"NEW YORK (MarketWatch) -- Global military spending for technology, fighter aircraft, tanks, guns and combat boots surged 49% in the last decade and shows few signs of slowing down despite economic weakness in the most developed nations, a study indicates. "...

..."Correlation of oil and armaments

Along with the U.S. conflicts in Afghanistan and Iraq, the rising price for oil and gas also helped to drive spending growth in emerging economies since 2000. Natural resources provide a direct source of income to a government that can be easily spent on arms, unlike tax revenue form the general population, which could carry a higher political risk.

"The Middle East has for a long time been the region with the highest level of military expenditure relative to GDP in the world," according to a Sipri report.

"This is a factor of the high level of conflict in the region and the low level of democracy but also, arguably, the vast oil revenues enjoyed by many countries in the region. However, in recent years increasing oil revenues in other parts of the developing world have also been accompanied, in many cases, by rapid increases in military spending and arms imports."

The oil- and gas-producing state of Chad saw its military spending skyrocket 663% in the last decade, while former Soviet state Azerbaijan's military budget grew 471% and Kazakhstan's rose 360%, albeit off of low levels.

A downturn in oil and commodity prices in 2009 slowed the rising trend somewhat. But military spending among such countries should continue as energy prices remain highs, particularly if those countries are in regions of high political tension." Article>>>>

Thursday, June 17, 2010

U.S. Rep. Joe Barton apologizes to BP CEO for '$20 billion shakedown'

The Dallas Morning News
10:46 AM CDT on Thursday, June 17, 2010

By MELANIE MASON / The Dallas Morning News
mmason@dallasnews.com

"WASHINGTON – Rep. Joe Barton , R-Arlington, apologized to BP CEO Tony Hayward on Thursday morning for the "political pressure" his company is facing.

Barton condemned the White House's handling of a meeting Wednesday with BP officials, in which President Barack Obama pushed the company to create a $20 billion escrow account for damage claims from the Gulf of Mexico oil spill. The congressman called the account a "slush fund."

Barton made the remarks at a House Energy and Commerce committee hearing that is ongoing. Hayward is before the committee to testify about his company’s handling of spill.

"I am ashamed of what happened at the White House yesterday," said Barton, the top Republican on the committee. "It is a tragedy in the first proportion that a private corporation can be subjected to what I would characterize as a shakedown – in this case a $20 billion shakedown."' More>>>>

House members spar over BP fund at hearing

MarketWatch
June 17, 2010, 10:41 a.m. EDT

By Steve Gelsi

"NEW YORK (MarketWatch) -- Members of a House Energy subcommittee on Wednesday sparred over the $20 billion escrow fund that BP PLC (BP 31.96, +0.11, +0.35%) agreed to set up for victims of the Deepwater Horizon oil spill. Joe Barton, R., Texas, said the fund amounted to a "shake-down" of BP that has no legal standing and sets a "terrible precedent" for the future."

From the Office of Congressman Joe Barton website:

"A proponent of competition, Barton is additionally responsible for both the first electricity deregulation legislation to pass a House subcommittee, and for legislation which deregulated the natural gas industry. "...

...He returned to Texas in 1982 as a natural gas decontrol consultant for Atlantic Richfield Oil and Gas Company before being elected to Congress."...

...And... "In order to achieve these goals, I was a primary author of H.R. 6, the Energy Policy Act of 2005. The President signed this bill into law in August of 2005."

Links to the Energy Policy Act of 2005:
http://www.epa.gov/oust/fedlaws/publ_109-058.pdf
http://en.wikipedia.org/wiki/Energy_Policy_Act_of_2005

Film challenges safety of U.S. shale gas drilling

Reuter's
Thu Jun 17, 2010 9:19am EDT

"Faucet water ignites in show of shale gas dangers

Industry says film is oversimplified and exaggerates
By Edith Honan

NEW YORK, June 17 (Reuters) - A new documentary purporting to expose the hazards of onshore natural gas drilling illustrates its point with startling images of people setting fire to water flowing from faucets in their homes.

"GasLand," which premiers on cable's HBO on June 21, fuels the debate over shale gas and the extraction process known as hydraulic fracturing, which involves blasting millions of gallons of water, sand and diluted chemicals into shale rock, breaking it apart to free the gas.

It comes at a time of heightened environmental awareness and scrutiny of the energy industry due to the BP oil disaster in the Gulf of Mexico.

Advocates promote shale gas as an abundant and relatively clean source of energy within the United States but critics including "GasLand" director Josh Fox assert there are environmental and health risks.

Fox, a Pennsylvania playwright, calls the industry's contention that such drilling is harmless too good to be true. He started asking questions about when his family was offered $100,000 plus royalties to allow hydraulic fracturing, also known as "fracking," on their property.

"I don't think it's a gold mine. I think it's a trap," Fox said. He turned down the offer but many neighbors took the money.

The documentary traces Fox's cross-country journey and includes interviews with families who signed leases with the gas industry and now regret it.

In Colorado, Fox shows families setting tap water alight due to what they say is gas that entered the water during the drilling process. Colorado authorities ruled out that scenario at one of the homes where Fox filmed.

"The film started with just a basic inquiry into what was happening with gas drilling," Fox told Reuters in an interview. "Quickly, though, I found out that it was a complete disaster for all the places that I visited."

The film, Fox's first feature-length documentary, won the Special Jury Prize for documentaries at the Sundance Film Festival." More>>>>

Wednesday, June 16, 2010

The Secret, 700-Million-Gallon Oil Fix That Worked — and Might Save the Gulf

(Image, Esquire: Workers on the Arabian Gulf overlook a supertanker owned by Saudi Aramco, the oil company that used a suck-and-salvage American technology to recover 85 percent of its previously unreported spill in 1993 and '94.)

Esquire

"There's a potential solution to the Gulf oil spill that neither BP, nor the federal government, nor anyone — save a couple intuitive engineers — seems willing to try. As The Politics Blog reported on Tuesday in an interview with former Shell Oil president John Hofmeister, the untapped solution involves using empty supertankers to suck the spill off the surface, treat and discharge the contaminated water, and either salvage or destroy the slick

Hofmeister had been briefed on the strategy by a Houston-based environmental disaster expert named Nick Pozzi, who has used the same solution on several large spills during almost two decades of experience in the Middle East — who says that it could be deployed easily and should be, immediately, to protect the Gulf Coast. That it hasn't even been considered yet is, Pozzi thinks, owing to cost considerations, or because there's no clear chain of authority by which to get valuable ideas in the right hands. But with BP's latest four-pronged plan remaining unproven, and estimates of company liability already reaching the tens of billions of dollars (and counting), supertankers start to look like a bargain.

UPDATE (June 4): Nearly 50 Supertankers Are Waiting for BP (and On the Cheap)

UPDATE (June 1): BP Executives Skirt Around Supertanker Questions

UPDATE (May 27): Obama Glances Over Supertanker Question as BP, Coast Guard Fail to Respond

UPDATE (May 26): The Pragmatic Oil Spill Fix That BP's Still Waiting On

UPDATE (May 24): Sources Say BP Looking Beyond 'Top Kill' with Supertanker Fix

UPDATE (May 21): Why the Supertanker Fix Works at Depth... but the Government Won't Listen

The suck-and-salvage technique was developed in desperation across the Arabian Gulf following a spill of mammoth proportions — 700 million gallons — that has until now gone unreported, as Saudi Arabia is a closed society, and its oil company, Saudi Aramco, remains owned by the House of Saud. But in 1993 and into '94, with four leaking tankers and two gushing wells, the royal family had an environmental disaster nearly sixty-five times the size of Exxon Valdez on its hands, and it desperately needed a solution." More>>>>

BP's red flag

CBS MarketWatch
June 16, 2010, 2:36 p.m. EDT

"SAN FRANCISCO (MarketWatch) -- As BP PLC's top executives trooped into the White House Wednesday under the glare of the global media, a new front in the struggle to save their company may be opening up far from the public eye: the trading room.

Late Tuesday, Reuters reported that Bank of America Merrill Lynch (BAC 15.87, +0.07, +0.45%) instructed its traders not to enter contracts with BP extending beyond a year from now. The report cites an anonymous source familiar with the order. Neither BP (BP 32.36, +0.96, +3.06%) nor Bank of America Corp. will comment on it, but they both know how grave this is, if true.

No reason is given for the contract order, but given BP's troubles in the Gulf of Mexico, it's a fair bet it stems from the oil spill."...

..."This part of the saga is being played out very publicly. That's because it's as much a political spectacle as it is economic planning.

What the public can't see is how many red flags are appearing on traders' screens, fending them off further dealings with BP. Traders naturally don't want to divulge their strategies, so if any of them are actually unwinding positions with BP, they aren't going to talk about it until they're done.

The idea, based on good old-fashioned greed and fear, is to clear out ahead of the stampede. Because once word gets out that a company has been red-flagged by traders, stampedes become a scary possibility." Article>>>>

CORRECTED - UPDATE 1-BP cuts dividend, capex, assets for oil spill fund

"June 16 (Reuters) - Oil giant BP BP.L BP.N said it would cut four quarters of dividends, significantly reduce its investment program and sell $10 billion of assets to fund a planned $20 billion fund to pay for its Gulf of Mexico oil spill.

The commitments, outlined in a statement on Wednesday, are harsher penalties than most investors had expected and follow BP chairman Carl-Henric Svanberg's meeting with President Obama on Wednesday." More>>>>

Gulf Reps. Call for...More Drilling?

MotherJones
By Kate Sheppar
Tue Jun. 15, 2010 3:29 PM PDT

"Even as oil continues to pour into the Gulf from BP's well a mile below the sea, some members of Congress are calling on the Obama administration to end the temporary moratorium on new drilling in the region. The group, which 17 Republicans and one Democrat from Gulf coast states, argues that the BP disaster and offshore drilling should be treated as separate issues entirely.

At a press conference on Tuesday, Ted Poe (R-Texas) said that "jobs will be lost, businesses will move someplace else" if the moratorium continues, and introduced a bill that would lift the administration's temporary pause on new drilling and exploration. Sen. David Vitter (R-La.) has introduced companion legislation in the Senate.

"This is about the Gulf coast and about America," said Louisiana's Charlie Melancon, the lone Democrat at the presser. His district in southern Louisiana has been the most affected by the oil disaster, but is also heavily dependent on income from the oil industry. "We are united in support of responsible offshore drilling … The last thing we need is a moratorium on offshore drilling that would result in thousands of workers laid of." He said while he understands that the moratorium is "well intentioned," it "would deliver a body blow to the economy."

It might seem counter-intuitive that the same representatives from states devastated by the Gulf spill are the ones calling on the government to move ahead full-bore on new drilling. But these are also states heavily dependent on income from the oil industry–16 percent of Louisiana's GDP is from the oil industry. That said, the current ban only affects new drilling and exploration, despite what the representatives argued. Rigs already in production have not been affected by the moratorium." More>>>>

~~~ Oil and gas industry advocates still using the same old arguments. They do not own up to the failed Bush/Cheney policies that laid the groundwork for this disaster -- the largest in American history. The BP spill was a disaster waiting to happen. It did not happen in a vacuum. Inherently, current offshore drilling carries the same risks as when the BP disaster occurred, and is occurring; especially given that the majors seem to have similar emergency response plans and were granted permits by the same dysfunctional national agency.

Consequently, are these advocates willing to accept the risk? If so, then for the BP oil disaster and future ones in waiting, they need not look to beyond themselves to be bailed out or compensated. They need to bear the brunt of the adverse impacts fully.

As parts of the Gulf Coast has federal lands, these advocates would need to also be ready to bring full compensation and restoration to those lands adversely impacted.

Oddly enough, the oil and gas drilling advocates who tend to dismiss the BP disaster as a B lack Swan Event, also tend to embrace the privatize profits and socialize losses theory.

BP Agrees to Set Aside About $20 Billion for Spill Claims

The New York Time

Published: June 16, 2010
By JACKIE CALMES

"WASHINGTON — The White House and BP tentatively agreed that the oil giant will create a $20 billion fund to pay claims for the worst oil spill in American history, to be independently run by the mediator who oversaw the 9/11 victims compensation fund, Kenneth Feinberg, according to two people familiar with the deliberations.

The agreement was not final and was still being negotiated when President Obama and his top advisers met this morning with BP’s top executives and lawyers. Its preliminary terms would give BP several years to deposit the full amount into the fund so it could better manage cash flow, maintain its financial viability and not scare off investors. " More>>>>

Just guessing, but even if an agreement were reached, the $20B would be just a starter amount...

BP's Oil Disaster: The Dangers and Difficulties of 'Bottom Kill'

(Image: Der Spiegel, " How 'bottom kill' works.")

Der Spiegel
By Philip Bethge

"BP has only one arrow left in its quiver, a method known as 'bottom kill.' The idea is for relief wells to stop the gushing oil from below, but the technical challenges are formidable. Past experiences show that the oil may continue flowing into late autumn."...

..."BP's most recent efforts to stop the flow of oil have only made the situation worse, says Leifer. The engineers' attempt to seal off the well from above, using a method known as "top kill," failed and only enlarged the borehole, according to Leifer. Now, he adds, there is almost nothing stopping the oil from flowing out of the well.

Most experts now believe that the relief wells, despite the risks, are the only option left. The principle of the method sounds simple enough. The engineers start by drilling vertically, and then diagonally toward the out-of-control well. Once they've reached the well, they drill into it from the side and pump large amounts of mud into it. The material fills up the well from below and eventually acts as a plug. In the end the well, like a decayed tooth, is capped with cement.

As straightforward as it sounds, this approach has not always been easy to implement in the past. The disaster in the Timor Sea, for example, ended in a debacle. It took engineer five tries to even find the borehole under the sea floor. Shortly before the end, the West Atlas oilrig went up in flames, after all." More>>>>

Tuesday, June 15, 2010

Republican Rep. Cliff Stearns asks BP chief to resign

Politico

By JAKE SHERMAN | 6/15/10 1:37 PM EDT

"A Florida Republican has called for BP America's top executive to resign.

Rep. Cliff Stearns (R-Fla.) said he was not going to ask for an apology from Lamar McKay, like Rep. Ed Markey (D-Mass.) did in a Tuesday oil executive hearing on Capitol Hill.

"You should be resigning as chairman of BP America," Stearns said as the nationally televised hearing started to wind down.

Stearns called for McKay’s resignation after he admitted BP had not estimated how much oil was leaking into the Gulf of Mexico for several months. He said the government is now keeping that tally.

Rep. Anh "Joseph" Cao (R-La.) went one step further than Stearns, not so subtly pointing out that in Asian culture the oil crisis would be handled differently.

In samurai days, Cao said, "we’d just give you a knife" and ask you to commit hara kiri."

Efforts to Repel Oil Spill Are Described as Chaotic

The New York Times
By CAMPBELL ROBERTSON
Published: June 14, 2010

"GRAND ISLE, La. — Deano Bonano, the emergency preparedness director for Jefferson Parish, marched from a motor home being used as a command center to an office across the street filled with BP officials.

It was late May. Oil had been creeping into the passes around Grand Isle. Two fleets of fishing boats were supposed to be laying out boom, the long floating barriers to corral oil and protect the fragile marshes of Barataria Bay.

But the boats were gathered on the inland side of the bay — the wrong side — anchored idly as the oil oozed in from the Gulf of Mexico. BP officials said they had no way of contacting the workers on the boats, Mr. Bonano recalled.

“You’re watching the oil come in,” Mr. Bonano said, “and they can’t even move.”

For much of the last two months, the focus of the response to the Deepwater Horizon explosion has been a mile underwater, 50 miles from shore, where successive efforts involving containment domes, “top kills” and “junk shots” have failed, and a “spillcam” shows tens of thousands of barrels of oil hemorrhaging into the gulf each day.

Closer to shore, the efforts to keep the oil away from land have not fared much better, despite a response effort involving thousands of boats, tens of thousands of workers and millions of feet of containment boom.

From the beginning, the effort has been bedeviled by a lack of preparation, organization, urgency and clear lines of authority among federal, state and local officials, as well as BP. As a result, officials and experts say, the damage to the coastline and wildlife has been worse than it might have been if the response had been faster and orchestrated more effectively.

“The present system is not working,” Senator Bill Nelson of Florida said Thursday at a hearing in Washington devoted to assessing the spill and the response. Oil had just entered Florida waters, Senator Nelson said, adding that no one was notified at either the state or local level, a failure of communication that echoed Mr. Bonano’s story and countless others along the Gulf Coast." More>>>>

BP Oil Disaster Could Hit Europe Via the Powerful Gulf Stream Current

The Market Oracle
Jun 10, 2010 - 01:26 PM
By: F_William_Engdahl

"The Obama Administration and senior BP officials are frantically working not to stop the world’s worst oil disaster, but to hide the true extent of the actual ecological catastrophe. Senior researchers tell us that the BP drilling hit one of the oil migration channels and that the leakage could continue for years unless decisive steps are undertaken, something that seems far from the present strategy.

In a recent discussion, Vladimir Kutcherov, Professor at the Royal Institute of Technology in Sweden and the Russian State University of Oil and Gas, predicted that the present oil spill flooding the Gulf Coast shores of the United States “could go on for years and years … many years.”

According to Kutcherov, a leading specialist in the theory of abiogenic deep origin of petroleum, “What BP drilled into was what we call a ‘migration channel,’ a deep fault on which hydrocarbons generated in the depth of our planet migrate to the crust and are accumulated in rocks, something like Ghawar in Saudi Arabia.” Ghawar, the world’s most prolific oilfield has been producing millions of barrels daily for almost 70 years with no end in sight. According to the abiotic science, Ghawar like all elephant and giant oil and gas deposits all over the world, is located on a migration channel similar to that in the oil-rich Gulf of Mexico.

As I wrote at the time of the January 2010 Haiti earthquake disaster, Haiti had been identified as having potentially huge hydrocasrbon reserves, as has neighboring Cuba. Kutcherov estimates that the entire Gulf of Mexico is one of the planet’s most abundant accessible locations to extract oil and gas, at least before the Deepwater Horizon event this April.

“In my view the heads of BP reacted with panic at the scale of the oil spewing out of the well,” Kutcherov adds. “What is inexplicable at this point is why they are trying one thing, failing, then trying a second, failing, then a third. Given the scale of the disaster they should try every conceivable option, even if it is ten, all at once in hope one works. Otherwise, this oil source could spew oil for years given the volumes coming to the surface already.”

He stresses, “It is difficult to estimate how big this leakage is. There is no objective information available.” But taking into consideration information about the last BP ‘giant’ discovery in the Gulf of Mexico, the Tiber field, some six miles deep, Kutcherov agrees with Ira Leifer a researcher in the Marine Science Institute at the University of California, Santa Barbara who says the oil may be gushing out at a rate of more than 100,000 barrels a day." More>>>>

Monday, June 14, 2010

Why Was BP Drilling in 5,000 Feet of Water Anyway?

Yahoo Finance

Justin Rohrlich, On Friday June 11, 2010, 1:00 pm EDT

"Drilling in thousands of feet of water is costly and dangerous. It's also where the oil is. But the real story behind deepwater exploration and production is not so simple an equation.

"Deepwater production is a new frontier," American Petroleum Institute senior economic advisor Rayola Dougher explained in an interview with Minyanville. "The oil companies have been denied access to the outer continental shelf in the past; they haven't been allowed to explore. That's why they're out there now."

Kert Davies, research director at Greenpeace USA, disagrees. He says BP (BP) isn't drilling down a mile deep because environmental groups prevented the company from operating closer to shore. It's because, 15 years ago, oil production off the outer continental shelf was effectively subsidized by the US taxpayer when Congress passed the Deep Water Royalty Relief Act, which exempted oil companies from paying a 12% royalty on oil extracted from wells in federal waters.

In 1995, crude oil was selling for about $16 a barrel. Nobody had any interest in drilling in thousands of feet of water, and companies were beginning to focus overseas."...

..."Still, the 2005 Energy Policy Act provided $6 billion in subsidies for oil and gas development, ostensibly leading to the unattainable goal of "energy security." The bill also provided $1.5 billion in direct payments to drill deepwater wells.

API's Dougher says, "There are 3,559 platforms in the Gulf, that have been operating safely for 30 years. An excellent safety record. From 1947 until now, spills in the Gulf represented 1/1000th of 1% of all the oil produced. That's multiple times better than natural seepage. Much better than nature."

BP thought so too, until the Deepwater Horizon exploded on April 20. In the plan filed with MMS dated February 2009, BP mentioned frequently how "unlikely" an "accidental surface or subsurface oil spill would occur from the proposed activities." And in its environmental impact analysis, BP argued that there was virtually zero chance of a spill that could damage beaches, fish, mammals, or fisheries.

2009 happens to also be the year that Department of Interior Secretary Ken Salazar installed former BP executive Sylvia Baca as the head of the MMS." Article>>>>