Skimming on Offers of Spill Aid

"The big focus of our operations right now would be on water skimming, trying to deal with the oil as far offshore as we can." - National Incident Commander Thad Allen, 6-30 press briefing

The U.S. State Department released information on aid offers on Day 71 of the Gulf oil spew. They include:

Belgium- skimmers (6-15), under consideration
Canada- skimmers (6-23), under consideration
El Salvador- skimmers (6-23), under consideration
European Maritime Safety Agency- skimmers (5-13), under consideration
Japan- skimmers (6-22), under consideration
Mexico- skimmers (5-3), two have arrived and are operating
Netherlands- skimmers (4-30), three purchased
Norway- skimmers (4-30), eight accepted in early May
Portugal- skimmers (6-21), under consideration
Korea- skimmers (5-2), under consideration
Sweden- skimmers (4-30), offer increased on 6-15, under consideration
Turkey- skimmers (6-23), under consideration
Qatar- skimmers (6-22), under consideration
UAE- skimmers (5-10), under consideration

Recall President Obama's "all out response" commitment on 4-29? Disaster commander Thad Allen cited the critical need for skimmers on 6-10. Interestingly, the State of Alaska has:

Over 120 skimming systems to pick up oil from within containment boom and store it in barges and other vessels. This equipment can recover over 300,000 barrels of oil in 72 hours.

Did any offers come in from Alaska?

A correction is needed in the State Department memo as twenty eight countries made offers. The State Department omitted Turkey from their press release, while not displaying offers from Saudi Arabia in their chart. Did the Saudis offer Obama any supertankers?

More than one person is frustrated by the gulf between language and action.

Update: Thad Allen officially retired from the Coast Guard today. He will remain in charge of the Oil Spill Response in a civilian role. Also, tar balls hit Texas beaches. They are being tested to see if they came from the BP spill.

BP Fined for Lying to Native Americans

The LATimes reported:

The Department of Interior assessed BP America Inc. a civil penalty of $5.2 million for submitting “false, inaccurate, or misleading” reports for energy production on Southern Ute tribal land in southwestern Colorado.

Tribal auditors first brought the errors to the attention of BP three years ago after discovering that the company's reports were inaccurate in a number of ways, including using incorrect royalty rates. The company agreed to correct the problem, which it attributed to errors in automated files. But later audits showed that the errors continued, even after BP said it had resolved the issue.

BP isn't the first oil company to lie to indigenous people. ExxonMobil told the people of Valdez they would take care of the environment. Promised "state of the art" radar system had long been broken and disabled when the Valdez ran aground. Ironically, BP's incompetent response added to the severity of the Exxon Valdez spill.

Will heart breakers Exxon and BP get together? Tears trail the path of broken promises.

Bill Clinton Goes Matt Simmons

CBS News reported President Clinton's advice for stopping the Gulf oil spew:

"Unless we send the Navy down deep to blow up the well and cover the leak with piles and piles and piles of rock and debris, which may become necessary - you don't have to use a nuclear weapon by the way, I've seen all that stuff, just blow it up - unless we're going to do that, we are dependent on the technical expertise of these people from BP."

Matt Simmons suggested this over a month ago, May 26.

President Clinton added at the 4:55 mark:

This is a geological monster.

Bill Clinton has close ties with the White House, having helped President Obama on health reform. Is insider Bill spouting opinion or laying the groundwork for future actions?

Impossible BP

The LATimes reported:

The gushing BP oil well is a mystery still unfolding, and late last month, a team of scientists from the Energy Department discovered a new twist: Their sophisticated imaging equipment detected not one but two drill pipes, side by side, inside the wreckage of the well's blowout preventer on the bottom of the Gulf of Mexico.

BP officials said it was impossible. The Deepwater Horizon rig, which drilled the well, used a single pipe, connected in segments, to bore 13,000 feet below the ocean floor. But when workers cut into the wreckage to install a containment cap this month, sure enough, they found two pipes.

The force of the blowout jammed the second pipe into the blowout preventer. This reinforces Matt Simmons assertion of a lack of well integrity. It explains why the top kill failed so miserably, despite encouraging theatrics for public consumption.

The question is how far down is the well compromised? We won't know until relief wells attempt their plug.

Wall Street: Ants or Giants?

Pittsburgh Tribune-Review reported:

House Minority Leader John Boehner criticized the financial regulatory overhaul compromise reached last week between House and Senate negotiators as an overreaction to the financial crisis that triggered the recession. "This is killing an ant with a nuclear weapon," Boehner said.

I believe Boehner omitted two letters, G & I. Consider the size of three Wall Street firms, according to their 2009 year end balance sheets:

JP Morgan has $2 trillion in assets.
Goldman Sachs has an $850 billion balance sheet.
Morgan Stanley’s is $770 billion.

What three ants have $3.6 trillion in assets? Consider their financial subsidiaries:

Goldman Sachs only listed significant subsidiaries, with less than half (36 of 78) based in the U.S.:

Morgan Stanley listed 30 pages of subsidiaries. At 43 per page, that totals over 1,200 Morgan Stanley entities.

JP Morgan has 9 pages of subsidiaries, with 65 per page. Total JP Morgan subsidiaries, 534.

These are no ants, Mr. Boehner. They're financial giants.

BP: The Shining

BP flashback:

Mr. Hayward has prided himself on improving the company's safety record, while cutting 5,000 jobs last year and $4bn of costs this year. The oil giant outshone its bigger rival, Royal Dutch Shell, this week when it announced profits far exceeding analyst expectations.

BP's Texas City refinery exploded due to a "misplaced culture of safety," driven by cost cutting from Hayward's predecessor, Lord John Browne. Browne gave deposition regarding the 15 Texas City deaths:

Q: And the third dot says, "Reduce business unit cash cost for the year 2001 by at least 25 percent from the year 1998 levels." Do you see that, sir?

Browne: I do.

Q. And, in fact, that was a request or a mandate that came from London as part of the merger and acquisition of Amoco, isn't it, sir?

Browne: I don't believe that's what this piece of paper says, and it wasn't actually done this way. I believe these are the downstream strategies and goals, not the group goals.

Q. Okay. Were you aware of any orders going to any of the refineries in the United States after the merger to cut their operational cost 25 percent?

Browne: No, I wasn't, not in detail at all.

Q. Okay. Have you ever been provided with any of the lists of what the various individual refineries were doing in response to requests to reduce their budget after the merger?

Browne: Not to my knowledge. I can't remember seeing such a list.

Q. Okay. Were you ever made aware of what BP Texas City did in response to the budget reduction requests out of London?

Browne: Not -- not to my knowledge.

Q. Were you aware that the plant manager at Texas City initiated dozens of different cost-cutting measures after receipt of this request?

Browne: I wasn't aware of that.

Q. Were you ever made aware that they reduced the maintenance spend at BP Texas City as a result of that request?

Browne: No, I wasn't aware of that.

Q. Were you aware that they reduced their staff operations in the control room at the ISOM unit by 50 percent as a result of that request?

Browne: I wasn't aware of that.

Q. Were you aware that they curtailed, cut back or completely killed a number of training programs at BP Texas City as a result of that request?

Browne: I wasn't aware of that.

Q. Were you ever made aware that this outside consulting assessment ascertained that there had been a decade of underinvestment in the infrastructure at Texas City?

Browne: No, I wasn't.

Q. Were you made aware that there were literally hundreds of millions of dollars of deferred maintenance cost that accumulated at Texas City as a result of long-term deferred budget expense on maintenance there?

Browne: No. Since I didn't see the report, I obviously wasn't aware.

How did Hayward's cuts work their way down to the Deepwater Horizon blowout? The BP pattern continues. It's a disaster fractal.

Update: BP is deferring skimmer capacity.

Matt Simmons' Predicted BP Bankruptcy: Six Degrees

Matt Simmons said on BP:

“They have about a month before they declare Chapter 11. They’re going to run out of cash from lawsuits, cleanup and other expenses. One really smart thing that Obama did was about three weeks ago he forced BP CEO Tony Hayward to put in writing that BP would pay for every dollar of the cleanup. But there isn’t enough money in the world to clean up the Gulf of Mexico. Once BP realizes the extent of this my guess is that they’ll panic and go into Chapter 11.”

A week after suggesting BP would declare bankruptcy, Matt Simmons "retired" as Chairman Emeritus of the firm he founded, Simmons & Company. That was June 16.

Fast forward two weeks to find ABC News reporting:

The Federal Reserve Bank of New York has been probing major financial firms' exposure to BP Plc to ensure that if the oil giant buckles under the costs of the Gulf oil spill, it won't put Wall Street or the global financial system at risk.

The Fed examination underscores market uncertainty about how the spill's staggering clean-up bill might affect Wall Street, a fragile economic recovery, or the multitrillion dollar energy market.

Another news story showed Simmons & Company advising Noble in its acquisition of Frontier Drilling from The Carlyle Group and joint venture, energy partner Riverstone Holdings. In the small world of big money men, former BP CEO Lord John Browne is managing director for Riverstone. Browne was in charge when the BP Texas City explosion killed 15 people.

Matt didn't stick to the party line. Definitive predictions and assignment of blame from industry experts are frowned upon. Especially by those with major skin still in the game.

BP's Oil Spew Numbers

BP filed the following information with the SEC:

To date, the total volume of oil recovered or flared by containment systems is approximately 435,600 barrels.

Operations to skim oil from the surface of the water now have recovered, in total, approximately 652,000 barrels (27 million gallons) of oily liquid. In addition, a total of 275 controlled burns have been carried out to date, removing an estimated 238,000 barrels of oil from the sea's surface.

Doing the math on collection: 435,600 + 652,000 + 238,000 = 1,325,600 barrels

If the spill rate is 60,000 bpd, the well leaked 4,080,000 barrels over a 68 day period. BP collected 32%. That leaves 68% of the flow to date. How might a Hurricane Alex contribute to the deficit?

Oil Capture Capacity Pushed Back

BP will delay adding the Helix Producer to the oil recovery effort, as Tropical Storm Alex will generate heavy seas. BP leaders expect conditions to push back additional capacity to July 6 or 7.

Oil hit Mississippi beaches on Day 68. Those heavy seas will push oil toward the Gulf Coast's beaches, bays and estuaries. A Hurricane Alex means less capture, more landfall.

One relief well is within 20 feet of the well casing. However, they plan to drill down 900 more feet, angling into the target. Relief for the oil spew is expected in early August, but could come earlier. That could also depend on the Gulf hurricane season.

Update: Tropical Storm Alex has 60 mph sustained winds and is stationary. No forward movement could be a bad sign.

BP to File Claim Against Transocean

BP gave notice it intends to claim £470 million against rig owner Transocean Ltd.'s insurance policy for its part in the Deepwater Horizon rig disaster, The Mail on Sunday reported, without citing sources. BP's risk management strategy continues. How much will the company ask from Cameron, manufacturer of the blowout preventer?

Will any settlements be secret, like the one between Tenet Healthcare and LifeCare Hospitals after Hurricane Katrina? Tenet's Memorial Medical Center was the site of 35 patient deaths, 25 belonged to The Carlyle Group's LifeCare.

BP Day 68: Supertanker on the Way

BP will change undersea structures to collect more oil from its spewing well. They expect everything to be in place by mid-July. Christian Science Monitor reported:

BP’s primary goal in the weeks ahead is to replace these fixed riser pipes with flexible riser pipes that would remain connected to the well during a hurricane, their mouths floating about 300 feet below the surface.

BP will also add processing capability on the surface. The Discoverer Enterprise and Q4000 processed 25,000 barrels per day. The Helix Producer is expected to come online Tuesday, adding another 25,000 bpd. Once completed, the system could process 80,000 bpd.

As for collecting the millions of barrels already spilled:

The A Whale is on its way to the Gulf. The supertanker could skim 500,000 gallons of oil-contaminated water from the surface of the Gulf daily.

The supertanker solution could finally be utilized. Neither BP nor the Coast Guard have contracted with the A Whale. It's un-commissioned at this point. On what day will it arrive? 69, 70, 71. What day will it be put to work?

It's two months after President Obama promised "an all out response" and "very aggressive" stance.

Update: Day 77 and the A Whale not yet skimming

Tropical Storm Alex & Oil Spew

A Gulf Coast hurricane could interrupt oil recovery efforts for up to two weeks. While the impact of Tropical Storm Alex is unclear, the scope of the oil spill continues to overwhelm collection efforts.

Despite promises from President Obama and BP officials to collect up to 90% of the well's daily volume, they haven't reached 50%.

Meanwhile, BP's risk management efforts continue, this time under the guise of journalism.

Food Fights & Lobbying Fishbowl

While Conservative bloggers toss cafeteria trays at one another, a Gulf Coast fishbowl lurks under toxic waters. It's not the BP oil catastrophe, but New Orleans post Hurricane Katrina, where 35 patients died in Memorial Medical Center. Tenet Healthcare owned Memorial, renting a floor to The Carlyle Group's LifeCare Hospitals, responsible for 25 of the deaths.

Lobbying firm Quinn Gillespie hit the Oval Office on behalf of Tenet. They talked to President George W. Bush's White House on corporate governance changes.

The Bush Lessons Learned report made no mention of Memorial, the hospital with the highest patient death toll. A year later John Ellis "Jeb" Bush joined the Tenet Board.

It's hard to look into the cesspool, especially when those buying and selling influence offer diversions, like the current food fight. Unprecedented events bring unprecedented opportunity.

Update 5-1-11:  Jeb Bush helped Carnival Cruise Lines land Hurricane Katrina recovery work. I can't wait to see Bush White House e-mails during and after Katrina. 

National Security Trumps Justice

The Supreme Court declined the case of Maher Arar, a Canadian citizen seeking justice for his transfer and subsequent torture as a terror suspect. The Christian Science Monitor reported:

US officials detained Mr. Arar in September 2002 as he attempted to change planes at New York’s Kennedy International Airport for a flight home to Canada from Tunisia. He was held in the US and questioned by federal agents for 13 days before being whisked off to Syria.

Arar asked to be sent home to Canada, complaining that he would be tortured in Syria. Once in Syria, he was housed in a three-foot by six-foot by seven-foot cell. “Syrian officials tortured Arar while asking him questions strikingly similar to those federal agents had asked him in New York,” Arar’s petition to the high court said.

In October 2003, Syrian officials released Arar and allowed him to return to Canada after concluding he had no link to Al Qaeda, to terrorism, or to any other wrongdoing. After an inquiry into his ordeal, the Canadian Parliament and prime minister issued public apologies to Arar and awarded him $10.5 million Canadian dollars in compensation for the Canadian government’s part in his treatment.

Arar filed a lawsuit in the US seeking to hold American officials accountable for their actions.

America is now the land of the unaccountable. National security trumps justice. This bodes ill for those mistreated by federal officials or others blowing the whistle on such behavior. Make no mistake, the Feds and their corporate sponsors are in charge.

Kellogg Recall: Waxy Like "Off-Taste & Smell"

Kellogg recalled four cereal brands due to packaging problems. Their press release cites "an uncharacteristic off-flavor and smell coming from the liner in the package." It states the company is working in consultation with the Food & Drug Administration.

Here's what they said:

The products involved in the recall were shipped throughout the U.S.

We have identified a substance in the package liners that can produce an uncharacteristic waxy-like off taste and smell.

Consumers should not eat the recalled products.

What they didn't say:

1. Where the package liners were manufactured.
2. What the identified substance is.

Did the FDA fill in the gaps? No, but Bloomberg tried. It's now a process of elimination.

Update: CBS News reported the problem came from "an excess of chemicals in the liners (package)." That clears up very little...

BP's Lawyers Read

BP's legal team,Wilmer, Cutler, Pickering & Hale, visited my two blogs. Google Analytics revealed the following about WilmerHale's visits:

State of the Division
June 16, 2010
Time spent: 14:14
Landing page: Spill Estimate Reaches Hayward's Upper Bound
Pages visited: 4

PEU Report
June 16, 2010
Time spent: 16:02
Landing page: Obama's Oil Spew Commission Chair on ConocoPhillips Board
Pages visited: 4

June 22, 2010
Time spent: 13:32
Landing page: It's Small World for BP Oil Catastrophe Commission
Pages visited: 3

Other groups interested in my posts on this topic include:

Executive Office of the President
U.S. House of Representatives
United States Senate
U.S. Department of Justice
U.S. Department of Commerce
Department of Homeland Security
NASA
Federal Energy Regulatory Commission
DOD Network Information Center
Booz Allen Hamilton
ConocoPhillips
Amoco
Chevron
ExxonMobil
Baker Hughes
Apache Corporation
Council on Foreign Relations
NBC Universal
Associated Press
Turner Broadcasting System
Tribune Company
Fox News Channel
McClatchy Management Services
Aspen Institute
Center for American Progress
University of Alaska

Google reveals the network name. Either the organization is officially interested in the post or employee(s) visited based on personal interests. I expect WilmerHale's interest is official.

Toxins in Whales: This Decade's Warning

Whales in the most remote oceans harbor toxins generated by humans. Found in their tissues:

high levels of cadmium, aluminum, chromium, lead, silver, mercury and titanium

AP reported the consequences of the metals could be horrific for both whale and man.

"I don't see any future for whale species except extinction," biologist Roger Payne said. "This is not on anybody's radar, no government's radar anywhere, and I think it should be."

That's odd, given a 2000 story with similar findings. CNN reported:

A 1998 study by the International Whaling Commission determined levels of contamination among some marine mammals are so high that the animals would be classified as hazardous waste sites if they were on land.

Several reports circulated at the International Whaling Commission meeting in July about the level of contaminants of whale meat in Japan, Phillips added. "Building on previous studies scientists have just reported new contaminants data from Japan, she said. "They detected mercury some 1,600 times above the government permitted level as well as large amounts of organic mercury and cadmium in whale meat that is widely available."

What happened in between 2000 and 2010? The Chinese economic engine pumped out plenty of toxic products. Humans experienced tainted blood thinner, deadly infant formula, toxic drywall and poisonous children's jewelry. I'm sure other countries contributed to the dire situation. The pursuit of profits at the expense of quality causes heavy losses, for humans and whales.

BP's Fannie

A corporate executive noted, we were "engulfed by an unprecedented _______ that was catastrophic and unforeseeable." Is it:

a. decline in home prices (Fannie Mae)
b. oil well blowout (BP)

The answer is a, Fannie Mae.

It turns out BP has a Fannie fractal. BP executives showed their backsides with inane public comments and Congressional non-answers, but there's more. The coterie who brought Fannie Mae to its knees is defending BP. Consider the cast of characters:

Jamie Gorelick
Vice Chairman Fannie Mae from 1997-2003
BPAmerica External Advisory Council
BP lawyer

Ken Duberstein
Fannie Mae board 1998-2007, member of the Assets and Liabilities Policy Committee. That committee was responsible for oversight of management’s interest rate risk, credit risk, and capital management activities.
Regulatory consultant for Fannie, earning over $1.8 million
BP Lobbyist
ConocoPhillips Board member (like Oil Spew Commission co-chair William Reilly)

Warren Rudman
BPAmerica External Advisory Council
Represented Fannie Mae in a $9 billion accounting scandal. From 2001-2004 the firm failed to properly account for derivatives. The Independent Commission report went soft on CEO Franklin Raines.

The Financial Crisis Commission recently interviewed Fannie Mae executives, who defended the firm. Former EVP Robert Levin offered:

Fannie Mae had independent risk-management board committees, a chief risk officer and others that sought to update their economic models, but were unable to "catch up with the reality."

Unable to catch up with reality? How BP'ish of Fannie. Which will be the bigger loss? Fannie and Freddie could cost taxpayers $1 trillion.

For those worried about BP, it has a stable of political insiders working on its behalf.

BP Probes

The list of investigations into the BP Deepwater Horizon catastrophe includes:

BP Internal Investigation

BP has 70 people in its investigative team. In the 2005 Texas City refinery accident, which killed 15 people, BP had a list of terms internal investigators were not to use.

Justice Department

The Justice Department launched a criminal investigation into the accident. Defending BP are Jamie Gorelick and Mark Filip, prior Deputy Attorney Generals.

Coast Guard-Homeland Security & Minerals Management-Interior Department

This is a joint investigation. Interior Secretary Ken Salazar's 30 day report bailed on investigating causes of the blowout. Testimony under this investigation could have criminal implications. However, it's not clear how the various investigations will collaborate or overlap.

U.S. Chemical Safety Board

This independent commission investigates industrial accidents involving chemicals. It investigated BP's Texas City refinery explosion without ever interviewing BP President Lord John Browne.

President's National Oil Spew Commission
The charge for this commission continues evolving in the media. President Obama started off with a thorough investigation of causes. The White House shifted to focusing on government's cozy relationship with the oil industry. Bloomberg cited it would "review safety procedures." Two Oil Spew Commissioners, William Reilly and Fran Ulmer, have significant organizational ties to BP.

Congressional Investigations

Congressional hearings can be good political theater, but frequently push critical information off stage. CEO Tony Hayward's testimony reflected BP's corporate risk management priorities. I expect that to continue.

Let's hope the lot is better than conflicted Interior Secretary Ken Salazar's 30 day report. Which group is studying the impact of toxins?

Update: Transocean is conducting an internal investigation and civil lawsuits will eventually serve an investigative function. Civil suits in the BP Texas City refinery explosion took years. BP CEO Lord John Browne was deposed three years after the accident. He noted the deposition was his first interview with authorities on the accident.

Groinal Warming

On October 24, 2006 a "Mr. Stone" received a massage in his hotel room. The therapist worked on Stone's abdomen. He started to moan, indicating his desire she go lower. Stone grabbed her hand forcing it toward his pubic area. She claims he tried to have sex with her, but she got away.

Stone was an alias, used by Al Gore. He isn't the first politician to suffer from groinal warming. San Angelo's Scott Campbell beat Gore by two years.

And Rep. Scott Campbell, R-San Angelo, shouldn't have been in any danger from newcomer Jeri Slone in District 72. But then Campbell got popped for DUI (not for the first time) and responded by denouncing the DPS troopers (not a smart move); then a charge of indecent exposure earlier this year surfaced from a local masseuse (the spa owner said Campbell appeared drunk that time, too). Campbell may well be in trouble.

Despite allegations of DWI and of confusing a legitimate massage therapist's office with the less reputable kind (and exposing himself to the masseuse), state Rep. Scott Campbell, R-San Angelo, still managed to get 57% of the vote and will continue to represent the party of "moral values."

The Austin paper didn't indicate Campbell's alias. Could it have been Stone? What is it about political power that gives men giant stones?

Over Two Months of Oil Spew

Day 65 of the BP Oil Spew finds:

BP is doing all that it can and is deeply concerned but is learning as it goes, said BP America's Chief Operating Officer Doug Suttles.

Funny, CSPAN interviewed an expert over the weekend. Their guest said the U.S. has over 2,000 skimmers, but only 500 were working the Gulf spill.

As for learning as it goes, CEO Tony Hayward missed the opportunity to learn from his global peers when he skipped the World National Oil Congress. Might BP be doing all that it can to obfuscate, keep the media away and conduct corporate risk management?

Eight days ago President Obama said:

And in the coming weeks and days, these efforts should capture up to 90 percent of the oil leaking out of the well. This is until the company finishes drilling a relief well later in the summer that’s expected to stop the leak completely.

How close is BP to capturing the 90%, 54,000 barrels per day? They were halfway when the collection cap had to be removed. This sidelined the retrieval of nearly 17,000 bpd.

Day 65 has 10,000 bpd being burned off by the Q4000, roughly 17%. The other over 80% (50,000 barrels released today) will migrate in the Gulf, waiting for collection.

President Obama appointed two commissioners with BP/ConocoPhillips ties to his Oil Spew Commission, co-chair William Reilly and member Fran Ulmer. The commission is one step closer to subpoena power. The key will be the questions asked.

NOAA's Oil Maps

NOAA maps indicate surface oil blowing north toward Louisiana and Florida's panhandle. Meanwhile, undersea currents take oil plumes south. (Note: The dot in middle of either zone is the well location.)



The combination has 36% of the Gulf of Mexico closed for fishing.

What happens if a tropical storm or hurricane are added to the mix? Forecasters predict a very busy season, with possible development over the next week.

Tropical Storm Could Enter Gulf of Mexico Next Week

At least, that's the prediction for a tropical wave in the Caribbean Sea. Forecasters call for it to strengthen as it moves north-northwest. Low wind shear and high sea temperatures favor development.

Weather predictors could intersect with oil spill prognosticators. Matt Simmons said a hurricane could paint the Gulf Coast black. Oddly, the spill size has grown over several weeks to Simmons' like proportions, 100,000 barrels per day or greater.



Simmons predicts the well head is the problem, meaning the well bore has no integrity. Matt says it cannot be plugged via relief wells, only sealed via a bedrock fusing nuclear blast. NOAA research ship Thomas Jefferson reported:

Scientists observed several seeps of what appears to be natural gas in an area of known gas seepage, located to the southwest of the spill site.

Matt cited major health problems from the leak on the ship's crew. He projected those coming ashore in a hurricane.

There is benzene coming out of that stuff. If a hurricane finally blows up the Gulf, we could have millions of people die.

One Simmons prediction has come true, let's hope and pray the others are way off base.

Peter Orszag Not Sticking Around

Peter Orszag will leave the White House's Office of Management and Budget. The architect of health reform won't hang around for implementation. Who will throw things against the health care payment wall to see what sticks?

The White House will lose a Social Security expert. Obama's Deficit Commission will "save" Social Security and might need someone like Peter.

Watch where Orszag lands. The competition for his connections should be intense. Will The Carlyle Group's David Rubenstein hire Peter? They got along great in Peter's interview at the Economic Club of Washington, where Orszag stated:

I do try to see CEOs a lot, and so they’ll come in and give their perspectives, not only on their own businesses but on business conditions, hiring and what have you. They will often provide information. I don’t know that it sways a decision, but it informs a decision, as one would hope.

Which CEO will garner Orszag's services? Stay tuned.

CSB to Investigate BP

The U.S. Chemical Safety Board will investigate BP's Deepwater Horizon blowout. This comes after Interior Secretary Ken Salazar bailed on President Obama's charge for a 30 day review of the incident.

The Chemical Safety Board (CSB) investigated BP's Texas City Refinery explosion, which killed 15 workers in March 2005. The CSB spent $2.5 million studying the refinery explosion. Their report excoriated BP's inattention to safety and obsession with cost cutting.

The CSB released its report in March 2007. BP CEO Lord Browne was deposed in April 2008 in a civil lawsuit. Browne testified he never spoke to any investigative group regarding the Texas City refinery explosion. Surely, the CSB, Justice Department or OSHA would want to talk to the man in charge at the time of the incident? Apparently not, according to Lord John.

The CSB letter to Rep. Waxman and Stupak can be seen here.

Tony Hayward Backs Out of Oil Congress

BP CEO Tony Hayward was slated to give the keynote address at the annual meeting of the World National Oil Congress. His talk would've concerned "global responsibilities of international oil companies."

That likely flashed warning lights for BP risk managers. It wouldn't do for Hayward to make definitive remarks on oil company responsibilities. Those could come back to haunt the company in court.

What about "Bob"? How did Hayward's 52 foot yacht do in the JP Morgan Asset Management Round the Island Race?

A global gathering of oil executives seems more appropriate for the BP Chief Executive. Hayward could ask for help from other national oil companies, especially the Saudis. They cleaned up a 700 million gallon spill.

What the AP Missed on BP

A summary piece on BP's oil spew had multiple omissions, even errors. They are:

The panel (spill commission) appointed by President Barack Obama to investigate the Gulf of Mexico oil spill has yet to meet, yet some panel members are making their views known, with one member blogging about it regularly.

Five commissioners are experts in policy and management. The White House said the commission will focus on the government's "too cozy" relationship with the oil industry.

Two of the five commissioners are paid by organizations with significant BP ties. The AP didn't say co-chair William Reilly controls over $2 million in stock in ConocoPhillips, a joint venture partner with BP in the massive Tiber field in the Gulf of Mexico. It also failed to mention Fran Ulmer's work for the University of Alaska-Anchorage, the $30 million beneficiary of BP and ConocoPhillips largess.

As for the commission's charge, President Obama said they would look at the causes of the accident. The AP didn't note Interior Secretary Ken Salazar bailed on that with his 30 day investigative report.

The AP also reported on the huge decline in the shrimp catch:

Biologist Marty Bourgeois says preliminary figures show 4.1 million pounds of headless shrimp landed last month. That's two-thirds below last year's May catch of 17.4 million pounds.

The shrimp drop is 76%, or over three-quarters.

The spill is now in Matt Simmons' territory, with unimpeded flow at up to 100,000 bpd. Maybe the AP or Thad Allen will catch up.

Painfully "Saving" Social Security & Pensions

Programs designed to fund retirement are under severe financial stress in America. From public pensions to Social Security, government leaders are jiggling funding formulas and retirement age, all to save money.

NYTimes reported:

Many states are acknowledging this year that they have promised pensions they cannot afford and are cutting once-sacrosanct benefits, to appease taxpayers and attack budget deficits.

President Obama's Deficit Commission works on Social Security, the primary retirement source for many Americans. In an interview Deficit Co-chair Alan Simpson said this about their effort:

In the year 2037, instead of getting 100% of your check, you are going to get about 75% of your check. So we want to take care, we're not cutting, we're not balancing the budget on the backs of senior citizens. That's bullshit. So you've got that one down. So as long as you've got those two things down, you can't play with anymore, that we're not balancing the budget of the United States on the backs of poor old seniors and we're not cutting anything, we're stabilizing the system.

The crisis is now:

There is not enough in the system by the month to pay in, to pay out what comes in. In other words, there is more going out, than coming in. That happened 3 or 4 weeks ago.

And change must be sold:

they thought ... the retirement ... they that you would die at 57 and that's why they set the date at 65. If you can't get through this stuff, then why do you spread this crap. The thing was setup when the life expectancy was 57 years and that's why they set 65 as the retirement date. Now the life expectancy is 78, whatever it is, and so we have to adjust that and make it work for the future people like you in the United States.

The group that thought you would die at 57 is long gone. Social Security has been reset several times by Congress, which knew people were living longer. Alan Simpson co-chairs a conflicted Deficit Commission, in addition to serving on BPAmerica's External Advisory Council.



American's retirement could well take a double hit, with pension and Social Security changes. It's similar to Hurricane Katrina and the BP oil spew's impact on the Gulf of Mexico.

Update: America Speaks, carefully orchestrated public sessions on the topic, are being held across the country. The question is who's listening? Meanwhile corporate consultants push the same meme.

Three BP Monkeys: Tony, Ken & Joe

The BP oil spew has its version of see no evil, hear no evil and speak no evil. BP CEO Tony Hayward told a congressional hearing on Thursday it was too early in the investigations to draw conclusions. See no evil.

Interior Secretary Ken Salazar was charged with an initial investigation into the accident. He bailed on that charge. Speak no evil.

Representative Joe Barton (R-TX) apologized to BP for the White House shakedown. He later retracted his apology, but for his initial act Joe is Hear no evil.

Meanwhile a partner in the gushing well eviscerated BP. The TelegraphUK reported:

Jim Hackett, chief executive of Anadarko Petroleum, launched a scathing attack, saying he was "shocked" by the details emerging from initial investigations into events leading to the explosion of the Deepwater Horizon rig in April, which killed 11 oil workers.

This information "indicates BP operated unsafely and failed to monitor and react to several critical warning signs during the drilling of the well," he said.

Tony, Ken & Joe won't say it. The pressure is now on President Obama's Oil Spew Commission.

Two of its seven members have significant BP ties. Co-chair William Reilly controls over $2 million in stock in ConocoPhillips, a joint venture partner with BP in the massive Tiber field in the Gulf of Mexico. Fran Ulmer is Chancellor for the University of Alaska Anchorage. The University received over $30 million in gifts from BP and ConocoPhillips in the last decade.

How might BP's external advisory council come to BP's aid? Surely, Tom Daschle, Alan Simpson, Jamie Gorelick, Skip Bowman, Christine Todd Whitman and Mark Hamilton, President of the University of Alaska, can influence the outcome.

Wayward Hayward's Tin Oar

BP CEO Tony Hayward is on the high seas. No, he's not vacuuming up Gulf oil into a BP supertanker. Tony is recreating at the JP Morgan Asset Management Round the Island Race. Hayward is watching his 52 foot yacht "Bob" compete in the annual event. The Isle of Wight, off the south coast of England, is yet to be soiled by BP's Deepwater Horizon oil spew.

Justice is very different for the CEO class. Take Union Carbide's Bhopal, Exxon's Valdez, or BP's Texas City refinery explosion.

Hayward's Testimony: BP Deja Vu

Apologize profusely and say nothing else. BP CEO Tony Hayward lived up to that mantra in his Congressional testimony.

Tony is not the first BP chief executive to use corporate risk management language in his testimony. Lord John Browne gave a deposition in April 2008 regarding the Texas City refinery explosion, an accident that occurred in March 2005. It killed 15 people.

Browne was asked about BP's investigation practices (page 56 of his deposition):

Q. (BY MR. COON) Mr. Browne, I'm showing you Exhibit 13, which has previously been identified in this litigation. Have you seen that document before, sir?

A. No, I haven't.

Q. Let me represent to you that these are words that BP investigators were admonished not to use in their reports. Are you ever aware of investigators conducting investigations into incidents that BP admonished not to use certain types of language?

A. No, I wasn't.

Here's the kicker (page 9):

Q. And, Mr. Browne, have you given testimony before in either this matter -- do you understand we are deposing you principally regarding the explosion that happened in Texas City in March, 2005? Have you given testimony in that capacity before, sir?

A. No, I haven't.

The issue arises later (pages 66-67)

Q. (BY MR. COON) Mr. Browne, with respect to the ongoing investigations with the FBI, the Department of Justice and others, did you have any discussions with any of the investigative legal authorities about any of the BP matters, being the BP explosion or the Alaskan pipeline problems or the gas trading problems?

A. No, I didn't.

BP's trading problems resulted in a $303 million fine. Alaska pipeline problems resulted in $20 million in fines and restitution. It paid roughly $150 million in fines for the Texas City explosion.

Lord John Browne had no discussions with investigative legal authorities for behavior resulting in nearly $475 million in fines. That speaks to a class of Americans immune to the law.

BP's Hayward Pulls a Browne

A House committee grilled BP CEO Tony Hayward. Tony's risk management coaching was in full display. Hayward apologized profusely but gave no data, claiming he played no role in his company's disaster.

On the issue of well design arose, where BP chose a riskier, cheaper blueprint, AP reported:

Hayward repeatedly said that he didn't make those design choices as CEO. "I'm not stonewalling. I simply was not involved in the decision-making process," Hayward told Waxman, adding that the well's engineering team clearly grappled with such issues.

"What's clear to me," Waxman interrupted, "is that you don't want to answer our questions."

"You're not taking responsibility," the congressman added. "You're kicking the can down the road and acting like you have nothing to do with ... this company. I find that irresponsible."

Irresponsible, but not novel. Lord John Browne, Hayward's predecessor, would be proud of Tony's performance. Lord Browne was CEO when BP's Texas City refinery exploded, killing 15.

Both men made budgetary decisions that framed choices for their employees. Lord Browne said the following in his testimony:

Q. Were you ever made aware of what BP Texas City did in response to the budget reduction requests out of London?

A. Not -- not to my knowledge.

Q. Were you ever made aware that they reduced the maintenance spend at BP Texas City as a result of that request?

A. No, I wasn't aware of that.

BP has aloof chief executives. Lord John Browne's deposition is worth the read. It's amazing what he can't remember or never knew.

Update: Tony Hayward was happy to discuss Cameron's blowout preventer, while passing on the opportunity to discuss well design or the myriad of operational problems prior to the blowout. BP's partner in the well, Anadarko Petroleum, wasn't so charitable.

White House Unveils BP Deal

A White House agreement has BP setting aside $5 billion a year for four years. The first $5 billion is due in 2010. BP will set aside $20 billion in U.S. assets as assurance.

Oddly, a 2007 report cited BP America's $20 billion investment into Gulf of Mexico deepwater fields (see page 6). Simply coincidence, or will BP be out of the Gulf of Mexico?

The future $20 billion in escrow funds will be used to "pay claims adjudicated by the independent claims facility, as well as judgments and settlements, natural resource damage costs, and state and local response costs." It didn't say what would happen to any remainder, but it would likely revert to BP.

Jamie Gorelick attended the deal making session, as BP's lawyer.



She also sits on BP America's External Advisory Council.