Saturday, July 31, 2010

BP's WilmerHale & Rig Worker Fund

The AP reported:

BP says it has picked a charitable foundation in Louisiana to administer a $100 million fund for oil workers struggling because of a federal moratorium on deepwater drilling.

The Rig Worker Assistance Fund will be administered through the Gulf Coast Restoration and Protection Foundation, an affiliate of the Baton Rouge Area Foundation.

The American Bar Association Journal noted WilmerHale's helping BP with White House negotiations. It included assistance for rig workers, unemployed due to the drilling moratorium.

BP was able to structure the deal to limit claims attributable to the moratorium after successfully arguing that it shouldn’t be liable for a decision of the president, the Wall Street Journal says. It also was successful in rebuffing demands that it pay to restore the Gulf to conditions better than before the oil spill.

Jamie Gorelick earned her fee.

Steve Rinehart, a BP spokesman, said in a statement earlier this week that BP is not legally liable to compensate for job losses caused by the moratorium, though it did set up the $100 million fund as a goodwill gesture.
The rig worker fund is as clear as the Unified Command's use of dispersants. Public comments don't jibe with back room deals.

Senator Conrad to Help Bowles Earn Next Fortune

Senator Kent Conrad (D-ND) gave his subcommittee report to Deficit Commission co-chair Erskine Bowles, who previously acknowledged his need to "build another fortune." Conrad's words must have been soothing to Bowles. Kent stated:

My own conclusion from this is that we really have a tax system that is badly outdated. It no longer relates to the world we are in today. This tax system was constructed at a time we did not have to worry about America's competitive position, because America was dominant in the world.

Now we face determined competition, and we really need to think about how the tax system effects the competitive position of the United States, because of the role that plays in future economic growth, and the economic strength of the nation and the economic opportunities that all our citizens will enjoy. So, my conclusion is we have a tax system that really does not fit the circumstances we confront today, either in terms of generating the revenue that's necessary, or in contributing to the competitive position that's absolutely critical for the country going forward.

Bowles reinforced Conrad's position, giving a shout out to his private equity peers:

I think the other point you made, Senator Conrad, at the same time was that the current tax system was put in before capital was as mobile as it is now, and that has an enormous effect on where revenue goes.

Conrad pandered further:

It's a very different world we live in today, and that has to be kept in mind.

Kent's framing doesn't hold up well, given that America faced tremendous competitive challenges in the 1980's. Taxes are nothing like the 1950's and 60's, when the U.S. stood alone as the world's manufacturer. The top tax rate by the end of WWII was 94%. Oddly, Congress reformed taxes in 1986, when Conrad was first elected to the Senate.

Change accelerated the last decade. It was brought on by the Erskine Bowles of the world, corporate executives, directors and private equity underwriters (PEU's). American branded businesses shifted production to "low cost" portions of the globe. PEU's pooled investment from the global have's, promising 30% annual returns. Those profits came on workers' and taxpayers' backs.

Red & Blue Corporacrats stack Obama's Deficit Commission. Erskine and Kent sound like Republicans of yesterday. That means the Red team must move further right for differentiation. Given that politics is already painted into the "mean & greedy" corner, elected officials must find citizens to stand on to avoid splatter.

Struggling Americans will have to take solace in Erskine's new fortune, Peter Orszag's future Wall Street job and Evan Bayh's coming cash machine. Kent Conrad and Max Baucus can rest assured that their time at the private-sector payback terminal will be most profitable. Robber barons reward their tax lackeys.

Update 2-7-11:   The esteemed Senator Conrad offered, "The current state of the tax code is simply indefensible. It is hemorrhaging revenue."  Specifically to the Kent's mobile capitalists. 

The Telegraph Pushes BP Fiction

The TelegraphUK pushed the fantasy that the Gulf of Mexico withstood the BP oil spew.

With the gush plugged for the past two weeks, experts are beginning to question whether the BP spill can really be called an environmental disaster at all.

The article didn't say which experts or who they were under contract to. Not one expert was quoted in the Telegraph piece. It did back-hand compliment BP CEO Tony Hayward:

You also don't compare the biggest oil leak in US history to a "drop in the ocean", even though that has turned out to be more or less the case, when your company is responsible for dumping 60,000 gallons a day into the sea, and when it has probably been economical with the truth about the size of the outflow.

The Telegraph doesn't know the difference between a gallon and barrel of oil? A barrel is 42 gallons. The Unified Command reported capturing nearly 1 million gallons per day via the containment cap and Q4000. The public saw oil escaping from the containment cap, in use for some 30 days of the roughly 90 day spew.

If BP and the Obama administration have been "economical with the truth" to date, why should their unnamed experts be believed now? How far can the bar fall in politics and journalism? Who can one trust for honest information nowadays?

Friday, July 30, 2010

Orszag Sends Goodbye Memo

WaPo reported the contents of Peter Orszag's goodbye letter to OMB staff. My highlights are below:

As you know my last day in the Administration is today.

Before you read about it in the press, I also wanted to let you know about the transition here at OMB. Until Jack Lew is confirmed as OMB Director, Jeff Zients will serve as Acting Director. Jeff Liebman has been planning to resume his teaching and research at Harvard and rejoin his family already back in Massachusetts. Rob Nabors will therefore return to OMB to take Jeff’s place as Acting Deputy Director.

Peter packed a number of leadership changes into his final memo. While five weeks may not be time to find a replacement, Orszag waited until his final day to announce interim leadership.

Rob Nabors returns from Rahm Emanuel's Chief of Staff office, where he served as Senior Adviser. Jeff Zients was a private equity underwriter (PEU) for Portfolio Logic prior to becoming the White House's Chief Performance Officer. Oddly, Peter Orszag may join a private equity firm, after a five month cooling off period at a Blue think tank.

My bet is Orszag will announce his high paying job after the November elections. So many things to do, so little time. With Peter gone, Rob or Jeff (or their replacements) will throw things against the health care wall to see what sticks.

The federal government's answer to performance, putting data on line so citizens can hold leaders accountable, remains laughably on track. I'll close with Peter's words on the topic

Jeff Zients will enhance the transparency of the government’s finances so that citizens are empowered to hold us all accountable for improved stewardship and performance.
The leadership bar continues to fall. Don't you miss Peter already?

Update: Politico reported "Orszag leaves for a position as a distinguished visiting fellow at the Council on Foreign Relations in New York, a position he said he hopes to use to think through issues that came up at the OMB and to plot his next step.

“Not surprisingly, there have been a whole series of opportunities that have arisen, and I haven’t explored any of them for ethics reasons,” he said, adding that he wouldn’t rule out a post on Wall Street, despite the administration’s clashes with the banking sector.

Update 12-11-10:  Orszag landed a Vice Chairman job at Citigroup.  He'll be in the Global Banking group

BP in Control

With the oil spew to be permanently stopped via a static kill, BP marches onward. A hated CEO is on his way out, an American taking his place. WilmerHale's next move is ring fencing liability for the oil catastrophe. That involves framing the causes of the spill.

BP's internal investigation will be the first one finished. It is due in August. FT reported:

BP believes it will be able to rebut the charge that it was guilty of “gross negligence” but nothing is certain until the outcome of the investigations is known.

This is the same BP that prohibited the use of certain words in its internal investigations. They'll spin it far away from "gross negligence." BP CEO Tony Hayward set the tone with his Congressional non-testimony.

Obama's Ken Salazar expressly bailed on his charge to conduct a 30 day investigation. That leaves Obama's Oil Spew Commission, with two conflicted members, to uphold the public interest. Congressional corporacrats denuded the tainted commission's ability to investigate.

Spew Commission Co-chair Bob Graham echoed the "C" word, regarding BP's culture. James A. Baker, III came up with the term in his investigation of BP's 2005 Texas City refinery explosion. After going light on CEO Lord John Browne, Baker's Carlyle Group friends hired Browne at Riverstone Holdings.

A finding of gross negligence impacts BP's potential liability. That said, ExxonMobil got a $5 billion punitive fine reduced to $500 million, simply using America's court system.

Would a determination of gross negligence impact Ken Feinberg's payouts? I wouldn't sign Ken's BP release of liability until that question is answered.

Wednesday, July 28, 2010

BP's Safety Promise

Robert Dudley, BP's new CEO, promised to ramp up Tony Hayward's work in transforming the company's corporate culture. Dudley said:

"Tony started a cultural change three years ago around a focus on safe and
reliable operations."

That change came after BP's Texas City refinery explosion, which killed 15 people. Hayward will lose his job after BP's Deepwater Horizon oil spew is permanently stemmed. The stacking cap temporarily ceased oil flow nearly three months after the blowout killed 11 people.

Are Dudley's safety promises as hollow as his predecessor's? It took three years for investigators to track down CEO Lord John Browne and interview him on the Texas City explosion. While Tony Hayward testified before Congress on the Gulf oil spew, he offered very little information, instead blaming Transocean, Halliburton and Cameron.

FT reported Hayward will not go before the Senate on the release of the Lockerbie bomber. The Libya deal occurred under the Two Tonys, Hayward and Blair. Both should be under oath.

The wheels of justice move very slowly, if at all for the corporacrat class. That includes Lord John Browne's lack of accountability, Tony Hayward's nontestimony and Tony Blair's profit-a-palooza. Lord John Browne is pictured above, however the bars and hands are but graphic devices. Browne is reforming British government and Managing Director for Carlyle Group's energy joint venture, Riverstone Holdings. Browne mentored "Turtle" Dudley, once the Lord's executive assistant. What did Bob learn from safety suboptimizing Browne & Hayward?

Monday, July 26, 2010

BP to Shed Oiled Executive

Now that oil isn't spewing into the Gulf of Mexico, BP may turn the page on CEO Tony Hayward. American Robert Dudley may replace the oiled chief executive. Dudley is an American with Gulf Coast roots.

Dudley's job will be to keep BP drilling in the Gulf of Mexico, Alaska and the Artic. Bloomberg

The Gulf is home to about 25 of the 40 production projects BP plans by 2015.

A change of face at the top, combined with two conflicted Oil Spew Commissioners, could keep BP drilling in the Gulf. The shedding of Tony Hayward is but the latest risk management move. Look for BP to reorganize assets and ring fence liability.

American Robert Dudley will have BP's interest, no one else's. A look at his nefarious mentors, Lord John Browne and Tony Hayward, should inspire caution.

Saturday, July 24, 2010

Disabling Gas Alarms

Transocean/BP deepwater drillers and Massey coal miners disabled gas warning alarms. Both had explosions that killed workers. NY Daily News reported:

A technician for the Deepwater Horizon said Friday the alarm system for the BP-leased rig was partly disabled at night so workers could sleep without interruption.

Eleven workers died in the Gulf of Mexico. Twenty nine died under the hills of West Virginia. NPR reported:

An electrician deliberately disabled a methane gas monitor on a continuous mining machine because the monitor repeatedly shut down the machine.

Working without interruption vs. safety? It's clear which side management favored.

Wednesday, July 21, 2010

BP's Lobbyists Old D.C. Hats

Bloomberg reported:

BP Plc’s spending to lobby Congress in the second quarter rose 6.3 percent from the first as the company dealt with the fallout from its gushing Gulf of Mexico oil well.

London-based BP paid more than $1.7 million to firms such as Podesta Group and Duberstein Group from April through June, an increase from $1.6 million for January through March, according to congressional filings today.

Tony Podesta received $120,000 from BP in the second quarter. The Podesta Group earned twice their first quarter fees for BP lobbying. Brother John Podesta runs the Center for American Progress. Coincidentally, CAP blogs have gone light on BP oil spew coverage. Is it John's lobbying relations or Tom Daschle's sitting on BPAmerica's external advisory board? Daschle is a Senior Fellow at CAP.

Ken Duberstein helped Fannie Mae avoid regulation, prior to pushing BP's positions to Congress. He sits on the board of ConocoPhillips and has to pick up the slack for Bill Reilly, Obama's Oil Spew co-chair. Duberstein's fees remained a cool $100,000 per quarter.

New is old in the influence peddling arena.

Monday, July 19, 2010

Senator Carte Goodwin & Wilbur Ross

Carte Goodwin helped craft mine rescue reforms after the Sago Mine disaster in 2006. He's now a United States Senator from West Virginia. Will Goodwin keep his eye out for Wilbur Ross, owner of the Sago Mine?

Ross invested in his third bank and has a stake in $5.7 billion of FDIC subsidies. They arose from his first two deals, BankUnited and First Michigan Bank. I hope Carte will reign in federal giveaways to a death dealer.

Conflicted Academic on Capital Gains & Corporate Taxes

Fresh from diminishing the employer role in health insurance coverage, Princeton economist Uwe Reinhardt went after capital gains and corporate income taxes. Dr. Reinhardt has more than one dog in that fight, as a corporate board member for:

AmeriGroup - 17,048 shares with options to purchase 142,753 shares of our common stock and 2,704 shares of restricted stock.

Boston Scientific - 77,622 shares
Reinhardt's AmeriGroup holdings gross out at$5.3 million, while his Boston Scientific shares are valued at $475,000.

Uwe received the Bush tax break on his $2.3 million profit from the sale of Triad Hospitals. Uwe's 5% break amounted to $115,000. He'd love zero capital gains when he moves his AmeriGroup, Boston Scientific, Legacy Hospital Partners or other holdings:

Dr. Reinhardt is a Trustee of the H&Q Healthcare Investors, H&Q Life Sciences Investors and Hambrecht & Quist Capital Management LLC.
Conflicted corporacrats are the rule today. It matters not whether they are Red or Blue.

Sunday, July 18, 2010

BP's Well Seep & Fund Creep

The AP reported:

An administration official familiar with the spill oversight, however, told The Associated Press that a seep and possible methane were found near the busted oil well. The official spoke on condition of anonymity Sunday because an announcement about the next steps had not been made yet.

The official, who would not clarify what is seeping near the well, also said BP is not complying with the government's demand for more monitoring.
Oil Spew Compensation Czar Ken Feinberg offered more clarification on his fund.

Kenneth Feinberg, told The Associated Press on Sunday that if BP pays fishermen wages to help skim oil and perform other cleanup work, those wages will be subtracted from the amount they get from the fund.

Longtime charter boat captain Mike Salley said he didn't realize BP planned to deduct those earnings, and he doubted many other captains knew, either.

The wage deduction is in addition to signing a waiver releasing BP from liability. The more things change, the more they stay the same. The public gets incomplete information, while BP does risk management at every turn.

Libya, Lockerbie Bomber, Blair & BP

The British Foreign Minister wrote to American officials:

"There is no evidence that corroborates in any way the allegations of BP involvement in the Scottish executive's decision to release Megrahi on compassionate grounds in 2009, nor any suggestion that the Scottish executive decided to release Megrahi in order to facilitate oil deals for BP."
Contrast the British word parsing with the statement by Colonel Muammar Gadhafi's son, the night of the Bomber's return to Libya:

"It is to be said for the first time, you (Megrahi) were present on the table in all commercial, oil and gas agreements that we supervised in that period.

You were
on the table in all British interests when it came to Libya, and I personally supervised this matter."

BP CEO Tony Hayward signed the Libyan deal in 2007, as Prime Minister Tony Blair looked on.

I can take Mr. Gadhafi at his word, especially since he avoided confrontation with Israel this week.

Will the younger Gadhafi testify before the Senate? How about fellow Senator John McCain? What did McCain learn at the Gadhafi ranch, the week before the bomber's release? Influence peddlers will insure none of this will surface.

Saturday, July 17, 2010

Oil Spill Day Before Tap Turned Off

NASA reported:

On July 14, 2010, a silvery gray patch of oil stretched across the Gulf of Mexico about 80 kilometers (50 miles) southeast of the tip of the Mississippi River Delta. This photo-like image was captured by the Moderate Resolution Imaging Spectroradiometer (MODIS) on NASA’s Aqua satellite at 1:55 p.m. Central Daylight Time.

The largest oil slick is located in the center of the image, but a few isolated ribbons of oil are visible to the east. The tan-colored waters around the river delta are full of sediment.

Southeast of the main oil patch, a very dark region may also be oil-covered. Oil smooths the water surface and changes the way it reflects light back to the satellite. Depending on the location of the oil, the angle of incoming sunlight, and the satellite viewing angle, oil-covered waters may appear much brighter or much darker than surrounding oil-free water.

Friday, July 16, 2010

Thad Allen Meets Matt Simmons

NYT reported:

Admiral Allen said that such a pressure buildup suggested that the well was not damaged. But he said that the pressure level reached — about 6,700 pounds per square inch, or more than 450 times atmospheric pressure — was below that expected for an intact well.

One explanation for the ambiguity, he said, is that the reservoir of oil 13,000 feet below the seabed could have been depleted by the well as it galloped out of control for nearly three months. But another possibility is that the well is breached, with oil and gas escaping into the rock or, worse, into the gulf through the sea floor.

That's exactly what Matt Simmons asserted for 50 days. He reiterated it yesterday to Dylan Ratigan.

Update: Pressure readings after 41 hours were 6,745 pounds per square inch and rising slowly, Allen said, below the 7,500 psi that would have shown the well was not leaking.

Update 2: Matt Simmons passed away due to accidental drowning with heart disease as a contributing factor. How many people get dissed in their death announcement? May Matt Simmons rest in peace.

BP Buying Scientists' Silence

CBS News reported on BP's latest risk management move, hiring Gulf Coast scientists:

Scientists who sign the contract to work for BP will be subject to a strict confidentiality agreement. They will be barred from publishing, sharing or even speaking about data they collected for at least three years.
Silence can be bought for $100,000 a year. Who will stand? Meanwhile Matt Simmons continues his one man crusade:

Obama Increases Well Flow

While announcing the oil spew's temporary containment from the White House, President Obama cited the new capability of capturing up to 80,000 barrels of oil per day. He called this "almost all" of the well's flow.

Funny, that's 133% of the maximum flow of the government's latest estimation. The dance of the flow rate estimators continues.

Thursday, July 15, 2010

Petroleum Byproduct Sickened Cereal Eaters

CBS News gave an update on the Kellogg's 28 million cereal box recall. It said the sickening odor and taste came from "an excess of chemicals in the liners." CBS didn't state the chemicals involved, however AOL News did. The culprit is:

Methylnaphthalene, a petrochemical

The FDA is investigating the chemical and Kellogg's recall. Who made the paper-backed foil liner with sickening chemicals and where was it manufactured? That question remains unanswered.

Stacking Cap Cuts Off Oil Spew

85 days, 16 hours and 25 minutes after the first report April 20 of an explosion on the Deepwater Horizon oil rig, oil stopped flowing into the Gulf of Mexico (through the stacking cap).

Pressure tests will determine if BP has to release oil again. To hear BP's Kent Wells technical briefing on the integrity tests click here.

A relief well will permanently plug the flow and there's a monstrous mess to clean up. Cheers to the stopping the spew, even if temporarily.

Feinberg BP's Risk Manager

Forbes reported:

Feinberg said that at his request, lawyers for BP will be involved in drafting releases that exempt BP--but not other potential defendants--from any future liability for the spill.

"This makes sense, since the release is designed to provide BP protection from lawsuits, and BP is paying $20 billion to satisfy claims," Feinberg said in an e-mail message.

The $20 billion victims fund was marketed as a first step by the Obama administration, not a permanent liability cap. It's amazing how BP injects risk management at every turn in the oil catastrophe.

BusinessWeek showed Feinberg's marketing to victims:

Kenneth Feinberg, who is overseeing a $20 billion fund to pay damage claims from BP Plc’s oil spill, pledged to create a system “more generous and more beneficial” to spill victims than taking the company to court.

Given the ExxonValdez case took two decades to resolve, Feinberg's promise won't be tested in reality anytime soon. What damage will BP oil cause over a twenty year period? That won't be compensable as Feinberg and BP rush to close out and cap liability. Recall this is Day 87 and most of the oil spilled is unaccounted for.

Wednesday, July 14, 2010

What Only BP Knows

BP Senior Vice President Kent Wells, BP's most effective communicator to date, said:

"I've had to take these steps to learn the things I've learned. Without taking those steps, it's unlikely that I would have known what I know now."

That's indicative of the hand BP and the government played over 3 months. Consider their latest move, delaying well integrity tests using the capping stack:

The decision to delay the test was made by federal authorities and BP officials Tuesday afternoon, Wells said. But the delay was not announced until Allen and BP put out news releases late Tuesday night -- continuing a pattern in which officials have waited many hours to inform the public of what is happening in the gulf.

In late May, for example, officials waited almost a day to reveal that they had suspended the top kill effort, and the news media continued to report, inaccurately, that the mud was being pumped into the well.

The top kill effort produced well pressure data. It revealed clues as to the well's integrity or lack thereof. The government conducted seismic tests on the formation around the well. The results came in prior to the announced delay.

Many have asked for information on well integrity. Little has been forthcoming. Obama missed numerous opportunities to be honest with the American people, using the crisis to push his political priorities. Those can come after the spew is stopped, while clean up continues.

Seismic Mapping Has BP Doing Further Analysis

Well integrity tests have been delayed for further analysis. RTT reported Admiral Thad Allen, National Incident Commander, said late Tuesday:

"Today I met with Secretary Chu, Marcia McNutt and other scientists and geologists as well as officials from BP and other industry representatives as we continue to prepare and review protocols for the well integrity test - including the seismic mapping run that was made around the well site this morning. As a result of these discussions, we decided that the process may benefit from additional analysis that will be performed tonight and tomorrow."

Not a good sign.

Tuesday, July 13, 2010

Deficit Commission Can Gut Health Care Reform

Deficit Commission co-chair Alan Simpson told the National Governors Association (NGA) that the new health care bill is on the table, i.e. within the their purview.

They discussed Medicaid and how states can save money. The federal government foots the bill for nearly 2/3 the cost of covering the poor, while states pick up roughly 1/3. President Obama's health reform has Medicaid expanding rapidly with Uncle Sam picking up 100% of the cost of new enrollees.

Private equity underwriters (PEU's) shop for Medicaid insurance contractors. Seeing 30% returns in health care, PEU's bought safety net hospitals as PPACA passed.

I’ve questioned how a tapped out government can keep PPACA's commitments, which don’t begin in earnest until 2014. The Deficit Commission’s recommendations start in 2012. They present their work December 1. Congress committed to an up or down vote on recommendations with 14 supporters (of 18 commission members).

Did I mention co-chair Erskine Bowles' PEU job with Carousel Capital or his goal to grow another fortune? That's in the mix.

Monday, July 12, 2010

Erskine Bowles Between Fortunes

Governor Bev Perdue introduced Erskine Bowles at the National Governors Association meeting. Closing her effusive praise for Mr. Bowles, Perdue shared Erskine's advice:

"You know Bev, when your introduce me, just tell them ...actually I'm between fortunes. I've lost one and need to make another one, so that's what my goal is."

Those are ominous words from a man co-chairing a Deficit Commission. His recommendations will determine taxes on fortune makers. The man revealed his conflicts without truly declaring them.

As for fortunes lost, the average American should be so lucky. Erskine and wife Crandall received over $1 million for their 2009 board service and together their public holdings are $4.1 million. That does not include Bowles pay from the University of North Carolina or his compensation from Carousel Capital, where Bowles serves as Senior Advisor.

Erskine Bowles is paid to represent private equity underwriters (PEU's) and Wall Street giants. His goal is to make gobs and gobs of money. How will that express in his volunteer work? Bowles pointed at America's Government Corporate Monstrosity with his advice for his co-chair:

"Always be introduced by someone you contribute to."

Spoken like a true PEU. They run in packs. (Bowles cited Britain's effort, headed by PEU Lord John Browne, former BP CEO). It's a shameless bunch.

Update 12-14-11:  Gov. Bev Perdue's campaign finance chief got 24 months unsupervised probation and a $25,000 fine for unscrupulous handling of donations.  The miscreant also raised big money for Erskine Bowles.

Sunday, July 11, 2010

Charge of the Oil Brigade

The charge for Obama's Oil Spew Commission continues to evolve in the media.

1. President Obama started off with a thorough investigation of causes.

2. The White House shifted to focusing on government's cozy relationship with the oil industry.

3. Bloomberg
cited it would "review safety procedures."

4. WSJ cited the view of co-chair William Reilly:

"The question we have is, is this a one-off event [caused by] a series of bad decisions" or evidence of broader "systemic issues" in the industry, Mr. Reilly said. He said the panel intends to examine the "organizational characteristics" of the companies, the industry and the government regulators involved, and "the culture that may have induced the decisions" that contributed to the accident.
This echoes the Baker report on BP's Texas City Refinery explosion, which killed 15. James A. Baker blamed a "misplaced culture of safety."

5. NOLA reported the deepwater drilling moratorium would be out of bounds. Co-chairs said the group would focus on "basic concerns" like:

Figure out the root causes of the catastrophic oil well blowout on April 20, determine if they were unique to that BP operation or systemic across the whole deepwater drilling industry and then recommend to Congress and the president the best way to alter policy to improve safety and preparedness for any future spills.

The commission is also looking at the response of industry and government to the spill, and when it comes to the possibility of filing interim reports within the next six months, Reilly said he's most interested in drawing quick conclusions about the environmental impact of chemical dispersants that are now being used in unprecedented volumes.

How can one draw quick conclusions regarding a long term environmental catastrophe? Those could benefit BP as it defines its maximum liability for the spill.

6. Co-chair William Reilly weighed in from Gulfport, Mississippi, his first contact with the oil spill.

"The president appointed a seven member commission on the oil spill with three essential purposes. One, to figure out what happened; secondly, figure out what to do so that it doesn't happen again; and three, what should be the future of off shore oil and gas," Reilly said.

A TV reporter said:

"Reilly hopes the Commission can quiet some of the bad press that he says is keeping tourists away from the beach."
Funny, Reilly said nothing of what he saw at the Deepwater Horizon spill site. The SunHerald reported:

Commission Co-Chair William K. Reilly is scheduled to take a National Guard flight with state DMR officials to inspect the Deepwater Horizon rig site and oiled Gulf waters off Florida, Alabama and Mississippi. Reilly will speak with members of the state’s tourism and seafood industries and then meet the press at 1:20 p.m. at Ken Combs Pier.

7. As for the six month time frame, one commission co-chair already weighed in:

Reilly said the commission won't be able to meet the six-month deadline established by Obama.

Oil Spew Commission members are scattered around the Gulf, but will meet in New Orleans. Public meetings are on tap for Monday and Tuesday. One might expect them to have a clear, stated aim. Maybe one will evolve while the spate of investigations progress.

BP's Lines of Defense

Robert Dudley's letter to highlighted BP's lines of defense during replacement of the containment cap with a new stacking cap. The replacement operation is described in the video below:

The unofficial first line of defense is the use of toxic dispersants. Dudley states:

Consistent with prior approvals obtained from the Unified Area Command subsea dispersants will be utilized at the LMRP flange during the flange removal and replacement operations.

The plan is optimized to pump, when operationally possible, 12 gal/min of subsea dispersant into the exiting oil stream using a wand placed approximately 4 feet inside the top of the LMRP.

BP's official first line is skimming:

Skimmers doubled their collection to 25,500 oily barrels of water. It's not clear the percentage of oil and water, but let's hope it's higher than 10% oil, a prior figure.

The second line involves dispersants and controlled burning:

BP relied on these strategies, prioritizing them well over skimming, which comes back in as the third line of defense:

The final line is:

Once the stacking cap is successfully installed, BP will a tool to test the integrity of the well and flow can be collected until relief wells are successful.

Saturday, July 10, 2010

Skimming Capacity Clear as Goo

National Incident Commander Thad Allen conducted a skimming tutorial last week. One might expect the Unified Area Command's skimming capacity (in barrels per day) to be shared.

Before the well blew out, BP reported its skimming capacity as 491,721 barrels of oil each day in the event of a major spill. That dropped to 171,000 bpd when the burning rig sank.

Thad Allen did share vessel numbers, but not their combined capacity:

Skimming capacity in the Gulf of Mexico was boosted more than fivefold within about 30 days in response to the ongoing oil spill that was triggered by an Apr. 20 explosion and fire on Transocean Ltd.’s Deepwater Horizon semisubmersible rig, an official said.

National Incident Commander and retired US Coast Guard Adm. Thad Allen reported that about 550 skimming vessels of various sizes were available in the gulf by early July compared with 100 large skimmers available in early June.

BP added skimmers for replacement of the containment cap. Until a new cap is fitted over the riser pipe, oil will flow freely into the Gulf. That could be over 50,000 barrels per day for up to nine days. BP officials provided a range of details on the move:

As a result, efforts to skim and burn oil off the surface will be increased, said Bob Dudley, head of BP's efforts to contain the spill.

Dudley's letter to Thad Allen provides greater detail, as did the NYT, which reported:

To cope with the oil that leaks into the gulf during the cap-swapping procedure, BP has positioned more than 40 large or midsize skimmers near the well site.

Bloomberg stated:

The process of switching caps will allow the oil to flow without restriction from the seafloor. BP will use surface ships to capture as much as possible, said company spokesman Mark Proegler.

“We have 22 large skimmers” standing by, Proegler said.

Oddly, Alaska has 120 skimmers capable of capturing 300,000 barrels of oil in 72 hours. Those could come in handy over the next week.

A trip down memory lane finds President Obama saying:

Now, when it comes to what’s happening on the surface, we’ve been much more involved in the in-situ burns, in the skimming. Those have been happening more or less under our direction, and we feel comfortable about many of the steps that have been taken.
That was in May before Top Kill's failure. Admiral Allen said the last four to six weeks have focused on skimming, specifically on BP's Vessels of Opportunity program. Note: the well blew eleven weeks ago.

It's clear that BP prioritized oil collection from the riser/blowout preventer and use of dispersants over skimming. A 110 foot boat skims oil into a 100 barrel tank, then offloads it to a barge. Captain Dave sees oiled and dead sea life.

The UAC will get to show its skimming prowess over the next week or two. In over two months BP is yet to skim its promised one day capability of 171,000 barrels. Does it have anything to do with high use of dispersants?

Twain on American Glory

“It is the will of God that we must have critics, and missionaries, and Congressmen, and humorists, and we must bear the burden.”

Uncensored Mark Twain, it took 100 years. Twain rails against American imperialism, international military intervention and giants of Wall Street. Not much has changed, Mr. Clemens.

Friday, July 09, 2010

Containment Cap Replacement Could Take Up to 9 Days

BP's Robert Dudley sent a letter to National Incident Commander Thad Allen. It said work to replace the ill fitting containment cap could take up to nine days.

60,000 barrels per day for 9 days = 540,000 barrels

Skimming capacity becomes more critical. Let's hope they replace it in four.

Corporate Sponsored Governors & Speakers

The National Governors Association meeting's $2 million cost is covered by corporations. As was the recent Western Governor's Association meeting ($470,000 in sponsorship) and the National Speakers Conference (to the tune of $500,000).

Speaking at the NGA meeting in Boston are the co-chairs of President Obama's Deficit Commission.

On Sunday, governors will discuss the risks and challenges of the federal budget deficit and the growing national debt in the closing plenary session. The Honorable Alan K. Simpson and Erskine B. Bowles, co-chairs of the National Commission on Fiscal Responsibility and Reform, will provide their insight into the monetary challenges facing the nation.

Alan Simpson spoke inelegantly on the need to cut Social Security benefits. Most Deficit Commission members have said America needs to cut corporate tax rates. Detect a pattern? Corporacrats infect our democracy such that "progressive bloggers" now write:

(The poor) who can vote have not only less money but much less social and cultural capital and thus the political system is almost entirely unresponsive to their needs.

The IMF wants the US to cut Social Security and the mortgage interest deduction and increase the gas tax.

Multiple messages vectoring around the same point, one front and center in the Governor's meeting? Social Security will be cut so corporations can pay less & no one can stop it.

How will remaining tax monies be spent? I bet you can guess. That's some serious corporafornication.

Update: Simpson's and Bowles' talk can be viewed here.

Oil Spew Commissioner on Way to Louisiana

The JuneauEmpire reported Oil Spew Commissioner Fran Ulmer is on her way to Louisiana to serve as a member of the National Commission on the Deepwater Horizon Spill. Ulmer is a former Lieutenant Governor and currently Chancellor at the University of Alaska. Both the state and university are dependent on oil money.

BP gave over $3 million to the University of Alaska (UA) in 2008. BP and ConocoPhillips donated over $30 million to UA since 1999.

The BP/ConocoPhillips connection leads to Commission co-chair William Reilly. Reilly is on temporary leave of absence from the ConocoPhillips board of directors, but he still controls over $2 million in stock. Why is this important?

BP and ConocoPhillips are partners in the massive Tiber field in the Gulf of Mexico. Would BP sell their share to make things more comfortable for Reilly? Morgan Stanley says maybe, maybe not.

Obama's Oil Spew Commission has two members with significant BP ties. They hear from the general public this coming Monday and Tuesday, after meeting with locals in Houma, La on Saturday.

Update: Toyota pressured Southern Illinois University over a professor who claimed electronics, not sticky gas pedals or floor mats, were the problem. E-mail among administrators cited the need to tout Toyota's "very productive relationship" with the university. Mrs. Ulmer is an administrator and BP has more at stake than Toyota.

Thursday, July 08, 2010

Empirical Data on Well Pressure

National Incident Commander Thad Allen spoke of a new containment cap in today's press availability:

I just want to remind everyone, that continues to be an estimated flow rate (35,000 to 60,000 bpd). Once we get this well bore completely sealed and producing, we'll have better empirical data by which to establish and refine our flow rate going forward.
FT reported:

For three days at the end of May, the fates of Britain’s biggest oil company and America’s president could be followed minute by minute on a computer display, sketched out by a dark line snaking across a white screen. BP chief executive Tony Hayward, US energy secretary Steven Chu and about 50 top engineers and scientific advisers watched in rapt concentration, studying the display for what it might reveal.

In Houston, alongside the main display, showing pressure levels in the well, other screens played video feeds from remote-controlled submarines recording the oil spewing from the broken pipes on the sea bed.

The Unified Area Command knew pressure levels in the well in late May.

It's clear that Thad Allen and company expected Top Kill to work. They didn't get serious about skimming until the procedure failed miserably. Oddly, they focused on "Vessels of Opportunity," and not international offers that started in late April. It took 44 days to take up the Dutch on their skimmer offers. It took two months to free up skimming capacity already in the U.S.

It's also clear, the government and BP have little intention of being open with the public. The government knows pressure levels in the well. Yet, they continue as if that is an unknown.

Today's "skimming tutorial" didn't occur in the press availability. I hope reporters asked lots of questions about President Obama's "all out response."

Perfect Citizen's "Traffic Cameras"?

WSJ reported:

The federal government is launching an expansive program dubbed "Perfect Citizen" to detect cyber assaults on private companies and government agencies running such critical infrastructure as the electricity grid and nuclear-power plants, according to people familiar with the program.

The world wide web could easily be part of America's critical infrastructure.

The surveillance by the National Security Agency, the government's chief eavesdropping agency, would rely on a set of sensors deployed in computer networks for critical infrastructure that would be triggered by unusual activity suggesting an impending cyber attack, though it wouldn't persistently monitor the whole system, these people said.

Do any sensors act as trap doors, mentioned recently as part of cyber warfare? A Pentagon official says not to worry:

Any intrusion into privacy is no greater than what the public already endures from traffic cameras. It's a logical extension of the work federal agencies have done in the past to protect physical attacks on critical infrastructure that could sabotage the government or key parts of the country.
Some might wonder the government's interest in private computer networks:

The U.S. government has for more than a decade claimed a national-security interest in privately owned critical infrastructure that, if attacked, could cause significant damage to the government or the economy.
Raytheon is the contractor for Perfect Citizen. One internal e-mail actually stated, "Perfect Citizen is Big Brother." How long will that employee last?

Personal privacy was once critical for perfect citizens. It's absence is now expected.

Thad Allen's Skimming Tutorial

National Incident Commander Thad Allen said several notable things in today's "skimming tutorial" at Theodore, Alabama. He mentioned a four to five week time frame to get things organized. Didn't the Deepwater Horizon sink on April 22? It's been eleven weeks. I take his words as confession that Admiral Allen and BP did not take skimming seriously for the first six or seven weeks.

Allen cited the overwhelming response from "Vessels of Opportunity" and how the variety of craft could be used for skimming. He compared them to Revolutionary War Minutemen, some showing up with a musket, others with a hatchet. Thad ignored the Colonies' cannon. Alaska has 120 skimmers capable of skimming 300,000 barrels of oil in 72 hours.

Weather should enable adding pumping capacity from the damaged well. The pattern has projected flow rates going up as processing capability is maxed out. Will that express again?

Most of the catastrophic spill has not been captured or burned. International offers of skimmers arrived in late April and early May. Allen did not say why they lingered under his watch.

While skimming needs grow by the day, Thad might have found a way to discredit the Supertanker solution.

Clinton/Bush MMS now Obama's BOEMRE

How far will Attorney General Eric Holder go back in his Oil Catastrophe investigation? Minerals Management Service (MMS) adopted a voluntary approach to safety and environmental compliance in 1994 during the Clinton administration. Sixteen years later MMS has a new name, the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE).

BOEMRE has 2010 SAFE Awards to pass out. BP was one of three finalists for the drilling safety award, until the Deepwater Horizon blew out.

The first relief well could intercept the runaway spew by July 27. Should that not work, private oriented Bill Clinton has the answer, one he picked up from Matt Simmons.

Wednesday, July 07, 2010

BP's Hayward in UAE to Buy Sand?

BP CEO Tony Hayward met with Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed Al Nahyan. Reports suggest Hayward angled for investment funding, similar to The Carlyle Group and Citi. However, Tony could have another motive.

BP could use a lot of sand to replenish Gulf Coast beaches. The Crown Prince's brother is on film using sand creatively.

Might Tony be in the UAE for sand? Could Dennis Blair facilitate the deal on behalf of Obama's State Department, currently busy processing international aid offers?

Other Middle Eastern countries interested in buying BP shares on the cheap include Libya and Saudi Arabia.

The Abu Dhabi Sheikh saved the Arabian Oryx. Can he do the same for Tony Hayward and Gulf Coast wildlife?

Tuesday, July 06, 2010

Oil Movement

The area closed for fishing is 34% of the Gulf of Mexico. NOAA's 72 hour Nearshore Surface Oil Forecast includes the upper Texas Coast down to Freeport.

Monday, July 05, 2010

BP's Numbers Update

BP published its official numbers. Graphically, they show since the spill began:

In the last week only 21,000 barrels of oily water were skimmed and no controlled burns conducted. This came from Hurricane Alex, five hundred miles away. Two lows threaten to keep seas rough around the spill area.

Note how bad weather impacts the spill. It prevents adding collection capacity from the blowout preventer lines, pushes oil into marshes (or around the Gulf), prevents skimmers from doing their work and impedes burning of surface oil.

With hurricane season, BP and the government may have missed prime skimming season.

Sunday, July 04, 2010

Catastrophic Case of BP

BP Highlights, Day 75:

-A Whale Supertanker Skimmer is under evaluation. It may be approved in time for a busy storm season. And other badly needed skimmers, Dutch or otherwise?

-National Hurricane Center adds Deepwater Horizon to Wind Probability Product.

-NOAA publishes Hurricanes & the Oil Spill. After reading it my question is: If oil evaporates (as part of biodegradation), does rain wring out those chemicals?

-Entrix (BP's environmental consultant) has an interesting post blowout history.

-BP asked 10% partner Mitsui for $111 million. What will ask from Anadarko, a 25% owner of the Deepwater Horizon well?

-Blackstone Group is helping BP search for a strategic investor. Will a private equity underwriter or sovereign wealth fund pony up for £6billion in shares?

-Freelance photographer detained for taking pictures of BP's Texas City refinery. The ProPublica story covered BP's release of over 500,000 pounds of toxic chemicals from April 6 to May 16. BP's well blew out April 20.

-Churches and nonprofits go to BP with hand out.

-Job 1 for BP, risk management. (A theme I've mined frequently on this blog)