Lessons Learned: "Unprecendented Twists"

BP and the Bush White House cited "unprecedented disasters" in their investigative reports. Frances Townsend crafted the White House Lessons Learned report after Hurricane Katrina. It's not clear who wrote BP's Harnessing the Lessons of Deepwater Horizon. No one signed the report.

Ms. Townsend does risk management consulting for Baker Botts, a law firm with a history of working for BP. Did she play a role in BP's whitewash? Townsend has the skills, having omitted the hospital with the highest Katrina death toll and not addressing responsibility, methods or performance in evacuating hospital and nursing home patients from dead facilities.

BP submitted a similarly flawed analysis. It cited over 5,000 Vessels of Opportunity. Was that for one week or a shorter period? Consider data from news sources:

2,500 (July 8)
3,200 boats (July 15)
2,400 boats (July 22)
1,400 boats (August 1)

400 boats (August 19)

It should have been called Vessels of Vanishing Opportunity (VoVO).

BP's Lessons Learned report claimed it went from skimming 450,000 bpd to over 1.2 million bpd. Final skimming numbers were a measly 150,000 barrels. Over three months time, BP skimmed one third of its skimming capacity on April 26? That's as laughable as Thad Allen saying skimming had been held up by the need to organize the Vessels of Opportunity program.

Fran Townsend played the American public after Katrina. Did she snooker us twice? Regardless, BP and politicians play the public for fools. Do you buy that BP needs to keep drilling in the deepwater Gulf to fund $20 billion in restitution? If so, it will soon be patriotic to buy BP gasoline.

HCA Dominates Most Profitable Hospitals

HCA owns eleven of the America's top twenty-five "most profitable hospitals." HCA's investors filed a S-1, taking the company public in a $4.6 billion stock sale. Investors include Bain Capital Partners, LLC, Kohlberg Kravis Roberts & Co., Merrill Lynch Global Private Equity, Citigroup Inc., Bank of America Corporation and HCA founder Dr. Thomas F. Frist, Jr.

HCA paid those investors $2.25 billion in special dividends in the last year. They expect $2.1 billion in IPO proceeds, giving them a take of $4.35 billion.

Community Health Systems has three of the top twenty five, including the most profitable hospital, Flowers Medical Center in Dothan, Alabama. CHS acquired Flowers from Triad Hospitals, near the time KKR purchased HCA. The two deals increased interest expense by over $2 billion. That cost is passed on to patients

Ironically, huge profits, special dividends, and dramatically increased interest expenses are hallmarks of private equity underwriters (PEU's). They're salivating over health care reform.

While Mayo has two hospitals on the list, they utilize a vastly different management philosophy, one focused on quality. While President Obama talks a good quality game, his plans don't include Mayo's methods. His reform mantra could be "hold the Mayo."

Mariner Well Explodes in Gulf of Mexico

A Gulf of Mexico well exploded while "undergoing maintenance activities." Mariner Energy owns the flaming Vermilion Platform 380, where 13 workers were rescued from the water. Apache signed a deal to acquire Mariner for $3.9 billion in cash and stock, but the deal is yet to close. Mariner's 10-K listed the well:

Vermilion 380

Operator- Mariner
Working Interest- 100 %
2009 production- 1.1 billion cubic feet equivalent (Bcfe)
Net estimated proved reserves- 33.2 Bcfe
Estimated reserves % Oil/% Gas- 47%/53%

It stated:

At year-end 2009 estimated proved reserves attributed to our Vermillion 380 field were 33.2 Bcfe, consisting of approximately 47% oil and NGLs and 53% natural gas. During 2008 and 2009, we drilled five wells and added additional production capacity on the “A” platform. Hurricane Ike damaged the structure with the rig on the platform, causing us to suspend drilling while underwater structural repairs were made. We brought the platform back on production at reduced rates until the facilities upgrade was finished. The platform is currently producing approximately 28 MMcfe per day. Our working interest in this block is 100%. Production at Vermillion 380 was approximately 1.1 Bcfe in 2009.

There is no word on the specific maintenance activities under way at Vermilion. Let's hope they weren't changing the blowout preventer.

Early reports sound similar to the Deepwater Horizon. CNBC cited an oil sheen, likely from diesel fuel on board the rig.

A mile-long oil sheen spread Thursday from an offshore petroleum platform burning in the Gulf of Mexico off Lousiana, west of the site of BP's massive spill.

However, the story changed from "not in production" to "in production" at the time of the explosion. White House Press Secretary Robert Gibbs offered this:

"We obviously have response assets ready for deployment should we receive reports of pollution in the water," Gibbs said.

Something's in the water.

Southern Governors Entice Chinese Businesses

The Southern Governors' Association hosted two toxic groups, BP and a Chinese delegation. The South wants to rise again via Chinese trade, specifically recruiting Chinese companies to locate in the southern U.S.

Governors want to “sell a unified South that offers low taxes, less regulation, generally lower energy costs, quality of life, a low cost of living, and states where labor unions are not as prominent or powerful.”

Does "unified South" mean pooling industrial development dollars and support. The Chinese government charges U.S. companies for the right to do business in their country. America pays employers via a plethora of local, state and federal subsidies.

The Chinese interchange produced an odd statement.

(American) businesses are surprised how involved government is in business (in China) and the Chinese are surprised at the lack of involvement of government here.

I wonder how the bribes compare?

Thad Should Order BP to Pay Bills

National Incident Commander Thad Allen cited a payment dispute over BP's spill command center. Bloomberg reported:

Officials in Louisiana’s St. Bernard Parish said at a press conference yesterday that they’d received notice to vacate the center within 10 days because BP hadn’t paid for land use, fuel and other services. There are payment disputes at two other bases, Craig Taffaro, parish president, said in an e-mailed statement today. BP wants to renegotiate the agreement.

The Montgomery Advertiser reported:

Feinberg and Dudley acknowledged there had been problems in compensating businesses.

Allen could require BP pay its bills and honor signed agreements. But that's not the BP way. And Thad follows orders.

Standard & Poors: Erskine & Al's Wizard

HuffPo reported:

S&P just put our elected officials on notice: Submit to the proclamations of the Deficit Commission or we'll downgrade our rating of government debt.

Recall Standard & Poors helped create the financial implosion by stamping financial vaporware "Triple A."

Do Deficit co-chairs Erskine Bowles and Al Simpson need a Rahm Emanuel coordinated campaign, one vectoring from all quarters? Bowles' Morgan Stanley is doing its part. Commission member Kent Conrad aided the cause.

However, it's hard to override Simpson's unfunny folk-isms and Bowles' stated greed. Maybe, the Wizard of Oz could scare Dorothy into submitting to the proclamations of the Deficit Commission. S&P might need more stage props to intimidate the public.

Might this one work?



Beware the Deficit Commission hand.

BP Sponsors Southern Governors' Association

BP made Founder level status through its sponsorship of the Southern Governors' Association meeting. The SGA website states

Benefits of our Founder level include:

• Participation in special private events with governors during the Annual Meeting and as otherwise scheduled by SGA, determined by governors’ schedule
• Six (6) complimentary registrations to all SGA Annual and Business Meetings (except for those portions explicitly limited to governors only)
• Six (6) invitations to a private reception with SGA’s governors at the Annual Meeting
• A seat with at least one governor during the Annual Meeting State Dinner
• Invitations to each of SGA’s quarterly breakfasts attended by
  the governors’ Staff Advisory Committee representatives
• Invitations to periodic Washington, D.C.-based “coffee breaks” with governors, as determined by his/her schedule
• Invitations to SGA-sponsored legislative briefings
• Prominent recognition on SGA’s Web site, with a link to the CAP member’s Web site, as well as in all Annual Meeting materials, SGA’s annual report and other appropriate publications
• Portfolio of SGA position papers

Oddly, incoming BP CEO told a different story than his company's internal investigation into the Deepwater Horizon accident. Did he tell the truth to the Governors? What did he tell the governors about the South's energy future?

The governors did come through for BP. In an upcoming meeting with the White House, the SGA wants to know the administration's plans for lifting a moratorium on new deepwater drilling.