Monday, May 31, 2010

Oil Catastrophe from Space

Transformational images of our planet from space were supposed to elevate man above tribalism and greed. May this video accelerate the earth shaking move. To date oily corporate and political leaders prioritize risk management over truth telling.

NOAA predicts oil 200 miles west of Key West on June 2. The question is whether the Loop Current breaks off an eddy. If so, Texas could be in trouble as dog days descend.

BP's Risk Management Plumage in Full Display

The AP reported more BP risk management language in response to monstrous oil plumes floating beneath the surface of the Gulf of Mexico:

On Sunday, BP's CEO Tony Hayward disputed the existence of the plumes, saying testing by the company showed no evidence that oil was being suspended in large masses underwater. Hayward said oil's natural tendency is to rise to the surface, and any oil found underwater was in the process of working its way up.
And the public is supposed to trust BP, which lied at nearly every turn since the Deepwater Horizon blew out on April 20?

Responding to Hayward's assertion, one researcher noted that scientists from several different universities have come to similar conclusions about the plumes after doing separate testing.

Scientists who study the Gulf said their efforts to track the spill had been hobbled by a shortage of research vessels.

BP has no incentive to provide more research vessels to document oil flow and corresponding damage. BP's risk management plumage is in full display, as they issue most of the orders from the Unified Area Command, where President Obama said the government is "potentially in charge."

Despite BP's promise to behave responsibly, their strategy is similar to past disaster perpetrators; deny, delay, claim ignorance, and shift the blame with "unprecedented nature" and "nobody expected" language. This will be a very long haul for justice.

Sunday, May 30, 2010

Obama's in Charge, Except When BP Is

An April 29 President Obama promised an "all out response" to the Deepwater Horizon blowout. A month later he held a press conference on the Gulf oil catastrophe. He said "I'm fully engaged," while implying criticism is politically motivated.

I realize that this entire response effort will continue to be filtered through the typical prism of politics.

Consider his language:

a catastrophe that is causing tremendous hardship in the Gulf Coast, damaging a precious ecosystem, and one that led to the death of 11 workers who lost their lives in the initial explosion

this economic and environmental tragedy

this oil spill is an unprecedented disaster

this disaster should serve as a wake-up call

Despite his strong words, President Obama is yet to declare the spill a national emergency. But he did appoint a Commission:

Still, preventing such a catastrophe in the future will require further study and deeper reform. That's why last Friday, I also signed an executive order establishing the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling.

Obama's co-chair sits on the board of ConocoPhillips, a joint venture partner with BP in the massive Tiber field in the Gulf of Mexico.

In a move similar to President Bush promoting shopping after 9-11, Obama encouraged people to spend money on Gulf vacations:

I should also say that Americans can help by continuing to visit the communities and beaches of the Gulf Coast.

One translation, please help minimize BP's economic damages. Another, enjoy them now because it might be a long time before you can again.

Obama deployed strong language on who's in charge:

But make no mistake: BP is operating at our direction. Every key decision and action they take must be approved by us in advance.

This makes it sound like BP is coming up with all the ideas. Their ability to take shortcuts is well known.

For all the clarity President Obama provided, government actions show a muddied picture. Did the Unified Area Command (UAC) approve having fishermen sign release of liability forms or the move to consolidate legal cases in a friendly Houston court? Did the UAC wait patiently for BP to provide video needed to define the scope of the disaster? It took the government five weeks to estimate flow from the sea floor.

What about BP's move to turn down offers of international help? State Department spokesman P.J. Crowley says the final decision on international offers is BP's. The Coast Guard cites BP's rules in preventing reporters from viewing oiled beaches and marshes.

Who orchestrated the false hope during top kill? Thad Allen said the well head would be cemented, while pumps sat idle.

BP officials, who along with government officials created the impression early in the day that the strategy was working, disclosed later that they had stopped pumping the night before when engineers saw that too much of the drilling fluid was escaping along with the oil.

Viewed through the prism of disaster management, the President has the authority to do more. Title 33, Section 1321 says:

(A) If a discharge, or a substantial threat of a discharge, of oil or a hazardous substance from a vessel, offshore facility, or onshore facility is of such a size or character as to be a substantial threat to the public health or welfare of the United States (including but not limited to fish, shellfish, wildlife, other natural resources, and the public and private beaches and shorelines of the United States), the President shall direct all Federal, State, and private actions to remove the discharge or to mitigate or prevent the threat of the discharge.

(B) In carrying out this paragraph, the President may, without regard to any other provision of law governing contracting procedures or employment of personnel by the Federal Government
(i) remove or arrange for the removal of the discharge, or mitigate or prevent the substantial threat of the discharge; and
(ii) remove and, if necessary, destroy a vessel discharging, or threatening to discharge, by whatever means are available.

Instead, America has a private company rescuing itself in a disaster, a feat not seen since New Orleans hospital evacuations after Hurricane Katrina.

Oil will flow until relief wells are completed or Jacques Cousteau and Red Adair return together from the afterlife. Not counting on the pair heroically appearing, the challenge is vacuuming oil from the Gulf and sopping it up on land.

It will happen BP's way on BP's time table, despite the President's assurances. The Red team should be be excited by this private sector solution to a greed inspired disaster, only it's Blue led.

Saturday, May 29, 2010

Top Kill Fails

Top kill's failure punctuated day 40 of BP's oil catastrophe. BP's abysmal reputation took another hit. Reuters reported BP's latest risk management pitch:

Hayward had given top kill a 60 to 70 percent chance of success, but the procedure was fraught with risk because it had never been attempted at the depth of the well, a mile (1.6 km) beneath the sea.

"I am disappointed this operation did not work," Hayward said in a statement. "The team executed the operation perfectly and the technology worked without a single hitch."

Except for the hitch of a system too open to push down the oil and cap the well with concrete.

The Obama administration and BP haven't been honest with the public. They sold a "working top kill" when pumps weren't pushing mud. Today, President Obama had the gall to remind us of their staging.

"While we initially received optimistic reports about the (top kill) procedure, it is now clear that it has not worked," Obama said in a statement.

It's now a race to pump spewing oil from the sea floor into tankers on the surface. That won't happen until day 44, at the earliest. More time is wasting, according to Matt Simmons.

Forgetful Frances Townsend Spews on Daily Beast

Frances Townsend penned the following in her Daily Beast column:

When the private sector and the civilian agencies of the federal government fail to anticipate, prepare, respond, and recover from a catastrophic event, we cannot reflexively turn to the U.S. military who are already fully engaged in their assigned missions. When the private sector and civilian agencies—those who are responsible—fail to man, train, and equip themselves for their assigned missions, we must not turn to the only national capability we have confidence in to bail them out!
Funny, Frances did that as a White House civilian, responsible for Homeland Security during Hurricanes Katrina and Rita. She contacted Defense Secretary Donald Rumsfeld as Hurricane Rita raged in the Gulf of Mexico. Her version of the story involves four letter words.

Fran has a long history of working the corporate side while "serving the public." Is she doing that as risk management practice chief for Baker Botts, the law firm of James A. Baker, III? Baker Botts worked for three Deepwater Horizon players, BP, Transocean, and Halliburton. If Fran's under their hire, she should declare her conflict of interest.

Townsend's hack investigation skills are already known. She made no mention of Memorial Medical Center in the White House Lessons Learned report. Who omits the hospital with the highest patient death toll from an investigation, especially one so politically connected?

FEMA drilled on Hurricane Pam and Fran's boss botched Katrina. Townsend ran to Rumsfeld as Rita bore down. This public servant turned to the military when she was clearly unready or incapable of fulfilling "her assigned mission."

Fran waxed sage:

There continue to be failures across the private and public sectors for which the American people must demand accountability. Absent clear accountability we will leave not only this environmental tragedy for our children but the legacy of incompetence for them to correct. We owe them better. We owe them more.

The Bush administration drilled on oil spills in 2002, 2004 and 2007. The Obama team conducted their drill in March 2010. Mrs. Townsend had a role in building America's disaster response, however oily.

As for accountability, I demanded it from Fran's boss, during and after Katrina. For four years and counting, I never heard a peep.

Frances Townsend's beastly column is laughable, yet her reach grows like the oil stain. She owes us better. She owes us more.

NOAA's Report on Oil Catastrophe

NOAA's May 28th report shows the following:

1. Of four listed, two aircraft are on the job. An Otter has been reassigned to the West Coast, while the King Air is expected out of maintenance.

2. Eight ships are listed. Six are in dock, one for a press conference, two for repairs and three research vessels are "alongside."

3. Fishery closure covers 25% of the Gulf of Mexico.

4. Turtles dead - 225

5. Dolphins dead - 24

This doesn't feel like an "all out response." promised by President Obama on April 29.

Friday, May 28, 2010

Top Kill Pictures

The top picture comes from the second phase of Top Kill. The lower one is from the first effort. It's difficult to see how the procedure will work on an open system, but I'm cheering for success.

The Obama administration hasn't spoken to the Supertanker question asked during his press conference. Nor has he addressed Matt Simmons' assessment that a much larger leak is nearby.

The rig blew April 20. On April 29 President Obama promised an "all out effort." On May 27 government officials released an estimate of the flow rate. Situational awareness and problem scope are early tasks in disaster management. Matt Simmons said we've wasted 37 days. The clock sits at 39.

Thus far, it's an information abyss, loaded with risk management language. Pay attention to BP's judge shopping in the Petroleum Club. McClatchy caught up with my find, over two weeks later.

Update: The junk shot didn't hold. “I won’t say progress was zero, but I don’t know if we can round up enough mud to make it work,” technician was reported as saying. “Everyone is disappointed at this time.”

Thursday, May 27, 2010

BP Pauses Top Kill for More Mud, Oil Still Flows

BP's top kill effort was suspended for much of Thursday "so crews could monitor their work and bring in more heavy drilling mud to shoot into the blown-out well 5,000 feet underwater."

BP insisted the top kill was progressing as planned, though the company acknowledged drilling mud was escaping from a broken pipe along with the leaking crude.

"The fact that we had a bunch of mud going up the riser isn't ideal but it's not necessarily indicative of a problem," said spokesman Tom Mueller.

As the system isn't closed, what is BP pumping into the line to maintain pressure? So far, there are no answers. BP's live feed is black.

The company admits that oil is still flowing out. Obama's Thad Allen appears less than forthright with his comments. NYT reported:

BP officials, who along with government officials created the impression early in the day that the strategy was working, disclosed later that they had stopped pumping the night before when engineers saw that too much of the drilling fluid was escaping along with the oil.
WSJ reported:

The company temporarily stopped the flow of hydrocarbons while it was pumping drilling mud at high pressure earlier this week, but pressure from the well pushed back out into the ocean a combination of oil, gas and drilling fluid when the pumping stopped.

Let's hope "top kill 2" works. Dylan Ratigan interviewed two oil men who remain skeptical.

The Irony of Mud

The LA Times reported:

Drilling fluid has blocked oil and gas, U.S. Coast Guard Adm. Thad Allen says. Engineers plan to begin pumping in cement and then will seal the well.

BP pumped untold amounts of drilling mud into the blowout preventer in the top kill operation. Thad Allen said one ship ran out of mud and a second ship was on the way. The system isn't closed. What do they pump in the meantime?

The accident happened in part because BP pulled the mud from the well in the cementing operation. BP wanted to reuse drilling fluids.

The U.S. government released its official estimate of the spill rate, 19,000 barrels a day or roughly 800,000 gallons of oil. The projections came 5 weeks after the Deepwater Horizon blowout. BP's internal data suggested 14,000 barrels a day. The public wasn't informed by government or BP officials, which stuck to the 5,000 barrels a day projection.

Should the cement seal be successful, a monstrous cleanup and investigations await. Obama's Oil Catastrophe Commission has a muddy co-chair. William Reilly is a board member for ConocoPhillips, which has a joint venture with BP on the massive Tiber field in the Gulf of Mexico. The mud stain widens.

Update: BP pauses top kill effort. Obama failed to respond to the supertanker suggestion in today's press conference. Dylan Ratigan interviewed two men about this idea.

Monday, May 24, 2010

San Angelo Hospice Will Change Owners for Second Time in Two Years

VistaCare Hospice in San Angelo will change hands again. Odyssey HealthCare consummated its VistaCare purchase in March 2008. Two years later, Odyssey will sell out to Gentiva, a huge home health care provider. The price is $1 billion, with Gentiva borrowing $1.1 billion to do the deal. There's no equity financing, all debt.

What makes banks willing to loan 110% on the deal? Uncle Sam's check writing. Medicare pays 93% of Odyssey's revenue and government programs account for 95% of Gentiva's hospice revenue. Gentiva's annual report stated:

Medicare reimbursement rates for hospice services increased 3.3 percent effective October 1, 2007, increased 3.6 percent effective October 1, 2008 and increased 1.4 percent effective October 1, 2009.
Gentiva has predictability on the revenue side. In addition, Uncle Sam pays a portion of provider's capital costs, so taxpayers will foot much of the interest on $1.1 billion in deal financing.

The San Angelo office is part of a larger organization.

VistaCare 4,500 average daily census (adc)
Odyssey/VistaCare 12,400 adc
Gentiva/Odyssey 14,000 adc
Odyssey is the heavier hospice hitter, with 90 Medicare certified hospice programs in 29 states. Gentiva is in six states. Hospice revenue breakdown shows a similar pattern:

Odyssey/Vistacare - $686 million
Gentiva - $75 million
Hospice David is buying Goliath and borrowing heavily to do so. San Angelo experienced this when Community Health Systems purchased Triad Hospitals, owner of San Angelo Community Medical Center. The increased debt burden passed onto to each CHS facility was $4.1 million per year.

Buyout costs are passed on to customers, in this case patients. How will Gentiva's purchase impact VistaCare of San Angelo? It remains to be seen. Obama's health reform is heating up the deals.

Sunday, May 23, 2010

It's Obama's Katrina, Mr. Gibbs

WSJ reported:

White House press secretary Robert Gibbs dismissed media critics who have said the spill would become the Obama administration's Katrina, the hurricane that devastated New Orleans in 2005. In the case of Katrina, Mr. Gibbs said, the federal government didn't response in the beginning. With the BP incident, "we were there immediately. We have been there ever since," he said.
This chronology could aid Gibb's recollection:

April 20
Deepwater Horizon rig explodes, killing 11 people.

April 24
Gibbs said "accidents happen" and Obama stated the event would not halt his push for offshore drilling off the East Coast and Florida. The spill is 400 square miles.

April 26
The spill grows to 1,800 square miles.

April 29
The Obama administration pledged an all-out response Thursday to the massive oil spill now expected to reach the Gulf Coast within a day and dispatched top officials to the region to help coordinate defenses against the potential environmental disaster.

April 30
Two Air Force C-130s were sent to Mississippi and awaited orders to start dumping chemicals on the oil spill.

May 1
Thad Allen put in charge of emergency response.

May 23
A government team spent the weekend crunching reams of existing data—from video footage and pressure readings to overhead imagery—to try to come up with a more accurate estimate by early this week.

Actually, "deer in the headlights" Bush acted twice as fast as a similarly flatfooted Obama. Both excel at corporate risk management. Watch Obama's actions, not his lips. BP has proven it cannot be trusted and the President remains hands off.

Saturday, May 22, 2010

Oil Spill Co-chair: More Government Love for PEU's

President Obama showed love for private equity underwriters (PEU's) with his last two appointments.

BP Oil Spew Commission - William Reilly, Senior Advisor TPG

Deficit Commission - Erskine Bowles, Senior Advisor Carousel Capital

William Reilly is much more than the ex-head of the World Wildlife Fund. He is President of Aqua International, a private equity firm, and sits on the board of eight companies, including ConocoPhillips. ConocoPhillips is a joint venture partner with BP on the Gulf's Tiber field and an Alaskan natural gas pipeline.

The Erskine Bowles household sits on the boards of Morgan Stanley, JP Morgan, Cousins Properties, Deere, Sara Lee and a number of privately held firms.

These influential and conflicted people will head commissions determining the future of offshore oil drilling and corporate taxes. It should be no surprise that PEU's came through financial reform with nary a nick. They are the elephant in the Obama White House.

Friday, May 21, 2010

Eddies in Gulf Loop Current: Threat to Florida or Texas?

An eddy in the Gulf Loop Current could change the course of the catastrophic oil spill. Thus far, south winds pushed oil to Louisiana, while northers blew it toward the Loop Current.

A new eddy, possibly forming off Southwest Florida could protect the Keys and the Gulf Stream. It could mean serious trouble for Texas should oil be caught in a westward floating ring.

Governors Charlie Christ and Rick Perry face the consequences of BP's virtual economic terminator. Who will blink first?

Thursday, May 20, 2010

Security Breach at Federal Building is Extremely Serious Misdemeanor?

The Associated Press reported a Federal Judge gave four boys a scolding for attempting to spy on a U.S. Senator. The article stated:

U.S. District Judge Stanwood Duval Jr. said Wednesday he isn’t exercising his right to hear the case even though the four defendants are charged with an “extremely serious” crime involving a security breach at a federal building.

“Deception is alleged to have been used by the defendants to achieve their purposes which in and of itself is unconscionable,” Duval wrote. “Perceived righteousness of a cause does not justify nefarious and potentially dangerous actions.”

James O’Keefe, Stan Dai, Joseph Basel and Robert Flanagan are scheduled to appear before Magistrate Daniel Knowles III on May 26 for arraignments on misdemeanor charges of entering a federal building under false pretenses. Duval said he has reviewed their plea agreements.

Misdemeanor charges? How could that happen in security fanatical America? It's the "just us" system for the politically connected:

O’Keefe is a videographer famous for wearing a pimp costume in a video that embarrassed the ACORN community organizing group.

According to several media outlets, Robert Flanagan is "the son of William Flanagan, the acting U.S. Attorney for the Western District of Louisiana."
Imagine the charges if a real pimp tried to bug a Senator's phone. It'd be more than "double secret probation."

Update: James O'Keefe was sentenced to three years probation, 100 hours of community service and a $1,500 fine. The others received two years probation, 75 hours of community service and $1,500 fines.

Witness for the Ocean

Testimony from Dr. Sylvia Earle before the House Transportation and Infrastructure Committee on May 19, 2010. CSPAN shows her saying:

It seems baffling we don't know how much oil is being spilled. We don't know where the oil is in the water column. (8:48)

Not only is the unruly flow of millions of gallons of oil an issue, but also the thousands of gallons of toxic dispersants that may make the ocean look a little better on the surface, where most of the people are, but make circumstances alot worse under the surface, where most of the life in the ocean actually is. Cosmetic clearers do not solve the problem. They are almost certainly making matters worse for life in the ocean. (10:50)
The flowchart below Dr. Earle's picture is from the report on the consequences of Australia's Montara rig blowout. The image highlights the toxic impact of dispersants under long term use.

The House Committee heard only one witness for the ocean. They endured a line of corporate and government officials dispersing risk management from "a unified command."

Such testimony won't come close to balancing out, much like BP's reported numbers. News updates indicate the siphon is pumping 5,000 barrels a day into the tanker. That's BP's estimate for the whole spill.

A month into the spill and the Obama team still can't tell the public the truth.

Oil Catastrophe Estimated at 4 Million Gallons per Day

The CBS video shows BP clearly in charge, from defining security rules for the Coast Guard to officially estimating the size of the leak based on underwater video. McClatchey reports:

The latest video footage of the leaking Deepwater Horizon oil spill in the Gulf of Mexico show that oil is escaping at the rate of 95,000 barrels — 4 million gallons — a day, nearly 20 times greater than the 5,000 barrel a day estimate BP and government scientists have been citing for nearly three weeks.
That means the siphon is not collecting 3/5ths of the spill, but 3/100ths. Despite the spill being an environmental crime scene, video of the numerous leaks is under BP's total control.

BP's risk managers are in charge. Obama's government plays the willing partner. Who knew the Coast Guard would enforce BP's rules?

Wednesday, May 19, 2010

BP's Risk Management Lingo

BP CEO Tony Hayward stuck to his lawyer's lines.

I think the environmental impact of this disaster is likely to be very, very modest. It is impossible to say and we will mount, as part of the aftermath, a very detailed environmental assessment as we go forward. We’re going to do that with some of the science institutions in the U.S. But everything we can see at the moment suggests that the overall environmental impact of this will be very, very modest.

Were they written by Baker Botts and Frances Townsend?

What can't be seen lies under the surface of the Gulf. The wellhead continues spewing oil unabated and the 21 inch pipe is diverting 2/5ths to 2/50ths of the flow to an oil tanker overhead.

Congress should uncap economic damages for BP, Transocean, Halliburton and Cameron. Truly independent scientists should evaluate the environmental damage, not BP hired stooges. Once the picture has been painted, then elected leaders can talk about a cap.

BP has a dark history with "accidents" and their language cannot be trusted. Verify the harm over time. That will enable accountable officials to assess appropriate economic damages.

Massachusetts Health Costs Skyrocketing

The Obama administration sold health reform as a cost cutter. Having everyone in the pool would "bend the cost curve." The bill uses the "economy of delayed implementation" according to Peter Orszag, thus major coverage expansion doesn't begin until 2014.

This gives America four years to watch Massachusetts health reform, now three years old. Covering everybody didn't bend Massachusetts' skyrocketing health care costs. It didn't save Caritas Christie, the largest nonprofit community hospital system in New England. Caritas Christie sold out to Cerberus Capital Management, a private equity underwriter (PEU) which expects skyrocketing investment profits.

Governor Deval Patrick uses the same language as the Obama team, health reform should cut business costs. That leaves individuals, health care providers and the government on the hook as businesses back away from their historical commitment.

The Governor's Jobs Bill is described as:

The plan also includes measures to provide businesses with access to working capital, ease unemployment insurance costs, extend tax relief to businesses that create new jobs, and establish a new organization dedicated to providing the resources businesses need to grow.
Apparently, the Red and Blue teams are competing on corporate welfare. I can't wait to see the recommendations from Obama's Deficit Commission, already using corporate tax cut language.

The rationale for national health reform isn't holding in Massachusetts. Four years is a long wait for help. Millions more will lose health care coverage as employers crop or shed the benefit. CBO expects 6 million to go off CHIP and Medicaid between 2011-2013.

How many safety net hospitals will follow Caritas Christie, close or sell out at fire sale prices to PEU's. What will America look like by 2014? What will four more years of deform by the Government-Corporate Monstrosity (GCM) bring?

(The GCM is Eisenhower's Military-Industrial Complex on steroids, encompassing health care, banking, infrastructure, homeland security, intelligence and the military.)

Tuesday, May 18, 2010

BP's Special Investigation Panels

The Obama ordered special investigation into the BP oil catastrophe is not the company's first. James A. Baker, III lead a Bush investigation into the Texas City refinery explosion, which killed 15 people. Bush's Chemical Safety Board, a federal agency, recommended BP conduct an independent investigation. They tapped James A. Baker, III, to chair the panel. Baker is a longtime close Bush associate and BP attorney via Baker Botts.

"The Report of the BP U.S. Refineries Independent Safety Review Panel" stated:

When systems and controls deteriorate, everything can come together in the worst possible way. Equipment malfunctions and controls fail. An explosion and fire occur. People lose their lives or suffer horrible injuries. Families and communities are devastated. (page i)

The CSB noted that the BP Texas City refinery had experienced two other fatal safety incidents in 2004, a major process-related hydrogen fire on July 28, 2005, and another serious incident on August 10, 2005. (page viii)

The January 2007 report wouldn't directly state management caused the deterioration in systems and controls. It cited a lack of emphasis on process safety.

In a press release issued on August 17, 2005, the company noted that the Texas City explosion was the worst tragedy in BP’s recent history and that it would “do everything possible to ensure nothing like it happens again.” (page viii)

BP has an aspirational goal and expectation of “no accidents, no harm to people, and no damage to the environment.” (page xiv)

BP’s process safety management system likely results in under reporting of incidents and near misses. (xiv)
Growing profit at all costs has its price. I can't wait to read what an Obama panel concludes.

Monday, May 17, 2010

BP's Siphon Operating, Oil Nears Gulf Stream Loop Current

BP reported the siphon in the 21 inch pipe is funneling 42,000 gallons of crude oil a day into a ship hold. This is approximately 1/5 of the government and BP's estimate. It's 1/50th of other expert assessments.

BP's goal is to slowly ramp up to 1/2 of their estimate, 1/20th of experts'. The spill continues fouling the Gulf of Mexico, but could soon migrate to the Atlantic.

Computer models have oil inside or very near the Gulf Loop Current, which feeds the Gulf Stream. South Florida and the Keys could be impacted. The permanent fix is a relief well, months away.

Sunday, May 16, 2010

Dispersants Create Huge Underwater Oil Plumes in Gulf of Mexico

The U.S. government gave BP permission to use dispersants on the sea floor on an ongoing basis. The company conducted three 24 hour tests prior to the government's approval to expand dispersant use. Dispersants cause oil to mix with water, reducing its buoyancy. Oil's toxic chemicals become suspended in water.

The Associated Press reported:

Researchers from the National Institute for Undersea Science and Technology said Saturday they had detected the underwater oil plumes at depths between just beneath the surface to more than 4,000 feet.

Three or four large plumes have been found, at least one that is 10 miles long and a mile wide, said Samantha Joye, a marine science professor at the University of Georgia.

Researchers Vernon Asper and Arne Dierks said in Web posts that the plumes were "perhaps due to the deep injection of dispersants which BP has stated that they are conducting." BP has won government approval to use chemicals on the oil near where it is gushing to break it up before it rises to the surface.

The researchers were also testing the effects of large amounts of subsea oil on oxygen levels in the water. The oil can deplete oxygen in the water, harming plankton and other tiny creatures that serve as food for a wide variety of sea critters.

Oxygen levels in some areas have dropped 30 percent, and should continue to drop, Joye said.

"It could take years, possibly decades, for the system to recover from an infusion of this quantity of oil and gas," Joye said. "We've never seen anything like this before. It's impossible to fathom the impact."

That's why Congress needs to uncap economic damages. Get rid of the $75 million cap and don't limit liability at $10 billion. Red and Blue Congressional Corporacrats won't consider such a thing, but they should.

Friday, May 14, 2010

VP Biden Knew Oil Drilling Oversight was BAD

The AP reported:

Vice President Joe Biden said the federal government's oversight of offshore drilling "was as bad as I thought it was." Biden was responding to a question about a New York Times story published Friday about Gulf of Mexico drilling plans that received approval from the Obama administration without the permits required under the Endangered Species Act and the Marine Mammal Protection Act. Biden told Pittsburgh radio station KDKA he thought lax federal oversight of permits was a problem throughout his six-term Senate career.
Why didn't the VP inform his boss and the pair do something about it? Instead we have catastrophe and misinformation.

President Obama repeated the canard that nobody knows how much oil is gushing from the sea floor. Experts are confident it's much more than BP or the government have estimated.

As for limiting damages to $10 billion, that could be a drop in the bucket of a $1 trillion cost. While Transocean and BP try to consolidate cases in Houston federal court, Congressional corporacrats wrestle with raising economic damage limits from $75 million to $10 billion. The White House approves such a move. Corporate and legislative risk management is clearly underway.

At this point economic damages should have no cap. Legal cases from past disasters inspire little confidence that corporations will voluntarily step up to their responsibilities, much less BP.

Oil Spill 10 Times Government & BP Estimate

Scientists studied video of oil and methane gushing from the sea floor. Their flow estimates indicate an Exxon Valdez sized spill every week. So why the minimization from BP and the Obama administration? Risk management.

Wayne Madsen wrote on May 7:

Wayne Madsen Reports has been informed by sources in the US Army Corps of Engineers, Federal Emergency Management Agency (FEMA), and Florida Department of Environmental Protection that the Obama White House and British Petroleum (BP), which pumped $71,000 into Barack Obama's 2008 presidential campaign -- more than John McCain or Hillary Clinton, are covering up the magnitude of the volcanic-level oil disaster in the Gulf of Mexico and working together to limit BP's liability for damage caused by what can be called a "mega-disaster."
Madsen says the administration blocked the true extent of the disaster from agencies capable of assessing and responding to the threat. How will Ken Salazar's investigation continue the risk management moves? Already, BP and Transocean are consolidating lawsuits in oil city, Houston.

It won't be the first time the government helped a corporation manage risk. Frances Fragos Townsend omitted the hospital with the highest patient death toll after Hurricane Katrina. Neither Memorial Medical Center, LifeCare Hospitals (which rented a floor of MMC) nor their corporate owners, Tenet Healthcare and The Carlyle Group, warranted one mention in the White House Lessons Learned report.

Alaska Governor Sarah Palin did her part to minimize the Exxon Valdez spill by calling it 11,000 gallons of fuel on CSPAN. It was 11 million gallons of oil. Twenty years after the disaster, Exxon paid up. The Supreme Court reduced punitive damages from $5 billion to roughly $500 million, a paltry amount for highly profitable Exxon.

Beware language from the Obama administration and BP. Actions speak louder than words.

Transocean Mines Houston Federal Court for Liability Limit

Transocean followed BP to the friendlier waters of Houston federal court with its petition to limit its liability for the Deepwater Horizon conflagration and oil catastrophe. The firm filed under the Limitation of Liability Act of 1851. The act holds a vessel owner liable only for the post-accident value of the vessel and cargo, so long as the owner can show he or she had no knowledge of negligence in the accident, according to maritime lawyers.

Transocean wants to do more than limit its liability. WSJ reported:

"One of the primary goals of this filing is to consolidate in a single court many of the lawsuits that have been initiate an orderly process for these lawsuits and claims before a single, impartial federal judge," Transocean said in a prepared statement.
I.e, no jury. Is Judge Lynn Hughes a member of the petroleum club? Is the Houston office of Baker Botts, the law firm of James A. Baker, III, at the table? Baker Botts performed legal work for all three companies testifying before Congress, BP, Transocean, and Halliburton.

The blame game means long delays in compensation for the injured and legal tricks to minimize corporate liability. It took twenty years for Exxon to pay a relative pittance for fouling Alaska's coastline and wiping out the livelihood of those the company promised to protect. The hospital with the highest patient death toll during Hurricane Katrina is vigorously fighting lawsuits five years later.

LifeCare Hospitals sought federal court jurisdiction, like BP and Transocean. The Carlyle Group affiliate blamed the federal government for its patient deaths, claiming patients became wards of the government when FEMA evacuation teams set up in New Orleans. The defense is patently laughable, but Uncle Sam doesn't mind politically connected, wealthy death dealers.

Watch the lawsuits and the players involved, in a creepy Six Degrees of James A. Baker, III fashion. The first creepy connection is Frances Fragos Townsend, head of risk management consulting practice at Baker Botts. She specializes in government investigations, now representing the corporate side. Townsend omitted the hospital with the highest patient death toll from her White House Katrina Lessons Learned report. Incompetence or political connections?

The second creepy connection is James Baker's BP ties, having investigated BP's Texas City refinery explosion that killed 15 people. BP CEO Lord John Browne promised to make things right, but fled to Riverstone Holdings, The Carlyle Group's energy joint venture. Lord Browne's testimony is laughable. Was he coached by Baker Botts' lawyers? Given his Carlyle Group connections, did James A. Baker, III help Browne land his new job?

It's sad how history repeats itself. Blue and Red "club members" cover up for one another, legally and financially. Nonmembers will suffer the costs of greed and shoddy work.

Thursday, May 13, 2010

Oil Forecast: More Landfall

Wednesday, May 12, 2010

Injecting Dispersants on Sea Floor

A BP executive stated the company released dispersants on the sea floor for three 24 hour periods since the Deepwater Horizon sank three weeks ago. That's 3 out of 21 days or 14% of the time.

Those three days are tests under study by the Environmental Protection Agency. One might expect the government to have conducted such tests given the Australian Montara rig blowout in August 2009.

The more leaders talk, the more it's clear they've failed the people.

Tuesday, May 11, 2010

The Oil Catastrophe Blame Game

In Congressional testimony today, company officials from BP, Transocean and Halliburton testified on the Deepwater Horizon disaster. Times Online blogged:

In short BP thinks the blowout preventer [run by Transocean] failed. Transocean thinks it was the well construction [Halliburton and BP] or its design [BP].
News reports indicate BP trying to consolidate lawsuits in Houston, presumably before a more favorable judge. However, it will likely be a long time before victims get any relief if other disasters are the model.

The Exxon Valdez spill took decades for victims to get compensation. Survivors of hospital patients who expired in Katrina's aftermath await justice, although the two corporations involved, LifeCare Hospitals and Tenet Healthcare, quickly reached a sealed settlement.

Exxon offered Captain Joseph Hazelwood up for sacrifice, ignoring the company's responsibilities to hire a competent captain and provide the crew operational navigation equipment.

LifeCare hazelwooded Dr. Ana Pou and Tenet nurses, even though it was legally responsible for caring for patients with LifeCare nursing staff and medical directors. Congress and the White House ignored the hospital disaster contained within Katrina. The public was not treated to LifeCare blaming Tenet or Tenet blaming LifeCare. The Carlyle Group owns LifeCare, which continues to aggressively fight Katrina lawsuits.

Will BP be like Exxon and LifeCare? Time will show how the death dealers are handled. Public language is used to mollify the masses, while behind the scenes lawyers scour ways to minimize "risk exposure." That includes not sharing well head test data during today's hearing.

Transocean, Halliburton and BP have a law firm in common, Baker Botts. Were any dark suited Baker Botts lawyers sitting behind the three executives during today's testimony?

Monday, May 10, 2010

BP Wants Oil Spill Lawsuits Consolidated in Houston

The Houston Chronicle reported:

BP wants more than 70 lawsuits over the Gulf oil spill consolidated before a federal judge in Houston.

The oil giant is asking the U.S. Judicial Panel on Multidistrict Litigation to have U.S. District Judge Lynn Hughes to hear pretrial matters for all the cases.

Potential class-action lawsuits have been filed in every Gulf Coast state. Plaintiffs include commercial fishermen, business interests, property owners and others.

Houston happens to have a Baker Botts office. Baker Botts is the law firm of James A. Baker, III, the former Secretary of State and Secretary of the Treasury. James Baker led the review of BP's 2005 Texas City refinery explosion which killed 15 people. The report went light on BP CEO Lord John Browne.

BP's post spill language had a Bush-Katrina like echo. Does this mean a Bushie is advising BP? Frances Townsend, Baker Botts risk management consultant and author of the abysmal White House Lessons Learned report, specializes in government investigations.

It would be convenient for Houston's Baker Botts lawyers to defend the plethora of lawsuits in the hometown of big oil. As for the judge, his resume reads globalist. A few high profile decisions have a corporatist feel.

On May 7, 2009 Judge Hughes conducted a lunch ethics seminar for the Permian Basin Geophysical Society (PBGS). The title was "Dilemmas of Trust." PBGS' Annual Exploration meeting was held at the Midland Petroleum Club.

Judge Hughes runs in the same Council on Foreign Relations circle as James A. Baker, III. The question remains, is he a member of the petroleum club? Houston, do we have a problem?

Update: McClatchy ran their story on Hughes and his oil ties on May 26, over two weeks after this post. His name came up in an AP report on judges with oil ties.

Carlucci Column Cracks Carlyle Code

Frank Carlucci, Chairman Emeritus of The Carlyle Group, revealed his private equity firm's strategy for growing from $6 billion in funds under management in 1999 to $91.5 billion in 2008. His commentary states:

Firms have a fiduciary responsibility to maximize profits, while increasing competition. A public good is not in their rational self-interest. They will therefore naturally seek to influence government regulation in ways that strengthen their competitive advantage relative to other firms.

At the same time, politicians rely on millions of dollars in private contributions to win and keep their seats. To raise the necessary funds, incumbents naturally solicit the firms and other interest groups with business before their committees in a system of pay-to-play.

Where do we find private equity underwriters (PEU's) reforming government to their advantage? PEU's chair President Obama's Deficit Commission and Virginia Governor McDonnell's Government Reform & Restructuring Commission.

Erskine Bowles, co-chair Deficit Commission and Senior Advisor Carousel Capital

Fred Makek, chair Virginia
Restructuring Commission and Senior Advisor for Thayer Capital, former Senior Advisor for The Carlyle Group

Remaking the game board to private equity's benefit, that's a sweet spot. How might they steer government business to PEU's or remake the regulatory framework to benefit affiliates or PEU's in general? Interestingly, the Dodd financial reform bill gives private equity a virtual free pass.

Saturday, May 08, 2010

Esperanza's Federal Grant Yet to be Cut as Reported

Despite reports of La Esperanza Clinic losing $1 million in federal 330 grant funding, the cut hasn't happened, according to Health Resources and Services Administration (HRSA) data. The Standard Times issued this report on 12-31-08:

For 2008, Esperanza received a $2.2 million Public Health Service Act, Title III, Section 330E grant from the federal government for administrative services.

The 2009 grant is $1.1 million, a 50 percent reduction.

"Those funds go to uninsured individuals," Campbell said, "No one actually receives 'free' health care. Everyone has a level of funds that they are expected to pay."

HRSA data tells a different story regarding 330 federal funding for Esperanza:



HRSA also shows two ARRA (stimulus bill) grants for the clinic in 2009.

Capital improvement--$539,170

Increased demand for services--$238,200

Rather than fall to $1.1 million, Esperanza's federal support soared to $2.9 million. That's a $1.8 million swing.

With the expiration of stimulus money and the Esperanza's funding for 2010 returned to $2,124,145, the same as 2009. The "cut" came a year later than reported. At $777,370, it was less than $1.1 million.

While the stimulus bill passed during 2009, i.e. after the article was published, what changed regarding Esperanza's base grant? What accounts for the $1.1 million differential between what was represented and actual funding?

BP's PlunderDome Fails due to Methane Crystals

The Coast Guard reported tar balls washed up on Alabama's Dauphin Island. An AP article addressed BP's effort to contain the spill at the leak via a Plunderdome. It stated:

A BP PLC official is saying icelike crystals formed inside of an oil containment box when it was placed over a massive oil leak and that crews have had to move the contraption away to study the problem.

Chief operating officer Doug Suttles said Saturday that he is not saying that the box has failed. But he did say what they tried Friday night did not work.

Suttles says the buildup on the specially constructed box made it too buoyant and clogged it up and they've set it to the side to study the problem.

Buoyancy was an issue with the well belching gas and gas condensate. Unfortunately, months of volcano-like gushing oil may be in the works.