BP -- Big Producer of Black Gold

The hysteria of the Gulf Oil Spill has passed and oil is trading at more than $90 a barrel. That's good news for BP, but oil prices are impinging on drivers and others who are now paying more for refined petroleum products. Obama, with his moratorium on Gulf well-drilling, did his best to push oil prices higher. However, in a moment of clarity, he removed the drilling ban on some Gulf drilling. Of course if he were truly thinking of ways to stimulate the US economy he would remove all limits on domestic oil drilling and end all mileage requirements on US-made vehicles.

But Obama is a job killer, so empowering business leaders to decide how to build their businesses is out of the question -- unless the business involves sunshine, wind or batteries. Then the government tries to help. However, the word from consumers will arrive soon. They won't spend $40,000 for electric cars that travel only 40 miles on a single charge of the battery. And they do not want to pay more for electricity because it was made from sunlight.

BP is back. The stock price is up and will surpass its levels of last spring before the well catastrophe. This year the company will resume payments of dividends and hopefully it will find a way to extract oil from places that have been off-limits to oil drillers since the environmental nuts have been driving our energy policies.

BP shares hit 6-month high after Shell bid report

January 4, 2011

LONDON (Reuters) - Shares in oil major BP hit a six-month high on Tuesday after The Daily Mail newspaper reported rival Royal Dutch Shell had considered a takeover bid during the Gulf of Mexico oil spill.

BP shares were up 5.0 percent to 488.85 pence at 1000 GMT (5 a.m. ET).

The paper, citing sources close to the Anglo-Dutch group, reported Shell weighed an opportunistic bid for BP as crude gushed into the Gulf, but was discouraged by the potentially uncapped legal liabilities.

The newspaper said Shell could yet bid for BP if another suitor emerged but Europe's largest oil company by market value was unlikely to be the "first mover."

Mic Mills, head of electronic trading at ETX Capital said BP was also being boosted by comments late on December 31 from the lawyer running BP's gulf spill oil compensation fund that suggested damages payments could be half the expected level.

Ken Feinberg told Bloomberg Television about half the $20 billion fund set up by BP should be adequate to cover claims for economic losses.

One dealer said the news reports focused minds on the fact BP shares were cheap compared to rivals. "BP remains cheap and vulnerable at these levels but I do not think a bid is likely."

BP shares trade on a price-earnings ratio of 6.5 times, consensus 2011 earnings, while Shell trades at 8.9 times, partly reflecting the fact BP's actual earnings could be far lower if it was found to have been grossly negligent in causing the oil spill which would boost legal costs and fines.

However, Feinberg's comment highlighted how the picture could also be brighter than the company has predicted.

Analysts and industry sources said during the crisis last summer it was likely that both U.S. oil giant Exxon Mobil and Shell -- the only companies considered large enough to mount a bid -- would run the slide-rule over BP.

However, the two notoriously conservative companies were seen as likely to be discouraged by the open-ended nature of BP's liabilities.

Now BP's shares have rebounded 65 percent from their June low at 296 pence, to give BP a market value of around $140 billion, a bid would be much harder to mount, especially for Shell which is worth over $210 billion.

Exxon has a market value of almost $370 billion.

It is uncertain whether regulators on either side of the Atlantic would support a tie-up in top tier of the industry.

BP -- Soon to become a Dividend Play

The media hysteria over the Gulf of Mexico oil leak led to shrieks and wails about extraordinary damages and overwhelming clean-up costs. However, with the leak sealed and most of the oil already removed from the water, it's clear the costs of the episode will drop well below $20 billion. All the affected businesses will resume relatively normal operations more quickly than expected. Interestingly, with an end to the clean-up, many boat operators will see their incomes drop. One of the ironies of the oil leak is this: the pay for removing oil was higher than the pay most operators were earning from fishing and their other maritime enterprises.

BP Tells Analysts Spill Claims May Be Lower Than $20 Billion

Sep 13, 2010 7:29 AM ET

BP Plc, responsible for the largest oil spill in U.S. history, told analysts that legal claims may be lower than the $20 billion it is setting aside for victims of the Gulf of Mexico disaster.

Robert Dudley, who takes over as chief executive officer from Tony Hayward on Oct. 1, said that the $32 billion provision for the spill is still the most reasonable estimate of the total cost, according to Mark C. Fletcher, an analyst at Citigroup Inc. who attended the meeting with Dudley last week.

Dudley said that given current estimates of claims the $20 billion Independent Claim Fund probably exceeds calls, Fletcher wrote in an e-mailed note today. Dudley also told analysts that state claims, which aren’t included in the fund, shouldn’t be too high, Fletcher said.

BP may resume paying dividends for the fourth quarter of this year after canceling three quarters of payouts to shareholders to free up funds for the spill, though they won’t be as much as before the incident, according to Fletcher. Dudley said July 27 that the company won’t “rush back into the same dividend philosophy” and didn’t indicate whether the company would make a payout for the fourth quarter of 2010.

Toby Odone, a spokesman for BP, said he couldn’t confirm Dudley’s statements. BP executives regularly meet with investors throughout the year, Odone said.

The company may wait until the first quarter to resume dividends, Sanford C. Bernstein & Co. said today in a separate note. BP will also need to complete the sale of as much as $30 billion of assets over the next 18 months to start making payouts, Bernstein said.

“BP’s cashflow position should be just strong enough to support restoration of dividends by the first quarter of 2011, under an $80 a barrel oil price scenario based on estimates,” analysts Oswald Clint and Iain Pyle wrote. “This assumes divestments are completed and the spill costs do not climb much above BP’s $32.2 billion estimate.”

BP is unlikely to sell more assets than announced or break up the company, Bernstein said. The analysts rate BP “market perform,” though production growth will probably lag behind peers Royal Dutch Shell Plc and Total SA, according to the note.

BP -- The Best Big Employer in Louisiana

How long will it take for the former Gulf of Mexico fishermen, who are now operating their boats as Vessels of Opportunity in service of BP, to get the idea they can artificially prolong their high paid employment while enjoying the light demands of their current jobs? They're going to milk this thing as long as possible. Maybe they'll do a little fishing on the side.

But the belief that fishermen lost their livelihoods is pure nonsense. The oil has nearly departed the Gulf waters. Some was dispersed through chemical action, some was skimmed off the water's surface, some was burned off the surface and some evaporated. But about 25% of the oil is unaccounted for. Where is it? some is undoubtedly mixed in the water of the Gulf, but most is probably heading out into the Atlantic in the Gulf Stream. It will be gone soon and by next year the water, the sea life will have returned to normal.

What does that add up to? One thing. Buy BP stock. As this issue fades and the company returns to normal operations, the price will rise. Moreover, the company will resume paying its dividend as soon as its politically possible. That means the stock will rise from its current price of about $36 a share to its $60 price before the rig explosion within the next two years. Combining capital appreciation and the reinstated dividend, the two-year gain is likely to reach 70%.

Louisiana fishermen net more cash working for BP

Venice, Louisiana

August 22 2010


A skiff prepares to go out at the start of the white shrimp season. Many shrimpers are employed cleaning up the BP oil spill


In the early afternoon, when the Louisiana sun begins its slow descent, the wide and shady bow of the Soul Mama provides an excellent place to hang a hammock, as Neil Foret has discovered over the past few months.

The white shrimp season officially began this week in Louisiana, and at this time of year 46-year-old Mr Foret, a hardened Cajun shrimper from Houma in the Mississippi delta, would normally be out on the water plying the trade that has kept him and his family since he was 13.

But now that he is a BP contractor through the oil company’s Vessels of Opportunity programme, designed to employ local fishermen in the oil spill clean-up operations, he earns more consistent money, and works a lot less than he used to.

“BP is a very nice fella, and this is a guaranteed cheque,” he says, pointing to a huge yellow skin or “bladder” on his boat that is used to collect skimmed oil. “I’m sticking with this for as long as I can.”

All over Louisiana, it is the same story: fishermen involved in the programme – according to BP, there are 2,000 vessels currently on active hire in the VoO – are discovering that hauling oil boom is far less taxing than shrimping, and they are in no hurry to return to their traditional way of life.

In Venice, Louisiana, the nerve centre of BP’s operation to remove the estimated 200m gallons of oil that gushed into the Gulf of Mexico after the blowout of Deepwater Horizon on April 20, the atmosphere is like a modern-day version of the Californian gold rush.

Pick-up trucks drive up and down the puddled road leading to BP’s command centre, and contractors of dozens of different companies offering a seemingly endless array of services line up to report on work as well as to seek out the latest opportunities. Captain Michael Owen, better known as the big “O”, has been doing pretty well out of BP. For the past three months, he and his 24-foot fishing boat have been ferrying clean-up workers to parts of the Gulf affected by the oil spill.

As a BP contractor, he does not have to worry about securing charter fishing contracts for small parties of tourists visiting the Mississippi delta, the business he ran until the oil spill. Nor does he have to stress over the pressure to find fish – redfish and speckled trout – for his demanding clients.

“I’m super happy with BP,” he says. “And I’m not taking a cut [in pay].”

Of course, for those fishermen who have not been able to get on the programme, the oil spill has been a devastating blow. They have been almost closed down for the past four months because of widespread fishing bans.

More worrying, perhaps, is that the oil spill has undermined the image Gulf seafood once had in the rest of the country.

In the first week of the white shrimp season, many fishermen complain that docks and processing plants throughout Louisiana remain closed because their customers no longer want to buy.

But for those commercial and charter fishermen on the programme, there has been little in the way of grumbling since the oil spill. As Chucky Farkas, a blond shrimper with piercing blue eyes and thickset shoulders, says, “Some people complain about BP but you ain’t going to hear me complaining.”

Between the rain showers that pass over the bayous of southern Louisiana during the summer months, Bobby Dugas relaxes with a cigarette and a beer on the deck of a nearby marina.

Mr Dugas, a lean and tanned 54-year-old with a bald head and a white tuft of hair under his lip, is officially contracted until about 5pm each day. But he says that he often finishes early.

It has been that way for many of the 74 days he has been on the oil company’s payroll. And at $1,500 a day – $1,200 for his boat and $300 for his time – he is reasonably happy with how his summer has gone.

“It takes you three days to make that charter fishing,” says a charter fisherman from Port Sulphur about 30 miles up the road. “Thank god for BP.”

BP -- Buy Petroleum stocks, especially BP

Disaster that never was: Why claims that BP created history's worst oil spill may be the most cynical spin campaign ever

By David Jones

Last updated at 10:31 PM on 6th August 2010

Comments (74) Add to My Stories The warm, white sand stretches for miles as clean and flat as a freshly laundered bed sheet.

The turquoise sea is so clear that I can see silvery fish playing around my toes as I take a cooling paddle.

If there is any more pristine resort in which to spend a summer holiday than Pensacola Beach, on the Gulf Coast of Florida, I would like to find it.

And yet, at a time of year when usually there is barely room to unfold a deckchair, the shore is eerily deserted.

Ask Pensacola’s fretfully quiet seafront traders why the tourists have all stayed away and they angrily recall one chaotic day back in late June.

Then, hungry for dramatic TV footage to support Barack Obama’s announcement, that the BP - or, as he preferred, ‘British Petroleum’ - oil spill was ‘the worst environmental disaster America has ever faced’, news networks descended on their town.

They quickly found what they were looking for: shocking images of Pensacola’s famously white beaches thickly-coated with sticky, black crude oil and apparently beyond salvation.

The apocalyptic message was reinforced in doom-laden interviews with locals. ‘It’s damn near biblical. This place is done for!’ lamented 36-year-old Kevin Reed, whose family have swum and sunbathed in the area for generations.

His anguish was understandable.

Broader success: Pensacola Beach is no isolated success story. The beach at Pass Christian, Mississippi, has also been cleaned remarkably
Yet, as I saw this week, nothing could be further from the truth. Strolling along the beach for an hour, I found just one, pea-sized tar-ball which crumbled to nothing between my fingers.

When, as a young boy, I played on Morecambe beach in Lancashire, worse things often washed up from the nearby ICI refinery.

Moreover, if the U.S. TV news crews had returned just three days after their original visit, they would have seen that the black morass had already been removed by some of the 20,000 clean-up workers hired by BP.

The workers are still there - only now they are using toothbrushes to sift out even the tiniest particles of oil.

But, of course, after a ‘catastrophic’ oil spill, a spotless beach doesn’t make dramatic viewing and who wants to know?

Bouncing back: Experts, both from the government and from BP's oil recovery teams, say wildlife his recovered well - fish stocks especially. Certainly not the politicians, nor the green-lobby tub-thumpers, nor the compensation claimants and their mega-bucks lawyers.

Until this week, it didn’t fit with the White House’s British-bashing script, either. In recent days, though, we have witnessed an extraordinary U-turn in America’s attitude towards the great spill.

It began when a respected Time magazine environmental writer voiced the near-heretical proposition: that the effects of the Deepwater Horizon disaster on April 20 had been massively hyped.

His article was largely based on the opinions of Professor Ivan van Heerden, a brilliant but controversial marine scientist fired by Louisiana State University after publishing a book about Hurricane Katrina that said cataclysmic flooding was inevitable because the protection given to the coast was wholly inadequate.

He said: ‘There is just no data to suggest this is an environmental disaster - although BP lied about the size of the oil spill, we’re not seeing catastrophic impacts.’

Emboldened by the academic’s willingness to go against the accepted wisdom, other leading scientists have concurred, with similar views being expressed in influential U.S. newspapers such as the New York Times and Washington Post.

It was against this background that the Obama administration made its own dramatic U-turn this week.

In a humiliating climb-down, it conceded in an official report from the U.S. National Oceanic and Atmospheric Administration (NOAA) that the ‘vast majority’ of the spilled oil had already gone.

The rest, it said, had probably diluted and didn’t appear to pose much of a threat.

According to 25 leading U.S. government and independent scientists, the feared catastrophe to the coast’s fragile ecosystem had been averted.

The cynical spin from Washington suggested that Obama had successfully browbeaten BP into mopping up its mess - with Mother Nature lending a helping hand.

What more suitably upbeat message with which to mark the president’s 49th birthday?

So were the doom-mongers really so wrong, and if so, then why?

Why was one of Britain’s greatest companies so demonised? Why did America’s politicians and president so hysterically over-react?
In order to get to the bottom of one of the most shameful buck-passing operations in recent times, I spent this week with those involved at the sharp end.

BP's Gulf of Mexico oil spill could actually lead to an INCREASE in fish stocks

Pensacola just happened to be my first stop. Quite clearly, one clean beach doesn’t begin to tell the full story - particularly as it is relatively easy to remove oil from sand, whereas the sensitive wetlands further west are altogether more difficult to repair.

Journeying from Florida, through Alabama to the vast, swampy bays of southern Louisiana, however, what struck me most forcibly was that everything looked so normal.

What a contrast to the scenes I witnessed 21 years ago reporting on America’s previous worst oil disaster, when the Exxon Valdez supertanker spilled hundreds of thousands of barrels of crude oil into the Prince William Sound, Alaska.

Taking a close look: Even when U.S. President Barack Obama visited the Gulf coast at the beginning of the crisis, it was difficult to see the impact
Then, I flew over huge, multi-coloured ribbons of oil and waded into thigh-deep pools of the stuff - horrible proof that the Exxon chiefs were lying when they claimed no oil had reached the remote bays.

I spent another grim day helping animal rescuers to scrub matted seabirds and otters.

The area’s ecology was devastated, and an estimated 250,000 birds and 2,800 otters died, plus hundreds of seals and at least 22 killer whales.

But last Wednesday in the Gulf of Mexico, when I went out with one of the Shore Clean-up Assessment Teams (SCAT), whose job is to observe the coastline and chart the location and condition of oil pollution, I felt at times as though I was on an enjoyable sea-nature tour.

One British journalist, who was guided by a populist Louisiana politician whose agenda was obviously to exaggerate the problems, reported seeing extensive areas of oil and claimed ‘fresh waves’ were still swamping wetland areas - even though the BP rig was finally capped three weeks ago.

PR disaster: CEO Tony Hayward's hapless bungling caused untold damage to BP's image in the U.S.
Of course, since an estimated 200 million gallons has gushed into the Gulf since April and around 50 million gallons remain in the water or on the shore (four times more than the entire Exxon Valdez spill), it is hardly surprising that some heavy pockets can be still found.

But what is truly remarkable is that they are so few and far between. Sailing from early morning to mid-afternoon in sweltering heat on Wednesday, the team I accompanied charted the coastline of two marshy islands off Louisiana’s southernmost tip, Casse-tete and Calumet, covering some 25 miles.

With fishermen still banned from returning to the waters until a final all-clear is given - and charging $2,000 (£1,250) a day to rent their flat-bottom boats to spill response workers, it is clear why BP has been forced to make available a staggering £12.5billion for the clean up, compensation and other legal obligations.

But as our team leader, 41-year-old scientist Stephane Grenon, told me as we skimmed across the shallows, using a craft able to reach the shore is the only sure way to tell whether oil is present.

This is because the wetland fringes in this region are always surrounded by a thick, dark-brown plant sediment known as ‘coffee ground’ for its resemblance to the dregs left at the bottom of the cup.

Even from a few feet away, this sediment can be very easily mistaken for oil, and often when passing boats or aircraft report spotting oil on the shore, this is what they have really seen.

This is one reason why the extent of the coastal oiling has been exaggerated. Indeed, Grenon, a veteran of 25 spills, says he is constantly amazed at how little pollution he finds.

He says: ‘I know it sounds ridiculous, but it’s probably the largest spill there has ever been and yet there’s hardly any oil.

‘The ecosystem around here is also used to oil. It’s been here forever, and there are more than 4,000 oil wells in the Gulf.

‘So there are spills and natural seepage all the time, and the fish and plants adapt to deal with them. I’m confident the area will make a full recovery.’

Grenon works for a BP-contracted spill clean-up company, but suspicions that he may have been painting an over-rosy picture were allayed by the three other scientists in the team who represented the federal and state governments.

‘I expected to see miles of oil, but I haven’t seen that,’ said one of the team, David Culpepper, a geologist with NOAA.

‘I’ve been out on the water about 25 days, and I’ve only seen one dead bird - and I’m not even sure if that had any oil on it. And I’ve probably seen ten dead fish.’

Our skipper, Gerrard Cheramie - no BP apologist, but a gnarled Creole fisherman who knows these waters so well that he can sniff the scent of speckled trout shoals - was equally realistic.

He said: ‘The waves here are like a washing machine and you can already see they’re rinsing the oil away. Because the fisheries have been closed down as a precaution, I think our catches will be bigger than ever when we are allowed back.’

His one nagging worry, though, is that the oil may have sunk to the bottom of the sea or that the 1.8 million gallons of chemical dispersant will cause some as-yet unrevealed damage to the fish and shrimp breeding grounds.

It is a fear that has been voiced by some scientists, including Professor Ian MacDonald, an eminent Florida State University oceanographer, who dismisses this week’s U.S. government’s report that 75 per cent of the oil has gone as an unsatisfactory mixture of science and spin and warns that worrying unknowns remain.

'I know it sounds ridiculous, but it’s probably the largest spill there has ever been... and yet there’s hardly any oil. The ecosystem around here is also used to oil. It’s been here forever, and there are more than 4,000 oil wells in the Gulf. So there are spills and natural seepage all the time, and the fish and plants adapt to deal with them. I’m confident the area will make a full recovery.'However, our captain’s fleeting doubts evaporated when he spotted a plump shrimp jumping magically from the waves.

‘Look at that! Sure looks healthy enough, don’t it?’ he exclaimed.

On Bird Island, we passed hundreds of pelicans nestling unsullied in the mangrove thickets. Then later we spotted pods of dolphins at play, redfish and the fin of a blacktip shark.

Surely these species wouldn’t have been so plentiful in a sick or dying environment? Although parts of the shoreline were stained with what David Culpepper termed a ‘bathtub ring’ of oil residue, new green shoots were already sprouting through, indicating that their roots were undamaged.

And at the day’s end, the team concurred that almost all the area they surveyed had improved or at least remained in the same condition in which it was found when last inspected a few weeks ago.

According to Dr Ed Owens, the veteran British oil spill expert who runs the SCAT teams, there are several reasons why the Gulf appears to have escaped so incredibly lightly.

First, the type of light oil that leaked here dissipates far more quickly than the medium crude that pumped from the Exxon Valdez, particularly in these warm waters.

Second, powerful currents from the enormous Mississippi Delta swept much of the oil away from the shore. In addition, there is the undeniable success of the clean-up effort, which is far more sophisticated and effective than those used to tackle previous disasters.

The combined result of these factors is clear from the statistics. Although more than 9,000 miles of shoreline lies within reach of the Deepwater Horizon rig, just 369 miles have been oiled - and only 53 of them with what are classed as ‘heavy’ deposits.

Compare this with the Exxon when, though the spill was 20 times smaller, the oil was so persistent and spread so widely that more than 2,000 miles of coastline were hit - and even today lumps of tar are occasionally found trapped between the rocks.

So, in Barack Obama’s words, which of these two terrible spills was ‘the worst environmental disaster America has ever faced’?

Back in mid-June, with approval of his presidency at an all-time low in the opinion polls, and critics drawing parallels between his mishandling of the BP crisis and the Hurricane Katrina fiasco that forever tarnished George Bush’s reputation, the answer was obvious.

Not only was it important for him to be seen to recognise the worst-case scenario - and appear to be doing everything he could to avert it - but he needed to find a scapegoat.

Thus, he turned on BP - a nominally British company, though half of its top executives and the majority of its workers are Americans - with a vengeance.

The company’s response was a public relation’s horror show, with its now sacked chief executive Tony Hayward the chief culprit.

He stonewalled questions put to him by a U.S. congressional sub-committee and at the height of the crisis he went yachting at Cowes.

And though it now seems he was right to describe the spill as a ‘drop in the ocean’, his timing and choice of phrase were appallingly ill-judged, especially as 11 oil rig workers died in the Deepwater explosion.

As a result, a staggering £43 billion has been wiped off the value of BP, and the company’s share price has plunged from 655p before the will to 425p, hitting many ordinary British people whose pension portfolios include the company’s stock.

What a terrible mess. And now, far too late, Obama tells us, without any hint of apology, that it isn’t really so bad after all.

If he had heard the pathetic cries of dying otters and seabirds in Alaska two decades ago, perhaps he would have chosen his words more carefully.

BP -- Strong Buy

Surprise, surprise, the oil that had been gushing into the Gulf of Mexico seems to have disappeared. According to the experts, a combination of human and natural forces have led to its near disappearance.

When the leak sprung, BP piped in special dispersant chemicals into the flow. Apparently they have worked as advertised. Second, the oil that rose to the surface of the Gulf was further dissolved by the combination of warm water and hot sun. After clean-up efforts got underway, a lot of oil was skimmed off the surface of the water. Meanwhile, the water currents in the Gulf have carried much of the oil out to the Atlantic Ocean.

Some oil reached shore areas. But able-bodied citizens were there and waiting, scooping up every blob that hit land.

Thus the question of damages needs a major revision. It looks like the immediate damage to the water and shore is close to ZERO. The harsh dispersant chemicals and the oil itself may have harmed or killed some sea life. But the new question is how long will it take for the effects of the chemicals to dissipate?

When can fishermen, crabbers and oystermen resume their work?

Hard to say. But, it's now clear the total cost of the clean-up and compensating the fishermen and resort owners will fall far below the figure of $20 billion concocted by hysterics claiming the oil leak was Doomsday for the Gulf.

What's ahead for BP?

The company will make good on its obligations to pay for the clean up and maintaining the income of the people hurt by the interruption to their livelihoods. After the company and the injured parties settle on a figure, the company will restart its dividend. It's important to remember that BP stock is the Widows and Orphans stock of Great Britain. A lot of people and mutual funds expect to collect hefty dividends from this stalwart organization.

When the dividend is reinstated, the stock will rise. If oil stays around its current price, the company will continue to enjoy enormous cash flow, which suggests the stock price will return to its pre-leak levels -- $60.

Obama the Job Killer

In ObamaLand, some jobs are more equal than others. Green Jobs, for example, especially green jobs in companies that depend on massive government subsidies -- taxpayer subsidies -- to survive. High-paying jobs in the oil industry don't count. They are bad jobs. Those jobs -- oilfield service jobs -- are bad because they give consumers what THEY want, rather than what Green Lobbyists have decided they SHOULD want.

Oilfield Service workers -- oil rig workers, onshore and offshore -- do their part to keep America moving. Sounds trite, but it's true. The oil industry powers our transportation industry moving and it gives some velocity to the money moving through our economy. That's the way things should work. With a minimum of government intrusion.

Let's focus on offshore rig safety, but let's focus while we expand the domestic oil drilling industry. We already know that some drilling techniques are better than others. We do not need to start fresh. Meanwhile, we already know how to extract oil from the North Slope of Alaska without destroying the surrounding environment.

Meanwhile, our president has proven himself a danger to job creation. There's no evidence any of his programs have created a single job worth creating. Moreover, any jobs that have been created have been financed by taxpayers. Not by economic growth.

The oil & gas industry in the US is set to expand -- if only the government would get out of the way. But while we have a president who believes America should import oil from muslim enemies, we have a problem.

Thousands protest drilling moratorium at rally

Published: Jul 21, 2010

LAFAYETTE — Thousands attended a rally in Lafayette Wednesday aimed at convincing the Obama administration to lift the federal offshore drilling moratorium, which officials said could further endanger the state through the loss of tens of thousands of jobs.

The “Rally for Economic Survival” was held at the Cajundome and drew about 11,000 people, some dressed in their oil industry uniforms, others in shirts bearing messages of “Drill Baby Drill” and “No Moratorium.”

The event attracted national media attention and featured elected leaders from the local, state and federal level.

Lt. Gov. Scott Angelle served as master of ceremonies and fired up an already lively crowd, proclaiming that “it is time to quit punishing innocent American workers to achieve some unrealistic political agenda.”

Gov. Bobby Jindal, one of 12 speakers at the two-hour event, pleaded with President Barack Obama to “let our people work.”

The rally was in opposition to the Obama administration’s ongoing efforts to temporarily block deep-water drilling in the wake of the Deepwater Horizon rig explosion.

“We’re in the middle of a war to defend our way of life,” Jindal said, adding that the state and its people shouldn’t also have to fight the federal government.

He said the moratorium is bad for the country’s energy security and bad for the economy.

Angelle said the state has a long and strong history of fueling the country and daily sends it people out to “begin the tough work of exploring, producing, processing, storing, refining and transporting the fuel to energize the great United States of America.”

“And while we too support the use of renewable and alternative energies, let’s keep the conversation real: America is not yet ready to get all of its fuel from the birds and the bees and the flowers and the trees,” Angelle said to loud laughter and applause.

Angelle added that a 50 cent increase per gallon of gas at the pump costs the economy $1.3 billion a week.

Closing the Gulf Oil Leak -- Almost There

It's remarkable the way the Obama administration is demanding BP develop back-up plans for its back-up plans. The government is worried about more failures at BP's leaking oil well. It is right for the government to worry about the success of BP's efforts, and thus fair to expect the company to develop alternative plans should something else go wrong.

Ironically, when crafting emergency plans for the entire nation, the government ignores this piece of clear thinking. Unlike BP, at any time the government can declare success. It does exactly that.

Imagine BP declaring its efforts to cap the leaking well were successful while observers were recording the spreading of the oil slick across the Gulf waters. While tar balls are collecting on beaches. But Joe Biden has repeatedly announced the success of the Obama Stimulus Plan. Really? Even though the economy is in dire straits -- painfully evident to all -- Biden and other members of the Obama Administration are claiming we are on the mend. Please.

Who you gonna believe? The Obama Administration or your lying eyes?

BP Sets New Spill Target

Aims to Cap Well by July 27 Earnings; Backup Plans as Obama, Cameron Meet

BP PLC is pushing to fix its runaway Gulf oil well by July 27, possibly weeks before the deadline the company is discussing publicly, in a bid to show investors it has capped its ballooning financial liabilities, according to company officials.

At the same time, BP is readying a series of backup plans in case its current operations go awry. These include connecting the rogue well to existing pipelines in two nearby underwater gas and oil fields, according to company and administration officials.

Much of the additional planning has been pushed by the U.S. government, which has urged BP to develop what one official called the "backup to the backup plan." Both BP and the federal government are concentrating on their next steps, particularly because of uncertainty caused by the imminent hurricane season and the protracted political and financial damage caused by the endless spill.

Both BP and the Coast Guard continue to state publicly they're aiming to have a fix in place in early to mid-August. BP has discussed its backup plans only with administration officials, who in turn have briefed President Barack Obama.

The July 27 target date is the day the company is expected to report second-quarter earnings and will speak to investors. BP also wants to show progress by July 20, the day U.K. Prime Minister David Cameron is scheduled to visit the White House.

"In a perfect world with no interruptions, it's possible to be ready to stop the well between July 20 and July 27," said the head of BP's Gulf Coast restoration unit, managing director Bob Dudley, in an interview. He added that this "perfect case" is threatened by the hurricane season and is "unlikely."

On Wednesday, on a visit to the Discoverer Enterprise, the ship that's collecting oil from the well, Mr. Dudley got word of a nine-day period of clear weather starting Friday, a period that could prove critical to the effort.

BP is drilling two relief wells through which it will pump material designed to seal the leaking well. One is now 12 feet horizontally and 300 feet vertically from the target spot.

Billy Brown, president of Blackhawk Specialty Tools, a BP contractor helping with the relief-well process, said Wednesday the effort is progressing ahead of schedule.

Mindful of prior snafus, BP has quietly crafted backup plans. The first would force spewing oil to a depleted gas field on the ocean floor two miles away. The second would move the oil to an existing underwater oil field nine miles away. Both require laying flow lines, either flexible or hard steel piping, to connect the leaking well to existing wellheads on these older sites.

The engineers described their plans at a seven-hour meeting last week featuring BP engineers and Energy Secretary Steve Chu, held at BP's Houston crisis center. Mr. Chu said he told them: "Force yourself to think each one will fail." In an interview, he added: "We're in new territory full of perils, and nothing is a slam dunk."

BP's Mr. Dudley reviewed Wednesday the company's engineering work with retired Coast Guard Admiral Thad Allen, who heads the Obama administration's effort.

Flying by helicopter to the ship collecting oil, the two men discussed the backup options. All around the ship, 43 miles offshore, the ocean was tinged orange.

The stakes are huge for BP, which has lost nearly half of its market capitalization since the explosion aboard the Deepwater Horizon rig April 20.

The company's board is setting up a "Gulf of Mexico" committee for a few directors to delve deeply into the disaster's safety and financial implications.

When they announce earnings July 27, BP officials hope to provide investors with more information on the estimated liabilities from the Gulf spill.

One official said the company wants to be able to describe the oil spill as finite, not infinite, a moment that would allow it to start calculating the total potential liabilities under U.S. law.

To prepare Prime Minister Cameron to speak with Mr. Obama about one of the U.K.'s largest companies, British Ambassador to the U.S. Nigel Sheinwald last Friday attended BP briefings in Houston and New Orleans and then toured the damaged Florida coast. He also met Coast Guard officials.

Support ships are seen near the Discoverer Enterprise drilling rig, right, as they continue the effort to recover oil from the Deepwater Horizon spill site on July 3, 2010 in the Gulf of Mexico off the coast of Louisiana.

At Wednesday's trip to the spill site, Mr. Dudley and Adm. Allen evaluated a prospect for controlling the spill—a newly designed cap to replace the leaky one currently directing oil to ships on the surface.

The risk: removing the old cap could exacerbate the spill in the short run.

At the administration's prodding, BP created a new device called an "autonomous subsea dispersant system." Environmental Protection Agency head Lisa Jackson told BP to create such a capability to monitor and measure chemicals used underwater to break up the oil. The large volume of dispersants used has concerned scientists and some government officials.

House Panel Notes Gaps In Cleanup Research. Access thousands of business sources not available on the free web. Learn More .In recent days, the company has installed new battery-powered equipment on the ocean floor that will inject dispersant into the flowing well. Typically, the dispersants are controlled by ships on the surface, but they may have to move if storms hit.

Separately, the BP-dominated consortium that operates the Trans-Alaska Pipeline, Alyeska Pipeline Service Co, said Chief Executive Kevin Hostler will retire in September.

Mr. Hostler, a former senior BP executive, had faced accusations from U.S. lawmakers that efforts to cut costs put the integrity of the pipeline at risk.

Barack Petroleum – Oil Stays on Gulf Waters

 

Why Is the Gulf Cleanup So Slow?

There are obvious actions to speed things up, but the government oddly resists taking them.

As the oil spill continues and the cleanup lags, we must begin to ask difficult and uncomfortable questions. There does not seem to be much that anyone can do to stop the spill except dig a relief well, not due until August. But the cleanup is a different story. The press and Internet are full of straightforward suggestions for easy ways of improving the cleanup, but the federal government is resisting these remedies.

First, the Environmental Protection Agency can relax restrictions on the amount of oil in discharged water, currently limited to 15 parts per million. In normal times, this rule sensibly controls the amount of pollution that can be added to relatively clean ocean water. But this is not a normal time.

Various skimmers and tankers (some of them very large) are available that could eliminate most of the oil from seawater, discharging the mostly clean water while storing the oil onboard. While this would clean vast amounts of water efficiently, the EPA is unwilling to grant a temporary waiver of its regulations.

Next, the Obama administration can waive the Jones Act, which restricts foreign ships from operating in U.S. coastal waters. Many foreign countries (such as the Netherlands and Belgium) have ships and technologies that would greatly advance the cleanup. So far, the U.S. has refused to waive the restrictions of this law and allow these ships to participate in the effort.

The combination of these two regulations is delaying and may even prevent the world's largest skimmer, the Taiwanese owned "A Whale," from deploying. This 10-story high ship can remove almost as much oil in a day as has been removed in total—roughly 500,000 barrels of oily water per day. The tanker is steaming towards the Gulf, hoping it will receive Coast Guard and EPA approval before it arrives.

In addition, the federal government can free American-based skimmers. Of the 2,000 skimmers in the U.S. (not subject to the Jones Act or other restrictions), only 400 have been sent to the Gulf. Federal barriers have kept the others on stations elsewhere in case of other oil spills, despite the magnitude of the current crisis. The Coast Guard and the EPA issued a joint temporary rule suspending the regulation on June 29—more than 70 days after the spill.

The Obama administration can also permit more state and local initiatives. The media endlessly report stories of county and state officials applying federal permits to perform various actions, such as building sand berms around the Louisiana coast. In some cases, they were forbidden from acting. In others there have been extensive delays in obtaining permission.

As the government fails to implement such simple and straightforward remedies, one must ask why.

One possibility is sheer incompetence. Many critics of the president are fond of pointing out that he had no administrative or executive experience before taking office. But the government is full of competent people, and the military and Coast Guard can accomplish an assigned mission. In any case, several remedies require nothing more than getting out of the way.

Another possibility is that the administration places a higher priority on interests other than the fate of the Gulf, such as placating organized labor, which vigorously defends the Jones Act.

Finally there is the most pessimistic explanation—that the oil spill may be viewed as an opportunity, the way White House Chief of Staff Rahm Emanuel said back in February 2009, "You never want a serious crisis to go to waste." Many administration supporters are opposed to offshore oil drilling and are already employing the spill as a tool for achieving other goals. The websites of the Sierra Club, Friends of the Earth and Greenpeace, for example, all feature the oil spill as an argument for forbidding any further offshore drilling or for any use of fossil fuels at all. None mention the Jones Act.

To these organizations and perhaps to some in the administration, the oil spill may be a strategic justification in a larger battle. President Obama has already tried to severely limit drilling in the Gulf, using his Oval Office address on June 16 to demand that we "embrace a clean energy future." In the meantime, how about a cleaner Gulf?

Bad Mix -- Government, Oil and Water

Is anyone surprised? Our government analysts have more than enough trouble tracking and analyzing the past. Knowing their ability to understand what has already happened is weak, we should worry a lot when we rely on government predictions, especially when those predictions involve events or developments of unknowable dimensions. Like big oil leaks. Like Iran with a nuclear bomb.

BP Relied on Faulty U.S. Data

BP PLC and other big oil companies based their plans for responding to a big oil spill in the Gulf of Mexico on U.S. government projections that gave very low odds of oil hitting shore, even in the case of a spill much larger than the current one.

The government models, which oil companies are required to use but have not been updated since 2004, assumed that most of the oil would rapidly evaporate or get broken up by waves or weather. In the weeks since the Deepwater Horizon caught fire and sank, real life has proven these models, prepared by the Interior Department's Mineral Management Service, wrong.

Oil has hit 171 miles of shoreline in southern Louisiana, Mississippi, Alabama and northern Florida. Further, government models don't address how oil released a mile below the surface would behave—despite years of concern among government scientists and oil companies about deep-water spills.

BP's efforts to contain the spill suffered a brief setback when an undersea robot hit the cap that's channeling oil to the surface. BP was able to reinstall the cap Wednesday night.

Separately, Interior Secretary Ken Salazar told lawmakers that he is reviewing how to re-draft a moratorium on new deep-water drilling in response to a federal judge's ruling that struck down a blanket six-month drilling halt ordered by President Barack Obama last month. The Obama administration on Wednesday night asked the judge to delay his court ruling while the Justice Department appeals the decision, according to the Associated Press.

The government's optimistic forecasts reinforced the oil industry's confidence in its spill-prevention technology, leading to decisions that left both oil companies and the government ill-prepared for the disaster that has unfolded in the Gulf since April 20.

BP and government agencies responding to the spill have scrambled to assemble enough oil-containing boom and the ships and hardware needed to keep oil out of marshes and off beaches. Owen Kratz, chief executive officer of Helix Energy Solutions, one of the company's working to contain the spill for BP, said Wednesday that the industry needs to have more oil containment equipment positioned to handle a blowout – instead of building containment systems after an accident.

"We hope the best science will be used going forward in this model that MMS requires," said a spokesperson for the American Petroleum Institute.

The Obama administration has launched a major overhaul of the agency that regulates offshore oil and gas drilling in the wake of the Gulf spill. "Without question, we must raise the bar for offshore oil and gas operations," a spokesperson for the Interior Department said Wednesday in response to questions about the spill models.

BP has come under heavy fire from Congress and environmental groups for its lack of readiness to handle a worst-case spill. But that criticism has overlooked a key fact: BP was required by federal regulators to base its preparations on Interior Department models that were last updated in 2004.

The government's spill models have been at the center of years of debate among scientists that study oil spills. One study in the late 1990s used satellites to track almost 100 "drifters" set loose in the Gulf of Mexico to mimic floating oil. The paths of the drifting objects were compared with what the model predicted. After 30 days, the average discrepancy was 300 miles. "We have observed differences of some magnitude," a 2003 paper said, summarizing the study.

But the researchers, led by a team of scientists from the Interior Department's MMS, concluded that the results were "neither surprising nor disappointing," and "do not negate the utility" of the model. The scientists said the findings could lead to improvements in oil-spill modeling.

.Researchers have spent the past decade trying to improve modeling of oil spills. The biggest challenge: to update the models to reflect the new reality of deep-water oil drilling. Spills thousands of feet below the surface behave very differently than spills on the surface. Underwater currents, for example, can grab plumes of oil and transport them far from the scene of the initial spill, scientists say. Deep-water releases tend to break into smaller oil slicks, further complicating efforts to forecast where they'll go.

MMS said in early 2000, in a notice to lessees, that it planned to require oil companies operating in deep-water to use new oil-spill predictions specifically designed for deep water.

That regulation never came into effect. Oil companies today still base their contingency plans on the government's models, designed only for surface spills.

In 2001, the then-head of the MMS environmental division wrote a paper that warned "the oil spill trajectory models currently used by the oil industry for the preparation of oil spill response plans may not be adequate for deep water."

Since then, MMS researchers have experimented with new models specifically designed to simulate deep-water oil spills. In 2005, after one such experiment, the MMS modeling team wrote in a paper that "spill response plans need to be upgraded" to deal with potential deep-water releases. But the models haven't incorporated new deep-water simulations.

Questions about the industry's preparedness for a spill have come up repeatedly as Congress has investigated the response to the Gulf disaster.

House lawmakers accused BP, Exxon Mobil Corp., Chevron Corp. and other companies last week of using "cookie cutter" contingency plans that contained numerous errors and omissions.

Exxon Chief Executive Rex Tillerson pointed out that much of the company's response plan "is prescribed by regulation, including the models that are used to project different scenarios for oil spills."

The MMS spill trajectory model is known as OSRA, an acronym for "oil spill risk analysis." The model simulated currents and winds in the Gulf to calculate where oil slicks would travel over a period of three, 10, and 30 days.

That model projected that a spill of oil on the surface in the Mississippi Canyon area, located 68 miles offshore, would have just an 11% chance of making landfall in Plaquemines Parish, La., after 30 days. In reality, Plaquemines, the area hardest hit by the current spill, got its first tar balls 22 days after the explosion.

The bulk of the Gulf Coast, according to the model which projects spill trajectories for 30 days maximum, would not see oil reach shore even with a catastrophic offshore spill.

BP's Water World

Maybe Kevin Costner's second act will play out on the stage of an oil platform in the Gulf. Here's to hoping his clean-up technology works.

BP Seriously Just Purchased 32 Oil Cleanup Machines From Kevin Costner

Posted Jun 15, 2010

How desperate is BP? CEO Doug Suttles finally agreed to purchase 32 of the miracle oil-cleanup machines touted weeks ago by Kevin Costner, according to ABC News.

"We were confident the technology would work but we needed to test it at the extremes. We've done that and are excited by the results," said Doug Suttles, BP's chief operating officer. "We are very pleased with the results and today we have placed a significant order with OTS [Costner's Ocean Therapy Solutions] and will be working with them to rapidly manufacture and deploy 32 of their machines."

The Waterworld actor was so appalled by Exxon-Valdez that he spent $20 million of his own money to develop a centrifuge that separates oil from water. His company, Costner's Ocean Therapy Solutions, is not a joke.

Says Costner: "If 20 of my V20s [machines] would have been at the Exxon Valdez, 90 percent of that oil would have been cleaned up within the week."



.

BP's Troubled Waters

Obama and others are demanding cash -- now. Ironically, it may turn out that BP will hire many unemployed workers to clean the mess now accumulating in the Gulf. For taxpayers, this is good news. Instead of collecting government benefits, formerly unemployed workers might begin collecting paychecks from BP. Moreover, all the businesses harmed by the leaking oil will most likely receive full compensation from BP. Of course to ensure BP's ability to write checks to injured parties, the government should consider opening more territory to oil drilling. That way BP will have the funds to pay all its bills, even if the bills are inflated by opportunists.

BP Submits Capture Plan, Obama Seeks Escrow Account

June 14 (Bloomberg) -- BP Plc sent a revised oil-capture plan for its leaking Gulf of Mexico well to the Obama administration as the government demanded an escrow account for damages claims related to the biggest petroleum spill in the nation’s history.

BP said 53,000 barrels of oil a day can be captured by the end of June, two weeks sooner than previously proposed, according to a copy of the plan provided by the administration. BP also proposed having the capacity to get up to 80,000 barrels by mid-July. The London-based company has been collecting about 15,000 barrels a day from the leak for the last week.

The U.S. Coast Guard asked BP to capture more oil after a federal scientific panel said twice as much oil is leaking as previously estimated. White House Adviser David Axelrod yesterday called on BP to establish an escrow account for claims. Senate Majority Leader Harry Reid is requesting BP set up a $20 billion fund administered by an independent trustee, according to a draft letter issued by his office.

“We want to make sure the money is escrowed for the businesses and want to make sure the money is independently administered so it’s not slow-walked,” Axelrod said yesterday on NBC’s “Meet the Press.”

BP’s board meets today to discuss whether to reduce or defer its second-quarter dividend. The shares fell as much as 6.6 percent in London trading.

No Decision Expected

“The board will be looking at a number of options when it meets,” Sheila Williams, a spokeswoman for BP, said yesterday. “No decision is expected this week.”

Jon Pack, a BP spokesman in Houston, said he was unaware of the revised recovery plan and couldn’t immediately comment on it.

BP and the Coast Guard expect some leakage to continue at least until mid-August, when the first of two so-called relief wells can plug the bottom of the damaged well.

The company will start taking oil and natural gas from the damaged well to a ship on the surface through a separate pipe in the next few days, and a “more permanent and flexible” system with floating risers is set to begin operations around the end of the month, according to a statement today.

“Plans are being developed to further develop these systems and also for further options to provide additional containment capacity and flexibility, in line with requests made by the U.S. Coast Guard,” BP said. The company was able to capture 127,000 barrels from June 4 until June 12.

Obama Address

Obama will address the nation at 8 p.m. tomorrow, after he returns from a two-day visit to Alabama, Mississippi and Florida, said Ben LaBolt, White House spokesman.

The president is scheduled to meet June 16 at the White House with BP’s chairman, Carl-Henric Svanberg, and other company officials. BP Chief Executive Officer Tony Hayward is also expected to attend, Coast Guard Admiral Thad Allen said yesterday.

Establishing the reserve account will be a subject for “discussion,” Axelrod said. “But it has to be substantial. BP has the resources to meet the claims and we’re going to make sure they do.”

Allen said having an independent administrator for the escrow account would make sure that the response to claims “happens quicker.”

“We’ve been very concerned about the claims process,” he said yesterday on CBS’s “Face the Nation” program. “This is not a core function of an oil-producing company.”

$37 Billion Cost

The cleanup costs and legal liabilities resulting from the leak may reach $37 billion, according to Credit Suisse Group AG. BP said today it has spent $1.6 billion so far on the response to the spill.

BP fell 23.85 pence, or 6.1 percent, to 368.05 pence at 2:19 p.m. in London trading. The shares are down 44 percent since the April 20 explosion aboard the Deepwater Horizon drilling rig in the Gulf, resulting in the deaths of 11 workers.

BP’s revised plan calls for keeping more oil-recovery ships at the spill site and adding vessels that can process and shuttle the captured oil ashore.

Oil gushed from the well at a daily rate of 20,000 barrels a day to 40,000 barrels through June 3, when BP removed a kinked pipe that may have been curtailing the flow, a panel of government scientists said June 10. One research team said the rate might have been 50,000 barrels a day.

Installing Sensors

BP, at the request of the government’s flow-rate group, was installing pressure sensors yesterday on the well to help determine the leak rate, said Mark Proegler, a company spokesman.

In its application for the well, BP told the government it was prepared for a worst-case oil spill of 250,000 barrels a day.

The spill has closed as much as 37 percent of the Gulf of Mexico to fishing, cut the number of offshore drilling rigs in the nation by half and polluted 140 miles of shoreline from Louisiana to Florida.

He Can't Walk on Water or Oil

Obama Critics Should Have Voted for Red Adair

June 11 (Bloomberg) -- The blame game is replacing baseball as the U.S. national pastime.

First it was the greedy Wall Street bankers who got us into this mess, were rewarded with a government bailout and then went back to the business of making money.

Next came the insurance companies, whose collective scalp was shaved and sacrificed for the greater good: garnering support for ObamaCare.

Now it’s the oil companies, which have joined the list of personae non grata following the BP Plc oil spill in the Gulf of Mexico.

And who’s getting the blame for the response to the BP spill? Why, President Barack Obama.

This makes as much sense as blaming the weatherman for global warming. Obama can’t plug a hole 5,000 feet below the ocean’s surface, as first daughter Malia asked him to do.

Nor can his energy secretary, Steven Chu, winner of the Nobel Prize in physics, find a quick fix to halt the flow of tens of millions of gallons of oil into the Gulf, threatening the coastline’s delicate ecosystem and the livelihood of its residents. (Chu, who won the Nobel for “the development of methods to cool and trap atoms with laser light,” knows more about black holes than well holes.)

Screeds accusing the president of being detached or disengaged since the April 20 explosion and subsequent collapse of the Deepwater Horizon oil rig are about style, not substance. Frustration has given way to blame from both sides of the aisle. If the public wanted an ace fighter of oil-well fires and blowouts, they should have voted for Red Adair.

Misplaced Anger

“It is better to be angry at Obama for his health-care and labor policies, not this,” writes Richard Epstein, professor of law at the University of Chicago, in a June 7 column for Forbes.com.

Epstein’s on to something. Blaming the president for failing to halt the oil spill is unwarranted. Let’s look at some areas where blame is more appropriate.

1. Labor Policies

I doubt Epstein was echoing the view that the president isn’t doing enough to create jobs. The Oval Office isn’t an employment office. Government’s role should be to foster an environment that encourages the private sector to create jobs. Raising the cost of hiring isn’t a winning strategy.

The civilian unemployment rate topped out at 10.1 percent last year, below the 10.8 percent peak during the 1981-1982 recession. Teen unemployment set a record, however, rising to 27.6 percent in October, the highest in the 62-year history of the series. Raising the minimum wage to $7.25 last year, the third step in a three-year $2.10 increase, didn’t help.

Minimum Wage, Maximum Pain

I’m always reminded of my late friend, economist Bob Laurent, when discussions about the minimum wage come up. Bob would ask, “Why raise the minimum wage to $5.00? Why not raise it to $100 and make everyone rich?”

Answer: Because there’s a cost. Putting a floor under the price of labor -- setting it above the equilibrium price -- results in increased supply (more people willing to work for an above-market wage) and reduced demand as employers consolidate the functions of low-wage workers. Unemployment goes up.

Obama didn’t sign the minimum wage increase into law as president; he did vote for it as a senator from Illinois. During the campaign, he promised to increase it to $9.50 by 2011.

Maybe the president will be too preoccupied crafting Son of Stimulus to keep his promise and deny more young Americans a start in the work world.

2. Health Care

Just what the U.S. needed: another entitlement program that promises more than it can deliver. The U.S. was already facing an unfunded liability for Medicare and Social Security -- the difference between benefits promised to current and future retirees and the taxes and premiums collected -- of more than $100 trillion in today’s dollars, according to the 2009 Social Security and Medicare Trustees reports. That was before universal health care became the law of the land.

Few would object to the goal of providing universal access to health care. Everyone should object to the failure of the health-care plan enacted earlier this year to do the one thing that would lower costs: Make the price of health care transparent to consumers.

While individuals and small businesses will be able to choose a plan on health-insurance exchanges, they will still be divorced from the cost of health-care services. Who among us really knows what a colonoscopy costs?

3. Foreign Policy

Obama seems to have difficulty differentiating between our strategic allies and enemies. The “special relationship” between the U.S. and the U.K., a phrase coined by Winston Churchill in his 1946 “Iron Curtain” speech, has gotten less special in the 16 months since Obama took office. Obama’s tactless gesture of shipping a bust of Churchill back to the U.K. was symbolic of the deteriorating ties.

The president claims that brokering a Mideast peace deal is a “vital national security interest” for the U.S. In other words, our security depends on the creation of a Palestinian state.

That’s pretty much what Arab leaders have been telling their populations for decades to deflect attention from their lousy leadership. It’s easier to convince the masses that the problem is an external oppressor and two small pieces of land, one on the West Bank and the other on the Mediterranean Sea, than let them face an uncomfortable reality: The Arab world had no interest in building a real state in Gaza, as opposed to a terrorist outpost, after Israel withdrew completely in 2005.

Criticism of Obama’s handling of long-time allies is justified. Those who blame him for not commandeering BP’s underwater robots should take a deep breath and find some serenity. They should accept what the president can’t change, challenge him for what he can and have the wisdom to know the difference.

BP's Crude Solution

BP is capturing more than half the oil spewing from the well and when its current effort is in high gear, it might catch ninety percent of the escaping oil.

BP Increases Oil-Capture Rate; U.S. Braces for Siege

June 6 (Bloomberg) -- BP Plc said it is capturing more of the oil spewing into the Gulf of Mexico from its damaged well as U.S. officials said they expect the battle against pollution from the disaster to continue for months.

“This is a siege across the entire Gulf,” U.S. Coast Guard Admiral Thad Allen said on CBS’s “Face the Nation” broadcast today. “There will be oil out there for months to come. This will be well into the fall.”

BP said it captured 10,500 barrels of oil from its leaking well yesterday, up from 6,077 barrels in the previous 24-hour ending at midnight June 4. The well was estimated by government scientists to be gushing 12,000 to 19,000 barrels a day. The spill is the worst oil spill in U.S. history.

A “cap” over the well is capturing “probably the vast majority” of the leaking oil, Chief Executive Officer Tony Hayward told the British Broadcasting Corp. today in an interview in London. BP is preparing a second system to capture even more oil that will be implemented within the week, he said. BP plans to swap out those temporary systems with one that is more hurricane-proof by the end of the month.

The well began gushing oil after the Deepwater Horizon rig BP leased from Transocean Ltd. exploded on April 20 and sank two days later, resulting in the deaths of 11 workers. The leak is 40 miles (64 kilometers) off Louisiana’s coast under about 5,000 feet (1,524 meters) of water.

Oil Ashore

Gulf winds are moving the oil now in the water closer to the coasts of Mississippi, Alabama and Florida, according to Allen. He said oil in tar balls and patties is affecting areas from western Mississippi to Pensacola, Florida.

The spill, which has cost BP more than $1 billion, has soiled about 140 miles of shoreline in Louisiana, Alabama and Mississippi, along with some 80 miles in Florida, the Coast Guard said yesterday.

Oil that washed ashore on beaches in Florida’s northwest Panhandle region was quickly removed, and crews are attacking tar balls that are left on the sand, Florida Governor Charlie Crist said on CNN’s “State of the Union” broadcast. A cleanup command post has been set up in Pensacola, he said.

More oil is expected to arrive in northwest Florida within the next three days, according to a statement today from the Florida Deepwater Horizon Response team, which cited National Oceanic and Atmospheric Administration forecasts.

Slow Payments

Mississippi Governor Haley Barbour said state beaches remained clear of tar balls or other deposits, though he fears tourists will still stay away because they think the coast from Florida to Texas is “ankle-deep in oil.”

Both Crist and Allen faulted BP for taking too long to compensate businesses and workers for losses tied to the oil.

“We want these claims to be responded to much more quickly,” said Crist said on CNN. “These people need help. And we have to be there to try to make them as whole as we can during this very difficult process.”

President Barack Obama’s moratorium on offshore drilling, which has idled 33 deepwater rigs in the Gulf of Mexico, will cost as many as 6,000 jobs this month and 20,000 by the end of next year, Louisiana Governor Bobby Jindal said in a letter to Obama on June 2.

Lost Livelihoods

Mississippi Governor Haley Barbour today endorsed the call by Jindal to resume offshore drilling in the Gulf, which produces 30 percent of all U.S. oil and gas. If not, rigs in the region will be moved to oil fields overseas, further delaying the resumption of drilling in the Gulf, he said.

Obama said communities along the Gulf Coast suffering because of the oil spill will be “made whole” with payments from BP and government aid. In his weekly address on the radio and Internet, which was taped June 4 in Grand Isle, Louisiana, Obama said livelihoods that have spanned generations are in danger of being lost.

BP has paid about half of the 35,000 claims submitted by Gulf residents and companies for income lost because of the spill, Darryl Willis, vice president of resources at BP America, said yesterday on a conference call. BP is awaiting documentation before it can pay the remaining claims, he said. Willis said the company’s spending on claims through June may top $84 million.

BP said it will continue to try increasing the amount of oil it is capturing with its latest containment system.

Still Leaking

“I’d like to see us capture 90-plus percent of this flow,” Doug Suttles, BP’s chief operating officer for exploration and production, said June 4 on CBS’s “Early Show.” “That’s possible with this design.”

The oil is funneled to a drillship at the surface that can capture and separate as much as 15,000 barrels of oil, gas and water a day, Kent Wells, a BP senior vice president, said in a conference call with reporters last week.

Jagged edges left when the pipe was cut for the containment cap may prevent a tight seal and allow some oil to continue leaking, Allen said. Government scientists expected the cut, which removed a kink in the pipe, to increase the flow of oil by as much as 20 percent.

“History has taught us to be cautiously optimistic, not overly optimistic,” Dan Pickering, an analyst at investment bank Tudor Pickering Holt & Co. in Houston, said. Capturing 90 percent of the flow would be a “huge home run,” he said.

Kuwait Investment Authority, the country’s sovereign wealth fund, isn’t considering selling its 1.75 percent stake in BP and believes there is no threat to the company’s future as a result of the spill, the Al-Rai newspaper reported today.

‘First Call’

Hayward told investors June 4 on a conference call the spill has the “first call” on the company’s funds and financial consequences of the spill will be “severe.”

Allen said relief-well operations to stop the leak permanently will involve pumping mud to reduce pressure and placing a cement plug. He said this effort will be the “bottom kill exercise.”

“In the long term, the threat from this well will not go away until the relief well has been drilled, pressure has been taken off and the well has been plugged,” Allen said. “In the meantime, we need to optimize our containment efforts.”

BP -- Better Plans -- Maybe Success This Time

The latest attempt to stop oil from flowing into the Gulf is showing some promising signs.

BP's cap funneling oil to the surface-Coast Guard

Fri Jun 4, 2010 10:08am EDT

* Cap on leak, funneling fraction of oil to drillship

* BP hopes cap will eventually capture 90 pct of oil

HOUSTON, June 4 (Reuters) - BP Plc.'s containment cap over its stricken Gulf of Mexico well is collecting about 1,000 barrels per day, the top U.S. official overseeing the cleanup effort said on Friday.

A top BP executive overseeing containment efforts told CNN earlier that as that collection rate increases, it could corral "90-plus percent" of the oil.

One thousand barrels is a small fraction of the 19,000 barrels per day that the U.S. government has estimated could be gushing from the well, but the amount should increase as BP closes vents at the bottom of the cap to trap more oil, Coast Guard Admiral Thad Allen told reporters in a conference call.

"Sometime later today we'll probably be able to get ... an approximation of how much oil we are capturing," he said.

The containment cap is BP's latest attempt to trap oil, after its' "top kill" plan to plug the well failed on Saturday. BP's strategy is now to trap the oil at the well and funnel it to a tanker on the surface until it can drill a relief well to staunch the flow, which could take until mid-August.

Doug Suttles, BP's chief operating officer of exploration and production, told CNN earlier on Friday that the containment cap "should work."

"I'd like to see us capture 90-plus percent of this flow," Suttles said. "I think that's possible with this design."

Both Allen and Suttles said BP would continue working to seal the cap on jagged remnants of a pipe on equipment at the wellhead.

"Of course what we have to do is work through the next 24 or 48 hours to optimize that. But that would be the goal ... We want to stop this oil from spilling to the sea," Suttles said.

Suttles was the first BP official to publicly discuss the cap -- its latest attempt after a series of failures to try to contain a gushing oil and gas leak in the Gulf of Mexico.

BP spent Thursday lowering the cap onto the jagged remnants of a pipe that had been sheared from the top of equipment at the wellhead.

A rubber seal on the bottom of the cap is intended to capture most of the oil, but some is still expected to escape.

Meanwhile, drilling continues on two relief wells expected to intercept and plug the leaking well far beneath the seabed. Drilling began May 2 on the first relief well and May 16 on a second. Both are expected to be finished in August.

Progress in the Gulf Oil Leak

BP stock is trading about $45 a share, giving the company a market capitalization of $140 billion. Last month, before the explosion and start of the leak, the stock was at $60 and the company had a market cap of $188 billion.

The nightmare for BP has lowered its market cap by $48 billion. Is the company really headed for a hit that large? Not according to any credible sources.

Maybe that means now is a good time to buy BP shares. Based on today's price, the dividend yield is 7.9%. Thus, investors will enjoy significant income while they watch the stock price inch up again.

BP Has ‘Some Success’ in Bid to Halt Leak, U.S. Says

May 27 (Bloomberg) -- BP Plc temporarily stopped the flow from a leaking well in the Gulf of Mexico, indicating progress on its plans to plug a well that’s been spewing oil for more than a month, U.S. Coast Guard Admiral Thad Allen said.

“They’ve had some success overnight,” Allen, National Incident Commander for the spill, said in an interview on WWL radio in New Orleans today. “Everybody is cautiously optimistic, but there’s no reason to declare victory yet.”

The company began pumping mud-like drilling fluid into the well at 2 p.m. New York time yesterday in a procedure known as “top kill.” BP will need another 24 hours before it can be “sure of success” for the process, Robert Dudley, managing director for the London-based company, said on NBC’s “Today” show this morning.

Success of top kill would bring to an end a leak that has poured an estimated 22 million gallons of oil into the Gulf and soiled 100 miles (161 kilometers) of coast. BP rose 28.8 pence, or 5.9 percent, to 520.8 pence at 4:35 p.m. in London trading.

The process uses the drilling fluid to “arm wrestle” the gusher of oil and natural gas back into the well, said Dudley, and then allow engineers to seal it with cement. BP has halted the flow of oil and gas and now must drop the pressure in the well to zero for the seal, Allen said.

Shares Rise

BP jumped as much as 6.6 percent in London trading after the Los Angeles Times quoted Allen as saying that the top kill had succeeded. The Coast Guard issued a “technical clarification” in an e-mail, saying the temporary halt in flow doesn’t mean the effort was successful.

“The operation is ongoing, we’re not giving a commentary on it,” David Nicholas, a BP spokesman in Houston, said in a telephone interview.

The well began leaking after an April 20 explosion and fire on the Deepwater Horizon drilling rig. BP leased the rig from Geneva-based Transocean Ltd., the largest deep-water driller.

Transocean rose as much as 9.1 percent today. The shares gained $3.47, or 5.9 percent, to $62.05 at 11:38 a.m. in New York Stock Exchange composite trading. Halliburton Co., which provided services on the rig, rose $1.29, or 5 percent, to $27.08. Cameron International Corp., which provided equipment to the rig, rose $1.60, or 4.4 percent, to $37.68.

Anadarko Petroleum Corp., which owns a 25 percent stake in the well, rose $3.40, or 6.4 percent, to $56.74.

Junk Shot

“It will be Friday night or Saturday at the earliest before we know definitively that the well has been killed,” Robert MacKenzie, a Houston-based analyst for FBR Capital Markets, wrote today in a note to clients. “They are in the process of mixing more mud or perhaps even a junk shot to pump before they switch to cement to seal the well.”

BP has said a “junk shot” injection of rubber scraps, may be used as needed to seal leaks in the well piping so that enough pressure can be exerted on the column of oil and gas.

A plume from the spill may reach northeast 22 miles toward Mobile, Alabama, a research vessel from the University of South Florida found in a preliminary report. The Weatherbird II made initial tests that show the highest concentrations of “dissolved hydrocarbons” were 400 meters underwater.

Congress has scheduled at least 20 hearings on the Deepwater Horizon and offshore drilling since the incident, and the Minerals Management Service and Coast Guard held another day of hearings in Louisiana on the explosion and sinking of the rig.

Drilling Delay

President Barack Obama today extended by six months a moratorium that began after oil started to spill from BP’s well. The president also canceled a proposal to drill for oil off the coast of Virginia and planned drilling by Royal Dutch Shell Plc of exploratory wells in the Arctic off Alaska.

Obama said the changes were the result of a 30-day safety review on offshore drilling the president ordered from Interior Secretary Ken Salazar.

The well may have leaked more than twice the oil that the Exxon Valdez spilled in 1989, according to figures from a U.S. government panel.

The BP well may have gushed 12,000 to 19,000 barrels a day, Marcia McNutt, director of the U.S. Geological Survey, said today in a conference call. Based on the midpoint of the estimates released by the Flow Rate Technical Group, the well may have leaked about 527,000 barrels from April 22, when the rig sank, through yesterday. That is more than double the Exxon Valdez’s 257,000-barrel spill in Alaska.

The amount of oil being spilled will help determine BP’s liability for the leak.

Spill Costs

The spill has cost BP a total of $760 million, or about $22 million a day, the company said May 24. Average daily profit last year was $45 million a day, according to data compiled by Bloomberg.

The federal government has spent more than $100 million responding to the spill and will be reimbursed by BP, Landry of the Coast Guard said.

BP said yesterday in an e-mailed statement it has paid more than $36 million in damage claims and will appoint an independent mediator to review and assist claims.

The leaking well can be permanently sealed only by one of two relief wells it’s drilling, which won’t be complete before August.

If the top of the well can’t be plugged, the company plans to replace the damaged riser pipe at the well. That requires cutting away a kink in the existing pipe, at least temporarily increasing the size of the leak, BP Senior Vice President Kent Wells said May 25.

The top kill “procedure has not been carried out in 5,000- feet (1,524-meter) water depth before and BP has stressed its success cannot be assured,” Andrew Whittock, an analyst in London at Oriel Securities Ltd., said in a note yesterday. “Many commentators believe the chance of success is less than 50 percent.”

Oil and Water

It should be obvious that less offshore drilling is unlikely to prevent or reduce oil spills. Prior to the current leak in the Gulf of Mexico, the biggest leak came from the Exxon Valdez, a ship. Not a producing well. If we drill less, then we will import more, and more of the imported oil will arrive by ship. More ships means more potential for leaks.

Drilling in Deep Water
A ban on offshore production won't mean fewer oil spills

It could be months before we know what caused the explosion and oil spill below the drilling rig Deepwater Horizon. But as we add up the economic costs and environmental damage (and mourn the 11 oil workers who died), we should also put the disaster in some perspective.

Washington is, as usual, showing no such restraint. As the oil in the Gulf of Mexico moves toward the Louisiana and Florida coasts, the left is already demanding that President Obama reverse his baby steps toward more offshore drilling. The Administration has partly obliged, declaring a moratorium pending an investigation. The President has raised the political temperature himself, declaring yesterday that the spill is a "massive and potentially unprecedented environmental disaster."

The harm will be considerable, which is why it is fortunate that such spills are so rare. The most recent spill of this magnitude was the Exxon Valdez tanker accident in 1989. The largest before that was the Santa Barbara offshore oil well leak in 1969.

Workers load oil booms onto a crew boat to assist in the containment of oil from a leaking pipeline in the Gulf of Mexico.

.The infrequency of big spills is extraordinary considering the size of the offshore oil industry that provides Americans with affordable energy. According to the Interior Department's most recent data, in 2002 the Outer Continental Shelf had 4,000 oil and gas facilities, 80,000 workers in offshore and support activities, and 33,000 miles of pipeline. Between 1985 and 2001, these offshore facilities produced seven billion barrels of oil. The spill rate was a minuscule 0.001%.

According to the National Academy of Sciences—which in 2002 completed the third version of its "Oil in the Sea" report—only 1% of oil discharges in North Americas are related to petroleum extraction. Some 62% of oil in U.S. waters is due to natural seepage from the ocean floor, putting 47 million gallons of crude oil into North American water every year. The Gulf leak is estimated to have leaked between two million and three million gallons in two weeks.

Such an accident is still unacceptable, which is why the drilling industry has invested heavily to prevent them. The BP well had a blowout preventer, which contains several mechanisms designed to seal pipes in the event of a problem. These protections have worked in the past, and the reason for the failure this time is unknown. This was no routine safety failure but a surprising first.

One reason the industry has a good track record is precisely because of the financial consequences of accidents. The Exxon Valdez dumped 260,000 barrels of oil, and Exxon spent $3.14 billion on cleanup. Do the math, and Exxon spent nearly 600 times more on cleanup and litigation than what the oil was worth at that time.

As for the environmental damage in the Gulf, much will depend on the weather that has made it more difficult to plug the leak and contain the spill before it reaches shore. The winds could push oil over the emergency containment barriers, or they could keep the oil swirling offshore, where it may sink and thus do less damage.

It is worth noting that this could have been worse. The Exxon Valdez caused so much damage in part because the state of Alaska dithered over an emergency spill response. Congress then passed the 1990 Oil Pollution Act that mandated more safety measures, and it gave the Coast Guard new powers during spill emergencies. We have seen the benefits in the last two weeks as the Coast Guard has deployed several containment techniques—from burning and chemical dispersants to physical barriers. America sometimes learns from its mistakes.

On the other hand, Washington's aversion to drilling closer to shore has pushed the industry into deeper, more difficult, waters farther out to sea. BP's well is 5,000 feet down, at a depth and pressure that test the most advanced engineering and technology. The depth complicates containment efforts when there is a disaster.

As for a drilling moratorium, it is no guarantee against oil spills. It may even lead to more of them. Political fantasies about ending our oil addiction notwithstanding, the U.S. economy will need oil and other fossil fuels for decades to come. If we don't drill for it at home, the oil will have to arrive by tanker and barges. Tankers are responsible for more spills than offshore wells, and those spills tend to be bigger and closer to shore—which usually means more environmental harm.

The larger reality is that energy production is never going to be accident free. No difficult human endeavor is, whether space travel or using giant cranes to build skyscrapers. The rest of the world is working to exploit its offshore oil and gas reserves despite the risk of spills. We need to be mindful of such risks, and to include prevention and clean up in the cost of doing business, but a modern economy can't run without oil.