Oil -- More Domestic Oil is the Answer

We can drill for oil in Texas, and we can use the hydraulic fracturing process to extract it from the rocks it's in. Or we can go for the easy stuff in the Artic National Wildlife Refuge, off the coast of California and in a lot of other places that are now officially off-limits to drillers.

Why is the nation determined to bankrupt itself while enriching the people who want to provoke our collapse? Crazy.

Shale Boom in Texas Could Increase U.S. Oil Output

May 27, 2011

CATARINA, Tex. — Until last year, the 17-mile stretch of road between this forsaken South Texas village and the county seat of Carrizo Springs was a patchwork of derelict gasoline stations and rusting warehouses.

Now the region is in the hottest new oil play in the country, with giant oil terminals and sprawling RV parks replacing fields of mesquite. More than a dozen companies plan to drill up to 3,000 wells around here in the next 12 months.

The Texas field, known as the Eagle Ford, is just one of about 20 new onshore oil fields that advocates say could collectively increase the nation’s oil output by 25 percent within a decade — without the dangers of drilling in the deep waters of the Gulf of Mexico or the delicate coastal areas off Alaska.

There is only one catch: the oil from the Eagle Ford and similar fields of tightly packed rock can be extracted only by using hydraulic fracturing, a method that uses a high-pressure mix of water, sand and hazardous chemicals to blast through the rocks to release the oil inside.

The technique, also called fracking, has been widely used in the last decade to unlock vast new fields of natural gas, but drillers only recently figured out how to release large quantities of oil, which flows less easily through rock than gas. As evidence mounts that fracking poses risks to water supplies, the federal government and regulators in various states are considering tighter regulations on it.

The oil industry says any environmental concerns are far outweighed by the economic benefits of pumping previously inaccessible oil from fields that could collectively hold two or three times as much oil as Prudhoe Bay, the Alaskan field that was the last great onshore discovery. The companies estimate that the boom will create more than two million new jobs, directly or indirectly, and bring tens of billions of dollars to the states where the fields are located, which include traditional oil sites like Texas and Oklahoma, industrial stalwarts like Ohio and Michigan and even farm states like Kansas.

“It’s the one thing we have seen in our adult lives that could take us away from imported oil,” said Aubrey McClendon, chief executive of Chesapeake Energy, one of the most aggressive drillers. “What if we have found three of the world’s biggest oil fields in the last three years right here in the U.S.? How transformative could that be for the U.S. economy?”

The oil rush is already transforming this impoverished area of Texas near the Mexican border, doubling real estate values in the last year and filling restaurants and hotels.

“That’s oil money,” said Bert Bell, a truck company manager, pointing to the new pickup truck he bought for his wife after making $525,000 leasing mineral rights around his family’s mobile home. “Oil money just makes life easier.”

Based on the industry’s plans, shale and other “tight rock” fields that now produce about half a million barrels of oil a day will produce up to three million barrels daily by 2020, according to IHS CERA, an energy research firm. Oil companies are investing an estimated $25 billion this year to drill 5,000 new oil wells in tight rock fields, according to Raoul LeBlanc, a senior director at PFC Energy, a consulting firm.

“This is very big and it’s coming on very fast,” said Daniel Yergin, the chairman of IHS CERA. “This is like adding another Venezuela or Kuwait by 2020, except these tight oil fields are in the United States.”

In the most developed shale field, the Bakken field in North Dakota, production has leaped to 400,000 barrels a day today from a trickle four years ago. Experts say it could produce as much as a million barrels a day by the end of the decade.

The Eagle Ford, where the first well was drilled only three years ago, is already producing more than 100,000 barrels a day and could reach 420,000 by 2015, almost as much as Ecuador, according to Bentek Energy, a consultancy.

The shale oil boom comes as production from Prudhoe Bay is declining and drilling in the Gulf of Mexico is being more closely scrutinized after last year’s Deepwater Horizon disaster.

What makes the new fields more remarkable is that they were thought to be virtually valueless only five years ago. “Everyone said the oil molecules are too large to flow in commercial quantities through these low-quality rocks,” said Mark G. Papa, chief executive of EOG Resources.

EOG began quietly buying the rights to thousands of acres in the Bakken and Eagle Ford after an EOG engineer concluded that the techniques used to extract natural gas from shale — fracking, combined with drilling horizontally through layers of rocks — could be used for oil. Chesapeake and a few other independents quickly followed. Now the biggest multinational oil companies, as well as Chinese and Norwegian firms, are investing billions of dollars in the fields.

The new drilling makes economic sense as long as oil prices remain above $60 a barrel, according to oil companies. At current oil prices of about $100 a barrel, shale wells can typically turn a profit within eight months — three times faster than many traditional wells.

But water remains a key issue. In addition to possible contamination of surface and underground water from fracking fluids, the sheer volume of water required poses challenges, especially in South Texas, which faces a severe drought and rapidly diminishing water levels in the local aquifer.

At the rate wells are being drilled, “there’s definitely going to be a problem,” said Bay Laxson, a local water official.

Dave Thompson, regional production superintendent for the oil company SM Energy said the industry knew that water issues were “an Achilles heel.” He said his company was building a system to reuse water in the field.

But unlike Pennsylvania and New York, where fracking for natural gas has produced organized opposition, the oil industry has been mostly welcomed in western and southern states.

Thanks to the drilling boom, the recession bypassed North Dakota entirely. Here in Dimmit County, Tex., the unemployment rate has fallen in half, and sales tax receipts are up 70 percent so far this year, allowing the county to hire more police officers and buy sanitation and road repair equipment.

“In my lifetime, this is the biggest thing I’ve ever seen,” said Jose Gonzalez, 78, a retired teacher and son of migrant farm workers, who leased mineral rights to Chesapeake for $27,000 and sold another plot for $100,000 to a company building an RV park for oil workers. “You can see I’m happy.”

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.

Oil -- Builds Economic Strength in Many Ways

To no one's surprise, oil remains a primary source of energy. The Gulf of Mexico oil leak did nothing to change our demand. Oil is holding onto its dominance because there are no competitive alternatives or substitutes. Sure, it's possible to power cars with natural gas -- and the government should urge auto-makers to build more natural-gas powered vehicles -- but no other fuel matches oil for cost and versatility.

Sure, we could use more ethanol -- if we opened our economy to imports. Brazil has plenty to sell us, if only we would remove the import tariff that makes their product at least as expensive as our domestic product. Unfortunately, diverting huge quantities of corn away from animal feed and into ethanol production has led to increases in the cost of animal feed. In turn, those increases have led to higher food prices. If we were to eliminate the tariff on ethanol imported from Brazil, we would see a drop in many food prices and an increase in ethanol mixed with gasoline.

Furthermore, without oil the airline industry would crash land. Never will we see an electric airplane.

If we were to mix more ethanol with gasoline, we would reduce our need to import oil from nations that are enemies of freedom.

Meanwhile, if we were to increase our domestic oil drilling activities, we would further reduce our need to import oil from muslim and other unfriendly nations. Moreover, when it comes to paychecks, oil industry jobs pay at least double the national average. What are we waiting for?

Gulf Spill Triggers New Oil-Field Work

Cameron International Corp. could emerge as an unlikely beneficiary in the Gulf of Mexico oil spill

The company came under intense scrutiny in the first days after the Deepwater Horizon drilling rig exploded April 20, killing 11 workers and sparking the worst offshore oil spill in U.S. history. Cameron built the rig's blowout preventer, a critical safety device that failed to shut down the well.

In the weeks since the disaster, however, investigators have focused on decisions made by BP PLC, the well's primary owner, and Transocean Ltd., which owned the rig and the blowout preventer and was responsible for their maintenance.

Now, it appears the disaster could help generate new sales for Houston-based Cameron, which reports second quarter earnings on Wednesday. In the wake of the well accident, regulators in the U.S. and overseas are expected to require stronger, more reliable blowout preventers. Oil companies, fearing liability, also are looking to beef up their safety systems even before any new rules go into effect.

Other major manufacturers of oil-field safety equipment are already seeing increased business. Oceaneering International Inc., which makes deepwater drilling equipment, including the underwater robots that monitor and control blowout preventers, last week said it anticipated increased demand for its products due to the Gulf disaster. On Thursday, executives from National Oilwell Varco Inc., the second biggest maker of blowout preventers for offshore rigs after Cameron, said they are ordering new equipment to meet a surge in orders for new or enhanced blowout preventers.

National Oilwell Varco Chief Executive Pete Miller said the company is also developing a new, more powerful blowout preventer that had already been in the works before the Gulf disaster. He said the device will be able to cut tougher drill pipe and require less hydraulic force to operate than previous models.

Mr. Miller also said he expects to see more business for maintaining safety equipment. Investigators into the Deepwater Horizon disaster have uncovered signs that the rig's blowout preventer was modified after it was built and may not have been properly maintained. Transocean has said it conducted all required maintenance.

Cameron's stock tumbled more than 30% in the weeks after the spill began. It has rebounded somewhat since then, but remains well below its pre-disaster level. Jim Crandell, an analyst with Barclays in New York, said Cameron maintains a strong reputation in the industry and shouldn't suffer in the long term. Cameron declined to comment.

Two other companies with ties to the Gulf disaster, Transocean and Anadarko Petroleum Corp., also report earnings this week, and may not fare as well as Cameron.

Transocean, which releases its results on Wednesday, has faced increased scrutiny in recent weeks as investigators have probed its maintenance practices and the decisions made by its workers aboard the rig. Transocean has defended its workers and said BP was responsible for most major decisions on the well.

At the same time, Transocean has also suffered from the Obama administration's deepwater drilling moratorium. Transocean, the world's biggest deepwater driller, is battling with customers that are trying to cancel contracts due to the moratorium. Even when the moratorium is lifted, the company and its competitors are likely to see increased costs due to tightened maintenance requirements and higher insurance rates, says Arun Jayaram, an analyst with Credit Suisse in New York.

Anadarko, which owned a 25% stake in BP's well, is unlikely to see the effects of the spill in its second quarter earnings, which it will release Tuesday. But The Woodlands, Texas, company could ultimately face huge costs.

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.

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.

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.