No shortage of jobs for oil industry lobbyists hired to influence new safety rules and speed up shallow-water permits

(Photo of blowout preventer from Flickr and photographer Eschipul/Ed Schipul


If you’re thinking Congress and the Obama Administration will make the most logical moves to assure safe drilling in the Gulf of Mexico from now on, think again.

Big Oil is hiring well-connected lobbyists, including former U.S. Rep. Robert Livingston (R-LA) as well as ex-staff of Sen. Mary Landrieu (D-LA), House Minority Leader John Boehner (R-OH) and others on Capitol Hill.

Six companies have formed the Shallow Water Energy Security Coalition, which is clamoring for new drilling leases. They complain there is a de facto moratorium on new leases in shallow water because the Interior Department isn’t issuing new ones until revised safety rules are in place.

Interior says that isn’t so, that the last week in June they OK’d 11 shallow-water leases, 4 of which are for new wells (with the others for ongoing operations) and in half the cases rigs have moved to those spots.

Interior says shallow-water drilling can continue as long as new safety requirements are met.

But the coalition says its members have been unable to get permits and some shallow-water drillers are laying off workers. Including support jobs, as many as 7,000 people could be affected, a coalition spokesman said.

Hercules, a rig operator, and three other members of the coalition have hired not one, not two, but three lobbying firms to represent them, as well as Rudy Giuliani for advice.

Safety equipment manufacturers, including those making blowout preventers, also have lobbyists trying to affect the government’s new rules.

T-3 Energy Services, a company that makes blowout preventers and other safety equipment it sells to BP, Exxon and others, has hired a lobbyist to make sure new regulations “strike an appropriate balance,” a lobbyist told Greenwire in an email. Lobbyists working with 3-T include former aides to Sen. Arlen Specter (D-PA), Del. Eleanor Holmes Norton (D-DC) and Boehner.

BP, of course, has its own lobbyists, among them former advisors to Sen. Richard Shelby (R-AL), Rep. Ed Towns (D-NY) and Rep. Ron Klein (D-FL), in addition to Tony Podesta, former Justice Dept. official Jamie Gorelick and a longtime aide to former VP Walter Mondale.

Need I say more?

(Sources: Greenwire, Shallow Water Energy Security Coalition)

Just who does the six-month moratorium stop from drilling?

(Photo of Deepwater Horizon drilling rig before the accident from Flickr and photographerTravellingSteve)

As Gulf Coast lawmakers push for an end to the 6-month moratorium on deepwater drilling, and BP sets up a $100M fund for unemployed oil workers, many are still confused about which drilling is affected by the shutdown. Is it just for new wells or is it everyone drilling in deepwater? Neither.

When Obama announced the stoppage on May 27, he made clear it was for deepwater Gulf drilling (more than 500 feet beneath the sea) and would apply to any new permits as well as the 33 rigs that were doing exploratory drilling but not yet producing.

The 591 producing deepwater wells could continue their operations.

He also postponed new drilling off Alaska for this summer and cancelled lease sales until more was known about the Deepwater Horizon accident and lessons learned from the catastrophic explosion and continuing leak.

Yet the oil and gas industry and Gulf Coast lawmakers are so concerned about the economic impact of the shutdown they want to ban the ban. Sen. Mary Landieu (D-La.) told Larry King she is worried oil companies will pull up stakes and go elsewhere in the world, even if they’ve already sunk millions into exploration here. Those companies include Chevron, Royal Dutch Shell and Australia-based BHP Billiton.

(Which reminds me: the oil is ours but the companies drilling are often multinational and based somewhere else. This whole “reduce dependence on foreign oil” thing is a crock. What they mean is Middle Eastern, Chinese or Venezuelan oil – from our “enemies.” They just don’t want to put it that way.)

Worries about lost oil jobs and income
But getting back to the moratorium. In addition to putting the oil companies on hiatus, it affects the drilling rigs owned and operated by a whole other set of companies: Transocean, Halliburton, Slumberger, etc., who are paid about a half-million dollars a day per rig. So they’ll lose income.

The American Petroleum Institute, which is the main oil and gas trade group, estimates 46,000 jobs will be lost short term. In addition to rig workers, suppliers, divers and others will be affected.

Oil and gas makes up 16% of the Louisiana economy, according to the Energy Tomorrow blog. Yet it strikes me as schizophrenic the way Gulf Coast official rail about the damage being done to their waters, coastline and businesses, then turn around and say “let’s do more of this.”

Sen. David Vitter (R-La.) and U.S. Rep. Pete Olson (R-Texas) have introduced bills in the Senate and House to end the moratorium.

And Interior Sec. Ken Salazar met yesterday with a bipartisan group of about two dozen congressmen and senators on The Hill to hear their pleas, but he gave no assurance the ban could be shortened.

Salazar said the moratorium stands unless new information indicates it should be lifted. Good for him.

Meanwhile, the commission report is due in November. Seems a long time to wait? Well the relief wells won’t be ready to stop the damn leak until late August, at best. So it's a slow process all the way around.

We need to be careful not to rush back to deepwater drilling just because of lost oil industry jobs. Some think we should never go back until the technology of fixing problems catches up with the technology of getting oil out of the ground. Too much is at stake.

And let's keep in mind that only about 5% of the deepwater rigs have been shut down (and they have not yet found oil) -- while all of the 4,515 shallow water wells in the gulf are still pumping. What is all the whining about?


(Sources: E&E Daily, Greenwire, E&E News PM, Energy Tomorrow blog)

New House bill would amend or repeal ancient laws that could let BP, Transocean off the liability hook

Archaic laws protect BP, Transocean and others from full liability in the Great Gulf Oil Spill of 2010. So U.S. Rep. John Conyers (R-Mich.) introduced a bill Friday to amend those laws.

HR 5503 (The SPILL Bill) would amend the 90-year-old Death on the High Seas Act and Jones Act, so that families of the 11 workers killed in the Deepwater Horizon rig explosion could sue for non-pecuniary damages (such as pain and suffering).

Further, the bill would strengthen bankruptcy rules to make it harder for BP to spin off part of its company responsible for the ruptured well and have that piece declare bankruptcy to avoid financial liability. Some are concerned that as costs mount the company might use bankruptcy to avoid payment.

The bill also would repeal a 160-year-old law that limits the liability of vessel owners to the value of the vessel and its cargo. Transocean lawyers had at one point planned to use this to limit the company's liability, but backed away because of objections from the Justice Department.

Finally, the bill would give states affected by the spill the power to pursue legal redress against BP and others responsible in their own courts.

“We should not allow reckless corporations to use 19th century laws to shortchange their victims,” Conyers said in a statement.

The bill is co-sponsored by 11 other representatives, including Charles Melancon (D-La.).

(Source: E&E Daily, InsideLouisianaNews.com)

BP, other Big Oil said they had technology to stop blowouts

(Image of "top hat" attempt to stem oil flow from Flickr and Mick Licht, NotionsCapital.com.)

BP and other drilling companies in the Gulf assured the Minerals Management Service – in writing – that they had the “proven equipment and technology” to handle deepwater oil spills like the one we’re seeing now.

They didn’t describe what that technology was and MMS didn’t ask. Top hat? Junk shot?

Most of the 36 deepwater drilling operations in the Gulf got approval by giving the same assurances, according to a Greenwire analysis of MMS records. Nearly all plans said they could handle a “worst case scenario” which BP defined as 162,000 barrels a day, far more than the estimated 12,000 to 25,000 a day of this spill.

Seven plans had identical wording: "In the event of an unanticipated blowout resulting in an oil spill, it is unlikely to have an impact based on the industry wide standards for using proven equipment and technology for such responses."

Many of the companies said because of their “response capabilities” even a major spill would cause no major damage.

Now we know otherwise.

Last week President Obama suspended 33 deepwater drilling operations in the Gulf.

Some members of the Senate Environment Committee have asked for a criminal investigation of BP’s alleged “false statements,” which might also lead to looking at other drilling companies making similar assurances, including Exxon and Marathon Oil.

(Source: Greenwire)

Will BP pay for all the oil spill cleanup plus damages?

(Image from Flickr and Mike Licht, NotionsCapital.)

Who will pay for the damage caused by the Great Gulf Oil Spill of 2010?

Everyone is saying BP. As majority lease owner of the Deepwater Horizon oil well that is gushing a mile down on the ocean floor, BP owns most of the responsibility. BP executives have repeatedly said the company will pay for the cleanup and “legitimate claims” for economic and other damages.

But that’s not the whole story. Anadarko and Matsui, who own 35% of the lease, will have to pick up their share of the spill cleanup.

A 1990 law, enacted after the Exxon Valdez spill in Alaska, said the companies with the oil leases would have to pay for the cleanup, plus up to $75 million for economic and natural resources damage. BP has acknowledged that this spill, really a gusher, will cost a lot more than that.

Raising the liability cap
Some senators are trying to raise the cap from $75 million. There are several proposals. Sen. Bob Menendez (D-N.J.) tried to fast-track an increase to $10 billion. But it was blocked by Sen. Lisa Murkowski (R-Alaska). Others, from the Gulf Coast, say it should be one year’s profit or $150,000 million, whichever is less – to protect the little guy (guy meaning oil company.) BP is expected to see a profit of $23B this year.

The 1990 law also set up an Oil Spill Trust Fund to help pay for major spills. With a tax of 8 cents a barrel the fund is now at $1.6B, but by law just $1B of that can be spent on any one event.

Others involved in the accident, who will probably have to pay something, are Transocean, owner of the rig; Halliburton, who cemented the well, and Cameron International, maker of the faulty blowout preventer.

Then there's insurance
But they won’t have to pay all of it themselves. Each has insurance, and that insurance has re-insurance. The loss to insurance companies for this incident is estimated at between $1.5B and $3.5B by Swiss Re, whose own losses in the accident are estimated at about $200 million. The higher $3.5B figure could be reached if the oil goes ashore, which triggers another section in the policy.

Total insurance losses to date are about $700 million. The rig itself was insured at Lloyds of London for $560 million, which has already been paid, according to The Guardian in England, where BP is headquartered.

BP said at mid-week it had paid about $1.5 million in claims to fisherman and had not yet questioned the legitimacy of any claims. It also paid $25M in grants to each of the four affected states.

But government and vulnerable businesses, like tourism and fishing, are worried payment may be slow and not in full.

They also are concerned because BP asked out-of-work fishermen to sign waivers not to sue before hiring them to help with the cleanup.

In the Valdez case, some claims weren’t paid for two decades and the Supreme Court reduced punitive damages from $2.5B to $500M at the end of long drawn-out court fight. NOAA estimates there is still 21,000 gallons of oil on the Alaska shoreline.

(Sources: E&E Daily, Greenwire, E&E TV, LA Times, New York Times, The Guardian, The Hill, National Post,
PlanetArk. )

Is PB's remedy for oil spill only making matters worse?

Joe Romm, author of the award-winning blog Climate Progress, has an excellent lead story in Salon about the dangers of BP dispersing oil, which it is doing now. Would you rather protect sea birds and other wildlife on the land or marine life at the bottom of the sea? See Salon.com

Are Europe and Asia beating the U.S. at attracting clean energy investment and new energy jobs?

(Photo of Europea wind turbine factory from Flickr and photographer Jody Dickerson)

Is the U.S. economy losing out to Europe and Asia in the competition for a green energy future?

On the heels of my post last week about China hording rare earth minerals needed for clean energy production, I noticed with some concern three news items over the past few days:

*BP is closing its solar-panel plant in Maryland and moving the business to China, India or another country where production is cheaper and demand is higher. BP is partnering with Tata in India and SunOasis in China. The closure is the final step in moving BP’s U.S. solar manufacturing business abroad. It will mean 320 jobs lost, though 100 jobs will remain here in research and sales, the company says.

*GE said it is investing $453 million in European offshore wind through 2020, most of it in England and Germany. Norway and Sweden will also get a piece of the pie. The company hopes to mass produce its 4MW offshore turbine by 2012. Because Europe is moving ahead on both land and offshore wind, the biggest growth is seen there and suppliers are available. Billions have been spent on onshore wind in Europe over the past decade, with both Spain and Denmark now getting half their electricity from wind.

*Siemens, the international German-based conglomerate, with investments around the world, has targeted England for a $120 million factory for offshore wind turbines. England was chosen over Germany and Denmark because of government incentives in the form of a $90M competition. England is now 5th in renewable energy, tied with Spain.

Do I see a trend here?

(Source: Reuters, Washington Post, PlanetArk, Greenwire)

Oil companies earn record quarterly profits

(Photo of pump prices in May from Flickr and and futureatlas.com)

Washington Report 2: While drivers were paying high prices at the gas pump over the past few months, oil companies were raking in profits. The major oil companies all announced record 2nd-quarter profits in the past week:
• Exxon Mobil: $11,680,000,000
• Shell: $11,600,000,000
• BP: $9,460,000,000
• Chevron: $5,980,000,000
• ConocoPhillips: $5,439,000,000
And that’s just for 3 months. All those zeros kind of take you aback, don’t they? (Source: Greenwire)

Oil profit announcements next week may give Dems edge in spat over offshore drilling

(Photo of ConocoPhillips gas station from Flickr and photographer Alec Ananian)

Washington Report 1: Three major oil companies will announce their earnings next week, possibly giving Democrats an advantage in the political fight over energy. Dems today failed 50-43 to pass a bill calling for more regulation of commodity traders, blaming high gas prices on speculators. Republicans, on the other hand, are calling for more domestic exploration, especially offshore and in shale. Dems say the oil companies should drill in the 68 million acres they already have under lease rather than offshore, and tried unsuccessfully to pass a bill to that effect. One big oil company, ConocoPhillips, announced its second-quarter earnings last week, revealing a $5.4 billion profit, up 13% from the same period last year. Rep. Rahm Emanuel (D-Chicago) criticized the oil companies for using too much of their record profits for stock buy-backs and not enough for drilling. ConocoPhillips used $2.5 billion to buy back stocks. Exxon, Chevron and BP will all announce their earnings next week. Dem leaders are expecting record profits from all, at a time when people are hurting because of the price of gas. They think that will give them an election-campaign advantage, while Republicans think they have a winning message with their call for more offshore drilling. If you want to take action in opposition to offshore drilling, go to the Sierra Club Web site and write an effective letter to the editor. (Sources: Greenwire, E&E Daily)

Is Big Oil turning back from wind and solar to focus on oil and gas despite carbon emissions?

(Photo of Shell station in Britain from Flickr and photographer Lee Jordan.)

News Update: Shell Oil pulled out of plans to build a large off-shore wind farm in the UK last week, sparking concern about the viability of the project, which could have powered a quarter of London’s homes. The company said it was selling its one-third share in 341-turbine London Array wind farm, casting doubts about the viability of the 1-gigawatt project. Another partner said it was weighing its options. The cost of the project had skyrocketed from $2 billion to about $5 billion, largely because of the high demand for wind turbines. Britian was counting on the project to help it meet its target of 20% renewable energy by 2020. Shell said it would continue to invest in onshore wind in the U.S., but a story in The Guardian questioned whether two oil giants, Shell and BP, were turning away from renewables to focus more on oil and gas, after ExxonMobil made the biggest profit this year while avoiding renewable investment. BP is cooling on solar, The Guardian said, and putting money into tar sands, after earlier refusing to do so because of the greenhouse gases emitted. Meanwhile, descendents of John D. Rockefeller, who started Standard Oil, forerunner of Exxon, pushed the company to begin investing in renewables, citing the dangers of climate change. Leading the charge was Sen. Jay Rockefeller (D-W.Va.) (Sources: The Financial Times and The Guardian.)