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Offshore Oil Drilling: Avoid Reckless Repeat

Posted in: BP Claims by admin on March 13, 2012

In the headlines recently have been articles about BP and plaintiffs in a lawsuit against the oil company reaching a settlement the oil well rupture in the Gulf of Mexico, fear over oil drilling of off Cuba and an increase in deepwater oil drilling.

It’s been less than two years since BP’s Deepwater Horizon rig exploded 40 miles southeast of the Louisiana coast, triggering the largest oil spill in U.S. history.

Despite the loss of 11 human lives and devastating injuries to workers, billions of dollars of economic losses in states on the Gulf Coast — including Florida — and harsh environmental damage that is still being measured, energy companies are aggressively drilling and exploring deep waters off American shores. BP, for instance, is operating the same number of rigs (five) as it did before the disaster and plans to have three more operational by the end of this year.

Yes, the United States imposed a moratorium on gulf production after the BP well exploded, a special commission investigated and the Obama administration took significant steps to improve regulations.

DEEPWATER DANGER

But the effectiveness of those rules has yet to be tested by harsh reality, and history provides few reasons for Americans to be confident about the safety of drilling in extremely deep water. After all, before the Deepwater Horizon blew, government and industry officials contended that regulations were adequate and companies took extraordinary steps to exceed the standards.

The explosion and response to it showed that those assertions were hollow.

Despite the uncertainty that remains and the warnings of additional spills, no matter how good the regulations and their enforcement, politicians — including President Obama — are fighting a public relations battle to show how aggressively they support expansion of deepwater drilling.

Just south of Florida, Cuba is attracting international companies for exploration and drilling. Cuba lacks both the capacity to regulate deepwater drilling and the ability to effectively respond to a spill. This recipe for disaster is another reason for the U.S. to end its isolation of Cuba.

Amy Jaffee, of the Rice University energy program, told The New York Times that expensive, risky deepwater drilling is expanding for a simple reason: “We need the oil.”

Yes, but we also need a healthy gulf and an active economy along the nation’s shores. As the Deepwater Horizon showed, these two needs and the thirst for oil can be mutually exclusive — a lesson that hasn’t yet been learned.

Analysis: Chevron is gambling with its reputation in South America

Posted in: BP Claims by bp oil spill - Google News on March 12, 2012

RIO DE JANEIRO -- George Buck, a slim, towering American who runs Chevron's operations in Brazil, is often flanked by lawyers these days. Since November, when the No. 2 U.S. oil company spilled at least 2,400 barrels of oil offshore Brazil, the local attorneys have helped Buck navigate the legal system, sometimes doubling as Portuguese translators and cultural consultants. The soft-spoken engineer, in the country since 2009, has good reason to measure his words. Chevron is being sued for more than $11 billion by Brazilian prosecutors, although its leak was less than 0.1 percent the size of BP's 2010 Gulf of Mexico oil spill. Officials say they are preparing criminal charges against Chevron, Buck and several of his colleagues. Eager to halt criticism from regulators, politicians and environmental groups, Buck said last November his company "accepted full responsibility" for the incident. But federal prosecutor Eduardo Santos de Oliveira viewed that as an admission of guilt. Soon afterward, Oliveira canceled a scheduled interrogation of Buck and filed Brazil's largest-ever environmental lawsuit against Chevron. "We no longer needed to call him in," Oliveira said in an interview earlier this year. Chevron also faces fines of up to $121 million and has had its drilling license suspended in Brazil, where it has spent over $2 billion developing the largest foreign-run oil field. The crisis in Brazil adds big new risks for

Chevron in what could be a year of reckoning for its Latin American portfolio. It already faces an $18 billion environmental verdict in Ecuador, arising from decades of oil pollution in the Amazon region by Texaco, which Chevron acquired in 2001. Its footing in Venezuela -- where Chevron stayed after major U.S. oil companies Exxon Mobil and ConocoPhillips departed in 2007 following oil nationalizations -- is also unstable. Ali Moshiri, Chevron's head of exploration and production in Latin America and Africa, is hailed as a "close friend" by Venezuela's anti-American President Hugo Chavez. But the company's special relationship there might not last. Chavez, who is up for re-election in October, is suffering from pelvic cancer. Once a playground for U.S. oil investment, Latin America's resource nationalism, toughening environmental standards, and courts have spooked Big Oil. "Other oil majors have pulled back," says Fadel Gheit, an oil analyst at Oppenheimer in New York. Chevron "is stuck on the ground, and a string of mishaps means things have gotten difficult." Despite all that, the company is proceeding with its newest Brazil project, the 140,000 barrel-a-day Papa Terra offshore field led by state-run Petrobras, scheduled to start next year. At the center of the controversy is Buck, 46, a 23-year Chevron veteran whose career has included stints in U.S. oil patches like Alaska and Texas. He declined to be interviewed. Buck's Brazil posting has proved the most challenging yet, sources close to the company said. During one uncomfortable moment in November, he apologized for the spill to Brazil's Congress in stilted Portuguese. Past Brazilian spills, including several larger ones, have never triggered criminal charges against state-run Petrobras or its executives, Petrobras said. Buck and his family live in Rio's Ipanema beach neighborhood, where the Chevron case has provoked unease among a growing expatriate community lured to Brazil by an oil boom. More than a dozen foreign executives may face criminal charges. "The wives and kids are very nervous," the wife of a European energy company executive said. "Many are trying to adjust to a strange, new life. Some are now trying to explain why daddy might go to jail." Latin America is only a minor moneymaker for Chevron, whose operations span more than 35 countries. It pumps about 166,000 barrels-per-day of oil and equivalent natural gas from Brazil, Venezuela, Argentina and Colombia, or around 6 percent of its 2.67 million bpd output worldwide. From a liability and public-image perspective, its stakes are far higher. If Brazilian litigation goes badly, Chevron may "rethink" its projects here, people familiar with the situation said. Chevron's worst-case scenario damages from Brazil and Ecuador could top the company's $26.9 billion in 2011 profits. In January, a judge in Ecuador upheld a ruling ordering Chevron to pay Amazon region plaintiffs $18 billion. Today, Chevron pumps no oil in Ecuador, but the judgment takes the case to a new phase where plaintiffs can attempt to seize Chevron's assets around the world. One of their lawyers, Steven Donzinger, expects that process to begin within weeks. Targets for collection may include Latin American countries where legal systems similar to Ecuador's are seen as sympathetic. Chevron has countersued Donzinger, alleging the Ecuador judgment was obtained through fraud. Since 2004, plaintiffs have leveled their own fraud charges against Chevron. Chevron had chances in past years to settle for a small fraction of the judgment. "It will have a hard time convincing plaintiffs to settle now for less than the full amount," Donzinger said. Chevron, which has pressed Ecuador's government to void the verdict, is optimistic about an eventual victory, as are some analysts. Mark Gilman, an oil analyst at Benchmark in New York, said "Chevron will absolutely not settle this lawsuit." Ultimately, he said, lawsuits against Chevron in both Ecuador and Brazil have little chance of badly hurting its finances. But Chevron's deputy comptroller, Rex Mitchell, warned in U.S. District Court last year that the Ecuadorians' collection effort could "cause irreparable injury to Chevron's business reputation and business relationships." Chevron may be spending $200 million per year in legal fees related to Ecuador alone, the plaintiff lawyers estimated. Chevron declined to comment on legal fees. The risks have not stopped Moshiri, 60, a dapper Iranian-American, from jetting around the region and pressing Chevron's board to maintain investments. The reason is simple: South America pumps 12 percent of the world's oil and holds more than 30 percent of its oil and gas resources, and its governments need the oil majors' expertise. Venezuela holds 297 billion barrels of reserves, and Brazil aims to become the world's No. 3 producer by nearly tripling output to around 7 million barrels a day in 2020. "Venezuela (is) too rich a prize for international oil companies to abandon," Moshiri told U.S. diplomats, according to a June 2007 cable published by WikiLeaks. He also warned them a "vacuum" left by U.S. companies in Venezuela could be filled by Chinese, Russian and Iranian rivals. Chevron does not break out investment plans by region, but a review of its Latin America projects suggests it could spend more than $10 billion this decade at five joint-venture oil or gas projects in Venezuela, three large offshore fields in Brazil, three gas fields in Colombia and Argentine concessions. Moshiri, fluent in Spanish and married to a Venezuelan, has strived to keep Chevron in Chavez's good graces, accepting laws limiting foreign oil companies to minority roles. The company shares projects led by state-owned oil company PDVSA, and invests in Venezuelan social welfare programs. Moshiri has also served as a back-channel diplomat, State Department cables show. Venezuela "approached Chevron for assistance in dealing with U.S. issues," Moshiri told U.S. diplomats in 2008. He also called Chevron "the energy link" between Venezuela and the United States, the top buyer of its exports. Moshiri declined an interview. Neither Chevron nor the U.S. State Department would comment on the diplomatic cables. Chavez is convalescing after cancer surgery last month. "Chevron stayed in Venezuela. That may not mean it will have an advantage there in the future," said Gilman. Nor has it made the present easy. A tax increase last year rattled oil companies that stayed in Venezuela, and PDVSA annoyed Chevron last month when it announced plans to sell part of the giant Petropiar oil upgrading plant to a Chinese state fund, industry sources said. Chevron owns 30 percent of Petropiar but was not consulted, they said. Chevron declined to comment. Meanwhile Chevron's newest oil venture with PDVSA in the oil-rich Orinoco Belt faces delays. Production was expected to start this year, but sources say Chevron and PDVSA have yet to agree on investment terms, and basic engineering is unfinished. It is in Brazil that Chevron's future in the region may be determined. The company is waiting for state oil regulator ANP to end a months-long probe of its November spill, which could pave the way for Chevron to regain its Brazilian drilling license. After the spill, Moshiri traveled to Brazil to meet with top brass at ANP. An industry source called the meeting "tense." Chevron has said its operational response to the spill was successful. It largely stanched the seafloor leaks near its 80,000 barrel-a-day (bpd) Frade field within four days. It admits, however, that a public relations response flopped. Chevron did not put its "best foot forward" in Brazil, CEO John Watson told analysts. The company initially denied responsibility for a sea surface oil sheen that led to detection of its leak. Earlier, it had experienced a pressure kick at a new Frade well. Oliveira says that Chevron drilled recklessly, allowing a surge of oil and "drilling mud" to puncture fragile rock and breach the seabed. He says Chevron knew the rock it was drilling through might not withstand the oil and gas pressure levels it could find in the reservoir. Chevron has said it took no undue risk at Frade, where its drilling plans were preapproved by the ANP and environmental regulators. The prosecutor told Reuters the more than $11 billion civil award sought against Chevron is not based on a clear assessment of damages from the spill. The figure is meant to send a message. "Energy companies operating here need to know that reckless behavior will cost them," he said. Oliveira's claims about Chevron's risk-taking are hard to verify. The company has not released its own seismic imagery of the area's geology. Narrow pressure margins are a classic conundrum of well design, said University of Texas engineer Paul Brommer. "This is an area where you have to be very careful," he said. Paulo Augusto Silva Novais, a lawyer who has represented other energy companies in Brazil, said trials could take three years, and appeals may extend a decade. Chevron can prevail, Novais said, but the saga will "add an additional weight to the company's operations for years."

BP’s Influence Peddling In Congress Bears Fruit Two Years After Gulf Spill – Huffington Post

Posted in: BP Claims by bp oil spill - Google News on

NOLA.com

BP's Influence Peddling In Congress Bears Fruit Two Years After Gulf Spill
Huffington Post
“It really is outrageous that after being responsible for the largest oil spill in our nation's history, BP spent more than $8 million on DC lobbyists to try, among other things, to escape any effort to shut off the spigot of taxpayer subsidies,” ...
BP oil spill health settlement details are still a mysteryNOLA.com
BP oil spill aftermath: A tale of three plaintiffsNational Post
BP Stock Moves Into Striking Range of RecoveryWall Street Journal
WITN -Chicago Tribune
all 115 news articles »

BP oil spill: A tale of three plaintiffs – Times of India

Posted in: Uncategorized by bp oil spill - Google News on March 11, 2012

BP oil spill: A tale of three plaintiffs
Times of India
She can sign onto a $7.8 billion settlement struck between BP and lawyers representing people who, like her, have lost money because of the worst oil spill in US history. Or she can take her chances and try to strike a better deal on her own.

and more »

BP oil spill health settlement details are still a mystery – NOLA.com

Posted in: BP Claims by bp oil spill - Google News on

NOLA.com

BP oil spill health settlement details are still a mystery
NOLA.com
By Rebecca Mowbray, The Times-Picayune In the BP oil spill case, the health settlement negotiated last weekend between BP and attorneys for private plaintiffs in the oil spill litigation makes tens of thousands of new people eligible for care and ...
BP Oil Spill Claims Process Set UpHuffington Post
BP oil spill aftermath: A tale of three plaintiffsNational Post
Senate votes to give 80% oil spill fines to statesSan Francisco Chronicle
Houston Chronicle -WAMC -Science Now
all 115 news articles »

BP oil spill settlement is a bonanza for lawyers, columnist writes – NOLA.com

Posted in: Uncategorized by bp oil spill - Google News on March 10, 2012

NOLA.com

BP oil spill settlement is a bonanza for lawyers, columnist writes
NOLA.com
By Times-Picayune Staff Lawyers are the big winners in the BP oil spill settlement with private plaintiffs, Joe Nocera writes in an opinion piece for The New York Times. The business columnist, a former editor of Fortune Magazine, praises Kenneth ...
BP Oil Spill Settlement: Lawyers Gearing Up For Fee FightHuffington Post
Local seafood industry still wary of BP claims process.Houma Courier
Legal fees in BP oil spill deal stir conflictgulfnews.com
Washington Times -San Antonio Express
all 29 news articles »

In BP oil spill case, court names mediator in $2.3 billion seafood claims … – NOLA.com

Posted in: Uncategorized by bp oil spill - Google News on March 9, 2012

NOLA.com

In BP oil spill case, court names mediator in $2.3 billion seafood claims ...
NOLA.com
By David Hammer, The Times-Picayune In the BP oil spill case, a key component of the proposed class-action settlement between private plaintiffs and BP is a $2.3 billion set-aside for seafood claims, the only part of the settlement that's capped.
Local seafood industry still wary of BP claims process.Houma Courier

all 3 news articles »