June 3, 2010

 http://www.nytimes.com/2010/06/03/us/03lobby.html?src=me

By ERIC LICHTBLAU and JAD MOUAWAD
Published: June 2, 2010

WASHINGTON  When the Obama administration imposed new restrictions last week on offshore drilling in the wake of the BP oil spill, officials carved out an exemption that received little public attention: Companies working in shallow waters, unlike deep-sea operators like BP, could again begin drilling for oil and gas.

The decision, which followed a furious appeal from lawmakers allied with the oil industry, represented a surprising victory for the shallow-water drillers in the midst of what could prove the biggest environmental disaster in United States history. And it reflected the intense lobbying efforts at work from all sides, as Congress and the administration consider ways to prevent another drilling disaster off the nation’s coasts.

Environmentalists and their supporters in Congress, hoping to seize the political momentum, are working to push through measures to extend bans on new offshore drilling, strengthen safety and environmental safeguards and raise to $10 billion or more the cap on civil liability for an oil producer in a spill.

“You don’t want to let a good crisis get away,” said Athan Manuel, the director of lands protection for the Sierra Club’s legislative office, which is pushing for a permanent moratorium on new offshore drilling.

Oil industry executives acknowledge the stiff political resistance that they face. Despite the success of shallow-water drillers in avoiding a continued ban on their end of the industry, executives and industry analysts say the daily images of oil wafting onto the coastline will make it tougher for them to fend off calls for tougher regulations that extend far beyond BP and the Deepwater Horizon spill.

Bruce Vincent, president of the Independent Petroleum Association of America, which represents both deep-sea and shallow-water drillers, said Wednesday that he was concerned about a “domino effect” sweeping through Washington, with new regulations now under discussion threatening to cut oil production, jobs and industry profits.

“It’s amazing to see the impact that one company can have for all sorts of other people,” he said. “When a plane crashes, you don’t just shut down every airline in the fleet until you find out what happened.”

The oil and gas industry is a formidable presence in Washington. It spent more on federal lobbying last year than all but two other industries, with $174.8 million in lobbying expenditures, according to the Center for Responsive Politics, a nonpartisan research group.

Political action committees set up by the oil and gas producers contributed an additional $9 million last election cycle to Congressional candidates, with Koch Industries, ExxonMobil, Valero Energy and Chevron leading the way, the data showed. (BP ranked 19th, with $75,500 in contributions, most to Republicans.)

For decades, the oil industry had showcased and developed its latest technology in the Gulf of Mexico. But the spill now casts a pall over offshore oil and gas operations, just as the industry thought it had snatched a major victory from the administration, which agreed to expand oil and gas drilling earlier this year.

Rex Tillerson, the chairman and chief executive of ExxonMobil, admitted last week that the industry faced a huge challenge.

“The most difficult challenge confronting the whole industry at this point is regaining the confidence and trust of the public, the American people, and regaining the confidence and trust of the government regulators and the people who oversee our activities out there,” he said in response to questions from reporters after a shareholder meeting.

The industry was already grappling with the prospect of tighter scrutiny over some of its drilling practices even before the gulf spill. Congress has been looking at the environmental impact of hydraulic fracturing, where water is pumped at high pressure to break rocks and free natural gas, a technique that some environmental groups believe can pollute underground water sources.

Now the industry is facing a much graver threat as it seeks to determine how long the administration’s deepwater drilling ban will last. The Interior Department said last weekend that all drilling activity in the waters deeper than 500 feet was to stop for six months. But some analysts fear the ban could be prolonged until a commission appointed by the president provides its conclusions.

That could extend the ban for a year, and the American Petroleum Institute, the industry’s main trade group, forecasts that a longer delay could crimp future production by as much as 400,000 barrels a day by 2015.

As well as imposing a drilling ban in the Gulf of Mexico, the administration also halted new drilling off Alaska and Virginia for the time being. The announcement stalled plans by Shell to drill three exploration wells in the Beaufort Sea this summer. It also put off a long-awaited sale of new leases off Virginia for the first time since the administration lifted a longstanding moratorium on drilling in the Atlantic.

With the environmental damage growing from the BP disaster, the industry’s most persuasive argument in trying to fend off tougher regulations may prove to be jobs. That was one of the crucial elements used by the shallow-water operators  mostly smaller companies that produce about 20 percent of the gulf’s daily oil production of 1.7 million barrels  to earn an exemption from the new restrictions at the Interior Department.

Representative Gene Green, a Texas Democrat who led about 50 lawmakers in appealing to the administration to lift the ban on shallow-water drillers, said he did not want to see 6,000 employees working in shallow waters risk being put out of work.

The Interior Department said that its decision to lift the restrictions on shallow-water drilling “recognizes that there are different challenges in the deepwater, and our approach with the moratorium recognizes that.”

Kendra Barkoff, a spokeswoman for the Interior Department, said in a statement: “The safety recommendations contained in the 30-day report to the President will be implemented as soon as practicable and will apply to all operators on the Outer Continental Shelf, including in shallow water. Operators will need to demonstrate compliance with the safety requirements in due course.”

The political pressure on the entire industry will keep growing as long as the spill lasts, bringing with it daily images of soiled coastlines.

“The oil companies know that if this is not resolved quickly, the well has been poisoned for everybody,” said Lawrence Goldstein, a veteran energy economist. “They are going to be painted with a broad brush. They are on the hook here.”

Eric Lichtblau reported from Washington, and Jad Mouawad from New York.

Special thanks to  Richard  Charter

http://www.biologicaldiversity.org/

For Immediate Release, June 2, 2010
Contact: Andrea Treece, Center for Biological Diversity, (415) 378-6558; atreece@biologicaldiversity.org
SAN FRANCISCO- The Center for Biological Diversity today filed an official notice of its intent to sue the Environmental Protection Agency for authorizing the use of toxic dispersants without ensuring that these chemicals would not harm endangered species and their habitats. The letter requests that the agency, along with the U.S. Coast Guard, immediately study the effects of dispersants on species such as sea turtles, sperm whales, piping plovers, and corals and incorporate this knowledge into oil-spill response efforts.
“The Gulf of Mexico has become Frankenstein’s laboratory for BP’s enormous, uncontrolled experiment in flooding the ocean with toxic chemicals,” said Andrea Treece, an attorney with the Center for Biological Diversity. “The fact that no one in the federal government ever required that these chemicals be proven safe for this sort of use before they were set loose on the environment is inexcusable.”

Dispersants are chemicals used to break oil spills into tiny droplets. In theory, this allows the oil to be eaten by microorganisms and become diluted faster than it would otherwise. However, the effects of using large quantities of dispersants and injecting them into very deep water, as BP has done in the Gulf of Mexico, have never been studied. Researchers suspect that underwater oil plumes, measuring as much as 20 miles long and extending dozens of miles from the leaking rig, are the result of dispersants keeping the oil below the surface.

On May 24, EPA Administrator Jackson expressed concern over the environmental unknowns of dispersants, which include the long-term effects on aquatic life. Nonetheless, the federal government has allowed BP to pump nearly 1 million gallons of dispersants into the Gulf of Mexico.

“Pouring dispersants into vital fish nursery grounds and endangered species habitat simply trades one evil for another. Had the government first examined dispersants before the disaster, we would not be left wondering what sort of havoc BP is wreaking on the ecosystem just so it can make the oil less visible,” added Treece. “We cannot and will not allow this to happen again.”
Studies have found that oil dispersed by Corexit 9527 damages the insulating properties of seabird feathers more than untreated oil, making the birds more susceptible to hypothermia and death. Studies have also found that dispersed oil is toxic to fish eggs, larvae, and adults, as well as to corals, and can harm sea turtles’ ability to breathe and digest food. Formulations of the dispersants being used by BP, Corexit 9500 and 9527, have been banned in the United Kingdom due to concerns over their impacts on the marine environment. 

The Center for Biological Diversity is a national, nonprofit conservation organization with more than 260,000 members and online activists dedicated to the protection of endangered species and wild places.

Special thanks to Richard Charter

http://www.miamiherald.com/2010/06/02/1660594/obama-orders-oil-companies-to.html

June 2, 2010

BY SHASHANK BENGALI

WASHINGTON – The Obama administration late Wednesday moved swiftly to plug a hole in its much touted six-month ban on new deepwater drilling when the Interior Department ordered oil companies to overhaul and resubmit dozens of exploration plans that had already been approved but were virtually identical to BP’s and that called major spills and environmental damage “unlikely.”

The action came after McClatchy informed the White House and Interior officials that it had reviewed 31 deepwater exploration and development plans approved for the Gulf under the Obama administration and found that all of them downplayed the threat of spills to marine life and fisheries.

The language scarcely varied from company to company, suggesting that the plans were pumped out like boilerplate. Of the 31 plans McClatchy reviewed, 14 were approved since the April 20 explosion on BP’s Deepwater Horizon oil rig,

The administration had failed to include the plans in its moratorium, and experts told McClatchy that the filings could clear the way for drilling new wells when the ban was lifted. Following inquiries by McClatchy to White House and Interior officials, the Bureau of Land Management announced late Wednesday that oil companies would need to resubmit the plans with additional safety information before they’d be allowed to drill new wells.

“Pulling back exploration plans and development plans and requiring them to be updated with new information is consistent with this cautious approach and will ensure that new safety standards and risk considerations are incorporated into those planning documents,” BLM Director Bob Abbey said in a brief press release.

In the White House’s initial response to McClatchy’s inquiries, spokesman Ben LaBolt said only that a presidential commission investigating the BP spill would also “assess exploration and production plans and could provide options for ways to improve their development and review.”

Less than half an hour later, the Interior Department issued its press release, which came from the BLM, not the Minerals Management Service.

Even as millions of gallons of crude from BP’s well befouled the Gulf of Mexico, oil companies have continued to submit exploration plans. The MMS had received more than two dozen in the past month.

“Interior has very doggedly refused to address this core problem because they realize that’s where the rubber meets the road and the real reform begins,” said Kieran Suckling, the executive director of the Center for Biological Diversity, an environmental group that has studied the issue.

“It’s a very cynical ploy. They’re staying away from the real environmental review process because that’s where the stakes are highest for the oil industry.”

While the moratorium had blocked new wells and freezes new drilling permits – the last step before drilling begins – it didn’t stop companies from taking the earlier step of filing exploration and development plans. These plans include the most thorough environmental studies that companies must conduct during the entire approval process.

Experts say these plans are often filled with incomplete or overly hopeful statements about the likelihood of spills, blowouts and ecological damage.

On May 18, four weeks after the blowout preventer on BP’s Deepwater Horizon rig exploded and sent oil gushing into the Gulf, the MMS approved an exploration plan by Petrobras America for Block 697 of the Mississippi Canyon area, the same area where BP was drilling. The Petrobras site is 7,150 feet underwater – nearly one-and-a-half times deeper than where BP was operating.

The Petrobras plan states: “In the unlikely event a blowout were to occur during exploratory operations, the well would most likely bridge over very quickly considering information known about (rock) formation types in the Gulf of Mexico.”
 

While investigators don’t yet know what caused BP’s blowout preventer to fail, John Evans, the owner of the Evantech petroleum consulting firm in Fort Worth, Texas, said that it was extremely optimistic to expect that a well would automatically “bridge over,” meaning that loose rocks from the sea floor would slide into the well bore and seal it off.

“That’s a big hope,” Evans said. “It could occur, but as to ‘most likely’ occurring _ I would doubt that.”

Given the water pressure at that depth and the huge volume of uncontrolled oil surging from the blowout, sand and other particles would slide along with the rocks, which could eat into the valves on the blowout preventer that are designed to cut off the flow of oil, Evans said.

The plan also said that a relief well would take “approximately 7-10 days to drill”; BP’s relief wells aren’t expected to be completed before August, 90 days after the accident.

A spokeswoman for Petrobras didn’t return phone calls seeking comment.

In the Interior Department’s 38-page report on increased safety measures for Gulf drilling, issued last week, drilling permits – known as “applications for permits to drill,” or APDs – are mentioned 10 times, while exploration and development plans are mentioned only once. The permits are the final step before new wells are drilled, and experts say that the major environmental review comes at the phase of the exploration plans.

The Obama administration has said that the agency’s ability to scrutinize exploration plans was limited by federal guidelines that they be approved or rejected within a 30-day period, and has proposed extending that deadline to 90 days.

“The drill plan is where all the real substance is,” Suckling said. “One you get approved there, you’ve gotten over the big expensive hurdle. You’ve gotten over the stage where you could be shut down.”

A former MMS official, who didn’t want to be named criticizing the agency, said: “If you want reform it certainly needs to incorporate (the exploration plans). A lot of times the (environmental) analyses are very incomplete and unfocused.”

The exploration plans typically are 50 pages or longer and include lengthy discussions of potential environmental impacts. However, the plans reviewed by McClatchy were often so similarly worded that it appeared that the companies may have cribbed from one another.

At least three plans – by BHP Billiton Petroleum, approved on July 20, 2009; by Noble Energy, approved on Oct. 2, 2009; and by Hall-Houston Exploration III, approved May 14 – use identical wording to describe the impact of a potential spill on water quality. While “the dissolved components and small oil droplets” would “temporarily” affect the waters, “dispersion by currents and microbial degradation would remove the oil from the water column or dilute the constituents to background levels,” all three plans say.

Some scientists disputed that, saying it’s unclear whether the magnitude and depth of the BP spill, and the company’s unprecedented use of chemical dispersants, will make it harder for microbes to break down the oil naturally.

“It’s kind of a lazy statement,” said Andreas Teske, a microbiologist at the University of North Carolina-Chapel Hill. “It’s OK if you just look at an oceanography textbook . . . but on an oil spill of this magnitude, no one has thought about this before.”

Even plans for wells located hundreds of miles apart shared similarities. An exploration plan by Anadarko Petroleum approved on June 17, 2009, noted that from 1980 to 2000, “OCS (Outer Continental Shelf drilling) operations produced 4.7 billion barrels of oil and spilled only 0.001 percent of this oil, or one barrel for every 81,000 barrels produced.”

The identical language appeared in a plan by MCX Gulf of Mexico to develop a site more than 240 miles to the west, off Corpus Christi, Texas, which the MMS approved on April 21 _ the day after the BP explosion.

“These oil companies, if you know the rules, you put down the exact same things. You get the rubber stamp, and the system just plows forward,” Suckling said.

http://www.whitehouse.gov/the-press-office/remarks-president-after-meeting-with-bp-oil-spill-commission-co-chairs
 
The White House
Office of the Press Secretary
For Immediate Release
June 01, 2010

Remarks by the President After Meeting with BP Oil Spill Commission Co-Chairs

Rose Garden

11:50 A.M. EDT
THE PRESIDENT:  Good morning, everybody.  I just met with these gentlemen, former Senator Bob Graham of Florida and former EPA Administrator, Bill Reilly.  They will lead the National Commission on the BP oil spill in the Gulf, which is now the greatest environmental disaster of its kind in our history.  Their job, along with the other members of the commission, will be to thoroughly examine the spill and its causes, so that we never face such a catastrophe again.
At the same time, we’re continuing our efforts on all fronts to contain the damage from this disaster and extend to the people of the Gulf the help they need to confront this ordeal.  We’ve already mounted the largest cleanup effort in the nation’s history, and continue to monitor — minute to minute — the efforts to halt or capture the flow of oil from the wrecked BP well.  Until the well is stopped, we’ll multiply our efforts to meet the growing threat and to address the widespread and unbelievably painful losses experienced by the people along the Gulf Coast.  What’s being threatened — what’s being lost — isn’t just the source of income, but a way of life; not just fishable waters, but a national treasure.
There are now more than 20,000 men and women in the region working around the clock to contain and clean up the oil.  We’ve authorized more than 17,000 National Guard members to respond across four states.  More than 1,700 vessels are currently aiding in the response.  And we’ll ensure that any and all responsible means of containing this leak are pursued as we await the completion of the two relief wells.  I’ve also directed Homeland Security Secretary Janet Napolitano and Admiral Thad Allen, who is the National Incident Commander, to triple the manpower in those places where oil has hit shore or is within 24 hours of impact.
The economic response continues as well.  We’ve ordered BP to pay economic injury claims, and we will make sure they deliver.  The Small Business Administration has stepped in to help businesses by approving loans and allowing deferrals of existing loan payments.  We’ve stationed doctors and scientists across the region to look out for people’s health and monitor any ill effects felt by cleanup workers and residents.  And we will absolutely continue to hold BP and any other responsible parties accountable for financial losses borne by the people in the region.
But our responsibility doesn’t end there.  We have an obligation to investigate what went wrong and to determine what reforms are needed so that we never have to experience a crisis like this again.  If the laws on our books are insufficient to prevent such a spill, the laws must change.  If oversight was inadequate to enforce these laws, oversight has to be reformed.  If our laws were broken, leading to this death and destruction, my solemn pledge is that we will bring those responsible to justice on behalf of the victims of this catastrophe and the people of the Gulf region.
 
When Interior Secretary Ken Salazar took office, for example, he found a Minerals and Management Services agency that had been plagued by corruption for years — corruption that was underscored by a recent Inspector General’s report that uncovered appalling activity that took place before last year.  Secretary Salazar immediately took steps to clean up that corruption.  But this oil spill has made clear that more reforms are needed.  For years, there’s been a far too cozy relationship between oil companies and the agencies that regulate them.  That’s why we’ve decided to separate the people who permit offshore leases, who collect revenues, and who regulate the safety of drilling.
In addition, we’ve placed a six-month moratorium on drilling new deepwater oil and gas wells in the Outer Continental Shelf.  And now that a 30-day safety and environmental review is complete, we’re making a series of changes.  The review recommended aggressive new operating standards and requirements for offshore energy companies, which we will put in place.  And I’ve also called on Congress to pass a bill to provide critical resources to respond to this spill and better prepare us for any spills in the future.
Now, all that has to do with dealing with the crisis at hand.  But it’s critical that we take a comprehensive look at how the oil and gas industry operates and how our government oversees those operations.  That’s why I signed an executive order establishing this national commission.  And I’m extraordinarily pleased that Bob Graham and Bill Reilly have agreed to be its co-chairs.
Bob served two terms as Florida’s governor, represented Florida in the Senate for almost two decades.  And during that time he earned a reputation as a champion of the environment, leading the most extensive environmental protection effort in the state’s history.  Bill is chairman emeritus of the board of the World Wildlife Fund, and is also deeply knowledgeable of the oil and gas industry.  He also was EPA Administrator during the first Bush administration, serving during the Exxon Valdez disaster.
 
So I can’t think of two people who will bring greater experience or judgment to this task.  I personally want to thank both of them for taking on this arduous assignment — for demonstrating a great sense of duty to this country.
Very soon I’ll appoint five other distinguished Americans, including leaders in science and engineering, to join them.  And they’ll work alongside other ongoing reviews, including an independent examination by the National Academy of Engineers.  And I’ve authorized the commission to hold public hearings and to request information from government, from non-for-profit organizations, and from experts in the oil and gas industry both at home and abroad, as well as from relevant companies — including BP, Transocean, Halliburton, and others.
I just said in our meeting:  In doing this work, they have my full support to follow the facts wherever they may lead — without fear or favor.  And I’m directing them to report back in six months with options for how we can prevent and mitigate the impact of any future spills that result from offshore drilling. 
 
As a result of this disaster, lives have been lost.  Businesses have been decimated.  Communities that had already known great hardship now face the specter of sudden and painful economic dislocations.  Untold damage is being done to the environment — damage that could last for decades.  We owe all those who’ve been harmed, as well as future generations, a full and vigorous accounting of the events that led to what has now become the worst oil spill in U.S. history.  Only then can we be assured that deepwater drilling can take place safely.  Only then can we accept further development of these resources as we transition to a clean energy economy.  Only then can we be confident that we’ve done what’s necessary to prevent history from repeating itself.
Thank you very much, everybody.
END
11:57 A.M. EDT

Special thanks to Richard Charter

http://www.boston.com/news/local/breaking_news/2010/06/pelosi_markey_b.html?comments=all#readerComm
 
 By Jack Nicas, Globe Correspondent
WATERTOWN — House Speaker Nancy Pelosi and Massachusetts Representative Edward Markey blasted BP today for its inability to stop the massive oil spill in the Gulf of Mexico.

 
“We have been told that the technology is such that we could go all the way down, miles into the sea Š and that this was safe,” Pelosi said. “Nobody said, ‘But if it doesn’t work, we don’t have the faintest idea what to do.'”
“BP is just making this up as they go along; they have no plan,” Markey said of the company’s efforts to plug the leaking well or capture the oil it is spewing into the ocean, nearly a mile below the surface.
Pelosi and Markey had just taken a tour of A123 Systems, a lithium-ion battery company that received millions in recovery money. The two said clean energy like that produced by the company could reduce the country’s reliance on petroleum — and the need for risky offshore drilling.
The news conference was supposed to address the benefits of stimulus funding but reporters’ questions quickly turned to the spill.
Both Pelosi and Markey also touted the idea of lifting the liability cap on BP, which currently limits BP’s financial responsibility for the spill to $75 million. Markey, chairman of the House Select Committee for Energy Independence and Global Warming, said the legislation would be passed by the end of this year.
“BP reported $6 billion in profit in the first quarter of 2010. They have the money to ensure that the people of Louisiana, the Gulf Coast, and our country don’t have to foot the bill,” Markey said.
BP’s chief executive has said the company would take full responsibility for the spill. BP managing director Robert Dudley said Sunday on NBC-TV’s “Meet the Press” that the company had already spent nearly $1 billion on cleanup efforts.

Special thanks to Richard Charter