originally appeared in The New York Times:
The Interior Department on Tuesday opened an urgent review of Arctic offshore drilling operations after a series of blunders and accidents involving Shell Oil’s drill ships and support equipment, culminating in the grounding of one of its drilling vessels last week off the coast of Alaska.
Officials said the new assessment by federal regulators could halt or scale back Shell’s program to open Alaska’s Arctic waters to oil exploration, a $4.5 billion effort that has been plagued by equipment failures, legal delays, mismanagement and bad weather.
Interior Secretary Ken Salazar said that the expedited review, which is to be completed within 60 days, was prompted by accidents and equipment problems aboard Shell’s two Arctic drilling rigs, the Kulluk and the Noble Discoverer, as well as the Arctic Challenger, a vessel designed to respond to a potential well blowout and oil spill.
In addition, the Coast Guard announced Tuesday that it would conduct a comprehensive marine casualty investigation of the grounding of the Kulluk on Dec. 31.
Shell’s repeated and early misadventures have confirmed the fears of Arctic drilling critics, who said that the company and its federal partners had not shown that they had the equipment, skill or experience to cope with the unforgiving environment there.
The director of the Interior Department’s Bureau of Ocean Energy Management, will lead the review. As part of our department’s oversight responsibilities, he said in a statement, our review will look at Shell’s management and operations in the Beaufort and Chukchi Seas. We will assess Shell’s performance in the Arctic’s challenging environment.
The assessment will look at Shell’s safety management systems, its oversight of contracted services and its ability to meet federal standards for Arctic oil and gas operations.
According to the president of Shell Oil, said of the government assessment: It’s not a concern to me. I welcome this kind of high-level review. It’s important that both we and the Department of Interior take a look at the 2012 season.
Shell's president added: There are obviously some issues that need to be worked on, particularly the marine transport. He said that it was too early to say what damage may have occurred to the Kulluk but that he had great confidence in this program.
Shell’s rigs drilled two shallow wells last summer, but were halted by government officials before they reached oil-bearing formations. Officials would not allow Shell to drill deeper because the company did not have the required capacity to contain spills after the testing failure of a device designed to cap a runaway well and collect the oil.
In the past several months, the Coast Guard has examined the containment barge and the rebuilt dome, and both passed necessary tests. But the Bureau of Safety and Environmental Enforcement still needs to inspect the equipment before it can be deployed. Those inspections were originally to be done later this month, but have been put off because of the Kulluk accident.
Environmental advocates have been leery of the Arctic drilling program for years and became especially vocal after the Kulluk ran aground.
Greenpeace, which is circulating petitions calling on President Obama to halt the Arctic drilling program, said that the Interior Department’s reassessment was long overdue.
We’ve repeatedly been told Shell is the best in the business, and so we can only conclude after this series of mishaps that the best in the business is simply not good enough for the Arctic, according to Greenpeace's deputy campaigns director. We only hope that 60 days is long enough to properly examine the extraordinary number of dangerous incidents that have beset Shell’s accident-prone drilling program and put Alaska’s environment at risk.
The senior Pacific counsel for the environmental advocacy group Oceana, said that government regulators were too lax in allowing the program to go forward without adequate assurances that Shell could operate safely and competently.
We hope this review amounts to more than a paper exercise, he said. The Department of the Interior, after all, is complicit in Shell’s failures because it granted the approvals that allowed Shell to operate.
The Kulluk was towed to a safe harbor on Monday, where it will undergo extensive inspections before continuing its journey to its winter home in Seattle.
If the Kulluk, which Shell has upgraded in recent years at a cost of nearly $300 million, is found to have been wrecked or substantially damaged, it will be hard for the company to find a replacement and receive the numerous government permits needed to resume drilling in July, as it has planned.
Under Department of Interior rules governing Arctic drilling, the company must have two rigs on site at all times to provide for a backup vessel to drill a relief well in case of a blowout, an uncontrolled escape of oil or gas.
The Kulluk, which does not have a propulsion system of its own, ran into trouble in late December when its tow ship, the Aiviq, lost engine power and the towline separated in high winds and heavy seas.
Shell’s other Arctic drill ship, the Noble Discoverer, has also had problems. In July, before sailing to the Arctic, it nearly ran aground after dragging its anchor in the Aleutian Islands. Then in November it had a small engine fire.
Later that month, during an inspection in the Alaskan port of Seward, the Coast Guard found more than a dozen violations involving safety systems and pollution equipment.
At the end of December, the Noble Corporation, the Swiss company that owns the 512-foot-long drill ship and is leasing it to Shell for $240,000 a day, said that many of the problems had been repaired and that the ship was preparing to sail to Seattle to fix the remainder of them.
Wednesday, January 9, 2013
Monday, January 7, 2013
Exports of U.S. Gas May Fall Short of High Hopes
originally appeared in The New York Times:
Only five years ago, several giant natural gas import terminals were built to satisfy the energy needs of a country hungry for fuels. But the billion-dollar terminals were obsolete even before the concrete was dry as an unexpected drilling boom in new shale fields from Pennsylvania to Texas produced a glut of cheap domestic natural gas.
Now, the same companies that had such high hopes for imports are proposing to salvage those white elephants by spending billions more to convert them into terminals to export some of the nation’s extra gas to Asia and Europe, where gas is roughly triple the American price.
Just like last time, some of the costly ventures could turn out to be poor investments.
Countries around the world are importing drilling expertise and equipment in hopes of cracking open their own gas reserves through the same techniques of hydraulic fracturing and horizontal drilling that unleashed shale gas production in the United States. Demand for American gas — which would be shipped in a condensed form called liquefied natural gas, or L.N.G. — could easily taper off by the time the new export terminals really get going, some energy specialists say.
It will be easier to export the technology for extracting shale gas than exporting actual gas, according to the former administrator of the Energy Department’s Energy Information Administration. I know the pitch about our price differentials will justify the high costs of L.N.G. We will see. Gas by pipeline is a good deal. L.N.G.? Not so clear.
Even the terminal operators acknowledge that probably only a lucky few companies will export gas because it can cost $7 billion or more to build a terminal, and then only after a rigorous federal regulatory permitting process. The exploratory process to find a suitable site for a new terminal alone can take a year and cost $100 million, operators say, and financing can be secured only once long-term purchase agreements — 20 years or more — are reached with foreign buyers.
It’s a monumental effort to put a deal together like this, and you need well-heeled partners, according to the president of Sempra Energy, which is based in San Diego and is applying for permits to turn around a Hackberry, La., import terminal for export. There are only a handful of people who can do this kind of thing.
At least 15 proposed terminal projects have filed regulatory applications to export gas, and if all were approved, they could export more than 25 billion cubic feet a day, equivalent to more than a third of domestically consumed natural gas.
Environmental advocates say that kind of surge in demand would produce a frenzy of shale drilling dependent on hydraulic fracturing of hard rocks, an industrial method they say endangers local water supplies and pollutes the air. Dow Chemical, a big user of natural gas, and some other manufacturers express concerns that an export boom could threaten to raise natural gas prices for factories and consumers and, ultimately, kill jobs.
Opponents are already lobbying the Obama administration to reject most of the planned terminals, and protests have already occurred. Sempra, Exxon Mobil, Cheniere Energy and others have already built import terminals on the Gulf of Mexico. With docking facilities and giant gas tanks already built on land they had acquired and received permits for, they have a huge advantage over companies that have not yet built terminals. Cheniere, the only company to secure an export license, already has entered long-term purchase agreements for its L.N.G., and several other companies are only a few steps behind.
Dominion Power, which operates a nearly idle import terminal near Cove Point on Chesapeake Bay in Maryland, is also expected to proceed with a conversion to exports, since it is strategically located near the mid-Atlantic gas fields of the Marcellus Shale.
You have got to be able to change, adapt as changes take place in the world, according to the manager of the Cove Point plant.
The companies with import terminals now wanting to export won a victory in December when an Energy Department report said exports of L.N.G. could produce $30 billion a year in export earnings without driving up domestic gas prices significantly.
Many energy specialists expect the Obama administration to approve several export license applications in the next couple of years, and exports could begin as soon as 2015.
The plans for a gas export boom are based on the theory that cheap American gas will remain cheap for decades while Asian and European gas supplies remain tight and expensive. Global demand for natural gas is expected to expand for decades as nations seek a replacement for coal, nuclear energy and increasingly expensive oil, energy specialists say.
If the American terminals could be built tomorrow, they would have a perfect market opportunity. The production glut in the United States has reduced natural gas prices in this country by more than two-thirds since 2008.
Gas prices in most other places around the world are much higher because they are linked to oil, which has remained comparatively expensive. Gas prices in the United States are around $3.30 per thousand cubic feet, compared with $10 to $11 in Europe and over $15 in Asia.
But analysts say that the price spread could quickly shrink as a host of factors converge. Gas prices in the United States will face upward pressure as exports rise, electric utilities switch to gas-fired plants from coal, and companies use more natural gas in manufacturing and for fleet vehicles.
With rising U.S. gas prices, U.S. L.N.G. could be priced out of the market, according to the head of global gas research at the consultancy Wood Mackenzie. Even without L.N.G. exports, the price of gas will go up.
The indexing of Asian and European gas to oil prices is beginning to erode. At the same time, huge natural gas pipelines are being built around Asia to supply China, while new gas finds around Australia, East Africa and the eastern Mediterranean are likely to flood the markets with more L.N.G. Russia, a major global gas producer, is also moving aggressively to protect its markets.
And the cost of shipping and processing liquefied gas will cut into American suppliers’ competitiveness.
A gas analyst at PFC Energy, said if the current gas price of slightly less than $3.30 per thousand cubic feet rose to $6, by the time it gets to Asia, it’s double that price and that means there is no arbitrage. The biggest threat, over the long term, is the spread of the American shale boom overseas. The United States has a big lead; shale drilling has been slow to get started in Europe, South Africa and South America because of environmental concerns, water shortages and political obstacles.
But China, which potentially has more shale resources than the United States, is poised for development. And Poland, Britain and Argentina are moving forward with more shale drilling.
Resistance from environmental groups like the Sierra Club could help stop some export projects, especially outside the Gulf of Mexico region, which has long been comfortable with the oil and gas industry. And manufacturers like Dow Chemical are campaigning against unfettered exports to keep their costs down.
Over all, these factors will make it challenging for export projects to raise enough financing. L.N.G. terminal developers note that more than 20 import terminals proposed a decade ago were never built because of local opposition or lack of government permits and financing.
Can all these projects get financed? That’s a good question, according to the president of Shell Oil Company, which is looking at various possible L.N.G. terminal sites to invest in. The outcome of this is not likely to be unlimited L.N.G. exports.
Cheniere’s chief executive, predicted that by 2018, the country would manage to export only one billion to two billion cubic feet of gas a day, or roughly 2 percent of current domestic consumption. In 10 years, after two to four projects have received permits and have been built, he said he expected exports to grow to three billion to five billion cubic feet a day. The total global production of L.N.G. is about 40 billion cubic feet a day, and growing rapidly.
Dow Chemical’s vice president for energy and climate change, said that exports that come near other projections that would ease Dow’s concerns. That is a range that I think will maintain a competitive advantage for the United States, he said.
Only five years ago, several giant natural gas import terminals were built to satisfy the energy needs of a country hungry for fuels. But the billion-dollar terminals were obsolete even before the concrete was dry as an unexpected drilling boom in new shale fields from Pennsylvania to Texas produced a glut of cheap domestic natural gas.
Now, the same companies that had such high hopes for imports are proposing to salvage those white elephants by spending billions more to convert them into terminals to export some of the nation’s extra gas to Asia and Europe, where gas is roughly triple the American price.
Just like last time, some of the costly ventures could turn out to be poor investments.
Countries around the world are importing drilling expertise and equipment in hopes of cracking open their own gas reserves through the same techniques of hydraulic fracturing and horizontal drilling that unleashed shale gas production in the United States. Demand for American gas — which would be shipped in a condensed form called liquefied natural gas, or L.N.G. — could easily taper off by the time the new export terminals really get going, some energy specialists say.
It will be easier to export the technology for extracting shale gas than exporting actual gas, according to the former administrator of the Energy Department’s Energy Information Administration. I know the pitch about our price differentials will justify the high costs of L.N.G. We will see. Gas by pipeline is a good deal. L.N.G.? Not so clear.
Even the terminal operators acknowledge that probably only a lucky few companies will export gas because it can cost $7 billion or more to build a terminal, and then only after a rigorous federal regulatory permitting process. The exploratory process to find a suitable site for a new terminal alone can take a year and cost $100 million, operators say, and financing can be secured only once long-term purchase agreements — 20 years or more — are reached with foreign buyers.
It’s a monumental effort to put a deal together like this, and you need well-heeled partners, according to the president of Sempra Energy, which is based in San Diego and is applying for permits to turn around a Hackberry, La., import terminal for export. There are only a handful of people who can do this kind of thing.
At least 15 proposed terminal projects have filed regulatory applications to export gas, and if all were approved, they could export more than 25 billion cubic feet a day, equivalent to more than a third of domestically consumed natural gas.
Environmental advocates say that kind of surge in demand would produce a frenzy of shale drilling dependent on hydraulic fracturing of hard rocks, an industrial method they say endangers local water supplies and pollutes the air. Dow Chemical, a big user of natural gas, and some other manufacturers express concerns that an export boom could threaten to raise natural gas prices for factories and consumers and, ultimately, kill jobs.
Opponents are already lobbying the Obama administration to reject most of the planned terminals, and protests have already occurred. Sempra, Exxon Mobil, Cheniere Energy and others have already built import terminals on the Gulf of Mexico. With docking facilities and giant gas tanks already built on land they had acquired and received permits for, they have a huge advantage over companies that have not yet built terminals. Cheniere, the only company to secure an export license, already has entered long-term purchase agreements for its L.N.G., and several other companies are only a few steps behind.
Dominion Power, which operates a nearly idle import terminal near Cove Point on Chesapeake Bay in Maryland, is also expected to proceed with a conversion to exports, since it is strategically located near the mid-Atlantic gas fields of the Marcellus Shale.
You have got to be able to change, adapt as changes take place in the world, according to the manager of the Cove Point plant.
The companies with import terminals now wanting to export won a victory in December when an Energy Department report said exports of L.N.G. could produce $30 billion a year in export earnings without driving up domestic gas prices significantly.
Many energy specialists expect the Obama administration to approve several export license applications in the next couple of years, and exports could begin as soon as 2015.
The plans for a gas export boom are based on the theory that cheap American gas will remain cheap for decades while Asian and European gas supplies remain tight and expensive. Global demand for natural gas is expected to expand for decades as nations seek a replacement for coal, nuclear energy and increasingly expensive oil, energy specialists say.
If the American terminals could be built tomorrow, they would have a perfect market opportunity. The production glut in the United States has reduced natural gas prices in this country by more than two-thirds since 2008.
Gas prices in most other places around the world are much higher because they are linked to oil, which has remained comparatively expensive. Gas prices in the United States are around $3.30 per thousand cubic feet, compared with $10 to $11 in Europe and over $15 in Asia.
But analysts say that the price spread could quickly shrink as a host of factors converge. Gas prices in the United States will face upward pressure as exports rise, electric utilities switch to gas-fired plants from coal, and companies use more natural gas in manufacturing and for fleet vehicles.
With rising U.S. gas prices, U.S. L.N.G. could be priced out of the market, according to the head of global gas research at the consultancy Wood Mackenzie. Even without L.N.G. exports, the price of gas will go up.
The indexing of Asian and European gas to oil prices is beginning to erode. At the same time, huge natural gas pipelines are being built around Asia to supply China, while new gas finds around Australia, East Africa and the eastern Mediterranean are likely to flood the markets with more L.N.G. Russia, a major global gas producer, is also moving aggressively to protect its markets.
And the cost of shipping and processing liquefied gas will cut into American suppliers’ competitiveness.
A gas analyst at PFC Energy, said if the current gas price of slightly less than $3.30 per thousand cubic feet rose to $6, by the time it gets to Asia, it’s double that price and that means there is no arbitrage. The biggest threat, over the long term, is the spread of the American shale boom overseas. The United States has a big lead; shale drilling has been slow to get started in Europe, South Africa and South America because of environmental concerns, water shortages and political obstacles.
But China, which potentially has more shale resources than the United States, is poised for development. And Poland, Britain and Argentina are moving forward with more shale drilling.
Resistance from environmental groups like the Sierra Club could help stop some export projects, especially outside the Gulf of Mexico region, which has long been comfortable with the oil and gas industry. And manufacturers like Dow Chemical are campaigning against unfettered exports to keep their costs down.
Over all, these factors will make it challenging for export projects to raise enough financing. L.N.G. terminal developers note that more than 20 import terminals proposed a decade ago were never built because of local opposition or lack of government permits and financing.
Can all these projects get financed? That’s a good question, according to the president of Shell Oil Company, which is looking at various possible L.N.G. terminal sites to invest in. The outcome of this is not likely to be unlimited L.N.G. exports.
Cheniere’s chief executive, predicted that by 2018, the country would manage to export only one billion to two billion cubic feet of gas a day, or roughly 2 percent of current domestic consumption. In 10 years, after two to four projects have received permits and have been built, he said he expected exports to grow to three billion to five billion cubic feet a day. The total global production of L.N.G. is about 40 billion cubic feet a day, and growing rapidly.
Dow Chemical’s vice president for energy and climate change, said that exports that come near other projections that would ease Dow’s concerns. That is a range that I think will maintain a competitive advantage for the United States, he said.
Wednesday, January 2, 2013
Breakaway Oil Rig Runs Aground in Gulf of Alaska
originally appeared in The New York Times:
One of Shell Oil’s two Arctic drilling rigs is beached on an island in the Gulf of Alaska, threatening environmental damage from a fuel spill and calling into question Shell’s plans to resume drilling in the treacherous waters north of Alaska in the summer.
The rig, the Kulluk, broke free from a tow ship in stormy seas and ran aground Monday night. The Coast Guard was leading an effort to keep its more than 150,000 gallons of diesel fuel and lubricants from spilling onto the rocky shoreline.
At a news conference in Anchorage on Tuesday afternoon, the federal on-scene coordinator, said that a reconnaissance flight showed the Kulluk was upright and stable, with no significant motion.
The results are showing us that the Kulluk is sound, he said. No sign of breach of hull, no sign of release of any product. He said the response team hoped to get salvage experts aboard the ship to get a better picture of damage.
A representative of the Alaska Department of Environmental Conservation said that, so far, there was no sign of harm to the environment or wildlife.
The Kulluk’s 18 crew members had been evacuated by Coast Guard helicopters on Saturday after the rig first went adrift in high winds and rough seas.
The grounding was the latest in a series of mishaps to befall Shell’s ambitious plans to prospect for oil in the Beaufort and Chukchi Seas off the North Slope of Alaska.
Shell halted drilling for oil in September after equipment failures, unexpected ice floes, operational missteps and regulatory delays forced the company to scale back its plans.
Its drilling rigs completed two shallow pilot holes and left the Arctic in late fall to return to Seattle for maintenance work but have encountered problems in transit.
If the Kulluk, which Shell upgraded in recent years at a cost of nearly $300 million, is wrecked or substantially damaged, it will be hard for the company to find a replacement and receive the numerous government permits needed to resume drilling in July, as planned.
Under Department of Interior rules governing Arctic drilling, the company must have two rigs on site at all times to provide for a backup vessel to drill a relief well in case of a blowout, an uncontrolled escape of oil or gas.
A separate containment system designed to collect oil in the case of a well accident failed during testing, preventing Shell from drilling into oil-bearing formations during its abbreviated exploration season last summer and fall. Shell’s Alaska vice president said he could not discuss the latest accident, saying that company officials were working with a Coast Guard-directed unified command and could not comment separately.
An official involved in the response operation, who spoke on the condition of anonymity because he was not authorized to comment, said: We don’t know about the damage. It’s too dark. The weather is horrendous. The official said that when a helicopter flew over the rig Monday night: It looked upright about 1,600 feet off the beach. There was no sign of any spill. The official said the fuel tanks on the vessel were well protected inside the hull, making a spill unlikely.
The Kulluk, which does not have a propulsion system of its own, ran into trouble late last week when its tow ship, the Aiviq, lost engine power and the towline separated. A Coast Guard cutter and other ships arrived, and crews struggled through Monday, in seas up to 35 feet, to reconnect tow lines to the rig, succeeding several times. But each time the lines separated.
On Monday night, the Kulluk, 266 feet in diameter, broke free from one tow ship and the Coast Guard ordered a second ship to disconnect, fearing for the safety of its crew.
The Kulluk is sitting on the southeast coast of Sitkalidak Island, an uninhabited island separated by the Sitkalidak Strait from the far larger Kodiak Island to the west. The nearest town, Old Harbor, is across the strait on Kodiak Island; it has a population of about 200 people. The strait is home to a threatened species of sea lion.
A spokesman for the Interior Department’s offshore drilling safety office would not say whether the latest problem would cause a re-evaluation of the agency’s approval of Shell’s overall Arctic program. But the spokesman of the Bureau of Safety and Environmental Enforcement, said that any equipment Shell proposes to use off the Alaskan coast must meet federal safety and testing standards. He added that regulations require a federal inspector be present around the clock during drilling operations.
The other ship Shell has used in the Arctic, the Noble Discoverer, has had problems of its own. In July, before sailing to the Arctic, it nearly ran aground after dragging its anchor in the Aleutian Islands. Then in November it had a small engine fire.
Later that month, during an inspection in the Alaskan port of Seward, the Coast Guard found more than a dozen violations involving safety systems and pollution equipment. Last week, the Noble Corporation, the Swiss company that owns the 512-foot-long drillship and is leasing it to Shell for $240,000 a day, said that many of the problems had been repaired and that the ship was preparing to sail to Seattle to fix the remainder of them.
Critics said that the accident confirmed their worst fears about Shell’s Arctic project and should force federal regulators to stop it.
We’re learning that oceans, while beautiful, are dangerous and unforgiving, according to a senior Pacific counsel for the environmental group Oceana. Shell has demonstrated again and again that it’s not prepared to operate in Alaskan waters. Hopefully something good will come out of this latest incident, and the government will take a careful look at whether activities such as this can be conducted safely, and if so, what changes are needed to make that possible.
Shell was on the verge of drilling in 2011, but delays in getting final approval for an air quality permit forced the company to put off drilling until 2012. More equipment failures and unpredictable weather continued through the year. In September, Shell had to abandon preliminary drilling in the Chukchi Sea when sea ice moved toward the drilling area only a day after work began.
And finally, the company was forced to put off completing the two wells it had begun to drill for another year when a barge containing a spill containment dome was badly damaged during a testing accident. During the testing, a mechanical device malfunctioned as the containment dome was lowered into the water, and a submarine robot became tangled in some of the dome’s anchor lines.
One of Shell Oil’s two Arctic drilling rigs is beached on an island in the Gulf of Alaska, threatening environmental damage from a fuel spill and calling into question Shell’s plans to resume drilling in the treacherous waters north of Alaska in the summer.
The rig, the Kulluk, broke free from a tow ship in stormy seas and ran aground Monday night. The Coast Guard was leading an effort to keep its more than 150,000 gallons of diesel fuel and lubricants from spilling onto the rocky shoreline.
At a news conference in Anchorage on Tuesday afternoon, the federal on-scene coordinator, said that a reconnaissance flight showed the Kulluk was upright and stable, with no significant motion.
The results are showing us that the Kulluk is sound, he said. No sign of breach of hull, no sign of release of any product. He said the response team hoped to get salvage experts aboard the ship to get a better picture of damage.
A representative of the Alaska Department of Environmental Conservation said that, so far, there was no sign of harm to the environment or wildlife.
The Kulluk’s 18 crew members had been evacuated by Coast Guard helicopters on Saturday after the rig first went adrift in high winds and rough seas.
The grounding was the latest in a series of mishaps to befall Shell’s ambitious plans to prospect for oil in the Beaufort and Chukchi Seas off the North Slope of Alaska.
Shell halted drilling for oil in September after equipment failures, unexpected ice floes, operational missteps and regulatory delays forced the company to scale back its plans.
Its drilling rigs completed two shallow pilot holes and left the Arctic in late fall to return to Seattle for maintenance work but have encountered problems in transit.
If the Kulluk, which Shell upgraded in recent years at a cost of nearly $300 million, is wrecked or substantially damaged, it will be hard for the company to find a replacement and receive the numerous government permits needed to resume drilling in July, as planned.
Under Department of Interior rules governing Arctic drilling, the company must have two rigs on site at all times to provide for a backup vessel to drill a relief well in case of a blowout, an uncontrolled escape of oil or gas.
A separate containment system designed to collect oil in the case of a well accident failed during testing, preventing Shell from drilling into oil-bearing formations during its abbreviated exploration season last summer and fall. Shell’s Alaska vice president said he could not discuss the latest accident, saying that company officials were working with a Coast Guard-directed unified command and could not comment separately.
An official involved in the response operation, who spoke on the condition of anonymity because he was not authorized to comment, said: We don’t know about the damage. It’s too dark. The weather is horrendous. The official said that when a helicopter flew over the rig Monday night: It looked upright about 1,600 feet off the beach. There was no sign of any spill. The official said the fuel tanks on the vessel were well protected inside the hull, making a spill unlikely.
The Kulluk, which does not have a propulsion system of its own, ran into trouble late last week when its tow ship, the Aiviq, lost engine power and the towline separated. A Coast Guard cutter and other ships arrived, and crews struggled through Monday, in seas up to 35 feet, to reconnect tow lines to the rig, succeeding several times. But each time the lines separated.
On Monday night, the Kulluk, 266 feet in diameter, broke free from one tow ship and the Coast Guard ordered a second ship to disconnect, fearing for the safety of its crew.
The Kulluk is sitting on the southeast coast of Sitkalidak Island, an uninhabited island separated by the Sitkalidak Strait from the far larger Kodiak Island to the west. The nearest town, Old Harbor, is across the strait on Kodiak Island; it has a population of about 200 people. The strait is home to a threatened species of sea lion.
A spokesman for the Interior Department’s offshore drilling safety office would not say whether the latest problem would cause a re-evaluation of the agency’s approval of Shell’s overall Arctic program. But the spokesman of the Bureau of Safety and Environmental Enforcement, said that any equipment Shell proposes to use off the Alaskan coast must meet federal safety and testing standards. He added that regulations require a federal inspector be present around the clock during drilling operations.
The other ship Shell has used in the Arctic, the Noble Discoverer, has had problems of its own. In July, before sailing to the Arctic, it nearly ran aground after dragging its anchor in the Aleutian Islands. Then in November it had a small engine fire.
Later that month, during an inspection in the Alaskan port of Seward, the Coast Guard found more than a dozen violations involving safety systems and pollution equipment. Last week, the Noble Corporation, the Swiss company that owns the 512-foot-long drillship and is leasing it to Shell for $240,000 a day, said that many of the problems had been repaired and that the ship was preparing to sail to Seattle to fix the remainder of them.
Critics said that the accident confirmed their worst fears about Shell’s Arctic project and should force federal regulators to stop it.
We’re learning that oceans, while beautiful, are dangerous and unforgiving, according to a senior Pacific counsel for the environmental group Oceana. Shell has demonstrated again and again that it’s not prepared to operate in Alaskan waters. Hopefully something good will come out of this latest incident, and the government will take a careful look at whether activities such as this can be conducted safely, and if so, what changes are needed to make that possible.
Shell was on the verge of drilling in 2011, but delays in getting final approval for an air quality permit forced the company to put off drilling until 2012. More equipment failures and unpredictable weather continued through the year. In September, Shell had to abandon preliminary drilling in the Chukchi Sea when sea ice moved toward the drilling area only a day after work began.
And finally, the company was forced to put off completing the two wells it had begun to drill for another year when a barge containing a spill containment dome was badly damaged during a testing accident. During the testing, a mechanical device malfunctioned as the containment dome was lowered into the water, and a submarine robot became tangled in some of the dome’s anchor lines.
Wednesday, December 19, 2012
Fall of oil exec Roger Parker marked by risky bets gone bad
originally appeared in The Denver Post:
Roger Parker appeared to have it all in 2007. He lived in a historic, $9 million mansion in Cherry Hills Village amid Denver's business and sporting elite. He golfed with John Elway. He traveled by private jet to gamble in Las Vegas and golf in Palm Springs.
Also that year, Parker completed the deal of his career. The chief executive of Denver-based Delta Petroleum sold a $684 million, one-third stake in the growing company to Tracinda Corp., owned by billionaire investor Kirk Kerkorian.
The transaction would be Parker's undoing, marking the start of a remarkable downfall. It played out, friends say, as a close business associate discovered that Parker, then married, was having an affair with his wife.
Parker and Delta struggled with risky bets gone bad. Tracinda forced Parker out after about a year and eventually took Delta into bankruptcy. It pursued Parker for more than $7 million from an unpaid loan but recently found just $46 in his retirement account and $10,000 in his brokerage account.
On Nov. 27, the U.S. Securities and Exchange Commission accused Parker of tipping off his close friend and another, as-yet-unidentified friend ahead of the Tracinda deal, allowing them to reap hundreds of thousands of dollars in ill-gotten gains. Some of his gains were used to finance use of a private charter jet company for business and personal use.
Two Cherry Hills homes — one Parker bought in 2004 for $9 million and the one it replaced, recently signed over to his ex-wife — are for sale.
An attorney for Parker did not respond to requests for comment for this story. He has not yet responded to the SEC's claims.
Interviews with friends, associates and businessmen, as well as scores of public documents, paint a picture of Parker, 51, as ambitious and aggressive, someone who set out early on a path toward multimillion-dollar success and social prominence.
He achieved both — with the help of a network of well-placed friends — but he took big risks along the way, spent lavishly and seldom settled for second-best.
Roger was a guy who thinks it all works out in spades, according to Delta's former chief operating officer. At one point, he speculated aloud he would be worth $200 million someday.
Fast success
Parker was a standout student at the University of Colorado business-school program in mineral land management. It trained students to be the property-acquisition brains behind the geologic science that identified potentially drillable resources.
But the 1980s, with the petroleum industry tanking, wasn't the best time to aspire to be an oilman.
There were no jobs, recruiting was down 80 percent, and the only ones likely to find a job after the collapse were those with experience, or new grads, according to an associate who graduated with Parker in 1983. But Roger got involved from the start. While we were all in school, he was getting a feel for the business, getting connections and experience. Parker found fast success from hard work.
Only a couple years out of school, he had the big house, all the trappings of success, according to one source.
That happened at Ampet Inc., a small oil-and-gas company formed by Parker mentor and a family friend, a Breckenridge attorney, and his lawyer father, Parker's parents were investors in the business.
The younger Parker and the junior partner would remain business associates for years, beginning with Parker's seat as executive vice president of Ampet while still a student at CU, records show.
While Parker worked at Ampet, his business partner and an associate formed Delta Petroleum in 1984. Parker was first listed on Delta documents as secretary in 1987.
Golf friendships
Two months later, Parker's father, was nominated to the U.S. District Court bench in New Mexico by President Ronald Reagan.
The elder Parker eventually served as federal chief judge in New Mexico until 2003. Along the way, he invested in oil and gas — including Delta — and as of 2010 was drawing royalties on several Colorado wells, some in the range of $500,000 to $1 million, according to financial-disclosure records required of all federal judges.
Roger Parker's relationships reach deep into Denver's business community and stretch across years.
Boisterous in laughter and quick with a joke, Parker was often found hanging with pals at Elway's, in part because of a friendship with the former Broncos quarterback. Both exceptional golfers, Elway and Parker sometimes partnered in charity events, friends said.
Efforts to reach Elway through the Denver Broncos were unsuccessful.
One of Parker's closest friends is a CU graduate in mineral land management with Parker.
The two are avid golfers — with memberships at Cherry Hills and Castle Pines, among others — and big boosters of CU's athletic program, forming the elite Buff Club Cabinet with others including Van Gilder.
The CU graduate has found a level of success that eluded his friend. He recently sold his Cordillera Energy Partners III for $2.8 billion to the company where he started, Apache Corp. Efforts to reach the college friend for comment were unsuccessful.
Drive for status
Parker, twice divorced, enjoyed living large, primarily through houses, golf-club memberships and jets, friends say.
His drive for status was evident in a years-long pursuit of a home at the very pinnacle of Denver society.
Parker sold his first Cherry Hills house and moved into a two-story Tudor he built in 2001 next to the Cherry Hills Country Club. He borrowed $1.6 million to build it and borrowed another $9 million on it over the years. But friends said he was disappointed with the outcome.
In 2004, Parker bought a $9 million mansion from old-money oilman's family along the exclusive Cherry Hills Park Drive. Next door lived the Broncos head coach, and across the street was their legendary money manager.
But Parker was unable to sell the Tudor home, and it remains on the market. The mansion he bought from the oil family — one of the oldest in that area — also is for sale.
Parker acquired a quarter interest in use of a Citation 10 jet, and he sold half of that to Delta.
On a golf trip to Palm Springs, Parker and friends stopped in Las Vegas — the Bellagio and Venetian were among his favorite haunts — to play the tables. Parker believed he could break the house in blackjack, one associate said.
Parker isn't flashy, most comfortable wearing shorts and tennis shoes, driving an SUV, listening to Aerosmith and drinking rum and Coke, friends said.
Parker often does business with friends. One of those is Denver power broker and Parker's personal and business attorney. Earlier this year, Parker pledged 100,000 shares in Prospect Global Energy as collateral to his attorney's law firm for personal legal help, state corporation filings show. At the time, the shares were worth $1 million. Today, they're valued at $167,000.
His attorney who is not representing Parker in the SEC's insider-trading case, would not comment for this story.
One of the attoney's sons, is vice chairman and co-founder of the Denver company, which mines potash.
A Prospect investor who founded Hexagon Investments in 1992, also is a friend of Parker's. He would eventually loan $24.7 million into Parker's latest venture, Recovery Energy, according to financial filings. Efforts to reach the investor for comment were unsuccessful.
Lucrative introduction
Parker was introduced to Kerkorian by a former chauffeur who entered the oil-and-gas business after marrying the former Denver Post owner. The chauffeur, now a Las Vegas resident, had done business with Delta as far back as 2003.
For the introduction — and the resulting sale of a 35 percent ownership share of the Denver company — Davis landed about $5 million worth of Delta shares. Kerkorian would allege later in a settled lawsuit that Parker had secretly arranged contracts and business arrangements for Davis as part of the deal.
Tracinda bought in at $19 a share — Parker had pushed off an initial $17 bid and pressed for more — on New Year's Eve 2007. The $684 million purchase pushed the company stock up 19 percent in one day. It would eventually hit $24.78 from $15.51, when the Tracinda deal was announced.
The SEC alleges in its civil suit that in the months and days before the Tracinda investment was firm and made public, he sent dozens of text messages about it to his business associate. Insiders said Parker didn't even tell some of his closest board members and company executives about the impending deal.
In a related case, his business associate was indicted on criminal insider-trading charges that he allegedly made about $86,000 on the information. He has pleaded not guilty. The SEC alleges that another unnamed individual who is friends with him and Parker racked up a $730,000 payday on Delta stock.
The government has not accused Parker of profiting from the information.
Delta and Parker had encountered the SEC before. In 2006 and 2007 — prior to the Tracinda deal — the government investigated alleged backdating of stock options that were awarded to Parker and other executives. The SEC later dropped its inquiry, and a pair of shareholder suits alleging the practice were settled.
Margin call
Following the merger, it didn't take long before Parker's business plan — a no-hedge, keep-drilling approach — would weigh on Delta's books and, eventually, its stock price.
Several company insiders say Parker's steadfast refusal to hedge some of the company's natural-gas and oil assets against a potential price drop was its most critical undoing. Typically, energy companies hedge by agreeing to sell a portion of their future production at a set price or range.
Delta's former COO and chief geologist, said Delta could have hedged through 2015 but didn't. We'd still be around today if it had.
When shares in Delta dropped below $4 in November 2008, it triggered a margin call on Parker's brokerage account because he had pledged shares as collateral for loans.
Tracinda loaned Parker $7.5 million to cover the shortfall. It said in legal filings it wanted Parker to pay attention to Delta instead of his failing personal finances.
By January 2009, the situation was, in one insider's viewpoint, desperate. He was the eternal optimist of gas prices coming right back, the insider said. They didn't.
By May 2009, Kerkorian had had enough. Three board members asked Parker to resign as chairman and CEO. Parker couldn't get along with new co-chairman Daniel Taylor, a Kerkorian board appointee.
Parker left with a severance payday of about $7 million.
New venture
Parker wasn't unemployed for long.
With the help of friends, he staged a comeback through a new venture, Recovery Energy.
While Reiman was the money lender, the oil-and-gas properties that made up Recovery's inventory came from Davis. Van Gilder provided the office space.
Parker paid for much of it with shares in the new company, a tactic he had used before.
Filings show the company's production and revenues followed a downward trend. Revenues in 2010 were $9.76 million but only $8.36 million in 2011. Oil and gas production in the second quarter of 2012 was down 24 percent from 2011.
Interest expenses in 2011 almost equaled the value of the oil and gas the company produced.
Parker engaged in an unusual practice with his Recovery shares that may have been intended to land a bigger payday or ward off a creditor such as Tracinda.
Normally, executives try to obtain the shares they are granted as quickly as possible, a process known as vesting. Parker, however, amended his employment agreement 14 times over more than two years to push back the date when his Recovery shares would vest and come into his possession.
Tracinda in late August won a judgment for the $7.5 million loan — now $7.7 million — against Parker, who argued he'd been shorted about $5 million in an effort to sell the last of his Delta stock in 2009.
Tracinda has been following Parker with garnishment orders to collect — first on his pension account and then his securities account. Total garnered: $10,745.
It followed with a garnishment order at Recovery for Parker's salary, roughly $21,000 a month, and is making a grab at about 1.3 million of Parker's Recovery shares.
Parker resigned from Recovery on Nov. 14, just ahead of another garnishment effort by Tracinda. SEC notices show his business partner began selling Recovery stock heavily just after.
Two weeks later, the SEC named Parker a co-defendant in its insider-trading lawsuit against another associate.
Friends said he left town on a trip when the case was about to be made public.
Roger Parker appeared to have it all in 2007. He lived in a historic, $9 million mansion in Cherry Hills Village amid Denver's business and sporting elite. He golfed with John Elway. He traveled by private jet to gamble in Las Vegas and golf in Palm Springs.
Also that year, Parker completed the deal of his career. The chief executive of Denver-based Delta Petroleum sold a $684 million, one-third stake in the growing company to Tracinda Corp., owned by billionaire investor Kirk Kerkorian.
The transaction would be Parker's undoing, marking the start of a remarkable downfall. It played out, friends say, as a close business associate discovered that Parker, then married, was having an affair with his wife.
Parker and Delta struggled with risky bets gone bad. Tracinda forced Parker out after about a year and eventually took Delta into bankruptcy. It pursued Parker for more than $7 million from an unpaid loan but recently found just $46 in his retirement account and $10,000 in his brokerage account.
On Nov. 27, the U.S. Securities and Exchange Commission accused Parker of tipping off his close friend and another, as-yet-unidentified friend ahead of the Tracinda deal, allowing them to reap hundreds of thousands of dollars in ill-gotten gains. Some of his gains were used to finance use of a private charter jet company for business and personal use.
Two Cherry Hills homes — one Parker bought in 2004 for $9 million and the one it replaced, recently signed over to his ex-wife — are for sale.
An attorney for Parker did not respond to requests for comment for this story. He has not yet responded to the SEC's claims.
Interviews with friends, associates and businessmen, as well as scores of public documents, paint a picture of Parker, 51, as ambitious and aggressive, someone who set out early on a path toward multimillion-dollar success and social prominence.
He achieved both — with the help of a network of well-placed friends — but he took big risks along the way, spent lavishly and seldom settled for second-best.
Roger was a guy who thinks it all works out in spades, according to Delta's former chief operating officer. At one point, he speculated aloud he would be worth $200 million someday.
Fast success
Parker was a standout student at the University of Colorado business-school program in mineral land management. It trained students to be the property-acquisition brains behind the geologic science that identified potentially drillable resources.
But the 1980s, with the petroleum industry tanking, wasn't the best time to aspire to be an oilman.
There were no jobs, recruiting was down 80 percent, and the only ones likely to find a job after the collapse were those with experience, or new grads, according to an associate who graduated with Parker in 1983. But Roger got involved from the start. While we were all in school, he was getting a feel for the business, getting connections and experience. Parker found fast success from hard work.
Only a couple years out of school, he had the big house, all the trappings of success, according to one source.
That happened at Ampet Inc., a small oil-and-gas company formed by Parker mentor and a family friend, a Breckenridge attorney, and his lawyer father, Parker's parents were investors in the business.
The younger Parker and the junior partner would remain business associates for years, beginning with Parker's seat as executive vice president of Ampet while still a student at CU, records show.
While Parker worked at Ampet, his business partner and an associate formed Delta Petroleum in 1984. Parker was first listed on Delta documents as secretary in 1987.
Golf friendships
Two months later, Parker's father, was nominated to the U.S. District Court bench in New Mexico by President Ronald Reagan.
The elder Parker eventually served as federal chief judge in New Mexico until 2003. Along the way, he invested in oil and gas — including Delta — and as of 2010 was drawing royalties on several Colorado wells, some in the range of $500,000 to $1 million, according to financial-disclosure records required of all federal judges.
Roger Parker's relationships reach deep into Denver's business community and stretch across years.
Boisterous in laughter and quick with a joke, Parker was often found hanging with pals at Elway's, in part because of a friendship with the former Broncos quarterback. Both exceptional golfers, Elway and Parker sometimes partnered in charity events, friends said.
Efforts to reach Elway through the Denver Broncos were unsuccessful.
One of Parker's closest friends is a CU graduate in mineral land management with Parker.
The two are avid golfers — with memberships at Cherry Hills and Castle Pines, among others — and big boosters of CU's athletic program, forming the elite Buff Club Cabinet with others including Van Gilder.
The CU graduate has found a level of success that eluded his friend. He recently sold his Cordillera Energy Partners III for $2.8 billion to the company where he started, Apache Corp. Efforts to reach the college friend for comment were unsuccessful.
Drive for status
Parker, twice divorced, enjoyed living large, primarily through houses, golf-club memberships and jets, friends say.
His drive for status was evident in a years-long pursuit of a home at the very pinnacle of Denver society.
Parker sold his first Cherry Hills house and moved into a two-story Tudor he built in 2001 next to the Cherry Hills Country Club. He borrowed $1.6 million to build it and borrowed another $9 million on it over the years. But friends said he was disappointed with the outcome.
In 2004, Parker bought a $9 million mansion from old-money oilman's family along the exclusive Cherry Hills Park Drive. Next door lived the Broncos head coach, and across the street was their legendary money manager.
But Parker was unable to sell the Tudor home, and it remains on the market. The mansion he bought from the oil family — one of the oldest in that area — also is for sale.
Parker acquired a quarter interest in use of a Citation 10 jet, and he sold half of that to Delta.
On a golf trip to Palm Springs, Parker and friends stopped in Las Vegas — the Bellagio and Venetian were among his favorite haunts — to play the tables. Parker believed he could break the house in blackjack, one associate said.
Parker isn't flashy, most comfortable wearing shorts and tennis shoes, driving an SUV, listening to Aerosmith and drinking rum and Coke, friends said.
Parker often does business with friends. One of those is Denver power broker and Parker's personal and business attorney. Earlier this year, Parker pledged 100,000 shares in Prospect Global Energy as collateral to his attorney's law firm for personal legal help, state corporation filings show. At the time, the shares were worth $1 million. Today, they're valued at $167,000.
His attorney who is not representing Parker in the SEC's insider-trading case, would not comment for this story.
One of the attoney's sons, is vice chairman and co-founder of the Denver company, which mines potash.
A Prospect investor who founded Hexagon Investments in 1992, also is a friend of Parker's. He would eventually loan $24.7 million into Parker's latest venture, Recovery Energy, according to financial filings. Efforts to reach the investor for comment were unsuccessful.
Lucrative introduction
Parker was introduced to Kerkorian by a former chauffeur who entered the oil-and-gas business after marrying the former Denver Post owner. The chauffeur, now a Las Vegas resident, had done business with Delta as far back as 2003.
For the introduction — and the resulting sale of a 35 percent ownership share of the Denver company — Davis landed about $5 million worth of Delta shares. Kerkorian would allege later in a settled lawsuit that Parker had secretly arranged contracts and business arrangements for Davis as part of the deal.
Tracinda bought in at $19 a share — Parker had pushed off an initial $17 bid and pressed for more — on New Year's Eve 2007. The $684 million purchase pushed the company stock up 19 percent in one day. It would eventually hit $24.78 from $15.51, when the Tracinda deal was announced.
The SEC alleges in its civil suit that in the months and days before the Tracinda investment was firm and made public, he sent dozens of text messages about it to his business associate. Insiders said Parker didn't even tell some of his closest board members and company executives about the impending deal.
In a related case, his business associate was indicted on criminal insider-trading charges that he allegedly made about $86,000 on the information. He has pleaded not guilty. The SEC alleges that another unnamed individual who is friends with him and Parker racked up a $730,000 payday on Delta stock.
The government has not accused Parker of profiting from the information.
Delta and Parker had encountered the SEC before. In 2006 and 2007 — prior to the Tracinda deal — the government investigated alleged backdating of stock options that were awarded to Parker and other executives. The SEC later dropped its inquiry, and a pair of shareholder suits alleging the practice were settled.
Margin call
Following the merger, it didn't take long before Parker's business plan — a no-hedge, keep-drilling approach — would weigh on Delta's books and, eventually, its stock price.
Several company insiders say Parker's steadfast refusal to hedge some of the company's natural-gas and oil assets against a potential price drop was its most critical undoing. Typically, energy companies hedge by agreeing to sell a portion of their future production at a set price or range.
Delta's former COO and chief geologist, said Delta could have hedged through 2015 but didn't. We'd still be around today if it had.
When shares in Delta dropped below $4 in November 2008, it triggered a margin call on Parker's brokerage account because he had pledged shares as collateral for loans.
Tracinda loaned Parker $7.5 million to cover the shortfall. It said in legal filings it wanted Parker to pay attention to Delta instead of his failing personal finances.
By January 2009, the situation was, in one insider's viewpoint, desperate. He was the eternal optimist of gas prices coming right back, the insider said. They didn't.
By May 2009, Kerkorian had had enough. Three board members asked Parker to resign as chairman and CEO. Parker couldn't get along with new co-chairman Daniel Taylor, a Kerkorian board appointee.
Parker left with a severance payday of about $7 million.
New venture
Parker wasn't unemployed for long.
With the help of friends, he staged a comeback through a new venture, Recovery Energy.
While Reiman was the money lender, the oil-and-gas properties that made up Recovery's inventory came from Davis. Van Gilder provided the office space.
Parker paid for much of it with shares in the new company, a tactic he had used before.
Filings show the company's production and revenues followed a downward trend. Revenues in 2010 were $9.76 million but only $8.36 million in 2011. Oil and gas production in the second quarter of 2012 was down 24 percent from 2011.
Interest expenses in 2011 almost equaled the value of the oil and gas the company produced.
Parker engaged in an unusual practice with his Recovery shares that may have been intended to land a bigger payday or ward off a creditor such as Tracinda.
Normally, executives try to obtain the shares they are granted as quickly as possible, a process known as vesting. Parker, however, amended his employment agreement 14 times over more than two years to push back the date when his Recovery shares would vest and come into his possession.
Tracinda in late August won a judgment for the $7.5 million loan — now $7.7 million — against Parker, who argued he'd been shorted about $5 million in an effort to sell the last of his Delta stock in 2009.
Tracinda has been following Parker with garnishment orders to collect — first on his pension account and then his securities account. Total garnered: $10,745.
It followed with a garnishment order at Recovery for Parker's salary, roughly $21,000 a month, and is making a grab at about 1.3 million of Parker's Recovery shares.
Parker resigned from Recovery on Nov. 14, just ahead of another garnishment effort by Tracinda. SEC notices show his business partner began selling Recovery stock heavily just after.
Two weeks later, the SEC named Parker a co-defendant in its insider-trading lawsuit against another associate.
Friends said he left town on a trip when the case was about to be made public.
Tuesday, December 4, 2012
Ecuador Seeks Damages from Chevron Oil Spill
Chevron Corp. (CVX) is facing its first test of whether farmers and fishermen from the Amazon rainforest will collect $19 billion in environmental damages from the world’s fourth-largest oil company.
A group of 47 Ecuadoreans have asked Ontario’s Superior Court of Justice to seize Chevron assets in Canada, ranging from an oil sands project to offshore wells, to satisfy a 2011 court ruling in the Latin American nation that ordered the company to pay for oil pollution dating to the 1960s. Chevron said the Ecuadorean judgment is outside Ontario’s jurisdiction and that the ruling resulted from bribery and fraud.
A hearing in Toronto today marks the Ecuadoreans’ inaugural step in a global collection effort that includes seizure attempts in Argentina and Brazil. The Ecuadoreans estimated Chevron has $12 billion in Canadian assets, a figure that equates to almost half of the company’s 2011 profit. An adverse Ontario ruling for Chevron would put at risk fuel-manufacturing and oil-production operations across Canada.
Robert Sweet, who helps manage $150 million at Horizon Investment Services in Hammond, Indiana, said it is a cause for concern, and as with all ecological disasters will take a long time to resolve.
The company’s presence in Canada dates back to the 1930s and includes an oil-refining complex in British Columbia, an Alberta oil-sands venture, offshore wells in the Atlantic Ocean, and cash held in Canadian bank accounts.
The $19 billion ruling handed down last year by a court in Lago Agrio, a town near Ecuador’s border with Colombia, held Chevron accountable for health and environmental damages resulting from chemical-laden wastewater dumped from 1964 to 1992.
The Ecuadorean plaintiffs, from the remote northern Amazon River basin, are seeking enforcement of the judgment outside their home country because Chevron has no refineries, oil wells, storage terminals or other properties in the nation. Pablo Fajardo, their lead lawyer in Ecuador, said during a February 2011 conference call with reporters he would use every strategy and manner at his disposal to collect the award.
The Ecuadoreans face an “uphill battle” because they must convince the court that Chevron and its Canadian operations should be treated as one entity rather than separate companies, said Barry Leon, a partner and head of the international arbitration group at Perley-Robertson, Hill & McDougall LLP in Ottawa.
Chevron rose 0.8 percent to $106.35 at 9:35 a.m. in New York today. The shares have increased 9.1 percent in the past year.
Alan Lenczner, the Toronto attorney from the firm Lenczner Slaght Royce Smith Griffin LP representing the Ecuadoreans, when reached by phone declined to comment on the case.
Leon said it is likely that the initial decisions will be appealed.
Chevron doesn’t disclose how much it spends on legal fees.
Chevron’s campaign to avoid payment suffered a setback last month when the U.S. Supreme Court upheld a lower-court decision that rejected the company’s request for a pre-emptive block on collection efforts in Chevron’s home country. The lower court had ruled that it didn’t have authority to thwart payment when the Ecuadoreans hadn’t yet filed such a claim in the U.S.
Today, in paid statements published in two Argentine newspapers, Chevron urged the local court to release its money from escrow and indicated the company intends to pursue a legal defense identical to that employed in Canada. “Chevron Argentina has never had operations in Ecuador and has no relation with the fraudulent trial in Ecuador,” the company said in the newspapers Clarin and La Nacion.
Lawyers for the Ecuadoreans including Stephen Donzinger have accused Chevron of engaging in a campaign to discredit them, entrap an Ecuadorean judge that presided over the case and set up dummy corporations in Ecuador to hide Chevron’s alleged role in testing soil samples from the pollution sites.
Ecuador ranked 120th out of 183 nations in Transparency International’s 2011 corruption-perception index, where No. 1 New Zealand is perceived to be the most honest. Albania, Liberia and Lesotho were perceived as less corrupt than Ecuador, according to the index.
In February 2011, Chevron filed a racketeering lawsuit that’s ongoing against the Ecuadoreans and their lawyers in New York for “leading a fraudulent litigation and PR campaign against the company.”
Exxon Mobil Corp. (XOM) is the world’s biggest oil company by market value, followed by PetroChina Company Ltd. and Royal Dutch Shell Plc (RDSA), according to data compiled by Bloomberg.
A group of 47 Ecuadoreans have asked Ontario’s Superior Court of Justice to seize Chevron assets in Canada, ranging from an oil sands project to offshore wells, to satisfy a 2011 court ruling in the Latin American nation that ordered the company to pay for oil pollution dating to the 1960s. Chevron said the Ecuadorean judgment is outside Ontario’s jurisdiction and that the ruling resulted from bribery and fraud.
A hearing in Toronto today marks the Ecuadoreans’ inaugural step in a global collection effort that includes seizure attempts in Argentina and Brazil. The Ecuadoreans estimated Chevron has $12 billion in Canadian assets, a figure that equates to almost half of the company’s 2011 profit. An adverse Ontario ruling for Chevron would put at risk fuel-manufacturing and oil-production operations across Canada.
Robert Sweet, who helps manage $150 million at Horizon Investment Services in Hammond, Indiana, said it is a cause for concern, and as with all ecological disasters will take a long time to resolve.
The company’s presence in Canada dates back to the 1930s and includes an oil-refining complex in British Columbia, an Alberta oil-sands venture, offshore wells in the Atlantic Ocean, and cash held in Canadian bank accounts.
Every Strategy
San Ramon, California-based Chevron was on the losing side of last year’s ruling by a provincial Ecuadorean court that blamed decades of toxic soil and water contamination on Texaco Inc., which Chevron acquired in 2001. Texaco was found to have discharged into the environment saltwater and other byproducts of oil drilling. Texaco quit the country and its equipment was taken over by the Ecuadorean state oil company in 1992.The $19 billion ruling handed down last year by a court in Lago Agrio, a town near Ecuador’s border with Colombia, held Chevron accountable for health and environmental damages resulting from chemical-laden wastewater dumped from 1964 to 1992.
The Ecuadorean plaintiffs, from the remote northern Amazon River basin, are seeking enforcement of the judgment outside their home country because Chevron has no refineries, oil wells, storage terminals or other properties in the nation. Pablo Fajardo, their lead lawyer in Ecuador, said during a February 2011 conference call with reporters he would use every strategy and manner at his disposal to collect the award.
Corporate Veil
In a Nov. 23 filing, Chevron argued the Ontario court has no jurisdiction to grant the Ecuadorean judgment because the company’s Canadian units are indirect subsidiaries with independent boards separated from the U.S. parent by several levels of ownership.The Ecuadoreans face an “uphill battle” because they must convince the court that Chevron and its Canadian operations should be treated as one entity rather than separate companies, said Barry Leon, a partner and head of the international arbitration group at Perley-Robertson, Hill & McDougall LLP in Ottawa.
Chevron rose 0.8 percent to $106.35 at 9:35 a.m. in New York today. The shares have increased 9.1 percent in the past year.
Pending Arbitration
According to Chevron Chairman and Chief Executive Officer John Watson, the Ecuadoreans’ lawyers have blackmailed judges, bribed judges, falsified evidence, falsified expert witnesses, ghostwritten expert opinions and ghostwritten court judgments. If the plaintiffs were confident in the “integrity” of the ruling, they would seek enforcement in U.S. courts with jurisdiction over the parent company, Kent Robertson, a company spokesman, said in an e-mailed statement.Alan Lenczner, the Toronto attorney from the firm Lenczner Slaght Royce Smith Griffin LP representing the Ecuadoreans, when reached by phone declined to comment on the case.
Leon said it is likely that the initial decisions will be appealed.
Chevron doesn’t disclose how much it spends on legal fees.
The Hague
Chevron is awaiting a ruling in a related case before the Permanent Court of Arbitration, the 113-year-old panel based in The Hague that handles trade disputes between corporations and nations. Chevron filed the arbitration claim in 2009, accusing the government of Ecuador of reneging on a 1998 contract that absolved Texaco of Amazonian pollution claims. Three days of hearings in the case concluded yesterday, Robertson said.Chevron’s campaign to avoid payment suffered a setback last month when the U.S. Supreme Court upheld a lower-court decision that rejected the company’s request for a pre-emptive block on collection efforts in Chevron’s home country. The lower court had ruled that it didn’t have authority to thwart payment when the Ecuadoreans hadn’t yet filed such a claim in the U.S.
Unfair Influence
Following the filing of their Canadian seizure request in May, the Ecuadoreans sought similar forfeitures in a Brazilian tribunal in June and in Argentina earlier this month. A judge in Buenos Aires ordered some Chevron bank deposits held in escrow while the case is pending, Enrique Bruchou, a lawyer for the Ecuadoreans, said in an interview on Nov. 7.Today, in paid statements published in two Argentine newspapers, Chevron urged the local court to release its money from escrow and indicated the company intends to pursue a legal defense identical to that employed in Canada. “Chevron Argentina has never had operations in Ecuador and has no relation with the fraudulent trial in Ecuador,” the company said in the newspapers Clarin and La Nacion.
Transparency International
Chevron has accused the Ecuadorean government of unfairly influencing court proceedings that led to the $19 billion ruling and alleged that a damage assessment provided by a court- appointed expert was ghostwritten by consultants and lawyers hired by the plaintiffs.Lawyers for the Ecuadoreans including Stephen Donzinger have accused Chevron of engaging in a campaign to discredit them, entrap an Ecuadorean judge that presided over the case and set up dummy corporations in Ecuador to hide Chevron’s alleged role in testing soil samples from the pollution sites.
Ecuador ranked 120th out of 183 nations in Transparency International’s 2011 corruption-perception index, where No. 1 New Zealand is perceived to be the most honest. Albania, Liberia and Lesotho were perceived as less corrupt than Ecuador, according to the index.
In February 2011, Chevron filed a racketeering lawsuit that’s ongoing against the Ecuadoreans and their lawyers in New York for “leading a fraudulent litigation and PR campaign against the company.”
Exxon Mobil Corp. (XOM) is the world’s biggest oil company by market value, followed by PetroChina Company Ltd. and Royal Dutch Shell Plc (RDSA), according to data compiled by Bloomberg.
New Flex-Fuel Could Damage Engines
story first appeared in Detroit Free Press
The AAA says the Environmental Protection Agency and gasoline retailers should halt the sale of E15, a new ethanol blend that could damage millions of vehicles and void car warranties.
AAA, which issued its warning today, says just 12 million of more than 240 million cars, trucks and SUVs now in use have manufacturers' approval for E15. Flex-fuel vehicles, 2012 and newer General Motors vehicles, 2013 Fords and 2001 and later model Porsches are the exceptions, according to AAA, the nation's largest motorist group, with 53.5 million members.
AAA President and CEO Robert Darbelnet tells USA TODAY that he believes unfamiliarity with E15 among Americans provides a strong possibility that many may improperly fill up using this gasoline and damage their vehicle."
BMW, Chrysler, Nissan, Toyota and VW said their warranties will not cover fuel-related claims caused by E15. Ford, Honda, Kia, Mercedes-Benz and Volvo said E15 use will void warranties, says Darbelnet, citing potential corrosive damage to fuel lines, gaskets and other engine components.
Gasoline blended with 10% ethanol has become standard at most of the nation's 160,000 gas stations, spurred by federal laws and standards designed to use more renewable energy sources and lessen the nation's dependence on foreign oil. Pushed by ethanol producers, the EPA approved the use of E15 -- a 15% ethanol-gasoline blend -- in June over objections from automakers and the oil industry. It's been available at a handful of outlets in Kansas, Iowa and Nebraska since July.
EPA stickers affixed to gas station pumps say E15 is safe for use in virtually all vehicles 2001 and newer. (USA TODAY made repeated requests for EPA comment.)
But AAA -- in an unusual warning for a travel organization -- says the sale and use of E15 should be stopped until there is more-extensive testing, better pump labels to safeguard consumers and more consumer education about potential hazards.
Bob Dinneen, CEO of the Renewable Fuels Association, says E15 is safe for virtually all post-2001 vehicles, based on extensive government-sponsored testing.
But the American Petroleum Institute says a three-year study by automakers and the oil industry found that E15 is a consumer safety issue for a majority of drivers with pre-2012 vehicles.
The National Association of Convenience Stores says it's also worried about the effect of E15 on station pumps and fuel lines.
Scott Zaremba, who has been selling E15 blends at several of his eight Zarco 66 stations in Kansas since July, says no customers have complained. He's fueling his 2001 Chevy pickup with the E15 blend.
The AAA says the Environmental Protection Agency and gasoline retailers should halt the sale of E15, a new ethanol blend that could damage millions of vehicles and void car warranties.
AAA, which issued its warning today, says just 12 million of more than 240 million cars, trucks and SUVs now in use have manufacturers' approval for E15. Flex-fuel vehicles, 2012 and newer General Motors vehicles, 2013 Fords and 2001 and later model Porsches are the exceptions, according to AAA, the nation's largest motorist group, with 53.5 million members.
AAA President and CEO Robert Darbelnet tells USA TODAY that he believes unfamiliarity with E15 among Americans provides a strong possibility that many may improperly fill up using this gasoline and damage their vehicle."
BMW, Chrysler, Nissan, Toyota and VW said their warranties will not cover fuel-related claims caused by E15. Ford, Honda, Kia, Mercedes-Benz and Volvo said E15 use will void warranties, says Darbelnet, citing potential corrosive damage to fuel lines, gaskets and other engine components.
Gasoline blended with 10% ethanol has become standard at most of the nation's 160,000 gas stations, spurred by federal laws and standards designed to use more renewable energy sources and lessen the nation's dependence on foreign oil. Pushed by ethanol producers, the EPA approved the use of E15 -- a 15% ethanol-gasoline blend -- in June over objections from automakers and the oil industry. It's been available at a handful of outlets in Kansas, Iowa and Nebraska since July.
EPA stickers affixed to gas station pumps say E15 is safe for use in virtually all vehicles 2001 and newer. (USA TODAY made repeated requests for EPA comment.)
But AAA -- in an unusual warning for a travel organization -- says the sale and use of E15 should be stopped until there is more-extensive testing, better pump labels to safeguard consumers and more consumer education about potential hazards.
Bob Dinneen, CEO of the Renewable Fuels Association, says E15 is safe for virtually all post-2001 vehicles, based on extensive government-sponsored testing.
But the American Petroleum Institute says a three-year study by automakers and the oil industry found that E15 is a consumer safety issue for a majority of drivers with pre-2012 vehicles.
The National Association of Convenience Stores says it's also worried about the effect of E15 on station pumps and fuel lines.
Scott Zaremba, who has been selling E15 blends at several of his eight Zarco 66 stations in Kansas since July, says no customers have complained. He's fueling his 2001 Chevy pickup with the E15 blend.
Sea Level Debate Continues
story first appeared on usatoday.com
Echoes of Superstorm Sandy remain from Manhattan's once-flooded streets to Maryland's battered boardwalks to New Jersey's washed-away beaches.
No surprise. The Eastern Seaboard — or any coastal region — occasionally finds itself in the cross hairs of ferocious ocean storms. But it may have taken Sandy to drive home the added threat that scientists have been warning about for years: a rise in the sea level.
More of the same could lie ahead, suggest ocean scientists such as U.S. Geological Survey oceanographer Asbury Sallenger. The storm triggered the expected arguments about global warming's role, but that debate aside, the new constant for any storm is the increasingly important role likely to be played by sea level. In a study out Tuesday, climate scientists led by Stefan Rahmstorf of Germany's Potsdam Institute report that since 1993 sea level has risen worldwide at a rate 60% higher than predictions. The findings appear in the Environmental Research Letters journal.
Sallenger says sea-level rise is accelerating along the East Coast
The real question, Sallenger and other ocean experts say, is what effect rising sea levels, which are accelerating along a "hotspot" stretching from Cape Hatteras, N.C., to Maine, will have on storms hitting these places.
In June, Sallenger and colleagues reported in the journal Nature Climate Change that sea-level rise along the U.S. Atlantic Coast has been climbing at a rate three to four times higher than the global average since 1950. About 1.5 inches per decade now, it doesn't sound like a lot. But each inch counts, and New York Harbor's water level is 11 to 16 inches higher than it was a century ago, Sallenger says.
The accelerating sea-level rise springs partly from "subsidence," where groundwater withdrawals to sate thirsty towns and farms along the coast cause the ground to sink, and partly from warming waters in the North Atlantic, the study suggests. Warmer water simply takes up more space than cold water.
Not to be forgotten is that teetering infrastructure poses as much of a problem as global warming, says Alan Weisman, author of The World Without Us.
Most climate scientists would see Superstorm Sandy as a largely natural event, not something born as a result of global warming, says Texas Tech climate researcher Katharine Hayhoe. But she acknowledges that the storm, sea-level rise and climate change are hard to disentangle.
A water level that's a few inches higher pales in comparison with a 14-foot storm surge in Lower Manhattan, but those few inches meant the surge was higher than it might have been otherwise.
And was the storm surge stronger because of climate change? Indeed. Warmer ocean temperatures could have provided up to 20% greater power for the storm, so climate change's role isn't necessarily an either-or question, Hayhoe says.
Most climate projections that look ahead to the coming century see hurricanes that look stronger, but are fewer in number. Why? Warmer waters strengthen storms but stronger winds above the equatorial oceans wreck the stillness that burgeoning tropical storms need to become ferocious hurricanes.
MIT hurricane expert Kerry Emanuel says that while he does expect increased hurricane damage in the U.S. as the climate warms, Sandy is not a pure example of a hurricane. It was a hybrid event that started as a tropical storm, grew into a hurricane, and morphed into an intense nor'easter. He says climate science doesn't have enough data to say whether these hybrid storms like Sandy will become more or less frequent.
It also doesn't matter, Emanuel writes in the current Foreign Policy magazine, because the real problem is sea-level rise.
The 2007 Intergovernmental Panel on Climate Change estimated that warming alone, which expands ocean waters, would raise sea levels worldwide by almost two feet over the next century. Add in future melting glaciers in Greenland and elsewhere, and sea level could rise more than 3 feet by then, NASA climate scientist James Hansen and Stanford's Ken Caldeira reported at last year's American Geophysical Union meeting in San Francisco.
Sallenger believes the "hotspot" study suggests this worsening will continue, yet he acknowledges other researchers are taking a more "wait-and-see" attitude.
Also worth noting, a 2009 study led by Environmental Protection Agency analyst Jim Titus concluded that 60% of the East Coast's coastal land is zoned for more development, while less than 10% is zoned for wetlands that soak up storms.
At the same time, dikes, or seawalls, are an unlikely remedy for the entire East Coast, says civil engineer Robert Traver of Villanova (Pa.) University. Of the 25 most-densely populated counties nationwide, 23 are coastal ones. "We can't build barriers around everything," Traver says.
Echoes of Superstorm Sandy remain from Manhattan's once-flooded streets to Maryland's battered boardwalks to New Jersey's washed-away beaches.
No surprise. The Eastern Seaboard — or any coastal region — occasionally finds itself in the cross hairs of ferocious ocean storms. But it may have taken Sandy to drive home the added threat that scientists have been warning about for years: a rise in the sea level.
More of the same could lie ahead, suggest ocean scientists such as U.S. Geological Survey oceanographer Asbury Sallenger. The storm triggered the expected arguments about global warming's role, but that debate aside, the new constant for any storm is the increasingly important role likely to be played by sea level. In a study out Tuesday, climate scientists led by Stefan Rahmstorf of Germany's Potsdam Institute report that since 1993 sea level has risen worldwide at a rate 60% higher than predictions. The findings appear in the Environmental Research Letters journal.
Sallenger says sea-level rise is accelerating along the East Coast
The real question, Sallenger and other ocean experts say, is what effect rising sea levels, which are accelerating along a "hotspot" stretching from Cape Hatteras, N.C., to Maine, will have on storms hitting these places.
In June, Sallenger and colleagues reported in the journal Nature Climate Change that sea-level rise along the U.S. Atlantic Coast has been climbing at a rate three to four times higher than the global average since 1950. About 1.5 inches per decade now, it doesn't sound like a lot. But each inch counts, and New York Harbor's water level is 11 to 16 inches higher than it was a century ago, Sallenger says.
The accelerating sea-level rise springs partly from "subsidence," where groundwater withdrawals to sate thirsty towns and farms along the coast cause the ground to sink, and partly from warming waters in the North Atlantic, the study suggests. Warmer water simply takes up more space than cold water.
Not to be forgotten is that teetering infrastructure poses as much of a problem as global warming, says Alan Weisman, author of The World Without Us.
Most climate scientists would see Superstorm Sandy as a largely natural event, not something born as a result of global warming, says Texas Tech climate researcher Katharine Hayhoe. But she acknowledges that the storm, sea-level rise and climate change are hard to disentangle.
A water level that's a few inches higher pales in comparison with a 14-foot storm surge in Lower Manhattan, but those few inches meant the surge was higher than it might have been otherwise.
And was the storm surge stronger because of climate change? Indeed. Warmer ocean temperatures could have provided up to 20% greater power for the storm, so climate change's role isn't necessarily an either-or question, Hayhoe says.
Most climate projections that look ahead to the coming century see hurricanes that look stronger, but are fewer in number. Why? Warmer waters strengthen storms but stronger winds above the equatorial oceans wreck the stillness that burgeoning tropical storms need to become ferocious hurricanes.
MIT hurricane expert Kerry Emanuel says that while he does expect increased hurricane damage in the U.S. as the climate warms, Sandy is not a pure example of a hurricane. It was a hybrid event that started as a tropical storm, grew into a hurricane, and morphed into an intense nor'easter. He says climate science doesn't have enough data to say whether these hybrid storms like Sandy will become more or less frequent.
It also doesn't matter, Emanuel writes in the current Foreign Policy magazine, because the real problem is sea-level rise.
The 2007 Intergovernmental Panel on Climate Change estimated that warming alone, which expands ocean waters, would raise sea levels worldwide by almost two feet over the next century. Add in future melting glaciers in Greenland and elsewhere, and sea level could rise more than 3 feet by then, NASA climate scientist James Hansen and Stanford's Ken Caldeira reported at last year's American Geophysical Union meeting in San Francisco.
Sallenger believes the "hotspot" study suggests this worsening will continue, yet he acknowledges other researchers are taking a more "wait-and-see" attitude.
Also worth noting, a 2009 study led by Environmental Protection Agency analyst Jim Titus concluded that 60% of the East Coast's coastal land is zoned for more development, while less than 10% is zoned for wetlands that soak up storms.
At the same time, dikes, or seawalls, are an unlikely remedy for the entire East Coast, says civil engineer Robert Traver of Villanova (Pa.) University. Of the 25 most-densely populated counties nationwide, 23 are coastal ones. "We can't build barriers around everything," Traver says.
Thursday, November 29, 2012
Upkeep of New Orleans Levee
Story first appeared on APNews.com.
In the busy and under-staffed offices of New Orleans' flood-control leaders, there's an uneasy feeling about what lies ahead.
By the time the next hurricane season starts in June of 2013, the city will take control of much of a revamped protection system of gates, walls and armored levees that the Army Corps of Engineers has spent about $12 billion building. The corps has about $1 billion worth of work left.
Engineers consider it a Rolls Royce of flood protection - comparable to systems in seaside European cities such as St. Petersburg, Venice, Rotterdam and Amsterdam. Whether the infrastructure can hold is less in question than whether New Orleans can be trusted with the keys.
The Army Corps estimates it will take $38 million a year to pay for upkeep, maintenance and operational costs after it's turned over to local officials.
Local flood-control chief Robert Turner said he has questions about where that money will come from. At current funding levels, the region will run out of money to properly operate the high-powered system within a decade unless a new revenue source is found.
There's a price to pay for resiliency, the levee engineer said from his office at the Southeast Louisiana Flood Protection Authority-East.
On Nov. 6, New Orleans voters were faced with one of their first challenges on flood protection when they voted on renewal of a critical levee tax. The tax levy was approved, meaning millions of dollars should be available annually for levee maintenance.
Bob Bea, a civil engineer at the University of California, said the region must find additional money to keep the system working properly.
Many locals remain uneasy, even though Turner's agency is a welcome replacement for local levee boards that were previously derided.
After Katrina, the locally run levee boards that oversaw the area's defenses were vilified, and quickly replaced by the regional levee district run by Turner.
Congressional investigations found the old Orleans Levee Board more interested in managing a casino license and two marinas than looking after levees. Though the Army Corps of Engineers had responsibility for annual levee inspections, the local levee boards were responsible for maintenance. Still, the boards spent millions of dollars on a fountain and overpasses rather than on levee protection. And there was confusion over who was responsible for managing the fragmented levee system, U.S. Senate investigations revealed.
Still, experts generally agree the old levee board's failings did not cause the levees to collapse during Katrina. Poor levee designs by the corps and the sheer strength of Katrina get the lion's share of the blame.
Since the Flood Control Act of 1936, the Army Corps has given local or state authorities oversight of water-control projects, whether earthen levees in the Midwest or beach walls in New England.
New Orleans is an unusual case because the area is inheriting the nation's first-of-its-kind urban flood control system.
The nation has spent lavishly on fixing the system in the seven years since Katrina flooded 80 percent of New Orleans and left 1,800 people dead.
Ensuring it remains that way could be tricky. The biggest headaches are several mega-projects with lots of moving parts, all needing constant upkeep. The corps is building them across major waterways that lead into New Orleans.
Take for instance the 1.8-mile-long, 26-foot-high surge barrier southeast of the French Quarter that blocks water coming up from the Gulf of Mexico across lakes and into the city's canals. Water from this direction doomed the Lower 9th Ward and threatened to flood the French Quarter. Maintaining this giant wall alone will cost $4 million or more a year.
There is a mounting list of to-dos.
Already, lightning has knocked out chunks of wall. Grass hasn't grown well on several new stretches of levee. Louisiana State University grass experts have been called in to help seed them.
There are recurring problems with vibrations and shuddering on a new floodgate at Bayou Dupre in St. Bernard Parish. The corps has plans to overhaul the structure in the spring before handing it over to local control. And there will be the inevitable sinking of levees and structures, as always happens in south Louisiana's naturally soft soils. Over time, levees will have to be raised.
Col. Ed Fleming, the New Orleans corps commander, said his outfit will work to ensure the transition to local control is smooth.
In the busy and under-staffed offices of New Orleans' flood-control leaders, there's an uneasy feeling about what lies ahead.
By the time the next hurricane season starts in June of 2013, the city will take control of much of a revamped protection system of gates, walls and armored levees that the Army Corps of Engineers has spent about $12 billion building. The corps has about $1 billion worth of work left.
Engineers consider it a Rolls Royce of flood protection - comparable to systems in seaside European cities such as St. Petersburg, Venice, Rotterdam and Amsterdam. Whether the infrastructure can hold is less in question than whether New Orleans can be trusted with the keys.
The Army Corps estimates it will take $38 million a year to pay for upkeep, maintenance and operational costs after it's turned over to local officials.
Local flood-control chief Robert Turner said he has questions about where that money will come from. At current funding levels, the region will run out of money to properly operate the high-powered system within a decade unless a new revenue source is found.
There's a price to pay for resiliency, the levee engineer said from his office at the Southeast Louisiana Flood Protection Authority-East.
On Nov. 6, New Orleans voters were faced with one of their first challenges on flood protection when they voted on renewal of a critical levee tax. The tax levy was approved, meaning millions of dollars should be available annually for levee maintenance.
Bob Bea, a civil engineer at the University of California, said the region must find additional money to keep the system working properly.
Many locals remain uneasy, even though Turner's agency is a welcome replacement for local levee boards that were previously derided.
After Katrina, the locally run levee boards that oversaw the area's defenses were vilified, and quickly replaced by the regional levee district run by Turner.
Congressional investigations found the old Orleans Levee Board more interested in managing a casino license and two marinas than looking after levees. Though the Army Corps of Engineers had responsibility for annual levee inspections, the local levee boards were responsible for maintenance. Still, the boards spent millions of dollars on a fountain and overpasses rather than on levee protection. And there was confusion over who was responsible for managing the fragmented levee system, U.S. Senate investigations revealed.
Still, experts generally agree the old levee board's failings did not cause the levees to collapse during Katrina. Poor levee designs by the corps and the sheer strength of Katrina get the lion's share of the blame.
Since the Flood Control Act of 1936, the Army Corps has given local or state authorities oversight of water-control projects, whether earthen levees in the Midwest or beach walls in New England.
New Orleans is an unusual case because the area is inheriting the nation's first-of-its-kind urban flood control system.
The nation has spent lavishly on fixing the system in the seven years since Katrina flooded 80 percent of New Orleans and left 1,800 people dead.
Ensuring it remains that way could be tricky. The biggest headaches are several mega-projects with lots of moving parts, all needing constant upkeep. The corps is building them across major waterways that lead into New Orleans.
Take for instance the 1.8-mile-long, 26-foot-high surge barrier southeast of the French Quarter that blocks water coming up from the Gulf of Mexico across lakes and into the city's canals. Water from this direction doomed the Lower 9th Ward and threatened to flood the French Quarter. Maintaining this giant wall alone will cost $4 million or more a year.
There is a mounting list of to-dos.
Already, lightning has knocked out chunks of wall. Grass hasn't grown well on several new stretches of levee. Louisiana State University grass experts have been called in to help seed them.
There are recurring problems with vibrations and shuddering on a new floodgate at Bayou Dupre in St. Bernard Parish. The corps has plans to overhaul the structure in the spring before handing it over to local control. And there will be the inevitable sinking of levees and structures, as always happens in south Louisiana's naturally soft soils. Over time, levees will have to be raised.
Col. Ed Fleming, the New Orleans corps commander, said his outfit will work to ensure the transition to local control is smooth.
United States Wealth Rises
Story first appeared on USAToday.com.
The nation's oil and gas boom is driving up income so fast in a few hundred small towns and rural areas that it's shifting prosperity to the nation's heartland, a USA TODAY analysis of government data shows.
The 261 million people who live in cities and suburbs still haven't recovered earning power lost in the economic downturn. Average income per person fell 3.5% in metropolitan areas between 2007 and 2011 after adjusting for inflation, according to data released Monday by the federal Bureau of Economic Analysis.
By contrast, small-town America is better off than before: Inflation-adjusted income is up 3.8% per person since 2007 for the 51 million in small cities, towns and rural areas.
The energy boom and strong farm prices have reversed, at least temporarily, a long-term trend of money flowing to cities. Last year, small places saw a 3% growth in income per person vs. 1.8% in urban areas.
Small-town prosperity is most noticeable in North Dakota, now the nation's No. 2 oil-producing state. Six of the top 10 counties are above the state's Bakken oil field.
The Boise area's rank in income per person plummeted from 139th to 251st among metro areas from 2007 to 2011, the biggest drop of any place except Las Vegas, which suffered largely because of high-tech layoffs and a real estate price collapse.
VIDEO: Inside a North Dakota 'Man Camp'
Other findings:
-- Richest. The Bridgeport-Stamford, Conn., metro area had income of $78,504 per person in 2011, making the New York suburb the most affluent place in the USA for the past decade. The oil community of Midland, Texas, was next, followed by the high-tech metro areas of San Francisco and San Jose.
-- Poorest. Three Texas metro pockets were poorest: McAllen, Brownsville and Laredo. Income per person in McAllen: $21,260. Lake Charles, La., was poorest among metro areas having 200,000 or more residents.
-- Surprising. Rochester, N.Y., moved up faster in the income rankings than any big metro area, despite suffering layoffs when hometown company Kodak went bankrupt. Rochester ranked No. 43 in income among the 102 metro areas of 500,000 or more, climbing 21 positions since 2007.
-- High-paying jobs. The oil county of Sutton, Texas, saw wages and benefits double to $115,775 per job from 2007 to 2011, BEA reports. Only New York City's Manhattan had higher-paying jobs last year.
-- Benefits. Three Kentucky counties — Owsley, McCreary and Wolfe — are the only places that rely on government programs such as Social Security, food stamps and Medicaid for more than half of income.
The BEA's data is the government's most comprehensive report on income in the nation's 3,000 counties. It includes wages, benefits and investment income, plus government programs such as Medicare, Medicaid and food stamps. The Census Bureau does not county benefits, food stamps, Medicare or Medicaid as income.
The nation's oil and gas boom is driving up income so fast in a few hundred small towns and rural areas that it's shifting prosperity to the nation's heartland, a USA TODAY analysis of government data shows.
The 261 million people who live in cities and suburbs still haven't recovered earning power lost in the economic downturn. Average income per person fell 3.5% in metropolitan areas between 2007 and 2011 after adjusting for inflation, according to data released Monday by the federal Bureau of Economic Analysis.
By contrast, small-town America is better off than before: Inflation-adjusted income is up 3.8% per person since 2007 for the 51 million in small cities, towns and rural areas.
The energy boom and strong farm prices have reversed, at least temporarily, a long-term trend of money flowing to cities. Last year, small places saw a 3% growth in income per person vs. 1.8% in urban areas.
Small-town prosperity is most noticeable in North Dakota, now the nation's No. 2 oil-producing state. Six of the top 10 counties are above the state's Bakken oil field.
The Boise area's rank in income per person plummeted from 139th to 251st among metro areas from 2007 to 2011, the biggest drop of any place except Las Vegas, which suffered largely because of high-tech layoffs and a real estate price collapse.
VIDEO: Inside a North Dakota 'Man Camp'
Other findings:
-- Richest. The Bridgeport-Stamford, Conn., metro area had income of $78,504 per person in 2011, making the New York suburb the most affluent place in the USA for the past decade. The oil community of Midland, Texas, was next, followed by the high-tech metro areas of San Francisco and San Jose.
-- Poorest. Three Texas metro pockets were poorest: McAllen, Brownsville and Laredo. Income per person in McAllen: $21,260. Lake Charles, La., was poorest among metro areas having 200,000 or more residents.
-- Surprising. Rochester, N.Y., moved up faster in the income rankings than any big metro area, despite suffering layoffs when hometown company Kodak went bankrupt. Rochester ranked No. 43 in income among the 102 metro areas of 500,000 or more, climbing 21 positions since 2007.
-- High-paying jobs. The oil county of Sutton, Texas, saw wages and benefits double to $115,775 per job from 2007 to 2011, BEA reports. Only New York City's Manhattan had higher-paying jobs last year.
-- Benefits. Three Kentucky counties — Owsley, McCreary and Wolfe — are the only places that rely on government programs such as Social Security, food stamps and Medicaid for more than half of income.
The BEA's data is the government's most comprehensive report on income in the nation's 3,000 counties. It includes wages, benefits and investment income, plus government programs such as Medicare, Medicaid and food stamps. The Census Bureau does not county benefits, food stamps, Medicare or Medicaid as income.
Wednesday, November 28, 2012
Strip Club Blown Away in Natural Gas Explosion
story first appeared in Lost Angeles Times
A natural gas explosion that tore through a strip club in western Massachusetts on Friday night scattered brick and glass for blocks, injured more than a dozen people and displaced dozens of apartment dwellers.
About 40 apartment units have been condemned, at least one neighboring building will have to be demolished and others will be inspected Saturday morning after what Springfield Police Commissioner William Fitchet called the most devastating gas explosion in his 40 years in the city. Despite the destruction, it appeared no one was killed.
About an hour before the 5:25 p.m. explosion, the local utility company, Columbia Gas of Massachusetts, started receiving calls from people who smelled gas in downtown Springfield. Crews arrived within 30 minutes and determined the odor was coming from Scores Gentlemen's Club.
By then, State Fire Marshal Stephen Coan said, gas had accumulated to an explosive level inside the building. Customers, employees and dancers were soon rushing to safety.
Debbie, a dancer at Scores who didn't want her last name used, told the Republican, a local newspaper, that she was performing on stage when she was told to evacuate.
As she gathered her clothes, Debbie told the newspaper, the manager told her to get out.
The manager hurried people over to the Mardi Gras Champagne Room across the street, the Republican reported. After barely half an hour, the building exploded.
The blast was heard for miles, rattling the community and sending glass shards flying.
Coan credited local firefighters with saving lives.
Most of those injured were first responders trying to stop the gas leak or others urging people to take cover. City officials said at least 18 people were injured: nine firefighters, four Columbia Gas workers, two Springfield police officers, one city water and sewer maintenance worker and two civilians. Firefighters suffered cuts and back injuries, and one was injured falling into a sewer after the blast, Springfield Fire Commissioner Joseph Conant said.
Stephanie Simmons, a waitress working two blocks away from the explosion, described the blast to the Republican newspaper. She said it felt like an earthquake or a large explosion.
Springfield building, electrical, plumbing and housing workers are scheduled to go building to building Saturday morning to assess the damage around the blast. At least three buildings around the club were severely damaged. Officials said they were considering controlled demolitions Friday night.
Tenants in nearby apartments will have to find somewhere else to sleep while building officials determine whether the buildings can be declared safe.
The Massachusetts Emergency Management Agency was activated after the explosion, and workers will help find shelter for displaced residents, Lt. Gov. Tim Murray said.
Over the next two days, Columbia Gas crews will spread across downtown to drill holes in the streets and take measurements for gas leaks. Tests Friday night didn't reveal any other leaks, company spokeswoman Sheila Doiron said.
She said the company had no records of gas leaks in the Scores club or elsewhere in the area for the last 10 years.
On Nov. 10, a natural gas explosion in Indianapolis killed a married couple and left more than 30 houses uninhabitable. Authorities have opened a homicide investigation into that blast.
A natural gas explosion that tore through a strip club in western Massachusetts on Friday night scattered brick and glass for blocks, injured more than a dozen people and displaced dozens of apartment dwellers.
About 40 apartment units have been condemned, at least one neighboring building will have to be demolished and others will be inspected Saturday morning after what Springfield Police Commissioner William Fitchet called the most devastating gas explosion in his 40 years in the city. Despite the destruction, it appeared no one was killed.
About an hour before the 5:25 p.m. explosion, the local utility company, Columbia Gas of Massachusetts, started receiving calls from people who smelled gas in downtown Springfield. Crews arrived within 30 minutes and determined the odor was coming from Scores Gentlemen's Club.
By then, State Fire Marshal Stephen Coan said, gas had accumulated to an explosive level inside the building. Customers, employees and dancers were soon rushing to safety.
Debbie, a dancer at Scores who didn't want her last name used, told the Republican, a local newspaper, that she was performing on stage when she was told to evacuate.
As she gathered her clothes, Debbie told the newspaper, the manager told her to get out.
The manager hurried people over to the Mardi Gras Champagne Room across the street, the Republican reported. After barely half an hour, the building exploded.
The blast was heard for miles, rattling the community and sending glass shards flying.
Coan credited local firefighters with saving lives.
Most of those injured were first responders trying to stop the gas leak or others urging people to take cover. City officials said at least 18 people were injured: nine firefighters, four Columbia Gas workers, two Springfield police officers, one city water and sewer maintenance worker and two civilians. Firefighters suffered cuts and back injuries, and one was injured falling into a sewer after the blast, Springfield Fire Commissioner Joseph Conant said.
Stephanie Simmons, a waitress working two blocks away from the explosion, described the blast to the Republican newspaper. She said it felt like an earthquake or a large explosion.
Springfield building, electrical, plumbing and housing workers are scheduled to go building to building Saturday morning to assess the damage around the blast. At least three buildings around the club were severely damaged. Officials said they were considering controlled demolitions Friday night.
Tenants in nearby apartments will have to find somewhere else to sleep while building officials determine whether the buildings can be declared safe.
The Massachusetts Emergency Management Agency was activated after the explosion, and workers will help find shelter for displaced residents, Lt. Gov. Tim Murray said.
Over the next two days, Columbia Gas crews will spread across downtown to drill holes in the streets and take measurements for gas leaks. Tests Friday night didn't reveal any other leaks, company spokeswoman Sheila Doiron said.
She said the company had no records of gas leaks in the Scores club or elsewhere in the area for the last 10 years.
On Nov. 10, a natural gas explosion in Indianapolis killed a married couple and left more than 30 houses uninhabitable. Authorities have opened a homicide investigation into that blast.
Thursday, November 8, 2012
Richmond Refinery Repaired with New Chrome Alloy
story first appeared on mercurynews.com
RICHMOND -- Chevron will use chrome alloy to replace all the piping in the sections of its Richmond refinery that were damaged in an Aug. 6 fire that hobbled the fuel factory and curtailed its production, the energy giant said in a letter it released Wednesday.
The chrome alloy pipes could address one of the key issues that contributed to the fire. Chevron has notified industry officials that thinning and corrosion in pipes at the refinery may have caused pipe failures ahead of the accident and fire, according to the letter issued by Nigel Hearne, general manager of the Richmond refinery. Hearne sent his letter to the city of Richmond and the Bay Area Air Quality Management District. The new chrome alloy pipes are constructed of similar materials to that of ball screws. Ball Screw Repair specialists know the value of product materials and the benefit of precision craftsmanship.
The fire knocked out the refinery's crude unit No. 4, which processes and distills crude oil and is deemed to be the heart of the plant. Since the fire, the Chevron refinery has been operating at around 60 percent capacity and has primarily blended gasoline.
Hearne wrote in the letter that he is optimistic they can com plete the planned repairs and restart in the first quarter of 2013.
San Ramon-based Chevron intends to replace damaged support structures, pressure vessels, tanks and pumps, along with the chrome alloy pipe replacement. The company also intends to repair the cooling tower, motor control center, and fix an array of instruments and electrical systems.
City manager Bill Lindsay said it was helpful to have the planned repairs laid out. He said they'd continue evaluating permit applications and hoped to process permits expeditiously.
City officials also were encouraged about the Chevron plans to replace the pipes that may have corroded with pipes made with chrome alloy. Chrome is often used in manufacturing Walk-in Coolers and other refrigeration equipment because it resists rust.
Lindsay also said that the new materials in Chevrons pipe replacement is significant. From what he understands, they are created with materials better suited for the conditions that lead to the accident.
United Steelworkers Local 5, which represents 600 employees at the Chevron refinery, is also following the repair and replacement efforts closely.
RICHMOND -- Chevron will use chrome alloy to replace all the piping in the sections of its Richmond refinery that were damaged in an Aug. 6 fire that hobbled the fuel factory and curtailed its production, the energy giant said in a letter it released Wednesday.
The chrome alloy pipes could address one of the key issues that contributed to the fire. Chevron has notified industry officials that thinning and corrosion in pipes at the refinery may have caused pipe failures ahead of the accident and fire, according to the letter issued by Nigel Hearne, general manager of the Richmond refinery. Hearne sent his letter to the city of Richmond and the Bay Area Air Quality Management District. The new chrome alloy pipes are constructed of similar materials to that of ball screws. Ball Screw Repair specialists know the value of product materials and the benefit of precision craftsmanship.
The fire knocked out the refinery's crude unit No. 4, which processes and distills crude oil and is deemed to be the heart of the plant. Since the fire, the Chevron refinery has been operating at around 60 percent capacity and has primarily blended gasoline.
Hearne wrote in the letter that he is optimistic they can com plete the planned repairs and restart in the first quarter of 2013.
San Ramon-based Chevron intends to replace damaged support structures, pressure vessels, tanks and pumps, along with the chrome alloy pipe replacement. The company also intends to repair the cooling tower, motor control center, and fix an array of instruments and electrical systems.
City manager Bill Lindsay said it was helpful to have the planned repairs laid out. He said they'd continue evaluating permit applications and hoped to process permits expeditiously.
City officials also were encouraged about the Chevron plans to replace the pipes that may have corroded with pipes made with chrome alloy. Chrome is often used in manufacturing Walk-in Coolers and other refrigeration equipment because it resists rust.
Lindsay also said that the new materials in Chevrons pipe replacement is significant. From what he understands, they are created with materials better suited for the conditions that lead to the accident.
United Steelworkers Local 5, which represents 600 employees at the Chevron refinery, is also following the repair and replacement efforts closely.
Mike Smith, a representative for Local 5 said their main focus is safety. Specifically, he said, the safety of the workers, the environment and the community. If he feels things are going the wrong way, he assures he'll be vocal.
The refinery has the capacity to handle 244,000 barrels of crude oil a day. Soon after the fire knocked the refinery offline, gasoline prices spiked in the Bay Area. Prices have retreated somewhat since then, however. The refinery's restoration could offer welcome relief for California drivers since the plant is one of the largest refineries in the nation.
The average price of gasoline was $3.94 a gallon on Thursday, which was 2.1 percent above the $3.86 average price in the hours before the early August fire. When Bay Area prices rocketed to a record high average of $4.70 a gallon in early October, those per-gallon prices were about 22 percent higher than the fire.
The refinery has the capacity to handle 244,000 barrels of crude oil a day. Soon after the fire knocked the refinery offline, gasoline prices spiked in the Bay Area. Prices have retreated somewhat since then, however. The refinery's restoration could offer welcome relief for California drivers since the plant is one of the largest refineries in the nation.
The average price of gasoline was $3.94 a gallon on Thursday, which was 2.1 percent above the $3.86 average price in the hours before the early August fire. When Bay Area prices rocketed to a record high average of $4.70 a gallon in early October, those per-gallon prices were about 22 percent higher than the fire.
Solar Power More Available at Night
story first appeared on murcurynews.com
UNION CITY -- DayStar Technologies has struck a deal to buy a company whose technology could solve a problem that has chilled the solar energy industry: How to make solar power available for electricity usage at night when the sun is gone. While wind power is available day and night, solar is obviously limited to daylight hours. Wind Turbine Repair services make sure energy is renewable by keeping wind turbines in good operating order.
DayStar is planning to buy Premier Global Holdings. Premier Global has rights to a patent pending for a solar conversion unit that can generate and store solar energy within a single unit. Terms of the deal weren't disclosed.
The technology is based on photosynthesis, a process that's similar to the way plants convert light to usable energy.
Union City-based DayStar believes the technology can reduce overall power usage in an electricity grid.
UNION CITY -- DayStar Technologies has struck a deal to buy a company whose technology could solve a problem that has chilled the solar energy industry: How to make solar power available for electricity usage at night when the sun is gone. While wind power is available day and night, solar is obviously limited to daylight hours. Wind Turbine Repair services make sure energy is renewable by keeping wind turbines in good operating order.
DayStar is planning to buy Premier Global Holdings. Premier Global has rights to a patent pending for a solar conversion unit that can generate and store solar energy within a single unit. Terms of the deal weren't disclosed.
The technology is based on photosynthesis, a process that's similar to the way plants convert light to usable energy.
Union City-based DayStar believes the technology can reduce overall power usage in an electricity grid.
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