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Oil companies aren’t happy that the government is making them fix defective offshore rig parts

Oil companies aren’t happy that the government is making them fix defective offshore rig parts

The U.S. government has asked Chevron, Shell, and our old friends at Transocean to halt drilling on wells in the Gulf of Mexico. Why? Because the systems connecting the rigs to the ocean floor contain defective parts.

From Bloomberg:

[The companies] have been directed by U.S. regulators to suspend work aboard rigs that employ General Electric Co. devices connecting drilling tubes to safety gear and the seafloor. The equipment must be retrieved so defective bolts can be replaced, the U.S. Bureau of Safety and Environmental Enforcement said in an alert issued on Jan. 29. …

The defect was discovered last month after a leak of drilling fluid was linked to bolts that failed because of stress corrosion, according to the Jan. 29 alert. The regulator didn’t identify the owner of the rig or which oil company was leasing it. GE declined to identify the manufacturer of the bolts.

Thanks for your help, GE.

How big a deal is this for the companies?

Installing new bolts and resuming drilling may take as long as three weeks for each rig, Credit Suisse Group AG said. For oil companies paying upwards of $600,000 a day to rent the most-sophisticated deep-water vessels and another $500,000 a day to staff and supply each of them, the delays may be significant, said Craig Pirrong, director of the University of Houston’s Global Energy Management Institute.

“This certainly will be costly for the industry,” Pirrong said in a telephone interview yesterday. “This is a result of increasing government scrutiny of deep-water activities. The question is, will the increased costs be so onerous that they discourage some companies” from searching the deep oceans for crude.

1. You know what’s more expensive than spending $1.1 million a day to replace faulty bolts? Massive oil spills.

2. If a company is going to be discouraged from drilling offshore because it might have to fix defective, leaky parts, it’s probably for the best.

Source

U.S. Halts Drilling on Gulf Wells With Flawed Bolts, Bloomberg

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Oil companies aren’t happy that the government is making them fix defective offshore rig parts

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Don’t worry about BP; it’s going to be fine

Don’t worry about BP; it’s going to be fine

BP’s logo is of an offshore rig exploding with money.

“BP” used to stand for “British Petroleum,” presumably until Britain got embarrassed. Well, not really — although British people weren’t very happy about people calling the company British Petroleum after its Gulf rig exploded and leaked and killed mammals of various types.

Anyway, here’s News About BP and Money and the Government, our new feature about BP and money and the government, part one in a series of one.

BP made a lot of money last year.

Big surprise. Annual profits for the company were $11.6 billion, only six or seven times what the average U.S. household makes (over the course of 33,000 years).

And of course we’ll bring back our favorite tool to make this figure hit home:

But not as much as states think it should pay for the Gulf spill.

BP doesn’t want to be rude or disrespectful, of course, but it thinks that the amount of money sought by state and local governments over the Deepwater Horizon disaster is a tad steep. From Reuters:

BP Plc has tallied up claims made by states and local governments on the U.S. Gulf Coast for economic and property damages from the Macondo oil spill, and come up with a figure of $34 billion, which it deems “substantially” overstated. …

The $34 billion total, provided for disclosure reasons with the company’s financial results on Tuesday, is based on claims made last month by Alabama, Mississippi and Florida as well as claims made by Louisiana and others from local governments, BP said.

Citing the Oil Pollution Act (OPA) underpinning the claims, the company said it considers the methods used to calculate them to be “seriously flawed, not supported by the legislation and to substantially overstate the claims.”

I am shocked and you are shocked and everyone is shocked that BP thinks this. But, really, how ungrateful can those states be? Have they already forgotten that the company ran this ad promoting Gulf Coast tourism over and over and over again? That’s like $30 billion worth of effort right there!

The government is doing its best to help BP pay its bills.

You may remember that the feds recently finalized a $4 billion penalty for BP for its role in the Gulf spill. But what the government taketh away, it also giveth, in spades.

From Bloomberg:

BP Plc’s Pentagon contracts have more than doubled since the year of the Gulf of Mexico oil spill, the biggest in U.S. history.

The company’s awards surged to $2.51 billion in the year ended Sept. 30 from $1.04 billion in fiscal 2010, the year of the oil rig explosion, according to data compiled by Bloomberg. BP’s share of the military’s petroleum market jumped to 12 percent from 8.5 percent during the period. …

The Pentagon “greatly rewarded the company for the oil spill,” said Charles Tiefer, a University of Baltimore law professor and former member of the U.S. Commission on Wartime Contracting. “This is alarming since the billions of dollars of environmental harm by BP make it the worst federal government contractor in history.”

Not sure “alarming” is the best word, but we’ll stick with it for now.

This past November, the EPA suspended BP’s ability to win new government contracts, but didn’t cancel the existing ones.  In fiscal years 2010 and 2011, BP got more than $3.5 billion from the Defense Department alone. It’s safe to assume that over the past year and up to now, the company’s existing government contracts brought in at least $500 million. So the company’s $4 billion fine from the feds will probably be completely covered by money the company got from the feds. The system works.

In summary.

BP should stand for “Bafflingly Profitable,” but only because “Bullshit Professionals” is rated R.

Philip Bump writes about the news for Gristmill. He also uses Twitter a whole lot.

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Explosion at headquarters of Mexico’s state-owned oil company kills 32 [UPDATED]

Explosion at headquarters of Mexico’s state-owned oil company kills 32 [UPDATED]

It’s not clear why the lower floors at the headquarters of Pemex, Mexico’s state-owned oil company, exploded. Things that have been blamed so far: a gas leak, a malfunctioning boiler, the electricity supply. Mexico’s Interior Minister, Miguel Angel Osorio, outlined the known facts for the press last night (translated via Google):

[Yesterday], around 15:40 pm in the North Annex B-2 Pemex Administrative Center, there was an explosion which seriously affected the ground floor, basement and mezzanine of the building and caused severe damage to three floors. …

The death of 25 people, 17 women, eight men, same SEMEFO have been transferred to the Attorney General of the Republic, 101 wounded, of whom 46 remain in care and the rest were discharged.

What is clear is that Pemex has a track record of mistakes and accidents — and that the explosion comes at a tricky political moment for the company.

From The New York Times:

The blast — in a highly protected but decaying office complex — comes in the middle of a heated debate over the future of Pemex, a national institution and a corporate behemoth that has been plagued by declining production, theft and an abysmal safety record that includes a major pipeline explosion almost every year, like the one in September that killed 30 workers.

Experts, while cautioning that it was too early to tell what had gone wrong, said the company would inevitably face more severe scrutiny as Mexico’s Congress returned to work in the coming weeks. The country’s new president, Enrique Peña Nieto, has pledged to submit a plan for overhauling Pemex, opening it to more private investment and perhaps greater consolidation. But with the blast, deliberations about the company could become more elemental.

“You pull all of this together and you say, well, if they can’t even guarantee safety in their own building, their own headquarters, what does that tell us about the company?” said Duncan Wood, director of the Mexico Institute at the Woodrow Wilson International Center for Scholars.

It doesn’t tell us much new about the company. Last September, an explosion at a gas plant killed 26. In 2005, workers cut into a pipeline, killing six. In 2008, poor training resulted in an accident that killed 22 workers on an offshore platform. And those are only the first three results on a quick Google search. In a normal circumstance, blaming gross incompetence for an explosion like yesterday’s would seem naive or suspicious. Here, it does not.

George Baker of Houston’s Energia energy research institute suggested that the government would use the explosion as a pretext for change, according to the Times.

In 1992, he said, a major explosion in a residential Guadalajara neighborhood — caused by gas leaking into the sewers — was followed by calls for change, and a plan to break Pemex into smaller pieces.

“The provocation, the pretext was that we had this terrible thing happen and now we are going to have a response from Pemex,” Mr. Baker said, adding that the explosion on Thursday would also now become part of the political calculations over what to do about the company.

“This may be used, may be manipulated, used as a pretext to do something,” he said. “Who knows what that something is, but they may exploit it to do something they were going to do anyway.”

If this is the massive, deadly explosion that finally fixes a dysfunctional and dangerous company, so be it. Exploit away.

clinker

The Pemex headquarters towers over Mexico City on a smoggy day in 2004.

Update: Reports now suggest that 32 have died.

Philip Bump writes about the news for Gristmill. He also uses Twitter a whole lot.

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Guacamole Sunday: A better name for the Super Bowl, or a crappy marketing campaign?

Guacamole Sunday: A better name for the Super Bowl, or a crappy marketing campaign?

It’s a good thing that unexpected California frost didn’t freeze out the state’s avocado crop. It’s not just the Golden State that loves nature’s butter. Americans’ appetite for avocados has exploded over the last decade, jumping significantly in 2012 alone, in no small part due to marketing campaigns by foreign avocado growers. This weekend, Americans are expected to eat several tons of avocados on “Guacamole Sunday” while watching the Super Bowl.

Nate Steiner

Twilight Greenaway at the Smithsonian‘s Food Think blog:

Last year, according to the produce industry publication The Packer, about 75 percent of the avocados shipped within the U.S. in the weeks leading up to the Super Bowl came from Mexico. Most of the rest came from Chile. And that translates to a lot of the creamy green fruits. This year Americans will eat almost 79 million pounds of them in the few weeks before the big game — an eight million pound increase over last year and a 100 percent increase since 2003.

None of this has been an accident. The avocado industry started promoting guacamole as a Super Bowl food back in the 1990s, shortly after the NAFTA agreement began allowing floods of avocados from Central and South America to enter the country in winter. By 2008, Mexico had become the largest supplier of avocados to the U.S.

Touchdown for the centralized global food system! Funny end-zone dance for big profits! But a painful loss for local farming. Avocado season hasn’t really begun yet, so the ones you buy for Guacamole Sunday aren’t likely to be super-tasty, even after you let them ripen in a bag for a couple days. If you’re going to give in to the green monster, though, just please don’t do this.

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More Hill staff go on to lobby for the oil industry, because this is how politics works

More Hill staff go on to lobby for the oil industry, because this is how politics works

Here’s more of this nonsense. From The Hill:

The Independent Petroleum Association of America (IPAA) has hired a pair of House GOP staffers to promote oil-and-gas development in Western states and the Gulf of Mexico.

The industry lobbying group said Tuesday that it’s expanding its government affairs staff by adding Mallori McClure, who was an aide to Rep. Doug Lamborn (R-Colo.), and Samantha McDonald, who worked for Rep. John Fleming (R-La.).

“Mallori’s and Samantha’s experience on Capitol Hill, both advising legislators who not only sat on the House Natural Resources Committee, but who represent important energy-producing states primes them perfectly to advocate for America’s independent oil and natural gas producers inside the Beltway,” said IPAA President Barry Russell in a statement.

Bullshit. Mallori and Samantha’s relationships on Capitol Hill prime them perfectly to advocate for the industry with their friends and former associates.

A 2010 report found that three out of every four oil industry lobbyists had previously worked for the government.

Even considering the generally friendly relationship between K Street and Capitol Hill, the number of well-connected oil lobbyists is remarkable. The nonpartisan Center for Responsive Politics calculates that fewer than one in three registered lobbyists in 2009 had revolving-door connections — less than half the oil industry rate found by The Post.

Officials with the Project on Government Oversight, a nonprofit group that tracks Interior Department officials who cross over to the oil sector, said they were surprised by the findings. “With these numbers, you can see how the revolving door between the Hill and industry allowed problems in the agency to happen and not be addressed,” said Mandy Smithberger, an investigator for the group.

The Independent Petroleum Association of America is one of 195 organizations and companies lobbying on oil issues. The oil and gas industry employs 736 lobbyists. In 2012, those lobbyists have cost their clients $103 million. That is more than eight times the amount spent by environmental advocates in 2011.

And that explains that.

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Meat company sues USDA to speed up horse meat sales

Meat company sues USDA to speed up horse meat sales

A lot of people are pretty upset about the fact that we are still without a new farm bill. But no one is upset in quite the same way as this New Mexico man who is suing the U.S. Department of Agriculture, the Humane Society of the United States, and other people who are standing in the way of him slaughtering and selling horses.

A provision passed last year might’ve effectively made horse slaughter legal for the first time in five years, but it turns out the feds are not exactly chomping at the bit to get back to inspecting those slaughterhouses. There’s no telling whether a new farm bill would restore a ban on the practice by defunding the USDA inspections. (The House has recommended that, but the Senate hasn’t.)

Rick de los Santos and his Valley Meat Company want to force the USDA to allow the country’s first horse meat operation since 2007. But it’s hard out there for a guy who wants to profit off of horse meat. The Los Angeles Times reports:

After waiting a year for permits, De los Santos, 52, says he’s using the courts to force the U.S. Department of Agriculture to resume inspections necessary to open what would be the nation’s first new horse slaughterhouse since 2007.

“I’ve submitted all the paperwork and have been told all along ‘Oh, it won’t be long now,’” said De los Santos, who owns Valley Meat Co. “I followed all their guidelines. I put more than $100,000 in upgrades and additions on my facilities to handle equine slaughter. And then the government comes back and tells me, ‘We can’t give you the permits. This horse issue has turned into a political game.’

“So what else do you do? I figured it was time to go to court.”

Another idea for something to do: not open a horse slaughterhouse?

The U.S. has been without them since the feds defunded USDA inspection of horse meat facilities in 2006. The last three slaughterhouses paid their own million-dollar inspection bills until closing.

Horses aren’t any more or less sustainable than the other hoofed animals we raise for meat, though we inexplicably love them more. De los Santos makes solid arguments for humane slaughter stateside as opposed to the current system of shipping animals to dirtier deaths in other countries, where horse meat is socially acceptable. (This argument being a slippery slope toward dog burgers, cat stews, and A Modest Proposal.)

The USDA has until January to respond to the suit, and we have until any day now to stop eating so dang many hoofed animals of any kind.

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Walmart bribed its way around Mexico’s environmental rules

Walmart bribed its way around Mexico’s environmental rules

BREAKING: Walmart did another terrible thing!

grass_stained_feet

The retail giant is not just the biggest employer in the U.S. — it also dominates Mexico with 2,275 outlets. And it got there by playing very, very dirty. According to the second part of a New York Times investigation, Walmart de Mexico routinely bribed officials not just to get its plans bumped to the top of the pile, but to “subvert democratic governance.” This is how the company successfully built a Walmart in a Teotihuacán alfalfa field a mile from ancient pyramids that draw tons of tourists. (Now those tourists get a view of a boxy Walmart supercenter when they climb to the top.) The local leaders said no, so Walmart de Mexico paid a guy $52,000 and redrew the zoning map itself.

Frankly, this is not very surprising. But it’s damning as hell. From the Times:

Thanks to eight bribe payments totaling $341,000, for example, Wal-Mart built a Sam’s Club in one of Mexico City’s most densely populated neighborhoods, near the Basílica de Guadalupe, without a construction license, or an environmental permit, or an urban impact assessment, or even a traffic permit. Thanks to nine bribe payments totaling $765,000, Wal-Mart built a vast refrigerated distribution center in an environmentally fragile flood basin north of Mexico City, in an area where electricity was so scarce that many smaller developers were turned away.

But there is no better example of Wal-Mart de Mexico’s methods than its conquest of Mrs. Pineda’s alfalfa field. In Teotihuacán, The Times found that Wal-Mart de Mexico executives approved at least four different bribe payments — more than $200,000 in all — to build just a medium-size supermarket. Without those payoffs, records and interviews show, Wal-Mart almost surely would not have been allowed to build in Mrs. Pineda’s field.

The Times seems eager to point out that this is a Walmart problem, not a Mexico problem. These bribes were not, as Reuters puts it, “routine payments.” Except that in effect they actually were.

Walmart now says it’s all kinds of ready “to fully cooperate with the competent authorities in whatever investigation,”  Fox helpfully reports (even though the company abandoned its own internal investigation years ago). Perhaps this is because it could be facing “sizable fines.”

This is both vindicating and infuriating, like most times Walmart gets caught doing something terrible. The Securities and Exchange Commission and Department of Justice might be investigating, but they aren’t commenting on the story, at least not yet. Meanwhile, shares of Walmart’s stock rose 30 cents today.

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Idiot misinterprets draft U.N. climate report, shares his idiocy with the world

Idiot misinterprets draft U.N. climate report, shares his idiocy with the world

Next September, the United Nations’ Intergovernmental Panel on Climate Change will release its fifth report compiling the scientific evidence of climate change. But, if you’re impatient, you can read it today, thanks to a buffoon associated with a buffoon-clogged website committed to undermining climate change. (We choose not to link to said site because fuck them.)

From The Guardian:

The fifth assessment report (AR5) by the Intergovernmental Panel on Climate Change, which is not due to be published in full until September 2013, was uploaded onto [yet another buffoon-clogged website] on Thursday and has since been mirrored elsewhere on the internet. Several scientists who helped to write the report have confirmed that the draft is genuine.

A little-known US-based climate sceptic called Alex Rawls, who had been accepted by the IPCC to be one of the report’s 800 expert reviewers, admitted to leaking the document.

As the Huffington Post puts it, this “raises questions about the process.” Um, yeah. I’d say. Hey, U.N.? Here’s a tip: Maybe don’t give review copies of important, complex documents to dingbat deniers. Go ahead and write that down; I’ll wait.

Here’s the fun part:

In a statement posted online, [Rawls] sought to justify the leak: “The addition of one single sentence [discussing the influence of cosmic rays on the earth’s climate] demands the release of the whole. That sentence is an astounding bit of honesty, a killing admission that completely undercuts the main premise and the main conclusion of the full report, revealing the fundamental dishonesty of the whole.”

Climate sceptics have heralded the sentence — which they interpret as meaning that cosmic rays could have a greater warming influence on the planet than mankind’s emissions — as “game-changing”.

Yes! Nice work, Mr. Rawls! That’s how science works: If you find even 20 words out of 100,000 that seem like they cast the evidence in a different light, then nothing else matters. Man, you just livened up the holiday party at [Idiot Climate Denier Website]’s offices, which are located in a garage behind an abandoned house somewhere in the low hills of post-Manhattan Project New Mexico, probably.

People who study science and respect the rigor of scientific analysis (hereafter, “scientists”) point out that Rawls is an idiot, and a biased one at that. Steve Sherwood, one of the report’s lead authors and a director of the Climate Change Research Center at the University of New South Wales, explains: “You could go and read those paragraphs yourself and the summary of it and see that we conclude exactly the opposite, that this cosmic ray effect that the paragraph is discussing appears to be negligible.” Moreover:

The leaked draft “summary for policymakers” contains a statement that appears to contradict the climate sceptics’ interpretation.

It says: “There is consistent evidence from observations of a net energy uptake of the earth system due to an imbalance in the energy budget. It is virtually certain that this is caused by human activities, primarily by the increase in CO2 concentrations. There is very high confidence that natural forcing contributes only a small fraction to this imbalance.”

By “virtually certain”, the scientists say they mean they are now 99% sure that man’s emissions are responsible. By comparison, in the IPCC’s last report, published in 2007, the scientists said they had a “very high confidence” — 90% sure — humans were principally responsible for causing the planet to warm.

If you’d like a thorough rebuttal of Rawls (which you would), see Skeptical Science’s outline of the minute role solar activity plays. Here’s the key graph:

Skeptical Science

Click to embiggen.

But, you know, we’ve seen this movie before. The prequel was called “Climategate.” Sketchy climate denier steals information, isolates something that he thinks (erroneously) proves his point, trumpets it loudly. How long will it be before Rawls is on Fox News? He will be on before Christmas. Before the end of Hannukah, probably.

The great irony of this huge coup for Rawls and [Terrible Site for Idiots] is that the main critique of the IPCC’s fifth report is that it’s likely to be too conservative in its estimates, leaving out, for example, the effects of thawing permafrost.

The full (very early draft!) report is available online. But if you go to a site hosting it, you likely earn that site money. And since most of the sites are of the [We Hate Science Because Derp] variety, I encourage you not to seek it out. Besides, the honorable Alex Rawls has already saved us the effort of reading the whole thing by isolating the only sentence that matters. And for that, statues will be built in his honor someday, on the barren plains that were once America’s bread basket, just outside the Thunderdome.

Philip Bump writes about the news for Gristmill. He also uses Twitter a whole lot.

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Mexican environmentalist murdered by drug gangs

Mexican environmentalist murdered by drug gangs

For years, Juventina Villa Mojica worked to preserve the virgin forest surrounding her small Mexican town. Drug traffickers wanted to strip the forest to expand the area in which they could grow poppies and marijuana, but Villa Mojica and her husband led an effort to organize farmers in opposition to the gangs. Last year, her husband and two of her children were murdered. On Wednesday, she and her 10-year-old son met the same fate.

From the Washington Post:

A band of gunmen killed an environmental activist who had received death threats for standing up to drug gangs and had a police guard when she was ambushed in southern Mexico, authorities said Thursday. …

Villa and her children had ridden in an all-terrain vehicle near the top of a mountain where she could get a cellphone signal since there are no telephones in the village. They were ambushed despite the presence of 10 state police officers who were protecting them, state prosecutors said in a statement.

Five of the officers were in a patrol car ahead of Villa and her children and the other five where on foot behind them, the statement said. Villa got ahead of the officers on foot and that’s when the assailants fired their weapons, it said.

catr

Mexican authorities prepare to destroy seized drugs.

The Post notes that Villa Mojica had been uncommonly lucky; more than 20 members of her and her husband’s families had been killed by drug gangs in the past year.

In October, the New Scientist reported that up to 90 percent of tropical deforestation was the result of organized crime, though generally the goal was resale of rare wood. The situation in Mexico presents the rawest form of the conflict between economics and sustainability; the amount of money to be gained by selling illegal drugs is a powerful force compared to efforts to preserve an ecosystem.

Source

Gunmen kill Mexican environmental activist being guarded by police team, prosecutors say, Washington Post

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Hooray: Obama administration sells more drilling plots in the Gulf

Hooray: Obama administration sells more drilling plots in the Gulf

Congratulations to Chevron, the highest bidder in an auction this morning for the right to drill in several plots in the western Gulf of Mexico. BP, as you may have heard, was ineligible to win, because a rig on one of their plots blew up a few years ago.

From Reuters:

Chevron’s highest bid of $17.2 million was for a tract about 140 miles (225.3 km) south of Galveston, Texas. …

Chevron also submitted the top sum of high bids at $56 million, followed by ConocoPhillips at $51.7 million, BHP Billiton at $14.5 million and Exxon Mobil Corp at $5.9 million.

Simmons & Company International said in a note to investors on Wednesday that the 116 tracts that received bids were 3 percent of those offered. The last western Gulf lease sale in December 2011 garnered bids on 5 percent of tracts offered.

The government offered 3,873 blocks in total, about one-third of which were in deep water. (Next March, there will be an auction for tracts in the central Gulf.) The $56 million in bids Chevron offered today is even larger than its other recent investment: $4 million during the most recent political cycle.

The auction was held in New Orleans’ Mercedes-Benz Superdome, the stadium that famously hosted thousands of displaced residents in the aftermath of Hurricane Katrina. The Superdome is about 100 miles northwest of the where the Deepwater Horizon disaster occurred. Which is why we’re suggesting the following informal name for the auction: the Mercedes-Katrina-Deepwater Oil Drilling Sale. Please use this nomenclature in any future communication.

To get to the drilling-plot auction, head northwest from this location.

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