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Kerry Kennedy: Gulf Needs Concrete Actions That Respect Residents’ Rights

June 11, 2010

CODEN, Ala. — When Gulf Coast resident Louise Bosarge heard President Obama refer to her community as “resilient,” her response was poetic: “We bounce back. We always bounce back. Bouncing hurts.” Along with my daughter Mariah and a team of human rights experts from the RFK Center for Justice and Human Rights, I spent the last several days in Mississippi, Louisiana and Alabama speaking with commercial fishermen, deck hands, restaurateurs, ecologists, farmers, service providers, marina workers, hoteliers, kids and more whose lives are directly affected by BP’s toxic tsunami swamping the Gulf Coast and wiping out the fishing and tourism industries which have been the mainstays of these communities for decades. “Oil will be all that’s left,” lamented one long-time resident. “And with the politicians in the pockets of the oil companies, there will be more pressure than ever to drill, baby, drill.” Photographs of slime-soaked seabirds distract from the human tragedy suffocating the region. More concerned about its image than about the human beings impacted, BP has spent $50 million on an oil-slick ad campaign. Meanwhile, BP is strangling the livelihoods of the people of the gulf coast just as surely as its oil is eviscerating the ecosystems. Eleven of us motored a small boat eight miles out from shore. Though far from shore, the water there appeared as though we had pulled up to a gargantuan gas dock, with a rainbow sheen covering the ocean, horizon to horizon. Our eyes stung, our throats closed and our heads ached despite the respirators we wore. Our little boat came to a bird sanctuary which was surrounded by buoyant booms floating on the water to hold the oil off the island. But the oil, aided by dispersants, had slipped beneath the booms and puddled in a gooey brown ring around the once pristine land. We watched in horror as a pelican, smothered in molasses-like gunk, struggled haplessly to get a foothold on the rocky shore — spreading its wings and falling back, spreading and falling, spreading and falling. As we docked the boat, the captain said “I’ll be dreaming about that pelican tonight. I hope I’m not that pelican.” After generations spent mastering their trade, fishermen (already underwater with loans on boats that now stand idle) fear they will have to permanently pull up their nets. BP is attempting to buy them off with promises to pay their lost salaries, but in reality BP has cynically designed a system that makes it impossible for most fishermen to successfully make claims. BP forced many of those who came forward to sign forms releasing BP from future liability. Only through public pressure has BP agreed to rescind these forced agreements. BP’s public relations machine says it will protect the cleanup crews. However, workers were not only denied protective equipment but, after arriving for work wearing respirators, were threatened with the loss of their jobs if they chose to wear these “unnecessary” safety devices which serve only to “spread hysteria.” Workers complaining of illnesses such as headaches and breathing difficulty were told by BP that they have “food poisoning” or “heat stroke.” BP warned workers that if they wanted to be treated, they should see the BP doctors rather than county health officials. Fishermen, residents and the American public had no say in the decision of a private company to conduct a colossal experiment of pouring billions of gallons of carcinogens into one of the most fertile fishing grounds on earth. BP refuses to publicly disclose the litany of chemical agents so that patients and health care professionals can properly identify and treat related illnesses already being reported. Because of the virtual silence about the real health impacts of these chemicals, nothing has been done to prepare for the potential evacuation on the horizon. Six weeks out, the economic backlash, with vast swaths of the fishable waters closed and vacation and convention cancellations rampant, is already manifesting itself in a worrisome spike in mental health concerns for persons who have lost virtually everything and fear for their future. Professionals reported significant increases in depression, which can be expected to lead to domestic violence, alcohol and drug use, and suicide. Residents of the Gulf Coast have a clear sense of what should be done: * Everyone send donations to the Gulf Coast Fund, which funds community organizations across the region * BP should keep its promise and pay fair and prompt compensation to all fishermen and related business people who have suffered economic losses * BP should immediately give a bonus to fisherman of 30 percent of the value of the catch for those who continue fishing in available waters * The federal government should develop an evacuation plan for coastal communities which is consistent with international standards for the treatment of internally displaced people, including keeping families together, preserving voting rights and recognizing the right to return * The federal government, through executive order, should direct a portion of the $19 billion in allocated but unspent Katrina monies to create 100,000 green and living wage jobs along the gulf coast, as called for in the Gulf Coast Civic Works Act (H.R. 2269). It may take decades for BP to make the Gulf “whole.” In the aftermath of this oil tsunami, concrete actions that respect residents’ rights are the next steps.

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David Isenberg: KBR: Private Military Cancer (PMC) Provider? Part II

June 11, 2010

Back in April I wrote about the lawsuit filed by Indiana National Guardsmen, against KBR. The suite suit alleges that KBR knowingly allowed exposure to the toxic chemical sodium dichromate, also known as hexavalent chromium. It was widely present as an orange-colored dust that soldiers assigned to guard the Qarmat Ali water treatment plant in southern Iraq could not avoid inhaling. Sodium dichromate chromium is a powerful carcinogen known to cause lung, nasal and other cancers, other severe respiratory problems and other medical problems. Yesterday, six more British Iraq vets and a former Indiana National Guardsmen sued KBR in Houston federal court over alleged toxic exposure at the Qarmat Ali site. This makes a total of 98 U.S. and U.K. vets and two families of vets who have died since serving in Iraq that have sued KBR in three cases pending in Texas, Oregon and West Virginia federal courts. The amended complaint also includes recent confirmation from the U.S. Army that Indiana National Guard Commander Jim Gentry’s death from cancer resulted from his service exposure. Here are some excerpts from the amended complaint. As outlined further below, Halliburton/KBR is apparently still withholding from the United States Army the full extent of Halliburton/KBR’s managers’ knowledge of the dangers to the soldiers and others onsite, dangers with serious consequences directly impacting their current and future health evaluations of the soldiers exposed at Qarmat Ali. Several Indiana National Guardsmen serving at Qarmat Ali have already manifested respiratory system tumors characteristically associated with hexavalent chromium exposure, two of the Tell City, Indiana Guardsmen have died as a result of sodium dichromate exposure, and many of the Tell City, Indiana Guardsmen continue to experience chemical sensitivities and rashes consistent with the impacts of hexavalent chromium poisoning. The United States Army has already confirmed that Jim Gentry’s death from cancer resulted from his service exposure. The Tell City, Indiana Guardsmen and their fellow soldiers accepted the hazards from enemy action while doing their part to assist the United States in restoring freedom to Iraq, but could not even imagine that Halliburton/KBR’s managers would act in a manner that directly and continuously exposed them to serious health impacts for the rest of their lives. As stated by Lieutenant Colonel James Gentry, commanding officer of the Tell City, Indiana Guardsmen at Qarmat Ali, before his untimely death: I understand and accept there’s danger with my line of service, in my line of service. What’s very difficult for me to accept is if I’m working for KBR and they have knowledge of hazardous chemicals on the ground that can cause cancer and not share that knowledge, then that is putting my men at risk that is not necessary. I’m very upset over this . . . I feel like they should be ashamed that they did that. The RAF Ground Regiment Gunners and the other members of the British Forces at Qarmat Ali were likewise wholly unprotected against the hazards of sodium dichromate known to Halliburton/KBR’s managers for months and months. In fact, despite the demonstrated knowledge of elevated chromium levels in the admittedly inadequate blood testing of Halliburton/KBR’s civilian employees, Halliburton/KBR’s managers apparently deliberately told British Forces exactly the opposite. Actually this makes a weird kind of perverse, corporate sense. If a company is willing to endanger the troops of its own country why would anyone expect it to care about the troops of another country? What happened to Ed Blacke, the American civilian medic at Qarmat Ali, when he tried to take action to protect the workers and soldiers in late July 2003, points to the Halliburton/KBR handling of the site contamination: As an EMT concerned that there was a health problem, I began to query all English-speaking personnel working at the facility, which included KBR, Halliburton, Iraqi Oil Company, U. S. Army National Guard and British soldiers, and all were suffering identical symptoms. The symptoms for all at the facility developed into continuous bloody noses, spitting up of blood, coughing, irritation of the nose, eyes, throat and lungs, and shortness of breath. In order to determine what might be the cause of these medical problems, I undertook a more in depth assessment of the facility with my Iraqi interpreter taking down the chemical names on the burst bags I initially noted as well as from the tanks in the Injection building. The chemical was Sodium Dichromate, which contains hexavalent chromium. I asked my Iraqi interpreter if he was aware of what the material in the bags was used for and was advised that it was injected into the water supply system for the oil fields as an anti-corrosive. He was reluctant to say more and when pressed he said he knew it was poisonous and that he was aware of many workers from the plant who were made ill by it. He said that it being a poisonous chemical was probably the reason members of the Baath party had opened the storage bags and spread their contents all over the plant as part of their sabotage efforts in the facility. That evening, on my return to my quarters, I researched sodium dichromate on the internet, finding and downloading a Material Safety Data Sheet (MSDS) for the chemical (attached). The MSDS states that sodium dichromate is a hazardous material and a carcinogen, exposure to which is to be avoided. At this time, a colleague I knew from Chad provided me with an internal memo written by a KBR Industrial Hygienist that substantiated my personal findings. I was totally taken aback to find that KBR knew as early as May, from a UN report and from their Industrial Hygienist, that they were putting not only KBR workers but our security details from the U. S. and British in harms way, without the required training or personal protective equipment. I reported my findings about the imminent danger sodium dichromate was posing to the workers at Qarmat Ali to the HSE and Project Managerin Kuwait and insisted that they take immediate action. A few days later, two representatives of the health, safety and environmental section of KBR came to Qarmat Ali to assess the situation and talk to the workers. Those individuals were Safety Manager Tommy Mornay and Medical Supervisor Ray Garcia. They held a meeting with the workers in which they told the workers that the sodium dichromate was a mild irritant at worst, that the plant had been thoroughly checked out and was safe, and that they were to get back to work. I was at the meeting and was shocked that fellow safety and medical professionals were telling such outrageous and blatant lies to the workers. I pointed out in the meeting that the NIOSH/CDC documents that I had on sodium dichromate directly contradicted their statements to the workers. At this point, Mr. Garcia, who was one of my superiors, directed me to be quiet and to leave. He then escorted me out of the meeting. Outside of the meeting, he advised me that I was being insubordinate, disruptive, and that my input was not appreciated. I was determined to pursue the complaint with higher-ups in KBR’s HSE department in Kuwait, and upon attempting to do so, it was made clear to me that my presence in Iraq and Kuwait was no longer appreciated and that I would be better off going home. As a response to my complaints, the Medical Supervisor, Ray Garcia, under direction of the KBR Project Manager, directed me to accompany him to a clinic for blood workup. I was taken to a substandard medical clinic where I refused to submit to the tests due to the unsanitary conditions and unprofessional nature of the staff. …………………………………………………………………………….. In my mind, it was criminally negligent of the KBR HSE and Project management to make a decision to continue to expose personnel to sodium dichromate poisoning at the Qarmat Ali water treatment plant when they knew of the exposure and knew of the absence of any personal protective gear whatsoever. I understand that KBR and Halliburton take the position that the air was tested at the plant and showed low levels of chromium, however, those tests were apparently done when the air was still, not during one of the frequent dust storms in which all of the materials on the ground became airborne. Furthermore, the levels of chromium from the ground samples show that the plant was a highly dangerous and unsafe and contaminated facility, and these facts were objective facts known by KBR management, in the face of which they made the conscious decision to continue to expose the American workers, the Iraqi workers, the American military personnel, and the British military personnel at the plant to these horrifically unsafe conditions. It is outrageous that American tax dollars are the source of the funding of the Iraqi operation of Halliburton and KBR when those companies have demonstrated such total and complete disregard for the health and safety of the workers for whom they are responsible. It would be interesting to hear from the various PMC trade associations and see whether they think KBR is living up to the various codes of conduct they are so proud of.

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BP Atlantis Should Stay in Operation Amid U.S. Safety Probe, Salazar Says

June 11, 2010

By Laurel Brubaker Calkins June 11 (Bloomberg) — BP Plc ’s Atlantis oil and natural- gas platform in the Gulf of Mexico should remain in production while regulators investigate a whistleblower’s allegations that the installation is unsafe, U.S. Secretary of the Interior Kenneth Salazar said. The U.S. Minerals Management Service, which oversees offshore drilling, will decide after completing its probe whether to shut Atlantis, which produces 200,000 barrels of oil and 180 million cubic feet of gas daily, Salazar said. “The Department of Interior is currently undertaking an exhaustive investigation, at the request of Congress, to determine whether BP maintains a complete and accurate set of required engineering drawings for the BP Atlantis platform and its associated subsea components,” Salazar said in papers filed yesterday in federal court in Houston. Former BP employee Kenneth Abbott sued Salazar, the Interior Department, MMS and its regional chief Michael Saucier last month for failing to act on his warnings about BP’s second- largest Gulf platform. Abbott sued in conjunction with Food & Water Watch, an environmental watchdog group, to force MMS to shut down Atlantis until BP can prove the platform meets federal engineering and safety requirements. BP is struggling to cap an unrelated well about 100 miles (161 kilometers) north of Atlantis after the Deepwater Horizon drilling rig caught fire and sank in April. The resulting oil spill is the largest in U.S. history. The London-based company insists the Atlantis platform is safe and in compliance with federal regulations. The MMS probe should be finished by mid-September, Salazar said. ‘10 Percent Complete’ “Given the quantity of records and need for MMS to focus on responding to the Deepwater Horizon accident, the investigation is only approximately 10 percent complete,” Salazar said. Abbott, who managed Atlantis’s engineering documentation database until he left BP in early 2009, said MMS failed to respond when he brought his safety concerns to the agency last year and again this year. MMS initiated the probe in February, at the request of 19 congressional representatives who learned of Abbott’s complaint. The agency had said it would report its findings in May. Abbott claims almost 90 percent of the platform’s engineering and safety documents lacked final approval, as required by U.S. law. Atlantis’s operators have no “as-built” drawings on the platform’s actual construction, leaving them vulnerable to mistakes in an emergency, he said. “We maintain that without these documents, rig operators are flying blind,” Mikal Watts , one of Abbott’s lawyers, said in a statement last week. “We are now into hurricane season and that ups the odds for situations requiring immediate, accurate response to problems. Crews can’t do that if they don’t have accurate, ‘as built’ documents to refer to.” The case is Abbott v. Salazar, 4:10-cv-01759, U.S. District Court, Southern District of Texas (Houston). To contact the reporter on this story: Laurel Brubaker Calkins in Houston at laurel@calkins.us.com .

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Dale Pendell: An Economy Not Worth Saving

June 8, 2010

An economy that is dependent on people buying things they don’t need, ever new gewgaws and gadgets, with money they don’t have, is not worth saving. An economy that has to grow just to cover its own debts is not worth saving. An economy dependent on the energy of fossil fuels to avoid collapse is not worth saving. Why is an economy where most of the profits go to one percent of the population worth saving? Our current economic system, which might be called global corporatism, is based on growth fueled by IOUs. The IOUs are not only to banks, but to future decades; not merely financial debts, which could be cured by hyperinflation or default, but real debts — that is, debts to the land and the air and the water — that we can’t just buy our way out of. Skimping on maintenance is an IOU. Burning carbon is an IOU — a big one. Squeezing the middle classes into working more for less is an IOU. Increasing poverty and poor health is an IOU that society will have to pay — now and also later. While it is true that the financial meltdown and the catastrophic gulf oil leak can be partly blamed on the lack of oversight by the government, especially during the Bush administration, the roots of the problems are in the structure of the economy itself. That is, an economy hooked on growth spurred by fossil fuel energy and controlled (if that is the right word) by global corporations whose sole purpose is amassing monetary profit. If a corporation can make money by shifting the cost of redeeming their IOUs onto the public, they generally do so, whether the corporations are in the business of extraction or merely playing financial games. What a coup! Let the public pay, then let’s all give ourselves another fat bonus. Greed is called a virtue. How can such a morally corrupt system be worth saving? Let the recession come. The earth needs a recession, badly, globally. The future needs a recession — not a “correction,” but a recession, and a long one. The earth needs a permanent recession. Society needs a permanent recession. It’s time to turn off the lights and to roll up our sleeves. There is a lot of work to do. And let’s make the gamblers do their part, like everyone else. They are very smart, after all: maybe they could learn to do something useful, such as repairing radios. Maybe they could learn to hoe some of the cream they’ve been skimming off back into the soil of the commons. Creating money with IOUs is like using a drug — like, say, cocaine. “Stimulus.” The pushers move in, everyone feels good for a while. Then we are all hooked. And not only hooked, but in denial. “How could burning the earth’s carbon warm the climate? The scientists might be wrong.” We’ll deny it to the end. We’d rather fight than switch. The specter of bread lines is paraded before us. We’ll bail out our rich pushers if they bust, so we’ll be sure to get our next fix. As in “the first one is free,” during the growth cycle life is easy. Since maintenance and cleanup are being charged to the future, it feels like prosperity, so no one makes a stink that the lion’s share of the profits are going into a few pockets. Then the bills start to come due: a shipment gets busted, there is an accident, people are getting sick or dying from the waste of the slag heap. Then the pushers double the price and make their demands: work harder, maintain this sick system or you’ll be hurting. While in the euphoria of the early stages of addiction, we hardly noticed that our once viable alternatives were disappearing. Having done their work of consuming the resources of the earth, both natural and cultural, having exhausted the last government bailout, the mega-corporations will simply close their doors and let the sand dunes bury their once proud windows. As any junkie knows, tapering off voluntarily is extremely difficult. Why suffer when the cure is right there, in the pipe? So almost always a junkie uses the dope until it is all gone. Then it’s panic and cold turkey. Then you can’t work, because you are too sick. And you are nasty, and desperate. You’re ready to steal, or kill. Tapering down–say, cutting your dose in half, and then in half again–requires a resolve that is rare, but it can be done. First you have to face the truth: that growth cannot continue forever with IOUs sent to the future. As Lenny Bruce said: “You gotta pay dues.” It’s going to hurt but if we are all in it together we can commiserate and figure out how to get by. Maybe we could have a neighborhood barbecue: start it with the last cup of diesel and burn paper money and coupons and the national debt. Or we could write checks for ten thousand dollars each and burn them. We could grill some rats and share them around, the way Jesus fed the five thousand. We could sing sad songs but we could all be in it together. There are plenty of rascals in our government, both elected and appointed, who seem to place the next quarter’s bottom line of their corporate donors above the common good. Of course we need to throw the rascals out. Of course we need to demand that our government reinstitute regulation and independent, scientific oversight of our environment and our industry. But we also have to give up our addiction to consumption and false mantra of “growth” that is, really, simply the looting of the future. Sustainable cultures are not built overnight. Generations are required — not only for particular skills and techniques to be developed, but for the social and philosophical and spiritual values that underpin such cultures. We have lingered an extra hundred years in our adolescence, binging like teenagers: find oil, use it all up; get the most toys; get the most money. Profligacy has been our mark, and not in a sacred manner. We need to mature into a post-growth adulthood, in which we can find comfort and grace in a long slow recession — otherwise we will be the only species to move from adolescence to senescence with no maturity in between.

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Exxon Valdez Lawyer: Louisianans, ‘To Use A Legal Term,’ Are ‘Just F–ked’

June 8, 2010

Long after oil stops spilling from the Gulf and the ecological catastrophe caused by the spill begins to be cleaned up, the process of determining the extent to which BP owes the afflicted will be litigated in the courts. And while the case against the oil company seems fairly clear-cut (BP admits, after all, to being responsible for the worst environmental disaster in U.S. history), a lawyer with perhaps the most relevant experience on the matter at hand is painting a depressing picture about the litigation ahead. “[I]f you were affected in Louisiana,” said Brian O’Neill, an attorney with the firm Faegre & Benson, “to use a legal term, you are just f–ked.” More than any attorney in the country, O’Neill personally understands the implications of that imprecise legal term. For more than two decades, he represented fishermen in civil cases related to the now second-most-damaging spill in U.S. history: the Exxon Valdez spill in 1989. And from it, he learned valuable lessons about how to sue an oil giant for the damages it has caused — above all, to push for the best and plan for the worst. “In Valdez we had 32,000 legitimate claims — that was a lot,” he said in an interview with the Huffington Post. “I think there will be more claims in this one.” “These big oil companies, they have a different view of time and politics than we do,” he added. “The fact that BP hard-asses it a little bit for 5 to 10 to 15 years, despite all the bad publicity there may be between segments of society and BP as a result [of this spill]. Exxon sure weathered it really well. The market went up the next day for Exxon stock [after the settlement]. They just thrived despite treating an entire state poorly. And there is a lesson there for BP, and that is: it really doesn’t matter whether you treat these people nicely or not. The only difference is if you extract oil. It sounds cynical but it might be true.” The similarities between the two crises are telling in many ways. When Exxon’s ship hit Prince William Sound’s Bligh Reef — in the process, releasing an estimated minimum of 10.8 million gallons of oil into the water — the company pledged (like BP has done now) that they would cover the entire cost of the cleanup and all legitimate claims of damages. Two decades of litigation and appeals resulted in punitive damages being reduced from $5 billion to $500 million. The irony, as O’Neill tells it, is that the law Congress passed in the wake of that spill — the Oil Pollution Act of 1990 — may end up hindering the type of relief that Gulf residents can expect currently. Under that legislation, a $75 million cap was placed on economic damages that an oil company can pay as a penalty for a spill (this isn’t true, O’Neill notes, in states that have passed their own liability caps — of which Louisiana isn’t one). Congress is currently trying to lift that cap. But there are constitutional questions about whether it can do so retroactively to cover BP. “Constitutionally, I don’t know whether you can do that. I don’t know whether it is ex post facto,” O’Neill said. “It will likely be challenged. I would, if I was representing BP.” There are other problems that the Exxon Valdez vet recognized when discussing the forthcoming courtroom battles for BP. There are questions, for starters, as to who actually can sue the oil company under the Oil Pollution Act law and whether, in fact, those 11 workers killed on the rig will have their settlements capped by the Death On the High Seas Act. Mainly, however, O’Neill is concerned over the pervasive influence that the oil industry has on all sector of governance — which he predicts will weigh heavily on the legal process. “This is more important than banks,” he said. “This is oil. And at some point in time, the administration and the states will resolve all their dealings and it will leave fisherman and the tourist industry to resolve their differences in the courts. It could be another 20 years till then because BP [is] going to defend this like Exxon did.”

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Max Fraad Wolff: Moving Forward?

June 7, 2010

The great oil spill of 2010 has called forth anger, sadness and opinion from all quarters. It is truly mesmerizing to watch our present technologies, regulations, habitat and livelihoods fail as oil sprays out from a ruptured pipe on the sea bed. We have all heard and shared passions on the lives lost and permanently degraded. It is clear that our regulatory systems, technological attainment and disaster planning were terribly and painfully inadequate. So they remain. BP and associates will be fighting court claims, civil issues and possibly criminal inquiries for decades. Likewise, the citizens of the gulf-plant, animal, human, ecological — will be struggling with wounds for a long time. There is every indication that this long ago became a national emergency. Anger has boiled over, justifiably. Aggrieved parties are bandying about jail sentences, nationalizations and radical departures from coastal drilling plans. We are not seeing careful, historical and best practices based suggestions. There is a century of study, policy and critique of the relationship between extractive industry, the environment and stakeholder interest. The oil and gas industries have struggled with angered local communities, spills and lost local ways of life for over 100 years. BP, formerly Anglo-Iranian, has a 104 year history of struggle with various host nations and communities. For most of its modern history, 1913-1987, what is now BP was partially or entirely a national oil company in the UK. Anglo-Iranian became British Petroleum and then BP across waves of mergers and privatizations. The firm and industry were made and remade as local communities, crises and critics shaped the industry and the company. We do not need to start from scratch in assessing the situation. We are not the first to face these issues. We don’t need to be led solely by our sadness and rage about what is and will be happening as a result of the Deepwater Horizon disaster. The literature on the curse of oil and the best practices for handling economic and ecological issues is immense and has made great strides in the past 10 years. This literature and its leading lights should be front and center in our debates on this spill and our contentious future relationship with oil and gas exploration, development, refining. The spill highlights the inadequacies of our present system. We need a system where large, systemically relevant firms pay into a transparently managed national clean up and environmental restitution fund. The payments made should be indexed to the amount of oil produced. Bigger operations will pay more into the fund and smaller operations will pay less. Payments into the fund will also be weighted for the risk of ecological damages. Higher risk programs will either face regulatory rejection, or be assessed scaled up risk payment. All information on payments to and operations of the funds must be made available. Councils comprised of regulators, stakeholders and industry should administer funds. In the event of major spills and accidents, damages will be assessed by these councils. Serious and long term damages — like those flowing from the Deepwater Horizon failure should have their own remediation funds. In disasters, councils of industry, regulators and stakeholders should be immediately empowered to direct operations. If significant dereliction of safety and regulatory duties are established, all profits should be paid into a remediation fund for the producing life of the project in question. The Deep Water Horizon could become our test of this approach?

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BP Increases Oil-Capture Rate U.S. Braces for Siege

June 6, 2010

By Aaron Clark and Edward Klump June 6 (Bloomberg) — BP Plc said it is capturing more of the oil spewing into the Gulf of Mexico from its damaged well as U.S. officials said they expect the battle against pollution from the disaster to continue for months. “This is a siege across the entire Gulf,” U.S. Coast Guard Admiral Thad Allen said on CBS’s “Face the Nation” broadcast today. “There will be oil out there for months to come. This will be well into the fall.” BP said it captured 10,500 barrels of oil from its leaking well yesterday, up from 6,077 barrels in the previous 24-hour ending at midnight June 4. The well was estimated by government scientists to be gushing 12,000 to 19,000 barrels a day. The spill is the worst oil spill in U.S. history. A “cap” over the well is capturing “probably the vast majority” of the leaking oil , Chief Executive Officer Tony Hayward told the British Broadcasting Corp. today in an interview in London. BP is preparing a second system to capture even more oil that will be implemented within the week, he said. BP plans to swap out those temporary systems with one that is more hurricane-proof by the end of the month. The well began gushing oil after the Deepwater Horizon rig BP leased from Transocean Ltd. exploded on April 20 and sank two days later, resulting in the deaths of 11 workers. The leak is 40 miles (64 kilometers) off Louisiana’s coast under about 5,000 feet (1,524 meters) of water. Oil Ashore Gulf winds are moving the oil now in the water closer to the coasts of Mississippi, Alabama and Florida, according to Allen. He said oil in tar balls and patties is affecting areas from western Mississippi to Pensacola, Florida. The spill, which has cost BP more than $1 billion, has soiled about 140 miles of shoreline in Louisiana, Alabama and Mississippi, along with some 80 miles in Florida, the Coast Guard said yesterday. Oil that washed ashore on beaches in Florida’s northwest Panhandle region was quickly removed, and crews are attacking tar balls that are left on the sand, Florida Governor Charlie Crist said on CNN’s “State of the Union” broadcast. A cleanup command post has been set up in Pensacola, he said. More oil is expected to arrive in northwest Florida within the next three days, according to a statement today from the Florida Deepwater Horizon Response team, which cited National Oceanic and Atmospheric Administration forecasts. Slow Payments Mississippi Governor Haley Barbour said state beaches remained clear of tar balls or other deposits, though he fears tourists will still stay away because they think the coast from Florida to Texas is “ankle-deep in oil.” Both Crist and Allen faulted BP for taking too long to compensate businesses and workers for losses tied to the oil. “We want these claims to be responded to much more quickly,” said Crist said on CNN. “These people need help. And we have to be there to try to make them as whole as we can during this very difficult process.” President Barack Obama ’s moratorium on offshore drilling, which has idled 33 deepwater rigs in the Gulf of Mexico, will cost as many as 6,000 jobs this month and 20,000 by the end of next year, Louisiana Governor Bobby Jindal said in a letter to Obama on June 2. Lost Livelihoods Mississippi Governor Haley Barbour today endorsed the call by Jindal to resume offshore drilling in the Gulf, which produces 30 percent of all U.S. oil and gas. If not, rigs in the region will be moved to oil fields overseas, further delaying the resumption of drilling in the Gulf, he said. Obama said communities along the Gulf Coast suffering because of the oil spill will be “made whole” with payments from BP and government aid. In his weekly address on the radio and Internet, which was taped June 4 in Grand Isle, Louisiana, Obama said livelihoods that have spanned generations are in danger of being lost. BP has paid about half of the 35,000 claims submitted by Gulf residents and companies for income lost because of the spill, Darryl Willis, vice president of resources at BP America, said yesterday on a conference call. BP is awaiting documentation before it can pay the remaining claims, he said. Willis said the company’s spending on claims through June may top $84 million. BP said it will continue to try increasing the amount of oil it is capturing with its latest containment system. Still Leaking “I’d like to see us capture 90-plus percent of this flow,” Doug Suttles , BP’s chief operating officer for exploration and production, said June 4 on CBS’s “Early Show.” “That’s possible with this design.” The oil is funneled to a drillship at the surface that can capture and separate as much as 15,000 barrels of oil, gas and water a day, Kent Wells, a BP senior vice president, said in a conference call with reporters last week. Jagged edges left when the pipe was cut for the containment cap may prevent a tight seal and allow some oil to continue leaking, Allen said. Government scientists expected the cut, which removed a kink in the pipe, to increase the flow of oil by as much as 20 percent. “History has taught us to be cautiously optimistic, not overly optimistic,” Dan Pickering , an analyst at investment bank Tudor Pickering Holt & Co. in Houston, said. Capturing 90 percent of the flow would be a “huge home run,” he said. Kuwait Investment Authority, the country’s sovereign wealth fund, isn’t considering selling its 1.75 percent stake in BP and believes there is no threat to the company’s future as a result of the spill, the Al-Rai newspaper reported today. ‘First Call’ Hayward told investors June 4 on a conference call the spill has the “first call” on the company’s funds and financial consequences of the spill will be “severe.” Allen said relief-well operations to stop the leak permanently will involve pumping mud to reduce pressure and placing a cement plug. He said this effort will be the “bottom kill exercise.” “In the long term, the threat from this well will not go away until the relief well has been drilled, pressure has been taken off and the well has been plugged,” Allen said. “In the meantime, we need to optimize our containment efforts.” To contact the reporter on this story: Edward Klump in Houston at eklump@bloomberg.net ; Aaron Clark in New York at aclark27@bloomberg.net .

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AlaskaDispatch.com: BP Shareholders, Give Tony Hayward His Life Back. Fire Him

June 6, 2010

BP Chief Executive Tony Hayward told shareholders last week that the well technology that should have prevented the Gulf oil spill wasn’t failsafe. Yet, industry knew this for years. And Hayward let his company continue to drill. Bad PR is not the reason BP Chief Executive Tony Hayward should be in trouble today; corporate integrity is. Forget Hayward’s snafu last week, the one the idiot press made much about, when the man in charge of the company smearing the Gulf of Mexico with crude oil said, “There’s no one who wants this over more than I do. You know, I’d like my life back.” Hayward was just being honest then and stating what a lot of people in the Gulf of Mexico are thinking as BP’s undersea volcano continues to gush oil. With the amount in the water now up past twice that of the Exxon Valdez spill in Prince William Sound, who wouldn’t want the disaster to be over with? No, honesty about feelings is not Hayward’s problem. This is: His statement to investors in a conference call Friday when he said the oil industry needs a “paradigm shift.” “We need better safety technology,” he said. “For example, the blowout preventer which this incident has shown is not failsafe.” There are two things wrong with this statement. The first is that the oil industry has known for years that the failsafe devices in blowout preventers — the rams designed to shear the drill pipe and seal a well in the event of a catastrophic blowout — were inadequate. The U.S. Minerals Management Service warned of this years ago. It has been discussed at oil drilling conferences around the globe for at least a of couple years. And a truly failsafe blowout preventer has been in the design stage for at least five years, first with Devon Energy and Cameron, and now with Chevron and Cameron. Houston-based Cameron is one of the major, global producers of blowout preventers, or BOPs, as they’re commonly called in the industry. Cameron and Chevron are supposed to be at this moment testing what Chevron has called an alternative well kill system, or AKWS, which is another way of saying “a BOP that is indeed failsafe.” It didn’t take an enterprising reporter more than a few days to learn about this, or discover from talking to oil-drill rig operators that they’ve long known that existing BOPs won’t shear joints where drill pipe is welded together, won’t shear the pipe if there are tools in it (which now appears might have been the case deep below BP’s sunken Deepwater Horizon rig in the Gulf), and might not shear new, high-tensile-steel pipe, especially at extreme depths. The Deepwater Horizon, it is worth noting, was drilling 5,000 feet beneath the surface of the ocean. All of which brings us to the second and most important problem with Hayward’s statement during that conference call with investors: Either he didn’t know when he took the job as BP chief executive that the BOPs the company was using beneath its drill rigs weren’t failsafe, or he is now trying to pretend — “for example … this incident has shown (it) is not failsafe” — that he didn’t know. It’s hard to say which is worse. Tony Hayward gets paid $4.6 million a year to run BP. He should be expected to know more about the huge risks to his company posed by an oil leak than some poorly paid reporter in Podunk, Alaska. If that reporter can find out in a matter of days that everyone actively involved in oil drilling knows BOPs aren’t failsafe, shouldn’t Hayward have figured this out from about day two on the job? Wouldn’t he think to ask someone, “Hey, what’s the greatest risk facing our company at this time?” At this point, there is little doubt what his engineers would have told him: A deepwater blowout. Everyone in the drilling business — EVERYONE — knew they were pushing into a new frontier in the Gulf of Mexico. Drilling deepwater isn’t quite as difficult as venturing into space, but it’s close. People were working at the limits of technology where things can be expected to go wrong, and they did. Everyone in the drilling business — EVERYONE — also knew that there were and are flaws in existing BOPs. Highly experienced drillers have tried to explain this away by noting that if they do everything right they’ll never need to use the “failsafe” shear-ram in the BOP to shear and seal a well. Read more of this story at AlaskaDispatch.com.

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BP Increased Oil-Capture Rate to 10,500 Barrels a Day

June 6, 2010

By Edward Klump June 6 (Bloomberg) — BP Plc said it increased the amount of oil being captured from its leaking well in the Gulf of Mexico to 10,500 barrels a day from 6,077 barrels in the previous 24-hour period ending at midnight June 4. The well is estimated by government scientists to be gushing 12,000 to 19,000 barrels a day into the Gulf. The spill is the worst oil spill in U.S. history. A “cap” over the well is capturing “probably the vast majority” of the leaking oil , Chief Executive Officer Tony Hayward told the Broadcasting Corp. today in a live interview in London. BP has “a further containment system to implement this week,” he said, adding that a permanent and hurricane-proof mechanism will be in place by the end of the month. U.S. Coast Guard Admiral Thad Allen said yesterday in a news conference that four vents on the cap remained open, allowing oil to flow through the cap and into the ocean. BP will try to close the vents when pressure is stabilized, Allen said. On June 4, Allen said BP was recovering oil at the rate of about 1,000 barrels a day. BP said yesterday that it collected 6,077 barrels of crude in the 24-hour period of June 4. “They are making adjustments to the systems and making sure they don’t increase the production rate until it’s safe to do so,” Allen said. Improvement Expected After the cap was put in place the night of June 3, gas reached a surface ship at about 11 p.m. local time, and oil was being piped to the ship about 10 minutes later, BP said yesterday on its website. “Improvement in oil collection is expected over the next several days,” the London-based company said yesterday on its website . The system can capture as much as 15,000 barrels a day, and BP will push toward that limit, Allen said. “I’d like to see us capture 90-plus percent of this flow,” Doug Suttles , BP’s chief operating officer for exploration and production, said June 4 on CBS’s “Early Show.” “That’s possible with this design.” The shears used to prepare the well for the cap created a cut that was more jagged than had been hoped for, so there is isn’t a perfect seal between the cap and the well, Allen said. The company won’t know how bad the leakage is until it is capturing more oil, he said. History Lesson “History has taught us here to be cautiously optimistic, not overly optimistic,” Dan Pickering , an analyst at investment bank Tudor Pickering Holt & Co. in Houston, said yesterday. He said capturing 90 percent of the flow would be a “huge home run.” The spill, which has cost BP more than $1 billion, has soiled about 140 miles of shoreline in Louisiana, Alabama and Mississippi, along with some 80 miles in Florida, the Coast Guard said yesterday. Gulf winds are moving the oil now in the water closer to the coasts of Mississippi, Alabama and Florida, Allen said. He said oil in tar balls and patties is affecting areas from western Mississippi to Pensacola, Florida. The well began gushing oil after the Deepwater Horizon rig BP leased from Transocean Ltd. exploded on April 20 and sank two days later, resulting in the deaths of 11 workers. The leak is 40 miles (64 kilometers) off Louisiana’s coast under about 5,000 feet of water. Obama, Hayward President Barack Obama said communities along the Gulf Coast suffering because of the oil spill will be “made whole” with payments from BP and government aid. In his weekly address on the radio and Internet, which was taped June 4 in Grand Isle, Louisiana, Obama said livelihoods that have spanned generations are in danger of being lost. BP’s Hayward told the BBC he hadn’t spoken directly to Obama since the Deepwater Horizon rig exploded. “There is no need for that,” Hayward said. “I have spoken to his key lieutenants.” BP and the Obama administration are working “hand-in-hand” to resolve the spill, Hayward said. The company has paid about half of the 35,000 claims submitted by Gulf residents and companies for income lost because of the spill, Darryl Willis, vice president of resources at BP America, said yesterday on a conference call. BP is awaiting documentation for the other claims, he said. Willis said the company’s claims spending through June may top $84 million. ‘First Call’ Hayward told investors June 4 on a conference call the spill has the “first call” on the company’s funds and financial consequences of the spill will be “severe.” Allen said relief-well operations to stop the leak will involve pumping mud to reduce pressure and placing a cement plug. He said this effort will be the “bottom kill exercise.” Allen said the “worst case” he sees is that a discharge continues until relief wells are completed in August. “In the long term, the threat from this well will not go away until the relief well has been drilled, pressure has been taken off and the well has been plugged,” Allen said. “In the meantime, we need to optimize our containment efforts.” To contact the reporter on this story: Edward Klump in Houston at eklump@bloomberg.net .

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BP Spill Hits Florida, Fouling Beaches, Silencing Hotel Reservation Lines

June 6, 2010

By Mary Jane Credeur and Kim Chipman June 5 (Bloomberg) — More clumps of oil washed up on Florida’s Pensacola Beach overnight, and local officials said hotels and restaurants aren’t getting reservation phone calls as the BP Plc spill hits the state’s tourism industry. About 400 people are working to clean up tar balls that have come ashore, triple the number from yesterday, and an additional 100 are being trained, BP spokeswoman Lucia Bustamante said today at a press briefing in Escambia County in northwest Florida. A large sheen of oil with thick patches of “tar mats” was about 1 mile to 7 miles off the shore from Pensacola Beach, county officials said. Florida officials and tourism industry executives are juggling two missions, working to protect the shore from oil spreading from the April 20 spill in the Gulf of Mexico while assuring tourists that the state’s 825 miles (1,327 kilometers) of beaches remained safe so far. Hotels relaxed cancellation policies for wary guests while updating photos on websites to show beaches that remained pristine. “I’ve talked to hoteliers and it’s not so much that there are cancellations — it’s the reservations line,” Grover Robinson, chairman of the Escambia County Commission, said today at a press briefing. “The phone just isn’t ringing.” 80 Million Tourists Florida draws about 80 million visitors a year, bringing in $60 billion and making tourism the state’s No. 1 industry, according to Kathy Torian, spokeswoman for Florida’s tourism office in Tallahassee. Tourism accounts for almost one-quarter of the state’s sales-tax revenue, she said. Of Florida’s 19 million residents, almost 1 million work in tourism, Torian said. While more and larger tar balls were washing ashore today in some places, including Perdido Key to the west of Pensacola, state and local officials haven’t closed beaches and most oil is being cleaned up within hours, Robinson said. Dozens of leisure boats dotted the water at Pensacola Beach, in the state’s Panhandle, while tourists went parasailing or sunbathed on the white sand. “Yes, we’ve had impact, but it hasn’t been a disaster on the beach,” Robinson said. Pensacola Mayor Mike Wiggins walked this morning along Casino Beach, near a Hilton resort and a restaurant named after Ernest Hemingway , and said he went 100 yards without spotting any tar balls. Size of a Hamburger “Then you might see a few, then none again for a long time,” Wiggins said at the press briefing. The biggest tar balls he saw were about the size of a hamburger, he said. U.S. Representative Jeff Miller , a Republican who represents the Pensacola area, said he flew over the Gulf with the Coast Guard today and saw tar balls mostly at Florida’s border with Alabama. A large sheen of oil was six miles off of Pensacola Beach, and a smaller sheen was close to the shoreline, he said. Would-be tourists “obviously have a lot of questions,” Jennifer Williams, director of sales and marketing for the WaterColor Inn and Resort in Santa Rosa Beach, said in an interview. “For the most part, people are still booking,” she said. “Honestly, we don’t know what’s going to happen.” John Gerseth, 43, a part-time plumber interviewed in Pensacola Beach, said “businesses out here are totally freaking out.” “Tourism is how we make our living,” he said in an interview. “If that’s gone, it’s all over.” Surfer, Boater Gerseth said he grew up in the area, and he and his wife saved money to move back from Las Vegas in 2007. “The reason people come out here and forgo careers is so they can enjoy the beach,” he said. “I’m a surfer, I’m a boater — now that all may be gone.” Escambia County, which includes Pensacola and Pensacola Beach, has committed $3 million for the cleanup so far, Robinson said yesterday. The county is seeking reimbursement from a $25 million state fund provided by BP. Workers are picking up tar balls with shovels and gloves, and the county is making cleanup recommendations to BP where it sees fit, he said. “We have expertise here, we know how to clean up beaches – - we do it 365 days a year,” Robinson said. “There are times when Escambia County has more experience than BP on some of these things.” Scuba Shack Business was already down about 80 percent at Pensacola’s Scuba Shack, the oldest and largest scuba-dive operator in the city, said Eilene Beard, a co-owner of the 29-year-old company. She received an initial payment from BP of $5,000 for lost business, and now has to compile three years of business-tax paperwork and monthly revenue reports to submit in an effort to get additional money. Scuba Shack had just spent more than $20,000 on a new roof for its store, repairs on its 50-foot boat and equipment refurbishing in preparation for peak season, she said. The Scuba Shack’s boat, the Wet Dream, has been chartered by BP for oil observation in the Gulf since May 28 “and we haven’t sent out any divers since,” said Beard, 61, who was born in Pensacola. Fear that oil may be coming has spread beyond the Panhandle beaches. U.S. Representative Kathy Castor , a Democrat from the state, met June 3 with hoteliers, business owners, fishermen and environmentalists in St. Petersburg in west-central Florida. “There’s tremendous anxiety,” Castor said in an interview. To contact the reporters on this story: Kim Chipman in Pensacola Beach, Florida at KChipman@bloomberg.net ; Mary Jane Credeur in Pensacola Beach, Florida at 1322 or mcredeur@bloomberg.net .

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BP Increases Capture Rate From Leaking Gulf Oil Well

June 5, 2010

By Edward Klump June 5 (Bloomberg) — BP Plc increased the amount of oil it is capturing from its leaking oil well in the Gulf of Mexico to thousands of barrels a day as it tries to reduce the damage from the worst oil spill in U.S. history. BP said it collected 6,077 barrels of crude in the 24-hour period ended at midnight last night. The well is estimated by government scientists to be gushing 12,000 to 19,000 barrels into the Gulf every day. Four vents on a “cap” over the well remain open, allowing oil to flow through the cap and into the ocean, U.S. Coast Guard Admiral Thad Allen said today in a news conference. BP will try to close the vents when pressure is stabilized, Allen said. Yesterday, Allen said BP was recovering oil at the rate of about 1,000 barrels a day. “They are making adjustments to the systems and making sure they don’t increase the production rate until it’s safe to do so,” Allen said. After the cap was put in place the night of June 3, gas reached a surface ship at about 11 p.m. local time, and oil was being piped to the ship about 10 minutes later, BP said today. “Improvement in oil collection is expected over the next several days,” the London-based company said today on its website . The system can capture as much as 15,000 barrels a day, and BP will push toward that limit, Allen said. “I’d like to see us capture 90-plus percent of this flow,” Doug Suttles , BP’s chief operating officer for exploration and production, said yesterday on CBS’s “Early Show.” “That’s possible with this design.” Jagged Cut The shears used to prepare the well for the cap created a cut that was more jagged than had been hoped for, so there is isn’t a perfect seal between the cap and the well, Allen said. The company won’t know how bad the leakage is until it is capturing more oil, he said. “History has taught us here to be cautiously optimistic, not overly optimistic,” said Dan Pickering , an analyst at investment bank Tudor Pickering Holt & Co. in Houston. He said capturing 90 percent of the flow would be a “huge home run.” The spill, which has cost BP more than $1 billion, has soiled about 140 miles of shoreline in Louisiana, Alabama and Mississippi, along with some 80 miles in Florida, according to the Coast Guard. Tar Balls, Patties Gulf winds are moving the oil now in the water closer to the coasts of Mississippi, Alabama and Florida, Allen said. He said oil in tar balls and patties is affecting areas from western Mississippi to Pensacola, Florida. The well began gushing oil after the Deepwater Horizon rig BP leased from Transocean Ltd. exploded on April 20 and sank two days later, resulting in the deaths of 11 workers. The leak is 40 miles (64 kilometers) off Louisiana’s coast under about 5,000 feet of water. President Barack Obama said communities along the Gulf Coast suffering because of the oil spill will be “made whole” with payments from BP and government aid. In his weekly address on the radio and Internet, which was taped yesterday in Grand Isle, Louisiana, Obama said livelihoods that have spanned generations are in danger of being lost. More Claims Paid The company has paid about half of the 35,000 claims submitted by Gulf residents and companies for income lost because of the spill, Darryl Willis, vice president of resources at BP America, said today on a conference call. BP is awaiting documentation for the other claims, he said. Willis said the company’s claims spending through June may top $84 million. BP Chief Executive Officer Tony Hayward told investors yesterday on a conference call the spill has the “first call” on the company’s funds and financial consequences of the spill will be “severe.” Allen said relief-well operations to stop the leak will involve pumping mud to reduce pressure and placing a cement plug. He said this effort will be the “bottom kill exercise.” Allen said the “worst case” he sees is that a discharge continues until relief wells are completed in August. “In the long term, the threat from this well will not go away until the relief well has been drilled, pressure has been taken off and the well has been plugged,” Allen said. “In the meantime, we need to optimize our containment efforts.” To contact the reporter on this story: Edward Klump in Houston at eklump@bloomberg.net .

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BP Increases Capture Rate From Leaking Gulf Oil Well, Trying to Get

June 5, 2010

By Edward Klump June 5 (Bloomberg) — BP Plc increased the amount of oil it is capturing from its leaking oil well in the Gulf of Mexico to thousands of barrels a day as it tries to reduce the damage from the worst oil spill in U.S. history. BP said it collected 6,077 barrels of crude in the 24-hour period ended at midnight last night. The well is estimated by government scientists to be gushing 12,000 to 19,000 barrels into the Gulf every day. Four vents on a “cap” over the well remain open, allowing oil to flow through the cap and into the ocean, U.S. Coast Guard Admiral Thad Allen said today in a news conference. BP will try to close the vents when pressure is stabilized, Allen said. Yesterday, Allen said BP was recovering oil at the rate of about 1,000 barrels a day. “They are making adjustments to the systems and making sure they don’t increase the production rate until it’s safe to do so,” Allen said. After the cap was put in place the night of June 3, gas reached a surface ship at about 11 p.m. local time, and oil was being piped to the ship about 10 minutes later, BP said today. “Improvement in oil collection is expected over the next several days,” the London-based company said today on its website . The system can capture as much as 15,000 barrels a day, and BP will push toward that limit, Allen said. “I’d like to see us capture 90-plus percent of this flow,” Doug Suttles , BP’s chief operating officer for exploration and production, said yesterday on CBS’s “Early Show.” “That’s possible with this design.” Jagged Cut The shears used to prepare the well for the cap created a cut that was more jagged than had been hoped for, so there is isn’t a perfect seal between the cap and the well, Allen said. The company won’t know how bad the leakage is until it is capturing more oil, he said. “History has taught us here to be cautiously optimistic, not overly optimistic,” said Dan Pickering , an analyst at investment bank Tudor Pickering Holt & Co. in Houston. He said capturing 90 percent of the flow would be a “huge home run.” The spill, which has cost BP more than $1 billion, has soiled about 140 miles of shoreline in Louisiana, Alabama and Mississippi, along with some 80 miles in Florida, according to the Coast Guard. Tar Balls, Patties Gulf winds are moving the oil now in the water closer to the coasts of Mississippi, Alabama and Florida, Allen said. He said oil in tar balls and patties is affecting areas from western Mississippi to Pensacola, Florida. The well began gushing oil after the Deepwater Horizon rig BP leased from Transocean Ltd. exploded on April 20 and sank two days later, resulting in the deaths of 11 workers. The leak is 40 miles (64 kilometers) off Louisiana’s coast under about 5,000 feet of water. President Barack Obama said communities along the Gulf Coast suffering because of the oil spill will be “made whole” with payments from BP and government aid. In his weekly address on the radio and Internet, which was taped yesterday in Grand Isle, Louisiana, Obama said livelihoods that have spanned generations are in danger of being lost. More Claims Paid The company has paid about half of the 35,000 claims submitted by Gulf residents and companies for income lost because of the spill, Darryl Willis, vice president of resources at BP America, said today on a conference call. BP is awaiting documentation for the other claims, he said. Willis said the company’s claims spending through June may top $84 million. BP Chief Executive Officer Tony Hayward told investors yesterday on a conference call the spill has the “first call” on the company’s funds and financial consequences of the spill will be “severe.” Allen said relief-well operations to stop the leak will involve pumping mud to reduce pressure and placing a cement plug. He said this effort will be the “bottom kill exercise.” Allen said the “worst case” he sees is that a discharge continues until relief wells are completed in August. “In the long term, the threat from this well will not go away until the relief well has been drilled, pressure has been taken off and the well has been plugged,” Allen said. “In the meantime, we need to optimize our containment efforts.” To contact the reporter on this story: Edward Klump in Houston at eklump@bloomberg.net .

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BP Captured 6,000 Barrels of Oil Over 24 Hours With Well Cap, Allen Says

June 5, 2010

By Edward Klump June 5 (Bloomberg) — BP Plc captured about 6,000 barrels of oil from its leaking Gulf of Mexico well over a 24-hour period ending at midnight last night, U.S. Coast Guard Admiral Thad Allen said. The oil was piped to a ship on the surface using a cap the company placed over the leak, Allen said today at a news conference. The system can capture as much as 15,000 barrels a day, and BP will push toward that limit, he said. “The goal is to continue that production and raise it up and hopefully take the pressure off the well and hopefully start to reduce the oil that is coming out through the vents that were intentionally opened to make sure the oil had a place to go while they were increasing production,” Allen said. The well began leaking after the Deepwater Horizon rig exploded on April 20 and sank two days later, resulting in the deaths of 11 workers. Government scientists have estimated the well was leaking 12,000 to 19,000 barrels of oil a day, an amount they said may have increased by 20 percent after BP cut away kinked piping in order to set the cap. Gulf winds are moving the oil now in the water closer to Mississippi, Alabama and Florida, Allen said. He said oil in such forms as tar balls and patties is being seen in western Mississippi and near Pensacola, Florida. To contact the reporter on this story: Edward Klump in Houston at eklump@bloomberg.net .

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Robert L. Cavnar: My Industry — the Oil Industry — Should Be Ashamed of Itself

June 4, 2010

Phoom!

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BP Told U.S. It Could Handle Oil Spill 10 Times Larger Than Gulf Disaster

May 31, 2010

By Alison Fitzgerald May 31 (Bloomberg) — BP Plc said in permit applications for drilling in the Gulf of Mexico that it was prepared to handle an oil spill more than ten times larger than the one now spewing crude into the waters off the southern United States. “Proper execution of the procedures detailed in this manual will help to limit environmental and ecological damage to sensitive areas as well as minimizing loss or damage to BP facilities in the event of a petroleum release,” the company said in its oil-spill response plan , filed with the U.S. Minerals Management Service in 2008. The company listed as its worst-case scenario a blowout in an exploratory well 57 miles west of the disaster, in a valley on the seafloor known as Mississippi Canyon. It’s about 33 miles off the coast of Louisiana. Such a blowout could have spewed 250,000 barrels a day, according to the 582-page plan. The representations show that BP overestimated its ability to control an oil spill in waters where it’s the biggest player in a Gulf energy extraction industry worth $52 billion a year, said Bob Deans, a spokesman with the Natural Resources Defense Council in Washington. “BP has obviously overpromised and underdelivered,” Deans said. “They told us they had a plan that could deal with the consequences of a worst-case scenario. They don’t.” The plan was posted on the Minerals Management Service website and was incorporated by reference into BP’s application with the agency for a permit to drill the Macondo well. The company said in that application that a worst-case blowout from that well could spew at most 162,000 barrels a day. BP’s ‘Plan in Place’ On April 20, a blowout there caused the drilling rig, Deepwater Horizon, to explode and then sink, leaving an open wellhead spewing as much as 19,000 barrels of oil a day into the Gulf waters. The company has failed so far to stop the gusher. “Clearly we do have an oil-spill response plan in place, it was an integral part of our permitting with the MMS and it was specifically agreed with and approved by the MMS,” BP spokesman David Nicholas said in an e-mailed statement. “It sets out the actions, considerations, plans and steps that will be used in the case of an oil spill, and it is this plan that has been in action in response.” Officials with the Minerals Management Service didn’t respond to e-mails and calls seeking comment about the oil-spill clean-up plan. BP fell 5 percent to 494.8 pence in London trading on May 28 and has lost 25 percent of its market value since the blast. Dispersants, Skimming BP’s plan says it has contracts with the Marine Spill Response Corp. of Herndon, Virginia, and the National Response Corp. of Great River, New York, to contain and clean up any spills through the use of dispersant chemicals sprayed from airplanes and skimming vessels that would suck up oil-filled water. The company would also use containment booms to control the spread of oil in the Gulf and work with local environmental groups to clean affected wildlife, according to the plan. The House Energy and Commerce Committee, investigating the Gulf of Mexico oil spill, is seeking documents from the clean-up consultants. Chairman Henry Waxman , a California Democrat, and oversight subcommittee Chairman Bart Stupak , a Michigan Democrat, sent letters on May 28 to National Response, a unit of Seacor Holdings Inc., Marine Spill Response, and O’Brien’s Response Management Inc. of Spring, Texas. Waxman’s committee has reviewed 105,000 documents provided by companies connected with the rig. BP’s plan says that those companies have enough oil- skimming vessels to remove about 492,000 barrels of oil a day from the water. The companies have the capacity to store 299,000 barrels a day, according to the plan. 91 Vessels BP spokesman John Curry said yesterday that so far, the company, through its contractors, has deployed 91 skimming vessels that have picked up a total of 312,952 barrels of oily water mixture from the spill that has gushed for almost six weeks. “That’s not all oil, it’s oily water,” he said. He said the company had spread more than 3 million feet of containment boom, a floating plastic barrier designed to contain the spread of oil and direct it to skimming vessels. The boom was enough to cover about 350 miles of coastline, he said. BP’s plan foresaw the possibility of a prolonged spill. “If the spill went unabated, shoreline impact would depend upon existing environmental conditions,” according to the plan. Plaquemines Parish The chance of oil reaching the shoreline within 30 days was estimated at 3 percent or less for most coastal areas, except Louisiana’s Plaquemines Parish, which the company said had a 21 percent chance of seeing oil onshore within 30 days. Louisiana Governor Bobby Jindal said on May 19 that oil was washing ashore in the Plaquemines wetlands. BP said yesterday that a plan to stop the leak through a strategy of pumping in heavy mud and debris, known as “top kill,” failed. The company now plans to place a cap over the well. The spill has cost BP a total of $760 million, or about $22 million a day, the company said May 24. BP’s average daily profit last year was $45 million a day, according to data compiled by Bloomberg . To contact the reporter on this story: Alison Fitzgerald in Washington at afitzgerald2@bloomberg.net .

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BP Reverts to Attempting to Contain Oil Spill After Plugging Effort Fails

May 30, 2010

By Jim Polson and David Wethe May 30 (Bloomberg) — BP Plc began outlining its plan to contain oil leaking from its Gulf of Mexico oil well after the company and U.S. government officials abandoned a three-day effort to plug the hole. In a two-step process, underwater robots will shear away sections of damaged pipe, according to a BP illustration posted today on the spill command’s web site. That should permit BP to install a “snug seal” to a new pipe that would carry “a great majority of the oil” to a drill ship on the surface, Doug Suttles , the BP executive in charge of the spill response, said yesterday in a press conference. The job will take four to seven days, he said. Failure to plug the well from the top, a method dubbed “top kill,” means “the real solution is a relief well,” Mary Landry , the government’s on-scene spill coordinator, said yesterday. Drilling a relief well to intersect the damaged well near the bottom of the hole will give BP better control over the pressurized flow of oil and gas, allowing it to inject drilling mud and cement to plug the flow. BP’s “best forecast” for finishing the first of two relief wells it has begun drilling is early August, Suttles said. Meantime, curbing the amount of oil spilled will reduce pollution, he said. The undersea gusher already is estimated to be the biggest oil spill in U.S. history, and more than twice as big as the Exxon Valdez disaster in 1989. Cutting off the damaged pipe may result in a “small increase” in flow from the well, BP Managing Director Robert Dudley said today on CNN’s “State of the Union.” “We would not expect to see a large increase, if any, by cutting this off and making a clean surface.” Dudley’s statement contradicted the assessment of White House energy adviser Carol Browner, who said today on CBS’s “Face the Nation” that the operation could increase the leak by as much as 20 percent for as long as a week. “What our experts are saying is that when you cut the riser, the kink may be holding some of the oil in, and so we could see an increase,” Browner said. “Our experts are saying as much as 20 percent.” BP has no choice but to continue trying to stop the spill, even if it risks increasing the flow, Jason Kenney , an Edinburg- based analyst ING Commercial Banking, said today in an interview. “This is war,” Kenney said. “As in all wars, it very rarely goes smooth. This has never been done before at this water depth. Ultimately, containment and all the rest of it will be options that have to be used in future deep water drilling. It has to be more secure.” BP hasn’t abandoned trying to stop the leak completely before August, spokesman David Nicholas said today in an interview. “We got a huge amount of data out of the top kill and we will be analyzing that to inform our future options,” Nicholas said. Alternatives include installing a second piece of equipment on top of the well at the seabed with valves that could shut off the pipe. If those are successful, it may still be a month before the flow is stopped, Les Ply, a retired mud engineering consultant for the oil industry, said in a telephone interview yesterday. “I think we’re looking at a week to 10 days to get this riser and cap in place.” BP had diverted 22,000 barrels of oil to the drill ship through a smaller pipe before top kill failed to stop the gusher with jets of mud. That earlier recovery “gives us confidence” more oil can be routed to the ship, Suttles said. He wouldn’t quantify how much they might capture, or the odds of success the so-called lower marine riser package cap will work as intended. Kenney, the ING analyst, revised his estimate today of how much the spill will cost BP to $22 billion, should the spill persist to August, compared with $5.3 billion if top kill had succeeded. Nevertheless, he reiterated a “buy” rating on the stock and doesn’t own the shares. “BP can digest whatever cost this is going to take,” Kenney said today in an interview. Energy Secretary Steven Chu and Interior Secretary Ken Salazar agreed to allow BP to revert to a containment strategy. After BP’s first containment effort, a 100-ton steel box, failed, it devised a smaller alternative called “top hat” and another device that was eventually used, a small pipe inserted in the broken pipe leaking oil. “Every day that this leak continues is an assault on the people of the Gulf Coast region, their livelihoods, and the natural bounty that belongs to all of us,” President Barack Obama said in a statement yesterday after the top kill effort failed. “It is as enraging as it is heartbreaking.” To contact the reporter on this story: David Wethe in Houston at dwethe@bloomberg.net ; Jim Polson in New York at jpolson@bloomberg.net .

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Obama Says BP Oil Spill Represents an `Assault’ on U.S. Gulf Coast Region

May 28, 2010

By John McCormick May 29 (Bloomberg) — President Barack Obama called the oil spill from a damaged BP Plc well in the Gulf of Mexico an “assault” on the region and its residents and vowed to keep it a top priority until the damage is cleaned up. “This isn’t just a mess that we’ve got to mop up; people are watching their livelihoods wash up on the beach,” Obama said yesterday at a U.S. Coast Guard station in Grand Isle, Louisiana, a barrier island south of New Orleans where he was briefed on efforts to plug the leak. “This is our highest priority.” The president said his administration is exploring “any and all reasonable contingency plans” should BP fail in its latest attempt to stop the spill, which may be the largest on record and more than twice as big as the Exxon Valdez disaster in 1989. Obama returned to the Gulf Coast for the second time this month as he sought to blunt criticism of his administration’s response to the spill. The president said there are no “silver bullets” to stop the leak and mitigate the damage. “This is a man-made catastrophe that’s still evolving,” he said. Not every decision “is going to be right the first time out,” and Obama said he expects there will continue to be frustration and anger until the situation is resolved. Responsibility “The buck stops with me,” he said, reiterating a point he made at a White House news conference on May 27. “I ultimately take responsibility for solving this crisis.” In remarks directed at residents of the Gulf Coast, Obama said, “You will not be abandoned, you will not be left behind.” The spill threatens the region’s fishing and tourism industries. As Obama’s appearance was shown on the flat-screen TV in the office of Dean Blanchard Seafood Inc. in Grand Isle, Dean Blanchard said he may shut down after losing $5 million worth of sales over the past month. “I think he’s a liar,” Blanchard said. “He said he promised he wouldn’t interrupt my cash flow.” The 51-year-old Louisiana native said he is trying to sell what he can and is considering moving to Costa Rica, where there is a strong fishing market. “I’m out of business,” he said. Vickie Lemoine, who lives along the main road through town, said Obama needs to do more. “I don’t think he’s been tough enough on BP,” said Lemoine, whose 17-year-old daughter, Hanna, posted hand-painted signs in their front yard that read, “BP we want our beach back” and “shame on you BP.” Keeping Attention Chris Camardelle, 50, a commercial fisherman, said he was hoping to hear the president say that the oil leak has been stopped. Though that didn’t happen, Camardelle said he doesn’t want Obama’s departure to cause attention to fade from his hometown. “I hope in six months they still know that we’re still Grand Isle down here,” he said. While in town, the president met with Coast Guard Admiral Thad Allen , who is overseeing the spill response, and regional leaders including Governors Bobby Jindal of Louisiana, Charlie Crist of Florida and Bob Riley of Alabama. He got a briefing on the latest attempts to plug the well and limit environmental damage. BP yesterday was adding golf balls and scraps to the drilling mud it’s pumping into the well to choke off the oil ‘Full Force’ “Our response will continue with its full force regardless of the outcome of the ‘top kill’ approach,” Obama said. Allen will “get whatever he needs to deal with this crisis.” The gushing well has taken center stage in Obama’s presidency, even as he tries to push for an overhaul of the nation’s financial regulations, monitor tensions on the Korean Peninsula and address 9.9 percent unemployment . Republicans have been critical of the administration’s response, seeking to draw parallels to the botched government reaction to devastation from Hurricane Katrina in the Gulf in 2005. The issue dogged then-President George W. Bush , a Republican. Obama said May 27 he’s “confident that people are going to look back and say that this administration was on top of what was an unprecedented crisis.” Obama got a first-hand look at some of the damage from the spill yesterday when he toured the beach in Port Fourchon, Louisiana, which was speckled with tar balls. Viewing the Beach Wearing boots and a casual shirt, Obama bent down several times to touch the sand as Allen explained clean-up efforts. Obama said he spotted some dolphins off the shore. “Obviously there’s precious wildlife in this area even though you see a whole bunch of oil rigs in the background,” he said. Before the president arrived in Louisiana, environmental activists called for a full federal takeover of the spill response and for more resources to be put into it. “What we have found on the ground is that BP is having too much say in what’s happening on the water,” said Aaron Viles, campaign director for the New Orleans-based Gulf Restoration Network . “They are fighting a forest fire with an eye dropper right now.” To contact the reporter on this story: John McCormick in Grand Isle, Louisiana, at jmccormick16@bloomberg.net ;

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President Says Oil Spill Is Top Priority as Livelihoods `Wash Up on Beach’

May 28, 2010

By John McCormick May 28 (Bloomberg) — President Barack Obama said oil spilling from a damaged BP Plc well in the Gulf of Mexico is an “assault on our shores” and said the government’s focus remains plugging the leak and cleaning up environmental damage. “This isn’t just a mess that we’ve got to mop up; people are watching their livelihoods wash up on the beach,” Obama said at a U.S. Coast Guard station in Grand Isle, Louisiana, a barrier island south of New Orleans. “This is our highest priority.” The government response won’t let up even if BP is successful in its latest effort to stop the oil flow, he said. If the so-called top kill technique doesn’t work, the U.S. will continue exploring “any and all” options. The president returned to the Gulf Coast for the second time this month as he sought to blunt criticism of his administration’s response to the spill. The president said there are no “silver bullets” to stop the leak and mitigate the damage. “This is a man-made catastrophe that’s still evolving,” he said. Not every decision “is going to be right the first time out” and Obama said he expects there will continue to be frustration among residents of the coast. Vow to Stay “You will not be abandoned, you will not be left behind,” Obama said in remarks directed at people in the region. He was joined by Governors Bobby Jindal of Louisiana, Charlie Crist of Florida and Bob Riley of Alabama. The gushing well has taken center stage in Obama’s presidency, even as he tries to push for an overhaul of the nation’s financial regulations, monitor tensions on the Korean Peninsula and address 9.9 percent unemployment . The president met with Coast Guard Admiral Thad Allen , who is overseeing the spill response, and state officials for a briefing on the latest attempts to plug the well and limit environmental damage. BP today was adding golf balls and scraps to the drilling mud it’s pumping into the well to choke off the oil, which threatens the region’s fishing and tourism industries. “Our response will continue with its full force regardless of the outcome of the ‘top kill’ approach,” Obama said. Tour of Beach Obama got a first-hand look at some of the damage from the spill earlier, touring a beach in Port Fourchon, Louisiana, speckled with tar balls formed in the spreading crude oil. Wearing boots and a casual shirt, Obama bent down several times to touch the sand as Allen explained clean-up efforts. Obama said “precious wildlife” makes the area home, “even though you see a whole bunch of oil rigs in the background.” Before the president arrived in Louisiana, environmental activists called for a “military response” to the spill. “What we have found on the ground is that BP is having too much say in what’s happening on the water,” said Aaron Viles, campaign director for the New Orleans-based Gulf Restoration Network . “We need to see a federalized response. There’s just not enough boats and boom on the water.” The floating boom is used to control the spread of the oil spill and protect coastline. “There was clearly no ‘Plan B,’” Viles said. “They are fighting a forest fire with an eye dropper right now.” To contact the reporter on this story: John McCormick in Grand Isle, Louisiana, at jmccormick16@bloomberg.net ;

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Obama Says Oil Spill Is U.S.’s Priority as Livelihoods `Wash Up on Beach’

May 28, 2010

By John McCormick May 28 (Bloomberg) — President Barack Obama said oil spilling from a damaged BP Plc well in the Gulf of Mexico is an “assault on our shores” and said the government’s focus remains plugging the leak and cleaning up environmental damage. “This isn’t just a mess that we’ve got to mop up; people are watching their livelihoods wash up on the beach,” Obama said at a U.S. Coast Guard station in Grand Isle, Louisiana, a barrier island south of New Orleans. “This is our highest priority.” The government response won’t let up even if BP is successful in its latest effort to stop the oil flow, he said. If the so-called top kill technique doesn’t work, the U.S. will continue exploring “any and all” options. The president returned to the Gulf Coast for the second time this month as he sought to blunt criticism of his administration’s response to the spill. The president said there are no “silver bullets” to stop the leak and mitigate the damage. “This is a man-made catastrophe that’s still evolving,” he said. Not every decision “is going to be right the first time out” and Obama said he expects there will continue to be frustration among residents of the coast. Vow to Stay “You will not be abandoned, you will not be left behind,” Obama said in remarks directed at people in the region. He was joined by Governors Bobby Jindal of Louisiana, Charlie Crist of Florida and Bob Riley of Alabama. The gushing well has taken center stage in Obama’s presidency, even as he tries to push for an overhaul of the nation’s financial regulations, monitor tensions on the Korean Peninsula and address 9.9 percent unemployment . The president met with Coast Guard Admiral Thad Allen , who is overseeing the spill response, and state officials for a briefing on the latest attempts to plug the well and limit environmental damage. BP today was adding golf balls and scraps to the drilling mud it’s pumping into the well to choke off the oil, which threatens the region’s fishing and tourism industries. “Our response will continue with its full force regardless of the outcome of the ‘top kill’ approach,” Obama said. Tour of Beach Obama got a first-hand look at some of the damage from the spill earlier, touring a beach in Port Fourchon, Louisiana, speckled with tar balls formed in the spreading crude oil. Wearing boots and a casual shirt, Obama bent down several times to touch the sand as Allen explained clean-up efforts. Obama said “precious wildlife” makes the area home, “even though you see a whole bunch of oil rigs in the background.” Before the president arrived in Louisiana, environmental activists called for a “military response” to the spill. “What we have found on the ground is that BP is having too much say in what’s happening on the water,” said Aaron Viles, campaign director for the New Orleans-based Gulf Restoration Network . “We need to see a federalized response. There’s just not enough boats and boom on the water.” The floating boom is used to control the spread of the oil spill and protect coastline. “There was clearly no ‘Plan B,’” Viles said. “They are fighting a forest fire with an eye dropper right now.” To contact the reporter on this story: John McCormick in Grand Isle, Louisiana, at jmccormick16@bloomberg.net ;

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Miles Mogulescu: Is Paul Volcker Barack Obama’s Potted Plant?

May 28, 2010

Whenever Barack Obama wants to establish some street cred (that’s wall street cred) on economics, he trots out Paul Volcker for a photo op. But when it comes to actually implementing Volcker’s financial policy proposals — particularly his common sense proposal to restore the separation between federally insured commercial banks and investment banks/hedge funds which make risky bets in the global financial casino, while keeping the profits when they win and being bailed out by the government when they lose — the Obama administration has either been undermining or bizarrely ineffectual. Standing 6’7″ tall and looking like a banker straight out of central casting, Volcker makes a terrific prop. Volcker is no one’s idea of a progressive. When he was Chairman of the Federal Reserve, he may have done more than any one on earth other than the Ayatollah Khomeini to cause the defeat of Jimmy Carter and the election of Ronald Reagan by jacking up short-term interest rates to nearly 20% and causing unemployment to temporarily skyrocket above 10% in order to ring inflation out of the economy. Obama and his advisors worked hard to gain Volcker’s backing for his Presidential campaign, and when they succeeded fairly early on in January, 2008, Volcker brought instant credibility to President Barack Obama’s 2008 presidential campaign. His weighty experience helped dispel the notion that Obama lacked the economic credentials to become chief executive during the worst economic crisis since the Great Depression…In a pivotal moment in the final 2008 presidential debate, Sen. John McCain questioned the associates of the junior senator from Illinois, a persistent campaign them. ‘Let me tell you who I associate with,’ Obama told McCain. ‘On economic policy, I associate with Warren Buffet and former Fed Chairman Paul Volcker…who have shaped my ideas on who will be surrounding me in the White House.’ As the Wall Street Journal put it 3 weeks before the election, Mr. Volcker delivers gravitas and credibility to Sen. Obama…’Volcker whispering in Obama’s ear will make even Republicans comfortable, because he’s a hero of the right and a supporter of a strong dollar,’ says John Tamny, a supply-side economist and Republican. In the crucial week of September 24, 2008 when markets seized up and John McCain pulled the self-destructive stunt of “suspending” his campaign to supposedly deal with the crisis, Obama called a meeting of his economic advisors. He conspicuously seated Volcker next to him for a photograph by the media entourage. This may have been the turning point of the campaign, cementing Obama’s image as cool under crisis and backed by an economic team capable of handling the situation. Volcker’s presence was key to this and may have been instrumental in making Obama President. During the campaign, Volcker was on speed dial on Obama’s cell phone and his staff routinely reviewed policy proposals and speeches with Volcker. But when it came time to govern, as Newsweek ‘s Jonathan Alter points out , “Volcker was frozen out of the Obama administration.” (Also frozen out were other more liberal economic advisors to Obama’s campaign like Nobel Laureate Joseph Stiglitz and former Clinton Secretary of Labor Robert Reich.) “After hearing from Obama often during the campaign, Volcker’s phone stopped ringing. He wryly told friends he has nothing more than a ‘wax figure’ for the White House.” As Volcker told another reporter, “I’m just a photo op.” The Washington Post reported , For much of last year, Paul Volcker wandered the country arguing for tougher restraints on big banks while the Obama administration pursued a more moderate regulatory agenda driven by Treasury Secretary Timothy F. Geithner…Volcker had been arguing that banks, which are sheltered by the government because lending is important to the economy, should be prevented from taking advantage of that safety net to make speculative investments. In an unusual left-right alliance, in December, 2009 Republican John McCain and Democrat Maria Cantwell introduced a bill that would implement some of Volcker’s ideas by reinstating many of the provisions of the 1933 Glass-Steagal act that separated federally insured commercial banks from investment banks and hedge funds, but was repealed under Bill Clinton with strong backing from Larry Suumers. The While House opposed the bill and prevented the House version from getting an up or down vote. Similarly, when the bill was attached as an Amendment to the Senate Financial Reform bill, the White House worked with Harry Reid and Chris Dodd to prevent it from getting a floor vote in the Senate. Then in January Republican Scott Brown won Ted Kennedy’s old Senate seat and the White House went into a political panic. Two days later, President Obama pulled Volcker off the shelf and positioned Volcker at his side for a White House announcement that Obama was now determined to include what Obama called “The Volcker Rule” in the financial reform bill. Referring to the megabanks who engaged in proprietary trading for their own account, Obama boldly proclaimed, “If these folks want a fight, it’s a fight I’m ready to have.” In March, the White House proposed specific legislative language to implement the Volcker rule. The proposal specifically prohibits a bank or institution that owns a bank from engaging in proprietary trading that isn’t at the behest of clients, and from owning or investing in a hedge fund or private equity fund, as well as limiting the liabilities that the largest banks could hold. But despite the fanfare, the Obama administration has been bizarrely ineffectual getting the Volcker rule into the financial reform legislation. As prominent financial blogger Yves Smith observed , The Volcker rule is following the tried and true path of all Obama ‘reforms’, meaning an idea announced with great fanfare is being whittled back to meaninglessness. Despite Obama’s promise that he was ready for a fight, he didn’t even manage to convince Democratic Senate Banking Chairman Chris Dodd to include the Volcker rule in the Democratic financial reform bill voted on by the Senate. Instead, the bill calls for regulators to spend the next two years “studying” how proprietary trading by federally insured banks should be handled, a sure death knell for any action. When Democratic Senators Carl Levin and Jeff Merkley, with numerous Senate supporters, brought up an Amendment to the Senate version of the financial reform bill to implement the Obama administration’s proposals on the Volcker rule, the Democratic leadership under Harry Reid and Chris Dodd could not even find a way to allow it be voted on during the period amendments were being considered. Some fight. Does anyone really think that if the President really wanted the Volcker rules included in the financial reform bill, he couldn’t have twisted arms to have Chris Dodd include it in the original Senate bill, or to have Dodd and Harry Reid bring the Merkley-Levin Amendment up for a vote? Or was the whole thing just a charade? The final opportunity for including the Volcker Rule in the final financial reform bill now moves to the Senate-House conference committee. On Thursday, Treasury Secretary Tim Geithner’s chief Treasury Department deputy Neal Wolin gave a speech proclaiming that in the conference committee, the Obama administration Will work hard to include the so-called ‘Volcker Rule’ provision, which would protect taxpayers and depositors by separating ‘proprietary trading’ from the business of banking–and in addition, would limit the size of financial firms by preventing acquisitions that would result in a concentration of more than ten percent of the liabilities in the financial system.” If Obama couldn’t manage to get the Volcker rules into the original Dodd bill or get Reid and Dodd to bring them up for a timely vote on an Amendment, it’s hard to see how they’ll manage to revive them in conference, particularly under intense lobbying from the banks to further water down the bill. But hope springs eternal and we will see in next week or two. The 81-year old Volcker told the Senate Finance Committee that that if speculative activities by commercial banks are allowed to continue at the present pace, ” II may not live long enough to see the [next[ crisis, but my soul is going to come back and haunt you.” I If after all the fanfare, photo ops, and promises to fight, the Obama administration shamefully doesn’t manage to get the Volcker rules into an already weak financial reform bill, I hope Volcker doesn’t wait until the next life to speak out. He should publicly resign in protest as Chair of the powerless President’s Economic Recovery Advisory Board to which Obama appointed him in January, 2009. He should refuse to ever again allow Obama to use him as a “wax figure”, a “photo op” or a potted plant.

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China IPOs Post World’s Biggest Gains of 2010 as Stocks Suffer Bear Market

May 27, 2010

By Michael Tsang and Inyoung Hwang May 28 (Bloomberg) — China has the world’s worst performing equity market this year and the best returns on initial public offerings. While the Shanghai Composite Index has slid 19 percent for the steepest drop among the 10 largest stock markets, IPOs are beating the country’s benchmark equity indexes by 33 percentage points on average in their first month of trading, data compiled by Bloomberg show. Chinese individuals restricted from international investments have helped snap up $25 billion in IPOs this year, three times more than were sold in the U.S., as inflation erodes savings and the government clamps down on property speculation. The rally by newly listed companies has made their shares almost twice as expensive relative to profits as the broader stock market , a sign to firms from KBC-Goldstate Fund Management to hedge fund Platinum Partners that a bubble may be forming. “Most of the China IPOs are overvalued,” said Larry Wan , Shanghai-based deputy chief investment officer at KBC-Goldstate, which oversees about $583 million. “It’s difficult to believe they are going to be able to deliver the sort of exponential growth that the valuations imply.” The fastest expansion among the 20 biggest economies has helped spur the surge in China’s IPO market. The country’s gross domestic product grew 11.9 percent in the first quarter, the most in almost three years and about four times the U.S. GDP. World’s Biggest IPO The amount raised from Chinese IPOs may double after the sale by Beijing-based Agricultural Bank of China Ltd. The nation’s third-largest lender by assets will seek at least $30 billion in Shanghai and Hong Kong, according to the Beijing Times. That would be the world’s biggest initial offering, exceeding the $22 billion deal by Industrial & Commercial Bank of China Ltd. of Beijing in 2006. Chinese IPOs have advanced 32 percent on average in their first month of trading, while the Shanghai Composite Index and the Shenzhen composite declined, Bloomberg data show. The rally by newly listed companies has been primarily fueled by individual investors, even as concern that Europe’s debt crisis will hamper the global economic rebound spurred a selloff in equities around the world, according to Andy Xie , an independent economist in Shanghai. “Chinese investors have this traditional belief that you can’t lose money buying new stocks,” said Xie, formerly Morgan Stanley’s chief economist for the Asia-Pacific region. “This is not sustainable. China’s economy has big bubbles, so does the IPO market. Investors can’t be fooled forever.” Inflation, Property Market Local investors who have a total of 146 million brokerage accounts are seeing their investment choices outside of equities limited by inflation that’s eroding China’s $7.2 trillion of savings and government curbs on mortgage loans. Consumer prices climbed 2.8 percent last month, surpassing the one-year savings rate of 2.25 percent. The pace of inflation is forecast to rise 3.4 percent this year, the median estimate of 18 economists surveyed by Bloomberg shows. Citigroup Inc. of New York and Paris-based BNP Paribas SA project that home prices will drop 20 percent this year, after Chinese policy makers increased bank reserve requirements three times in the past three months to slow lending. Property prices surged the most on record in April, according to the National Development and Reform Commission. “Chinese investors can’t allocate their money off-shore,” said Lei Wang , who helps oversee $20.2 billion at the Santa Fe, New Mexico-based Thornburg International Value Fund . “Most of the money is locked up at the home market, so for some of those investors, IPOs are a good short-term profitable trade.” Relative Value Gains by Chinese IPOs have pushed valuations to an average 46 times estimated profits, Bloomberg data show. That’s almost three times as much as companies traded in Shanghai , valued at 16 times earnings, and about double the ratio for Shenzhen-listed stocks. Chongqing Water Group Co. is valued at 35.1 times its estimated profit after a 59 percent advance in its first month of trading. That’s more than double the average price-earnings ratio for companies in the Shanghai gauge, which fell 5.2 percent over the same period. The $511 million IPO in March gave the supplier of water to the southwestern municipality of Chongqing a market capitalization of $4.9 billion. ‘Rocket Shots’ Investors in East Money Information Co. , the Shanghai-based provider of online financial information, paid 56 times the company’s estimated profits in its IPO, or 117 percent more than the average company in the Shenzhen measure of equities, Bloomberg data show. The company gained 93 percent in its first month of trading, helping to push its valuation to 92 times earnings, or more than three times the broader market. The Shenzhen index rose 4.9 percent in the same span. “A lot of the ones trading were really rocket shots,” said Uri Landesman , president of New York-based hedge fund Platinum Partners, which oversees more than $500 million. “It definitely does look like there could be bubble-like tendencies in the Chinese IPO market.” To contact the reporters on this story: Michael Tsang in New York at mtsang1@bloomberg.net ; Inyoung Hwang in New York at ihwang7@bloomberg.net .

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Obama to Revamp Drilling Rules as Demands Grow to Take On BP After Spill

May 26, 2010

By Nicholas Johnston and Kim Chipman May 26 (Bloomberg) — President Barack Obama will announce new safety measures for offshore drilling tomorrow, as calls increase for him to exert more control over BP Plc ’s efforts to stop its oil spill in the Gulf of Mexico and repair the damage. After receiving an initial report on the cause of the April 20 explosion at a BP well, Obama will respond with new permitting procedures for oil exploration and tougher inspections to ensure safety and environmental rules are being followed, according to an administration official who asked not to be identified before the announcement. “We have to revisit how these oil companies are operating and make sure that they’re operating in a safe and effective way,” Obama said last night at a Democratic Party fundraiser in San Francisco. Obama will travel to Louisiana on May 28 to assess the response to the spill that has reached Louisiana’s shores and threatens Florida and the East Coast, White House press secretary Robert Gibbs said yesterday. What’s been missing is a sense that Obama has taken charge, according to presidential historian Douglas Brinkley . “Obama has yet to have his ‘bullhorn moment’ on the Gulf catastrophe,” said Brinkley, a professor at Rice University in Houston, invoking the image of President George W. Bush speaking to New York firefighters after the Sept. 11 attacks. Oil in Marshlands “The more the images of oil in marshlands, and dead birds washing ashore, the angrier the American people are going to get,” Brinkley said in an interview yesterday. “Largely, it’s been directed toward BP. But as the weeks turn into months you can feel, almost on a daily basis, the public’s furor start heading toward the White House.” A poll released yesterday by the Pew Research Center for the People and the Press found a public critical of the administration as well as BP. It said 26 percent of those polled rated the administration’s response poor and 31 percent called it “only fair.” The poll said 31 percent gave the administration an “excellent” or “good” grade. “It’s inexplicable,” Louisiana native James Carville , a Democratic consultant who moved to New Orleans after Hurricane Katrina in 2005, said yesterday in an interview. “Why do we still not know how much oil has been pumped out? Why did it take us over 30 days to get the pictures? Who’s running this show?” To plug the leak, BP has begun diagnostic tests to pave the way for a crucial and risky operation that may be its last chance to plug the leak before August. The so called “top kill” will be the most complex effort yet to stop the monthlong leak before relief wells can plug the leak from the bottom. Chu’s Scientists Aboard Air Force One to California yesterday, Obama spoke with Energy Secretary Steven Chu for a briefing on the procedure and what steps might be taken if the attempt fails. Chu, who won the Nobel Prize for physics, and a team of scientists are in Houston helping BP evaluate diagnostic tests for attempts to plug the leak as well as developing backup plans in case the top kill fails, according to a White House statement. Top kill involves injecting heavy drilling fluid and cement into the well to stop the flow of oil and gas. If it doesn’t work, the company will consider replacing the damaged riser pipe at the well, an option that will be available by the end of May, the company said in a statement. The administration says it’s taking a tough line toward BP and won’t rest until the well is capped and the mess cleaned up. Obama has ordered a bipartisan commission to investigate the spill and take steps to ensure a similar disaster won’t happen again. Largest Response “This is the largest incident response to an oil spill ever in the history of the United States,” Homeland Security Secretary Janet Napolitano told reporters at a news conference in Louisiana May 24. “We have over 22,000 personnel working on this spill; literally hundreds of thousands of feet of boom have been laid. There are over 1,000 vessels that are on the water.” Administration officials have emphasized both that they are pressing BP to perform and that they are depending on the company because only it has the equipment, expertise and legal responsibility to stop the leak and repair the damage. Interior Secretary Ken Salazar has said that the administration intends to “keep the boot on the neck of British Petroleum” and that he would “push them out” if company workers didn’t perform effectively. Thad Allen , the Coast Guard admiral who is coordinating the federal response, contradicted that, saying that pushing BP aside isn’t practical. ‘Following BP’s Lead’ “To push BP out of the way would raise a question: to replace them with what?” Allen said at a White House briefing on May 24. BP is “exhausting every technical means possible” to deal with the leak, he said. The dependence on BP has raised the ire of Democrats such as Donna Brazile , a political consultant and commentator. “The Obama administration is following BP’s lead and not pressing them harder on contingency plans that should have already been in place,” she said in an interview. “It’s past time the Obama administration put all hands on deck in helping BP cut off the massive oil spill, contain what is gushing to our shoreline, clean up the mess and compensate those impacted immediately.” Brazile, who is from New Orleans and was Democrat Al Gore ’s campaign manager in the 2000 presidential race, said the commission examining the spill also should look at “how the administration handled this catastrophe.” ‘Disjointed Effort’ Louisiana’s Republican Governor Bobby Jindal , standing alongside Salazar and Napolitano at the May 24 press conference, described the federal government’s response as a “disjointed effort” providing “too little, too late to stop the oil from hitting our coast.” So far, Obama has relied largely on surrogates, such as Allen, Salazar and Environmental Protection Agency Administrator Lisa Jackson . “It’s unclear who’s in charge, there are six agencies holding press conferences every day,” Walter Isaacson , an author and president of the Aspen Institute, a nonpartisan public policy group in Washington, said in an interview. Charlie Cook , a Washington-based political analyst, said it’s “hard to imagine any president” emerging from such a disaster unscathed. “It’s more a question of how bad they are going to look, how much damage will be done, and whether they handle it competently,” Cook said. The White House probably will need to recalibrate its response, Brinkley said. “If the well is not capped this week, the president has to get into a new kind of leadership zone, because we’re looking at maybe two to three months of that oil gushing out,” Brinkley said. “A truly national catastrophe and not an industrial accident.” To contact the reporters on this story: Nicholas Johnston in Washington at njohnston3@bloomberg.net ; Kim Chipman in Washington at kchipman@bloomberg.net .

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Wenonah Hauter: Why Obama Must Shut Down BP Atlantis

May 25, 2010

Many details surrounding the spill in the Gulf remain a mystery. We don’t yet know how much oil is freely gushing through the ocean floor; the extent of the damage to affected wildlife; or how long fishermen and other communities dependent on the Gulf will suffer. But there is one thing we do know: Unless President Obama intervenes now, it could happen again on another BP deep-sea oil platform called Atlantis. BP’s Atlantis platform became active in October 2007. Located over 150 miles off the coast of Louisiana in “Hurricane Alley” at a water depth of more than 7,000 feet, Atlantis is one of the deepest moored semi-submersible oil and gas platforms in the world and it poses a serious, immediate and potentially irreparable threat to the Gulf of Mexico’s marine environment, oil workers and communities. In June 2009, a BP whistleblower named Kenneth Abbott informed Food & Water Watch that BP was operating the massive Atlantis platform without proper up-to-date and engineer-approved safety documentation. We began writing and calling the Minerals Management Service (MMS) to urge them to take action. It took the agency six months to agree to meet with us. 10 days after the Horizon spill on April 20, MMS responded to our most recent information request, but it appears that the agency has done nothing and it plans to continue doing nothing. It is clear that the cozy relationship between BP and MMS is resulting in irresponsible and dangerous practices. Food & Water Watch filed a lawsuit last Monday against the Department of the Interior (DOI) because it has failed to enforce its own safety regulations regarding oil drilling in the Gulf. The Deepwater Horizon explosion was not a freak accident, but a result of a history of negligent behavior, and Atlantis is no small threat: An internal BP email characterized the situation as having the potential for “catastrophic Operator errors.” A worst-case scenario spill from Atlantis would be many times larger than the spill from the Horizon explosion. President Obama must take immediate action to shut down BP Atlantis until it can be proven safe. We have announced our Spill the Truth Campaign, which includes a TV ad that will air soon in the Gulf region. It’s not enough that Chris Oynes, the head of MMS’s oil and gas drilling program, announced his departure. And, while the President’s move to split the MMS into three new agencies with oversight on leases, environmental protection, and revenue collection, respectively is a small step in the right direction, it is insufficient to address the lack of regulatory oversight of the industry. There are more than 100 industry standards that are currently incorporated into MMS regulations. The DOI must institute a review process of the regulations for permitting oil drilling and, based on a public rulemaking process, make them more stringent and binding. Safety and environmental programs should be mandatory for all platforms and subject to strict oversight. Verification of platform design and construction should be done by the agency, not paid verification agents. All engineer approved mandated drawings should be submitted to MMS, not kept on file by the company. Finally, there must be a mandatory environmental whistleblower office. President Obama can and must act now to prevent another accident and order the immediate shutdown of BP Atlantis. He must also require an independent review of safety documentation and procedures for all operating deep-sea platforms, beginning with those operated by BP. Go to www.spillthetruth.org to learn more and tell President Obama to shut BP Atlantis down now.

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Charles Karel Bouley: Oil And Water, Unlike Corporations and Government, Don’t Mix

May 24, 2010

Monday, May 24, 2010 British Petroleum (BP) announced that the next attempt to cap their man-made volcanic oil eruption won’t take place until Wednesday, May 26th. That’s two days away, that’s millions of gallons of crude gushing in to the Gulf of Mexico. How many millions of gallons We, the People will never know because British Petroleum has been blatantly lying about the amount of damage and the amount of oil (there’s a spill meter counting the estimated gallons per second here ) The gusher opened through corporate negligence on April 20th, 2010. The oil industry led We, the People to believe that they had sufficient resources to deal with any emergency associated with their offshore, deep water drilling efforts. They lied about that, too. Instead of shutting it off, they have added to the toxicity by using dispersants; dispersants which do nothing but make the oil harder to photograph and identify, dispersants which the EPA has now ordered BP to stop using. They won’t. In fact, according to the San Francisco Chronicle on May 24th, BP is invoking executive privilege of sorts, saying what’s in the dispersants is a protected trade secret so they won’t even tell the EPA what they’re putting in the water. And what about the EPA, the Environmental Protection Agency? One would think they would be leading the charge on this, since there is nothing posing a larger threat to the environment of the United States than the BP gusher. This will be the Chernobyl of our time. Established in 1970 by Richard Nixon, the EPA’s sole purpose is to write and enforce regulations that protect human life and the environment. The head of the EPA, Lisa Jackson stated Sunday, May 23rd that BP’s response was inadequate. And? Where’s yours? What has been the response from the administration? On my daily s yndicated radio show listeners have taken me to task about my criticisms of Barack Obama. I come on in most markets after Randi Rhodes, whom I adore, and she is a bit more positive about the administration than I. What I see is that since the gusher opened, according to Andrea Mitchell Reports on May 24th, 2010 the New York Times has reported that Federal Regulators have granted 19 environmental waivers for Gulf projects and 17 drilling permits. What I’ve seen is an administration that has stayed in the background, letting BP lead the charge on the efforts to stop the gaping wound in the Earth’s crust that is leaking toxic fluids in to a much-needed ocean. Obama was on television every day to pound home health care reform. Why isn’t he, or Jackson, on TV every morning giving We, the People, updates? Leading the way, making us feel that this is, in fact, under control? Where are the think tanks of the greatest scientific minds in the world convened in the Gulf and manned 24/7 until a solution is found? When BP says we can’t do anything until Wednesday, where’s Jackson or Obama saying, not acceptable, we’re taking over, this is now a military job? Why have we not assumed the responsibility for the ending of the greatest ecological disaster of our time? Money. BP should pay, BP should do the cleanup, BP should shut it off. It’s BP’s hole, let them plug it. And that philosophy could prove fatal for the region, and the administration. This isn’t Obama’s Katrina, it’s his 9/11. On 9/11 George W. Bush sat for six minutes reading My Pet Goat after he was told his nation was under attack. April 20th the White House knew a horrific gash had been opened, and so far, it has not stepped up to lead in the vacuum that is BP’s corporate stonewalling. It has been said that behind the scenes the administration has been on this from the get-go. But it does no good if the public doesn’t feel it, sense it, believe it. The press has been told that the administration has assembled great thinkers. Adm. Thad W. Allen from the Coast Guard said of the think tank “A technical team is at work devising a method, he said. “We are shoving pizzas under the door, and they are not coming out until they give us the answer,” he said. Well, less pizza, more coffee, because if dumping garbage in to the hole or inserting a straw to siphon off less than 10% of the escaping crude is the solution, say goodbye to the Louisiana coastline. On Sunday May 23rd Interior Secretary Ken Salazaar was quoted as saying “With respect to the rest of the responses, including keeping the oil from coming near shore and onshore and dealing with those ecological values, BP, again, is the responsible party and is on the hook for doing everything that needs to happen,” Salazar said.
”If we find that they’re not doing what they’re supposed to be doing, we’ll push them out of the way appropriately…” Really? When? Two days in most knew they were not doing what they are supposed to be doing, stopping the gusher. And it would appear to be not only a good idea but the administration’s obligation to seize control of this disaster. David Petit, an attorney at the Natural Resources Defense Council posted an excerpt from the Clean Water Act, later amended by the Oil Pollution Act of 1990, at his blog which seems to compel the President to take over: “(A) If a discharge, or a substantial threat of a discharge, of oil or a hazardous substance from a vessel, offshore facility, or onshore facility is of such a size or character as to be a substantial threat to the public health or welfare of the United States (including but not limited to fish, shellfish, wildlife, other natural resources, and the public and private beaches and shorelines of the United States), the President shall direct all Federal, State, and private actions to remove the discharge or to mitigate or prevent the threat of the discharge. To read the rest of Petit’s blog go here . That language seems pretty clear, the President SHALL direct, not MAY. So why hasn’t he? No one seems to know. The Gulf can’t wait for BP any longer. We, the People, can’t wait for BP. BP should be shut down, seized, it’s assets used in perpetuity for the damage that will continue to pour in for years to come, family’s lives that will be effected for years to come, conservation efforts that will have to be undertaken to try and protect or replenish the species wiped out, yes, wiped out, by the underwater oil plumes bigger than Manhattan that are robbing the sea of its life-giving oxygen. Hurricane season is upon the Gulf region. Hurricanes pick up water from the ocean, and drop it inland. Washington D.C, the Midwest, the East Coast all could see toxic oily rain falling down upon them in just weeks or months. This gusher could ooze from the Gulf all the way through the Eastern United States from the shores to the tiny crevices inland; streams that feed wildlife and pristine areas that will be covered in a sheen of crude. It’s already too late. Obama and the feds should have stepped in April 23rd or so. Now, it’s really about how much we can save, not how much will be lost. And to save it we need a savior. We need a leader. We need you, Barack Obama. If we’re going to hell, we need strong leadership to soften the blow and make us feel as though we can, in fact, get through this. And we need some real common sense. A leader that will end all offshore drilling period. Oil companies lie about their ability to contain, clean and monitor their disasters. Just one event is dangerous enough to destroy an entire region. The 1/3 oil we get from our own drilling isn’t worth it. The money we get from other companies leasing platforms near our shores isn’t worth it. BP can’t make a turtle from scratch. Try creating a coastline people want to visit when it’s covered in crude. And We, the People, need to be screaming every day as loudly as we can. This is an URGENT need. This is a MAJOR disaster. It will effect everyone in the United States and world, East or West Coast, inland or coastal. Maybe it’s a blessing in disguise. The nation is splitting over the immigration issue as this disaster unfolds as well. Arizona, and now nine other states, have decided to institutionalize bigotry against brown people. Well, one good hurricane and rain, and a majority of the Southern and Central United States might all be brown. A lovely shade of crude as it permeates every drop of water we have, from the sky to the shower. Can’t profile all the brown people if we’re all brown. Maybe Obama and BP should call Jedd Clampett from the Beverly Hillbillies. At least he knew how to cap his gusher when he ruptured the Earth. Or Iron Man. Or Thor. Because it would appear there’s no real character, no person on this Earth that can solve the problem of how to stop tens of thousands of barrels of crude from spewing forth from a man-made pipeline. And if there is, they’re staying awfully quiet, or worse, BP and the administration just aren’t listening. And the oil gushes. And the planet dies. And as I write this, there’s no end in sight for the gash, but certainly an end in sight for the Gulf, and the lives of the people and animals that depend upon it.

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U.S. Raises Pressure on BP to Stop Gulf of Mexico Oil Leak, Clean Up Spill

May 24, 2010

By Edward Klump May 24 (Bloomberg) — U.S. officials turned up pressure on BP Plc over its damaged Gulf of Mexico oil well with visits to the region and a promise to “push them out of the way” if the company doesn’t do enough to halt the leak and clean up the mess. U.S. Interior Secretary Ken Salazar spoke to reporters outside of BP’s Houston offices yesterday after meeting with the scientific team working on a new bid to stop the damaged well from gushing oil into the Gulf. “I am angry and I am frustrated that BP has been unable to stop this well from leaking and to stop the pollution from spreading,” Salazar said. “We are 33 days into this effort, and deadline after deadline has been missed.” BP said it plans to try again by May 26 to stop the leaking oil by pumping heavy drilling mud down the well to counter the flow, a method it calls “top kill.” The method is vulnerable to complications that could prevent its success, Marcia McNutt, director of the U.S. Geological Survey, said yesterday in Houston. “So don’t think we’re out of the woods yet.” President Barack Obama ’s administration is facing rising criticism that it’s been too lax in its oversight of BP in the crisis. BP’s well was damaged in an April 20 explosion aboard the Deepwater Horizon drilling rig that killed 11 workers. “If we find that they’re not doing what they’re supposed to be doing, we’ll push them out of the way appropriately and we’ll move forward to make sure that everything is being done to protect the people of the Gulf Coast, the ecological values of the Gulf Coast and the values of the American people,” Salazar said. Resources Lacking Obama yesterday named Democrat Bob Graham, a former Florida governor, and Republican William Reilly, a former EPA administrator, to lead a commission to investigate the spill. Oil has washed ashore along more than 65 miles (105 kilometers) of Gulf coastline, Louisiana Governor Bobby Jindal said yesterday at a news conference. “It is clear the resources needed to protect our coast are still not here,” Jindal said. Sarah Palin , the former governor of Alaska, questioned why the Obama administration has taken “so doggone long to get in there, to dive in there, and grasp the complexity and the potential tragedy that we are seeing here in the Gulf of Mexico,” according to a transcript of an interview on Fox News Sunday. The government is keeping a close watch over BP’s response to the oil spill, U.S. Coast Guard Commandant Thad Allen said yesterday on CNN’s “State of the Union.” When U.S. officials give BP Chief Executive Officer Tony Hayward directions on problems, they get a prompt reply, he said. BP’s Hayward ‘Trustworthy’ “I trust Tony Hayward,” Allen said. “When I talk to him, I get an answer.” Allen said the leaking well has become a “very large, complicated spill” that requires “fighting a multifront war.” Officials are concerned about oil washing ashore around Port Fourchon in Louisiana, he said, and tar balls showing up as far east as Alabama and Mississippi. Coast Guard Rear Admiral Mary Landry said during a conference call yesterday that BP was directed to double its work crews in some areas on the clean-up effort. Three of Obama’s top officials plan to be in the Gulf Coast region this week, including Salazar, Environmental Protection Agency Administrator Lisa Jackson and Homeland Security Secretary Janet Napolitano . Backup Plans BP, based in London, has several backup plans in case its top kill effort fails to stop the oil leak, BP Managing Director Robert Dudley said on CNN’s “State of the Union.” Though the procedure has been successful in wells on land, it has never been tried under these circumstances, with a well 5,000 feet below the water’s surface. If it fails, BP says it may try attaching a piece of equipment with valves to shut off the flow, or use another containment structure to divert more oil to the surface. BP is drilling two “relief” wells to plug the well permanently that will be finished in August. The company continues to divert some of the leaking crude to a ship using a mile-long pipe, and has captured an average of about 2,010 barrels of oil a day since May 17, Mark Salt , a company spokesman, said in an interview yesterday. A team of government and academic scientists may report this week how much oil is leaking from the well, after independent scientists told Congress the crude was coming out at more than 10 times the 5,000-barrel-a-day estimate BP and the government have given since April 28. EPA officials renewed discussion yesterday with BP about its use of Nalco Holding Co.’s Corexit oil dispersant to break the oil into small droplets that may eventually be digested by microbes, the Coast Guard’s Landry said. About 785,000 gallons of dispersant have been applied so far, according to BP and government officials, and the EPA has asked BP to find less toxic alternatives. To contact the reporter on this story: Edward Klump in Houston at eklump@bloomberg.net .

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Luxury Mall King Caruso Eludes Slump, Hunts for Fixable `Junk’ to Facelift

May 21, 2010

By Daniel Taub and Nadja Brandt May 21 (Bloomberg) — Mall developer Rick Caruso plans to take his success in retail to distressed shopping centers, apartments, luxury hotels, airports and maybe a run for Los Angeles mayor. The Grove, Caruso’s town square-like shopping center in Los Angeles that attracts 17 million shoppers a year, had few vacancies through the recession, he said. Sales at the Americana at Brand, his first retail-residential complex, have grown since its 2008 opening. Caruso plans to use profits to buy distressed properties he can rehabilitate. Caruso’s Los Angeles-based company, closely held Caruso Affiliated, last month announced a $750 million debt-and-equity venture with TPG Capital, David Bonderman ’s buyout firm, to make retail and mixed-used purchases. The venture has looked at about 100 properties in cities including San Francisco, Seattle and Portland, Oregon, and intends to announce a retail acquisition in Orange County, California, within 30 days, he said. “There’s a lot of junk that we won’t touch, that I don’t think you can fix,” Caruso, 51, said in an interview at Bloomberg’s Los Angeles offices. While there’s “a ton of money on the sidelines” for properties worth saving, many buyers are passive investors while Caruso is interested in redevelopment, he said. Caruso is expanding beyond retail centers while considering a mayoral candidacy in cash-strapped Los Angeles. He is building luxury apartments outside Beverly Hills, planning a beach resort in Montecito, California, and seeking to develop stores and restaurants at Los Angeles International Airport. ‘Guest Experience’ “Why can’t the airport experience actually be pleasant?” Caruso said. LAX travelers should have a “guest experience” similar to the Grove, and to shopping choices at London’s Heathrow Airport, he said. “We’re going to come up with a pretty compelling proposal,” Caruso said, declining to discuss details. “Hopefully we start in L.A. and it will be the first of many.” Caruso hopes to open his first luxury resort, the redeveloped Miramar Beach Resort and Bungalows in Montecito, near Santa Barbara, by 2013. “I like beach resorts. I love the water,” Caruso said. “If you find a great property that’s tough to duplicate, you have inherent value.” Caruso faces a challenge making his entry into high-end lodging pay off. He purchased Miramar in 2007, the height of the commercial real estate market, for an undisclosed amount. Hurdles in getting entitlements to redevelop the planned 192- room hotel have delayed groundbreaking, and construction won’t start before next year. Hotel Comeback? Luxury hotels have been hurt by a decline in business and leisure travel during the U.S. recession. The average daily rate among hotel chains with the costliest rooms fell 16 percent in 2009 from a year earlier to $242.99, according to Smith Travel Research Inc. in Hendersonville, Tennessee. A recovery of the U.S. hotel industry isn’t likely until 2011 because room rates are down and commercial real estate values have plunged, Fitch Ratings Ltd. said in December. In California, hotel foreclosures climbed 27 percent in the first quarter. “It’ll prove to be a very good investment,” Caruso said. “Luxury hotels will come back.” Caruso, who has nine shopping centers in the Los Angeles area, has thrived in retail while other mall owners were hurt by the recession. Vacancies at the largest U.S. malls reached 8.9 percent in the first quarter, the highest rate since at least 2000, New York-based real estate research firm Reis Inc. said. Grove Shoppers At the 20-acre Grove , adjacent to Los Angeles’s historic Farmers Market, the average shopper spends $179, about triple the industry average, Caruso said. Net operating income has risen over the past 18 months, and the facility is “99 percent leased,” he said. Caruso said he adds touches to encourage shoppers to stay longer . The Grove has a free trolley, and the open-air Americana in Glendale has grassy slopes for relaxing. “Many of his projects are anything but plain vanilla,” said Jim Sullivan , managing director at real estate researcher Green Street Advisors in Newport Beach, California. “His projects are fun places to go.” Caruso has had his stumbles outside of retail. At the Americana, opened in 2008 during the housing-market collapse, he has struggled to sell its 100 condominiums. Buyers are being enticed with discounts and half-price association dues for two years. “It was a really tough time to come out,” Caruso said. While Caruso Affiliated is responsible for management and sales, the condos’ backer is Barrow Street Capital LLC. “We did not have anything at risk financially,” Caruso said. Nicholas Chermayeff , co-chief executive officer of Stamford, Connecticut-based Barrow Street, declined to comment. Mayoral Run? A Republican who has served as board president at the Los Angeles Department of Water and Power and the Los Angeles Police Commission, Caruso has flirted for years with a mayoral run. “I’m leaning towards it” when Mayor Antonio Villaraigosa is termed out in 2013, Caruso said. “I have to make a decision probably sometime next year.” The city needs to do a better job keeping and attracting businesses, rework its pension system and encourage development, he said. He also imagines a monorail along Interstate 10 from downtown Los Angeles to the coast going up faster than a planned “subway to the sea,” which could take decades to build. Caruso’s chances of winning would depend in part on the competition, said Sherry Bebitch Jeffe , a senior fellow at the school of policy, planning and development at the University of Southern California. “There is a long list of tested Latino leaders who probably will be looking at the office,” Jeffe said. Caruso, who is married with four children, said family and business obligations will factor in to the decision. He also will weigh the Los Angeles mayor’s limited powers. “I’ve got to get convinced that, if I did it, that I can actually make a meaningful difference,” Caruso said. “If the city is so structurally hamstrung that I’m going to go waste four years of my life, I don’t want to do it.” To contact the reporters on this story: Daniel Taub in Los Angeles at dtaub@bloomberg.net ; Nadja Brandt in Los Angeles at nbrandt@bloomberg.net .

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Mall Maestro Caruso Eludes Retail Slump, Ponders Run for Los Angeles Mayor

May 21, 2010

By Daniel Taub and Nadja Brandt May 21 (Bloomberg) — Mall developer Rick Caruso plans to take his success in retail to distressed shopping centers, apartments, luxury hotels, airports and maybe a run for Los Angeles mayor. The Grove, Caruso’s town square-like shopping center in Los Angeles that attracts 17 million shoppers a year, had few vacancies through the recession, he said. Sales at the Americana at Brand, his first retail-residential complex, have grown since its 2008 opening. Caruso plans to use profits to buy distressed properties he can rehabilitate. Caruso’s Los Angeles-based company, closely held Caruso Affiliated, last month announced a $750 million debt-and-equity venture with TPG Capital, David Bonderman ’s buyout firm, to make retail and mixed-used purchases. The venture has looked at about 100 properties in cities including San Francisco, Seattle and Portland, Oregon, and intends to announce a retail acquisition in Orange County, California, within 30 days, he said. “There’s a lot of junk that we won’t touch, that I don’t think you can fix,” Caruso, 51, said in an interview at Bloomberg’s Los Angeles offices. While there’s “a ton of money on the sidelines” for properties worth saving, many buyers are passive investors while Caruso is interested in redevelopment, he said. Caruso is expanding beyond retail centers while considering a mayoral candidacy in cash-strapped Los Angeles. He is building luxury apartments outside Beverly Hills, planning a beach resort in Montecito, California, and seeking to develop stores and restaurants at Los Angeles International Airport. ‘Guest Experience’ “Why can’t the airport experience actually be pleasant?” Caruso said. LAX travelers should have a “guest experience” similar to the Grove, and to shopping choices at London’s Heathrow Airport, he said. “We’re going to come up with a pretty compelling proposal,” Caruso said, declining to discuss details. “Hopefully we start in L.A. and it will be the first of many.” Caruso hopes to open his first luxury resort, the redeveloped Miramar Beach Resort and Bungalows in Montecito, near Santa Barbara, by 2013. “I like beach resorts. I love the water,” Caruso said. “If you find a great property that’s tough to duplicate, you have inherent value.” Caruso faces a challenge making his entry into high-end lodging pay off. He purchased Miramar in 2007, the height of the commercial real estate market, for an undisclosed amount. Hurdles in getting entitlements to redevelop the planned 192- room hotel have delayed groundbreaking, and construction won’t start before next year. Hotel Comeback? Luxury hotels have been hurt by a decline in business and leisure travel during the U.S. recession. The average daily rate among hotel chains with the costliest rooms fell 16 percent in 2009 from a year earlier to $242.99, according to Smith Travel Research Inc. in Hendersonville, Tennessee. A recovery of the U.S. hotel industry isn’t likely until 2011 because room rates are down and commercial real estate values have plunged, Fitch Ratings Ltd. said in December. In California, hotel foreclosures climbed 27 percent in the first quarter. “It’ll prove to be a very good investment,” Caruso said. “Luxury hotels will come back.” Caruso, who has nine shopping centers in the Los Angeles area, has thrived in retail while other mall owners were hurt by the recession. Vacancies at the largest U.S. malls reached 8.9 percent in the first quarter, the highest rate since at least 2000, New York-based real estate research firm Reis Inc. said. Grove Shoppers At the 20-acre Grove , adjacent to Los Angeles’s historic Farmers Market, the average shopper spends $179, about triple the industry average, Caruso said. Net operating income has risen over the past 18 months, and the facility is “99 percent leased,” he said. Caruso said he adds touches to encourage shoppers to stay longer . The Grove has a free trolley, and the open-air Americana in Glendale has grassy slopes for relaxing. “Many of his projects are anything but plain vanilla,” said Jim Sullivan , managing director at real estate researcher Green Street Advisors in Newport Beach, California. “His projects are fun places to go.” Caruso has had his stumbles outside of retail. At the Americana, opened in 2008 during the housing-market collapse, he has struggled to sell its 100 condominiums. Buyers are being enticed with discounts and half-price association dues for two years. “It was a really tough time to come out,” Caruso said. While Caruso Affiliated is responsible for management and sales, the condos’ backer is Barrow Street Capital LLC. “We did not have anything at risk financially,” Caruso said. Nicholas Chermayeff , co-chief executive officer of Stamford, Connecticut-based Barrow Street, declined to comment. Mayoral Run? A Republican who has served as board president at the Los Angeles Department of Water and Power and the Los Angeles Police Commission, Caruso has flirted for years with a mayoral run. “I’m leaning towards it” when Mayor Antonio Villaraigosa is termed out in 2013, Caruso said. “I have to make a decision probably sometime next year.” The city needs to do a better job keeping and attracting businesses, rework its pension system and encourage development, he said. He also imagines a monorail along Interstate 10 from downtown Los Angeles to the coast going up faster than a planned “subway to the sea,” which could take decades to build. Caruso’s chances of winning would depend in part on the competition, said Sherry Bebitch Jeffe , a senior fellow at the school of policy, planning and development at the University of Southern California. “There is a long list of tested Latino leaders who probably will be looking at the office,” Jeffe said. Caruso, who is married with four children, said family and business obligations will factor in to the decision. He also will weigh the Los Angeles mayor’s limited powers. “I’ve got to get convinced that, if I did it, that I can actually make a meaningful difference,” Caruso said. “If the city is so structurally hamstrung that I’m going to go waste four years of my life, I don’t want to do it.” To contact the reporters on this story: Daniel Taub in Los Angeles at dtaub@bloomberg.net ; Nadja Brandt in Los Angeles at nbrandt@bloomberg.net .

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Mall Maestro Caruso Eludes Retail Slump, Ponders Run for Los Angeles Mayor

May 21, 2010

By Daniel Taub and Nadja Brandt May 21 (Bloomberg) — Mall developer Rick Caruso plans to take his success in retail to distressed shopping centers, apartments, luxury hotels, airports and maybe a run for Los Angeles mayor. The Grove, Caruso’s town square-like shopping center in Los Angeles that attracts 17 million shoppers a year, had few vacancies through the recession, he said. Sales at the Americana at Brand, his first retail-residential complex, have grown since its 2008 opening. Caruso plans to use profits to buy distressed properties he can rehabilitate. Caruso’s Los Angeles-based company, closely held Caruso Affiliated, last month announced a $750 million debt-and-equity venture with TPG Capital, David Bonderman ’s buyout firm, to make retail and mixed-used purchases. The venture has looked at about 100 properties in cities including San Francisco, Seattle and Portland, Oregon, and intends to announce a retail acquisition in Orange County, California, within 30 days, he said. “There’s a lot of junk that we won’t touch, that I don’t think you can fix,” Caruso, 51, said in an interview at Bloomberg’s Los Angeles offices. While there’s “a ton of money on the sidelines” for properties worth saving, many buyers are passive investors while Caruso is interested in redevelopment, he said. Caruso is expanding beyond retail centers while considering a mayoral candidacy in cash-strapped Los Angeles. He is building luxury apartments outside Beverly Hills, planning a beach resort in Montecito, California, and seeking to develop stores and restaurants at Los Angeles International Airport. ‘Guest Experience’ “Why can’t the airport experience actually be pleasant?” Caruso said. LAX travelers should have a “guest experience” similar to the Grove, and to shopping choices at London’s Heathrow Airport, he said. “We’re going to come up with a pretty compelling proposal,” Caruso said, declining to discuss details. “Hopefully we start in L.A. and it will be the first of many.” Caruso hopes to open his first luxury resort, the redeveloped Miramar Beach Resort and Bungalows in Montecito, near Santa Barbara, by 2013. “I like beach resorts. I love the water,” Caruso said. “If you find a great property that’s tough to duplicate, you have inherent value.” Caruso faces a challenge making his entry into high-end lodging pay off. He purchased Miramar in 2007, the height of the commercial real estate market, for an undisclosed amount. Hurdles in getting entitlements to redevelop the planned 192- room hotel have delayed groundbreaking, and construction won’t start before next year. Hotel Comeback? Luxury hotels have been hurt by a decline in business and leisure travel during the U.S. recession. The average daily rate among hotel chains with the costliest rooms fell 16 percent in 2009 from a year earlier to $242.99, according to Smith Travel Research Inc. in Hendersonville, Tennessee. A recovery of the U.S. hotel industry isn’t likely until 2011 because room rates are down and commercial real estate values have plunged, Fitch Ratings Ltd. said in December. In California, hotel foreclosures climbed 27 percent in the first quarter. “It’ll prove to be a very good investment,” Caruso said. “Luxury hotels will come back.” Caruso, who has nine shopping centers in the Los Angeles area, has thrived in retail while other mall owners were hurt by the recession. Vacancies at the largest U.S. malls reached 8.9 percent in the first quarter, the highest rate since at least 2000, New York-based real estate research firm Reis Inc. said. Grove Shoppers At the 20-acre Grove , adjacent to Los Angeles’s historic Farmers Market, the average shopper spends $179, about triple the industry average, Caruso said. Net operating income has risen over the past 18 months, and the facility is “99 percent leased,” he said. Caruso said he adds touches to encourage shoppers to stay longer . The Grove has a free trolley, and the open-air Americana in Glendale has grassy slopes for relaxing. “Many of his projects are anything but plain vanilla,” said Jim Sullivan , managing director at real estate researcher Green Street Advisors in Newport Beach, California. “His projects are fun places to go.” Caruso has had his stumbles outside of retail. At the Americana, opened in 2008 during the housing-market collapse, he has struggled to sell its 100 condominiums. Buyers are being enticed with discounts and half-price association dues for two years. “It was a really tough time to come out,” Caruso said. While Caruso Affiliated is responsible for management and sales, the condos’ backer is Barrow Street Capital LLC. “We did not have anything at risk financially,” Caruso said. Nicholas Chermayeff , co-chief executive officer of Stamford, Connecticut-based Barrow Street, declined to comment. Mayoral Run? A Republican who has served as board president at the Los Angeles Department of Water and Power and the Los Angeles Police Commission, Caruso has flirted for years with a mayoral run. “I’m leaning towards it” when Mayor Antonio Villaraigosa is termed out in 2013, Caruso said. “I have to make a decision probably sometime next year.” The city needs to do a better job keeping and attracting businesses, rework its pension system and encourage development, he said. He also imagines a monorail along Interstate 10 from downtown Los Angeles to the coast going up faster than a planned “subway to the sea,” which could take decades to build. Caruso’s chances of winning would depend in part on the competition, said Sherry Bebitch Jeffe , a senior fellow at the school of policy, planning and development at the University of Southern California. “There is a long list of tested Latino leaders who probably will be looking at the office,” Jeffe said. Caruso, who is married with four children, said family and business obligations will factor in to the decision. He also will weigh the Los Angeles mayor’s limited powers. “I’ve got to get convinced that, if I did it, that I can actually make a meaningful difference,” Caruso said. “If the city is so structurally hamstrung that I’m going to go waste four years of my life, I don’t want to do it.” To contact the reporters on this story: Daniel Taub in Los Angeles at dtaub@bloomberg.net ; Nadja Brandt in Los Angeles at nbrandt@bloomberg.net .

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BP Capturing 5,000 Barrels a Day From Gulf Leak as Oil Continues to Flow

May 20, 2010

By Jim Polson May 20 (Bloomberg) — BP Plc is capturing 5,000 barrels of oil a day from its leaking well in the Gulf of Mexico. A live video feed from the seafloor showed crude continuing to flow from the well. “That’s 5,000 barrels a day of oil that is not going onto the seabed,” said Mark Salt , a spokesman in Houston for BP. He couldn’t say what proportion of the crude was being captured. “We are continuing to optimize the flow.” The oil being captured is flowing through a mile-long tube up to a drillship equipped to store oil, decant water and flare natural gas. The ship is flaring natural gas from the well at a rate of 15 million cubic feet a day, said Salt. BP, based in London, estimated the daily flow to the ship yesterday at 3,000 barrels of oil and 14 million cubic feet of gas. The company and federal agencies have been estimating the spill rate as 5,000 barrels (210,000 gallons) a day since April 28. That figure is disputed by independent scientists, including Purdue University Associate Professor Steve Wereley, based on video of the leaking well. Scientists including Wereley testified yesterday to a Congressional subcommittee that the leak rate may range between 25,000 barrels and 100,000 barrels a day. “What they are capturing is a small fraction of the total leak,” Wereley said today in a telephone interview. “BP is in a position to provide us with evidence that they are capturing the lion’s share of the leak.” Live Video U.S. Representative Edward Markey , a Massachusetts Democrat and chairman of the Select Committee on Energy Independence and Global Warming, posted what his spokesman said was live video of the leak from BP on his panel’s website. The well is off the coast of Louisiana, about 5,000 feet (1,524 meters) below the water’s surface. It began leaking after an April 20 explosion aboard the Deepwater Horizon drilling rig, which caused it to sink and resulted in the deaths of 11 workers. BP leased the rig from Transocean Ltd. BP rose 5.3 pence, or 1 percent, to 528.8 at 4:35 p.m. in London trading. The shares have fallen 19 percent since the explosion. BP said on May 18 it has spent $625 million on the spill response. Cleanup of oil from the surface continued today, Salt said. There are 1,040 vessels and 24,700 personnel involved in the response, according to a BP statement today. Less Toxic Dispersant To prevent the oil from reaching shore, the company and the government have been using chemical dispersants to break up the oil slick into small droplets that can be digested by microbes. The Environmental Protection Agency today asked BP to find a less toxic dispersant to use on the slick. Oil recovered through the tube to the drillship, Transocean’s Discoverer Enterprise , will be processed at one of BP’s Gulf Coast refineries, Salt said. Piping more oil aboard the drillship may not reduce the extent of oil on the surface, Doug Suttles , chief operating officer for BP exploration and production, said at a press conference in Louisiana yesterday. The leak rate of 5,000 barrels a day “is highly, highly uncertain and not the estimate we’ve based the response on,” he said. BP is focusing on steps to plug the leaking well permanently, Suttles said. Engineers will try as early as May 23 to inject heavy drilling fluid and cement near the top of the well to seal it, a tactic known as “top kill,” he said. Relief Wells The company also is drilling two relief wells, each aimed at intercepting the damaged well about 13,000 feet (3,962 meters) below the ocean floor, an effort that may take about three months. Cement would then be poured into the well to plug it permanently. Heavy oil from the BP well has reached wetlands in the Pass a Loutre area of Plaquemines Parish, Louisiana, Governor Bobby Jindal said at a press conference yesterday in Venice, Louisiana, calling the pollution the most serious yet in nursery areas for fish and shrimp. “These are not tar balls, this is not sheen,” said Jindal, a Republican. “This is heavy oil we are seeing in our wetlands.” To contact the reporter on this story: Jim Polson in New York at jpolson@bloomberg.net .

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BP Capturing 5,000 Barrels a Day From Gulf Leak as Oil Continues to Flow

May 20, 2010

By Jim Polson May 20 (Bloomberg) — BP Plc is capturing 5,000 barrels of oil a day from its leaking well in the Gulf of Mexico. A live video feed from the seafloor showed crude continuing to flow from the well. “That’s 5,000 barrels a day of oil that is not going onto the seabed,” said Mark Salt , a spokesman in Houston for BP. He couldn’t say what proportion of the crude was being captured. “We are continuing to optimize the flow.” The oil being captured is flowing through a mile-long tube up to a drillship equipped to store oil, decant water and flare natural gas. The ship is flaring natural gas from the well at a rate of 15 million cubic feet a day, said Salt. BP, based in London, estimated the daily flow to the ship yesterday at 3,000 barrels of oil and 14 million cubic feet of gas. The company and federal agencies have been estimating the spill rate as 5,000 barrels (210,000 gallons) a day since April 28. That figure is disputed by independent scientists, including Purdue University Associate Professor Steve Wereley, based on video of the leaking well. Scientists including Wereley testified yesterday to a Congressional subcommittee that the leak rate may range between 25,000 barrels and 100,000 barrels a day. “What they are capturing is a small fraction of the total leak,” Wereley said today in a telephone interview. “BP is in a position to provide us with evidence that they are capturing the lion’s share of the leak.” Live Video U.S. Representative Edward Markey , a Massachusetts Democrat and chairman of the Select Committee on Energy Independence and Global Warming, posted what his spokesman said was live video of the leak from BP on his panel’s website. The well is off the coast of Louisiana, about 5,000 feet (1,524 meters) below the water’s surface. It began leaking after an April 20 explosion aboard the Deepwater Horizon drilling rig, which caused it to sink and resulted in the deaths of 11 workers. BP leased the rig from Transocean Ltd. BP rose 5.3 pence, or 1 percent, to 528.8 at 4:35 p.m. in London trading. The shares have fallen 19 percent since the explosion. BP said on May 18 it has spent $625 million on the spill response. Cleanup of oil from the surface continued today, Salt said. There are 1,040 vessels and 24,700 personnel involved in the response, according to a BP statement today. Less Toxic Dispersant To prevent the oil from reaching shore, the company and the government have been using chemical dispersants to break up the oil slick into small droplets that can be digested by microbes. The Environmental Protection Agency today asked BP to find a less toxic dispersant to use on the slick. Oil recovered through the tube to the drillship, Transocean’s Discoverer Enterprise , will be processed at one of BP’s Gulf Coast refineries, Salt said. Piping more oil aboard the drillship may not reduce the extent of oil on the surface, Doug Suttles , chief operating officer for BP exploration and production, said at a press conference in Louisiana yesterday. The leak rate of 5,000 barrels a day “is highly, highly uncertain and not the estimate we’ve based the response on,” he said. BP is focusing on steps to plug the leaking well permanently, Suttles said. Engineers will try as early as May 23 to inject heavy drilling fluid and cement near the top of the well to seal it, a tactic known as “top kill,” he said. Relief Wells The company also is drilling two relief wells, each aimed at intercepting the damaged well about 13,000 feet (3,962 meters) below the ocean floor, an effort that may take about three months. Cement would then be poured into the well to plug it permanently. Heavy oil from the BP well has reached wetlands in the Pass a Loutre area of Plaquemines Parish, Louisiana, Governor Bobby Jindal said at a press conference yesterday in Venice, Louisiana, calling the pollution the most serious yet in nursery areas for fish and shrimp. “These are not tar balls, this is not sheen,” said Jindal, a Republican. “This is heavy oil we are seeing in our wetlands.” To contact the reporter on this story: Jim Polson in New York at jpolson@bloomberg.net .

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Wright Joins Parsons as East Division Proposal Manager Water & Infrastructure

May 17, 2010

PASADENA, CA–(Marketwire – May 17, 2010) –  Parsons is pleased to announce that John D. Wright has joined the company as East Division Proposal Manager for its Water & Infrastructure group. In this capacity, he will lead major proposals, manage the division’s sales and marketing team, assist in training and development, and work closely with business development and division management to promote Parsons’ core values and strategic objectives.

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BP Says It Successfully Inserts Tube at Leaking Oil Well in Gulf of Mexico

May 16, 2010

By Kim Chipman and Jordan Burke May 16 (Bloomberg) — BP Plc said it made a breakthrough today in its attempts to control oil leaking from a damaged well in the Gulf of Mexico, successfully inserting a tube that will funnel oil to a ship on the water’s surface. It was BP’s second attempt to insert the tube to capture oil gushing from a well 5,000 feet below the water’s surface. A first attempt failed when the frame that holds the tube shifted, Doug Suttles , BP’s chief operating officer for exploration and production, said yesterday. The tube will capture only some of the spillage. “While not collecting all of the leaking oil, this tool is an important step in reducing the amount of oil being released into Gulf waters,” the statement said. After the tube was successfully inserted and working to funnel the oil, it was dislodged, halting the test. Technicians inspected the system and have reinserted the tube, BP and government authorities said today in a statement from the oil spill’s Joint Information Center. The tube is made from a 4-inch (10.2 centimeters) pipe wrapped with a rubber flange and inserted by remote-operated vehicles into a larger pipe leading from the leaking well. The idea is that undersea pressure will force the oil into the pipe and up to the surface, where a drill ship will separate and store the oil for processing at a refinery. After it was in place, the tube was successfully capturing oil and gas and funneling it to the ship, BP and government officials said in the statement. Transocean Ltd. ’s Deepwater Horizon drilling rig, leased to London-based BP, exploded April 20 and sank two days later, taking the lives of 11 crew members. BP attempted to divert the flow using a 40-foot steel box, which didn’t work. It also failed in an attempt to use remote-operated vehicles to engage a device that would shut the well. To contact the reporters on this story: Kim Chipman in New Orleans, Louisiana at kchipman@bloomberg.net ’ Jordan Burke in New Orleans at jburke29@bloomberg.net .

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Oil Spill’s `Slow-Moving Hurricane’ Leaves Gulf Coast’s Residents Waiting

May 14, 2010

By Kim Chipman and Jim Polson May 14 (Bloomberg) — For Tammy Wolfer of Louisiana, the worst part about the oil slick looming off the Gulf of Mexico coast isn’t that it cut her income from working at a marina and ruined plans to buy a house this year. The worst part is waiting to see where and when the oil will arrive on shore. “The not knowing is what is driving everyone crazy,” Wolfer, 42, who lives in Empire on Louisiana’s eastern coast, said this week. “At least if the oil started coming ashore, we could start cleaning it up and know where we are.” Coastal residents in Mississippi, Louisiana and Alabama have been bracing for black waves of oil since April 20, when an offshore rig drilling a BP Plc well exploded, triggering a leak that is dumping an estimated 5,000 barrels of oil a day into the Gulf. U.S. Representative Edward Markey said he’ll launch a probe into whether the well is leaking far more after a media report that it may be spewing as much as 70,000 barrels a day. Much of the largest spill in 40 years from an offshore U.S. rig or platform has stayed away from land. The amount of crude that has washed ashore doesn’t compare with the sheets of oil that polluted 1,300 miles (2,000 kilometers) of Alaska coastline after the Exxon Valdez tanker ran aground in 1989. The latest spill-forecast maps by the National Oceanic and Atmospheric Administration predict the bulk of the slick will remain at sea for at least two more days. Oil’s Arrival Dreaded “Right now it’s like being a goalie in a soccer game,” said Robert Thomas, professor and director of the Loyola University New Orleans Center for Environmental Communication. “Everyone is the goalie and we are trying to protect everything from every direction.” Local residents and officials say they dread the thought of thick oil coming ashore, where it could destroy fisheries and marshland and cause environmental damage. “Everybody is so anxious,” said Mark Schexnayder, regional coastal adviser for fisheries at Louisiana State University. “They would rather be doing something physical where they can help.” The crude-filled waters have killed the Wolfer family’s hopes of making the most of a newly repaired fishing boat, and Wolfer’s hours working at a marina have been slashed in half to 20 a week. Wolfer says her husband, Daniel, signed up for clean- up work and hasn’t yet heard back from BP. ‘Slow-Moving Hurricane’ “It’s like a slow-moving hurricane,” said Robert Moreau, who manages the Turtle Cove Environmental Research Station for Southeastern Louisiana University. “It’s kind of in our blood and DNA to watch maps and worry about what’s coming. This is a bigger unknown than a storm.” Projections show there is no imminent threat of oil affecting Mississippi, Alabama or Florida, Capt. Steve Poulin of the U.S. Coast Guard said at a news conference yesterday. So far the well has leaked at least 3.3 million gallons (12.5 million liters), based on estimates by the company and government officials. Tar balls and tar patties have been seen at Dauphin Island and Gulf Shores in Alabama and barrier islands off Mississippi, Poulin said, adding that the findings were sporadic and in “fairly small quantities.” The National Oceanic and Atmospheric Administration team forecast April 28 that winds and currents would drive oil ashore in Louisiana, Mississippi, Alabama and Florida on successive days through May 3. No widespread oiling occurred. No oil has been reported to the west off Atchafalya Bay in Louisiana, where a forecast predicted landfall earlier this week. Mississippi’s Impact NOAA is trying to figure out why the oil isn’t showing up where they think it should, said Doug Helton, one of NOAA’s two coordinators charged with calculating the spill’s movements. ‘It’s a complicated area to model,” he said. One factor might be the Mississippi River flowing into the Gulf, pushing the oil away from shore. Oil floats lower in fresh water than in salt water, possibly hiding some of the slick, he said. Louisiana native James Carville , a Democratic political consultant who moved to New Orleans after Hurricane Katrina in 2005, said the lack of information about the spill is “stunning.” “The whole place is just crazy with rumors,” he said in an interview. BP takes some of the credit for keeping the worst of the oil away from land. “Our teams working offshore are making a difference,” Doug Suttles , the BP executive running its response to the spill, said in a May 10 press conference. “The visible size of the spill is less significant than it was a week or 10 days ago.” Some residents fear the use of chemical dispersants to break up the oil and sink it beneath the water could create a nightmare for the coast if a hurricane hits this summer. “They can cap this well tomorrow, but three months from now, a three- or four-category storm could disturb the bottom of the Gulf and that oil will come to the top and it may be worse than it is right now,” said Ted Breaux, who lives near New Orleans and works in coastal Louisiana for Exxon Mobil Corp. To contact the reporters on this story: Kim Chipman in Washington at kchipman@bloomberg.net ’ Jim Polson in New York at jpolson@bloomberg.net

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Manisha Thakor : PriceCheck: How We Became a Culture of Consumption

May 10, 2010

On Saturday May 19th, Poetic People Power , a New York City spoken word group, will hold its 8th annual show Price Check: How We Became A Culture Of Consumption . The show will premiere new poems about the economics, psychology, and costs of our consumer culture. This is an interview with Poetic People Power founder, Tara Bracco. What was you inspiration for “Price Check: How We Became a Culture of Consumption? ” …We wanted to put together a show that really takes a look at how the U.S. got into this mess. How have the economics of our country changed? How did deregulation affect television marketing? How does psychology and values play into our consumer culture? And what are the costs of putting so much emphasis on consuming? So the poets will premiere works that creatively explore these areas. If audience members could only take away one key message from the show, what do you hope it will be? We present spoken word shows on topics that affect our society. Our goal is to get people to think, to discuss, and to act. After our last show about the water crisis, people tell us they no longer buy bottled water. I hope we can show people that their personal habits – whether it’s how they use water – or their personal struggles to pay their bills – whether it’s credit card debt or medical debt – are connected to larger political issues. In putting together the show, what surprised/shocked you most about our Consumer Culture? … since the ’80s for many people wages stagnated and the growing accessibility to credit then allowed people to pay for expenses that their incomes couldn’t cover. Also, people today have more expenses each month since items like cell phones and computers became a part of our everyday lives. So wages stagnated, the number of things we pay for monthly increased, and the costs of expenses like health care and education rose dramatically. In the U.S., the economy is driven by consumer spending… I actually read that we now have more shopping centers than high schools. That’s shocking! … Our artists want the audience to take a critical look at this issue. Hopefully then people will buy more consciously, be less susceptible to persuasive marketing, and make personal finance decisions in line with their income, goals, and values. If you were President Obama, what one step would you take right now to help restore balance to The American Dream? … People will have to determine for themselves what success looks like in the changing context of our country. I do think laws can be passed that would reduce inequality and improve well-being. I’ve been impressed with the Take Back Your Time campaign because it advocates for paid child care leave, vacation, and sick days. Instead of focusing on ways people can pay their way through the various stages of The American Dream – college, getting married, homeownership – let’s focus on what would actually improve quality of life. Other nations have laws that offer these protections for their citizens, and we don’t… That’s a dream worth working toward. How has doing this show changed you, personally? …When I do a show, I usually come across some thing during the research process that really makes me mad. And for this show that thing was the way companies are allowed to market to children. Television advertising to children was deregulated in America in the 80s….The book Affluenza states that since the ’80s spending on advertising to children rose 15,000%! … It’s very manipulative, and most parents are unaware of it. There’s a g ood video series on YouTube called Consuming Kids … it’s a video everyone needs to see, especially parents. Thanks to Tara for sharing her thoughts!

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Gulf Oil-Spill Containment Structure Is Now Just Above Seafloor, BP Says

May 7, 2010

By Jessica Resnick-Ault May 7 (Bloomberg) — BP Plc lowered nearly to the seafloor a 40-foot-tall steel structure that may capture as much as 85 percent of the oil leaking from a well into the Gulf of Mexico. The containment system may begin funneling oil to a ship in the Gulf as early as May 10, said Mark Salt , a spokesman for BP in Houston. The time frame for installing the system remains “very fluid,” he said. If it works properly, the rectangular structure with a pyramid-shaped dome on top would capture crude from the largest leak at a well that began spilling oil after the Deepwater Horizon rig exploded and sank in the Gulf last month. The containment box is an interim measure, being put in place until London-based BP can drill a relief well to permanently stop the leak. The company began drilling a relief well on May 2, an effort that will take about three months to complete. A second relief well is planned. The U.S. Coast Guard and BP have also been skimming oil from the Gulf and burning portions of the spill to reduce the amount that reaches shore. BP was leasing the rig, owned by Geneva-based Transocean Ltd., when it exploded April 20 and sank two days later. The oil leak comes from BP’s well, about 5,000 feet (1,524 meters) below the water’s surface. The oil-containment system is suspended above the seafloor as BP prepares the area where the box will go. Preparations include putting buoys around the leak to act as markers to guide the dome, Salt said. Robot Clearing Before the box can be installed, robots must make sure the area is clear, Salt said. The seabed currently has jagged pipes from the rig, he said. Water temperatures of about 42 degrees Fahrenheit (6 Celsius) and pressures of 2,300 pounds per square inch may cause natural gas in the oil, estimated at 3,000 cubic feet per barrel, to freeze as it rises. BP plans to circulate warm surface water and antifreeze around the pipe to prevent clogging, Dave Clarkson, the company’s project manager for the underwater containment plan, said during a May 5 conference call. Similar containment boxes have been used to funnel crude from leaking wells in shallow water. This is the deepest deployment of the system, according to a fact sheet provided by BP. It may take a week to determine if the system is working, Robert Dudley , BP’s executive vice president for the Americas and Asia, said in Boston yesterday. BP fell 13.1 pence, or 2.3 percent, to 553.9 pence at 4:35 p.m. in London. The shares have dropped 15 percent since the rig exploded. To contact the reporter on this story: Jessica Resnick-Ault in New York at jresnickault@bloomberg.net

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Blankfein Bonds Riskier Than Pandit’s; Junk Bonds Tumble: Credit Markets

May 5, 2010

By John Detrixhe and Bryan Keogh May 5 (Bloomberg) — Goldman Sachs Group Inc. bond yields show the firm’s credit is more hazardous than Citigroup Inc.’s for the first time since February 2009 as speculation grows that legal and regulatory risks will depress its revenue. Debt from the most profitable Wall Street firm yielded 2.73 percentage points more than Treasuries on average as of May 4, according to Bank of America Merrill Lynch indexes. That compares with a spread of 2.29 percentage points for Citigroup, which had to get a $45 billion bailout in 2008 and repaid $20 billion of the funds in December. At the end of March, Citigroup spreads were 0.45 percentage point wider than Goldman Sachs’s. Fitch Ratings revised Goldman Sachs’s A+ ranking outlook to “negative” from “stable” today on concern its reputation may be tarnished. Wider spreads mean the New York-based investment bank, with $180.4 billion of unsecured long-term borrowing, may pay an extra $7.6 million in annual interest on every billion of debt it issues. “With Goldman and the investigation going on, you have to build a bit more risk premium into that,” said Michael Donelan , director of trading and head portfolio manager who oversees $3.5 billion of bonds at Ryan Labs Inc., a money management and research firm in New York that sold two-thirds of its position in Goldman Sachs debt on April 30. “Citigroup actually could be further down the line as far as regulatory risk concern.” Federal Investigation U.S. prosecutors are investigating Goldman Sachs, where Lloyd Blankfein has served as chief executive officer since 2006. The Securities and Exchange Commission filed a civil lawsuit on April 16 alleging fraud tied to collateralized debt obligations. The firm called the SEC’s claims “unfounded.” “No one’s attacking Citigroup over anything anymore, and everyone’s attacking Goldman Sachs over everything,” said Richard Bove , a banking analyst at Rochdale Securities in Lutz, Florida. “It logically tells you that Citigroup should have a lower spread to Treasury than Goldman Sachs does.” Elsewhere in credit markets, turmoil in Europe’s financial system led banks to borrow the most in two months from the European Central Bank, junk bonds tumbled and relative yields on emerging-market bonds jumped to the most since February. California bucked the trend, boosting the size of a bond sale twice. Banks in the euro region borrowed 2.63 billion euros ($3.4 billion) from the ECB’s marginal loan facility on May 3, the most since March 10, ECB data show, while the amount of overnight deposits held at the central bank rose to 268.7 billion euros on May 4, the highest since July. Junk Bonds Financial institutions may be growing more reluctant to lend to each other in the so-called interbank market on concern that Greece’s debt crisis will hurt the quality of loan collateral. “There are echoes here of the July-August 2007 period, when people became very suspicious of what everyone else has on their books,” said Marc Ostwald , a fixed-income strategist at Monument Securities Ltd. in London. “This reinforces the idea that there’s less going in the interbank market. This will depress the ECB, but they’ll fully understand it in the current situation.” Yields over benchmark rates on high-yield bonds rose 23 basis points today, the most since June 2009, to 591 basis points, according to Bank of America Merrill Lynch index data. High-yield, high-risk, or junk bonds are rated below Baa3 by Moody’s Investors Service and lower than BBB- by Standard & Poor’s. Credit-Default Swaps A benchmark indicator of U.S. corporate credit risk soared to the most in three months. The Markit CDX North America Investment Grade Index Series 14 increased 7.3 basis points to 105.1, the highest since Feb. 8, according to Markit Group Ltd. The index typically rises as investor confidence deteriorates and falls as it improves. Credit-default swaps pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt. The extra yield investors demand to own emerging-market bonds over U.S. Treasuries rose 10 basis points to 290, the highest since Feb. 26, according to JPMorgan’s EMBI+ Index. Brazilian traders are betting for the first time that the central bank will raise the benchmark lending rate by 1 percentage point next month after last week’s increase failed to tame rising inflation expectations. Yields on overnight interest rate futures contracts due in July held at an 11-month high of 9.7 percent. The futures rose 14 basis points since central bank President Henrique Meirelles raised the overnight Selic rate by a bigger-than-forecast 75 basis points from a record low 8.75 percent on April 28. California Offering California ’s treasurer boosted the size of a bond sale for the state’s Department of Water Resources by 46 percent to $2.97 billion, after orders from individual investors exceeded $1.2 billion. The issue, now the largest offering of tax-exempt debt this year, was increased twice in response to investor demand, Treasurer Bill Lockyer said in a statement. The bonds, being sold to refinance debt from the state’s power crisis of 2001-2002, were offered at preliminary yields of 0.92 percent on two-year notes, to 3.8 percent on bonds maturing in 2022, according to data compiled by Bloomberg. Goldman Sachs’s 6.15 percent notes due in April 2018 yield 5.92 percent, compared with 5.71 percent for Citigroup’s 6.125 percent debt due a month later, according to data from Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The average bond yield for Goldman Sachs increased to 5.39 percent as of May 4, from 4.63 percent at the end of last year, Bank of America Merrill Lynch index data show. Michael DuVally, a Goldman Sachs spokesman, and Danielle Romero-Apsilos of Citigroup, declined to comment. ‘Loyalty and Relationships’ Credit-default swaps traders are charging 53 basis points more to protect Goldman Sachs bonds for one year than they are for bonds from New York-based Citigroup, run by Chief Executive Officer Vikram Pandit , according to CMA DataVision. Before the SEC filed its fraud suit, Goldman Sachs one-year swaps cost 15 basis points less than Citigroup’s. That means it would cost an extra $55,000 to protect $10 million of Goldman bonds rather than Citigroup’s. Goldman Sachs’s “reputation, their loyalty and relationships is what everyone talks about,” said James Barnes , money manager at Wyomissing, Pennsylvania-based National Penn Investors Trust Co., where he helps oversee $1 billion in fixed- income assets. “If that becomes challenging to maintain, that’s where you can see a continuation in spreads widening.” To contact the reporters on this story: John Detrixhe in New York at jdetrixhe1@bloomberg.net ; Bryan Keogh in London at bkeogh4@bloomberg.net

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Video: BP Faces Oil Spill Clean-Up Costs Exceeding $7 Billion: Video

May 3, 2010

May 3 (Bloomberg) — Bloomberg’s Adam Johnson reports from Venice, Louisiana on efforts to clean up the oil spill in the Gulf of Mexico and the impact on BP Plc’s reputation. BP, owner of the Gulf of Mexico Macondo well that has been spewing oil 5,000 feet below the water’s surface since April 20, outlined a battery of techniques it will use to attempt to stem the leak. Bloomberg’s Rishaad Salamat also speaks.

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Obama Surveys Operations to Stem Gulf Oil Spill `Impossible’ to Estimate

May 2, 2010

By Margot Habiby and Katarzyna Klimasinska May 2 (Bloomberg) — U.S. President Barack Obama arrived on the Gulf Coast today to review efforts to stem an oil-well leak with a flow rate that’s “impossible” to estimate, according to the U.S. Coast Guard. Obama, who was briefed on BP Plc’s efforts to cap the well, met with Louisiana Governor Bobby Jindal after getting off Air Force One. Press secretary Robert Gibbs said the leak was a “continued very serious situation.” The Coast Guard said it has been unable to get an accurate estimate of how much oil is leaking and is preparing for a worst-case scenario. Some of the crude has reached land in Louisiana, and “the more significant oil is coming” within two days, Jindal said at a news conference yesterday. More than 2,000 people have been deployed to protect the shoreline and coastal wildlife, according to a statement from the multiagency Joint Information Center coordinating the federal response. BP , the owner of the offshore well, is seeking ways to plug the leaks that are spewing crude 5,000 feet under the water’s surface. The company has two drill ships in place to bore a second well to take pressure off of the current gusher. The so- called relief well is due to be completed in about 90 days, Michael Abendhoff , a company spokesman, said today in a phone interview from Robert, Louisiana. Within seven to eight days, the company will put funnel- like caps in place to halt oil coming out of the well, said Steve Rinehart , a BP spokesman. Rig Explosion The oil spill followed an April 20 explosion on a drilling rig leased by BP. The rig, owned by Transocean Ltd ., sank two days later. Obama has ordered that no new offshore drilling leases be issued until a “thorough review” of the incident is completed. “Any exact estimation of what’s flowing out of those pipes right now is almost impossible because of the depth of the water,” said Admiral Thad Allen in a conference call with reporters yesterday. Allen, the U.S. Coast Guard commandant, was designated the national incident commander to coordinate efforts to control the oil spill and minimize the damage. “The focus has to be to stop it at the source,” Allen said. Obama is scheduled to make a statement at 2:30 p.m. local time today from Venice, Louisiana, after a briefing with response officials there. The attorneys general from five states bordering the Gulf are scheduled to meet today in Mobile, Alabama, to discuss legal options and strategies, Florida Attorney General Bill McCollum said in a statement today. Chemical Dispersant The London-based company has released 156,012 gallons of dispersant so far to break up the oil, said Bill Salvin, another BP spokesman. BP hasn’t been able to fully assess the efficiency of the method, Abendhoff said. The company has been unable to spray dispersants today because of weather conditions, said Steve Rinehart, a spokesman. Strong winds and 7-to-10-foot waves make it impossible to measure whether the dispersants lowered the volume of oil emerging on the sea surface, Abendhoff said. The response teams opted against conducting flyovers today due to continued foul weather, Rinehart said. Forecasts call for improved weather for the next four to five days starting tomorrow at the earliest, Salvin said. Skimming Operations Surface estimates of the size of the slick and skimming efforts were hindered as the Coast Guard ordered boats and aircraft back to port because of stormy weather. Salvin said 23,968 barrels of crude and other material has been picked up by skimming boats. The National Oceanic and Atmospheric Administration previously estimated the well is spewing 5,000 barrels of oil a day. At that rate, the volume of the spill would exceed Alaska’s 1989 Exxon Valdez accident by the third week of June. BP Chief Executive Officer Tony Hayward arrived in the Gulf area late last night to oversee efforts to combat the leak and will stay several days. BP has begun an investigation into the cause of the explosion and resulting leak, but has not yet set out a timeline for the project, Rinehart said. About 6.2 million cubic feet of gas production was halted yesterday as environmental and safety concerns stopped operations at two offshore platforms and prompted one to be evacuated. That’s less than a 10th of 1 percent of U.S. output. ‘American Chernobyl’ “This is an American Chernobyl,” said Louie Miller, 55, senior representative for the Sierra Club in Mississippi, referring to the explosion at a Ukrainian nuclear reactor in 1986 that killed 56 people, destroyed wildlife and contaminated waterways. Oil “may not be radioactive, but it’s toxic.” NOAA today closed commercial and recreational fishing in parts of the Gulf affected by the spill for a minimum of ten days, effective immediately. The agency said in a statement that it’s working with state governors to evaluate the need to declare fisheries a disaster to get federal aid to fishermen in the area. The Louisiana Department of Health and Hospitals advised residents not to swim or fish in affected waters and to prevent young children, pregnant women and pets from entering contaminated areas. The impact on wildlife “depends on the tides, weather and other factors beyond our control,” Jay Holcomb, director of The International Bird Rescue Research Center , said in a statement. The organization has set up bird-rescue centers in Louisiana and Alabama. Mississippi River Shipping Commercial shipping on Mississippi River fairways hasn’t been significantly affected so far, though that may change if cleanup efforts are implemented, Allen said. Traffic may be halted in contaminated areas or ships will have to be washed after passing through oily waters. St. Bernard Parish in Louisiana will employ local fishermen to deploy protective booms after training them on the procedure yesterday morning, the parish said in a statement. Defense Secretary Robert Gates approved a request by Jindal to mobilize as many as 6,000 National Guard troops to add security, medical support, engineers, communications capability and cleanup crews to the oil slick containment effort, spokesman Geoff Morrell said late April 30. To contact the reporters on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net . Katarzyna Klimasinska in Houston at kklimasinska@bloomberg.net .

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President to Visit Gulf Coast to Survey BP’s Efforts to Control Oil Spill

May 1, 2010

By Margot Habiby and Katarzyna Klimasinska May 2 (Bloomberg) — U.S. President Barack Obama will arrive on the Gulf Coast today to review efforts to mitigate a potential environmental disaster in Louisiana, Mississippi, Alabama and Florida as an expanding oil spill moves onshore. Some of the oil has reached land in Louisiana, and “the more significant oil is coming” within two days, Governor Bobby Jindal said at a news conference yesterday. More than 2,000 people have been deployed to protect the shoreline and coastal wildlife, according to a statement from the multiagency Joint Information Center coordinating the federal response. BP Plc , owner of the offshore well, is seeking ways to plug the leaks that are spewing crude 5,000 feet under the water’s surface. The U.S. Coast Guard said it has been unable to get an accurate estimate of how much oil is leaking and is preparing for a worst-case scenario. The oil spill followed a April 20 explosion on a drilling rig leased by BP. The rig, owned by Transocean Ltd ., sank two days later. Obama has ordered that no new offshore drilling leases be issued until a “thorough review” of the incident is completed. “Any exact estimation of what’s flowing out of those pipes right now is almost impossible because of the depth of the water,” said Admiral Thad Allen in a conference call with reporters yesterday. Allen, the U.S. Coast Guard commandant, was designated the national incident commander to coordinate efforts to control the oil spill and minimize the damage. “The focus has to be to stop it at the source,” Allen said. Stormy Weather Surface estimates of the size of the slick were hindered as the Coast Guard ordered boats and aircraft back to port because of stormy weather that swelled waves to 5 to 8 feet (1.5 to 2.4 meters) in the Gulf and prevented planes from flying. The vessels “weren’t able to do any work today,” said Coast Guard Petty Officer Matthew Schofield in an interview. “Because of the weather, there haven’t been any overflights.” The National Oceanic and Atmospheric Administration previously estimated the well is spewing 5,000 barrels of crude oil a day. At that rate, the volume of the spill would exceed Alaska’s 1989 Exxon Valdez accident by the third week of June. Production Halted BP Chief Executive Officer Tony Hayward was on his way to Louisiana to oversee efforts to combat the leak and will stay several days, said Toby Odone , a London-based spokesman. About 6.2 million cubic feet of gas production was halted yesterday as environmental and safety concerns stopped operations at two offshore platforms and prompted one to be evacuated. That’s less than a 10th of 1 percent of U.S. output. Responders have recovered more than 1 million gallons (3.78 million liters) of an oil-and-water mix from the Gulf. At the mouth of the Baptiste Collette, the easternmost pass from the Mississippi River to the Gulf, a flock of pelicans fed yesterday near oily black debris blowing inshore in long, thin strings. “This is an American Chernobyl,” said Louie Miller, 55, senior representative for the Sierra Club in Mississippi, referring to the explosion at a Ukrainian nuclear reactor in 1986 that killed 56 people, destroyed wildlife and contaminated waterways. Oil “may not be radioactive, but it’s toxic.” No Swimming The Louisiana Department of Health and Hospitals advised residents not to swim or fish in affected waters and to prevent young children, pregnant women and pets from entering contaminated areas. The impact on wildlife “depends on the tides, weather and other factors beyond our control,” said Jay Holcomb, director of The International Bird Rescue Research Center , in a statement. The organization has set up bird-rescue centers in Louisiana and Alabama. Commercial shipping on Mississippi River fairways hasn’t been significantly affected so far, though that may change if cleanup efforts are implemented, Allen said. Traffic may be halted in contaminated areas, or ships will have to be washed after passing through oily waters. Chemical Dispersant BP injected 3,000 gallons of a chemical dispersant 5,000 feet underwater in the Gulf of Mexico to break up the oil at the source of the leak before it can rise to the surface to form a slick, company spokesman Tom Mueller said by phone from Robert, Louisiana, yesterday. BP will be evaluating the effectiveness of the method before continuing, he said. St. Bernard Parish in Louisiana will employ local fishermen to deploy protective booms after training them on the procedure yesterday morning, the parish said in a statement. Defense Secretary Robert Gates approved a request by Jindal to mobilize as many as 6,000 National Guard troops to add security, medical support, engineers, communications capability and cleanup crews to the oil slick containment effort, spokesman Geoff Morrell said late April 30. To contact the reporters on this story: Margot Habiby in Dallas at mhabiby@bloomberg.net . Katarzyna Klimasinska in Houston at kklimasinska@bloomberg.net .

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Gulf of Mexico Spill May Alter Obama’s Plans to Expand Offshore Drilling

April 30, 2010

By Nicholas Johnston and Julianna Goldman April 30 (Bloomberg) — Oil spilling from a damaged BP Plc well in the Gulf of Mexico may complicate President Barack Obama ’s five-year plan to open new offshore tracts to energy exploration. The leak, which is five times bigger than previously estimated, prompted Louisiana Governor Bobby Jindal to declare a state of emergency, and led Senator Bill Nelson , a Florida Democrat, to ask Obama to indefinitely suspend plans to expand offshore drilling for oil and natural gas. “Obviously, what’s occurring now will also be taken into consideration as the administration looks to how to advance that plan and what makes sense and what might need to be adjusted,” Carol Browner , Obama’s adviser for energy and climate change, said at a White House briefing yesterday. Administration officials escalated the federal response, declaring the spill of “national significance,” announcing immediate inspections of all deep-water drilling rigs in the Gulf of Mexico and convening at the Department of Interior a meeting between government agencies and representatives from more than a dozen companies including BP, Chevron Corp ., ConocoPhillips , Exxon Mobil Corp . and Halliburton Co . Interior Secretary Ken Salazar , who also met with BP officials at their command center in Houston yesterday, urged the companies and technical experts “to get all hands on deck” to deal with the spill, a statement from the department said. “We expect industry to be fully complying with the law and to be taking aggressive measures to ensure that this type of incident does not happen again,” Salazar said in the statement. Federal Response The government response involves the Departments of Defense, Homeland Security, Commerce and Interior. Obama has directed the military to consult with BP on whether the Pentagon has technology better than that available in the private sector. The U.S. Navy is sending equipment to the Gulf, including 66,000 feet of inflatable booms for containing the oil and seven systems for skimming the crude off the water. That is in addition to the 76 skimmers, tugs, barges and recovery vehicles already deployed to the spill. At the current rate oil is spilling from the well, by the third week of June the spill will exceed the volume dumped after the Exxon Valdez ran aground in Alaska’s Prince William Sound in 1989. BP is required to cover the costs of the spill under the 1990 Oil Pollution Act, drafted after the Exxon Valdez incident. Every Resource “While BP is ultimately responsible for funding the cost of response and cleanup operations, my administration will continue to use every single available resource at our disposal,” Obama said in remarks yesterday at the White House. Obama said he is dispatching Salazar, Homeland Security Secretary Janet Napolitano and Environmental Protection Agency Administrator Lisa Jackson to the Gulf today “to ensure that BP and the entire U.S. government is doing everything possible, not just to respond to this incident, but also to determine its cause.” The leak, which followed an explosion on a drilling rig April 20 that left 11 workers missing, is costing BP and its partners in the well $6 million a day. BP’s costs of operation “are ramping up” as they bring more people and equipment, Neil Chapman , company spokesman, said in an interview in Robert, Louisiana. American depositary receipts of BP, which vies with Royal Dutch Shell Plc for the title of Europe’s biggest oil company, plunged 8.3 percent to $52.56 yesterday in New York. Gulf Production The well is in a portion of the Gulf of Mexico off the Louisiana, Mississippi and Alabama coasts that is already open to energy exploration. The area produces an estimated 1.7 million barrels of oil a day, about 30 percent of domestic production, according to Interior Department figures. Obama last month proposed expanding that area into portions of the Gulf off the coast of Florida as well as opening territory along portions of the East Coast. While the energy industry welcomed the decision, which Obama pitched as necessary to help wean the U.S. off foreign energy sources, it was criticized by environmental groups and some Florida politicians. Some lawmakers expressed skepticism yesterday. House Speaker Nancy Pelosi said yesterday Congress should “look at the danger to the coastline” posed by the oil slick when lawmakers “review the plan the president put forth.” White House press secretary Robert Gibbs said the president will reserve judgment on going forward with new exploration plans until the cause of the rig’s explosion is determined. Start of Process Browner said Obama’s decision “doesn’t automatically open up an area to drilling. It starts a process, and an area may or may not become open to drilling.” When asked whether the administration would support a pause in new deep-water oil drilling, Deputy Interior Secretary David Hayes said, “Everything’s on the table.” Nelson, the Florida Senator, said the possibility of an economic and environmental disaster caused by the spill required an immediate halt to Obama’s plans. “The questions about the practices of the oil industry raised in the wake of this still-unfolding incident require that you postpone indefinitely plans for expanded offshore drilling operations,” Nelson wrote in a letter to the president. To contact the reporters on this story: Nicholas Johnston in Washington at njohnston3@bloomberg.net ; Julianna Goldman in Washington at jgoldman6@bloomberg.net ;

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Siemens, GE Lured to Hydro Hub by Singapore’s Push to End Water Dependency

April 29, 2010

By Frederik Balfour April 29 (Bloomberg) — Singaporeans splash their way through 2 meters (6.5 feet) of rain each year on average, three times as much as Londoners. Yet the island nation’s economy depends on water imports from its rival, Malaysia. That reliance will ease May 3 when the country opens its newest of five water recycling facilities. The 50-million- gallon-a-day plant is a showcase for the expertise Singapore is using to tap a global market in water management — from treating sewage to desalination — that market consultants Frost & Sullivan say will more than triple to $1.38 trillion by 2020. General Electric Co. and Siemens AG are among companies that have invested in Singapore, lured by the government’s commitment to water treatment technology in the world’s fastest- growing region. Water companies are seeking to supply countries such as China and India, where increasing wealth means consumers each use more and compete for resources with the chip factories, refineries and farms needed to sustain economic growth. “A lot of our knowhow in water technology comes from our drive to be self-sufficient,” said Beh Swan Gin , chief executive officer of the Economic Development Board of Singapore, a government agency. While Paris-based Veolia Environnement and Compagnie de Suez and London’s Thames Water Holdings have worked on water technologies for decades, it is government support that gives Singapore’s industry an edge, said Melvin Leong, a Kuala Lumpur- based consultant at Frost & Sullivan. In the past three years, the city-state’s companies have won over 100 projects in more than 15 countries, valued at $5.6 billion, according to the Public Utilities Board of Singapore. Founding Father When Singapore was ejected from the Federation of Malaya in 1965, founding father Lee Kuan Yew set water self sufficiency as a national goal. The country cut Malaysian imports to 50 percent of its needs from 80 percent by building reservoirs, recycling waste and constructing desalination plants. Singapore will be able to recycle 30 percent of its water once the new plant is opened, the most among the world’s major cities, according to the International Water Association , an industry body. With no natural resources, the country of five million people evolved from low-wage manufacturer to Asia’s only economy whose debt is rated triple-A by Standard & Poor’s. It is home to the world’s largest container port and oil refining hub, and the region’s biggest bio-tech and private banking centers. To woo global water companies, the government is investing $240 million in research. Last year, the water division of GE opened a joint $108 million research lab with Singapore National University . It expects to double the number of scientists there to 70 by next year, said Kevin Cassidy, who heads the Fairfield, Connecticut-based company’s water business in the region. Talent Pool “We are taking advantage of the talent here and Singapore’s willingness to test technologies,” he said. Siemens opened a $33 million lab in 2007 that will be the Munich-based company’s biggest water research facility within two years. Almost $15 million in grants to help build the plant and find better desalination processes was instrumental in the choice of Singapore, said Ruediger Knauf, the facility’s chief. One company that may gain most from Singapore’s ambitions is Hyflux Ltd ., a maker of filtration membranes, which was founded on the island in 1989. Hyflux opened its own desalination plant, designed and built in 2005. In 2008, Hyflux outbid GE and others to win a $468 million contract to build and operate the world’s largest filter-based desalination plant in Mactaan, Algeria. Track Record “We have a track record in Singapore we can take everywhere else,” said Sam Ong, deputy chief executive officer. Hyflux’s net income rose 21 percent last year to S$75 million ($54 million). Its shares doubled to S$3.55, outpacing the 64 percent advance by the benchmark Straits Times Index. “Because of the experience Hyflux got in their home market they manage to export and have pretty strong results abroad,” said Arnaud Bisschop , who holds Hyflux stock among the $3.32 billion he manages at Pictet & Cie’s water fund in Geneva. The growing expertise is helping other local companies win contracts abroad. Keppel Corp., a government-linked company with interests ranging from shipbuilding to real estate, will open next year a $1.1 billion plant in Doha, Qatar, to treat municipal waste water that will be recycled for irrigation. Sembcorp Industries Ltd., also partly state-owned, is building a $1.7 billion water desalination facility in Fujairah, United Arab Emirates. It is also building a $1 billion combined desalination and power plant in Oman, and is investing $206 million in water treatment projects in China. The company’s new $130 million water recycling plant in Singapore, Asia’s biggest, is built 200 feet underground so waste water can flow from 20 miles away without pumping. Inside the central hub, waste is fed into a labyrinth of pipes that can turn sewage into drinking water. “Singapore is the closest to the city of the future in terms of water sustainability,” said David Garman , president of the London-based International Water Association. To contact the reporter on this story: Frederik Balfour in Hong Kong at fbalfour@bloomberg.net

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Siemens, GE Lured to Hydro Hub by Singapore’s Push to End Water Dependency

April 29, 2010

By Frederik Balfour April 29 (Bloomberg) — Singaporeans splash their way through 2 meters (6.5 feet) of rain each year on average, three times as much as Londoners. Yet the island nation’s economy depends on water imports from its rival, Malaysia. That reliance will ease May 3 when the country opens its newest of five water recycling facilities. The 50-million- gallon-a-day plant is a showcase for the expertise Singapore is using to tap a global market in water management — from treating sewage to desalination — that market consultants Frost & Sullivan say will more than triple to $1.38 trillion by 2020. General Electric Co. and Siemens AG are among companies that have invested in Singapore, lured by the government’s commitment to water treatment technology in the world’s fastest- growing region. Water companies are seeking to supply countries such as China and India, where increasing wealth means consumers each use more and compete for resources with the chip factories, refineries and farms needed to sustain economic growth. “A lot of our knowhow in water technology comes from our drive to be self-sufficient,” said Beh Swan Gin , chief executive officer of the Economic Development Board of Singapore, a government agency. While Paris-based Veolia Environnement and Compagnie de Suez and London’s Thames Water Holdings have worked on water technologies for decades, it is government support that gives Singapore’s industry an edge, said Melvin Leong, a Kuala Lumpur- based consultant at Frost & Sullivan. In the past three years, the city-state’s companies have won over 100 projects in more than 15 countries, valued at $5.6 billion, according to the Public Utilities Board of Singapore. Founding Father When Singapore was ejected from the Federation of Malaya in 1965, founding father Lee Kuan Yew set water self sufficiency as a national goal. The country cut Malaysian imports to 50 percent of its needs from 80 percent by building reservoirs, recycling waste and constructing desalination plants. Singapore will be able to recycle 30 percent of its water once the new plant is opened, the most among the world’s major cities, according to the International Water Association , an industry body. With no natural resources, the country of five million people evolved from low-wage manufacturer to Asia’s only economy whose debt is rated triple-A by Standard & Poor’s. It is home to the world’s largest container port and oil refining hub, and the region’s biggest bio-tech and private banking centers. To woo global water companies, the government is investing $240 million in research. Last year, the water division of GE opened a joint $108 million research lab with Singapore National University . It expects to double the number of scientists there to 70 by next year, said Kevin Cassidy, who heads the Fairfield, Connecticut-based company’s water business in the region. Talent Pool “We are taking advantage of the talent here and Singapore’s willingness to test technologies,” he said. Siemens opened a $33 million lab in 2007 that will be the Munich-based company’s biggest water research facility within two years. Almost $15 million in grants to help build the plant and find better desalination processes was instrumental in the choice of Singapore, said Ruediger Knauf, the facility’s chief. One company that may gain most from Singapore’s ambitions is Hyflux Ltd ., a maker of filtration membranes, which was founded on the island in 1989. Hyflux opened its own desalination plant, designed and built in 2005. In 2008, Hyflux outbid GE and others to win a $468 million contract to build and operate the world’s largest filter-based desalination plant in Mactaan, Algeria. Track Record “We have a track record in Singapore we can take everywhere else,” said Sam Ong, deputy chief executive officer. Hyflux’s net income rose 21 percent last year to S$75 million ($54 million). Its shares doubled to S$3.55, outpacing the 64 percent advance by the benchmark Straits Times Index. “Because of the experience Hyflux got in their home market they manage to export and have pretty strong results abroad,” said Arnaud Bisschop , who holds Hyflux stock among the $3.32 billion he manages at Pictet & Cie’s water fund in Geneva. The growing expertise is helping other local companies win contracts abroad. Keppel Corp., a government-linked company with interests ranging from shipbuilding to real estate, will open next year a $1.1 billion plant in Doha, Qatar, to treat municipal waste water that will be recycled for irrigation. Sembcorp Industries Ltd., also partly state-owned, is building a $1.7 billion water desalination facility in Fujairah, United Arab Emirates. It is also building a $1 billion combined desalination and power plant in Oman, and is investing $206 million in water treatment projects in China. The company’s new $130 million water recycling plant in Singapore, Asia’s biggest, is built 200 feet underground so waste water can flow from 20 miles away without pumping. Inside the central hub, waste is fed into a labyrinth of pipes that can turn sewage into drinking water. “Singapore is the closest to the city of the future in terms of water sustainability,” said David Garman , president of the London-based International Water Association. To contact the reporter on this story: Frederik Balfour in Hong Kong at fbalfour@bloomberg.net

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E.ON Is Near Accord to Sell $7.5 Billion U.S. Electricity Business to PPL

April 28, 2010

By Nicholas Comfort and Jordan Burke April 28 (Bloomberg) — E.ON AG is nearing an agreement to sell its U.S. unit to PPL Corp. in a deal that values the unit at about $7.5 billion including debt, according to a person with knowledge of the matter. E.ON, based in Dusseldorf, is seeking to sell more than 10 billion euros of assets by the end of the year after being saddled with debt from acquiring power plants and customers from Spain to Siberia. PPL, based in Allentown, Pennsylvania, owns its state’s second-biggest utility. E.ON’s U.S. unit, which includes two utilities, delivers electricity to about 900,000 customers and gas to about 318,000 customers. It can generate more than 8,000 megawatts of power. PPL owns or controls about 12,000 megawatts of power generation, of which 34 percent is coal-fired and 18 percent is nuclear. PPL has 1.4 million Pennsylvania customers and 2.6 million U.K. customers. “Consolidation in this industry makes sense,” said Paul Patterson , an analyst at Glenrock Associates LLC in New York. “There are a large number of smaller utilities, when combined together, that could drive operational efficiencies.” E.ON already has raised almost 6 billion euros selling high-voltage power lines, about 20 percent of its electricity generation capacity in Germany and a holding company for stakes in local energy suppliers, according to a March 10 presentation. E.ON’s net debt was 44.67 billion euros as of Dec. 31. E.ON acquired the U.S. assets when it bought U.K. electricity producer PowerGen Plc in 2002. PowerGen agreed to buy LG&E Energy Corp. for $5.4 billion in 2000. The German company also has 1,720 megawatts of wind turbines in the U.S. managed by its renewable-energy unit, according to its 2009 annual report. LG&E was originally formed in 1838 as Louisville Gas & Water to provide gas-fired street lighting. In February, FirstEnergy Corp. agreed to buy Allegheny Energy for about $4.7 billion to increase generation capacity in PJM Interconnection LLC, the largest electricity market in the U.S., which stretches from Washington to Chicago. “With the bigger balance sheet and more asset base, you can take on bigger projects that smaller and medium utilities cannot do,” said Steve Mitnick , a partner at Oliver Wyman in New York who advises power and utility companies. “That’s a real advantage.” E.ON hired Goldman Sachs Group Inc. to find a buyer for the unit, a person briefed on the matter said last month. With wider geographic spread, companies may find it easier to weather state utility commission actions, Mitnick said. Florida regulators in January rejected or reduced rate increases for Progress Energy Inc. and FPL Group Inc.’s Florida Power & Light Co. Both companies reduced capital-spending plans following the decisions. “Where a utility is in several states and is not dependent on just one regulatory commission, that means that its financial stability is less dependent on one commission,” Mitnick said. “In these tough times, some of these commissions have been difficult and challenging.” To contact the reporters on this story: Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net ; Jordan Burke in New York at jburke29@bloomberg.net .

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Gulf of Mexico Oil Spill Covers 100 Square Miles After Drilling Rig Blast

April 23, 2010

By Jim Polson April 23 (Bloomberg) — An oil spill near the site where Transocean Ltd. ’s Deepwater Horizon rig caught fire April 20 and sank yesterday has spread over an area of 100 square miles in the Gulf of Mexico and is drifting northeast toward shore. The spill measures 10 miles (16 kilometers) by 10 miles, about four times the area of Manhattan, and is comprised of a “light sheen with a few patches of thicker crude,” U.S. Coast Guard Lieutenant Commander Cheri Ben-Iesau said today. The Coast Guard’s search continues for 11 rig workers who are still missing, she said in a telephone interview. Aircraft hired by BP Plc , the oil producer that leased the Deepwater Horizon from Transocean, spayed the spill with a chemical dispersant overnight, Ben-Iesau said. Eleven skimming vessels were collecting oil from the water’s surface, she said. The oil spill is about 43 miles south of Venice, Louisiana. “This certainly has the potential to be a major spill,” David Rainey , London-based BP’s vice president for Gulf of Mexico production, said yesterday at a press conference in New Orleans. An effort to close well valves on the sea floor using remote-operated vehicles will continue. BP hired a rig capable of drilling down to plug the well if necessary, he said. Michael O’Berry , a senior chief petty officer with the Coast Guard, said remote-operated vehicles found no new leakage from the well yesterday. Blowout The rig had burned for more than 24 hours after an explosion April 20 that Geneva-based Transocean said was caused by a so-called blowout, an unexpected surge in pressure that ejected petroleum at the top of the well. Of 126 workers aboard, 115 were rescued. If the missing workers died, it would be the deadliest U.S. offshore rig explosion since 1968, when 11 died and 20 were injured at a platform owned by Gulf Oil Corp., according to data from the Minerals Management Service. A 1987 helicopter crash aboard a Forest Oil Corp. platform killed 14 people. Royal Dutch Shell Plc shut its Nakika offshore oil platform and a pipeline in the Gulf of Mexico a mile away, as a precaution against the sunken Deepwater Horizon drifting into it and causing another spill, said Jill Davis , a company spokeswoman. Another, unidentified pipeline was shut nearby, the Coast Guard said. The Coast Guard throttled back its search for survivors to the cutter Coho overnight, Ben-Iesau said. Three aerial searches are planned today. Hope was fading that the 11 missing crew survived, Coast Guard Rear Admiral Mary Landry said at yesterday’s press conference. To contact the reporter on this story: Jim Polson in New York at jpolson@bloomberg.net

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Drillers Risk Deadly Blowouts to Tap Oil, Gas Reservoirs Deeper Undersea

April 23, 2010

By Joe Carroll, Jim Polson and Katarzyna Klimasinska April 23 (Bloomberg) — Energy companies delving miles beneath the seafloor for oil are risking pressure surges like the one this week that may have sparked the deadliest U.S. rig accident in 23 years. Explorers began work on 17 new Gulf of Mexico wells last week in waters deeper than 1,000 feet (305 meters), spurred in part by a tripling in crude prices in the past decade. The threat of pressure surges, or blowouts, that can smash steel equipment and create gushing columns of fire increases as drillers probe deeper, Neal Dingmann , an analyst at Wunderlich Securities, said. U.S. Coast Guard rescuers said hope was fading of finding alive any of the 11 workers missing since an April 20 explosion aboard Transocean Ltd. ’s Deepwater Horizon rig, which the company said may have been caused by a blowout in an 18,000-foot well. The $365 million vessel sank yesterday and left an oil sheen on the water large enough to cover one-fourth of Manhattan. “Offshore drilling has always been high risk, but when you talk about wells going to these kinds of depths, the risks go even higher,” Dingmann said in a telephone interview from Houston. “Once you go anywhere below 10,000 feet, all of a sudden the pressure and temperature become a lot more difficult to contend with.” If the 11 missing workers are declared dead, it would be the worst offshore oil-industry accident in U.S. waters since 1987, when a helicopter crashed into a Forest Oil Corp. platform, killing 14 people, according to a Bloomberg News analysis of data from the U.S. Interior Department’s Minerals Management Service . No Warning Some workers were killed by the explosion on the Deepwater Horizon and others were thrown overboard, according to a lawsuit filed by the family of missing roustabout Shane Roshto against BP and Transocean. Adrian Rose , who oversees Geneva-based Transocean’s quality, health, safety and environment unit, said yesterday that the disaster unfolded with little or no warning. Michael Kersey told reporters in Kenner, Louisiana, that his brother, Jonathan Kersey, was aboard the Deepwater Horizon when it erupted in flames. “He said it was the scariest thing he saw in his life,” Michael Kersey said. Jonathan Kersey, 33, was among those who escaped in a life boat, his brother said. The accident may spur calls for tougher oversight and increased regulation of the drilling industry, as well as raise legal risks for companies. Political Pressure President Barack Obama last month proposed expanding offshore drilling in some U.S. coastal areas. “This accident happened at exactly the wrong time,” Jud Bailey , a Houston-based analyst for Jefferies & Co., said in a telephone interview. “The offshore industry has a good safety record, but this is something environmentalists can grab onto and say, ‘See, this is why you shouldn’t drill.’” Senator Mary L. Landrieu , a Louisiana Democrat, urged the Coast Guard and the Minerals Management Service, which has authority over oil and gas exploration in federal waters, to “conduct a swift and thorough investigation.” “It is critical that these agencies examine what went wrong and the environmental impact this incident has created,” Landrieu said in a statement. Cote de Mer The minerals agency requires energy producers to inspect wells at least every 30 days during exploration work, John Schiller , chief executive officer of Energy XXI (Bermuda) Ltd., said on a November conference call with investors. Energy XXI, along with partners that included Nexen Inc., spent $75 million to bring a June 2007 blowout at the Cote de Mer field in Louisiana under control. A surge of gas in the 22,261-foot well blew through a device known as a blowout preventer, burying the rig floor in six feet of sand, rock and seashells. No one was injured, the company said. Oilfield-equipment makers such as Ametek Inc. and FMC Technologies Inc. are working to develop hardware that can withstand pressures and temperatures in wells that can plunge more than 32,000 feet (9,754 meters) into the Earth’s crust. “The conditions keep getting worse as they go deeper,” said Brian Ainley, director of business development at Ametek’s Chandler Engineering unit in Broken Arrow, Oklahoma. Calculating Risks Some companies aren’t willing to risk the danger of a blowout. Exxon Mobil Corp., the world’s second-largest oil company, abandoned its Blackbeard well in the Gulf of Mexico in 2006 after the company’s engineers became alarmed over the pressure levels and temperatures almost seven miles beneath the seafloor, Dingmann said. McMoRan Exploration Co. obtained control over Blackbeard in 2007 as part of its $1.1 billion acquisition of offshore assets from Newfield Exploration Co., one of Exxon’s partners in the project. McMoRan of New Orleans extended the well almost 3,000 feet deeper than where Exxon left it. James “ Jim Bob ” Moffett, co-chairman of McMoRan, told investors on a January conference call that the risks of dealing with higher-pressure deposits may be worthwhile because those fields have more oil and gas packed into each square yard of rock. Transocean fell 8 cents to $90.29 yesterday in New York Stock Exchange composite trading. BP dropped 11.8 pence to 636.40 pence. To contact the reporters on this story: Joe Carroll in Chicago at Jcarroll8@bloomberg.net ; Jim Polson in New York at jpolson@bloomberg.net ; Katarzyna Klimasinska in Kenner, Louisiana, at kklimasinska@bloomberg.net .

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Parched Kansas Is Battlefield in $2.7 Billion Monsanto, DuPont Corn Fight

April 21, 2010

By Jack Kaskey and Antonio Ligi April 21 (Bloomberg) — Lance Russell’s neighbors aren’t used to seeing corn growing in the fields around Hays, Kansas, where the plants tend to wither and keel over in the hot, dry summers. They may be in for a surprise this summer. Russell is planting DuPont Co. ’s drought-tolerant corn, one of the seeds heading to market next year that’s designed to thrive where water is scarce. An experimental plot in 2009 improved on the economics of the sorghum crop “by a landslide,” Russell said. Monsanto Co. , DuPont and Syngenta AG are vying for a similar windfall. After battling for a decade to corner the $11 billion market for insect-resistant and herbicide-tolerant technologies, the world’s biggest seed companies are vying to develop crops that can survive drought. At stake is a new global market that may top $2.7 billion for the corn version alone. “It’s a race at the moment,” said Juergen Reck , a Frankfurt-based analyst at Macquarie Group Ltd. “They must see market potential.” The technology will have wide-ranging effects, from helping farmers draw less irrigation water to lowering insurance premiums and boosting land values in drought-prone regions, agricultural economists say. The seeds also may increase corn plantings in the U.S. Great Plains at the expense of wheat and sorghum while altering the market for biofuels. Higher Yields Perhaps most importantly for farmers, corn yields may climb. DuPont says seed being tested on 5,000 acres (2,023 hectares) this year is expected to boost yields in dry environments by at least 6 percent. Syngenta is targeting yield increases of at least 10 percent for its corn. Both companies used conventional breeding to develop the seeds for sale next year, with biotech versions due later in the decade. The seeds will be a “big market” for Basel, Switzerland- based Syngenta, Chief Executive Officer Michael Mack said in a telephone interview. “Farmers around the world are going to pay hundreds of millions of dollars to technology providers in order to have this feature.” Monsanto is moving directly to a biotech version that it says will increase corn yields 6 percent to 10 percent. The company’s seed, developed with BASF SE , may be put on sale in 2012 and become the first product genetically engineered to tolerate drought. The Monsanto-BASF partnership, created in 2007, aims to have its drought genetics in 55 million acres of U.S. corn by 2020. In comparison, St. Louis-based Monsanto had at least one biotech trait in 82 percent of the nation’s 86.5 million acres of corn last year. Insurance for Growers Monsanto and BASF are also developing drought-resistant versions that can serve as insurance for growers who normally have adequate rainfall or access to irrigation. The seeds may generate annual sales of almost $1 billion assuming the trait retails on average for $18 an acre , according to Ludwigshafen, Germany-based Germany BASF, the world’s largest chemicals company. “All players expect blockbuster potential,” said Patrick Rafaisz , a Zurich-based analyst at Bank Vontobel AG. The global market for drought-tolerant corn may reach 150 million acres, Wilmington, Delaware-based DuPont said in a February presentation , without providing a timeframe. That implies a market of $2.7 billion, based on BASF’s $18-per-acre projection. In comparison, global sales of all seeds in 2008 were $26 billion, including $9 billion of corn, Edinburgh-based industry consultant Phillips McDougall said in a December report. ‘Game Changer’ Agriculture accounts for 70 percent of global fresh-water use, Monsanto Chief Executive Officer Hugh Grant said in an interview. Reducing irrigation not only contributes to more sustainable farming, it’s a “game changer” that will boost profits and help feed a rising world population, he said. “The biggest single issue in farming going forward is water, use of water, water availability in many parts of the world, so I think it will be a significant product,” Grant said. Monsanto also is engineering crop seeds including cotton, wheat and sugar cane for drought tolerance, and the company and BASF are donating drought-resistant corn technologies to farmers in sub-Saharan Africa through the Nairobi-based African Agricultural Technology Foundation . The prospect of drought-resistant seeds isn’t winning over opponents of genetically modified foods, who say the latest technology may taint conventional corn supplies and allow large companies to perpetuate an industrial agricultural system that harms water resources. ‘System of Expansion’ “Their approach is that the market system of expansion we have is just fine and we can use technology to adapt to any problems and make money at the same time,” Maude Barlow , chairwoman of Washington-based Food and Water Watch , said in e- mailed responses to questions. “We are also very concerned about the possibility of this genetically engineered corn contaminating the stock.” The technology will expand the U.S. corn-growing region westward while helping the country’s farmers cut their irrigation bill, said Kevin C. Dhuyvetter , an agricultural economist at Kansas State University. The trait may reduce farmers’ insurance premiums and ultimately boost land values in water-starved regions of Nebraska, Kansas and Oklahoma, he said. “If we can apply 2 inches less water, that would be a huge benefit because the groundwater supplies are always diminishing,” Dhuyvetter said in a telephone interview. Effect on Markets By expanding the corn-growing region, the technology can help grow more grain to meet government targets that call for tripling use of biofuels including ethanol, which is made from corn in the U.S, by 2022, said Art Barnaby , an agricultural economist at Kansas State University. Growing more corn may lower prices, benefiting grain- importing countries, Barnaby said in a telephone interview. The biggest buyers of U.S. corn last year were Japan, Mexico and South Korea, according to the U.S. Department of Agriculture. Still, price changes won’t be significant because increased supply may be consumed by rising ethanol production and a growing world population, he said. Climate change may affect all of the variables. Global warming will increase vulnerability to drought in many U.S. regions, according to the Geological Society of America , and that may increase the need for drought-resistant seeds. “If you are in the drylands, this is a big deal,” Mark Gulley , a New York-based analyst at Soleil Securities, said in a telephone interview. It certainly is for Russell, the Kansas farmer. He said DuPont’s drought-tolerant corn outperformed other varieties by 15 percent last year when the weather was relatively moderate. “Honestly, I wouldn’t mind a dry, hot year where I can really test these varieties,” Russell said. To contact the reporters on this story: Jack Kaskey in New York at kaskey@bloomberg.net ; Antonio Ligi in Zurich at aligi@bloomberg.net .

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Iranian Supertankers Expand Oil Storage, Echoing Surge of 2008

April 12, 2010

By Alaric Nightingale April 12 (Bloomberg) — Iran, OPEC’s second-biggest crude producer, expanded the number of supertankers being used to store surplus oil, echoing a program that contributed to a tripling of freight rates two years ago. At least nine such vessels are idling in the Persian Gulf, Gulf of Oman and to the south of Egypt’s Suez Canal, according to data from the ships collected by AIS Live Ltd. Two months ago, there were three. Their depth in the water indicates they are loaded, with as many as 18 million barrels of oil being stored, almost enough to supply Europe for a day. Refineries across Asia, accounting for almost two-thirds of global demand for supertankers, typically process less fuel in the second quarter to carry out maintenance. Two years ago, Iran used as many as 15 tankers for storage when demand from refiners fell, constricting vessel supply and helping to drive up freight rates more than 200 percent in less than three months. “This kind of development can be a psychological trigger for the market,” said Per Mansson , managing director of Nor Ocean Stockholm AB. The supply of ships “is already about equal to demand, and this can rapidly alter sentiment.” National Iranian Tanker Co., which operates the nine supertankers, also has a laden suezmax tanker idling off Iran, ship-tracking data show. A suezmax can hold about 1 million barrels of oil. Four of the supertankers are off Iran, three are near the United Arab Emirates in the Gulf of Oman and two are south of the Suez Canal. ‘Positive Effect’ “Any capacity being taken out of the market is reducing the fleet and should have a positive effect,” Dag Kilen , an analyst at RS Platou Capital Markets A/S in Oslo, said by phone. The number of Iranian tankers being used for storage this year is about double the average, he said. Calls today to the office of Seifollah Jashnsaz, managing director of National Iranian Oil Co., weren’t answered. The office of Deputy Oil Minister Hossein Noghrekar Shirazi referred calls to NIOC’s office of international affairs. Ali Asghar Arshi , the company’s manager of international affairs, wasn’t immediately available for comment, his office said. Mohammad Souri , managing director of National Iranian Tanker, wasn’t immediately available for comment, his office said. Demand for Iran’s sulfur-rich crude has weakened as refineries that can process the fuel shut down for maintenance. The discount on Iran Heavy crude compared with Oman and Dubai petroleum is at its widest in more than a year, according to data compiled by Bloomberg. The discounts on Iran’s Forozan, Soroosh and Norooz crudes have also widened. Oil Production Iranian oil production expanded 0.8 percent last month to almost 3.83 million barrels a day, data compiled by Bloomberg show. That’s in contrast to the combined 12 members of the Organization of Petroleum Exporting Countries, accounting for about 40 percent of global supply, who kept output little changed in March, the data show. Iran’s tankers have idled since at least March 19, the ship-tracking data show. A normal turnaround for a supertanker taking on a cargo would be one or two days, said Halvor Ellefsen , a tanker broker at SeaLeague AS in Oslo. Iran’s expanding oil storage runs contrary to what is happening globally. The number of tankers tied up in storage fell to 104 by the end of February, from a record 168 in November, according to Simpson, Spence & Young Ltd., the world’s second-largest shipbroker. There were 18 supertankers storing. Stored on Tankers Traders had bought crude, stored it on tankers and sold the fuel for delivery in the next several months. Those trades unwound after the premium for later delivery was eroded. Iran’s storage may bolster freight rates and prompt traders to revise their expectations for the second quarter. Rates on the benchmark Saudi Arabia-to-Japan route will average $28,758 a day in the period, according to the median in a Bloomberg survey of 13 analysts, traders and shipbrokers at the end of March. That’s 49 percent less than the rate of $56,246 on April 9, according to prices from the Baltic Exchange in London. Higher freight rates could bolster earnings for shipping lines including Hamilton, Bermuda-based Frontline Ltd., the biggest operator of the vessels. The six-member Bloomberg Tanker Index of shipping stocks advanced 14 percent this year, more than the 5.1 percent gain in the MSCI World Index of 23 developed nations’ equities. The absence of Iranian tankers from the market would also compound an expected contraction in the global fleet this year as a ban on single-hulled vessels takes hold. The fleet will shrink 4.2 percent this year, according to Clarkson Research Services Ltd., a unit of the world’s largest shipbroker. To contact the reporter on this story: Alaric Nightingale in London at Anightingal1@bloomberg.net

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China Faces `Test’ Meeting Grain-Output Goal on Drought, Cold, Wen Warns

March 26, 2010

By Bloomberg News March 26 (Bloomberg) — China, the biggest grain user, faces a test meeting a crop-output target because of drought in the southwest and a cold winter in the north, Premier Wen Jiabao said, underscoring the challenges brought on by bad weather. Meeting this year’s goal of growing 500 million metric tons of grains will be a “test for sure,” the Xinhua News Agency reported, citing Wen. Wheat output in China may fall because of the cold weather, Wen was cited by the state agency as saying during a trip to drought-hit Yunnan from March 19-21. China’s leaders have prioritized food security to ensure that the world’s most populous nation has adequate supplies and stockpiles. Rivers in China’s southwest have plunged to record low levels, according to the Ministry of Water Resources. About 18 million people are short of drinking water, Xinhua reported. “There is little prospect for meaningful rainfall until May” in the southwest, forecaster Accuweather Inc. said in an e-mail. “The drought is badly affecting the planting of crops” and a serious shortage of water in reservoirs will make it even harder for planting to be sustained, it said. China set the 500 million ton target in February and the goal is lower than last year’s harvest of 530.8 million tons, Xinhua said in the report late yesterday. Output had increased in the six years to 2009, the report said. ‘Having an Impact’ “The cold weather and drought are definitely having an impact on China’s wheat crop,” Jay O’Neil, an adviser to the U.S. Grains Council, said by phone from Shandong today. Still, it’s too soon to tell what the outcome may be because wheat is a “hardy” crop that can recover if conditions improve, he said. The drought in the China’s southwest, which may have been caused by the El Nino weather phenomenon, extends southward into Southeast Asia. The Mekong River, which flows from China through five countries including Cambodia is at its lowest level in 30 years, Thailand’s Department of Water Resources said on March 10. Rice production may drop and the price may jump because of the dry weather, Thai Prime Minister Abhisit Vejjajiva said March 2. Palm oil output in Malaysia, the world’s second-largest grower, may decline 2 percent to 3 percent this year on the El Nino, the Malaysian Estate Owners Association said March 19. China maintains grain stockpiles of 150 million to 200 million tons, equivalent to about 40 percent of the nation’s annual demand, China Grain Reserves Corp. President Bao Kexin said March 6. Wen judges that the country’s grains market would be “too tight” with less than 150 million tons, according to Bao. Sinograin, as the company is also known, is a state-run entity that stockpiles grain for the government. Wheat Stockpiles O’Neil, the adviser to the U.S. Grains Council, said that the grain market generally believes that China has a “very good” quantity of wheat stockpiles, which may be used to offset any possible reduction in this year’s crop. China’s wheat imports are limited to small number of shipments of good-quality wheat at present, he said. Food self-sufficiency remains a priority for China because relying on other producers isn’t sustainable, Vice Minister for Agriculture Niu Dun told a conference in January. China has to produce 500 million tons of grain a year to feed its population, according to Niu. That allows for per-capita grain consumption of 400 kilograms (882 pounds), which is “not high,” he said. El Ninos, which can parch parts of Asia, are caused by a warming of the equatorial Pacific Ocean. The current El Nino is weakening after peaking in December, Philippine Senior Weather Bureau Specialist Daisy Ortega said on March 24. China’s government will by July ship 300,000 tons of wheat, 540,000 tons of rough rice and 580,000 tons of corn to southwestern provinces including Yunnan as part of a stockpile- rotation plan, the State Administration of Grain said in a statement yesterday. Losses from the dry weather total 23.7 billion yuan ($3.5 billion), Xinhua reported. About 79 million mu (5.3 million hectares) of crops are under stress in the southwest, about half of them in Yunnan province, the water ministry said in a March 10 statement. The drought, which is also affecting parts of Guangxi and Guizhou provinces, has lasted almost five months, the ministry said. To contact the reporter on this story: William Bi in Beijing at wbi@bloomberg.net

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Chavez Orders Three-Day Holiday to Conserve Electricity Amid Energy Crisis

March 24, 2010

By Daniel Cancel March 24 (Bloomberg) — Venezuelan President Hugo Chavez decreed three extra days off in the week before Easter to save electricity and water amid an energy crisis that is threatening to collapse the power grid. “The objective isn’t for people to be lazy, rather to save energy,” Chavez said today on state television. “Don’t forget to turn off the lights and close the faucet.” Chavez declared a national power emergency Feb. 8. He implemented rolling blackouts in most of the country and threatened to suspend power to businesses that don’t curb consumption by 20 percent. A severe drought is draining the South American country’s reservoirs that supply hydroelectric plants. Venezuela, the largest oil producer in Latin America, depends on hydroelectric power for more than two-thirds of its energy needs. Chavez didn’t say whether next week’s extra holidays would be given to the whole country or only government workers. Water levels at the Guri dam, which provides water to three hydroelectric plants with an installed capacity to generate 10,000 megawatts of power, fell 14 centimeters on March 23 to 251.37 meters above sea level, or 27 percent of its volume, according to the country’s grid operator . If the water level drops below 240 meters, the country may lose 5,000 megawatts of generation, Electricity Minister Ali Rodriguez said on March 18. To contact the reporter on this story: Daniel Cancel in Caracas at dcancel@bloomberg.net .

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Yields on Tax-Exempt Bond Sales Reach Their Lowest Level in Three Months

March 5, 2010

By Catarina Saraiva March 5 (Bloomberg) — Yields on local and state government tax-exempt bonds fell to a three-month low as supply shrank to the smallest amount in four weeks. Yields on top-rated general obligations due in 10 years fell to 3 percent, the lowest since Dec. 10, a daily survey by Municipal Market Advisors shows. Tax-exempt sales totaled $3.6 billion this week, dropping to less than $4 billion for the first time since the five-day period ended Feb. 5. Issuers led by Georgia’s Municipal Electric Authority sold $2 billion in taxable Build America Bonds, which provide a 35 percent subsidy on interest costs from the federal government. The Georgia utility plans to sell an additional $920 million of such debt today. “There is a lot of interest out there in pure tax-exempt bonds,” said Anthony Shields , a principal in the public finance department at Williams Capital Group in New York. “Build America Bonds are sucking out some of the issuance, so that there’s less and less pure tax-exempts coming to market.” The New York Dormitory Authority , the second-biggest municipal issuer after California last year, sold $590.8 million secured by personal income tax revenue, including $365.7 million of tax-exempt debt. After getting more than $200 million in orders from individual buyers, the agency finished the pricing ahead of schedule, Shields said. Benchmark borrowing costs for state and local government selling 30-year revenue bonds fell to a seven-week low of 4.93 percent, according to the weekly Bond Buyer 25 index. Securities in the gauge have an average Moody’s Investors Service rating of A1, the fifth highest. “The demand component is going up just as the supply component is going down,” said Mike Pietronico , chief executive officer of Miller Tabak Asset Management in New York. “That has all the makings of a bull market. It’s like the perfect storm.” Following are descriptions of pending sales of municipal debt in the U.S. ASCENSION HEALTH, the largest nonprofit health-care system in the U.S., plans to sell about $1.35 billion in tax-exempt revenue bonds beginning next week. About $745 million will be used to refinance current debt and $600 million will help fund new construction and expansion at five health-care centers, said Stephen Gilmore, director of capital finance for St. Louis-based Ascension. Morgan Stanley will market a $670.5 million fixed- rate sale on March 10 and a $675.4 variable-rate issue later in the month. Ascension is rated Aa1 by Moody’s, AA by Standard & Poor’s and AA+ by Fitch Ratings. (Added March 5) MASSACHUSETTS , the second most-indebted state per capita after Connecticut, plans to sell $538.9 million of floating-rate general obligations as early as next week. The date of the sale will be determined by market conditions, according to the state treasurer’s Web site. Revenue from the sale will help refinance outstanding variable-rate demand bonds supported by an agreement from Citibank that expires later this month, according to Moody’s. Underwriters led by Morgan Stanley will market the issue. The state’s general obligations are rated Aa2 by Moody’s, while Fitch and S&P rate them AA, the third-highest of 10 investment grades. (Updated March 5) GUILFORD COUNTY , North Carolina, plans to sell $298.4 million of general obligations next week. The sale includes $82.5 million of tax-exempt debt and the same amount of taxable Build America Bonds to fund public improvements. The remainder, also tax exempt, will be used to refinance existing debt. The county, which includes Greensboro, has a top rating from S&P. Moody’s and Fitch grade it one level lower. (Updated March 5) CALIFORNIA , the lowest-rated U.S. state, intends to raise as much as $5 billion from investors this month with its first debt sales since November, according to Treasurer Bill Lockyer . JPMorgan Chase & Co. and Morgan Stanley were selected to manage a tax-exempt deal of as much as $2 billion on March 11, and Citigroup Inc. and Bank of America Merrill Lynch will handle a taxable offering later in the month, according to the state treasurer’s Web site. California is rated A- by S&P, Baa1 by Moody’s and BBB by Fitch. (Updated March 2) DETROIT, the largest U.S. city whose general obligation debt is rated below investment grade, plans to borrow $250 million as early as next week by issuing municipal securities to help fill a budget deficit, Moody’s said in a report. State aid derived from a Michigan-wide sales tax as well as the city’s full faith and credit secure the bonds, rated A1 by Moody’s and AA- by S&P. Without aid from Michigan, the ratings would be B1 from Moody’s and BB by S&P. (Updated March 2) NEW YORK CITY MUNICIPAL WATER FINANCE AUTHORITY, which helps raise capital funding for a system that serves 9 million people, plans to sell $400 million in fixed-rate taxable Build America Bonds on March 9, the second such deal in less than two months. Proceeds from the sale will be used for capital improvements of the city’s water and sewer system, city finance officials said in a statement last week. The securities are rated AA+ by S&P, Aa3 by Moody’s and AA by Fitch. A group of underwriters led by Jefferies Group Inc. will market the securities to investors. (Added March 2) ILLINOIS, the second-lowest-rated U.S. state after California, will take bids on March 11 from banks seeking to underwrite $300 million of Build America Bonds and $56 million of non-subsidized taxable notes. The deal will finance school construction, according to John Sinsheimer , director of capital markets for Illinois. The state, which last sold BABs in a $1 billion deal on Jan. 28, is rated A2 by Moody’s, A+ by S&P and A by Fitch. A statutory requirement calls for 25 percent of all state debt to be bid competitively, Sinsheimer said. Banks led by William Blair & Co. will negotiate the sale of an additional $700 million in Build America securities in mid-March, he said. (Added March 2) DISTRICT OF COLUMBIA, the U.S. capital, plans to sell $715 million of tax-exempts backed by income tax revenue as soon as next week. The deal will replace a mixture of fixed- and variable-rate general obligation bonds, which have lower ratings, and reduce the district’s amount of adjustable-rate debt, Fitch said in a release March 3. Underwriters led by Goldman Sachs Group Inc. will handle the deal. The debt is rated AAA by S&P, AA by Fitch and Aa2 by Moody’s. (Updated March 4) To contact the reporter on this story: Catarina Saraiva in New York at asaraiva@bloomberg.net .

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