THE WALL STREET JOURNAL

JUNE 14, 2010

By James Herron

The Obama administration’s decision to ban new offshore drilling for six months in response to the BP oil spill was understandable given the scale of the Deepwater Horizon disaster, but was always destined for a head-on collision with economic reality.

Sure enough, there has been a rising clamor from oil industry workers, their families and Gulf State politicians chasing their votes, all of whom say the drilling moratorium could result in thousands of job cuts and huge losses for businesses in the area.

This is a major dilemma for the White House. The moratorium on drilling has a lot of support, but the oil industry is huge and shutting it down for six months could end up being even more economically damaging than the effect of the spill on other industries like fishing or tourism. [Read our latest coverage here.]

Luckily, the administration has come up with a handy solution to this problem–let BP pay the wages of any worker laid off because of the drilling ban.

This move–which played a big part in the temporary collapse in BP shares last week–may seem like a politicial win-win. BP is the most hated company in America, why not make it suffer more?

But it seems unlikely to succeed. BP is in a very weak position and has so far been more than willing to meet every cost of its oil spill, but it would have to be suicidal to set the precedent that it should bankroll policy decisions of this administration. What would be demanded of it next, especially in an election year? Legislation forcing BP to cover these costs may pass Congress, but could ultimately be declared unconstitutional.

If BP draws the line over this, what then is the fate of the offshore drilling moratorium? Six months is a long time to shut down one of the most important industries in the U.S. Especially one that produces such a strategically important commodity.

Credit ratings agency Moody’s says the impact of the moratorium could be felt far longer than anticipated.

Steven Wood, a Managing Director at Moody’s, said:

“We believe it could take up to two years before producers, rig operators, and service firms in the deepwater Gulf can resume activity to pre-spill levels.”

The International Energy Agency said last week that U.S. oil output could be up to 300,000 barrels a day lower in 2015 than it would be without the moratorium. With many analysts forecasting that oil will be pushing back towards $100 a barrel by that time, that lost output will make a major difference to the U.S. economy .

The Obama administration’s “safety first” approach to offshore drilling  may be laudable.

However, just as Europe’s total flight ban during the volcanic ash cloud crumbled once it became apparent that many airlines could be bankrupted, economic necessity may start the drill bits whirring sooner than we think.

WSJ ARTICLE

THE WALL STREET JOURNAL

By BRIAN BASKIN And CASSANDRA SWEET

JUNE 14, 2010

Extracts

On May 27, President Barack Obama ordered a six-month offshore drilling moratorium in the wake of the April explosion and sinking of the Deepwater Horizon rig, which killed 11 workers and started oil gushing into the Gulf. The rig was leased by BP. The president also commissioned an independent panel to recommend new offshore energy regulations.

Royal Dutch Shell PLC was awaiting the Interior Department’s final approval to drill up to five offshore wells this year when the moratorium was put into effect. The ban effectively postpones any work in Alaska until at least next summer, as sea ice prevents winter drilling. Work could be pushed back to 2012 if the government extends the ban.

The oil spill has also rejuvenated a campaign by environmental groups and native coastal villagers to reduce the area of the Arctic open to oil exploration and overhaul drilling regulations. A few weeks before the Deepwater Horizon disaster, the White House had expanded its plan to sell exploration leases in Arctic waters.

Write to Brian Baskin at brian.baskin@dowjones.com and Cassandra Sweet at cassandra.sweet@dowjones.com

FULL WSJ ARTICLE

Monday, June 14, 2010

SHELL EP Ireland plans to drill a satellite well north of the Corrib gas field which could produce additional gas reserves.

The Sedco 711-submersible rig arrived on location some 80km off the Mayo coast last week and has been booked for the summer.

Seismic information gathered last year on the Corrib North block has proved to be “very positive”, according to industry sources.

If the field proves commercial, it could result in a significant extension of the Corrib offshore and onshore infrastructure, subject to Government approval.

Vermilion, which bought out Marathon’s share in Corrib last year for a quoted price of $400 million (€330 million), described Corrib North last year as “a four-way dip closure that has the potential to hold about 200 billion cubic feet of gas”.

The Canadian company’s chief executive Lorenzo Donadeo told the industry journal, Upstream , that if the well was successful, “the discovery could be tied back to Corrib’s infrastructure via two sub-sea wells at a cost of up to $117.8 million.

The current Corrib gas field on the Slyne Basin is estimated to have a 20-year lifespan, with a capability of producing up to 60 per cent of Ireland’s energy needs over five years.

Shell EP Ireland confirmed that it “intended to drill an exploration well” on the site.

SOURCE ARTICLE

Richard Blendermann comments on the article “U.S. and BP slow to accept Dutch expertise“

Only a few days after the explosion of the Deepwater Horizon in the Gulf of Mexico I was asking my self the same questions, and 2 to three weeks into the spill I could tell that the approach and finger pointing from our administration (and the U.S. main stream Media) would only lead to delays that would make the situation much worse. My father helped to design and build the Texaco Plant in Port Arthur TX (the largest in the world at the time) from the ground up and worked at the plant all his life as a Chemical Engineer. So I have been around this industry for a very long time. In Texas and in fact every where in the world there have been unforeseen problems and disasters with oil exploration.

The only solution to resolve these problems is to act quickly and with as many resources as possible and then investigate and improve the technology, laws and procedures “After” the problem is contained. I seriously believe that if our administration had acted fast, unblocked any political and legal problems to get help fast that there would be a very small amount of the oil reaching to coastlines.  Also, to degrade BP by political criticism to the point where their stocks take a nose dive is not in the best interest of anyone! It has now limited the financial resources that BP has to pay for fixing the problem and the clean up efforts besides causing poor relations between the US and the UK.

I feel saddened by the fact that this only shows the rest of the world a stereotypical persona of Americans that can not understand that we do not know it all. Most of us are just normal folks like in any industrialized nation and have a clear understanding of what it means to help in any disaster around the world. This is an international community and what affects BP affects the rest of the oil companies as we are finding out by Obama halting of the offshore drilling. In fact 70% or more of the American public feel the same way that I do. Being from Texas, I seriously believe that if Bush were handling this problem, given his close ties to the Oil Industry, that the situation would be much better off.

Anyway, there are two fronts to this problem. First is capping the well and the other is the containment of the oil in the Gulf. And the containment part (where all the bad press is) sits squarely on the lack of reaction from the current U.S. administration and by that I mean all the staff surrounding the current President and advising him. I am sure that the oil industries adaptability will find a safe and secure way to improve the capping of deep water blowouts in the future. The Solution for containment is already available as many industry leaders have pointed out. This is where we (the U.S) has fallen short and shot ourselves in the foot so to speak.

By the way, I worked in the Int’l Building of Shell Oil in Houston  (upstream) by managing the original installation and maintenance of the Automatic Tape libraries (Braegen/Bell Atlantic) in the basement back in the mid 1980′s before my assignment in Rome doing the same for the Banca d’Italia and returned to Shell Oil when returning two years later. – Richard

Nothing about Mr Johns contact with me since May 2007, using multiple aliases, including “Mr X”, until he resurfaced in the guise of being the founder of RDS Forensics, has been straightforward, but instead mired by creepy deceptive behavior on his part, completely incompatible with his claims of transparency.

Former Shell exec John Johns threatens defamation proceedings

By John Donovan

Former Royal Dutch Shell executive Mr John Johns sent me several several legal notices last week threatening defamation proceedings.  I have no intention of retracting my comments about him made on this website, which were justified.

He also demanded that I remove information from an article published on 5 May 2010 that was copied from his Royal Dutch Shell Forensics Website. The information included the following assertions by Mr Johns in relation to transparency:

“Lets be clear and transparent to help Mr Donovan and others.”

“To also help Mr Donovan and other visitors we want to be fully transparent.”

He invited Shell employees to trust him and provide input including whistleblower information about Shell. I  removed the copyrighted information on 11 June 2010 and replaced it with a summary of the deleted information.

Nothing about Mr Johns contact with me since May 2007, using multiple aliases, including “Mr X”, until he resurfaced in the guise of being the founder of RDS Forensics, has been straightforward, but instead mired by creepy deceptive behavior on his part, completely incompatible with his claims of transparency.

The strange behavior exhibited by Mr John Johns in correspondence does not qualify as being transparent, as he falsely claims to be. He is a bible thumping hypocrite.

Mr Johns claims that RDS Forensics is an “NGO” and that other unidentified parties are involved. Thus far he is the only named person involved and consequentially despite his claims to the contrary, appears to be a one man band. Nothing wrong with that unless, to deceive people, you pretend to be something else.

The legal notices accuse me of defaming him and aggrieved unnamed (anonymous) parties. If I had made false statements about him that were damaging to his reputation, then Mr Johns would have a case on those grounds.  My claims against him are true. Since it is impossible to defame an anonymous party, his claim that I have done so against unidentified aggrieved parties is a complete nonsense and suggest ignorance of relevant law and a lack of commonsense on the part of Mr Johns. He persisted with the same nonsensical claim even after this was pointed out.

Mr Johns in any event fatally undermined his claim by publicly drawing attention to my alleged defamatory comments even providing links to the allegations published on my website. Presumably this was an act designed to generate publicity for his website and/or his threatened case against me.  He did so although marking the legal notices as being private and including the following stipulation:

“21. Any steps to publish this letter or the facts of it on your website will accelerate the Aggreived Parties legal drive to place fully the matters with our lawyers into the UK and other courts .”

I note that when Mr Johns published on the Internet a claimed copy of his legal notice dated 11 June 2010, he deliberately and cunningly deleted the stipulation – “Private” – as it would have obviously reflected on his integrity if it had remained. So much for his claims of being transparent. He chose to mislead as to the content and basis that it was sent to me, thereby providing further proof that Mr Johns is a hypocrite, and a devious one as well.

His website is no longer operational because of pornographic advertising appearing on it over which Mr Johns apparently has no control. It does not say much for his competence that he ended up with a website meant to be promoting high moral ideals, which is actually also displaying pornographic material. I am sure that is not what he intended, but it is a reality, and he is the only named person involved in operating his website.

In his postings on the royaldutchshellplc.com ”Shell Blog” facility he profusely welcomed the free publicity I generated for his RDS Forensics website…

e.g.

“Hello. Thanks to this website and Mr Donovan Jnr for acknowledging the RDS Forensics website and our existance!“

However, Mr Johns objected when I raised perfectly legitimate questions about him bearing in mind (1) his claims to be transparent (2) my realization that in fact he is the exact opposite, failing to declare his previous contact with me and (3) that he was projecting himself, his website and objectives as being on a high moral platform.

The Shell Blog comments I posted relating to Mr Johns…

John Donovan on May 5th, 2010 at 5:02 pm

In fact, there is still no denial from Mr Johns that he corresponded with me previously on the basis indicated.

The first contact from Mr Johns was via a German yahoo email address on 2 May 2007, when he used the alias “xx husspanzer”

His email contained a critic message in German concerning tax fraud in the Philippines. Shell had been accused of tax fraud in the Philippines.

For the subsequent emails to me in 2007 and 2008, he switched to English language and used various aliases including “Mr X”.

In his emails, he made extremely serious allegations about Shell which match with those he has made elsewhere in his own name.  His claims about documents in his possession match with claims made by Mr Johns. Certain distinguishing information in emails he sent to me using aliases match with information originated by Mr Johns and with correspondence he has recently published in bizarre video clips on YouTube, which in my humble opinion, should display a health warning about potentially causing motion sickness.

I was already certain that he and Mr X were one and the same. The latest evidence provides further confirmation.

I have on a number of occasions tried to cooperate with Mr Johns in his various guises but have found him impossible to deal with. I note his claim that 14 firms of lawyers have ditched him and his claims against Shell (apparently involving alleged wrongful dismissal by Shell Malaysia). He suggests that the refusal of 14 successive firms of lawyers to continue representing him is in some way down to Shell.  I suspect that it is for another reason.  It would be interesting to see the grounds on which he was dismissed by Shell.

I fell out with him in his “Mr X’ persona when I asked him to provide Shell internal documents confirming the allegations he was making against Shell, including high level corruption and Shell being responsible for alleged death threats made against him and his family which he said he had recorded and reported. I refused to publish his allegations without first supplying the documents to Shell so that the company had the opportunity to confirm or deny authenticity and comment on his allegations.

Mr Johns seems intent on holding what he considers to be leverage over Shell without actually providing sight of his claimed supporting evidence. After promising that I could publish the documents on royaldutchshellplc.com he never supplied them. Now he plays conjuring games with the video clips on YouTube zooming in and out on parts of correspondence, without (on the ones I have viewed), ever providing a full clear view.

Under all of these circumstances, any claim to transparency, honesty and integrity by this devious individual is in my view a joke.

It might well be that he does hold evidence which incriminates Shell. All I can say is that after three years of intermittent time wasting contact with him, he has not produced an iota of evidence that I have seen to support his various allegations against Shell.

I suppose that it says something positive about Mr Johns that despite the evasion, he has not actually denied, despite multiple challenges, that he is “Mr X”, as I have stated.

The question for Mr Johns is whether he is prepared to commit perjury in litigation documents and under oath testimony denying that he has engaged in subterfuge and evasion during his correspondence with me.

I have some advice for any lawyers approached by Mr Johns on this matter. Before becoming involved, ask Mr Johns to swear on the bible that he is not “Mr X”, since that is the crucial issue in the comments I have made against him. At any time he could have said: “John, you are completely barking up the wrong tree. I am not Mr X and have never corresponded with you by email except in my own name – John Johns.”

Because of his religious convictions Mr Johns has been unwilling to put an outright lie into writing.

Truth is what this is all about. There is no defamation if what is stated is true.

In my view it is an evil act on the part of Mr Johns to try to force me into retracting and apologizing for comments he knows to be accurate.  He has under false pretenses demanded money with menaces (threat of legal proceedings) on behalf of unnamed unquantified “Aggreived  Parties” (his misspelling) for unspecified opened-ended amounts of money.

20. That you are required to pay all and any legal and disbursement costs of this matter for  the Aggreived Parties within 7 days of date of presenting said copies of invoices.

If Mr Johns, who gives every impression of being in urgent need of professional help, does not within 28 days issue defamation proceedings after all the threats and bluster, I will publish information which will further expose his breathtaking hypocrisy.

*Bearing in mind his more fantastic claims, for example that he and his young family have been detained in Malaysia by Shell for the last five years, some readers of his writings might wonder if “Walter Mitty” might have been a more appropriate alias for him to use than “Mr X.”

*New end paragraph added 14 June 2010, 19.13 pm UK time

Village Magazine: June – July 2010

From Louisiana to Mayo: cometh the Candyman

MICHAEL MCCAUGHAN

US INTERIOR MINISTER, Ken Salazar, promised more rigorous regulation of oil and gas leasing last January after acknowledging that the petroleum industry called his office “the candy store” for its surrender to corporate energy interests.  “Whatever they wanted to happen, happened”, said Salazar.

The outcome of this policy became apparent in April when the Deepwater Horizon oil rig exploded, killing eleven people and sending a toxic plume into the ocean, the worst environmental catastrophe in US history.  President Obama promised tighter rules for future drilling.  Two weeks later, it emerged that Obama’s officials granted 27 exemptions from carrying out detailed environmental studies of oil exploration and production in the Gulf of Mexico since the oil spill.

The candy store remains open for business.

BP’s efforts to staunch the spill have been inept.  It tried to cap the spill with a 98-tonne steel box which quickly clogged with gas hydrates.  “It’s working as planned”, said BP vice-president Kent Wells, a statement which made perfect sense when it emerged that the federal Minerals Management Service (MMS) “routinely overruled” staff biologists and engineers who raised health and safety concerns over oil and gas projects.  Scientists were also pressurised to alter the findings of their internal studies if they predicted an accident might occur.  On the same night as the disaster occurred, April 20, seven BP executives were on board the rig celebrating the project’s exemplary safety record.

In the same breath as Salazar announced tighter regulations, he stated that the goal of the US review of oil and gas terms was to reduce the number of court challenges to leasing decisions and ease uncertainty for investors in drilling projects.  This logic takes us directly to An Bord Pleanala last November when the board’s experts rejected the Corrib gas pipeline route due to the “unacceptable risk” it posed to health and safety.  However, the same statement recommended “provisional” approval of the pipeline as “appropriate” on grounds of strategic national importance.  It is these three words which appear to be pushing forward a project which would otherwise be rejected.

Irish human rights’ organisation, Frontline, recently published ‘A Breakdown in Trust’, a report commissioned to establish whether community activists in Mayo qualified as human rights defenders and if so, how best to safeguard their rights. Barrister Brian Barrington, a former adviser to the SDLP’s northern Ministers, navigated the complex web of relationships in county Mayo with admirable skill.  The reaction to the report’s recommendations spoke volumes about its findings; Gardai demanded clarification, IRMS (private security) rejected the report, Shell defended their track record, saying they applied “the highest standards” but sidestepped the substantive issues raised in the document.  The Irish media, which has poured scorn on the community, ignored the report with the notable exception of Loma Siggins at the Irish Times.

The report concluded that the Minister for Justice blocked investigations into heavy-handed Garda tactics; and recommended an independent inquiry be held into the beating of Willie Corduff (in April ’09).  The report also suggested that Gardai who serve time on the Comb-gas beat be rotated elsewhere and that special training be given before fresh faces are assigned there.  The 95-page report demolished many of the myths associated with the campaign: Frontline found no evidence of Republican involvement beyond individual participation in events, and noted the diverse, leaderless nature of the campaign, a tribute to the collective effort underway.  Barrington did one thing that most observers have failed to do – he watched many hours of footage which give context to images of protestors tussling with police.  The report captures the broader context of police provocation, amply documented in over 100 written complaints to the Garda Ombudsman Commission.  This issue is perhaps the single biggest factor in driving the Corrib gas campaign from the mainstream to the margins of Irish life.  Frontline excludes from its remit those who use violence, recommending that “proportionate sanctions” be applied against them.  The report found isolated acts of criminal damage against Shell and verbal abuse against Gardai but concluded that such behaviour “does not characterise the overall situation”.  Allegations of intimidation were greatly exaggerated, reported Barrington, involving nothing stronger than “people no longer talking to each other”.

Frontline concluded that community activists in Co Mayo are indeed human rights’ defenders and deserve the full protection of the law.  Nevertheless, Pat O’Donnell remains in jail for refusing to surrender to a project regarded by technical experts and human rights observers alike as unsafe.  Minister for Energy Eamon Ryan welcomed publication of the report and said his department would “take all points on board”.  Minister Ryan’s learning curve is complete – he has mastered the language of the candy store. •

http://www.villagemagazine.ie

Three days after the explosion of the Deepwater Horizon in the Gulf of Mexico, the Dutch government offered to help.

DEC. 29, 1988 — Workers clean oil sludge from the Gasconade River near its confluence with the Missouri River. The men, employees of Riedel Environmental services of St. Louis, vacuumed the oil into tank trucks. (Gary Bohn/P-D)

Lessons of gulf pipeline spill found in unexpected place — the Ozarks

The Spokesman-Review

June 13, 2010

For the second time in as many years, we are witnessing catastrophic failure by one of America’s mightiest industries.

The loss of life and the environmental destruction in the Gulf of Mexico has exposed a level of ineptitude that is shocking. The oil industry and the government agencies supposedly monitoring its operations have failed in every way possible to look after the most fundamental of their responsibilities: the protection of human life and the natural resources necessary for its sustenance.

Two years ago, the incompetence and self-dealing of our financial services industry nearly brought the U.S. economy to its knees. We have been staggered, but we have not fallen, although that is no comfort to the millions of Americans who have lost their homes, their jobs, or both.

People make mistakes. Accidents happen. We all understand that.

But consider this: The world’s 10 largest oil companies, just those 10, in 2008 collected $2.7trillion in revenues. Yet they apparently do not have the technology to shut down one damaged oil well, except by drilling another.

We see TV advertisements showcasing software that can identify pockets of oil no bigger than a five-gallon bucket 20,000 feet below the surface.

By drilling horizontally, rig operators can hit that bucket from miles away. Hopefully, they will be just that accurate finding the Deepwater Horizon shaft.

And for more than two decades, we have seen our air cleansed of pollutants by improved gasoline formulations.

Each, in its way, a technological triumph.

Blowout preventers may deserve inclusion on that list of marvels. A very few have failed, at least as far as we know. Properly maintained, the valve atop the Deepwater Horizon well might have been able to contain the incredible pressure of fluids entombed two miles under the sea bottom for millennia.

Instead, we have watched the “geyser cam” and learned more than we ever wanted to know about “top kills,” “junk shots” and the other close-your-eyes, make-a-wish attempts to stanch the flow of oil.

BP deserves all the hell caught since the Deepwater Horizon exploded, but this was a failure by an entire industry. Can this really be the best effort, the best thinking, that Royal Dutch Shell, Exxon Mobil, Chevron and all the rest can come up with?

They seemed to know how to buy off the Minerals Management Service, perhaps the only federal agency that could make our financial regulators look good by comparison. Report after report has identified gross ethical lapses by MMS officials, but little was done until Interior Secretary Ken Salazar moved last month to divide responsibilities and minimize conflicts of interest.

Except for education, nothing could be more fundamental to human health and prosperity than capital and energy. Sadly, tragically, we have seen the men and women responsible for these resources pervert and mismanage their use. The financial service problems were pervasive, right down to consumers who thought they could own a home for nothing.

Only a few companies may be directly at fault for the Deepwater Horizon disaster, but the inability of the oil industry to envision the consequences of a blowout valve failure is a black mark not just for BP and whatever contractors and suppliers it was working with.

Americans are weary of hearing “We never saw it coming.”

SOURCE ARTICLE