1. GULF SPILL:

8 of 15 Interior advisers disagreed with deepwater moratorium

Published:

Advertisement

Experts tapped by the Obama administration for advice on offshore drilling safety opposed a federal decision to halt deepwater drilling for six months, and they are objecting to the Interior Department using their names to support the report's recommendations.

"There is an implication that we have somehow agreed to or 'peer-reviewed' the main recommendation of that report," the advisers wrote in a memorandum to Louisiana Gov. Bobby Jindal (R) and the state's U.S. senators, Mary Landrieu (D) and David Vitter (R).

Interior Secretary Ken Salazar, they wrote, "should be free to recommend whatever he thinks is correct, but he should not be free to use our names to justify his political decisions."

At issue is the May 27 Interior report on oil and gas drilling safety that was released at the request of President Obama. The 38-page report makes recommendations for safety improvements at offshore drilling rigs. Among them is a six-month moratorium on deepwater drilling and permitting.

"We broadly agree with the detailed recommendations in the report and compliment the Department of Interior for its efforts," eight of the 15 experts who consulted with the department wrote in a separate statement. "However, we do not agree with the six-month blanket moratorium on floating drilling."

The eight dissenters: Robert Bea, a civil and environmental engineering professor at the University of California, Berkeley; Benton Baugh, president of Radoil Inc.; Ford Brett, managing director of Petroskills; Martin Chenevert, senior lecturer and director of the drilling research program at the University of Texas; Hans Juvkam-Wold, a petroleum engineering professor at Texas A&M University; E.G. Ward, associate director of the Offshore Technology Research Center at Texas A&M University; and Thomas Williams, managing director of Nautilus International.

They say the moratorium language was not included in the draft copy of the report that they reviewed. In its place was language recommending a six-month moratorium on new permits for exploratory wells in waters deeper than 1,000 feet and a "temporary pause" in current drilling operations to allow for testing of blowout preventers and other equipment at the 33 permitted wells.

"We understand the need to undertake the limited moratorium and actions described in the draft report to assure the public that something tangible is being done," the dissenting panelists wrote. "A blanket moratorium is not the answer. It will not measurably reduce risk further and it will have a lasting impact on the nation's economy which may be greater than that of the spill."

Landrieu criticized Salazar for the move at a Senate Energy and Natural Resources Committee hearing today.

"This temporary pause, if it lasts very much longer than a few months -- not six, just a few months -- it could potentially wreak economic havoc on this region that exceeds the havoc wreaked by the spill itself," Landrieu said.

Landrieu said the moratorium is halting production on 33 deepwater rigs, which have 100 to 200 workers each, and also will affect four or five jobs that directly support every one of those positions.

Salazar said he appreciated and accepted the recommendations from the experts but added, "It was not their decision on the moratorium, it was my decision and the president's decision."

Jobs are a major concern, but the administration wants to make sure offshore development takes place in a safe way, Salazar said. New deepwater drilling can resume when there is "a sense of safety that this is never going to happen again," he said.

"It's not the 'stop' button, it's the 'pause' button," Salazar said.

Some estimates have said the moratorium could result in a significant decline in domestic oil production over the next several years. But executives from ConocoPhillips and Valero Energy Corp. said today that their companies will see little impact on production rates over the next year.

"The impact on us would be relatively modest," Clayton Reasor, ConocoPhillips's vice president of corporate and investor relations, said at a panel discussion today hosted by RBC Capital Markets.

Democrats lash out at BP

A group of nearly 50 House Democrats led by Reps. Lois Capps of California and Peter Welch of Vermont today called for BP PLC to suspend its planned dividend payout, stop its advertising campaign and spend the money instead on cleaning up the ongoing Gulf of Mexico oil spill.

"Not a single cent" should be spent on television ads, Capps said today. "If BP is so concerned about its public image, it should plug the hole."

The lawmakers today sent a letter to BP CEO Tony Hayward asking the company to suspend its plans to pay $10 million in quarterly dividends to shareholders. Democratic Sens. Charles Schumer of New York, Ron Wyden of Oregon and Byron Dorgan of North Dakota have urged similar moves. And Obama berated the company last week for its plans.

During a June 4 conference call with investors, Hayward and other company executives said the decision on whether to maintain the quarterly dividend of 14 cents a share for the second quarter of 2010 would be made on July 27.

The company has spent a reported $50 million on a hefty new advertising campaign to manage its image. In new television ads airing this week, CEO Tony Hayward is featured, saying, "We will make this right."

The company has also forked over a sizable sum to purchase a range of popular search terms -- including "oil spill" from Google, the most popular search engine in the United States.

"We urge you to halt your planned dividend payout and cancel your advertising campaign until you have done the hard work of capping the well, cleaning up the Gulf Coast and making whole those whose very livelihoods are threatened by this catastrophe," the letter says.

In a separate letter, Capps today urged Obama to relieve BP of its duty to respond to the health and safety of cleanup workers and residents. Instead, that duty should be handled by a public health official within his administration, she said.

Capps said the ongoing oil spill in the Gulf of Mexico is a public health crisis as well as an environmental and economic one.

"It's clear that BP has failed to responsibly care for and monitor the health of cleanup workers and Gulf Coast residents," Capps said in a statement. "BP does not have the expertise, resources or incentives to adequately respond to this public health crisis. The federal government has the expertise and resources required to ensure an effective response."

Some cleanup workers in recent weeks have reported sickness after working on the water near the oil and dispersants. And BP has been chastised for not providing respirators to workers, although federal officials have said respirators are not necessary.

Obama heads to the Gulf for his fourth visit next week. He will travel to Mississippi, Alabama and Florida on Monday and Tuesday to receive updates from responders on the scene.

House won't mark up supplemental -- Hoyer

House Majority Leader Steny Hoyer (D-Md.) said today that the House will not mark up its version of the war supplemental bill that carries with it extra funds for oil spill-related activities and will instead work off the Senate-approved version.

"We can just take up the Senate bill," Hoyer told reporters. Speaking of House Appropriations Chairman Dave Obey (D-Wis.), he said, "Right now, I think Mr. Obey's view, in light of the fact that the Senate has already passed a supplemental, would be to work on that supplemental."

Procedurally, the House can take such a step, since the Senate version of the supplemental was a House-originated bill designed to carry extra funds for the Federal Emergency Management Agency. Hoyer also said that it is possible that the two chambers will "ping-pong" the measure, which will avoid the need for a conference committee.

Hoyer, however, made clear that the House does not intend to simply adopt the Senate version but will instead push for its own changes to the legislation.

"I didn't say he was going to take the Senate supplemental. I said he was going to work on the supplemental," Hoyer said. "There is a huge difference between those two concepts."

The House Appropriations Committee had actually scheduled a markup of the supplemental just before the Memorial Day recess -- and even released a summary of the legislation -- but canceled it just a few hours before. A committee spokesman this afternoon did confirm Hoyer's comments, saying only that no announcements have been made.

The proposed House version carries about $275 million in various funding associated with the oil spill, including $83 million for unemployment assistance related to the spill, $7 million for the National Oceanic and Atmospheric Administration to conduct scientific investigations in connection with the spill, $14 million for fishermen affected by the spill, and $5 million for economic recovery programs. The House bill also includes $29 million for the Interior Department to increase inspections and enforcements and $10 million for the Justice Department to fund legal expenses (E&E Daily, May 27).

Hoyer said the House intends to take up the supplemental on the floor by the end of the month.

Fla. Sen. Nelson proposes citizens council for Gulf Coast

Sen. Bill Nelson (D-Fla.) wants to create a citizens' council to oversee environmental and safety compliance by oil and gas producers in the Gulf Coast.

Congress created two regional citizens' advisory councils after the Exxon Valdez spill in Prince William Sound and Cook Inlet in Alaska in 1989 to help protect against any future mishaps.

"The oil industry and our government regulators failed us in the Gulf," Nelson said today. "If we're going to learn any lasting lessons from this debacle, we should get citizens who are the most affected, and who are directly involved, and have them standing guard. This is something Congress wisely did after the Valdez accident."

BP finds gas in Norway

BP has boosted its coffers with a natural gas discovery off the coast of Norway.

Norway's oil directorate said today that the size of the discovery is between 280 billion and 490 billion cubic feet of recoverable gas.

The exploratory well was drilled in waters about 1,000 feet deep.

MMS in bull's eye

The deputy administrator of the Minerals Management Service won't say his agency was blameless in the Gulf disaster.

Asked if the criticism of his agency has been unfair, MMS's Walter Cruickshank said, "I am not going to say what is fair or unfair. In an event of this magnitude, the public wants to figure out who is responsible, and they are going to turn over every rock to find out."

In an interview after a presentation at the Capitol Hill Oceans Week gathering today, he said ongoing investigations would examine MMS's role in the spill.

"We'll have to see what answers they come up with," Cruickshank said. "If the responses are there are things we should have been doing differently or doing better, we're going to make those changes. We've already made some changes."

Salazar signed a secretarial order dissolving MMS and replacing it with three agencies to separate its leasing, enforcement and revenue collection duties.

Bob Abbey is serving as acting director of the offshore drilling agencies after its chief, Liz Birnbaum, was forced to resign amid withering criticism of MMS's shoddy oversight of offshore drilling. Abbey remains director of the Bureau of Land Management while he leads MMS but will turn over his daily management duties to his deputy.

Click here to read the memorandum from the experts to Louisiana politicians.

Click here to read the experts' statement about the Interior report.

Click here to read the letter from House Democrats to Hayward.

Click here to read the letter from Capps to Obama.

Reporters Noelle Straub, Alex Kaplun, Allison Winter and Katherine Ling contributed.