Wednesday PM March 31st, 2010
by: Ed Mayberry, March 31, 2010 9:03:30 pm
Shareholders of oil service companies Baker Hughes and BJ Services have approved the companies' plan to merge. Baker Hughes announced in August that it will buy BJ Services in a cash-and-stock deal valued at $5.5 billion. The combined company is expected to provide a one-stop shop for a variety of oilfield services, and allows Baker Hughes to diversify its product offering and to compete better with rivals Schlumberger and Halliburton. The Houston companies say that they expect the merger to close in early April following approval by federal regulators.
Royal Dutch Shell has begun producing natural gas and oil from its $3 billion Perdido hub in the deepwater Gulf of Mexico. Shell's Marvin Odum says this region could be a key contributor to energy supplies."We think we can produce oil and gas at rates that will actually make this a profitable economic project, so the size of the investment—while it's significant—only matters in terms of whether you can make it economic and have it paid back, and so we can do that. So then the important part for anyone listening or for the American people is that it's a very large-scale resource. So this idea of one day's production from this project covering the energy needs for over two million households for an entire year starts to give you a sense of the scale and the impact a project like this can have."
Two Shell Chemical companies have agreed to install $6 million in pollution reduction equipment at two petroleum refineries in Louisiana and Alabama and upgrade a terminal in Puerto Rico as part of a Clean Air Act settlement with the federal government. Shell Chemical and Shell Chemical Yabucoa, units of Royal Dutch Shell, also will pay a combined $3.3 million civil penalty to the federal government, Alabama and Louisiana. About $193 will go to Louisiana organizations for environmental education, teacher workshops and emergency operations. The new pollution control equipment will be installed at Shell Chemical refineries in St. Rose, Louisiana, and Saraland, Alabama. The settlement was announced by the Justice Department and the Environmental Protection Agency.
In a reversal of a long-standing ban on most offshore drilling, President Barack Obama is allowing oil drilling 50 miles off Virginia's shorelines. At the same time, he is rejecting some new drilling sites that had been planned in Alaska. Obama's plan modifies a ban that for more than 20 years has limited drilling along coastal areas other than the Gulf of Mexico. The president, joined by Interior Secretary Ken Salazar, also is announced that proposed leases in Alaska's Bristol Bay would be canceled. The Interior Department also plans to reverse last year's decision to open up parts of the Chukchi and Beaufort Seas. Instead, scientists would study the sites to see if they're suitable to future leases. Obama is allowing an expansion in Alaska's Cook Inlet to go forward. The plan also would leave in place the moratorium on drilling off the West Coast. In addition, the Interior Department has prepared a plan to add drilling platforms in the eastern Gulf of Mexico if Congress allows that moratorium to expire. Under Obama's plan, drilling could take place 125 miles from Florida's Gulf coastline.
Federal prosecutors say Lyondell Chemical has agreed to pay $162 million to settle environmental claims. They stem from the contamination of nine properties it owns in seven states. Prosecutors said an agreement was filed in bankruptcy court in Manhattan. It calls for Lyondell to pay for the cleanup of a total of 15 properties and sites. The other six sites are Superfund sites. Houston-based Lyondell Chemical is a subsidiary of LyondellBasell. LyondellBasell recently said Lyondell Chemical intends to raise $3.25 billion in debt to emerge from Chapter 11. LyondellBasell is the world's third-largest independent chemical company. Its products are used in gasoline, plastics, electronics, autos, paints and many other products.
The federal government has rejected a Texas plan allowing industrial polluters to avoid some Clean Air Act requirements. The Environmental Protection Agency said in September it wouldn't support several aspects of Texas' air-pollution permitting program, and the portion regarding modification of industrial plants was formally rejected Wednesday. The Clean Air Act exemptions allowed under the state rule included one requiring public review. The EPA has been meeting with the Texas Commission on Environmental Quality, industry representatives and environmental groups to change Texas' permitting practices. The EPA is expected to issue two more final decisions on the permitting program later this year.
Factory orders rose in February, bolstered by strong demand for industrial machinery and commercial aircraft. It was the 10th increase in 11 months as manufacturing provides crucial support for the economic recovery. The Commerce Department said new orders rose 0.6 percent last month, just ahead of analysts' estimates of a 0.5 percent increase, according to Thomson Reuters. Still, that's below January's upwardly revised increase of 2.5 percent and the smallest uptick since August 2009, the department said. Inventories held by manufacturers rose 0.5 percent, a figure that may disappoint economists, who are hoping to see stockpiles grow rapidly as a sign of confidence in future sales. A healthy rise in inventories would give a strong boost to the economic recovery.
The Postal Service is asking regulators for an opinion on dropping delivery service on Saturdays. Plagued by loss of mail business to the electronic media, the Post Office was required to send its request to the Independent Postal Regulatory Commission electronically. The Post Office said last week it would request the opinion on its plan to drop Saturday deliveries to homes and businesses to save money. Post offices would remain open on Saturdays. Congress would also have to approve the change, but it likely to give great weight to the Regulatory Commission's response.
President Barack Obama wants to make the nation's workplaces more flexible for employees and their families. The president and First Lady, Michelle Obama, will speak at a White House forum aimed at finding ways to do just that. Earlier this year, Obama laid out initiatives to help the middle class, including child care and elder care. The plan was created by his Middle Class Task Force, which is chaired by Vice President Joe Biden.
Super-low interest rates are still needed to aid the economic recovery, but there's a chance that the Federal Reserve may have to start raising rates before the nation's unemployment rate drops significantly, a Federal Reserve official says. Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, made his observations in prepared remarks to business people meeting in Hartford, Connecticut. Lockhart says the Fed is right to pledge to keep rates at record lows for an "extended period." But he--as Federal Reserve Chairman Ben Bernanke did last week--that does not mean a specific time period. Some analysts have taken it to mean around six months.
State Farm Insurance has filed a lawsuit against the Texas Department of Insurance after the state agency took the unprecedented move of publicizing on its Web site recent rate hikes by the company. Texas' largest insurer filed suit seeking to protect from disclosure certain information that State Farm said could benefit its rivals in the insurance industry. Department spokesman Jerry Hagins says the agency's position is that all documents associated with a rate filing are public information. Posted were two State Farm rate proposals filed over the last eight months that increase homeowner premiums an average of 13 percent. Hagins tells the Dallas Morning News that the decision to post was partly the result of increases filed so close together.
American Airlines says it plans to add an additional 23 flights to and from seven new destinations out of New York's JFK and LaGuardia Airports by the end of the year. The carrier, based in Fort Worth, has also pledged more than $30 million in terminal improvements at the two airports. Combined with earlier announcements, American and sister carrier American Eagle will add 31 total flights and 13 additional routes to and from the two airports by the end of 2010. American is also partnering with jetBlue to offer their passengers international connections to American's international flights.
Farmers will plant a record soybean crop this year while also boosting corn acres by three percent, according to an Agriculture Department estimate. The increases could boost year-end reserves of the major food crops and ease fears of food shortages after high demand from the ethanol industry and overseas consumers drew down supplies two years ago. Farmers plan to plant a record 78.1 million acres of soybeans in 2010, and 88.8 million acres of corn. Soybean acres are up less than one percent. The total area planted in major food crops nationwide will hold steady at 319.5 million acres, after declining 5.7 percent in 2009.