Monday PM June 21st, 2010
by: Ed Mayberry, June 21, 2010 9:06:23 pm
Companies that ferry people and supplies to offshore oil rigs are asking a judge to overturn a six-month moratorium on deepwater oil and gas drilling. U.S. District Judge Martin Feldman heard two hours of arguments in a lawsuit filed by Hornbeck Offshore, a Covington, Louisiana-based oilfield service company. Feldman says he'll rule by Wednesday. The moratorium was ordered by the U.S. Department of the Interior. It affects 33 projects that were under way when the BP-operated rig Deepwater Horizon exploded April 20th, killing 11 workers, and sank two days later. Hornbeck, which operates offshore vessels, was joined in the suit by other companies that service offshore rigs. The suit claims the Interior Department did not have proof that the projects pose a threat.
Interior Secretary Ken Salazar has sworn in a former federal prosecutor as director of a new government agency to oversee offshore drilling and other oil and gas development. A former assistant U.S. Attorney and Justice Department inspector general, Michael R. Bromwich will lead a reorganization of the agency formerly known as the Minerals Management Service. Bromwich's arrival coincides with a secretarial order signed by Salazar renaming the agency the Bureau of Ocean Energy Management, Regulation and Enforcement. The previous agency was criticized for a cozy relationship with oil companies and lax oversight. The Obama administration plans to break up the agency into three separate entities to eliminate conflicts of interest.
The man President Barack Obama picked to administer the $20 billion oil spill damage fund says no one should underestimate "the frustration and the anger" of people along the Gulf Coast. Attorney Kenneth Feinberg tells a nationally broadcast audience the resentment is real, saying "I witnessed it firsthand last week." Feinberg told ABC's Good Morning Americathat "we want to get these claims out quicker." Feinberg said many individuals and businesses in the area are in "desperate financial straits." And he said that officials will watch carefully for any fraudulent claims, but that he didn't think that would be a big problem. Feinberg ran the Victims Claim Fund set up after the September 11th terror attacks.
Imagine a target the size of a salad plate three miles away. That illustrates the difficulty for the teams drilling the relief wells to stop the oil. None of them have done it before because deep sea interventions are rare. If the workers miss or move too slowly, oil will keep pouring into the sea. Workers aboard Transocean's development driller ii say they're confident of success just the same. A second ship is drilling another relief well. Once one of the two relief wells intersects the damaged line, BP plans to pump heavy drilling mud in to stop the oil flow and plug the blown-out well with cement. It's tricky and it's not guaranteed to work. A pair of relief wells took months to stop an undersea gusher in Mexico that started in the summer of 1979.
BP says it has now spent $2 billion responding to the oil spill and with no end in sight, that sum will continue to rise. BP last week agreed to set up a $20 billion fund to compensate victims of the disaster on the U.S. southern coast. BP says that it has so far paid out $105 million to 32,000 claimants.
Public health officials and scientists will be gathering in New Orleans this week to talk about whether any health problems could be caused by the spill. The group will also talk about the best way to watch for any potential medical issues. The meeting is being organized by the Institute of Medicine at the request of the Department of Health and Human Services. The government has already set aside $10 million for research. Health officials say there seems to be little reason to worry at this point. But they're more uncertain about the long-term, particularly for workers cleaning up oil from the spill.
Texas oystermen are concerned the oil spill will focus more harvesting on oyster beds in Texas coastal waters that have only begun to recover from Hurricane Ike in 2008. Ike deposited enough sediment on the Texas coastal beds to kill half of the 16,000 acres of public oyster reefs. State figures show that, along with changes in salinity from a recent drought, cut the $60 million industry to $27 million. Texas and Louisiana usually both have summer seasons. However, the oil spill about 50 miles off extreme southeastern Louisiana closed many of the oyster beds there, dramatically increasing oystering on Texas beds. The Austin American-Statesman reports some oyster distributors believe that'll leave few oysters when the Texas coastal waters reopen to oystering this fall.
Newly released internal documents show BP estimated 4.2 million gallons of oil a day could gush from the damaged well if all equipment restricting the flow was removed and company models were wrong. Democratic Massachusetts Congressman Ed Markey released the documents Sunday showing BP said in a worst-case scenario the leak could gush between 2.3 million and 4.2 million gallons of oil per day. The current worst-case estimate of what's leaking is 2.5 million gallons a day. The documents anticipate a scenario where the blowout preventer and other equipment on the sea floor were removed, which was never done. BP provided the documents to federal officials in May, and company officials say they have no plans to remove the blowout preventer.
A little mathematical context to the spill size can put the environmental catastrophe in perspective. Viewing it through some lenses, it isn't that huge. The Mississippi River pours as much water into the Gulf in 38 seconds as the BP oil leak has done in two months. Since the rig exploded on April 20th, about 125 million gallons of oil has gushed into the Gulf. That calculation is based on the higher end of the government's range of barrels leaked per day and the oil company BP's calculations for the amount of oil siphoned off.
A Houston company wants to ship North Dakota oil through a proposed pipeline that would carry Canadian crude to the Gulf of Mexico. Quintana Capital Group says it wants to build a $250 million, 300-mile-long pipeline system from western North Dakota to eastern Montana, where it would meet Transcanada's proposed Keystone XL pipeline. Transcanada spokesman Terry Cunha says no agreement has been reached with Quintana or any other company wanting to ship domestic crude in the Canadian company's pipeline. But discussions are under way. Quintana says its pipeline would initially carry 100,000 barrels of crude from the Watford City area to Montana's Fallon County, where it also could be linked with pipelines that carry Montana crude.
Governor Rick Perry says his first trip to China has led to increased exposure for Texas in Asia. Perry, in a conference call from Taiwan, told reporters that he held talks with two Chinese companies that are interested in making investments in Houston and in Corpus Christi. Specifics were not released. Perry also says he took part in conversations that could result in direct flights from Texas to Shanghai and Beijing, with routes including Dallas-Fort Worth and Houston. Perry, who arrived in China on June 13th, led the Texas economic mission to Shanghai World Expo 2010.
Mercury astronaut John Glenn wants NASA's space shuttles to keep flying until their replacement is ready. Glenn joined the national debate over America's future in space. He issued a nine-page statement in which he questioned the decision to retire the shuttle fleet after two or three more missions. The first American to orbit earth--now 88--says the shuttles are working extremely well right now. He says little if any money will be saved by canceling the shuttle program, considering all the millions being paid to Russia to ferry U.S. astronauts to and from the International Space Station. He wonders what will happen if a Russian Soyuz rocket fails. He also worries scientific research in orbit will take a hit.
The nearly $16 million dredging of the Brownsville Ship Channel is finished. Port of Brownsville spokesman Manuel Ortiz says the dredging, which took about four months, is meant to clear the way for larger vessels to use the port. The Brownsville Herald reports that the channel had not been dredged since the mid-1990s. The U.S. Army Corps of Engineers was in charge of the dredging, funded by federal stimulus money. Ortiz says sediment and other dredging material, of higher quality, were used to support beaches. Levees also were built to hold the removed material. Ortiz says the port is now capable of accepting vessels with a draft up to 39 feet when fully loaded.
A new survey says people who buy their own health insurance have been hit lately with premium hikes that top increases seen in employer-sponsored coverage. The Kaiser Family Foundation says 77 percent of individual insurance customers questioned this spring in a national survey recently faced a premium increase. They reported an average hike of 20 percent. But some switched plans and bought less-expensive policies, so people who faced increases wound up paying 13 percent more on average. Those hikes surpass recent single-digit increases seen in employer-sponsored health insurance, which is where most insured Americans get coverage. About 14 million people under age 65 receive health insurance through the individual market.
In the debate over whether doctors may be ordering too many medical tests, the hospital emergency room is a focal point for the question, is it overkill or good care? The fear of missing something always weighs heavily but the stakes are highest in the ER, often leading to extra blood tests and imaging scans for what may be harmless aches, pains and bumps. Many ER doctors say the top reason is fear of malpractice lawsuits. ER physicians are among the top 10 specialists most likely to be sued for malpractice, according to leading doctor and insurers groups. The fast ER pace plays a role, too. It's much quicker to order a test than to ask patients lots of questions. And many patients think every ache and pain deserves a high-tech test. National data suggest there are more than 116 million ER visits each year nationwide, and rising.
Farmers hailed the weed killer Roundup when it was introduced in the 1970s because it could kill nearly any plant and allowed them to give up harsher chemicals and reduce tilling. But now some Roundup-resistant varieties of weeds have emerged, and some farmers are being forced to turn to less environmentally friendly herbicides. Penn State University weed scientist David Mortensen estimates that in three or four years, farmers' use of Dicamba and 2,4-D, a weed killer developed during World War II and used in Agent Orange, will increase by 55.1 million pounds a year because of resistance to roundup. Mortensen says that unlike Roundup, these older herbicides easily drift beyond the spots where they're sprayed and threaten neighboring crops and wild plants.
This week will bring more economic data and signals for economists and investors to ponder. Among them will be a report tomorrow on existing home sales for May from the National Association of Realtors. Also, the Federal Housing Finance Agency releases its April home price index. Later in the week, the Federal Reserve announces its decision on interest rates, the Commerce Department releases May figures on new home sales and durable goods, and the Labor Department releases weekly jobless claims. At the end of the week, the Commerce Department will provide an update on the overall economy when it reports the first-quarter gross domestic product.