Friday PM August 6th, 2010
by: Ed Mayberry, August 6, 2010 9:08:00 pm
BP is confirming that it plans to use a relief well to shove mud and then cement into the underground reservoir feeding the blown-out Gulf of Mexico well. Chief Operating Officer Doug Suttles says that crews still “plan to move forward with the bottom kill” at this point. The company has been hedging on what exactly it will do with the 18,000-foot relief well when it's finished later this month. Crews have already plugged up the well from the top with mud and cement. But federal officials want BP to plug it from the bottom to make sure it's permanently sealed. Suttles says crews are preparing to drill the final 100 feet of the primary relief well.
Retired Coast Guard Admiral Thad Allen says engineers will probably remove the failed blowout preventer and replace it to secure the site permanently. Admiral Allen told the Associated Press that it is likely the Justice Department will want the failed blowout preventer as evidence as it investigates. Crews have pumped mud and cement into the top of the blown-out well to plug it up. The plan has been to pump filler into the bottom later this month through a relief well. Allen also says he plans to remain national incident commander for the “foreseeable future” but indicated a government transition plan is in the works.
The BP executive responsible for the petroleum giant's response to the oil spill in the Gulf of Mexico is returning to his old job in Houston. BP announced that Doug Suttles will leave immediately for his previous job as chief operating officer for BP Exploration and Production. He has spent more than three months managing the oil spill response. Suttles will be replaced by Mike Utsler, who has been running BP's command post in Houma, Louisiana, since April. Utsler has been a vice president at BP and been with the oil giant for 33 years. BP is closing in on sealing its blown-out oil well. Millions of gallons of crude have gushed into the Gulf since a deepwater rig exploded in April and killed 11 workers.
BP says it may in the future drill in the same Gulf of Mexico oil reservoir that blew up. Officials said at a news briefing in New Orleans that the company hasn't closed the door to tapping the reservoir again. Chief Operating Officer Doug Suttles says “there's lots of oil and gas here.” He says “we're going to have to think about what to do with that at some point.” The company is plugging up the blown-out well with mud and cement. Officials have also been drilling two relief wells in a planned effort to plug the hole from the bottom. BP says it will abandon the blown well and the relief wells but is leaving open the option of drilling nearby.
BO says it has paid $303 million in claims to more than 40,000 businesses and individuals affected by the Gulf oil spill. The company's update also says $112 million of that money has been paid in the past three weeks. BP says it will continue making payments until Kenneth Feinberg, the Obama administration's pay czar, takes over processing claims from a $20 billion oil spill compensation fund later this month.
Private employers added new workers at a weak pace for the third straight month, making it more likely economic growth will slow in the coming months. The Labor Department says companies added a net total of 71,000 jobs in July, far below the roughly 200,000 needed each month to reduce the unemployment rate. The Labor Department says 131,000 jobs were cut last month, though that was primarily tied to layoffs of temporary census workers. The jobless rate is unchanged at 9.5 percent. Overall, the economy lost a net total of 131,000 jobs last month, as 143,000 temporary census jobs ended. The department also says businesses hired fewer workers in June than it previously estimated. July's private sector job gains were revised down to 31,000 from 83,000. May was revised up slightly to show 51,000 net new jobs, from 33,000.
President Barack Obama is hailing the seventh straight month of private job creation as a good sign for the economy. But he says the progress “needs to come faster.” The president spoke at Gelberg Signs, a small business in Washington, D.C., that is expanding and hiring workers. His comments came as a new jobs report shows companies lacked strong confidence in hiring for a third straight month. The unemployment rate was stuck at 9.5 percent, and private employers added a net total of only 71,000 jobs. Obama says the country is now consistently adding jobs instead of losing them in huge numbers. He said that for workers, the progress must be accelerated. He called on Congress to take more steps to help businesses.
BAE Systems says between 1,100 and 1,300 positions are affected in layoffs announced for its U.S. Global Tactical Systems business. That includes a combination of BAE Systems employees and temporary workers. GTS employs 2,900 workers in Sealy and Houston and Sterling Heights, Michigan. The reduction follows the loss of the U.S. Army’s Family of Medium Tactical Vehicles contract. Starting in September a majority of the 600 temporary positions will be eliminated, followed by BAE Systems employee reductions in October and December. BAE Systems is offering a severance package of pay, benefits and outplacement assistance.
Toyota has hired 1,000 workers in adding its Tacoma pickup assembly to its San Antonio factory, according to Bloomberg News. The plant is now capable of making 220,000 Tundra and Tacoma pickups annually—up from 200,000. Governor Rick Perry credits the strong relationship between Texas and Toyota for creating jobs, in speaking at a ceremony celebrating the launch of the Toyota Tacoma expansion. Toyota has $1.4 billion invested in its San Antonio plant, which now employs more than 2,800.
Some Texas legislators are asking state environmental regulators to solve a permit dispute with the U.S. Environmental Protection Agency that has left some of the nation's largest oil refineries in operating limbo. The bipartisan group of lawmakers made the plea in a July 23rd letter. E-mail correspondence obtained by the Associated Press indicates that oil industry leaders lobbied for the letter. The letter is signed by 46 legislators, including 29 Republicans, many of whom support Governor Rick Perry and his battle against the EPA. The crux of the debate is over so-called flexible permits, which set a general limit on how much pollution a facility can release. The EPA has barred the permits, saying they violate the Clean Air Act.
Increased demand and rising crude oil prices have helped boost retail gasoline prices slightly across Texas. The weekly AAA Texas gasoline price survey shows the average price of a gallon of unleaded regular grade rose a penny to $2.60. Nationally, the average price rose 2 cents to $2.76 per gallon. The statement notes that crude oil prices topped $80 per barrel after averaging $78 the previous week. Also, gasoline demand reached its highest levels since August 2007. The cheapest gasoline in Texas is in Houston and San Antonio with an average price of $2.55 per gallon, up a penny in Houston and two cents in San Antonio. the costliest gasoline is in El Paso, where the price rose a penny to $2.75.
Consumer borrowing fell in June for a fifth straight month as households keep cutting back on credit card use. The Federal Reserve says borrowing dropped at an annual rate of $1.3 billion in June. That marked the 16th drop in overall credit in the past 17 months. Americans backed away from swiping their credit cards for the 21st straight month. That offset a rise in the number of auto loans. The reduction in borrowing and efforts to by households to boost their savings have acted as a major drag on the overall economy by lowering consumer spending.
Hewlett-Packard says CEO Mark Hurd is stepping down following a sexual-harassment claim filed against him and the technology by a former HP contractor. Hewlett-Packard says Hurd decided to leave after an investigation. It concluded the company's sexual harassment policy was not violated, but that its standards of business conduct were. The technology company named Chief Financial Officer Cathie Lesjack as its interim CEO. HP says a board committee will search for a new CEO. Lesjak, who has been at hp for 24 years, will continue to act as chief finance officer.
The head of Target Corporation has apologized for a political donation to a business group backing a conservative Republican for Minnesota governor, which angered some employees and sparked talk of a customer boycott. Target CEO Gregg Steinhafel wrote employees to say the discount retailer was “genuinely sorry” over the way a $150,000 contribution played out. Steinhafel said Target would set up a review process for future political donations. MN Forward is running TV ads supporting Republican Tom Emmer, an outspoken conservative opposed to same-sex marriage and other gay-rights initiatives that have come before Minnesota's legislature.
Federal regulators are abandoning efforts to negotiate a compromise on so-called “network neutrality” rules. They were intended to ensure that phone and cable TV companies cannot discriminate against Internet traffic traveling over their broadband lines. The announcement from the FCC ends weeks of government-brokered talks aimed at reaching an agreement on the issue among a handful of big phone, cable TV and Internet companies. That word comes as two big firms that have been taking part in the talks, Verizon and Google, try to hammer out their own separate proposal on how broadband providers should treat Internet traffic. Verizon and Google expect to unveil their proposal within days. They hope it will provide a framework for net neutrality legislation in Congress.
Government-controlled mortgage company Fannie Mae says it needs another $1.5 billion in additional taxpayer aid. That's after posting a smaller loss in the second quarter. Fannie Mae says it lost $3.1 billion, which is actually the best showing since coming under federal control in September 2008. That takes into account $1.9 billion in dividends paid to the Treasury Department. The government rescued Fannie Mae and Freddie Mac two years ago. so far, they've needed nearly $147 billion to stay afloat.
Some analysts are predicting a big increase in China's corn imports, which could mean added income for U.S. farmers. But it also could mean higher food prices worldwide, particularly for meat as livestock feed prices rise. U.S. farmers said they're cautious but hopeful about doing more business with China, which needs more corn to feed the expanding livestock herds that supply meat to its growing middle class. China has historically grown the corn it needs domestically but land and water shortages, combined with a resistance to labor-saving equipment, are making that difficult. The chairman of the market research firm Shanghai JC Intelligence, Hanver Li, has estimated China's corn imports will climb from 1.7 million tons this year to up to 15 million tons by 2015.
The number of rigs actively exploring for oil and natural gas in the U.S. increased by 19 this week to 1,605. Houston-based Baker Hughes says that 983 rigs were exploring for natural gas and 611 for oil. Eleven were listed as miscellaneous. a year ago this week, the rig count stood at 966. Texas gained 16 rigs. The rig count tally peaked at 4,530 in 1981, during the height of the oil boom. The industry posted a record low of 488 in 1999.