Friday PM August 27th, 2010
by: Ed Mayberry, August 27, 2010 5:08:00 pm
The federal government says it will start work Monday to remove the temporary cap keeping oil from gushing out of BP's blown-out Gulf well so that it can raise a key piece of equipment from the seabed. Retired Coast Guard Admiral Thad Allen, the government's point man for the spill response, says engineers must remove the cap so they can raise the failed blowout preventer. The blowout preventer is considered a key piece of evidence in determining what caused the April rig explosion that unleashed the gushing oil. Allen says the Department of Justice and other federal investigators are overseeing the work to remove the blowout preventer. Allen says the goal is to drill the final 50 feet of a relief well beginning September 7th. The relief well has been called the ultimate solution to plugging the well.
The U.S. government is reopening more federal waters in the Gulf of Mexico for commercial and recreational fishing that had been closed because of the massive oil spill. Jane Lubchenco, head of the National Oceanic and Atmospheric Administration, told reporters that the government is reopening 4,281 square miles of federal waters off the coast of western Louisiana. Oil sheen has not been seen there since July 29th, and scientists found no oil or dispersants on samples of the area's shrimp and fin fish. Twenty percent of federal waters in the Gulf remain closed. Meanwhile, BP is preparing to permanently kill its undersea well. First, engineers plan to raise the failed blowout preventer, a key piece of evidence in ongoing investigations.
A BP drilling engineer who was a key decision maker at the rig in the Gulf has refused to testify before a federal panel investigating the incident. Mark Hafle exercised his constitutional right not to testify. The U.S. Coast Guard and the Bureau of Ocean Energy Management, Regulations and Enforcement have been holding hearings since Monday in Houston. Their goal is to determine what caused the explosion on the Deepwater Horizon rig that led to the largest offshore oil spill in U.S. history. The panel also will make recommendations to prevent such a catastrophe in the future. BP officials have been unwilling or unable to provide a clear picture of the company's hierarchy or say who was in charge of the rig the day it blew up. Federal investigators became visibly annoyed Thursday, with U.S. Coast Guard Captain Hung Nguyen saying, “everybody in charge, nobody in charge.” Nguyen is co-chairman of the investigative board. However, BP Senior Vice President Kent Wells said he disagreed. He explained that BP instilled a companywide safety culture that ensured every employee felt responsible.
A Covington company has been hired to process applications for money from a $100 million fund set up by BP to help oil rig workers idled by a federal moratorium on new deepwater drilling in the Gulf. The Louisiana charity running the program, the Gulf Coast Restoration and Protection Foundation, has contracted with First Premium Insurance Group with a call center and a background in claims processing. Grants will be limited to those who worked on the 33 rigs affected by the moratorium. Applications will be taken from September 1st to the 30th. The applications will be graded against each other. Grant checks ranging from $3,000 to $30,000--depending on financial hardship--will be mailed in October.
An Associated Press analysis finds some places have done pretty well since the Gulf oil spill while others have been hit by a double-whammy. The worst offshore oil spill in U.S. history has spurred something of an economic boom in some communities where cleanup operations are based. But other areas haven't been as lucky. They're too far away from the cleanup to serve as a staging ground for masses of workers, but close enough to experience severe losses in tourism, fishing and drilling. Sales tax revenue in Gulf states showed a stark difference, up 80 percent in June in front-line cleanup towns, but down 45 percent in towns that lost out on both the cleanup and tourist trades. The cleanup has become its own industry, according to some business owners in some front-line places.
The largest private landowner in the Florida panhandle has sued a Houston-based company over drilling fluids, including mud, linked to the April 20th rig disaster. Real estate developer St. Joe Company is seeking unspecified damages against M-I Swaco for a decline in the value of its 577,000 panhandle acres and in its developments. A month after the spill, an international airport opened in Panama City, Florida, on land donated by St. Joe and surrounded by land the company planned to develop. St. Joe had courted Dallas-based Southwest Airlines to service the airport under a unique plan in which the company agreed to pay the airline's fuel bill if it did not reach passenger goals in the opening year. St. Joe lead counsel William Brewer said the company had a positive future before the spill. But less than two months later, St. Joe had lost more than 40 percent of its stock value. The lawsuit was filed this week in Delaware.
The economy grew at a much slower pace this spring than previously estimated, mostly due to the largest surge in imports in 26 years and a slower buildup in inventories. The Commerce Department says the nation's gross domestic product--the broadest measure of the economy's output--grew at a 1.6 percent annual rate in the April-to-June period. That's down from an initial estimate of 2.4 percent last month and much slower than the first quarter's 3.7 percent pace. Many economists had expected a sharper drop. The economy has grown for four straight quarters, but that growth has averaged only 2.9 percent, a weak pace after such a steep recession. The economy needs to grow at about three percent just to keep the unemployment rate, currently 9.5 percent, from rising.
Commodities prices are mostly higher after a new report showed that economic growth in the U.S. wasn't as bad in the second quarter as some had feared. Gold, silver, copper and oil all settled higher while natural gas prices fell.
Federal Reserve Chairman Ben Bernanke says the Fed will consider making another large-scale purchase of securities if the slowing economy were to deteriorate significantly and signs of deflation were to flare. Bernanke's remarks, prepared for delivery to a conference here, came 90 minutes after the government said the economy slowed sharply in the second quarter to a 1.6 percent pace. Fears are growing that the country could lapse back into a recession. The Fed chief stops short of committing to any specific action. He raises the prospect of another Fed purchase of securities, most likely government debt or mortgage securities, to drive down rates on mortgages and other debt to spur more spending by Americans. Bernanke describes the economic outlook as “inherently uncertain” and says the economy “remains vulnerable to unexpected developments.”
Hewlett-Packard is boosting its bid for 3Par by 11 percent to $1.88 billion, topping Dell's offer and again raising the stakes in the bidding contest for the data storage company. The $30-per-share offer is worth three times the price of 3Par before Dell made its first bid last week, or $1.13 billion. Dell and 3Par said that 3Par's board has accepted the latest bid from Dell, which only has to match the terms of other offers under its initial agreement with 3Par. HP and Dell, two of the world's largest personal computer makers, are looking at 3Par as a way to build up their “cloud computing” businesses.
The Greater Houston Partnership’s World Trade Soiree is set for tomorrow night at Hotel ZaZa on Main Street. More than 600 government and business leaders are expected to attend. The event draws attention to the Houston region as a gateway to global markets, attracting jobs, capital investment and foreign trade. The Houston/Galveston region ranks as the fourth largest exporter by dollar value in the nation, with more than $75.2 billion in exports.
Prices at gasoline stations across the country are expected to keep dropping as travelers hit the road for late-summer trips. The national average pump price has declined for 17 days in a row. According to the auto club AAA and other price watchers, it's reached $2.68 for a gallon of unleaded regular gasoline. Motorists in the west are paying the most for gas, ranging from $2.81 to $3.52 a gallon. The cheapest prices are in Texas, parts of the Midwest and the Gulf coast area, where the range is $2.44 to $2.53 a gallon. The price pullback comes after a plunge in wholesale gasoline prices earlier this month continues to filter into the retail market.
Mississippi lawmakers convened a special session to consider $50 million of incentives for a biofuel production project. A Texas company, Kior, plans to use wood chips and other biomass to make a crude oil substitute. Governor Haley Barbour says Kior's first three plants would be in the city of Columbus, Newton County and an area around Franklin County. Barbour and Kior CEO Fred Cannon say the company eventually would build two more plants in Mississippi.
Ford says it is recalling 575,000 older model Windstar vans in the United States and Canada over concerns that the rear axles can corrode and potentially break. The recall covers vehicles in the model years 1998 to 2003 sold in states where the heavy use of road salt can cause more corrosion. That includes Canada, New England, the mid-Atlantic states and the Great Lakes region. Ford says it plans to start notifying owners beginning on September 27th. The company says the axle breaks have occurred in only a small number of cases.
United and Continental Airlines will help Southwest Airlines expand in the New York market. The move is designed to help United and Continental win approval from antitrust regulators to combine and form the world's largest airline. United and Continental said they will lease takeoff and landing slots at Newark New Jersey Liberty International Airport to Southwest beginning next March. The airlines said the arrangement was intended to address U.S. Department of Justice concerns about the proposed United-Continental combination.
British scientists say they've decoded the genetic sequence of wheat and are posting the data online. The plant is among the world's most important crops and the researchers say the information could help farmers create disease-resistant strains of the global food staple. University of Liverpool scientist Neil Hall says the wheat genome was far longer than the human genome first unraveled ten years ago. But he says the techniques used to decode genetic information have improved considerably, meaning the process took only about a year. Hall and others worked on a strain of wheat known as Chinese spring. Hall said that his team would soon work to decode other varieties.
Some Canadian cattle are getting red wine with their meals. It's the brainchild of Janice Ravndahl, whose family owns Suzmu meats in Kelowna, British Columbia. Ravndahl says the wine gives the meat a unique flavor that has been a hit with customers. She says serving cattle wine for two months before they are slaughtered enhances the meat's flavor, producing finer marbling and fat that tastes like candy. She got the idea from a television show about a chef who serves beer to his pigs. Chef Roger Sleiman of Kelowna, British Columbia, says he initially thought giving wine to cattle was a gimmick but has been impressed by the flavor. He suggests serving it with a pinot noir.
Meatpackers, feeders and hundreds of ranchers from around the country are attending a workshop to discuss proposed federal rule that aims to preserve competition in an industry increasingly dominated by a handful of corporate giants. The workshop in Fort Collins, Colorado, is one of five the administration set this year to hear about competition in an increasingly consolidated industry. Agriculture Secretary Tom Vilsack says the trend will ultimately hurt consumers. Meanwhile, he says hog and cattle farmers are worried about whether there's a future in farming. The proposal would make it easier to file lawsuits against meat processors by stating that farmers don't need to prove industry-wide anticompetitive behavior. Producers, however, sharply disagree on whether the rule would help or hurt.
The number of rigs actively exploring for oil and natural gas in the U.S. increased by five for this week to 1,656. Houston-based drilling systems provider Baker Hughes said 973 rigs were exploring for natural gas and 672 for oil. Eleven were listed as miscellaneous. A year ago this week, the rig count stood at 999. The biggest gain was in Texas with 13. The rig tally peaked at 4,530 in 1981, during the height of the oil boom. The industry posted a record low of 488 in 1999.