http://www.pennenergy.com/index/petroleum/display/7602822871/articles/pennenergy/petroleum/exploration/2011/12/federal-panel_calls.html?cmpid=EnlDailyPetroDecember132011

December 12, 2011
A panel convened by the federal government has issued a call for the oil and natural gas industry to take place a greater emphasis on potential environmental damage when drilling, according to The Wall Street Journal.

Health, safety and environmental concerns have always loomed large in the energy industry, between the often dangerous working conditions of coal miners and the very dramatic, public impact of oil spills.

But the emphasis has shifted recently to the natural gas industry, with the rise of the process of fracking, or hydraulic fracturing. Pumping pressurized mixtures of chemicals with fluids or sands to loosen gas deposits in the bedrock, substantial concerns have been raised that the process could contaminate nearby water aquifers, underground water reserves that provide crucial supplies of drinking water.

The panel commented on a report released in November, noting that several of its recommendations regarding improving public understanding of the issue and cooperation with regulators have not yet been implemented. The New York Times reports that a new report from the Environmental Protection Agency suggests fracking could have already caused some water contamination in Wyoming, where traditional well capping techniques might have proven insufficient to prevent leakage of methane.

Special thanks to Richard Charter

http://fuelfix.com/blog/2011/12/07/feds-charge-bp-with-new-oil-spill-violations/

Posted on December 7, 2011 at 9:37 am by Jennifer A. Dlouhy
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Mickal Vogt of Covington, La., uses a stick to place tar balls in a jar that washed up on the shore in Orange Beach, Ala., Saturday, June 12, 2010. Large amounts of the oil battered the Alabama coast, leaving deposits of the slick mess some 4-6 inches thick on the beach in some parts. (AP Photo/Dave Martin)

The federal government today issued fresh citations to BP in connection with the 2010 Gulf oil spill and accused the oil company of violating safety and environmental regulations governing offshore drilling.

The incidents of non compliance sent to firm today builds on earlier allegations that BP, Halliburton and Transocean together ran afoul of 15 offshore regulations in drilling, designing and cementing the failed Macondo well last year.

The companies already face up to $45.7 million in fines for those earlier citations, which were issued in October and based on the conclusions of a federal probe of the Deepwater Horizon disaster.

Today’s citations go further. The Bureau of Safety and Environmental Enforcement issued the newest so-called incidents of non compliance to BP today after taking a closer look at how the Macondo well was drilled.

Bureau director James Watson said the new citations were a result of that deeper dive.
“Further review of the evidence demonstrated additional regulatory violations by BP in its drilling and abandonment operations at the Macondo well,” Watson said in a statement.
“Our federal regulations exist to ensure safe and environmentally-responsible activities,” Watson added. “We will continue to be vigilant in enforcing those regulations.”

The safety bureau today sent BP five citations and accused the firm of violating two different regulations governing work on the outer continental shelf (in the case of one of those regulations, the violation is alleged to have occurred four times, in different sections of the Macondo well).

According to the safety bureau, BP violated a rule requiring the company to conduct an accurate pressure integrity test at the 13-5/8″ liner shoe. The bureau also argues that BP violated a separate regulation four times, by failing to suspend drilling operations at the well when the safe drilling margin that had been identified in the company’s government-approved permit to drill was not maintained.

That drilling margin represents the difference between the weights of drilling fluids at the site and the estimated formation and pore pressures there.

Each violation carries a penalty of up to $35,000 per day per incident. In the case of the oil spill, violations may have covered just one day or up to 87 days – the time crude was gushing into the Gulf – creating a maximum potential tab per incident of $3.05 million.
The new violations could add anywhere from $175,000 to $15.23 million to BP’s tab, on top of the $21.32 million in penalties the company was facing from the citations issued earlier.

The safety bureau’s sanctions are separate from fines and penalties expected under the Clean Water Act, which could reach $21 billion for BP, based on estimates that 4.9 million barrels of oil gushed into the Gulf after its Macondo well blew out on April 20, 2010. The failure triggered a lethal explosion on board Transocean’s Deepwater Horizon drilling rig, killed 11 workers and unleashed the worst oil spill in U.S. history. Halliburton was responsible for cementing work at the site.

The incidents of non compliance kick off a long process of assessing civil fines. The companies ultimately are able to challenge a fine assessment to the administrative Interior Board of Land Appeals.

Special thanks to Richard Charter

http://www.catholic.org/green/story.php?id=43958

By Catholic Online (NEWS CONSORTIUM)
12/7/2011
Catholic Online (www.catholic.org)

Risk of offshore drilling in pre-salt reserves must be reevaluated.

A growing offshore oil spill continues to threaten the delicate marine environment off the coast of Brazil. Despite the magnitude of the disaster, and its likelihood to upset the regional ecosystem, authorities are still yet to determine its cause, its true size, or the extent of the environmental damage. In any case, it is bound to be great.

RIO DE JANEIRO, BRAZIL (Catholic Online) – The spill occurred in an area which is rich in fish and other marine life. Officials are still working to ascertain the extent of the damage to regional ecosystems. There is no question however, that the final report will be devastating.

The oil spill occurred in an offshore region known to many as the “pre-salt oil reserves.” Pre-salt oil reserves are recently discovered deep-sea oil deposits which are difficult to reach that are believed to contain millions of barrels of oil.

The spill took place on a Chevron platform, on November 7, and government officials blame the “geological complexity” of the pre-salt deposit for the disaster. They also note that it is unclear if the spill has actually been contained despite the fact that the disaster has been ongoing for over a month.

The Brazilian government has previously expressed willingness to tap into the pre-salt reserves as a source of revenue for the government. In fact, as news of the spill broke the government was in the process of debating how to spend monies collected from drilling.

The Brazilian government has suspended Chevron’s drilling activities in the area until the cause of the disaster can be ascertained and responsibility assigned. If the disaster is shown to have been caused by human negligence, those convicted could face jail time and a multimillion dollar fine.

The Brazilian people, and the drilling companies must carefully reevaluate whether or not they are prepared to tap into the pre-salt reserves. The pre-salt reserves provide a challenge to oil companies because they can exist at depths around 7000 meters. While the oil is of very high quality, it’s extreme depths and the fact that it’s offshore, means that it is difficult to obtain. Additionally, because the oil is offshore the threat to the environment in the event of a mishap is extreme — as is being seen today.

Common sense and a modicum of environmental and personal responsibility would suggest that none should attempt to drilling in the pre-salt reserves until they are absolutely certain they can safely extract the oil without significant risk of damaging the environment. Just now, it appears evident that such a statement cannot yet be made.

Still, the lure of oil money especially given the relatively high price for oil on commodities markets, means that both governments and corporations are more willing to take risks because the profits are so great. Unfortunately, the risks these companies take do not simply involve governments and corporations alone. The risk is a common risk shared by all. Hapless marine animals, aquatic plant life, and even millions of people who depend on the health and integrity of those environments for their livelihood and survival, have a stake in the decision to drill for offshore oil.
Until governments and corporations can provide reasonable assurance that they can safely tap into these resources in a manner which compensates people and the environment upon which they depend for survival, the decision to drill in the sensitive ecological areas should be suspended.
© 2011, Catholic Online. Distributed by NEWS CONSORTIUM.

Special thanks to Richard Charter

Media Note
Office of the Spokesperson
Washington, DC

December 6, 2011

U.S. Department of State and other government officials will participate in a preparedness and response seminar in Nassau, The Bahamas, December 7-9, hosted by the Government of the Commonwealth of The Bahamas and the Regional Marine Pollution Emergency Information and Training Center for the Wider Caribbean (REMPEITC-Caribe). Government representatives from the Caribbean, Latin America, and the United States will discuss topics related to the offshore energy sector, including preventive regulatory frameworks, safety standards for floating production units, and best practices in oil spill containment. The goal of the meeting is to increase regional cooperation and joint planning on responses related to offshore units and marine pollution preparedness. U.S. participants will represent the United States Coast Guard, the Department of the Interior Bureau of Safety and Environmental Enforcement, the Department of Commerce National Oceanic and Atmospheric Administration, the United States Environmental Protection Agency, and the Department of State.

REMPEITC-Caribe is a regional activity center to help countries in the Wider Caribbean and Latin America prevent and respond to major pollution incidents in the marine environment. It receives support from the International Maritime Organization, the United Nations Environmental Programme, and participating governments, including the United States.

As new offshore oil drilling sites begin activities, the United States protects U.S. waters and shorelines by promoting safe drilling and response preparedness in areas close to our exclusive economic zone. The United States will continue to engage multilaterally to advance regional collaboration and to ensure responsible stewardship of the Gulf of Mexico and the Caribbean Sea.

Special thanks to Richard Charter

http://www.businessweek.com/news/2011-12-09/cuba-oil-drilling-tests-u-s-on-protecting-florida-or-embargo.html

December 09, 2011, 9:56 AM EST
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By Katarzyna Klimasinska

Dec. 8 (Bloomberg) — Four U.S. inspectors armed with safety glasses and notebooks will set out on a mission next month to protect Florida’s beaches from a Cuban threat.

They’ll rendezvous in Trinidad and Tobago with the Scarabeo 9, a rig headed to deep waters off Cuba to drill for oil about 70 miles (113 kilometers) south of Florida’s Key West.
Repsol YPF SA is making the Scarabeo 9 available to the U.S. inspectors before the rig starts drilling closer to Florida than the BP Plc well that failed last year in the Gulf of Mexico, causing the biggest U.S. offshore oil spill. The exploration poses an environmental, political and diplomatic challenge to the U.S. more than 50 years after cutting off relations with Cuba’s communist regime.

The Obama administration’s dilemma is “what steps to take for environmental protection and how much to honor current Cuba policy,” Dan Whittle, Cuba program director at the New York- based Environmental Defense Fund, said in an interview.

In the aftermath of the revolution that brought Fidel Castro to power, the U.S. banned exports to Cuba in 1960, withdrew diplomatic recognition, backed the failed Bay of Pigs invasion in 1961 and imposed a full trade embargo in 1962.

Now generations of animosity between the two nations limit cooperation on safety standards and cleanup precautions for the Cuba drilling planned by Madrid-based Repsol, which would be followed by state-owned companies from Malaysia to Venezuela. A conference on regional oil-spill response being held this week in Nassau, Bahamas, may provide a forum for discussions by U.S. and Cuban representatives.

Juan Jacomino, a spokesman for the Cuban Interests Section at the Swiss embassy in Washington, declined in an interview to comment on drilling off of the island nation.

Spare Parts

Repsol can use the Scarabeo 9 without violating the U.S. trade embargo because it was built at shipyards in China and Singapore, and fewer than 10 percent of its components are American, according to its owner, Eni SpA.

The sanctions would block spare parts from the U.S. for the rig’s blowout preventer, a safety device that failed in the BP spill. The restrictions also require Helix Energy Solutions Group Inc. of Houston, which provides oil-spill containment equipment for Repsol in the Gulf of Mexico, to seek a waiver to do so in Cuban waters in case of an accident.

U.S. companies seeking to do business with Cuba must ask the Commerce Department, which considers most applications “subject to a policy of denial,” the agency says on its website. The Treasury Department weighs requests to travel from the U.S. to Cuba.

Granting too few permits for spill prevention and response would keep contractors from offering the technology and services developed after the BP spill, Lee Hunt, president of the Houston-based International Association of Drilling Contractors, said in an interview.

Cuban Exiles

Approving too many licenses would undermine the embargo, enriching a regime listed by the U.S. State Department as a nation supporting terrorism along with Iran, Sudan and Syria, according to anti-Castro lawmakers such as Republican Representative Ileana Ros-Lehtinen of Florida, who heads the House Foreign Affairs Committee.

U.S. “assistance, guidance and technical advice” to Repsol, including the planned visit to Scarabeo 9, may violate the law by “helping to facilitate” the company’s work and providing the Cuban government “with a financial windfall,” Ros-Lehtinen said in a Nov. 1 letter to President Barack Obama.

Ros-Lehtinen, who immigrated from Cuba with her family at age 8, is a leader among Cuban exiles in South Florida who have opposed easing U.S. restrictions. Florida, which has been a swing state in presidential elections, also has been a bastion of opposition to oil drilling that opponents say could despoil the beaches that are a prime draw for tourists.

Florida Drilling Foes

Lawmakers such as Senator Bill Nelson, a Florida Democrat, have fought to keep drilling out of U.S. waters in the eastern Gulf of Mexico bordering Florida.

Nelson and Senator Robert Menendez, a New Jersey Democrat, introduced a bill Nov. 9 that would require foreign companies drilling in Cuban waters to pay for damage to U.S. territory without liability limits. Senator Marco Rubio, a Florida Republican, joined as a cosponsor.

Oil from BP’s spill tarred beaches 150 miles away in Florida’s northwestern Panhandle.
Now Floridians are faced with drilling under the jurisdiction of Cubans, who “don’t have the resources” to control a blowout, Jorge Pinon, an energy consultant and visiting research fellow at the Cuban Research Institute at Florida International University in Miami, said in an interview.

“If the U.S. is not willing to help” in an emergency, “the resources are going to come from Canada, Norway and the U.K., and it will take a very long time,” said Pinon, who led Amoco Corp. units in Mexico City and retired from BP in 2003, according to his biography.

Repsol’s Contract

Repsol signed a contract with Cuba in 2000, according to the company’s website, and confirmed the presence of oil with a Norwegian rig in 2004. Repsol will drill in about 5,000 feet (1.5 kilometers) to 6,000 feet of water, about the depth of BP’s Macondo well, according to Pinon.

Petroliam Nasional Bhd., or Petronas, based in Kuala Lumpur; New Delhi-based Oil & Natural Gas Corp.; Hanoi-based Vietnam Oil & Gas Group, known as PetroVietnam; Caracas-based Petroleos de Venezuela SA; and Sonangol SA of Luanda, Angola, also hold Cuban blocks, Pinon said.

U.S. officials say they are doing all they can to ensure safe drilling off Cuba.
“We are quite focused, and have been for many, many months” on “doing anything within our power to protect U.S. shores and U.S. coastline,” Tommy Beaudreau, director of the Bureau of Ocean Energy Management, an industry regulator, said in a Nov. 29 interview at Bloomberg’s Washington office.

Wild Well Control

The administration has issued some licenses to U.S. companies to respond to a spill in Cuban waters, Mark Toner, a spokesman for the State Department, said in an e-mail. He didn’t say how many have been approved, and the Commerce and Treasury departments didn’t respond to e-mailed requests for comment.

Wild Well Control Inc. of Houston is one permit recipient, according to Hunt of the drilling contractors’ trade group. The company didn’t respond to e-mails and phone calls seeking comment.

“Helix plans to build a new subsea containment cap to safeguard drilling operations in Cuba,” Cameron Wallace, a spokesman for that company said in an e-mail about its request for U.S. licenses. “The cap and associated equipment will be staged at a U.S. port near to the drilling site to minimize response time.”

Walking the Deck

In their visit to the Scarabeo 9, two inspectors from the U.S. Coast Guard and two from the Interior Department will walk the deck and check generators, the positioning system and firefighting equipment, Brian Khey, who will be on the team, said in an interview.

The Americans will watch a firefighting simulation and conduct an abandon-ship drill, according to Khey, the supervisor at the Coast Guard’s Outer Continental Shelf National Center of Expertise in Morgan City, Louisiana,

While the visitors will discuss with Repsol any deficiencies they find, they won’t have enforcement powers, Khey said. Nor will they be able to check the blowout preventer or the well casing and drilling fluid that will be used on site, according to the Interior Department.
Scarabeo 9 was built “according to the latest and most advanced international standards available at the time of her design and construction,” Rome-based Eni said in an e-mailed statement. “Health, safety and environmental protection are always a top priority.”
Eni Subsidiary

The vessel “is one of the very few units in the industry which is using a technology which is not an American one,” Pietro Franco Tali, chief executive officer of Eni’s oilfield- services subsidiary, Saipem SpA, said on an Oct. 27, 2010, conference call.

One U.S. component is the blowout preventer, made by Houston-based National Oilwell Varco Inc. The company hasn’t applied for a license to do business with Cuba and doesn’t plan to, Chief Financial Officer Clay Williams said in a phone interview.

That means rig operators will have to seek training and spare parts in Europe or Asia, according to Hunt, whose group represents 1,494 companies including Saipem.

“It’s like buying a Mercedes and being told you have to go to a Ford dealer for parts,” Hunt said in an interview.

The results of Cuba’s drilling may affect U.S. energy policy. Success would put pressure on the U.S. to open its waters surrounding Florida for exploration, Pinon said.
A serious accident off of Cuba could throw the industry out of the Gulf of Mexico, according to Brian Petty, executive vice president for governmental affairs of the drilling contractors’ group.

“A mess” in Cuban waters would lead critics of drilling to say, “Stop it, don’t let it go on anywhere,” Petty said.

–With assistance from Nicole Gaouette in Washington and Nguyen Dieu Tu Uyen in Hanoi. Editors: Judy Pasternak, Larry Liebert
-0- Dec/09/2011 14:34 GMT
To contact the reporter on this story: Katarzyna Klimasinska in Washington at kklimasinska@bloomberg.net
To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net

Special thanks to Richard Charter