Court Testimony: BP Managers Under Cost-Cutting Pressure before Spill

NEW ORLEANS - BP PLC's managers were under pressure to cut costs significantly in the years leading up to the Deepwater Horizon accident, according to testimony at the federal trial here over liability for the 2010 explosion and oil spill.

Kevin Lacy, BP's former head of drilling in the Gulf of Mexico, said in a videotaped deposition that he was told to cut hundreds of millions of dollars in costs in 2008 and 2009.

"I was never given a directive to cut corners or deliver something unsafe," Mr. Lacy said. "But there was tremendous pressure on costs."

The testimony came on the third day of the civil trial that will determine the degree of culpability that BP and other companies have for the accident, which killed 11 workers. They are being sued by the federal government, state, and local businesses that say they were hurt financially by the oil spill, which lasted for three months.

Mr. Lacy's testimony was preceded by excerpts from interviews lawyers for plaintiffs suing BP did with its former chief executive, Tony Hayward, who was asked repeatedly about speeches he had given on cost-cutting at the company. In many cases Mr. Hayward tried to point out a broader context for the statements and speeches.

On Monday, lawyers for the parties traded barbs over who was to blame for the explosion that unleashed the worst offshore oil spill in U.S. history. Tuesday was dominated by testimony from Robert Bea, a University of California Berkeley engineering professor who called the accident "a classic failure of management and leadership in BP" that came after many warnings to the company.

Lamar McKay, the head of BP's exploration and production business, repeatedly rebuffed attempts by a lawyer for the plaintiffs to place the entire blame for the accident on BP. Mr. McKay stressed that decision making and safety were shared responsibilities among all the companies working on the doomed rig.

The trial is scheduled to take up to three months, but could be cut short or temporarily stopped if the parties reach a settlement.

A second trial, scheduled for the fall, will determine how much oil leaked into the Gulf of Mexico.

Together, they will determine the size of fines firms face under the Clean Water Act, which could total as much as $17.6 billion.

BP, which hired Transocean Ltd. and Halliburton Co. to work on drilling its well, has said the fines would likely be under $5 billion.

Copyright (c) 2012 Dow Jones & Company, Inc.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

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Court Testimony: BP Managers Under Cost-Cutting Pressure before Spill

NEW ORLEANS - BP PLC's managers were under pressure to cut costs significantly in the years leading up to the Deepwater Horizon accident, according to testimony at the federal trial here over liability for the 2010 explosion and oil spill.

Kevin Lacy, BP's former head of drilling in the Gulf of Mexico, said in a videotaped deposition that he was told to cut hundreds of millions of dollars in costs in 2008 and 2009.

"I was never given a directive to cut corners or deliver something unsafe," Mr. Lacy said. "But there was tremendous pressure on costs."

The testimony came on the third day of the civil trial that will determine the degree of culpability that BP and other companies have for the accident, which killed 11 workers. They are being sued by the federal government, state, and local businesses that say they were hurt financially by the oil spill, which lasted for three months.

Mr. Lacy's testimony was preceded by excerpts from interviews lawyers for plaintiffs suing BP did with its former chief executive, Tony Hayward, who was asked repeatedly about speeches he had given on cost-cutting at the company. In many cases Mr. Hayward tried to point out a broader context for the statements and speeches.

On Monday, lawyers for the parties traded barbs over who was to blame for the explosion that unleashed the worst offshore oil spill in U.S. history. Tuesday was dominated by testimony from Robert Bea, a University of California Berkeley engineering professor who called the accident "a classic failure of management and leadership in BP" that came after many warnings to the company.

Lamar McKay, the head of BP's exploration and production business, repeatedly rebuffed attempts by a lawyer for the plaintiffs to place the entire blame for the accident on BP. Mr. McKay stressed that decision making and safety were shared responsibilities among all the companies working on the doomed rig.

The trial is scheduled to take up to three months, but could be cut short or temporarily stopped if the parties reach a settlement.

A second trial, scheduled for the fall, will determine how much oil leaked into the Gulf of Mexico.

Together, they will determine the size of fines firms face under the Clean Water Act, which could total as much as $17.6 billion.

BP, which hired Transocean Ltd. and Halliburton Co. to work on drilling its well, has said the fines would likely be under $5 billion.

Copyright (c) 2012 Dow Jones & Company, Inc.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

View the original article here

Shoppers brave long lines, full parking lots before holiday

Font ResizeLocal NewsBy Jordan Steffen
The Denver Postdenverpost.comPosted: 12/22/2012 02:56:23 PM MSTDecember 23, 2012 5:0 AM GMTUpdated: 12/22/2012 10:00:35 PM MST


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Twas The Night Before Tax Cuts

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E15: A Fuel Before Its Time

E15 – gasoline containing 15 percent ethanol that has EPA approval  – is one of those ideas that looks good on paper but seems headed for problems in the real world. API’s Bob Greco, director for downstream and industry operations, outlined some of them for reporters during a conference call:

Testing so far shows the higher concentration of ethanol would not be fully compatible with much of the dispensing and storage equipment the nation’s gas stations. A recent API review estimated half of the existing retail outlet equipment isn’t E15 compatible.As a result, there could be damage to equipment, safety problems and potential environmental concerns at gas stations.Difficulties with E15 getting into the market could erode public support for the nation’s renewable fuels program.Refiners could face problems in the future, caught between satisfying federal requirements for blended fuels and the lack of a retail market for those fuels.

Greco said EPA’s E15 approval isn’t a mandate to sell and that the timing of its emergence into the marketplace will depend on clearing hurdles in individual states. Still, the concern is that E15 wasn’t thoroughly evaluated before it got EPA approval.

“The availability of biofuels for blending in gasoline is a good thing because of its favorable octane, and the industry supports a realistic and workable Renewable Fuels Standard.  In fact, more than 90 percent of all gasoline sold in the country has a 10 percent blend of ethanol.  But EPA has not done its homework before introducing E15 to America.  The Agency’s enthusiasm for E15 has clouded its judgment and led to approval of a fuel before adequate study has been done.”

Compatibility issues loom large, Greco said. “Even with vehicles the EPA says are compatible, automakers disagree,” he said. Last summer U.S. Rep. James Sensenbrenner of Wisconsin forwarded letters from car companies to EPA Administrator Lisa Jackson that outline their E15 concerns. A sampling:

Ford: “Ford does not support the introduction of E15 into the marketplace for the legacy fleet. … Fuel not approved in the owner’s manual is considered misfueling and any damage resulting from misfueling is not covered by the warranty.”

Chrysler: “We are not confident that our vehicles will not be damaged from the use of E15. … The warranty information provided to our customers specifically notes that use of the blends beyond E10 will void the warranty.”

Honda: “Vehicle engines were not designed or built to accommodate the higher concentrations of ethanol.  … There appears to be the potential for engine failure.”

Ultimately, Greco said, consumers might become confused and ultimately could bear higher costs:

“Without a market for the higher ethanol blends, Congress’ biofuels mandate could result in higher compliance costs or production constraints that could place upward pressure on gasoline prices for consumers.”

One questioner asked whether NASCAR’s use of higher-ethanol fuel suggests E15 concerns are overstated. “I don’t know about you,” Greco said, “but I don’t drive a race car.”

View the original article here

EPA Should Improve Emissions Rule Before Finalizing

Here’s something to keep in mind as we discuss the Environmental Protection Agency’s proposed rule on emissions from oil and natural gas development: A Rasmussen Reports poll this week showed 44 percent of likely voters believe, generally, that EPA’s regulations and actions hurt the economy. Just 17 percent disagree and say EPA’s policies help the economy.

EPA has a new policy on the way, the proposed New Source Performance Standards. As presently crafted, the standard would require hydraulic fracturing operators to use “green completion” equipment to control emissions of volatile organic compounds or VOCs.

But in a conference call with reporters, Howard Feldman, API director of regulatory and scientific affairs, said the proposed rule could needlessly impose significant costs – more than $780 million over four years – and troublesome delays on energy producers:

“First, the proposed rule would require more emissions equipment for sources that emit little to no regulated pollutants and should not be subject to these requirements. … Second, EPA recognized that there will be a significant increase in reduced emission completions but failed to analyze whether or not there is enough of the specific emissions reduction equipment available.”

Joined by Sara Banaszak of America’s Natural Gas Alliance, Feldman said industry has urged EPA to apply the new rule only to sources with significant VOCs emissions – and not to those whose vent streams contain less than 10 percent VOCs. Industry also believes more time is needed to develop and deploy the equipment needed to reduce emissions, as well as to train workers to use it. Feldman:

“The fact is that the industry is already leading efforts to reduce emissions. Our companies, after all, are in the business of selling methane, which is natural gas, so they don’t want it to escape into the atmosphere. The technology and equipment being used to reduce emissions were created by the industry itself – not by the EPA or by our critics in the environmental movement – and companies are already implementing it in many locations. … The (EPA) proposal took too much of a one-size-fits-all approach to regulating an industry that varies greatly in the type, size and complexity of operations.”

Critics say oil and natural gas companies are trying to avoid compliance with emissions-reducing efforts, which Feldman rejected:

“I want to be clear that we do not oppose these rules. … The whole concept of the VOCs threshold, let me emphasize, is to make sure that the rule is cost-effective for the regulated pollutant. It would be unprecedented to try to fit a standard that would have an extremely high [cost] approaching infinity. … You don’t force controls where there are no significant emissions. … Where there’s no emissions, to require control equipment doesn’t make any sense.”

Although environmentalists say the proposal as written would pay for itself or even produce revenue for industry, Feldman and Banaszak said EPA cost-effectiveness estimates are based on flawed data. Drillers say compliance costs and delays would be significantly greater. Feldman said if the choice is between the estimates of “lawyers in Washington” and operators, he would go with people doing the work on the ground.

EPA’s proposed rule is scheduled to be finalized next week. Earlier Thursday, API President and CEO Jack Gerard sent a letter to EPA Administrator Lisa Jackson, outlining industry’s concerns. Will EPA listen? Rasmussen’s results certainly suggest it should.

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Before You Dig: 811

April is National Safe Digging Month, and America's oil and natural gas companies join with the Common Ground Alliance on a simple message: Call 811 a few days before any digging project. API Pipeline Director Peter Lidiak:

"Eight-one-one should become as familiar to Americans as 911. April is the traditional start of digging season.  We strongly encourage individuals and companies to call 811 before they begin digging.  Millions of us live, work or play near or above pipelines and other underground infrastructure.  We need to protect it by calling 811.”

API encourages homeowners and professional excavators to:

Always call 811 a few days before digging, regardless of the depth or familiarity with the property.Plan ahead.  Call on Monday or Tuesday for work planned for an upcoming weekend, providing ample time for the approximate location of lines to be marked.Confirm with your local one call center that all lines have been markedLearn what the various colors of pain and flags represent at Call 811 FAQs.Consider moving the location of your project if it is near utility line markings.If a contractor has been hired, confirm that a call to 811 has been made.  Don’t allow work to begin if the lines aren’t marked.

For more information, visit Call 811 today to learn more about 811 and safe digging practices.

View the original article here