Gov. Hickenlooper’s ‘order’ to oil and gas commission to review fines an empty gesture

Recently, Gov. Hickenlooper put on a masterful show of playing a politician who cares about Coloradans. Unfortunately, it was just an act to distract from the fact that Gov. Hickenlooper successfully killed efforts to set mandatory minimum fines and increase caps on fines for oil and gas companies that pollute.  

After killing these measures, aimed at holding polluters accountable, Gov. Hickenlooper put out a press release ordering his oil and gas commission to ‘review enforcement, fines.’ In other words, he directed his commission to take a look into their abysmal record and get back to him. That’s not leadership, it was an empty gesture to cover his tracks.

Gov. Hickenlooper’s press release doesn’t do anything to strengthen Colorado’s woefully outdated laws, which include the lowest fines in the nation for polluters.  And it’s doubtful that the governor’s oil and gas commission, which includes oil and gas industry employees, will suddenly become competent at holding oil and gas polluters accountable.  An analysis by the Denver Post found that Colorado rarely fines oil and gas companies who pollute. According to the Coloradoan, less than 7 percent of industry violations since 1996 have resulted in fines.

Site of Parachute spill
Source: ecoflight

Last year, the industry reported 402 spills, of which 20 percent contaminated water. Six companies alone accounted for 85 percent of all the spills that contaminated groundwater – Anadarko, Noble Energy, Encana, PDC Energy, WPX Energy and Pioneer Natural Resources.

Not only are polluters not held accountable, but Gov. Hickenlooper has routinely rewarded some of the biggest oil and gas polluters in the state. In 2010 and 2011, Noble Energy caused more spills than any other operator in Colorado – 126.  Yet, Hickenlooper’s oil and gas commission gave Noble an ‘Outstanding Operator’ award.

Gov. Hickenlooper also gave Anadarko an ‘Outstanding Operator’ award in 2011, while last year, Anadarko subsidy Kerr-McGee was linked to 70 spills – more than any other operator – of which, 38 percent resulted in water contamination. With these awards, Gov. Hickenlooper has once again made it clear that he isn’t that interested in holding oil and gas companies accountable when they pollute.

Gov. Hickenlooper used the power of his office to kill stronger standards that would have held the oil and gas industry accountable when they pollute. He chose to put the interests of the industry ahead of what’s best for Colorado families and that’s a shame. Now, Gov. Hickenlooper is insulting Coloradans by acting as the concerned politician.

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BP Has Around $14B After Tax to Cover US Civil Fines, Claims

LONDON - BP PLC has headroom of around $14 billion after tax credits to cover Clean Water Act fines as well as other claims and litigation costs stemming from its April 2010 Deepwater Horizon disaster in the U.S. Gulf that aren't payable from its $20 billion trust fund, ratings agency Moody's said Monday.

Although BP's financial results weakened in 2012, additional divestment proceeds should allow the company to absorb cumulative costs of up to $40 billion after tax, and retain its A2 rating, the agency said in a report.

However, considerable financial uncertainty will continue to weigh on the U.K. energy giant until the size of the ultimate financial liabilities arising from the disaster are known, Moody's said.

The first phase of a civil trial on Deepwater Horizon is scheduled to begin later Monday before a federal judge in New Orleans. The first stage will determine who was responsible for the accident and whether BP and other defendants acted with gross negligence. The second phase, which is likely to start in September, will determine how much oil was spilled.

The trial won't rule on the amount of the penalties and awards to claimants. That would be determined at a separate trial at a later date, probably not before 2014, Moody's said.

To date BP has spent a total of $37.2 billion pre-tax, which is equivalent to $26.1 billion after tax, on costs arising from the 2010 disaster, Moody's said.

Moody's said it expects BP's cash flows to strengthen from 2014 onwards as it begins to reap the benefits of the large roster of upstream projects that it is working on, many of which are based in high-margin regions.

This would help strengthen the group's credit metrics relative to their weaker positioning expected in 2013.

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Gulf of Mexico Fines Hit BP Profit

LONDON - BP PLC posted Tuesday a 72% drop in profit for the fourth quarter as its oil and gas production continued to fall and it agreed to pay billions of dollars in fines to the U.S. government, a performance that analysts said showed the company is still struggling to recover from the Deepwater Horizon oil spill.

The results, which come as the company faces the start of a trial on Feb. 25 that will determine whether it faces billions of dollars more in civil penalties for the spill, underscore how BP's promised turnaround from the disaster in the Gulf of Mexico almost three years ago is proving elusive.

BP Chief Executive Bob Dudley said the company passed many milestones in 2012, including selling assets and starting up new projects, which have laid a solid foundation for growth.

"We will continue to see the impact of this reshaping work in our reporting results in 2013. By 2014, I expect the underlying financial momentum to be strongly evident," Mr. Dudley said. "I don't regard our results as a setback."

BP said it started up five major new oil and gas projects last year and expects to bring four more--in Angola, Australia, the Gulf of Mexico and Azerbaijan--into production by the end of this year. A further six major projects are expected to start up through 2014.

However, the company's total oil and gas production fell by 7% to 2.29 million barrels of oil equivalent a day in 2012 and is expected to fall again in 2013, mainly as a result of the sale of oil-producing assets to cover the cost of the Gulf spill.

Despite being allowed to resume drilling in the Gulf of Mexico and continuing to operate around 700 offshore licenses, BP has been unable to reverse the steady decline in its oil production in the U.S., which has fallen by 40% since the disaster.

Excluding one-off gains and losses from asset sales or fines, BP's profit was above expectations, but its operating performance was still bumping along the bottom, analysts said.

"It's all a bit messy because it's beaten at the bottom line, but the operational results are quite mixed, with upstream not looking that impressive," and are unlikely to improve much until 2014, said Investec analyst Stuart Joyner.

The London-based oil and gas company said its replacement cost profit, a figure that excludes gains or losses in the value of inventories and is therefore equivalent to the net profit figure reported by U.S. oil companies, was $2.14 billion in the three months ended Dec. 31, compared with $7.61 billion in the fourth quarter of 2011.

Profit was reduced by a pretax charge of $4.13 billion related to the oil spill in the Gulf of Mexico, $3.85 billion of which is for the settlement of all federal criminal charges related to the disaster, BP said. This was partially offset by $3.31 billion of proceeds from the sale of oil and gas production assets during the quarter.

The drop in profit was particularly sharp compared with a year ago because BP's earnings in the fourth quarter of 2011 were boosted by a gain of $4.1 billion from oil-spill liability settlements with Anadarko Petroleum Company and Cameron International Corp.

BP has so far taken pretax charges totaling $42.2 billion for the Gulf of Mexico oil spill.

Fourth-quarter earnings were also reduced by the sale of BP's interest in major Russian oil producer TNK-BP Ltd. to OAO Rosneft, which was agreed on Oct. 22. The venture contributed $575 million in replacement-cost profit before interest and tax, versus $987 million a year ago.

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