Papua New Guinea Draws Energy Interest

SYDNEY - Foreign governments are boosting efforts to win influence in Papua New Guinea, with Australia deepening economic and defense ties with the impoverished South Pacific nation Friday as it prepares to become one of the world's newest significant energy producers.

The visit by Julia Gillard represented the first by an Australian prime minister to Papua New Guinea's capital, Port Moresby, in four years. It followed trips this year by Thailand's leader, Yingluck Shinawatra, and a U.K. government minister.

China, too, has made little secret of its desire to gain diplomatic weight in Papua New Guinea. Beijing offered almost $3 billion in loans for infrastructure projects in the country last year and has a long-term deal to buy its first natural-gas exports.

"We're seeing a lot more economic competition between Chinese and Australian and other businesses in Papua New Guinea," said Jenny Hayward-Jones of the Lowy Institute for International Policy, a Sydney-based think tank. "The Thai prime minister doesn't visit just for the hell of it."

Papua New Guinea, known for its jungles and tribal society, has large deposits of natural gas, copper and gold, and lucrative fishing rights that long have appealed to foreign investors.

Exxon Mobil Corp. has placed the biggest bet on the country's resources sector, leading development of a $19 billion liquefied-natural-gas project due to begin exporting to Asia, including China, next year.

Papua New Guinea has been a large recipient of foreign aid, including from Australia. Little infrastructure exists outside Port Moresby, while the country's hilly, densely forested terrain makes getting around difficult.

The country, with several thousand separate communities, has a history of tribal conflict. Lawlessness has been exacerbated by an influx of guns into urban areas. In 2011, Port Moresby was rated one of the worst cities in the world by the Economist Intelligence Unit, measured on criteria such as stability and infrastructure.

Papua New Guinea Prime Minister Peter O'Neill and Ms. Gillard penned a joint declaration Friday to boost trade and economic links. Later this year, they plan to sign a more formal economic-cooperation treaty. The nations also vowed to cooperate more on regional defense issues.

"Australia wants to work with Papua New Guinea as economic partners, as development partners, and as partners in the region," Ms. Gillard said in a speech.

Australian officials also have been advising Papua New Guinea on establishing a new sovereign-wealth fund to lock away proceeds from its anticipated energy riches.

Still, the trip got off to a rocky start, as Mr. O'Neill criticized Australia's visa policy as too onerous.

"Our people find existing visa arrangements very frustrating," he said. "Some regard them as insulting." Ms. Gillard said steps were being taken to address the issue.

Papua New Guinea, home to 6.4 million people and covering an area slightly larger than California, has been prone to political instability. A power struggle between Mr. O'Neill and predecessor Michael Somare, who led the country for many years following independence in 1975, lasted several months before it was settled in an August general election.

Since winning the election, Mr. O'Neill has signaled he wants more foreign investment in tuna processing, mining and gas.

Australia, separated from Papua New Guinea by about 94 miles of water at its northern tip, is the country's biggest investor, the Lowy Institute says. The U.S. and Malaysia invest a significant amount, while China is progressively increasing its role.

"There's no conflict whatsoever" between Papua New Guinea's strengthening of its relationship with China and ties with traditional allies like Australia, said William Duma, minister for petroleum and energy, in an interview. "Aren't we all looking to export to China?"

Beijing has offered loans totaling 6 billion kina ($2.9 billion) to Papua New Guinea for infrastructure, following similar moves by China in other Pacific Rim countries like Tonga. Mr. O'Neill said late last year the government planned to draw down as much as $200 million of those loans this year.

Unlike many resource-rich nations, Papua New Guinea is lightly explored, increasing its appeal to overseas investors. France's Total SA and Japan's Mitsubishi Corp. each bet on natural-gas projects there last year. U.K.-based consultancy Wood Mackenzie estimates Papua New Guinea has 26 trillion cubic feet of natural gas--about equal to U.S. annual consumption.

The country also has large minerals deposits that have lured companies like Glencore Xstrata PLC and Australia's Newcrest Mining Ltd.

Mining those deposits can be hard, however. Deals often need to be struck with tribal leaders and can unwind if there is popular opposition to mining companies' plans. The Panguna copper mine on the island of Bougainville shut in 1989 amid an armed insurrection that led to attacks on its workers.

"It ranks high on the list of difficult places to do business," said Ronald May, an Asia-Pacific specialist at Australian National University.

Copyright (c) 2013 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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Papua New Guinea Draws Energy Interest

SYDNEY - Foreign governments are boosting efforts to win influence in Papua New Guinea, with Australia deepening economic and defense ties with the impoverished South Pacific nation Friday as it prepares to become one of the world's newest significant energy producers.

The visit by Julia Gillard represented the first by an Australian prime minister to Papua New Guinea's capital, Port Moresby, in four years. It followed trips this year by Thailand's leader, Yingluck Shinawatra, and a U.K. government minister.

China, too, has made little secret of its desire to gain diplomatic weight in Papua New Guinea. Beijing offered almost $3 billion in loans for infrastructure projects in the country last year and has a long-term deal to buy its first natural-gas exports.

"We're seeing a lot more economic competition between Chinese and Australian and other businesses in Papua New Guinea," said Jenny Hayward-Jones of the Lowy Institute for International Policy, a Sydney-based think tank. "The Thai prime minister doesn't visit just for the hell of it."

Papua New Guinea, known for its jungles and tribal society, has large deposits of natural gas, copper and gold, and lucrative fishing rights that long have appealed to foreign investors.

Exxon Mobil Corp. has placed the biggest bet on the country's resources sector, leading development of a $19 billion liquefied-natural-gas project due to begin exporting to Asia, including China, next year.

Papua New Guinea has been a large recipient of foreign aid, including from Australia. Little infrastructure exists outside Port Moresby, while the country's hilly, densely forested terrain makes getting around difficult.

The country, with several thousand separate communities, has a history of tribal conflict. Lawlessness has been exacerbated by an influx of guns into urban areas. In 2011, Port Moresby was rated one of the worst cities in the world by the Economist Intelligence Unit, measured on criteria such as stability and infrastructure.

Papua New Guinea Prime Minister Peter O'Neill and Ms. Gillard penned a joint declaration Friday to boost trade and economic links. Later this year, they plan to sign a more formal economic-cooperation treaty. The nations also vowed to cooperate more on regional defense issues.

"Australia wants to work with Papua New Guinea as economic partners, as development partners, and as partners in the region," Ms. Gillard said in a speech.

Australian officials also have been advising Papua New Guinea on establishing a new sovereign-wealth fund to lock away proceeds from its anticipated energy riches.

Still, the trip got off to a rocky start, as Mr. O'Neill criticized Australia's visa policy as too onerous.

"Our people find existing visa arrangements very frustrating," he said. "Some regard them as insulting." Ms. Gillard said steps were being taken to address the issue.

Papua New Guinea, home to 6.4 million people and covering an area slightly larger than California, has been prone to political instability. A power struggle between Mr. O'Neill and predecessor Michael Somare, who led the country for many years following independence in 1975, lasted several months before it was settled in an August general election.

Since winning the election, Mr. O'Neill has signaled he wants more foreign investment in tuna processing, mining and gas.

Australia, separated from Papua New Guinea by about 94 miles of water at its northern tip, is the country's biggest investor, the Lowy Institute says. The U.S. and Malaysia invest a significant amount, while China is progressively increasing its role.

"There's no conflict whatsoever" between Papua New Guinea's strengthening of its relationship with China and ties with traditional allies like Australia, said William Duma, minister for petroleum and energy, in an interview. "Aren't we all looking to export to China?"

Beijing has offered loans totaling 6 billion kina ($2.9 billion) to Papua New Guinea for infrastructure, following similar moves by China in other Pacific Rim countries like Tonga. Mr. O'Neill said late last year the government planned to draw down as much as $200 million of those loans this year.

Unlike many resource-rich nations, Papua New Guinea is lightly explored, increasing its appeal to overseas investors. France's Total SA and Japan's Mitsubishi Corp. each bet on natural-gas projects there last year. U.K.-based consultancy Wood Mackenzie estimates Papua New Guinea has 26 trillion cubic feet of natural gas--about equal to U.S. annual consumption.

The country also has large minerals deposits that have lured companies like Glencore Xstrata PLC and Australia's Newcrest Mining Ltd.

Mining those deposits can be hard, however. Deals often need to be struck with tribal leaders and can unwind if there is popular opposition to mining companies' plans. The Panguna copper mine on the island of Bougainville shut in 1989 amid an armed insurrection that led to attacks on its workers.

"It ranks high on the list of difficult places to do business," said Ronald May, an Asia-Pacific specialist at Australian National University.

Copyright (c) 2013 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

Brazil's ANP: 71 Firms Show Interest in Oil Exploration License Auction

RIO DE JANEIRO - Brazil's National Petroleum Agency, or ANP, said Thursday that 71 companies had submitted paperwork to qualify for an auction of new licenses to explore for oil and natural gas that's set for May 14-15.

The fresh round of bidding is expected to generate a surge in activity across Brazil's oil industry, which was running out of areas to explore in the absence of concession auctions. Oil companies had warned that exploration could dry up as early as 2015 without new sales of exploration acreage.

Many of the world's largest oil companies from 18 different countries submitted documents by the ANP's deadline, including Exxon Mobil Corp., Chevron Corp. and BP PLC, the regulator said. Nineteen Brazilian firms dominated the list, including state-run energy giant Petroleo Brasileiro SA, or Petrobras, entrepreneur Eike Batista's OGX Petroleo e Gas Participacoes, and startup HRT Participacoes em Petroleo.

The ANP will now decide which of the 71 companies presented the correct documentation to qualify for the auction, a process that could take several weeks, an ANP spokesman said. The next deadline companies face is April 26, when financial guarantees for potential bids must be submitted to the regulator.

The ANP had published a preliminary list on March 26 with 60 companies on the list.

The 11th bidding round will put 289 oil and natural gas exploration blocks up for sale on May 14-15, Brazil's first such concession auction since December 2008. The auction is the first of several sales of exploration acreage set to take place in Brazil this year, including the first sale of subsalt exploration acreage under new production-sharing agreements.

Billions of barrels of oil have been discovered in the subsalt region, where oil and natural gas were found trapped deep beneath the ocean floor under a thick layer of salt. Unconventional oil and natural gas concessions, the same type of shale and tight gas acreage that sparked an oil-industry revolution in the U.S., are also expected to be sold this year.

Copyright (c) 2013 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

State Department Inspector General Probing Keystone XL Contractor’s Conflicts of Interest

In yet another investigation into the Obama Administration’s activities, the State Department Inspector General is probing the conflicts of interest surrounding the contractor that performed the Keystone XL review,.

The American public was supposed to get an honest look at the impacts of the Keystone XL pipeline. Instead, Environmental Resources Management (ERM), a fossil fuel contractor, hid its ties from the State Department so they could green light the project on behalf of its oil company clients.

Hiring an oil company contractor to review an oil pipeline that its clients have a financial interest in should be illegal – and it is. The Federal Government has strict laws to avoid conflicts of interest and prevent the hiring of contractors who cannot provide unbiased services.

Unredacted documents from the contractor’s proposal (revealed by Mother Jones) show that the company had worked for TransCanada, ExxonMobil and other fossil fuel companies that have a stake in the Canadian Tar Sands.

But, ERM misled the State Department at least twice in its proposal (see C&BP’s original post on ERM’s conflicts of interest)– which may have led to its selection by the State Department to review the Keystone XL pipeline.

First, ERM answered “No” to the question “Within the past three years, have you (or your organization) had a direct or indirect relationship (financial, organizational, contractual or otherwise) with any business entity that could be affected in any way by the proposed work?“ ERM appears to have added to the Yes/No questionnaire that, “ERM has no existing contract or working relationship with TransCanada.” Regardless of the addendum, the oil company contractor misled the State Department by checking “No” to the specific question above. Despite the fact that unredacted documents show that ERM worked for TransCanada and other fossil fuel companies with a stake in Keystone XL pipeline in the three years prior to its proposal.

Second, ERM claimed it was not an energy interest. The State Department question defines an energy interest in part as any company or person engaged in research related to energy development. Yet, ERM has worked for all of the top five oil companies and dozens of other fossil fuel companies. In other words, ERM is clearly an energy interest.

How can we trust ERM to perform an honest review of the Keystone XL pipeline, if it can’t answer a yes/no question honestly?

These misleading statements should have been flagged by the State Department and the contractor should not have been able to perform the review because of these seeming conflicts of interest.

Because of the issues above, Checks & Balances Project (C&BP) and 11 environmental, faith-based and public interest organizations sent a letter  [.PDF] on April 8, 2013, calling on Secretary of State John Kerry and the State Department Deputy Inspector General Harold Geisel to investigate two things: first, whether ERM hid conflicts of interest which might have excluded it from performing the Keystone XL environmental assessment and second, how State Department officials failed to flag inconsistencies in ERM’s proposal.

A few weeks later, C&BP received a voicemail from a Special Agent at the State Department’s Office of Inspector General (OIG):

Hello Mr. Elsner, my name is Special Agent Pedro Colon from the State Department’s Office of Inspector General.  I’m calling to inform you that we have received your request and are reviewing the matter.  If you have any questions please contact me at 703-284-2688.

On May 7, 2013, I called Special Agent Colon but he was unable to speak at the time. I followed up the next day and spoke with the Special Agent via phone regarding the request for an investigation. I asked a few basic questions about the status of the complaint and asked specifically if C&BP would be informed should the complaint be fully investigated by the Office of Inspector General (OIG). Special Agent Colon informed me that he could not speak to any of the questions and referred us to other staff in the OIG.

On May 9, 2013, I received an email from the OIG General Counsel saying, “that the complaint was being processed per the OIG hotline procedures and is under review.” (See the entire email correspondence here [.PDF])

I then asked the OIG General Counsel the same question he asked Mr. Colon:

If the hotline is moved out of the review process and onto the next step (an investigation?), will I be notified?

The OIG  replied via email saying that the OIG Office of Investigations will not comment if it is engaged in an investigation.

The correspondence between C&BP and the OIG indicates that there is a probe into the Keystone XL review conflicts of interest.

The public was supposed to get an honest look at the impacts of the Keystone XL pipeline. Instead, ERM, an oil company contractor, misled the State Department, in what appears to be an attempt to green light the project on behalf of oil industry clients.

The American Public needs a full investigation into the conflicts of interest and misleading statements of the Keystone XL review contractor, Environmental Resources Management.

Secretary Kerry needs to stop the Keystone XL process until the Inspector General completes a full investigation of these conflicts of interest and the State Department has an unbiased review of Keystone XL’s impact.

Filed under KeystoneXL Tagged with Big Oil, Checks and Balances Project, Energy, Energy Production, Environment, ExxonMobil, John Kerry, Keystone, Keystone XL, politics, Secretary Kerry, State Department, Tar Sands, TransCanada, US State Department

View the original article here

C&BP Calls for State Dept. Investigation into Keystone XL Consultant’s Conflicts of Interest

Letter to Secretary of State John Kerry and State Dept. Deputy Inspector General Harold Geisel

Originally posted on April 9, 2013. 

Yesterday, Checks & Balances Project and 11 environmental, faith-based and public interest organizations called on Secretary of State John Kerry and the State Department Deputy Inspector General Harold Geisel to investigate whether Environmental Resources Management (ERM) hid conflicts of interest which might have excluded it from performing the Keystone XL environmental assessment and how State Department officials failed to flag inconsistencies in ERM’s proposal. Tom Zeller, Senior Writer at The Huffington Post, wrote an article highlighting the letter callings for an investigation.

Early last month, the State Department released a 2,000 page environmental impact study for the Keystone XL pipeline claiming that the pipeline would not have major impact on the environment. But, Environmental Resources Management (ERM), the consulting firm hired to perform the “draft supplemental environmental impact statement (SEIS),” has ties to fossil fuel companies with major stakes in the Alberta Tar Sands. This conflict of interest was not accurately disclosed  in ERM’s answers on a State Department questionnaire. Checks & Balances Project considers ERM’s responses in its proposal to be intentionally misleading statements.

Unredacted Documents Uncover Conflicts of Interest
Last week, Mother Jones released unredacted versions of the ERM proposal, showing that three experts “had done consulting work for TransCanada and other oil companies with a stake in the Keystone’s approval.”

The unredacted biographies show that ERM’s employees have an existing relationship with ExxonMobil and worked for TransCanada within the last three years among other companies involved in the Canadian tar sands.

Here’s more from Mother Jones’ Andy Kroll:

“ERM’s second-in-command on the Keystone report, Andrew Bielakowski, had worked on three previous pipeline projects for TransCanada over seven years as an outside consultant. He also consulted on projects for ExxonMobil, BP, and ConocoPhillips, three of the Big Five oil companies that could benefit from the Keystone XL project and increased extraction of heavy crude oil taken from the Canadian tar sands.

Another ERM employee who contributed to State’s Keystone report — and whose prior work history was also redacted — previously worked for Shell Oil; a third worked as a consultant for Koch Gateway Pipeline Company, a subsidiary of Koch Industries. Shell and Koch have a significant financial interest in the construction of the Keystone XL pipeline. ERM itself has worked for Chevron, which has invested in Canadian tar-sands extraction, according to its website.”

When asked about who at the State Department decided to redact ERM’s biographies, a State Department spokesperson said “ERM proposed redactions of some information in the administrative documents that they considered business confidential.” Disclosing past clients may be business confidential information, but from what the biographies show, ERM may have recommended the redactions to hide conflicts of interest from public disclosure.

Problem with ERM Answers on Conflict of Interest Questionnaire 

ERM’s Proposal to the State Department

The biographies on ERM’s proposal show that the company has had direct relationships with multiple business entities that could be affected by the proposed work in the past three years.

In the “Organizational Conflict of Interest Questionnaire,” the State Department asks (page 42), “Within the past three years, have you (or your organization) had a direct or indirect relationship (financial, organizational, contractual or otherwise) with any business entity that could be affected in any way by the proposed work?“ ERM’s Project Manager, Steve Koster, checked “No” but appears to have added to the Yes/No questionnaire that, “ERM has no existing contract or working relationship with TransCanada.”

Regardless of the addendum Koster added, he still submitted an incomplete statement when checking “No” to the specific question above. Simply put, the information provided by Mr. Koster was an incomplete statement if one simply reviews the biographies of ERM’s employees for the project.

The State Department Contracting Officer should have flagged this inconsistency when reviewing the staff biographies.  ERM’s answers did not properly reveal in the Yes/No questionnaire that ERM did have a current “direct relationship” with a business enetity that could be affected by the proposed work and a relationship in the past three years with TransCanada, the company building the pipeline.

Koster’s incomplete statement on direct business relationships is not the only odd statement in ERM’s proposal. ERM also answered “No” to the question, “Are you (or your organization) an ‘energy concern?’” which the State Department defines (in part) as: “Any person — (1) significantly engaged in the business of conducting research…related to an activity described in paragraphs (i) through (v).” Paragraph (i) states: “Any person significantly engaged in the business of developing, extracting, producing, refining, transporting by pipeline, converting into synthetic fuel, distributing, or selling minerals for use as an energy source…” ERM as a research firm working for fossil fuel companies is, unequivocally, an energy interest.

So the question must be asked: If ERM is unable to accurately fill out a simple questionnaire regarding conflicts of interest, how can we trust the company to perform an unbiased environmental assessment of a 1,179 mile-long pipeline cutting through the American heartland? And, why did the State Department’s Contracting Officer not flag the inconsistencies in ERM’s Conflict of Interest Questionnaire when reviewing the proposals?

Intentions of State Department and ERM in Question

The Federal Government has strict ethics rules to prevent Organizational Conflicts of Interest (OCIs) from impacting the impartiality of government contracts and to prevent hiring contractors who cannot provide independent and unbiased services to the government.

According to a white paper from the Congressional Research Service, before the State Department could choose ERM as the contractor, the “Contracting Officer” had to make an “affirmative determination of responsibility.” All government contractors (including ERM) must be deemed responsible, in part by meeting strict ethics guidelines, known as “collateral requirements.”

According to current collateral requirements, contractors must be found “nonresponsible” when there are unavoidable and unmitigated OCIs. Checks & Balances Project believes that the Contracting Officer should have deemed ERM “nonresponsible” because the company serves as a contractor for major fossil fuel companies that have a stake in the Keystone XL pipeline. If ERM were “nonresponsible”, the company would have been ineligible to perform the environmental impact review of the Keystone XL pipeline.

These potential material incomplete statements on a Federal Government proposal calls into question the integrity of ERM and threatens millions in government contracts.

If ERM were determined to be “nonresponsible” or “excluded” because of these incomplete statements, it could jeopardize ERM’s ability to perform any work for the Federal Government. Again, according to the Congressional Research Service:

“Decisions to exclude are made by agency heads or their designees (above the contracting officer’s level) based upon evidence that contractors have committed certain integrity offenses, including any “offenses indicating a lack of business integrity or honesty that seriously affect the present responsibility of a contractor.””

Certainly these incomplete statements call into question both the independence of ERM and the judgement of the Contracting Officer in making the “affirmative determination of responsibility.” This proposal process should be investigated by the State Department Inspector General to determine if ERM’s statements are cause for exclusion.

Groups Calling for Inspector General Investigation

We believe ERM used multiple material incomplete statements and had clear conflicts of interest as shown in the unredacted documents. So, why was ERM hired by the State Department?

Checks & Balances Project asked a State Department spokesperson about the conflicts of interest and the spokesperson said: “Based on a thorough consideration of all of the information presented, including the work histories of team members, the Department concluded that ERM has no financial or other interest in the outcome of the project that would constitute a conflict of interest.” Perhaps the State Department’s Contracting Offier made the decision to hire ERM because of the company’s incomplete statements on the conflict of interest questionnaire.

Harold Geisel, Deputy Inspector General, U.S. State Department

Checks & Balances Project along with 11 other groups (Better Future Project, Center for Biological Diversity, Chesapeake Climate Action Network, DeSmogBlog, Forecast the Facts, Friends of the Earth, Greenpeace, NC WARN, Oil Change International, Public Citizen’s Energy Program and Unitarian Universalist Ministry for Earth) sent a letter to Secretary of State John Kerry and the State Department Deputy Inspector General Harold Geisel calling for an investigation into the matter. These incomplete statements and the determination by the Contracting Officer that ERM did not have any conflicts of interest, despite clear evidence to the contrary, are grounds for further investigation.

View the original article here

C&BP Calls for State Dept. Investigation into Keystone XL Consultant’s Conflicts of Interest

Letter to Secretary of State John Kerry and State Dept. Deputy Inspector General Harold Geisel

Originally posted on April 9, 2013. 

Yesterday, Checks & Balances Project and 11 environmental, faith-based and public interest organizations called on Secretary of State John Kerry and the State Department Deputy Inspector General Harold Geisel to investigate whether Environmental Resources Management (ERM) hid conflicts of interest which might have excluded it from performing the Keystone XL environmental assessment and how State Department officials failed to flag inconsistencies in ERM’s proposal. Tom Zeller, Senior Writer at The Huffington Post, wrote an article highlighting the letter callings for an investigation.

Early last month, the State Department released a 2,000 page environmental impact study for the Keystone XL pipeline claiming that the pipeline would not have major impact on the environment. But, Environmental Resources Management (ERM), the consulting firm hired to perform the “draft supplemental environmental impact statement (SEIS),” has ties to fossil fuel companies with major stakes in the Alberta Tar Sands. This conflict of interest was not accurately disclosed  in ERM’s answers on a State Department questionnaire. Checks & Balances Project considers ERM’s responses in its proposal to be intentionally misleading statements.

Unredacted Documents Uncover Conflicts of Interest
Last week, Mother Jones released unredacted versions of the ERM proposal, showing that three experts “had done consulting work for TransCanada and other oil companies with a stake in the Keystone’s approval.”

The unredacted biographies show that ERM’s employees have an existing relationship with ExxonMobil and worked for TransCanada within the last three years among other companies involved in the Canadian tar sands.

Here’s more from Mother Jones’ Andy Kroll:

“ERM’s second-in-command on the Keystone report, Andrew Bielakowski, had worked on three previous pipeline projects for TransCanada over seven years as an outside consultant. He also consulted on projects for ExxonMobil, BP, and ConocoPhillips, three of the Big Five oil companies that could benefit from the Keystone XL project and increased extraction of heavy crude oil taken from the Canadian tar sands.

Another ERM employee who contributed to State’s Keystone report — and whose prior work history was also redacted — previously worked for Shell Oil; a third worked as a consultant for Koch Gateway Pipeline Company, a subsidiary of Koch Industries. Shell and Koch have a significant financial interest in the construction of the Keystone XL pipeline. ERM itself has worked for Chevron, which has invested in Canadian tar-sands extraction, according to its website.”

When asked about who at the State Department decided to redact ERM’s biographies, a State Department spokesperson said “ERM proposed redactions of some information in the administrative documents that they considered business confidential.” Disclosing past clients may be business confidential information, but from what the biographies show, ERM may have recommended the redactions to hide conflicts of interest from public disclosure.

Problem with ERM Answers on Conflict of Interest Questionnaire 

ERM’s Proposal to the State Department

The biographies on ERM’s proposal show that the company has had direct relationships with multiple business entities that could be affected by the proposed work in the past three years.

In the “Organizational Conflict of Interest Questionnaire,” the State Department asks (page 42), “Within the past three years, have you (or your organization) had a direct or indirect relationship (financial, organizational, contractual or otherwise) with any business entity that could be affected in any way by the proposed work?“ ERM’s Project Manager, Steve Koster, checked “No” but appears to have added to the Yes/No questionnaire that, “ERM has no existing contract or working relationship with TransCanada.”

Regardless of the addendum Koster added, he still submitted an incomplete statement when checking “No” to the specific question above. Simply put, the information provided by Mr. Koster was an incomplete statement if one simply reviews the biographies of ERM’s employees for the project.

The State Department Contracting Officer should have flagged this inconsistency when reviewing the staff biographies.  ERM’s answers did not properly reveal in the Yes/No questionnaire that ERM did have a current “direct relationship” with a business enetity that could be affected by the proposed work and a relationship in the past three years with TransCanada, the company building the pipeline.

Koster’s incomplete statement on direct business relationships is not the only odd statement in ERM’s proposal. ERM also answered “No” to the question, “Are you (or your organization) an ‘energy concern?’” which the State Department defines (in part) as: “Any person — (1) significantly engaged in the business of conducting research…related to an activity described in paragraphs (i) through (v).” Paragraph (i) states: “Any person significantly engaged in the business of developing, extracting, producing, refining, transporting by pipeline, converting into synthetic fuel, distributing, or selling minerals for use as an energy source…” ERM as a research firm working for fossil fuel companies is, unequivocally, an energy interest.

So the question must be asked: If ERM is unable to accurately fill out a simple questionnaire regarding conflicts of interest, how can we trust the company to perform an unbiased environmental assessment of a 1,179 mile-long pipeline cutting through the American heartland? And, why did the State Department’s Contracting Officer not flag the inconsistencies in ERM’s Conflict of Interest Questionnaire when reviewing the proposals?

Intentions of State Department and ERM in Question

The Federal Government has strict ethics rules to prevent Organizational Conflicts of Interest (OCIs) from impacting the impartiality of government contracts and to prevent hiring contractors who cannot provide independent and unbiased services to the government.

According to a white paper from the Congressional Research Service, before the State Department could choose ERM as the contractor, the “Contracting Officer” had to make an “affirmative determination of responsibility.” All government contractors (including ERM) must be deemed responsible, in part by meeting strict ethics guidelines, known as “collateral requirements.”

According to current collateral requirements, contractors must be found “nonresponsible” when there are unavoidable and unmitigated OCIs. Checks & Balances Project believes that the Contracting Officer should have deemed ERM “nonresponsible” because the company serves as a contractor for major fossil fuel companies that have a stake in the Keystone XL pipeline. If ERM were “nonresponsible”, the company would have been ineligible to perform the environmental impact review of the Keystone XL pipeline.

These potential material incomplete statements on a Federal Government proposal calls into question the integrity of ERM and threatens millions in government contracts.

If ERM were determined to be “nonresponsible” or “excluded” because of these incomplete statements, it could jeopardize ERM’s ability to perform any work for the Federal Government. Again, according to the Congressional Research Service:

“Decisions to exclude are made by agency heads or their designees (above the contracting officer’s level) based upon evidence that contractors have committed certain integrity offenses, including any “offenses indicating a lack of business integrity or honesty that seriously affect the present responsibility of a contractor.””

Certainly these incomplete statements call into question both the independence of ERM and the judgement of the Contracting Officer in making the “affirmative determination of responsibility.” This proposal process should be investigated by the State Department Inspector General to determine if ERM’s statements are cause for exclusion.

Groups Calling for Inspector General Investigation

We believe ERM used multiple material incomplete statements and had clear conflicts of interest as shown in the unredacted documents. So, why was ERM hired by the State Department?

Checks & Balances Project asked a State Department spokesperson about the conflicts of interest and the spokesperson said: “Based on a thorough consideration of all of the information presented, including the work histories of team members, the Department concluded that ERM has no financial or other interest in the outcome of the project that would constitute a conflict of interest.” Perhaps the State Department’s Contracting Offier made the decision to hire ERM because of the company’s incomplete statements on the conflict of interest questionnaire.

Harold Geisel, Deputy Inspector General, U.S. State Department

Checks & Balances Project along with 11 other groups (Better Future Project, Center for Biological Diversity, Chesapeake Climate Action Network, DeSmogBlog, Forecast the Facts, Friends of the Earth, Greenpeace, NC WARN, Oil Change International, Public Citizen’s Energy Program and Unitarian Universalist Ministry for Earth) sent a letter to Secretary of State John Kerry and the State Department Deputy Inspector General Harold Geisel calling for an investigation into the matter. These incomplete statements and the determination by the Contracting Officer that ERM did not have any conflicts of interest, despite clear evidence to the contrary, are grounds for further investigation.

Filed under KeystoneXL Tagged with Andrew Bielakowski, Andy Kroll, Better Future Project, Big Oil, BP, Center for Biological Diversity, Checks and Balances Project, Chesapeake Climate Action Network, Chevron, Conflict of Interest, Conflicts of Interest, Congressional Research Service, ConocoPhillips, DeSmogBlog, Disclosure, Energy, Environment, Environmental Resources Management, ERM, ExxonMobil, Federal Acquisition Regulation, Federal Government, Forecast the Facts, Friends of the Earth, Greenpeace, Harold Geisel, Huffington Post, Industry, John Kerry, Keystone XL, Koch Gateway Pipeline Company, Koch Industries, KXL, lobbying, Mother Jones, NC WARN, Oil Change International, politics, Public Citizen's Energy Program, Shell, State Department, Steve Koster, Tar Sands, Tom Zeller, TransCanada, Unitarian Universalist Ministry for Earth

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Brenham Oil, Gas Adds Working Interest in Texas Field

Brenham Oil & Gas Corp., a majority owned subsidiary of American International Industries, Inc., (AMIN) (American), announced it acquired a 10 percent working interest in the Pierce Junction Oil & Gas Field in Houston, Texas.

"The Pierce Junction field is one of the oldest and most prolific fields in the Houston area. This field has been producing oil & gas since 1921 and has produced over 104 million barrels of oil since that time mostly from Miocene, Frio, and Vicksburg reservoirs," Bryant Mook, Brenham's recently elected president, stated.

Brenham's asset acquisition includes eight producing wells with an additional seven wells scheduled for mechanical work-over that should add more oil reserves to Brenham. Additional offsetting acreage can be developed by Brenham on a well by well basis to produce additional oil reserves from several producing horizons.

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New World Gets Govt Nod for Working Interest in Danish Licenses

New World Oil and Gas announced Monday that the Danish Energy Authority has formally approved the assignment to the company of a 25-percent working interest in Licence 1/08 of the Danica Resources Project in Denmark.

Licence 1/08 is located in the productive Western Baltic region of the South Permian Basin in Southern Denmark, totaling 2,479 square miles, according to New World.

The assignment of 25-percent working interest to New World is in accordance with the previous Farm-Out Agreement announced April 17, 2012 and follows the completion of Phase 1 of a 2D seismic acquisition program consisting of 64.26 square miles, and an additional 14.9 square miles 2D seismic acquisition program on two re-confirmed leads.

After this seismic acquisition program, New World estimates that the drill-ready Als prospect has an estimated P50 un-risked prospective recoverable resources of 1.4 trillion cubic feet and 97 million barrels of oil.

Additionally, the firm said four previously-identified Zechstein leads were confirmed on Falster and Lolland Islands from the new seismic data on which a 23.9-mile 2D acquisition program has recently been completed. Results from this 2-D program targeting these large leads which total 13,485 acres will be released in 2Q 2013.

New World CEO William Kelleher commented in a statement:

"We are delighted to have now earned into a 25 percent working interest in both of our Danish projects. In tandem with increasing our interests in these three exciting licenses, we are delivering on our strategy to systematically identify, delineate and de-risk multiple prospects to the point of drilling... With results expected in Q2 2013 there remains tremendous scope to materially add to the P50 prospective resources on the license, particularly bearing in mind the size of Als' volumetrics. I look forward to updating the market on our progress."

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Ezra to Divest 51% Interest in Lewek Arunothai FPSO

Ezra EOC disclosed late Friday that will sell 51 percent interest in the entities owning and operating the floating production storage and offloading Lewek Arunothai.

Lewek Arunothai has been chartered by Hess Exploration and Production Malaysia for three years, with an option to further extend three years.

Under the agreement, Ezra EOC Friday also entered into a share sale and purchase agreement with Perisai Petroleum Teknologi BHD for the sale of 51 percent of the equity interest in the entities owning and operating the FPSO and the purchase 50 percent of the equity interest in SJR Marine.

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Egdon Divests Interest in PEDL201

Egdon Resources plc announced the farm-out of a further 5 percent interest in Petroleum Exploration and Development Licence 201 ("PEDL201") located in Nottinghamshire and Leicestershire to Union Jack Oil plc.

Under the terms of the agreement, Union Jack will pay 10 percent of the cost of the planned Burton on the Wolds-1 exploration well to earn a 5 percent interest from Egdon. As a result Egdon's exposure to the well is reduced to 15 percent of costs. Union Jack has also agreed the same terms with Celtique Energie Petroleum Ltd. ("Celtique") to result in a 10 percent total license interest.

On completion the license interests in PEDL201 will be as follows:

Egdon Resources U.K. Limited 32.50% (operator)Celtique Energie Petroleum Limited 32.50%Terrain Energy Limited 12.50%Corfe Energy Limited 12.50%Union Jack Oil plc 10.00%

The transfer of interests is subject to approval by the Department of Energy and Climate Change.

PEDL201 was awarded in 2008 and is located on the southern margin of the Widmerpool Gulf geological basin. The Burton on the Wolds Prospect has been mapped on proprietary 2D seismic data, which was acquired by Egdon in May 2011. Evaluation has highlighted a prospect with targets at two distinct stratigraphic levels. The shallower target, the Rempstone Sandstone, is productive at the nearby Rempstone oil field. A seismic anomaly, possibly indicative of a carbonate reef, underlies the Rempstone Sandstone. The mean combined Prospective Resources for the primary and secondary objectives, as calculated by Egdon are estimated to be 3.8 million barrels of oil.

The planned well will be shallow with a drilled depth of around 3,281 feet (1,000 meters) to test both targets. A planning application has been finalized and is expected to be submitted shortly. Subject to planning it is intended that the Burton on the Wolds-1 well will commence drilling late in the second quarter of 2013.

Commenting on the farm-out Managing Director of Egdon Mark Abbott said:

"We look forward to working with Union Jack in exploring the Burton on the Wolds Prospect. The prospect combines a lower risk reservoir target offsetting nearby production with a higher risk, higher potential play at present untested in the basin. This further farm-out agreement enables Egdon to manage both the technical and financial risks associated with this project.

As part of our stated strategy to manage risk and accelerate activity, we have embarked on a more active marketing campaign and I am pleased to report that we are in advanced discussions regarding further farm-outs on a number of our projects. I hope to be able to report further progress with these in the coming weeks."

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Strong Interest Shown in Latest Norwegian APA Round

Norway's Ministry of Petroleum and Energy announced Friday that is offering shares in 51 new production licenses to 40 companies in connection with the 2012 Awards in Predefined Areas licensing round.

"Today, I am sending out offers linked to 51 new production licenses for the Norwegian continental shelf. I am pleased to see strong, broad-based interest in the most well-known parts of the continental shelf. This year's licensing round confirms that Norway's combination of framework conditions and geological opportunities is internationally competitive," Minister of Petroleum and Energy Ola Borten Moe said in a statement.

The Ministry said that the 51 production licenses are distributed among the North Sea (34), the Norwegian Sea (14) and the Barents Sea (3). Forty seven companies in total applied for licenses, with 40 being offered shares in one or more of these. Twenty three companies will be offered operatorships.

The APA licensing round includes mature areas on the Norwegian continental shelf, which have already been well explored and where the geology is known. The expected size of discoveries in mature areas is smaller, although the Ministry pointed out that recent years "have shown that positive surprises can still happen".

Borten Moe added:

"The award of new licenses is vital for effective, long-term resource management. Today's awards will facilitate the efficient exploration of the parts of the continental shelf that we know best. The next step is for the companies to deliver good results in the form of profitable discoveries."

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Strong Interest Shown in Latest Norwegian APA Round

Norway's Ministry of Petroleum and Energy announced Friday that is offering shares in 51 new production licenses to 40 companies in connection with the 2012 Awards in Predefined Areas licensing round.

"Today, I am sending out offers linked to 51 new production licenses for the Norwegian continental shelf. I am pleased to see strong, broad-based interest in the most well-known parts of the continental shelf. This year's licensing round confirms that Norway's combination of framework conditions and geological opportunities is internationally competitive," Minister of Petroleum and Energy Ola Borten Moe said in a statement.

The Ministry said that the 51 production licenses are distributed among the North Sea (34), the Norwegian Sea (14) and the Barents Sea (3). Forty seven companies in total applied for licenses, with 40 being offered shares in one or more of these. Twenty three companies will be offered operatorships.

The APA licensing round includes mature areas on the Norwegian continental shelf, which have already been well explored and where the geology is known. The expected size of discoveries in mature areas is smaller, although the Ministry pointed out that recent years "have shown that positive surprises can still happen".

Borten Moe added:

"The award of new licenses is vital for effective, long-term resource management. Today's awards will facilitate the efficient exploration of the parts of the continental shelf that we know best. The next step is for the companies to deliver good results in the form of profitable discoveries."

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‘Poisoned’ Politics, the Keystone XL and the National Interest

AppId is over the quota
AppId is over the quota

New York Times op-ed columnist Joe Nocera’s piece on the “poisoned” politics of the Keystone XL pipeline decision is a must read. Better get to it right away, before some of the folks posting comments to  Nocera’s column descend on the Gray Lady with pitchforks and battle axes, demanding that the article be pulled down. Nocera:

Surely, though, what the Keystone decision really represents is the way our poisoned politics damages the country. Environmental concerns notwithstanding, America will be using oil — and lots of it — for the foreseeable future. It is the fundamental means by which we transport ourselves, whether by air, car or truck.

Nocera’s point about oil (and natural gas) is spot on. According to the Energy Information Administration, oil and gas will supply most of our energy past 2030. More Nocera:

And here is Canada, a staunch American ally that has historically sold us virtually all of its crude exports. Over the past two decades, energy companies have invested tens of billions of dollars in the tar sands, so much so that Canada now ranks No. 3 in estimated oil reserves. Along with the natural gas that can now be extracted thanks to hydraulic fracturing — which, of course, all right-thinking environmentalists also oppose — the oil from the Canadian tar sands ought to be viewed as a great gift that has been handed to North America. These two relatively new sources of fossil fuels offer America its first real chance in decades to become, if not energy self-sufficient, at least energy secure, no longer beholden to OPEC. Yet these gifts have been transformed, like everything else, into political footballs.

Next Nocera focuses on the Keystone XL’s opponents:

As it turns out, the environmental movement doesn’t just want to shut down Keystone. Its real goal, as I discovered when I spoke recently to Michael Brune, the executive director of the Sierra Club, is much bigger. “The effort to stop Keystone is part of a broader effort to stop the expansion of the tar sands,” Brune said. “It is based on choking off the ability to find markets for tar sands oil.” This is a ludicrous goal. If it were to succeed, it would be deeply damaging to the national interest of both Canada and the United States. But it has no chance of succeeding. Energy is the single most important industry in Canada. Three-quarters of the Canadian public agree with the Harper government’s diversification strategy. China’s “thirst” for oil is hardly going to be deterred by the Sierra Club. And the Harper government views the continued development of the tar sands as a national strategic priority.

Back to Nocera’s first point. The politics of obstructing the Keystone XL – as well as the underlying opposition to a stronger energy relationship with Canada that fully utilizes its oil sands – is hurting the United States. The toll is in lost jobs and in an energy future that’s less secure, because the oil will come from less stable parts of the world.

Canada, Nocera’s  writes, at least knows where its national interests lie. Unfortunately, under current policy, the United States doesn’t. Here’s former Obama National Security Advisor Gen. James Jones, talking a couple months ago about the Keystone XL impasse:

"If we get to the point where we cannot bring ourselves to do what is in our national interest, then we are clearly in a period of decline, in terms of our global leadership and our ability to compete.”

It’s what worries Joe Nocera. It’s what should worry us all.

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