September 2007 News Stories

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CTV News
September 30, 2007

 http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20070928/bc_seamap_070929/20070929?hub=CTVNewsAt11

 Oil spill animation outlines worst cases for B.C.
Updated Sat. Sep. 29 2007 11:32 PM ET
CTV.ca News Staff

Oil Spill Map
 http://images.ctv.ca/archives/CTVNews/img2/20070929/450_Oil_map_070929.jpg
This map, made by The Living Ocean Society, demonstrates the possible outcome of an oil spill off the coast of British Columbia. ( www.livingoceans.org)

An environmental group has created an online cartoon http://www.livingoceans.org/oilgas/spill_model/oil_spill_model.shtml
that predicts the grim impact of oil spills on British Columbia's coast.

The Living Ocean Society, a non-profit research and public education organization, released the program in response to concerns that a current moratorium against drilling and shipping off B.C.'s coast could soon be lifted.

According to the oil spill animation, even the smallest accident could cause major devastation.

"The oil spill model clearly demonstrates that Canada and the Province of B.C. must strengthen and enforce the moratorium on oil tankers and offshore oil and gas in order to maintain the wealth of marine resources on B.C.'s coast," said Oonagh O'Connor, Energy Campaign Manager for the Living Oceans Society, in a news release.

A number of scenarios were developed using up-to-date oceanographic data to show how oil spills would affect ecosystems and communities on the North Coast of B.C.

The animation is based on a model developed using a software program built by the U.S. National Oceanic & Atmospheric Administration -- the same software used by response crews during actual spills to determine where clean up efforts should be directed.

The model outlines, day-by-day, how oil would wash into bays, inlets and beaches depending on the season and break location. Users can click options to see how whales, fish and habitat would be affected.

"It's very different than off the East Coast. We're right on the inside, we're in inside waters, the oil is trapped and it's almost immediately hitting land, which is the worst case scenario," O'Connor said.

The animation is designed as a warning to illustrate what the group argues would occur if drilling and shipping are allowed off B.C. -- something currently banned under a moratorium.

The B.C. Liberal government has been pushing the federal government for the right to offshore drill, and has said it wants an offshore oil and gas industry in operation by 2010.

O'Connor says that if the moratorium is lifted, an accident is inevitable.

"It is not a question of if a spill would happen, but one of when and how big. The oil spill model clearly demonstrates that a spill from just one tanker could devastate coastal ecosystems and communities," she said.

The Living Oceans Society says planned expansion of Alberta's tar sands has led to at least six proposed mega-projects in northern B.C. that call for pipelines to ports in Kitimat and Prince Rupert.

"There is considerable pressure to open the coast to oil tanker traffic and offshore oil and gas," O'Connor said.

Despite the fact that there are no drilling platforms along the coast, the animated scenarios don't seem so farfetched.

The Exxon Valdez tanker dumped nearly three-quarters of a million barrels of oil in nearby Alaska 19 years ago.

And when the Queen of the North, a 125-metre ferry, sank near Prince Rupert in 2005, it left behind a large slick on the water and tonnes of oil beneath it.

But amidst the fear of a pipeline from the tar sands and suggestions from the province that off-shore exploration could soon begin, some environmentalists hope that public educators such as the oil spill animation can keep such tragedies from happening in B.C.

"I think the conservation concerns of Canadians in terms of climate change and in terms of our rich coastal systems are maybe going to keep that from happening here," Jay Ritchlin, a marine conservation specialist with the David Suzuki Foundation, told CTV News.

With a report from CTV's Todd Battis

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Anchorage Daily News
September 30, 2007

 http://www.adn.com/money/story/9344006p-9258499c.html

 Oil production trends cause concern
TIM BRADNER
ECONOMY
Published: September 30, 2007
Last Modified: September 30, 2007 at 04:25 AM

A worry I have for our state's economy is that North Slope oil production has been declining faster than many have expected. Despite the state's efforts to offer tax incentives for new exploration, there isn't enough new drilling and discoveries to make much of a dent in the decline.

What worries me more, though, is that there isn't much talk about this among our state's leaders, an exception being Revenue Commissioner Pat Galvin, who has warned several times about the implications of production decline.

Galvin is right to be concerned. He and his people in the Revenue Department know more than anyone how dependent our state budget is on oil revenue. They also understand the revenue surpluses that recent sky-high oil prices have created mask the underlying weakness in our fiscal system, that oil production has been steadily declining for years.

Here's a couple of tidbits that particularly bother me: A year-over-year oil production summary the Department of Revenue recently prepared for me showed a 12.5 percent decline in average daily production for the 12-month period ending in June compared with the previous year.

That includes production lost due to the partial shutdown of the Prudhoe Bay field last August and September, but even if the decline is adjusted for that hopefully one-time event it is worrisome.

I was comforted more recently by reports that the Prudhoe field is performing well and even exceeding the producers' forecasts.

Alaskans have heard warnings of imminent fiscal perils for years, usually sparked by declines in oil prices. Each time prices rebounded and bailed us out. Things are different this time. The fall in production isn't easily slowed or halted.

Can exploration bail us out? Maybe, but it's doubtful anytime soon. One reality we must understand is that geologic prospects in areas now open to exploration just aren't that good in terms of finding fields big enough to flatten or even dent the production decline.

There's good potential for finding small discoveries and, with luck, one or two medium-sized fields. But that's not happening fast enough to dent the decline. The central North Slope area where most industry activity is concentrated is pretty well picked-over in terms of major discoveries, and so far exploration in the National Petroleum Reserve-Alaska has been somewhat disappointing.

One area geologists are excited about is the coastal plain of the Arctic National Wildlife Refuge, but given the political situation, it is doubtful Congress will allow drill rigs in ANWR anytime soon. The Arctic offshore has promise, but most of it is owned by the federal government, unlike the state ownership of most North Slope oil fields, so there would be relatively little revenue flowing to the state.

The situation isn't dire, however. A resource on state land that holds great promise and is accessible, though expensive, is huge heavy oil resources. These are expensive to develop and much of it will require new technology.

Then there are the resources remaining in the existing fields, which hold great promise. Prudhoe Bay, for example, physically held about 23 billion barrels of oil when it was discovered. About 13 billion barrels of this can be economically produced with current technology, and most of it already has been produced. This leaves 10 billion barrels, a huge target.

These barrels constitute a mega-oil field in themselves, but producing even some them will be very expensive. Technological innovations will be needed, too, if the largest and most attainable new production can come from the existing large fields.

Oil production underpins our state budget and a good part of our economy. Alaskans should understand the industry and its problems.

Tim Bradner writes for an Alaska economic reporting service. He also consults for private clients and writes for business publications. His opinion column appears every fourth Sunday.


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 http://www.adn.com/money/industries/oil/story/9343940p-9258436c.html

CH2M Hill defends seasonal layoffs
PRUDHOE BAY: Reduction has nothing to do with Veco acquisition, company says.
By PETER PORCO
pporco@adn.com
Published: September 30, 2007
Last Modified: September 30, 2007 at 01:34 AM

Scores of workers in the Prudhoe Bay oil fields have been laid off in a seasonal manpower reduction, including employees assigned to inspect pipelines for corrosion, according to spokesmen for BP Alaska and the workers' new Colorado-based employer, CH2M Hill.

The number of workers affected is fewer than 200, CH2M Hill communications director John Corsi said in a telephone interview Saturday night. CH2M Hill contracts with BP to perform the corrosion inspections of oil transit pipelines.

The remaining inspection crews will still be eight to 10 times the number of employees doing such work in the winter until a few years ago, said BP spokesman Daren Beaudo.

CH2M Hill's contracts for North Slope oil producers were owned by Veco Corp. until a few weeks ago, when scandal-plagued Veco was purchased by CH2M Hill. Veco's employees are now CH2M Hill's employees.

The work force downsizing "has nothing to do with the acquisition" of Veco, Corsi said. "We didn't come in with a plan that we had to be at a certain size or number of employees."

Corsi said CH2M Hill has worldwide operations. The acquisition of Veco's North Slope work is so recent that he knows few details of it, Corsi said.

Since early 2006, BP's North Slope operations have come under scrutiny from Congress, regulators and others because of a series of corrosion-related leaks and maintenance shortcomings. Four fires broke out in BP-run fields between Aug. 6 and Sept. 10. State officials said they're troubled by the fires, but the company said they were unrelated.

BP increased its work crews for pipeline corrosion inspections in August 2006, Beaudo said. "It was a big program to inspect the oil transit line, so now we're getting back to what we consider a normal staffing," he said.

Beaudo said he is pretty sure some of the laid-off workers "will switch to do winter construction activity."

London-based BP manages Prudhoe Bay, the nation's largest oil field, as well as several neighboring fields.

Find Peter Porco online at adn.com/contact/pporco or call 257-4582.

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Wall Street Journal
September 28, 2007

UPDATE:
BP Says Baku-Ceyhan Crude Pipeline Closed
DOW JONES NEWSWIRES
September 28, 2007 7:29 a.m.

(Updates an item published at 0930 GMT with trader comment, company response, crude prices, export information and pipeline throughput data.)

LONDON (Dow Jones)--BP PLC (BP) has confirmed that it has shut down the Baku-Ceyhan crude oil pipeline following a fault at a pumping station in Turkey.

According to a BP spokesman, the company was informed of a failure at a pumping station at Kars in northeast Turkey at approximately 2300 GMT Wednesday night. Operator of the pipeline in Turkey, Botas, informed BP that it had shutdown the pumping station, and BP subsequently decided to shut down the rest of the pipeline, the spokesman said.

Botas wasn't immediately available for comment on the shutdown.

Oil terminals at both end of the pipeline had to initiate controlled shutdowns, the BP spokesman added. He said that the eqipment failure affected only the pumping station, not the line itself. Repairs were expected to be completed in "a few days" he said.

With oil currently in storage at Ceyhan, crude exports from the terminal would continue "for the time being", the spokesman added. He also said that there was an alternative westward route for Azeri crude exports, via rail to the Georgian port of Batumi on the Black Sea.

Mediterranean crude traders said they expected the outage to last 1-2 days, and the shutdown was likely to boost prices.

One trader in the Mediterannean region said that the outage would add 15-20 cents to the Azeri crude price. Selling interest for the grade was last heard at a $1.20 premium to Dated Brent, before news of the outage emerged.

The Baku-Ceyhan pipeline transports crude from the Caspian Sea at Baku in Azerbaijan, via Tbilisi in Georgia to Ceyhan on the Turkish Mediterranean coast.

According to the latest figures from the Azerbaijani unit of BP, shipments via the pipeline to Turkey amounted to 633,000 barrels a day during August. BP predicts that it will achieve an average of 1 million barrels a day throughput by late 2008.

-By Nick Heath; Dow Jones Newswires; (4420) 7842 9405; nicholas.heath@dowjones.com

(Lananh Nguyen in London contributed to this article.)

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Anchorage Daily News
September 27, 2007

 http://www.adn.com/news/politics/veco/story/9335588p-9249637c.html

 State on sidelines of FBI investigation into Veco
TAKING NOTES: The attorney general's office won't
interfere with the federal investigation.
By SEAN COCKERHAM
scockerham@adn.com
Published: September 27, 2007
Last Modified: September 27, 2007 at 05:38 AM

Alaska Attorney General Talis Colberg said his office assigned lawyers to closely watch former-state Rep. Pete Kott's trial in federal court over the past two weeks as it revealed other possible criminal acts by politicians and Veco Corp. executives.

Colberg said the attorney general's office isn't ignoring the revelations. But he said the state has to proceed carefully before pursuing its own criminal charges. The broad federal investigation into corruption in Alaska politics doesn't appear to be close to finished. The feds don't want interference from the state, according to Colberg.

"They've made it clear enough that they appreciate us not stepping into the middle of something that's ongoing," Colberg said.

He said the federal government has also declined to share the results of its investigation with the state.

Jurors on Tuesday convicted Eagle River Republican Kott on federal charges of conspiracy, bribery and extortion. Next up are federal trials of former Republican state Reps. Vic Kohring and Bruce Weyhrauch. It's clear the federal government is investigating other Alaska politicians as well, including U.S. Sen. Ted Stevens.

The state is under a lot of pressure to act instead of relying on the FBI to clean up corruption here. The Alaska Public Offices Commission, a state agency known as APOC, has decided to investigate political polls Veco and possibly other companies bought for candidates.

APOC Executive Director Brooke Miles said the commissioners determined that, with all the public scrutiny and seeming unhappiness with APOC's lack of action, they wanted to find out the facts.

There was testimony at Kott's trial that Veco routinely paid for candidate's political polls, including a $20,000 poll for then-Gov. Frank Murkowski last year before he was a declared candidate for re-election. One of the federal charges against Kott was that Veco illegally bought him a poll.

It's not clear what APOC will do with the findings of its investigation into the other polls paid for by Veco. APOC says it is hindered by the one-year statute of limitations in state law on imposing civil penalties for campaign violations. The polls brought up at Kott's trial are more than a year old.

There is no one-year statute of limitations on criminal charges. APOC doesn't have the authority to pursue criminal matters but could refer its findings to the state attorney general's office. Miles, the APOC director, said that's a possibility.

APOC has only a single investigator. The attorney general's office, while lacking the manpower of the FBI, could call on state troopers and criminal prosecutors for a corruption probe.

MORE THAN JUST POLLS

A pair of Democratic legislators from Anchorage, Les Gara and Harry Crawford, wrote APOC and the state attorney general this week to urge action. They said the state must investigate the polls and other apparent criminal acts that came up in Kott's trial and related federal indictments.

"The scope of this misconduct is unprecedented, and taking no action simply condones this conduct," their letter said.

Gara and Crawford said the illegal acts weren't limited to polls. They pointed to federal indictments in which Veco executives Bill Allen and Rick Smith pleaded guilty to paying "more than $10,000" in expenses for candidate fundraisers, knowing the money would be ultimately recorded as legitimate corporate expenses.

That violates the ban in state law on corporate contributions to candidates, Gara and Crawford said.

The indictment does not mention which fundraisers were illegal. But former Veco executive Smith testified that he organized many fundraisers, including the annual pig roast for Alaska Congressman Don Young.

'SPECIAL BONUSES'

Smith and Allen also testified about Veco's "special bonus program," where the company would reimburse Veco executives for campaign contributions.

That's also against Alaska law. Gara said that not all the former Veco executives involved in the program are under federal indictment, and maybe they should be under state indictment.

The state should also investigate what legislators besides those charged by federal prosecutors benefited from Veco in violation of state law, he said. So far, all legislators indicted have been Republicans.

"There's a lot the state can do," Gara said.

Gara said the state could pursue criminal charges on issues like illegal polls without interfering in the much broader federal investigation. Gara said, at this point, it looks like the state is doing nothing.

Colberg said he could not comment on any proposed or ongoing investigation. Colberg did not rule out the idea of the state going after side issues such as political polls without messing up the federal probe.

"We do not overlook the idea there is something they may not pursue that we may be able to," the attorney general said.

Find Sean Cockerham online at adn.com/contact/scockerham or call him at 257-4344.
 

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Fairbanks News Miner
September 27, 2007

 http://newsminer.com/2007/09/27/9075

 Senator chides Palin, calls relations ‘frosty’
By R.A. Dillon
For the News-Miner
Published September 27, 2007

WASHINGTON  Sen. Ted Stevens on Wednesday called relations between the congressional delegation and Gov. Sarah Palin “frosty” following a series of public incidents that has revealed a growing schism among Alaska’s Republican leadership.

Speaking in his Senate “hideaway” office on the second floor of the Capitol, Stevens said Palin’s decision last week to redirect federal highway funding for the controversial Ketchikan bridge to other state Department of Transportation projects could spark demands from fiscally conservative Republicans for the return of the money.

“If they’re not going ahead with that bridge, I think there’s going to be demands here that the money be returned,” he said. “It could actually lead to litigation sometime in the future to ask that that money be returned to the federal treasury.

“And since Alaska has so much money in the bank, as far as everyone back here is concerned, it’s a dangerous place to be in,” Stevens added, citing a favorite target of Republican spending hawks  the state’s $40 billion Permanent Fund.

Fiscal conservatives in the U.S. House of Representatives wasted no time in calling for the “bridge to nowhere” funds to be returned. Illinois Congressman Mark Kirk took to the floor Wednesday afternoon to urge his colleagues to demand the return of “some of this money that was to be wasted to the American taxpayers that earned it.”

Stevens said he expects more calls in the coming weeks for the state to surrender the $223 million appropriated for the bridge between Ketchikan and Gravina Island.

The state is under no obligation to return the money and much has already been committed to other projects, said John MacKinnon, deputy commission of the Department of Transportation.

All but $48 million was money that would have come to Alaska under the regular highway funding formula anyway, MacKinnon said. Congress designated $48 million for road construction on Gravina Island related to the bridge and the money is being used to build about four miles of road, MacKinnon said.

As for the rest of the money, the governor has considerable discretion in deciding on which projects those funds should be used, MacKinnon said.

“Rep. Kirk has to recognize these are formula funds,” MacKinnon said. “If he wants us to give back money that belongs to Alaska, he should first give back some of the money Illinois got.”

Stevens said regardless of whether Congress can force the state to return the bridge money, it’s now a political issue that could harm Alaska in future funding fights.

The governor’s decision “may well jeopardize further funding by the Congress of any bridges in Alaska, which I think is a dangerous precedent,” he said. “I think they should be very careful how they use that money.”

Corruption probe

The governor last week called on Stevens to explain his link to a Justice Department’s investigation into political corruption in the state, including the August FBI search of his Girdwood home.

Stevens, to date, has been tightlipped on the investigation, citing the advice of attorneys. On Wednesday, however, he expanded on his reasons for remaining silent.

“I was a U.S. attorney. I’ve been involved in the law profession now for 57 years,” he said. “I basically know what has to be done, and I’m doing it. That’s stay out of the investigation.”

Stevens, reiterating statements he’s made in the past, said it would be inappropriate to comment further while the investigation was ongoing.

“If I, from the position of a U.S. senator, made comments about that, I would be seriously questioned about the propriety about of such comments,” he said. “It’s been my decision not to comment on it at all.”

Stevens said he would like to tell his side of the story but doesn’t want to risk being accused of obstructing justice by trying to influence a potential grand jury.

“The criticism I’m getting from some sources for not having spoken out really reflects the lack of knowledge of the process,” he said. “There’s nothing much I can do about that.”

Stevens’ name has come up during the corruption trial of former state lawmaker Pete Kott, who was convicted Tuesday of bribery, conspiracy and extortion. Former oil-field service company VECO Corp. chief Bill Allen, a long-time Stevens supporter who has admitted bribing Kott and other state legislators, testified at the trial that he paid for part of the 2000 remodeling of Stevens’ home and made secret recordings of conversations with the senator for the FBI. Stevens has not been charged with a crime.

Addressing criticism he’s received for his past dealings with Allen  who went so far as to purchase the Anchorage Times newspaper at the end of the 1980s to further his political influence in the state  Stevens said it would have been almost impossible not to have contact with one of the state’s most prominent businessmen.

“He was Alaskan of the Year, he was recognized by the Journal of Commerce, he got all kinds of awards,” Stevens said of Allen. “People say how could you possibly be involved with this. My god, it was just a natural thing that I would be involved with him. I cannot comment beyond that about what he’s done.”

Stevens said criticism of him in the national press and in the state is premature, but he doesn’t think Alaska voters have made a rush to judgment.

“You don’t see it, but I’ve been encouraged by the number of people that have contacted me by e-mail, by letters, by phone, personally in airports and restaurants,” he said. “I have not felt the loss of support that is reflected by some of the stuff you see in the media.

“But does it affect you?” Stevens said. “Yeah, my god, it has to affect you to have questions like this come up, particularly from people that I’ve worked with for years. I don’t see how anyone in my position would not feel very sad to reach the position of having been involved in government as long as I have and have these innuendos” made against them.

“There’s been no” charges of wrongdoing, he added. “The investigation’s not over yet, so we’ll just have to bear with it.”

No communication

Stevens expressed disappointment in the growing tension between the delegation and the Palin administration.

“I’d say they are a little frosty,” he said of the relationship.

“I would characterize our relationship as a respectful one,” Palin said in response.

Stevens stressed that relations with John Katz, the governor’s representative in Washington, were “perfectly good.” But neither he, nor Sen. Lisa Murkowski or Rep. Don Young, have heard from the governor on the progress of the natural gas pipeline project since June.

“There doesn’t seem to be a lot of information flowing to us on what the administration wants to do,” Stevens said. “We’ve not had one report of any kind that’s crossed my desk. That on a project this size is unheard of.”

Sharon Leighow, the governor’s spokeswoman in Anchorage, said there’s been little to report to the delegation since the request for applications went out at the beginning of the summer. Leighow said an update will be forthcoming once companies start submitting applications as the Nov. 30 deadline approaches.

Stevens said the pipeline is “critical” for the state’s economy and that the state needs to work closely with the delegation once a project is selected. Stevens said he weekly gets questions about the pipeline’s progress by colleagues in Congress and from federal officials that he doesn’t know how to answer.

“I’ve had people express to me that they think we’re very near a recession in Alaska because there’s been so much investment anticipating that the gas pipeline is going to start,” Stevens said. “if it’s delayed now for a period of time due to litigation or something like that, there’s going to be a real crunch.”

The state’s economy is currently in “fair shape”  mainly thanks to aviation and military construction projects  but it could easily slip, Stevens said.

“The timber economy is gone, the mining economy is under pressure, the oil and gas economy is at an absolute standstill,” he said. “The one part of our economy that’s growing is military construction money, but I don’t think that is going to expand to replace these other parts of our economy that are failing or at a standstill. The one hope that has been there that has led to the investment for the future has been the gas pipeline.”

Contact Washington correspondent R.A. Dillon at dcnews@newsminer.com.

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Wall Street Journal
September 27, 2007

 Motiva Refinery Expansion Heralds More Additions In US
DOW JONES NEWSWIRES
September 26, 2007 2:02 p.m.
By Beth Heinsohn
Of DOW JONES NEWSWIRES

 NEW YORK (Dow Jones)--Last week's decision by Royal Dutch Shell PLC (RDSB.LN) and Saudi Arabia Oil Co. (SOI.YY) to "super-size" a Texas oil refinery opens the door to more expansions, but diverging petroleum-market trends complicate refiners' capacity choices.

The companies' announcement that they would double the size of their jointly owned refinery in Port Arthur follows an extended period of higher gasoline and diesel fuel prices supported, in part, by refinery production that's increasingly insufficient to meet rising demand. The expansion project's approval stands as an endorsement of the refining industry's strength, aided by new flows of crude closer to home. However, uncertainty about future fuel demand and pollution concerns will weigh on investment deliberations.

"It's clear with the profitability of refining, we'll see expansions, but will demand growth underpin that?" said Roger Read, an analyst with Natixis Bleichroeder, an investment bank. Natixis and/or its affiliates have received compensation for non-investment banking services from Shell in the last 12 months. "It's a move that's a little bit offensive but also a little bit defensive."

The idea to make the Motiva Enterprises LLC joint venture refinery the largest in the U.S., processing as much as 600,000 barrels a day of crude oil, was aired as a possibility for more than two years and followed some postponements and cancellations of projects by other refiners. While a 'no' vote by Motiva's board - populated by Shell and Saudi Aramco officials - would have been downright chilling for the refining sector, its approval is a relatively passive vote of confidence.

Refiners must weigh the financial risk of multibillion-dollar upgrades with execution times of six to eight years against potential gains in profit. Going forward with the work can make the difference between an asset that's good for 50 years and one that's good for 30 years, Read said.
 
Alluring Canadian Crude

As the price of crude oil climbs past $80 a barrel, lower-cost but harder-to-refine oil becomes more attractive to refiners.

As part of the expansion, Motiva will be able to source heavy Canadian crude, more evidence that Canada's oil sands are growing in importance for U.S. refiners.

"The comfort level for expansions of this kind is improving by virtue of the fact that we'll have increased North American crude available," said John Parry, an analyst with John S. Herrold in Norwalk, Conn.

Canada, already the largest exporter of crude to the U.S., may see production from its Alberta oil sands tripling to 3 million barrels a day by 2015.

At the same time, many prospects for shipping crude south from Canada have been proposed. By mid-2010, it's expected that an additional 1.3 million barrels a day of pipeline capacity will be available from western Canada to the Midwest and Ontario. Further out in the future, pipelines are seen reaching Gulf Coast locations, including Port Arthur.

Apart from access to lower-priced Canadian crude, the Midwest and Gulf Coast product markets offer certain advantages that make them likely areas for expansion.

It's no surprise that the two largest expansions in the last few years - Motiva in Port Arthur and Marathon Oil Corp. in Garyville, La. - are occurring in the Gulf Coast.

"You can move product onshore and offshore and the region's regulations are more favorable for refiners," said Read.

The Gulf Coast's dense network of pipelines onshore and ready access to incoming and outgoing marine traffic affords flexibility for refiners looking to balance petroleum supply and demand to their best advantage.

In addition, the Gulf Coast tax environment is favorably disposed toward refining. Jefferson County, where Port Arthur is located, granted Motiva exemption from roughly $600 million in local taxes over the course of 20 years. Municipal and educational authorities also slashed Motiva's tax bill for the project.

Whither Gasoline Demand Growth?

 Still, concerns linger for refiners.

"High gasoline prices have had some effect, more hybrid vehicles are coming into the market, and increased use of biofuels will eat into the growth rate," said Natixis' Read. When considering refinery investments coming on line after 2010, demand growth rates in the prior ten years are not a good guide, he added.

In addition, some expansion plans have met with opposition from environmental groups concerned about increases in pollution emissions that would accompany the refining of larger volumes of crude oil.

Challenges by environmentalists and public officials to BP PLC's (BP) plans to expand its refinery in Whiting, Ind., recently led the company to suggest it may cancel modification plans. If its pledge to mitigate chemical discharge into Lake Michigan results in a material impact to the project's viability, "we could be forced to cancel it," BP America Chairman and President Bob Malone said last month.

In addition, the Sierra Club, along with the National Resources Defense Council, has asked the Environmental Protection Agency to overturn a permit granted to ConocoPhillips (COP) to expand its Wood River refinery in Roxana, Ill. The Sierra Club has also stated its opposition to Marathon Oil Corp.'s (MRO) plan to expand its refinery in Detroit.

 -By Beth Heinsohn, Dow Jones Newswires; 201-938-4435; beth.heinsohn@dowjones.com 

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Anchorage Daily News
September 26, 2007

 http://www.adn.com/money/industries/oil/story/9332511p-9247583c.html

 BP shares drop on warning of bad quarter
'DREADFUL': CEO says poor performance requires cuts, major restructuring.
The Associated Press
Published: September 26, 2007
Last Modified: September 26, 2007 at 05:21 AM

LONDON -- Shares in BP fell Tuesday after a newspaper reported that the oil company's chief executive had warned staff of poor third-quarter results.

The Financial Times said CEO Tony Hayward told a staff meeting in Houston that he planned a shake-up of the company's structure after its worst financial performance in 15 years.

The newspaper quoted Hayward as telling the staff that third-quarter revenues, due to be announced Oct. 23, will be "dreadful" and that BP needs to streamline its overly complicated structure.

"There is massive duplication and lack of clarity of who does what," the newspaper quoted Hayward as saying. "We will reduce the number of organization units. (We) will reduce the number of layers from the workers up to the CEO from 11 to about seven."

BP confirmed the staff meeting had taken place but said Hayward's comments had focused on operating performance rather than a major hit to revenue.

The company would not confirm it is planning to restructure. But Hayward said in July that he was "determined to fix" BP's operational performance, simplifying the company's organization and cutting head office work force.

BP shares dropped 2.5 percent to 574.5 pence, or $11.55, on the London Stock Exchange.

Hayward succeeded John Browne as BP's chief executive on May 1. The company is still struggling to recover from a series of high-profile mishaps including a deadly refinery blast in Texas in 2005 and an oil spill in Alaska that contributed to Browne's departure.

Hayward blamed the company's poor performance on lost revenue from its Texas City and Whiting refineries in the United States, which are not running at full capacity, and from large production projects that haven't yet started operation, the newspaper said.


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 http://www.adn.com/news/politics/fbi/kott/story/9331746p-9246830c.html

Kott guilty on 3 counts; sentencing set Dec. 7
Former legislator likely faces four years or more in prison
By LISA DEMER and SEAN COCKERHAM
Anchorage Daily News
Published: September 26, 2007
Last Modified: September 26, 2007 at 06:38 AM

Former state Rep. Pete Kott, a 14-year veteran of the Legislature and one-time House speaker, was convicted Tuesday by a federal jury of conspiring with Veco Corp. executives to push an oil tax favored by industry.

Jurors convicted the Eagle River Republican of conspiracy, bribery and extortion. They acquitted him of a fourth felony charge, wire fraud, that was based on a single cell phone conversation that went across state lines.

As the verdicts were read around 3 p.m. on the trial’s 15th day, Kott sat silent and still between his defense lawyers. He left the courtroom looking tired and drawn. He had little to say about the verdict.

“I’m disappointed,” Kott said. He didn’t want to talk about what’s next for him or the specifics of how he thought his corruption trial went. “It came,” he sighed. “It went.”

Kott walked out of the Federal Building with his girlfriend, Debora Stovern, on one arm, daughter Pamela on the other and lawyer Jim Wendt just ahead. They faced a barrage of television cameras and reporters asking questions that Kott wouldn’t answer.

Wendt said Kott almost surely would appeal. He and his co-counsel, Meg Simonian, hadn’t worked out all the potential grounds but he suggested the instructions the judge gave the jury could be one factor. “The jury instructions were a little ambiguous regarding the bribery and extortion charges,” Wendt said.

Then Kott’s group piled into a Dodge truck and drove away. ‘deal-maker,’ prosecutors said

During the trial, prosecutors Nicholas Marsh and James Goeke portrayed Kott as a deal-maker who plotted with former Veco executives Bill Allen and Rick Smith to secure the oil tax rate sought by North Slope oil producers during the 2006 regular session and special sessions that summer. They played nearly five dozen secretly made recordings during the trial.

The defense painted Kott as a hard worker with a drinking problem, an Air Force veteran, a man who got on his hands and knees laying hardwood floors but who didn’t ask his wealthy friends at Veco for handouts.

This is the second victory for prosecutors in the ongoing public corruption investigation, and the first involving oil field services contractor Veco. The company was sold to Denver-based CH2M Hill just before the trial.

Deliberations began at 12:30 p.m. Monday. Most of the jurors seemed “gung-ho” and ready to convict Kott that same day on at least a couple of charges, said Donna Riley, juror No. 1. She wanted to slow things down and sent the judge a note first thing Tuesday saying she had felt pressured the day before.

“And I’m like, man, you guys need to go over it,” Riley said after the verdict. “I need to understand. This is someone’s life, you know? I need to make sure I understand everything about it to have a clear conscience.”

Jurors were talking over each other on Monday when they finally got a chance to say what they thought after more than two weeks of trial, said juror Susan Pollard. By Tuesday morning, the jurors went out of their way to “cool it” and make sure Riley was included, juror Dale Hartzler said.

Riley, a custodial worker at Stevens International Airport, said she related to Kott since both do physical labor. She was moved, too, by a speech he gave on the witness stand.

“It kind of got to me when he said he was embarrassed and felt bad … for his family,” Riley said.

The defense was “trying for any emotional leverage they could get,” Pollard said.

In the end, what struck Riley as particularly important: the testimony and recordings about the promise of a job to Kott and the financial rewards, especially the inflated flooring invoice through which Veco executives funneled $7,993 to Kott.

She said she went home Monday night and prayed on what to do. By Tuesday, the situation in the jury room was calmer, she said. Their decision was the right one, she said.

Pollard, a former contract manager for the federal government, said it was Kott’s own testimony on the stand that left the biggest mark. Kott tried to explain to jurors that he just was telling Allen and Smith what they wanted to hear when he told them he’d push the tax rate they wanted.

Kott was saying ‘I’ll lie to my friends but I do have my principles,’ ” Pollard said. “How can you believe anything he says after that?” As to the inflated flooring invoice, she said she was very skeptical of the defense story that the money was for future flooring work. Why were invoices created by Stovern, Kott’s girlfriend, bookkeeper and a defense witness, after the fact? Why did none mention future flooring work?

Juror Hartzler said his vote to convict was a no-brainer given the evidence. Kott and his defense team couldn’t blunt the FBI audio and video, he said.

The defense didn’t ring true, said Hartzler, a systems analyst for Alaska Communications Systems. He said the whole tenor of the defense was just “flying in the face of the intercepts” recorded by the FBI. He gave the example of Kott’s son, who was also his campaign manager, claiming on the witness stand that the campaign didn’t use political polls. The defense was trying to refute the charge that Kott received a poll illegally paid for by Veco.

Hartzler said the defense claim was contradicted by a recording of Kott talking about the poll with a Veco executive, as well as poll questions the FBI found on a computer device at Kott’s residence. As for the drinking, Kott didn’t seem drunk in all of the late night recordings. Hartzler pointed to one in which Kott told Veco chief Allen that he wanted to be a lobbyist. It just seemed like a real, casual conversation, he said.

The evidence on the wire fraud charge just was too thin to support a conviction, Pollard said. It was based on a March 10, 2006, cell phone call that Kott made from Washington, D.C., to Smith. Kott, who was having drinks with a Marathon Oil lobbyist, told Smith he wanted to “take care of Marathon in this deal.” But Smith said that Marathon had dumped Veco as a maintenance contractor. “You know where my allegiance is,” Kott told Smith.

The verdicts come just before next month’s special session on oil taxes called by Gov. Sarah Palin. “I am more committed than ever to seeking a fair, untainted solution to our petroleum tax system,” the governor said in a written statement.

The evidence was compelling, said state Sen. Fred Dyson, R-Eagle River, who helped the FBI in its investigation and sat in on much of the trial. The recordings of people laughing and swearing about “jerking the public process around” generate a gut level impact.

Kott is likely facing more than four years in prison, according to what prosecutors have estimated under sentencing guidelines. But he could be looking at even more time, as much as 612 years, if the judge determines he did not testify truthfully and obstructed justice, said prosecutor Joe Bottini, who didn’t try the case but sat in on much of it. He is part of a four-person team of federal prosecutors handling Alaska public corruption cases.

U.S. District Judge John Sedwick set sentencing for Dec. 7.

Find Lisa Demer online at adn.com/contact/ldemer or call 257-4390. Find Sean Cockerham online at adn.com/contact/scockerham or call 257-4344.

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Christian Science Monitor
September 25, 2007

 http://www.csmonitor.com/2007/0925/p04s01-woeu.html

 As race for oil-rich Arctic heats up, Inuit stake their claim, too
Indigenous to the region, the Inuit want a 'meaningful voice' in the territory dispute.
By Colin Woodard |
Correspondent of The Christian Science Monitor
 
Ilulissat, Greenland
Even from the fishing village of Ilulissat  the largest settlement in Greenland north of the Arctic Circle  this polar region looks like an unlikely place to squabble over: dangerous-looking rocks and stark, treeless peninsulas jut out from the edge of the Greenland ice cap, which spits ever-greater quantities of icebergs into a frigid sea.

But since August, when a Russian submarine placed a flag on the seabed at the North Pole, the Arctic has been high on the world's diplomatic agenda. Five nations are now racing to claim new territory in the central Arctic Ocean, where climate change is expected to open up valuable new shipping routes, oil fields, and mineral deposits.

The region's indigenous people, the Inuit, want a say in how territorial claims unfold.

"We must develop, for the sake of my people and the world at large, a formal international process focusing on the Arctic that includes indigenous people having meaningful voices," Aqqaluk Lynge, president of the Greenland chapter of the Inuit Circumpolar Council (ICC) told an international gathering of politicians, scientists, and religious figures here earlier this month. "Or [else] we might just get washed away in the melting ice."

Mr. Lynge, vice chair of the United Nations Permanent Forum on indigenous issues, is a longtime advocate of his people, the Inuit, who have lived in the Arctic for thousands of years. Once called Eskimos  a Cree Indian term now considered pejorative  160,000 now live in Alaska, northern Canada, easternmost Russia, and Greenland, a Danish territory where they enjoy a large degree of self-government.

For 30 years, they have used the ICC to build bridges to one another and to give themselves a voice in the distant southern capitals that govern their homelands. Since the 1980s, they have argued for the central Arctic to be set aside as a demilitarized zone, much as Antarctica is, and for visa-free travel among the Inuit people.

When global warming began affecting their communities earlier this decade, the ICC's then-president, Sheila Watt-Cloutier of Iqaluit, Canada, traveled to global climate-change meetings to draw attention to their plight and even filed a suit with an international human rights body, charging the United States with destroying their homeland by not regulating greenhouse-gas emissions. In February, she was nominated for the 2007 Nobel Peace Prize.

Now the Inuit want their voices heard about the future of the central Arctic basin, 2 million square kilometers of seabed that Russia, Canada, Denmark, Norway, and the United States are expected to be divvying up among themselves, based on assertions that their respective continental shelves extend into the area.

"The Inuit have lived in the Arctic for a very, very long time and we should have some role to play in regard to what happens here," says Duane Smith, president of ICC-Canada, who is based in Inuvik, Northwest Territories. "We are the ones living here, and any detrimental impact to the area will have an effect on our way of life and our culture."

While nobody lives in the contested region around the North Pole, Inuit leaders say activities there will affect their communities, some of which are only a few hundred miles away. Increased shipping over the pole or through the Northwest Passage could disrupt ice cover and the migration patterns of animals that hunters rely on. Military rivalries might mean more land being appropriated for naval and air bases, which in the past have left environmental and cultural degradation. Then there's the possibility of oil spills, if petroleum is indeed found.

"We experienced the Exxon Valdez spill and we've seen the devastation that it brought to our communities in Alaska," says ICC chairman Patricia Cochran of Nome, Alaska. "We're concerned about increased traffic, increased pollution, and increased number of visitors to communities that aren't used to an influx of population."

Some are calling on the outside world to take a deep breath, step back, and perhaps consider protecting the region under an international treaty. "One of ICC's objectives is to keep the Arctic out of the hands of the military and encourage peaceful uses of the North Pole," says Lynge. "Maybe we should think of a kind of 'peace sanctuary' around the North Pole where we all can benefit."

If claims go forward, Greenland's Inuit stand to get a piece of the pie. They constitute 90 percent of the 56,000 people living in Greenland, where they control local government and where Greenlandic is the official language. Denmark has given Greenland an open door to independence  the island's economic viability is the only sticking point  and expects any new polar claims will ultimately belong to them.

"We are launching a claim in the Arctic only on behalf of the Greenlanders," which would inherit any of Denmark's Arctic territory once they become independent, says Svend Auken, a veteran Danish politician and former energy minister.

Aleqa Hammond, minister for finance and foreign affairs of Greenland's home rule government, has no doubts in that regard. "The Russians came and planted their flag up there on the North Pole, but everyone knows it's Greenlandic," she says with a smile. "The last land before you reach the pole is Greenlandic land."

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Anchorage Daily News
September 25, 2007

 http://www.adn.com/news/politics/fbi/kott/story/9330405p-9244768c.html

 Arguments end: Kott case handed to jury
IN CLOSING: Defense says Allen and Smith cannot be trusted; prosecutor says the evidence is "overwhelming."
By LISA DEMER and SEAN COCKERHAM
Anchorage Daily News
Published: September 25, 2007
Last Modified: September 25, 2007 at 04:22 AM

Lawyers laid out two opposite views of former state Rep. Pete Kott Monday during their closing arguments to jurors in his federal public corruption trial: hardworking with a drinking problem or greedy and looking out for himself.

Defense lawyer Jim Wendt told jurors to think of Kott as a legislator who pushed hard for oil development and got himself into trouble by spouting off when he drank too much.

He especially puffed himself up to his friends from Veco Corp. in Suite 604 of Juneau's Baranof Hotel, Wendt said. The nickname for the suite that served as Veco's headquarters during the Legislature was Animal House, Wendt reminded jurors.

"I'll tell you what it was. It was a place for boasting and banter, fueled by alcohol," Wendt told jurors in U.S. District Court. "The government is resting its case on the Animal House as if what goes on there is somehow reliable."

Assistant U.S. Attorney James Goeke told jurors that Kott took bribes from Veco and was guilty of putting his own self-interest before that of his constituents. Kott is charged with four felonies: conspiracy, extortion, bribery and honest services wire fraud.

The prosecutor said the case was unusual because jurors were able to watch and listen as the alleged crimes took place.

"Through the hours and hours of electronic surveillance that you've heard in this courtroom over the past few weeks, you the members of the jury have been able to sit in a ringside seat," Goeke told jurors.

No one knew during 2005 and 2006 that the FBI had put a bug in Suite 604 and wiretaps on phones of Veco executives.

The defense reminded jurors that the government focused on only the worst out of hundreds of hours of video recordings and thousands of intercepted phone calls. Prosecutors took "little snippets" out of context, Wendt said.

But Goeke told jurors "the evidence in this case is overwhelming."

The courtroom was nearly full of FBI agents, other defense lawyers, legislators and aides, reporters and Kott's friends and family. The case went to the jury around 12:30 p.m. on the trial's 14th day.

Kott is a former Republican House speaker from Eagle River who served 14 years in the Legislature.

Bill Allen, former Veco chief executive, and Rick Smith, former Veco vice president, have pleaded guilty and were key witnesses for the prosecution, testifying that they bribed Kott.

U.S. District Judge John Sedwick told jurors that Allen and Smith's guilty pleas in themselves are not evidence that Kott did anything wrong. In fact, the testimony of both Allen and Smith should be considered with more caution than that of other witnesses, he told them.

Wendt told jurors that Smith and Allen will say whatever the government wants to save themselves. Neither has been sentenced.

The stakes in the oil tax debate were high. The Murkowski administration was pushing a new state oil tax, a first step toward a natural gas pipeline that could have been worth millions to Veco in construction contracts. Kott is accused of pushing a 20 percent tax favored by North Slope oil producers in exchange for money, a political poll and Veco's promise of a job.

LAWYERS SUMMARIZE THE EVIDENCE

Goeke walked jurors through carefully picked highlights from nearly five dozen audio and video recordings played during the trial.

In a Sept. 26, 2005, call between Kott and Smith, the legislator said he needed a job. "You got a job. Get us a pipeline," Smith responded.

Later, the prosecution played a series of video recordings from the night of May 7 and into the early morning of May 8, just after key votes on the oil tax. "I'd vote for a 30 percent tax if it wasn't for this guy here," Kott says in one, pointing to Allen.

And in a video secretly recorded on June 1, 2006, Allen counts out what he later testified was $1,000 in cash for Kott. In another video from the same night, Allen asked Kott what he wanted to be. After joking about passing out beach towels in Barbados, where Veco was building a prison, Kott said he wanted to be a lobbyist. "Well, you will be," Allen tells him.

Allen later testified that Kott's job prospects with Veco all depended on him doing the right thing on the oil tax, Goeke reminded jurors.

During his closing, Wendt was frustrated at times by technical difficulties but forged ahead, focusing on a timeline displayed for jurors that included key votes.

Wendt emphasized that it was the defense, not the prosecution, who brought in two legislators to explain their dealings with Kott, which he said was better than relying on "some grainy tape" because they know what really happened.

The wire fraud charge, Wendt pointed out, is based on a single telephone conversation in which Kott assures Smith "you know where my allegiance is."

"Where is the plan or scheme in that telephone conversation?" Wendt asked.

Kott just wanted a gas pipeline, the same as Veco, but there was no criminal conspiracy, no intent to extort money from Allen or Veco, he said.

Others got so much more from Veco than Kott, Wendt said. Former Senate President Ben Stevens got hundreds of thousands of dollars in consulting work. U.S. Sen. Ted Stevens had his whole house redone with the help of Veco workers. Former Rep. Tom Anderson had Veco contracts too.

But Kott was working on his hands and knees doing flooring, Wendt said.

"Pete Kott never got anything," he said.

The last word came from prosecutor Nicholas Marsh, from the U.S. Justice Department's Public Integrity Section in Washington, D.C.

He told jurors that it made no sense to think that Kott got nothing from Veco. He received $1,000 in cash, a check for $7,993, a political poll that cost $2,750 and the promise of a job, all from Veco, Marsh said.

Kott's defense, Marsh said, appears to be that what he said in 11 months of secretly made recordings are "either lies or they are not true or the rantings of an alcoholic."

Kott, Marsh told jurors, "tried to snooker you."

Jurors finished deliberations for the day at 4:30 p.m. They return today.

Find Lisa Demer online at adn.com/contact/ldemer or call 257-4390. Find Sean Cockerham online at adn.com/contact/scockerham or call 257-4344.

VERDICT: Read about it first at adn.com or sign up to have it sent directly to your inbox at adn.com/newsletters.

Kott trial closing arguments at a glance

Prosecution

KOTT'S OWN WORDS: Assistant U.S. Attorney James Goeke replayed secretly made audio and video recordings. They included Kott talking to Veco executives about a possible job and asking Veco chief Bill Allen for instructions on the eve of the legislative session.

VECO TESTIMONY: Goeke said the testimony of Allen and former Veco executive Rick Smith, who are cooperating with the prosecution, matches what jurors heard on those FBI recordings.

OUTRAGE: Goeke hammered on the argument that Kott sold out the public trust by turning to Veco, instead of his Eagle River constituents, for direction on how to vote and act.

KOTT'S CREDIBILITY: Prosecutor Nicholas Marsh said Kott's explanations for his words and deeds made no sense. He "tried to snooker you," Marsh told the jury.

Defense

OUT OF CONTEXT. Kott's attorney, Jim Wendt, argued prosecutors plucked the worst statements out of hundreds of hours of video and thousands of intercepted phone conversation.

ANIMAL HOUSE. Wendt argued that Veco's Suite 604 at the Baranof Hotel in Juneau was known as the "Animal House," and was a "place for boasting and banter fueled by alcohol." Wendt said Kott loved and admired Veco head Allen and was just trying to impress him after drinking by saying things that weren't true.

HARD WORKER. The defense painted Kott as a hard-working man who did flooring jobs and didn't ask for handouts. He also worked hard trying to get a gas pipeline for Alaska, Wendt said.

LEGISLATORS' TESTIMONY. Wendt noted that Rep. Gabrielle LeDoux and ex-House Minority Leader Ethan Berkowitz testified that, despite what Kott told Veco executives, Kott didn't manipulate them to try and get the oil tax rate Veco wanted.

Compiled by Daily News reporters Sean Cockerham and Lisa Demer

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Financial Times
September 25, 2007

 http://www.ft.com/cms/s/0/9973e01e-6b00-11dc-9410-0000779fd2ac.html

 BP results set to be 'dreadful'
By Sheila McNulty in Houston and Ed Crooks in London
Published: September 25 2007 03:00 |
Last updated: September 25 2007 03:00

Tony Hayward, BP's new chief executive, has prepared staff for a far-reaching shake-up of the oil company as he delivered a blunt warning that third-quarter revenues would be "dreadful".

Mr Hayward told a staff meeting in Houston he would be announcing a streamlining of the company's organisation next month, the Financial Times has learnt. He said that BP's financial performance was at its lowest since 1992-93.

The remarks were made to a "town hall" meeting and summarised by a BP manager in a note circulated to colleagues under the heading "BP Confidential".

Mr Hayward's prediction of a "dreadful" third quarter comes as analysts prepare for downbeat results in spite of record high oil prices.

BP has been suffering from well-publicised problems including a squeeze on refining margins and falling US natural gas prices, as well as operational hold-ups such as damage to a North Sea gas pipeline.

The comments show how Mr Hayward, who has said little about his plans since taking over from Lord Browne in May, hopes to turn BP round and the scale of the challenges he faces.

Mr Hayward blamed BP's underperformance partly on excessive complexity, adding that the company' fragmented structure must be simplified. He plans to consolidate it into larger operations.

"There is massive duplication and lack of clarity of who does what," Mr Hayward was quoted as saying. "We will reduce the number of organisation units."

"[We] will reduce the number of layers from the workers up to the CEO from 11 to about seven."

Mr Hayward also said BP needed to shift its culture and take well-judged risks. "Assurance is killing us," he was quoted as saying.

He said people should be in positions long enough to see the consequences of their decisions, and that he wanted a "leadership style that really listens".

The chief executive said BP needed to change its mindset so that everyone had a say in decisions, and start letting the person accountable take the decision.

Mr Hayward also blamed the under-performance relative to BP's competitors on missingrevenues from the Texas City and Whiting refineries in the US and from big production projects that have not yet started operation.

BP has had to delay the start-up of Atlantis and Thunder Horse, its flagship projects in the Gulf of Mexico.

Mr Hayward went on to say that the fourth quarter would improve BP's revenues, however, as it picks up 250,000 barrels per day of production from the start of Atlantis, as well as Greater Plutonio in Angola, Mango in Trinidad and smaller Gulf of Mexico projects.

He added that the Texas City and Whiting refineries should be at full capacity by the year's end, according to the note, although the company has said they will not be operating at that capacity until next year.

Mr Hayward is under pressure to improve BP's reputation in the US, which has been undermined by the 2005 Texas City accident, which killed 15 people, and an oil spill in Alaska in 2006.

He was in Houston for BP's first board meeting there, so members could visit the Texas City refinery and the Thunder Horse project.

BP declined to comment.

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Anchorage Daily News
September 23, 2007

 http://www.adn.com/news/politics/fbi/kott/story/9326076p-9241110c.html

 Veco routinely paid for candidates' polling
MURKY LEGALITY: When, why, for whom determine lawfulness.
By KYLE HOPKINS
khopkins@adn.com
Published: September 23, 2007
Last Modified: September 23, 2007 at 03:43 AM

In April 2006, then-Gov. Frank Murkowski's popularity sagged among the worst of any governor in the nation, and the state waited to see if he would run for re-election.

Anchorage pollster David Dittman -- who later became Murkowski's campaign strategist -- said he came up with an idea. While everyone was mad at Murkowski, Dittman would conduct a poll asking people about good things Murkowski had done as governor.

The poll cost $20,000. Dittman said in an interview last week that, as best as he can remember, Murkowski's chief of staff told him to send the bill to Veco Corp.

Wait. Is that legal?

In the corruption trial of former House Speaker Pete Kott, a former Veco executive testified that the oil field services company routinely paid for all or parts of political polls -- usually at the request of candidates. The executive said the company paid for "upwards of 100" polls over the years.

Wait. Will any of those politicians get in trouble? The answer last week appeared to be no. At least not with the state. Not under Alaska's current campaign laws.

The trial of Kott on federal bribery and conspiracy charges has put former Veco chief Bill Allen, one of the premier campaign donors and kingmakers in Alaska history, in front of a jury under oath. Secret recordings played in court, along with the testimony of Allen and his lieutenant, ex-Veco vice president Rick Smith, exposed a series of what appear to be under-the-table campaign contributions by the company to Alaska politicians.

Just don't expect the state watchdog agency that oversees campaigns to investigate. Every poll that's been mentioned in the trial is more than a year old -- just past the statute of limitations -- said Brooke Miles, director of the Alaska Public Offices Commission.

And other polls that sound fishy could be perfectly legal.

Murkowski, for example, wasn't yet officially a candidate for governor when Veco paid for the $20,000 poll. So even though corporations are banned from giving contributions to candidates, campaign disclosure rules likely wouldn't have applied because Murkowski hadn't formally declared he was running for re-election, Miles said.

Now APOC wants some of those rules to change. The commission voted unanimously earlier this month to ask to increase the statute of limitations on campaign finance rules from one to four years.

On Friday, Sen. Bill Wielechowski, D-Anchorage, said he planned to file a bill that would do just that.

The statute of limitations was already four years in Alaska until 2003, when it was shortened at Murkowski's request. That year, Murkowski introduced legislation to reduce it from four years to two. The Legislature ended up passing a bill that cut it to one.

ANYBODY CAN BUY A POLL

In an interview last week, Dittman said he rarely worked for Veco and someone else must have done most of the polls that Rick Smith, the former Veco executive, talked about on the witness stand.

Dittman said he performed a Veco-paid survey on behalf of Sen. John Cowdery in 2004. Last June, Veco also paid Dittman for a $3,200 poll about then-Sen. Ben Stevens, who had already filed a declaration of candidacy with the state but eventually decided not to run for re-election.

Around the same time, Dittman worked as a Murkowski strategist, helping steer the direction of the governor's underdog re-election bid. At a June 16, 2006, party celebrating the launch of Murkowski's campaign, Dittman stood on a desk and predicted the unpopular governor would pull off an upset.

About two weeks later, Veco paid for a poll in Murkowski's primary race that cost $5,200, Dittman said.

Murkowski, who was a registered candidate by then, did not report the poll as a campaign contribution.

Another Anchorage pollster who often works with Republican candidates is Marc Hellenthal. He said he's conducted "quite a few" polls paid for partly by Veco, plus a few that the company paid for entirely, over the past 30 years.

Like Dittman, Hellenthal said Veco paid him for a poll last year on Ben Stevens.

He said he told his clients, including Veco, not to share poll results.

Did he have an inkling there was a problem in Veco paying for the polls?

"I assumed they were doing it to handicap races. They have been a major, major, major source of political contributions for 25, 25-plus years," he said. "When they're playing that heavy, they really need knowledge to know how to effectively channel their funds."

Miles, the APOC director, said any company or association can pay for political polls about candidates. It becomes illegal when they give those poll results to one candidate but not another. Political action committees are allowed to donate polls to one or more candidates as long as the cost doesn't exceed campaign contribution limits and the costs are reported as donations.

Dittman and Hellenthal said Veco wasn't the only special interest paying for polls -- labor unions and other groups do it too.

Hellenthal said he knows, for example, that the state teachers union -- NEA-Alaska -- frequently polls in political races because "they share results with my clients."

NEA-Alaska president Bill Bjork said the union's political action committee paid for poll questions in about half the legislative races in last year's elections to help it decide which campaigns to get involved in. The poll results were then told to dozens of people on the political action committee.

"Our (Political Action Committee for Education) is given instructions that this is confidential information. That said, there's 52 people who know in broad strokes what the poll says," Bjork said.

Anchorage pollster Ivan Moore works for NEA and said the union conducts surveys only for its own internal purposes, not to help out politicians. "They conduct themselves to the letter of the law, and any attempt to compare their conduct to the admitted illegal behavior we have seen from Veco is frankly outrageous."

VECO PAID FOR MULTIPLE SURVEYS

Ray Metcalfe, a campaign finance watchdog and potential U.S. Senate candidate, called on APOC last week to poll all 60 Alaska lawmakers to see if Veco paid for polls in their elections.

One of the accusations against Kott is that Veco bought him a $2,750 poll, though Kott said on the witness stand that he didn't want the poll and didn't use it.

To make their case, prosecutors played a phone conversation secretly recorded between Smith and Allen talking about Kott.

"We got him a poll, 'cause his guy (Kott's campaign consultant, former Rep. Jerry Mackie) wanted him to have a poll. ... So he was getting it done, and I called Dittman and says we'll take care of it," Smith tells Allen.

In one of the wiretapped phone calls played for the jury, Smith asks Dittman about a poll he was doing for Kott. "We want to take care of that, OK?" Smith asks.

"OK," Dittman responds.

Smith then instructs him to "do what you have to, bill it though us, send it to my attention, that kind of thing." Dittman says OK.

In another call, Smith called Kott.

"Hey I just got off the phone with, with Bill (Allen). You know, we did a poll for you. ... You know that, don't you?" Smith asks.

"Yeah," Kott replies.

Later in the conversation, Smith mentions another candidate: Earl Mayo.

"We did a poll for Earl too," he says.

Mayo, who ran unsuccessfully for the state Senate against Wielechowski, said he leaves all the polling details up to Hellenthal's company. "Nobody tells me nothing and I don't ask," he said.

Hellenthal acknowledged there was talk of Veco paying for a Mayo poll, but said it never happened.

On the witness stand, Smith, the Veco executive, said poll results paid for by the company were given to candidates. In fact, he couldn't remember a Veco poll that didn't end up in the hands of a candidate or a candidate's consultant or staff member.

As for why Veco would pay for the polls in the first place?

"In most the cases, we were probably asked by candidates," Smith said.

Find Kyle Hopkins' political blog online at adn.com/alaskapolitics or call him at 257-4334.

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Fairbanks News Miner
September 22, 2007

 http://newsminer.com/2007/09/22/9002

 Too quick to react? : Gov. Palin’s words in VECO
case now must apply to her team
Published September 22, 2007


Gov. Sarah Palin has walked perilously close to the edge in asking that a sitting state senator be removed from a committee chairmanship and that a former state senator give up his seat on the Republican National Committee.

Neither of the men involved  Sen. John Cowdery and former Sen. Ben Stevens, both from Anchorage  has been charged with a crime. Each has said he is innocent of any purported wrongdoing.

That’s no small fact.

It is correct, however, to say that the names of both men have been mentioned several times in unflattering ways in connection with the federal corruption probe of the state Capitol. The names of Sen. Cowdery and Mr. Stevens have also lately surfaced in former Rep. Pete Kott’s corruption trial, under way in Anchorage as a result of the broad federal investigation. Mr. Kott, from Eagle River, has been charged with crimes connected to the influence-buying case against top executives of the once-powerful oil field services company VECO Corp.

The governor wants Sen. Cowdery booted from the chairmanship of the Senate Rules Committee, the committee that schedules bills for votes on the Senate floor. To be chairman of this committee is to have a hand on the faucet of legislation flowing through Juneau, so it’s understandable that a governor with big plans would have keen interest in who sits at the head of the panel.

And she wants Mr. Stevens, the former Senate president, to give up his slot representing Alaska on the Republican National Committee. The governor, in her statement, comes close to convicting Mr. Stevens, however. “When I’m looking at the political party in which I’m registered and I see the national committee man is Ben Stevens, I’m free there to state my opinion and that’s he shouldn’t be our national committee man,” she said.

She is, indeed, free to say what she thinks. The problem, though, is that words of a chief executive have staying power.

In calling for pre-emptive action against Sen. Cowdery and for the resignation of Mr. Stevens, the governor can now be expected to apply a similar standard to a member of her administration if that person comes under suspicion. Anyone suspected of wrongdoing will have to go.

If the governor doesn’t apply such a standard as she is applying to Sen. Cowdery and Mr. Stevens, the public popularity she currently enjoys and cherishes may suffer. People can stomach a lot from their leaders. But, over the years, they have demonstrated a strong dislike for politicians who have one standard for other people and a different, lax, one for themselves.

Gov. Palin has set a high mark for standards of conduct in office. Her recent remarks about Sen. Cowdery and Mr. Stevens must be seen as a message not only to members of the legislative branch of state government, but also to members of the executive branch.

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Houston Chronicle
September 22, 2007

 http://www.chron.com/disp/story.mpl/business/energy/5155835.html

 A $7 billion gamble on oil refining
Motiva approves a plan to double the capacity of its Port Arthur plant
By BRETT CLANTON
Copyright 2007 Houston Chronicle

MAJOR EXPANSION
The expansion of Motiva's Port Arthur refinery will make it the largest in the nation:

The refinery
• Current capacity: 285,000 barrels of crude oil per day
• Capacity after: 600,000 barrels per day
• Expansion cost: $7 billion
• Products: Gasoline, diesel and aviation fuels
Source: Shell Oil Co.

MOTIVA ENTERPRISES
• Headquarters: Houston
• Ownership: Shell Oil Co. and Saudi Refining Inc. own 50 percent each
• Business: Motiva refines and markets products through about 7,700 Shell-branded stations
• Refineries: Port Arthur; Norco, La.; Convent, La.
• Combined capacity: 740,000 barrels per day
Source: Shell Oil Co.

Motiva Enterprises made a huge bet Friday that America's appetite for gasoline will keep growing well into the future, giving final approval to a $7 billion expansion of its Port Arthur refinery that will make it the largest in the nation.

The decision came after more than three years of study by Motiva, a joint venture of Royal Dutch Shell and Saudi Arabia's state-owned oil company, and after a jolt in costs doubled the project's price tag.

With the move, two of the world's biggest oil companies have signaled their belief that petroleum-based fuels are here to stay despite the growth of biofuels like ethanol and calls to curb U.S. gasoline use.

It also suggests the companies see more road ahead for the domestic refining industry's recent profit run, despite its history of boom and bust cycles.

"Even at this kind of investment level, this is still a very attractive project," Rob Routs, Shell's top global refining operations executive, said in a conference call with reporters Friday.

Recent increases in the cost of building materials and labor, along with concerns about the long-term demand for gasoline, have pushed some refiners to delay or cancel expansion projects.

As recently as May, the American Petroleum Institute said refiners planned to boost the nation's refining capacity almost 11 percent through expansion projects representing 1.6 million barrels a day. Now, the trade group says only about

1 million barrels a day in projects will go forward.

Material costs rose as a spate of refiners launched expansion projects simultaneously to take advantage of high refining profits, while labor costs spiked because of a shortage of construction workers after the 2005 Gulf Coast hurricanes.

The cloudy demand picture, meanwhile, is the result of proposals in Congress that could greatly boost the nation's ethanol output and also create higher fuel economy standards for cars and trucks, both of which could weaken demand for gasoline.

President Bush also has set a goal to cut gasoline use 20 percent by 2017.

Given those challenges, it is highly significant that Motiva decided to move forward with its Port Arthur expansion, said Mike Wilcox, head of global downstream consulting for Wood MacKenzie in Edinburgh, Scotland.

"On balance, I'd say it gives a positive message to other refiners," he said.

Most U.S. refineries now run near their peak, and still do not produce enough gasoline to keep up with Americans' demand for gasoline. To make up the shortfall, the U.S. imports about 10 percent of the gasoline it consumes each year.

Motiva CEO Bill Welte said those factors helped persuade the company to expand in Port Arthur, even though the partners considered pulling the plug when costs ballooned. "That was always an option," Welte said in an interview.

Expected to be complete in 2010, the expansion will more than double the Motiva facility's oil-processing capacity to about 600,000 barrels per day.

That will make it the nation's largest refinery, edging out an Exxon Mobil Corp. facility in Baytown that processes nearly 563,000 barrels per day.

Exxon Mobil spokeswoman Prem Nair said the world's largest oil company had no plans to match Motiva in order to retain the top spot.

Along with the expansion, Motiva is also adding equipment that will allow the Port Arthur plant to process a broader range of crude oils.

Prices for light, sweet crude recently have hit records as refiners in the Far East have snatched it up to feed rising energy demands, Routs said.

But Port Arthur will now be able to run heavy, sour crudes found in South America and thick tar sands from Canada, which can be produced at roughly $20 per barrel less than lighter crudes, he said.

Motiva said the project will create 300 new jobs, produce lower emissions per barrel of oil put through the system and spur more development in the region.

Though Port Arthur encouraged the plant expansion with tax incentives, Mayor Deloris "Bobbie" Prince still called the Motiva project a "gift from God."

"The quality of life for the people of this town will never be the same as of this morning," Prince said Friday.

Hilton Kelley, a community activist, said he will be watching to make sure Motiva makes good on promises to the area, including the installation of more air-monitoring devices at the plant.

"They have answered a lot of our concerns," Kelley said. "But we are not totally 100 percent satisfied with the expansion."

Motiva has been preparing the Port Arthur site for the expansion for more than a year. Hundreds of construction workers have been coming and going. Recently, they began driving pilings to undergird what essentially will be a new refinery connected to the original one.

That's why word of the final investment decision, even if it took awhile, was not totally unexpected Friday.

Said Routs: "We haven't been exactly hiding the fact that we wanted to do this."

brett.clanton@chron.com 

xxxx

 http://www.chron.com/disp/story.mpl/business/energy/5153915.html

Sept. 21, 2007, 2:10PM
Refinery expands with plan to be biggest in U.S.

Motiva Enterprises said today it will be going ahead with an expansion at its Port Arthur refinery that would make it the biggest in the country, more than doubling the capacity of the operation to 600,000 barrels a day.

The decision to go ahead by the Houston-based joint venture owed by Royal Dutch Shell and Saudi Aramco comes at a time when some other companies are having second thoughts about big refinery construction projects because of rising costs and questions about the long-term outlook for the business.

``The expansion is designed to strengthen our nation's supply of gasoline, diesel, aviation fuels and high quality base oils,'' said William B. Welte, Motiva President and Chief Executive Officer in the statement announcing the decision.

The largest refinery in the U.S. now is the Exxon Mobil refinery in Baytown with a  capacity to refine 562,000 barrels a day of crude, according to a July report from the Energy Information Administration of the U.S. Department of Energy.

The companies, which said the expansion is expected to generate more than 4,500 construction jobs and about 300 new full-time jobs when done, did not announce the cost of the project. 

A joint venture between Bechtel and Jacobs Engineering group will manage the project which will also upgrade the plant's pollution controls.

stephen.rassenfoss@chron.com

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Wall Street Journal
September 21, 2007

 Exxon Valdez Plaintiffs Say Top Court Should Drop Case
DOW JONES NEWSWIRES
September 21, 2007 4:21 p.m.
 By Steve Gelsi

 Exxon Mobil Corp.'s (XOM) move to take the last major lawsuit over the 1989 oil spill of the Exxon Valdez tanker to the U.S. Supreme Court lacks merit and shouldn't be heard by the high court, the lawyer for plaintiffs in the case said Friday.

David Oesting of Davis Wright Tremaine LLP in Anchorage, Alaska, said the oil giant its "grasping at straws" to get the top court to take the case.

Seeking to keep $5 billion in punitive damages awarded earlier this year by a federal appeals court, plaintiffs in the Exxon Valdez suit late Thursday filed a brief in opposition to Exxon Mobil's petition for writ of certiorari to the Supreme Court.

The suit represents the last piece of major litigation surrounding the Exxon Valdez oil spill 18 years ago, as the nine justices consider whether to rule in what has been a long and bitter fight.

Lawyers for the roughly 33,000 plaintiffs have now formally responded to Exxon Mobil's Aug. 20 petition arguing that the Supreme Court should hear the lawsuit.

In the court documents, Exxon Mobil argued the case hinges partly on whether punitive damages should be imposed under maritime law against a ship owner for the conduct of a ship's master at sea, even when the conduct was contrary to policies established and enforced by the owner.

Oesting said the case's punitive damage of $2.5 billion - which doesn't include another $2 billion or so in interest payments - amounts to an average of $76,500 for each of the 33,000 plaintiffs, about five times the average of about $15,500 in economic harm to each party in the suit.

The plaintiffs' latest brief points out that the $2.5 billion settlement amounts to less than thee weeks of Exxon's current net profits.

"Unlike any other ship owner of which we are aware, Exxon placed a relapsed alcoholic, who it knew was drinking aboard its ships, in command of an enormous vessel carrying toxic cargo across treacherous and resource-rich waters," according to the opposition brief submitted to the court.

"And unlike any previous shipping disaster, Exxon's wrongdoing inflicted such widespread harm to private parties' interests, that the district court, at Exxon's request, certified a mandatory punitive damages class to protect Exxon from the threat of multiple punitive damage verdicts."

Exxon Mobil could be forced to pay at least $2.5 billion in punitive damages plus another $2 billion in interest if the nation's high court refuses to hear the case and bumps it back to a judgment handed down by the U.S. 9th Circuit Court of Appeals, lawyers for the case said.

Oesting said Friday the court could decide whether to hear the case or bump it back to the lower court's judgment by the end of November.

The spill of nearly 11 million gallons of oil when the Exxon Valdez supertanker ran aground in Alaska's Prince William Sound still ranks as the worst oil slick from a ship to occur in U.S. waters.

Exxon Mobil said it has already paid $2.1 billion to clean up the area and $300 million to compensate commercial fishermen, seafood processors and others. All told, the oil giant says it has spent about $3.4 billion as a result of the spill.

"Exxon Mobil maintains that no punitive damages at all are warranted in this case," spokesman Tony Cudmore said in an email to MarketWatch last week.

"Plaintiffs were fully compensated for their injuries long ago," Cudmore said. "Punitive damages serve no sensible purpose in circumstances where compensatory damages and other expenses are more than sufficient to deter and punish anyone for anything."

Cudmore couldn't be reached for further comment on Friday.

The spill also damaged 1,300 miles of coastland, closed the 1989 fishing season in the region, reduced harvests in later years, and caused fish prices to drop, the plaintiffs said.

The current appeal fight dates back to 1994, after a jury verdict assessed $5 billion in punitive damages against Exxon. After a 13-year fight at the federal appeals court level, the 9th Circuit cut the size of the punitive damages to $2.5 billion.

Moving to recover punitive damages, the Alaskan plaintiffs over the summer filed a cross-petition asking the Supreme Court to restore the $5 billion awarded in the original suit.

While $5 billion remains a significant pile of money, it amounts to about 1% of Exxon Mobil's market capitalization.

-By Steve Gelsi; 415-439-6400; AskNewswires@dowjones.com 

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Anchorage Daily News
September 21, 2007

 http://www.adn.com/news/politics/fbi/kott/story/9320378p-9233860c.html

 Kott says he lied to Veco executives
TESTIMONY: He did take money, defendant says, but not as bribes.
By LISA DEMER, SEAN COCKERHAM and TOM KIZZIA
Anchorage Daily News
Published: September 21, 2007
Last Modified: September 21, 2007 at 01:39 AM

Former state Rep. Pete Kott apologized to jurors Thursday for his crude talk in secretly made FBI recordings, but he also conceded that he told Veco Corp. executives whatever they wanted to hear, even if it wasn't true.

On a day he made an emotional speech from the witness stand about his shattered legacy, other revelations spilled out, including that he changed his vote on a new oil tax at the last minute and took $5,000 from former Veco executive Bill Allen as a truck loan that he never repaid.

But, Kott maintained, he never took bribes.

Kott finished testifying late in the afternoon after two grueling days on the stand in his federal corruption trial. While he seemed testy at times during aggressive cross-examination, he didn't lose his cool.

Gov. Sarah Palin quietly popped into the trial for about 10 minutes in the morning. Few seemed to spot her as she slipped into the back row during a little of Kott's testimony on oil taxes. Palin said she took the opportunity to check in during a fire drill in the governor's Anchorage office in the nearby Atwood building.

"This is one of the most important series of trials in Alaska history," Palin said after her courtroom visit.

TRIAL COMES AT GREAT COST, KOTT SAYS

Kott is being tried in U.S. District Court on charges of bribery, conspiracy, extortion and wire fraud. Veco executives Bill Allen and Rick Smith have pleaded guilty to bribing Kott and three other legislators in an effort to influence them on the tax measure in 2006.

Kott told jurors he had to go to trial because he believes he's not guilty, but that it's coming at great cost.

Jurors have seen videos from Suite 604 of the Baranof Hotel in Juneau and heard wiretapped telephone conversations in which Kott, often after drinking, plotted and cussed alongside Veco executives.

Will those videos and newspaper stories about his behavior be his legacy? defense lawyer Jim Wendt asked.

Kott, in the Legislature 14 years, including two as House speaker, choked up a bit during a monologue that lasted several minutes.

"Unfortunately, with all the things I believe I accomplished, the goals that I managed to reach, the legacy will be just that. I think people will forget about the good things and remember the bad things," Kott said.

The video recordings are "extremely embarrassing," Kott said.

"Certainly to the jury, I apologize for the vulgarity that has been presented to you in the course of this trial," Kott said. "It has been an embarrassment for myself and my family." His girlfriend and grown son and daughter sat in the front row behind the defense table.

The defense slogged through the legislative record in an attempt to portray Kott as a statesman who sometimes voted against the 20 percent tax favored by Veco to reach an oil-tax compromise.

But as Kott himself explained, the unfolding of such complex bills is a "cat-and-mouse game," with lawmakers sometimes voting yes for loathsome amendments hoping to kill a bill.

The Legislature approved a 22.5 percent tax, and Kott told the jury he considered it a good compromise. "We pretty much split the baby right in half," he said.

SPIRITED CROSS-EXAMINATION

The cross-examination by assistant U.S. attorney James Goeke was heated from the start.

Goeke came close to yelling as he shot off questions rapid-fire about Kott's vote. Wendt objected time and again. And U.S. District Judge John Sedwick told Goeke to slow down, be more patient and stop making speeches.

Prosecutors also dug deep into the legislative record during their cross-examination, trying to show that Kott voted against the 22.5 percent compromise three times on the last day, when the tax measure nearly died.

Even on the final vote, Kott was a "no," switching his vote to the "yes" side only after the tally showed the measure passing.

"You changed it once the writing was on the wall," Goeke thundered. "It's good you did it so you can tell the jury you voted for 22.5."

Kott's lawyer objected.

"There was no jury then to consider," he pointed out.

It was, Goeke noted, the last vote of Kott's legislative career. He lost in the Republican primary two weeks later.

The prosecutor seemed to be portraying Kott as a hold-out for 20 percent until the bitter end -- even when some oil industry lobbyists had started pushing for 22.5 percent in fear a more onerous tax might pass instead.

During his cross-examination, Goeke replayed two FBI recordings from the Veco suite.

"Where do you want to take this, Bill? I don't want to jeopardize the gas line but I'll stay on 20," Kott says on a May 8, 2006, recording from Suite 604. Allen testified earlier that oil producers wanted certainty on oil taxes before they would commit to a multibillion-dollar gas pipeline. "Vic will be on 20 and Jay will be on 20 and Foster will be on 20. I don't know how many others will be on 20," Kott said on the recording, referring to Reps. Vic Kohring, Jay Ramras and Richard Foster.

"Tom Anderson," Smith, the former Veco vice president, chimes in with another lawmaker's name.

"Anderson will be on 20," Kott agreed.

Prosecutors also replayed an especially vulgar recording from late in the night of June 8, 2006. The men in Suite 604 spewed out f--- them repeatedly.

Goeke pressed Kott to explain why he assured Allen he'd fight for 20 percent if he was willing to go higher. Kott said he was misleading his Veco friends, choosing to "tell them what they want to hear."

That theme came up several times.

BERKOWITZ DID NOT HELP SWAY VOTE, KOTT SAYS

Wendt asked Kott to explain another secretly recorded conversation in which he boasts that he "outsmarted the fox" -- referring to then-House Minority Leader Ethan Berkowitz -- in order to get Berkowitz to persuade his fellow Democrats to vote the way Veco wanted.

Kott told jurors that he was just trying to impress Allen. He and Berkowitz had had a rational conversation on the House floor. Kott figured Allen was watching live on "Gavel to Gavel" television.

"I didn't want him to get the opinion I was just crawling in bed with the Democrats," Kott testified.

Kott said he also felt bad because he and Berkowitz had a good relationship for years and he had actually tried to deceive Berkowitz a little bit. He said Berkowitz was on his side back in 2005 when he attempted to regain the House speaker post through a coup. It failed.

That's why he talks in the recording about lying, cheating, stealing and selling his soul to the devil, Kott testified.

In reality, Berkowitz didn't do anything to help swing votes the way Veco wanted, Kott said, even though he told Allen that's what happened.

"I think I was trying to get some credit," he said.

At another point in his cross-examination, Goeke questioned Kott about a $5,000 check from Allen that jurors hadn't heard about before Thursday.

Kott told jurors that Allen loaned him the $5,000 in 2004 as a down payment on a new truck. He was supposed to pay Allen back once he paid off the truck.

But Goeke pointed out that on Aug. 31, 2006, when the FBI searched Kott's residence in Juneau, Kott told agents that he hadn't done so.

"That sounds like a gift to me," Goeke said.

Kott replied he and Allen had an agreement that Kott would pay the money back when the truck was paid off.

"It could also be characterized as a bribe," Goeke said.

"You can characterize it any way you want; it is not a bribe," Kott replied.

With a few more witnesses to go today, the case may not get to the jury until next week.

Find Lisa Demer online at adn.com/contact/ldemer or call 257-4390. Find Sean Cockerham online at adn.com/contact/scockerham  or call 257-4344. Find Tom Kizzia at adn.com/contact/tkizzia.

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 http://www.adn.com/money/industries/mining/story/9319384p-9233916c.html

Jay Ramras won't retract bribery claims
PEBBLE MINE: Regional leaders protest his allegation they've taken inducements.
By ELIZABETH BLUEMINK
ebluemink@adn.com
Published: September 21, 2007
Last Modified: September 21, 2007 at 02:38 AM

Executives of three Native corporations accused state Rep. Jay Ramras of defamation and said they have not been bribed to support the controversial Pebble mine prospect.

The corporate leaders demanded Thursday that Ramras, R-Fairbanks, retract his claim that a mining company trying to develop the vast Pebble copper and gold prospect in Southwest Alaska has paid Native leaders thousands of dollars to buy their support.

They said they are also exploring legal options against Ramras, though he has some immunity from lawsuits as a legislator.

Ramras doesn't plan to apologize, he said Thursday.

He said he has detailed his accusations in a confidential five-page letter this week to the state Department of Law's criminal division. He sent this letter after state attorneys, responding to Ramras' Sept. 1 call for an investigation, wrote back Tuesday asking for specifics.

"Depending on the identity and status of the persons receiving the alleged funds and the identity of (those) providing them, your allegations could be serious," wrote Richard Svobodny, a state deputy attorney general.

On Sept. 1, Ramras asked state and federal prosecutors to investigate whether Northern Dynasty Mines Inc., the company exploring Pebble, is plying Native leaders and elected officials in Southwest with large amounts of money -- either with cash payments or hefty salaries -- to buy their support.

The Pebble deposit could contain hundreds of billions of dollars worth of copper and gold, according to Northern Dynasty. The company recently joined up with international mining giant Anglo American, which plans to spend more than $1 billion to advance the project.

But Pebble also sits amid headwaters of some Bristol Bay rivers, a location that has alarmed commercial fishermen downstream, sportfishing lodge owners nearby and subsistence users who fear they could lose if the mine goes ahead.

Ramras never used the word "bribery" in his Sept. 1 accusations, which were targeted more at Northern Dynasty than at Native corporations, he said Thursday.

BRIBES OR JUSTIFIED PAY?

But the insinuation seemed clear to the accused.

Northern Dynasty officials said Thursday they have not bribed anyone for their support, and they have been discussing the accusations with the Department of Law.

The company spent about $4 million on salaries, lodgings and other services in the region last year, and Northern Dynasty officials said they expect to pay out more in 2007.

All of the payments they've made for lodgings and salaries have been within "market norms," said company spokesman Sean Magee.

Some of Northern Dynasty's employees or consultants are also elected officials in the region, but none of them has ever been asked to weigh in on behalf of Pebble, he said.

For the past few years, Northern Dynasty has also paid $200 per day to Bristol Bay residents to attend two- to three-day-long stakeholder meetings in Anchorage, in addition to paying their hotel and travel costs, Magee said.

The honorarium and travel payments are not unusual, Magee said, saying that Northern Dynasty based its policy on similar stakeholder projects in Alaska, and elsewhere.

Ramras cited the $200 payments as questionable in his Sept. 1 letter.

INDIGNANT RESPONSE

"Your statements are false, malicious and in complete disregard of the truth," said Sam Fortier, an Anchorage attorney who represents village corporations in the Bristol Bay region, in a letter to Ramras sent Tuesday.

The leaders of the Pedro Bay, Iliamna and Alaska Peninsula village corporations met with reporters at Fortier's law office Thursday morning, and they denied they or their shareholders had been bribed.

The village corporations have business contracts with Northern Dynasty, but they haven't decided whether to endorse Pebble development, said Lisa Reimers of Iliamna Development Corp., a village corporation subsidiary that sells payroll and catering services to Northern Dynasty.

"Not one of us has taken a bribe," said Norman Jacko of the Pedro Bay Corp., which has a contract to work on a proposed road alignment for Pebble.

Reimers questioned whether Ramras has been swayed by his own political relationships or friendships.

He received at least $1,300 during his 2006 election campaign from people affiliated with the Renewable Resources Coalition, a group fighting Pebble. And he's been friends for about three years with Bob Gillam, an Anchorage money manager who owns a private fishing lodge near the mine, and who contributes a large portion of the coalition's budget.

Ramras said Gillam had nothing to do with the letters he wrote to prosecutors. He said that a friend who owns a plumbing company in Fairbanks introduced him to a Native elder in Ekwok, and he offered to write the letter to prosecutors on behalf of the elder, Luki Ekelkok.

SHOULD TROOPERS INVESTIGATE?

State prosecutors declined to say Thursday whether they are investigating Ramras' allegations.

Federal prosecutors could not be reached for comment.

Svobodny said, in his letter to Ramras, that state troopers, not the Department of Law, would be the "first responders" to determine whether any crimes have been committed.

"Before asking the State Troopers to become involved, the first question we will be asking is which, if any, of the people you implicate in your letter are public servants," he wrote in the letter, signed on behalf of Attorney General Talis Colberg.

Potentially, state prosecutors can also investigate people who work in business for giving or receiving a bribe, the letter said.

Find Elizabeth Bluemink online at adn.com/contact/ebluemink or call 257-4317.

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Seattle Times
September 20, 2007

 http://seattletimes.nwsource.com/html/localnews/2003893175_icebreakers20m.html

 Aging fleet slows U.S. in Arctic "chess game"
By Sandi Doughton
 http://seattletimes.nwsource.com/ABPub/2007/09/19/2003892900.gif

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When Coast Guard Adm. Thad W. Allen imagines a melting Arctic, it's not a pretty sight: Cruise ships collide with icebergs. Oil tankers and ore ships run aground. Foreign fishermen sneak into American waters.

Even worse, the nation's top Coast Guard officer fears he may not have the tools to respond to these future crises.

At a time when Russia, Canada, Norway and other Arctic nations are scrambling to stake out turf in the still-frozen north, the United States' two most powerful icebreakers sit at a dock in Seattle, nearing the end of their working lives.

One is manned by a skeleton crew. Both are about 30 years old, and nothing is on the drawing board to replace them.

"We have the responsibility for maritime safety, stewardship and security," Allen said. "But how do you respond up there if you have no presence?"

Allen and others are urging the U.S. government to prepare now for the changes global warming will bring to the Arctic. The nation needs to figure out how to protect American interests, handle disasters and enforce laws in a region that will still be ice-choked much of the year, he said.

"Icebreakers will have an important role to play," Allen said.

A National Research Council panel concluded last year that planning and construction should start immediately on two new icebreakers. "U.S. icebreaking capability is now at risk of being unable to support national interests," the panel warned.

Each of the new ships could cost $750 million or more, experts estimate.

The Arctic ice cap shrank to a record low this summer, opening up the Northwest Passage along Canada's fringe for the first time.

Scientists say the ice is melting much faster than global-warming models predict, with the possibility that the Arctic Ocean will be completely ice-free in summer by 2050.

But the region will remain frozen in winter. And the Arctic's notoriously variable weather also means that entrepreneurs, tourists, fishermen and explorers lured into the area by its beauty and the promise of profit are likely to encounter bad weather and ice year-round.


More people traveling in icy waters translates into more accidents, more oil spills, more security problems  and more need for powerful icebreakers, says Scott Borgerson, a fellow at the Council on Foreign Relations and a former Coast Guard officer.

"Climate change is giving birth to a new region and allowing for all kinds of access," he said.

"A global chess game"

The U.S. Geological Survey estimates a quarter of the world's untapped oil and gas resources may lie beneath the Arctic Ocean. Oil and mineral companies are already building ice-strengthened tankers.

After a Russian minisubmarine planted a flag on the ocean floor beneath the North Pole this year, the Canadian government announced plans for military bases and a $3 billion fleet of ice-reinforced ships to patrol the Northwest Passage, which the country claims as sovereign territory.

President Bush countered by insisting the passage is an international waterway. Norway asserted its territorial rights, while Denmark, which controls Greenland, appealed for calm.

"We're seeing a global chess game play out in the Arctic as nations position and stake claims for the region's vast, untapped resources," said Coast Guard Cmdr. Brendan McPherson, Allen's press secretary.

If icebreakers are among the chess pieces, the United States is outnumbered.

The nation has three multipurpose icebreakers, all based in Seattle. The aging Polar Sea and Polar Star, both able to ram through 21 feet of ice, have primarily been used to break open a route to U.S. research stations in Antarctica.

The newest member of the fleet is the Healy, an eight-year-old ship capable of contin