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
xxxxxxxxxxxxxxxxxx
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.
xxxx
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.
xxxxxxxxxxxxxx
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."
xxxxxxxxxxxxxxxx
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
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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
xxxxxxxxxxxxxxxx
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.
xxxxxxxxxxxxxxx
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.
xxxxxxxxxxxxxxx
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.
xxxxxxxxxxxxx
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
xxxxxxxxxxxxxxxxx
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
xxxxxxxxxxxxxxxx
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.
Xxxxxxxxxxxxxxxxxxxxx
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.
xxxxxxxxxxxxx
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
Related
Archive | Arctic ice cap to melt faster than feared, scientists say
http://seattletimes.nwsource.com/html/localnews/2003873003_arcticice07m.html
Archive | Russian sub stakes claim on
North Pole
http://archives.seattletimes.nwsource.com/cgi-bin/texis.cgi/web/vortex/display?slug=polar03&date=20070803
Archive | Denmark joins rush
for Arctic resources
http://archives.seattletimes.nwsource.com/cgi-bin/texis.cgi/web/vortex/display?slug=webdenmark10&date=20070810
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 continuously breaking through 4-foot-thick ice and designed mainly for
Arctic science. A fourth icebreaker is leased by the National Science
Foundation exclusively for research in Antarctica.
With a much more extensive Arctic coastline, Russia has 18 icebreakers,
seven of them nuclear-powered. Finland has a fleet of seven. Canada has six.
But it's not really a numbers game, says Lawson Brigham, deputy director of
the U.S. Arctic Research Commission and former captain of the Polar Sea.
The United States needs to be able to patrol Alaska's 2,500 miles of Arctic
coastline, conduct research in both the Arctic and Antarctic and respond to
emergencies. The National Research Council panel concluded that a fleet of
three modern icebreakers can do the job.
Arctic research includes underwater mapping, which is key to territorial
claims under the 1982 United Nations Convention on the Law of the Sea. Every
Arctic nation except the United States has signed the treaty, which gives
countries rights to underwater terrain extending from their continental
shelves.
The 420-foot Healy is heading back to Seattle now after a two-month mapping
voyage in the Chukchi Sea off Alaska's northwest coast.
The lead scientists on the project say their work has already shown that
American territory extends at least 350 miles from land well beyond the
traditional 200-mile limit. In the Chukchi Sea, the U.S. may be able to
stake claims even farther out.
But first the United States has to ratify the treaty, something the Coast
Guard and many maritime experts have been calling for.
"We have to join the treaty if we want to participate in carving up the
Arctic," Borgerson said. "At the moment, we don't even have a seat at the
table."
Ships take a pounding
U.S. icebreakers trace their origins to the revenue cutters that policed
the new territory of Alaska. During the Cold War, a large fleet serviced
military outposts and early-warning radar stations in the Arctic, ground
zero for the nuclear faceoff between the U.S. and the Soviet Union.
The 399-foot-long Polar Sea and Polar Star were built in Seattle in the
1970s. The 60,000-horsepower cutters use their contoured bows to ride up on
the ice, crush it with their bulk, then push the chunks aside, Brigham said.
"The noise, the vibration it's really something."
The ships take a pounding, and maintenance budgets have not kept pace, the
National Research Council found. Replacement parts often have to be built
from scratch.
The Coast Guard calls the old icebreakers "operationally challenged."
Borgerson puts it more bluntly. "They're geriatric. Moribund," he said.
"It's just like a car. You can't drive a car for 300,000 miles ... and
expect it's going to be in great condition."
The National Science Foundation, the icebreakers' main "client," took
control of their budgets a few years ago. In 2006, the foundation
temporarily hired a Russian icebreaker to open the route to McMurdo Station
in Antarctica.
The ship broke a propeller, and the Polar Star was dispatched from Seattle
to assist. Since that mission, the Polar Star has been in "caretaker
status," essentially docked to save money. The Polar Sea remains fully
staffed and operational.
Even if work started tomorrow on new icebreakers, it would be 10 years
before they're ready to launch, said Jacqueline Grebmeier, a University of
Tennessee polar researcher who served on the National Research Council
panel.
"If people think it's important to have these ships," she said, "some
decisions need to be made now."
Sandi Doughton: 206-464-2491 or sdoughton@seattletimes.com
xxxxxxxxxxxxxxx
Houston Chronicle
September 20, 2007
http://www.chron.com/disp/story.mpl/front/5152757.html
Front page
Sept. 20, 2007, 6:10PM
FBI agents
taped Alaska Sen. Ted Stevens
as part of corruption sting
By MATT APUZZO
Associated Press
WASHINGTON The FBI, working with an Alaska oil contractor, secretly taped
telephone calls with Sen. Ted Stevens as part of a public corruption sting,
according to people close to the investigation.
The secret recordings suggest the Justice Department was eyeing Stevens long
before June, when the Republican senator first publicly acknowledged he was
under scrutiny. At that time, it appeared Stevens was a new focus in a case
that had already ensnared several state lawmakers.
The recorded calls between Stevens and businessman Bill Allen were confirmed
by two people close to the case who spoke on condition of anonymity because
the investigation is still under way. They declined to say how many calls
were recorded or what was said.
Allen, a wealthy businessman and Stevens' political patron, agreed to the
taping last year after authorities confronted him with evidence he had
bribed Alaska lawmakers. He pleaded guilty to bribery and is a key witness
against Alaska legislators. He also has told prosecutors he paid his
employees to renovate the senator's house.
In July, FBI agents raided that house in the Anchorage suburb of Girdwood.
Stevens has denied any wrongdoing and said he paid every bill he received
for the project.
Allen testified in federal court last week that he called several people at
the FBI's behest.
"It's been a lot of work," Allen said of his efforts for the FBI.
A judge had previously ruled that Allen could not discuss politicians under
investigation.
xxxxxxxxxxxxxxxxxxxx
Houston Chronicle
September 19, 2007
http://www.chron.com/disp/story.mpl/front/5146595.html
Front page
Sept. 18, 2007, 8:33PM
BP settles
with 4 in first civil suit from 2005 blast
The company has about 1,200 cases still pending
By KRISTEN HAYS
Copyright 2007 Houston Chronicle
GALVESTON If Scott Kilbert hadn't been late to a meeting in a trailer at
BP's Texas City refinery more than two years ago, he's sure he'd be dead.
"Thank God one of my employees needed help, or I'd have been there," he said
Tuesday about a trailer packed with 15 of his colleagues that disintegrated
in a March 2005 explosion, launching investigations, lawsuits and a criminal
probe.
"I just watched the trailer disappear," Kilbert said.
A jury won't hear his story or those of three other plaintiffs because their
cases were settled Tuesday amid the first civil trial to emerge from the
blast. The terms of the settlements were undisclosed.
While the company has settled hundreds of more than 3,000 blast-related
lawsuits including all involving deaths about 1,200 are pending, according
to state District Judge Susan Criss.
She has ordered mediation in all those cases, with potential trial dates set
for late October and early November.
BP spokesman Neil Chapman declined to comment on Tuesday's settlements but
reiterated the company's position that BP aims to settle all blast-related
litigation.
Also, BP awaits a resolution to a criminal investigation into what led to
the blast.
The company acknowledged the investigation last year, shortly after the
Occupational Safety and Health Administration issued citations alleging 300
violations of OSHA standards, imposed a $21.3 million fine and ordered
safety improvements at the plant.
The U.S. Attorney's Office in Houston and the Justice Department's
environmental crimes section are running the probe. Representatives from
neither commented Tuesday.
The explosion happened when a tower in a unit that boosts octane in gasoline
overfilled with flammable hydrocarbons, causing a vapor cloud to be released
from a blowdown stack. The cloud ignited, killing those in a trailer 121
feet away and hurting scores more.
BP raised its offer
Brent Coon, lawyer for the plaintiffs who settled Tuesday, said BP
increased its offer to reach the accord. Had the trial continued, he said he
would have presented documents showing that BP misrepresented the status of
equipment to regulators.
"We've never done that," Chapman said later in response.
Coon also said he hoped the trial reinforced the need for BP and the
refining industry "to reflect on what led to this."
In addition to Kilbert, 48, of Bellville, the plaintiffs were Rolando
Bocardo, 41, of Baytown, and Nara and David Wilson, both 44, of Santa Fe.
All were contractors at the plant.
Bocardo declined comment except to say he was glad to have settled, but the
Wilsons said they wanted to testify.
"I'm disappointed that I didn't get to look them in the eye and tell them
off," David Wilson said outside the courtroom, overcome with tears.
Throughout the trial, the plaintiffs contended that BP valued profits over
safety by cutting budgets for maintenance, repairs, upgrades and training in
the years leading up to the explosion. BP acknowledges the budget cuts, but
disputes any link between those reductions and the blast.
However, the U.S. Chemical Safety and Hazard Investigation Board concluded
after a two-year investigation that cost-cutting, a lack of vigilance and a
lack of investment in training and mechanical integrity at the plant paved
the way for disaster.
Also, a panel led by former Secretary of State James A. Baker III said that
even though BP increased funding for its U.S. refineries from 2002 on, after
budgets had been slashed in prior years, it wasn't enough.
'It was hell on earth'
Until this month, BP had consistently sought to settle all cases before
a jury was seated. Lawyers for the company declined comment on why the cases
settled Tuesday progressed further than any others.
But during opening statements, BP lawyers said the plaintiffs were using
minor ailments to get a big payoff.
Coon said Tuesday, which would have been the 10th day of the trial, that he
believed the company's legal team gave less credence to claims of people who
weren't killed or maimed.
"When you see your buddies, co-workers and friends disintegrate before you,
the psychological impact of being thrown into that kind of inferno, it was
hell on Earth no one would understand," Coon said.
BP is pouring $1 billion into upgrades and improvements at the refinery,
including replacement of blowdown stacks with flares, which burn off vapors.
It also is implementing safety improvements recommended by the Baker panel.
Another pending matter is Coon's effort to gain sworn testimony in a
deposition from former BP CEO John Browne, who he claims ordered the
debilitating cost cuts. The Texas Supreme Court is slated to hear arguments
next month on whether he must testify.
Jury warned not to talk
During the trial, several BP executives testified, including former
plant manager Don Parus; Pat Gower, regional vice president of BP North
America; and, by videotaped deposition, Mike Hoffman, former group vice
president of refining and marketing.
Parus testified that he looked into the refinery's deadly history after
three deaths occurred there in 2004, and found 22 deaths in the previous 30
years. A 23rd death came later.
He commissioned a survey of more than a thousand refinery workers that
elicited harsh assessments about the safety culture, with many saying they
thought each day there might be their last.
But Gower and Hoffman testified that they were largely ignorant of that
history until after the blast.
Before she dismissed the four-man, eight-woman jury, Criss ordered them to
speak to no one about the case except attorneys because of pending
litigation.
kristen.hays@chron.com
xxxxxxxxxxxxx
Wall Street Journal
September 19, 2007
BP-Blast Trial
Ends in a Deal
A WSJ NEWS ROUNDUP
September 18, 2007 9:06 p.m.
The first trial stemming from the deadly explosion at a BP PLC refinery in
Texas ended in a settlement, aborting a civil trial that had produced new
details about the 2005 accident.
Terms of the agreement weren't disclosed.
The four plaintiffs had reported injuries from a March 2005 explosion at
BP's Texas City, Texas, refinery that killed 15 contract workers and injured
hundreds more. BP has set aside $1.6 billion to resolve claims from the
accident, which spawned numerous government probes and played a role in a
corporate shake-up at the British energy company.
BP still faces some 1,200 cases relating to the accident. State Judge Susan
Criss told a court in Galveston, Texas, that she would meet next week with
attorneys from both sides to discuss the status of remaining cases. Judge
Criss's court docket still contains additional BP cases for later in 2007.
Brent Coon, a Beaumont, Texas, attorney for the plaintiffs, who has led the
litigation against BP, said talks between the two sides intensified over the
last month. Mr. Coon said he has settled 200 cases in addition to the four,
leaving him with fewer than a dozen unresolved cases.
BP spokesman Neil Chapman declined to comment on how the litigation was
going, but he said the latest agreement reflects BP's preference to settle
out of court.
The accident occurred after gases spewed from an overfilled refinery unit
and ignited, killing workers stationed in and around a temporary trailer.
Subsequent government and company-sponsored probes have pointed to a variety
of factors, including management lapses and the continued use of a "blowdown
drum," a mechanism that vents gases rather than burning them off.
During questioning of company officials, Mr. Coon, who portrayed the
accident as the result of penny-pinching, zeroed in on BP's failure to
replace company trailers and the blowdown drum.
xxxxxxxxxxxxx
Anchorage Daily News
September 18, 2007
http://www.adn.com/money/industries/oil/story/9311586p-9226569c.html
Alaska's oil flows past $80
PERCEPTION:
Global supply concerns and Fed interest rates are factors, experts say.
By WESLEY LOY
wloy@adn.com
Published: September 18, 2007
Last Modified: September 18, 2007 at 04:27 AM
Alaska crude oil bulled through $80 a barrel Monday, the highest closing
price ever.
North Slope crude for delivery to West Coast refineries settled at $80.07 a
barrel, up $1.47 from Friday's close.
Global supply worries, coupled with anticipation that the Federal Reserve
today might cut interest rates, fueled the spike in oil prices, analysts
said. Lower interest rates would spur the economy and, in turn, oil and
gasoline consumption.
Alaska oil prices have been on a comet ride for more than three years,
cracking $40 per barrel in May 2004 and since then $50, $60, $70 and now
$80.
This latest milestone comes as a tantalizing prelude to a special
legislative session scheduled to start Oct. 18, when state lawmakers could
overhaul the state's oil tax code for the second consecutive year.
The state as well as the three main North Slope oil producers -- Conoco
Phillips, BP and Exxon Mobil -- are raking in billions of dollars in oil
revenue.
But Gov. Sarah Palin and some lawmakers believe last year's tax reforms are
shortchanging the state as oil prices soar. What's more, they say, those
reforms were tainted by a bribery scandal resulting in federal criminal
charges against three former legislators.
Although $80.07 is a new record, the price is still well below
inflation-adjusted highs of about $100 a barrel seen in the early 1980s.
Michael Williams, chief economist with the state Department of Revenue, said
Alaska oil is a small part of a vast and jittery global petroleum market.
Oil traders are basing their buying and selling decisions on a wide range of
factors including the coming winter, when energy needs rise; news that oil
inventories have fallen in recent weeks; an OPEC production hike that won't
take effect until Nov. 1; the ever-present threat of political strife in the
Middle East and other oil provinces; and today's Fed announcement on
interest rates.
All that has prompted traders to bid up prices as they seek to lock in
supplies of oil.
"People's perception of the future is what guides their behavior. And that's
what's going on here," Williams said.
The state government depends overwhelmingly on oil revenue from taxes and
royalties, and the higher the price, the better for state coffers.
This spring the revenue department predicted oil would average $54.72 per
barrel for this fiscal year, which began July 1, and prices so far are
running substantially higher than forecast, Williams said.
But high prices don't tell the full story.
The other side of the coin is oil production, and lately North Slope output
has been running about 10 percent lower than forecast, Williams said, taking
some of the bloom off the high-priced rose.
The state projected average production for this year of 764,000 barrels per
day. But so far this month, production has averaged less than 600,000
barrels daily, due in part to a processing plant shutdown in the giant
Prudhoe Bay field and a fire in the Lisburne field.
Williams said he doesn't know if oil prices will climb even higher, but he
doubts such lofty prices are sustainable. For one thing, he said, the world
has no shortage of petroleum. And technology advances are driving higher oil
recovery and greater fuel efficiency.
Find Wesley Loy online at adn.com/contact/wloy or call 257-4590.
Xxx
http://www.adn.com/news/politics/fbi/kott/story/9312345p-9226555c.html
Kott
trial exposes Veco political maneuvering
PROSECUTION
RESTS: From pig roasts to political polls, former V.P. shines light on
firm's spending.
By RICHARD MAUER and SEAN COCKERHAM
Anchorage Daily News
Published: September 18, 2007
Last Modified: September 18, 2007 at 04:13 AM
Audio: Bill Allen
testimony and FBI surveillance tapes
http://community.adn.com/adn/node/110527
Former Veco vice president Rick
Smith was at the center of company fundraising, whether it was organizing
the annual pig roasts for Rep. Don Young or one of the many golf tournaments
where he turned checks into cash under a special arrangement with the
Buckaroo Club in Spenard known as the "Phony Account."
Smith concluded two days of testimony Monday as a government witness in the
federal corruption trial of former House Speaker Pete Kott, R-Eagle River.
The government later wrapped up its case, with Kott's attorneys expecting to
present their defense starting this morning and running through Thursday.
After the jury was dismissed for the day, U.S. District Judge John Sedwick
rejected a defense motion to throw out the case against Kott. He said the
government had provided ample evidence to support its charges of bribery,
extortion and conspiracy.
The day also provided an inside look into how Veco apparently broke state
law by hiring Anchorage pollster David Dittman to conduct a poll for Kott in
2006. Dittman, who took the stand after Smith, said he suspected the Veco-paid
poll amounted to an illegal campaign contribution from the company to Kott,
but decided it wasn't his business to worry about it.
Until it was sold 11 days ago on the eve of Kott's trial, Veco was an
Alaska-based oil field services company. Its former chairman, Bill Allen,
was among the most politically active businessmen in the state.
Kott's trial resumed Monday with Smith on the witness stand under
cross-examination by Jim Wendt, the chief defense counsel.
Smith began work at Veco in 1989 as a logistics expert in Veco's cleanup of
the Exxon Valdez oil spill. Rising to vice president of community and
government affairs, Smith said his most recent annual salary was $165,000
plus a bonus ranging from $20,000 to $80,000. He was also illegally
reimbursed for campaign contributions totaling $20,000 to $50,000 a year, he
said.
The corruption investigation, centered on Veco and its relationships with
politicians, brought an end to his employment in May, but his severance
package was worth $384,000. Veco continued to pay his legal bills until CH2M
Hill bought the company. He settled for a one-time lump-sum payment of
$500,000 for lawyers but can keep any money left over, he said.
Smith learned he was busted on Aug. 31, 2006, the day after Allen agreed to
work for the government. Smith said he got an early morning call from Allen,
who asked him to come to his home as soon as he could.
He got to Allen's door about 9 a.m.
"I got some people you need to talk to," Allen said, then left. Two FBI
agents approached Smith.
"They sat down and had a conversation with me, showed me the video and audio
evidence they had accumulated and talked about what would happen to me if
they were to prosecute and indict me," Smith testified.
He caved quickly and agreed to cooperate. Both he and Allen have pleaded
guilty to bribery, extortion and conspiracy and face about 10 years in
prison.
Wendt attempted to attack Smith's credibility by bringing up the dozens of
charitable golf tournaments he ran over the years and his odd arrangements
with the Buckaroo Club, a Spenard bar.
"The business relationship you had with them was to launder money, isn't
that true?" Wendt asked.
Smith denied his conduct was illegal. He said he'd bring tournament checks
from participants to the bar, which would cash them so he had money to pay
expenses. Wendt suggested the amount totaled in the hundreds of thousands of
dollars, and Smith didn't deny it. He also didn't deny that he called his
arrangement the "Phony Account."
"Didn't the owners of the Buckaroo warn you that the IRS would catch up to
you some day?" Wendt said.
"I don't recall," Smith said.
Smith said that for more than 10 years he organized the annual pig roasts
that raised money for Don Young's campaigns. They were major affairs,
attended by 200 to 400 people and catered by the Marx Bros. Cafe. The cost
was $10,000 to $15,000, he said. He wasn't asked whether Young's campaign
reimbursed the full cost.
Smith acknowledged he was the Veco employee who supervised the payments of
$30,000 to Tom Anderson when Anderson served in the state House -- a "sham
contract," in Wendt's words.
"We never got any work out of it," Smith said. "I asked him to work. It
didn't happen."
Anderson was convicted in July of taking bribes to do the bidding of another
company that wanted to build a private prison in Alaska.
Taking his turn in the witness stand, pollster Dave Dittman said Veco paid
him to conduct polls for candidates, including Kott and then-Gov. Frank
Murkowski. Such corporate-funded polls for candidates are illegal, according
to the head of the Alaska Public Offices Commission.
Dittman indicated on the stand that he did have some concerns about the
legality of the polls.
"I remember thinking that 'Oh, I hope you guys don't get yourselves in
trouble over this,' " Dittman testified, speaking about Veco paying $2,750
for the July 2006 Kott poll. "I knew it was a corporate contribution; it
would exceed the maximum contribution. I also felt they were big boys, had
been around for a while and probably knew what they were doing."
Dittman also testified that he conducted a $20,000 poll for then-Gov. Frank
Murkowski in April 2006. Veco executive Rick Smith paid for that poll,
Dittman said on the witness stand.
"This one was initiated by either Jim Clark or the governor," Dittman
testified. "The governor was very unpopular at the time and there was some
question of whether he would run."
Clark, who was Murkowski's chief of staff, did not return a phone message
seeking comment. Dittman said in an interview he thinks the poll could have
been legal because Murkowski was not a declared candidate at that time.
Brooke Miles, executive director of the APOC, said that is a gray area.
Dittman also said on the witness stand that Veco paid in June 2006 for a
"gubernatorial primary poll" and one for state Senate District N, where
then-Sen. Ben Stevens was trying to decide whether he had a chance to retain
his seat.
Dittman testified he has done "four or five" political candidate polls for
Veco over the past few years. In the later interview, Dittman said he could
not recall any other companies that had paid for him to do candidate polls
within the past several years.
Find Richard Mauer online at adn.com/contact/rmauer or call 257-4345.
Xxx
http://www.adn.com/news/politics/fbi/kohring/story/9312347p-9226559c.html
Defense disputes evidence from Kohring's FBI conversations
EVIDENCE: Lawyer asks to stifle material from search of office.
By LISA DEMER
ldemer@adn.com
Published: September 18, 2007
Last Modified: September 18, 2007 at 04:15 AM
A battle is being fought over evidence in the case against former Rep. Vic
Kohring, but that's just one of the twists.
At issue: whether prosecutors can use materials seized and statements made
by Kohring during the Aug. 31, 2006, search of his legislative office in
Wasilla.
His lawyer, John Henry Browne of Seattle, says they didn't get anything
incriminating, but he is still fighting to stifle everything from the
search. Kohring, a Republican elected seven times, talked with FBI agents
for hours that day.
One revelation came after the hearing. Browne told reporters that he
intended to file a motion within the next two weeks to dismiss the charges
based on what he called improper interference by state Sen. Fred Dyson,
R-Eagle River.
Kohring's trial is set to begin Oct. 22. He is charged with conspiracy,
extortion and bribery. He is accused of accepting money from Veco Corp.
executives in order to push the company's interests on oil taxes and a
natural gas pipeline.
According to an FBI report filed in court by his attorney, Kohring told
agents:
• He had asked for money for himself personally and for his political
campaigns from Veco executives Rick Smith and Bill Allen, and also asked
Smith about borrowing or renting a truck. The campaign contributions were
properly reported, he said.
• He told agents about regularly meeting and dining with lobbyists while the
Legislature was in session. "He likes receiving free meals and drinks from
lobbyists," the FBI summary of the Aug. 31 interview said.
• Kohring had a $2,700-a-month consulting contract with developer Marc
Marlow but couldn't describe his specific duties.
• Earlier, Kohring had asked Allen if Veco would hire his nephew as an
intern. Veco did so. Kohring told agents he thought it was a great benefit
for an 18-year-old to be paid $16 an hour.
In another revelation, former Cornell Cos. consultant Frank Prewitt and
former state Rep. Tom Anderson secretly recorded conversations with Kohring
for the government, according to a letter sent this summer by federal
prosecutors to Browne. It was just filed in court. Anderson was convicted in
July of taking bribes to do the bidding of Cornell, but it came out at his
trial that he at one point was cooperating with the FBI. Prewitt was working
undercover for the FBI to collect information against Anderson and, it's now
known, against Kohring.
The letter says both Prewitt and Anderson made recordings for the government
in the case voluntarily, so no court authorization was needed.
KOHRING'S VOTE RECORD
Browne said all the allegations can be explained and that what's
important is this: Kohring didn't vote Veco's way on the oil tax. A check of
legislative records shows that was true on certain key votes. When Veco
shifted strategy to support a compromise tax rate in an August 2006 special
session, Kohring voted against it.
Browne said he learned only Thursday from testimony in the Kott case that
Dyson had been helping the FBI investigate corruption in the Alaska
Legislature. That makes him an agent of the government, Browne said. He
called Dyson "a lapdog."
Browne said he takes issue with Dyson trying to persuade Kohring to at least
talk to the feds, if not take a plea deal. He said he believes that the
government could have been trying to interfere with Kohring's right to
counsel.
But Dyson said later that he just was trying to help Kohring as a friend and
wasn't asked to do so by prosecutors or the FBI.
As Browne tells it, a legislative aide to Dyson contacted an aide to Kohring
to say the FBI had contacted Dyson's office and that Kohring would be
"stupid to go to trial."
On Aug. 6, Craig Suffian, an attorney who works for Browne, sent Dyson an
e-mail saying there may have been "an end-run around the right to counsel."
In his e-mail response the same day, Dyson said he wasn't trying to do that.
"My sense of the FBI investigations is that it is not a witch hunt and that
they mostly want to nail the really bad guys who did intend to distort the
Alaskan Legislative process," Dyson wrote.
He believed that Kohring never meant any harm and possibly could "avoid a
good deal of stress and bad press at a trial by at least sitting down with
the Feds and see if an attractive alternative was possible," he said in his
e-mail. He said he figured Kohring's lawyers would go with him to talk to
prosecutors.
Browne provided a copy of the e-mail exchange.
So is Kohring negotiating? Browne said that's something defense lawyers are
barred from talking about.
FBI TESTIMONY
During the three-hour hearing on Monday, three FBI agents testified
about the search of Kohring's office.
Five agents were involved, along with an evidence technician. But while the
agents were armed, their weapons were concealed and never drawn, agents
testified. They wore business clothes, not FBI raid jackets, and drove
unmarked cars. While the outer door to the office was locked, it opened from
the inside and Kohring was always free to go, agent Alan Vanderploeg
testified.
They had a warrant, signed by federal Magistrate Judge John D. Roberts on
Aug. 29, 2006.
But the warrant was never executed. Agents wanted Kohring to agree to the
search, which he did.
Kohring's lawyer maintains that a search cannot be voluntary if agents tell
the subject they have a warrant.
Kohring is one of six former or current legislators whose offices were
searched that day. Agents testified they were instructed to get consent for
the searches as "a professional courtesy."
But it also made it more difficult for defense lawyers to see the written
support for the search warrant -- the application and the FBI agent's
detailed affidavit. The search warrant and affidavit were sealed.
Browne told Roberts that he still wanted to see the affidavit and that
prosecutors hadn't turned it over. At the hearing, prosecutors agreed to
provide it, as long as he kept it confidential.
Now it is up to Roberts to recommend to District Judge John Sedwick whether
the evidence taken in the search, and the statement that Kohring gave, can
be used against him.
Find Lisa Demer online at adn.com/contact/ldemer or call 257-4390. Reporter
Tom Kizzia contributed to this story.
Xxxx
http://www.adn.com/opinion/view/story/9312339p-9227306c.html
Speak
up, senator
Testimony
raises questions; Alaskans deserve answers
Published: September 18, 2007
Last Modified: September 18, 2007 at 02:53 AM
Bill Allen, former chairman of Veco, testified last week that he paid for
some of the labor and provided some materials for the remodeling of U.S.
Sen. Ted Stevens’ home in Girdwood.
Sen. Ted Stevens has said little about the FBI investigation into the
remodeling, which is part of a wide-ranging corruption probe. He has said
only that he paid every bill he was sent.
Even before Mr. Allen’s testimony at the corruption trial of former state
Rep. Pete Kott, the next question was obvious:
Were some bills never sent to Sen. Stevens, and paid by someone else?
According to Mr. Allen, his oil-field services company picked up the tab for
some furniture. Employees on Veco’s payroll did some of the work. And Mr.
Allen said Veco might have paid the bills of some contractors on the job,
but he wasn’t sure.
Sen. Stevens has refused to say more about the remodeling deal, in part
because he refuses to comment about an ongoing investigation. Any lawyer
would advise silence for his client in these circumstances. But Sen. Stevens
has more than just an obligation to himself here. He has an obligation to
clear the air with his constituents, the people of Alaska who have elected
him to office, the people for whom he works.
If he wasn’t getting all the bills, did he know that? Did he make sure he
was paying for all services? Why did he have his home remodeled through Veco,
a company that was not in the home building or remodeling business?
Mr. Allen is an admitted felon, so his word may not be the coin of the
realm. But his account under oath naturally makes Alaskans wonder about the
legitimacy of the Girdwood work - did Sen. Stevens accept gifts and services
and, if so, did he violate federal tax laws and Senate ethics rules?
No one has suggested, nor is there any evidence, that Mr. Allen received any
favors from Sen. Stevens in return for his work. But the evidence does
suggest that an influential Alaskan was taking care of the senator.
Sen. Stevens hasn’t been charged with anything. But the Girdwood deal and
Mr. Allen’s testimony have raised questions that Alaskans deserve to have
answered, not with stonewalling and anger, but straight up. The Alaskan of
the Century gets no free pass - he’s still accountable to those who elect
him, and not just every six years.
BOTTOM LINE: Sen. Ted Stevens owes Alaskans an explanation, the sooner the
better.
Steer clear
Sen. Stevens should
abstain from key FBI, justice agency votes
Sen. Ted Stevens is under investigation
by the FBI.
Sen. Stevens also sits on the Senate Appropriations Committee, which has a
strong say in the funding of that agency along with the rest of the federal
government.
Sen. Stevens should steer clear of any role with regard to FBI funding and
abstain from voting on it.
He also should steer clear of the Senate’s advise-and-consent role on the
nomination of a new U.S. attorney general. That individual will head the
Justice Department, which oversees the FBI. The attorney general would
likely have a role in discussions about the investigation of Sen. Stevens
and what, if any, further action the evidence suggested.
Finally, should the Internal Revenue Service take a look at the Girdwood
remodeling project, the senator should abstain from any appropriations
decisions about that agency.
Let’s reiterate: Sen. Stevens has not been charged with anything. The fact
that he is involved in a federal investigation is not an indictment. His
service to Alaska since 1968 entitles him to a generous benefit of the
doubt.
But the investigation creates a conflict between the senator’s appropriation
duties and the budgets of one or more federal agencies - and with his
prospective vote on a new attorney general. The subject of an investigation
shouldn’t have a say in an investigating agency’s budget or personnel.
Sen. Stevens should steer clear of those votes as he lets the investigation
take its course.
BOTTOM LINE: As long as he’s the subject of a federal investigation, Sen.
Stevens should abstain from votes and debate on the investigating agencies.
xxxxxxxxxxxxxxxxxx
Anchorage Daily News
September 16, 2007
http://www.adn.com/news/politics/fbi/kott/story/9308033p-9222390c.html
Former
Veco VP has more to reveal
Smith names
bribe takers; to testify again Monday in trial of Pete Kott
By LISA DEMER
ldemer@adn.com
Published: September 16, 2007
Last Modified: September 16, 2007 at 04:09 AM
Witnesses in the corruption trial of former state Rep. Pete Kott have
provided jarring testimony about secret dirty deals, payoffs to Kott, and
the remodel of U.S. Sen. Ted Stevens' Girdwood home.
Most of the revelations have come out through dozens of secretly made
recordings of cell phone calls and meetings in Suite 604 of the Baranof
Hotel, the Juneau headquarters of Veco Corp. when the Legislature was in
session. Kott is charged with taking bribes from Veco executives and
conspiring with them and others to pass a new oil tax favored by North Slope
oil producers in 2006.
The trial wrapped up its eighth day Friday and continues Monday.
Highlights so far:
WEDNESDAY, SEPT. 5
Just before the trial begins, U.S. District Judge John Sedwick splits
Kott's case from that of his co-defendant, former Rep. Bruce Weyhrauch of
Juneau. The two had been scheduled to be tried together. The split allows
Kott's case to move forward while the government appeals a ruling excluding
key evidence against Weyhrauch.
Jury selection for Kott begins. A few dozen people in the pool of 120 were
weeded out earlier because of hardships, biases or other reasons revealed in
written questionnaires.
THURSDAY, SEPT. 6
The process of picking a jury continues. It's slow going with
prospective jurors questioned one by one about what they already knew about
the case through news reports.
SEPT. 7
Just before noon, a jury of 10 women and two men, plus four
alternatives, is picked. Eight of the regular jurors are from Anchorage. One
is from Eagle River, which Kott represented for 14 years in the House.
Another is a public radio talk show host from Kodiak. She comes back into
the story later.
MONDAY, SEPT. 10
Prosecutor Nicholas Marsh, from the U.S. Justice Department's Public
Integrity Section, and defense attorney Jim Wendt outline their versions of
the case in opening statements to the jury, and the government begins to
introduce the FBI's secretly made recordings into evidence.
Marsh says that Kott had betrayed the public trust by pushing an oil tax
favored by industry in exchange for money, a Veco-paid-for political poll
and the promise of a job from the company. In one of the recordings, Marsh
tells jurors, Kott says "I sold my soul to the devil."
Wendt tells jurors the government has twisted what happened. Kott was just a
blue-collar Republican working hard to get what most Alaskans wanted: a
natural gas pipeline. There's nothing illegal about teaming up with
lobbyists, the oil industry or others to work for a common goal, Wendt says.
"About the only ones that I can trust is you and ol' Ben Stevens," former
Veco chief executive Bill Allen says to Kott in one of the recordings played
that day. Stevens is the former Senate president.
TUESDAY, SEPT. 11
The entire day, an FBI agent from Cincinnati is on the witness stand to
provide background as prosecutors introduce many more recordings into
evidence. The cell phone conversations and meetings in Suite 604 reveal a
crude world of political deal-making that operated on the fringes of the
Alaska Legislature.
After a key vote on the oil tax rate on May 7, 2006, Kott goes to Suite 604
to celebrate with Allen, former Veco vice president Rick Smith, and others.
In a grainy video, they clink glasses and Kott boasts about how he got the
votes. "I use 'em and abuse 'em," he says of his colleagues.
WEDNESDAY, SEPT. 12
The government plays more recordings in the morning and then Allen takes
the witness stand. It's the first time he's talked publicly about his role
in the corruption investigation since it burst into public view more than a
year ago. The courtroom fills with spectators.
Under questioning by prosecutor James Goeke, Allen tells about a scheme to
funnel nearly $8,000 to Kott for his son so his son could take off from work
to help on Kott's re-election campaign.
Allen also explains that when Kott keeps talking about going to work as a
warden for a prison that Veco was building in Barbados, it's just a running
joke. But Veco's promise to give Kott a job as a lobbyist once he was out of
the Legislature was real, Allen testifies.
THURSDAY, SEPT. 13
Allen remains on the witness stand all day. He tells jurors he has been
cooperating with the FBI since Aug. 30, 2006, when he was confronted by
agents while with Sen. Fred Dyson on the way to breakfast. On Aug. 31, teams
of federal agents raided offices of six legislators around the state. Allen
says he pleaded guilty to bribing three: Kott, former Rep. Vic Kohring and
Stevens. He does not mention Weyhrauch. Much of the day, defense lawyer
Wendt pushes Allen to say that what the government calls bribes weren't that
at all. But Allen doesn't go along.
FRIDAY, SEPT. 14
The most startling moment of the trial comes when Allen reveals that he
or Veco provided workers and material for the 2000 building project that
doubled the size of Ted Stevens' residence in Girdwood. Wendt, still doing
the cross-examination, was seeking to discredit Allen and downplay the role
that Kott played in the scandal.
Later in the day, former Veco vice president Rick Smith takes the stand. He
also testifies about whom he pleaded guilty to bribing: Kott, Kohring,
Weyhrauch, Stevens and one more, Sen. John Cowdery. In Smith and Allen's
charging documents, Cowdery is believed to be Senator A, a member of the
conspiracy, though not among the group that was bribed.
Also on Friday, juror Lisa Polito of Kodiak is dismissed after the judge
learns she wrote a letter to the editor in October 2006 that described
Veco's campaign contributions as "scandal-tainted money." One of the
alternates, a child-care worker from Anchorage, is moved to the panel of 12
regular jurors.
What's next: Smith continues on the stand Monday, followed by more
government witnesses. The defense is expected to begin presenting its case
on Tuesday. That's expected to last at least a couple of days.
Find Lisa Demer online at adn.com/contact/ldemer or call 257-4390.<
xxxxxxxxxxxxxxx
Anchorage Daily News
September 15, 2007
http://www.adn.com/money/industries/oil/story/9304224p-9218659c.html
Review
board yanks Shell pollution permits
FEDS UNDER
FIRE: The U.S. regulators "got sloppy," says one critic.
By WESLEY LOY
wloy@adn.com
Published: September 15, 2007
Last Modified: September 15, 2007 at 01:44 AM
Shell hit a new snag Friday in its quest to drill for oil in the Beaufort
Sea.
A Washington, D.C., board that reviews U.S. Environmental Protection Agency
actions found grounds to withhold air-pollution permits the EPA had granted
Shell in June for its two diesel-burning offshore drill ships.
The decision marked the second time in two days that Shell was frustrated in
its aims to start a $200 million drilling campaign -- and that federal
regulators were called into question for approving Shell's plans.
"Shell had a very tight schedule leading up to its first drilling season,
and it looks like more than one federal agency went out of its way to
accommodate that schedule. Unfortunately, the agencies got sloppy, they
didn't follow the rules, and they got caught," said David Harding, spokesman
for the North Slope Borough.
The borough and environmental groups petitioned the EPA's Environmental
Appeals Board to review air-pollution permits the EPA had granted Shell.
An EPA spokesman said Friday the agency had no immediate comment on the
ruling.
On Thursday, a federal court refused to back off its order forbidding any
drilling until a case brought by the borough, Native whale hunters and
environmentalists plays out.
The groups argue that another federal agency that regulates the oil
industry, the Minerals Management Service, failed to fully study the risks
to endangered bowhead whales and the environment before approving Shell's
exploration plan.
The legal and permitting snags almost certainly have dashed Shell's goal to
drill this year -- a costly blow considering the large fleet of drilling and
support ships the company has had on standby most of the summer.
Among the complaints petitioners lodged with the Environmental Appeals Board
was that the EPA shouldn't have treated individual drill sites as separate
"minor" sources of pollution. Rather, they argued, the agency should have
made Shell seek a tougher "major source" permit for the drilling operation
as a whole.
In its 69-page decision, the appeals board did not rule that the minor
permits were improper, but it criticized the agency for not adequately
explaining why it had issued them. It ordered the EPA's Seattle-based
regional office to reconsider the Shell permits, and possibly take public
comments.
The upshot for Shell is, it still doesn't have the air-pollution permits it
needs to drill.
But Shell, in a statement Friday, saw the ruling as mostly positive, saying
the appeals board "upheld the permitting approach" the EPA used and found
fault with only "one discrete issue."
"Shell is confident that EPA can address that issue in a timely manner."
Find Wesley Loy online at adn.com/contact/wloy or call 257-4590.
Xxxx
http://www.adn.com/news/politics/fbi/story/9305230p-9218615c.html
Allen
says Veco paid for part of Stevens' remodel
BOMBSHELL:
Courtroom gasps could be heard during testimony.
By RICHARD MAUER and LISA DEMER
Anchorage Daily News
Published: September 15, 2007
Last Modified: September 15, 2007 at 02:41 AM
Former Veco chairman Bill Allen might have been on the witness stand to
present bribery evidence against a state legislator, but the biggest shock
of the day -- perhaps the entire trial -- was his assertion Friday that he
or his company financed a substantial portion of the remodeling of U.S. Sen.
Ted Stevens' Girdwood home.
As he testified for the third day in the bribery, extortion and conspiracy
trial of former House Speaker Pete Kott, R-Eagle River, gasps emerged around
the crowded courtroom when Allen admitted he provided workers and some
material for the 2000 building project that doubled the size of Stevens'
official residence.
And that was only one of the revelations outside the scope of Kott's
specific charges.
Another former Veco official, Rick Smith, followed Allen to the witness
stand and was asked by one of the prosecutors, Nicholas Marsh, to name the
legislators whom he bribed.
"That would be Vic Kohring, Pete Kott and Bruce Weyhrauch," Smith said,
naming three former House Republicans who have already been indicted.
"And the state Senate -- did you plead guilty to bribing anyone in the state
Senate?" Marsh asked.
"That would be Ben Stevens and John Cowdery," Smith responded, naming two
Anchorage Republicans. One is Sen. Ted Stevens' son and the former Senate
president, the other a current sitting senator.
Smith and Allen were testifying under plea deals they made with prosecutors
in May that required them to work for the government.
Ben Stevens' name surfaced earlier in Kott's trial as an unindicted
co-conspirator, but Cowdery, believed to be "Senator A" in Smith's and
Allen's charging documents, hadn't been named in public proceeding.
In Smith's and Allen's charging documents, Senator A was accused of
conspiracy but not bribery. It was unclear whether Smith was confused Friday
or whether he was thinking of events not listed in his plea.
Neither Cowdery nor Ben Stevens have been charged with a crime. They deny
wrongdoing.
Allen's role in the remodeling has been the subject of widespread
speculation since May, when the Daily News reported that it had become part
of the far-reaching FBI investigation into Alaska political corruption. Ted
Stevens denied wrongdoing and the FBI refused to comment, though in July FBI
and IRS agents spent nearly 12 hours searching the house and documenting the
addition.
In response to cross examination by Jim Wendt, Kott's attorney, who was
seeking to discredit Allen and minimize the role that Kott played in the
scandal, Allen testified that one to four Veco employees worked for months
on the project. He also acknowledged Veco paid some of the contractors and
that it supplied some of the furniture.
Allen didn't testify about the value of the services and materials, though
they appeared to represent a substantial portion of the more than $400,000
in illegal payments he admitted making to public officials and their
families.
"One of these allegations is that you helped Sen. Ted Stevens with
remodeling his house in Girdwood, isn't that true?" Wendt asked.
"Uh, yes," Allen said.
"In helping Sen. Stevens remodel his residence, you or Veco paid a number of
bills in remodeling that residence, isn't that true?"
"I, I, I give Ted some old furniture, I don't think it was a lot of
material," Allen said, stammering at first. "There was some labor."
"There wasn't a lot of materials but you paid some labor bills that went
into Sen. Stevens's house?" Wendt continued.
"Yes," said Allen. "It would be Veco employees."
Under rebuttal examination by Assistant U.S. Attorney James Goeke, Allen
said that Veco might have paid the bills of contractors as well -- he didn't
know all the details. Allen then muttered something about a plumber and
"another guy, Augie's company," a reference to Augie Paone, the main
contractor who sent Veco more than $100,000 in bills for his work there.
Paone told the Daily News in May that after he sent his invoices to Veco, he
received checks from Stevens.
Stevens has said he paid all the invoices he was sent.
There was no evidence presented that Allen got anything in return for his
help on the remodeling. At a minimum, Stevens could be facing trouble with
the IRS if Allen provided him with free services and he didn't report the
gift on his taxes, said Adam Winkler, an elections law expert at UCLA.
"There are a host of potentially criminal implications associated with this
kind of behavior," Winkler said.
Before Allen concluded his testimony at 10:15 a.m., Wendt tore into his plea
deal and his motivation for testifying. Allen, 70, said he was facing 10 to
11 years in prison.
"That jail term can be reduced significantly?" Wendt asked.
"Yeah, but, I don't expect that," Allen said. He said the government had
already failed to deliver on one of his requests that it exonerate Veco's
4,000 employees in writing. Allen said he already got as much as he's going
to get: promises that any of his relatives wouldn't be indicted, as long as
he testifies truthfully.
"My family did get in the middle of this mess, so I'm gonna do what I told
(the government) I'm gonna do," Allen said.
Wendt pressed the idea that Allen could still get his sentence reduced.
"You know, I really don't care," Allen said. "I've never asked them for a
damn thing when it comes to my sentence. It'd be whatever happens. My life
is about gone anyway."
"So do you expect this jury to believe you don't care whether you die in a
jail cell somewhere or whether you die in a nice home surrounded by friends
and family?" Wendt said.
"You know, I'm not going to beg them to do anything," Allen said.
Smith rose to be Veco's vice president for government and community affairs
from a job working logistics during the Exxon Valdez oil spill.
In his testimony, Smith several times acknowledged that he knew he was
breaking the law in his dealings with Kott. Most of the case involves the
efforts of Veco to win passage of a state oil-tax change favored by oil
producers in 2006. Smith and Allen said they hoped a low, stable tax would
encourage producers to invest more in declining oil fields, extending their
lives, and build a gas pipeline.
Prosecutor Marsh asked Smith about a March 4, 2006, conversation in Suite
604 of Juneau's Baranof Hotel in which Smith told Allen they were going to
have "get dirty" and produce.
In explaining what was secretly recorded by the FBI, Smith said he meant he
and Allen would do "whatever it would take" to get the new oil tax through
the Legislature. That included giving financial favors and jobs to
lawmakers, Smith testified. And that meant a job for Kott, he said.
In the FBI's video, Smith told Allen they needed to be careful.
"We didn't want to get caught doing anything that might be illegal," Smith
told jurors.
Smith testified about meeting with Kott last July at the Rendezvous bar in
downtown Juneau about how to get money to Kott's son.
In a secretly recorded phone call on July 31, 2006, Smith told Allen he
needed to talk with Kott privately about the matter. Kott's son needed money
because he was helping with Kott's political campaign instead of working in
his flooring business, and his family needed money.
Smith testified that he didn't want Allen "tainted."
"If anyone would get hit with it, it should be me," Smith told jurors.
Wendt questioned him on why they went to a downtown bar if they wanted to
meet in private.
It's a "working class" bar, not a place that lobbyists, oil executives,
legislators and aides hang out, he said.
But if he wanted somewhere private, why not Suite 604, Wendt asked.
Maybe they wanted a cocktail, Smith answered.
It looked like from the FBI surveillance videos that there was plenty of
drinking going in Suite 604, Wendt shot back. The implication was that maybe
Smith wanted to talk about the deal outside the suite for another reason.
Another allegation concerns a political poll for Kott paid for by Veco.
Under questioning by Wendt, Smith said that Veco had paid for at least part
of over 100 polls during his years there to help favored candidates. He
arranged for most of them, when candidates or their aides asked, he said.
For most polls, the candidates paid at least part, he said. For some, Veco
paid the whole thing. That's what it did for Kott, paying Dittman Research
Corp. $2,750, Smith testified.
Yet if Kott or a campaign consultant sought a poll from Veco, wouldn't the
conversation likely have been captured during all the FBI recording? Wendt
asked Smith. After all, an FBI agent estimated that the agency had
intercepted as many as 9,500 calls in a year's time from Smith's cell phone.
"Very good chance," Smith said. But he didn't remember any specific request,
from the FBI transcripts he reviewed or otherwise.
At any rate, he said, he knows he talked with Kott's campaign consultant,
Jerry Mackie, about Veco paying for poll.
Find Richard Mauer online at adn.com/contact/rmauer or call 257-4345. Find
Lisa Demer online at adn.com/contact/ldemer or call 257-4390. Daily News
reporter Jim Halpin contributed to this report.
xxxxxxxxxxxxxxxxxx
Houston Chronicle
September 15, 2007
http://www.chron.com/disp/story.mpl/front/5136885.html
BP
executive testifies workers to blame for explosion
Blast wouldn't have happened if correct procedures were followed, he says
By KRISTEN HAYS
Copyright 2007 Houston Chronicle
A BP refining executive told jurors Friday that a March 2005 explosion that
killed 15 people at a Texas City refinery would not have happened had six BP
employees followed procedure for starting up the unit where the blast
occurred.
"There would not have been an event if they had followed the procedures,"
Pat Gower, regional vice president of BP North America, told jurors in his
third and last day of testimony in the first civil trial to emerge from
blast-related litigation.
BP fired six employees on the unit, including an operator who had worked
12-hour days for a month without a break, Gower acknowledged.
BP said the same thing about two months after the blast, prompting angry
reactions from union leaders, blast victims and others.
They said at the time that it appeared the company laid blame with low- and
midlevel workers while avoiding broader responsibility for more systemic
management problems, such as a lax approach to safety.
"Once past this low-level accountability of hourly people, did you look at
any people higher up on the chain of command who bore higher
responsibility?" plaintiffs' attorney Brent Coon asked.
Kathleen Lucas, operations manager at the plant, "looked at everybody who
reports to her," Gower said.
Defending fired workers
W.E. "Sonny" Sanders, international representative for the United
Steelworkers who worked at the Texas City plant for eight years until 1990,
testified later Friday that the union thought BP unfairly blamed the six
workers who were fired.
He said years of cost cuts, deferred maintenance and other managerial issues
under management control preceded the tragedy.
"They had no ability to get things changed," he said of the fired workers.
Also, higher-level executives, including Gower and three others targeted to
be fired by an internal investigation of the blast, were not terminated.
Gower and Willie Willis, supervisor of the unit where the blast occurred,
remain employed, as does former plant manager Don Parus, who is on paid
leave. Gower's former boss, Mike Hoffman, retired last year.
Gower said he took issue with the findings, particularly a comment he said
was wrongly attributed to him in the report that Willis should be fired. BP
group vice president Wilhelm Bonse-Geuking, whose videotaped testimony is
expected to be played in the trial, led the internal probe.
"The Bonse report captured something I did not say. Willie Willis is one of
the best operating people I know," Gower said under questioning from Coon,
who represents four plaintiffs suing BP in the trial.
Germans become issue
"What you see is the prejudice of Bill Bonse, as a German who thinks
everyone needs a Ph.D. to work in a plant," Gower said.
"Do you have something against Germans, sir?" Coon asked.
Gower said managers at BP's refineries in Germany have high levels of
education, "so when they come here they use their cultural bias to make
decisions." He added, "No, I don't have anything against Germans."
His comment prompted a terse rebuke from state District Judge Susan Criss
outside the jury's presence.
"This is a city built by German immigrants" with many residents of that
country's heritage, "as well as this German judge," she told Gower.
BP lawyer Jim Galbraith sought to soften Gower's comments after the trial
resumed, asking him to identify his nationality.
"Three of my four grandparents are German," Gower replied.
Explaining with models
Under questioning from Galbraith, Gower took on a professorial persona
as he explained how the blast happened, using a model of the unit and an
aerial photo of the refinery.
He also burst into sobs when Galbraith asked him about a death at the plant
earlier this year when a contractor was electrocuted.
But after a lunch break, the tears were gone. And under questioning from
Coon, he returned to the unemotional, matter-of-fact persona he'd had for
more than two days, as he said a BP investigation concluded that the man was
responsible for his own electrocution because he didn't turn off electricity
leading to a lighting fixture he was working on.
"When you have individuals who take shortcuts or put their lives in
jeopardy, we cannot be held accountable for every individual's action,"
Gower said.
Earlier Friday, Gower said BP is pouring $1 billion into repairs and
upgrades at the Texas City refinery, including the elimination of blowdown
stacks like the one that released vapors that ignited.
Very prophetic?
He also acknowledged that the company could have made such investments
before the blast rather than playing catch-up after the disaster.
The spending issue arose as Coon highlighted a survey of Texas City workers
in late 2004 that elicited harsh assessments of the company's commitment to
safety and willingness to forgo upgrades to maximize profits.
"BP is not addressing the leadership culture that will permanently reverse
the lack of operational integrity and is setting TC up for a series of
catastrophic failures," one of the survey answers said.
Gower called the statement "this person's view."
"In fact, it turned out to be very prophetic, didn't it?" Coon asked.
"It looks like it could be called prophetic, I don't know," Gower said.
kristen.hays@chron.com
xxxxxxxxxxxxxxx
Houston Chronicle
September 14, 2007
http://www.chron.com/disp/story.mpl/business/5134150.html
BP
turned down blast-proof trailers
Wood-frames
stayed in Texas City despite 1999 offer, executive testifies
By KRISTEN HAYS
Copyright 2007 Houston Chronicle
GALVESTON A BP refining executive acknowledged Thursday that the company
could have replaced flimsy wood-frame trailers like the one in which 15
contractors died with blast-proof trailers years before the March 2005
explosion at its Texas City refinery.
"Yes, Brent, it would make sense to spend money not to have the loss of 15
lives," Pat Gower, regional vice president of BP North America, told
plaintiffs' attorney Brent Coon matter-of-factly in the first civil trial to
emerge from blast-related litigation.
The issue arose when Coon presented jurors with a copy of a letter Gower
received from a company in September 1999 pitching blast-proof trailers. Gower
said he didn't remember the letter but acknowledged that a notation alerting
then-Texas City process safety head Bill Ralph to what it said was written in
his handwriting.
He said he thought Ralph would like to know he had an option to replace
wood-frame trailers on the plant site, and "this was the first time I was
aware these kinds of buildings were out there."
With the letter came a cost list that showed a price of $33 a day per trailer
with a 10-year lease, or $72 per day on a month-to-month basis. But BP didn't
buy blast-proof trailers.
Company policy dating back to 1995 said trailers couldn't be closer than 300
feet to processing units, according to a document Coon showed jurors Thursday.
Gower said the company had done a study on trailer placement, but the
necessary managers hadn't signed off on it before they were placed and used by
workers.
"In hindsight, we placed people in trailers where they never should have
been," Gower said.
The 15 workers were in a trailer 121 feet from the processing unit that
exploded.
Gower also testified Thursday that he took issue with an internal company
probe that skewered him for failing to stay on top of safety issues at the
refinery before the explosion.
Gower was one of four BP executives targeted to be fired for management
failures in an internal report of the probe completed in February. He remains
in his pre-blast role, and he said Thursday he disagrees with the report's
findings.
Of the other three, Gower's former boss, Mike Hoffman, group vice president of
refining and marketing, retired last December. The other two who worked at the
Texas City plant remain on BP's payroll, including former plant manager Don
Parus, who has been on paid leave since May 2005.
Gower said his current boss assured him that BP would not "act on the report
as it relates to me."
The report said Gower was or should have been aware of unreported fires,
leaks, emergency shutdowns and reliability issues at the plant and "didn't
adequately appreciate process safety implications of the dilapidated state of
the Texas City refinery." Process safety involves operation of equipment and
handling of hazardous materials, as opposed to personal safety, which involves
prevention of slips and falls.
'A snapshot in time'
Gower said that management was addressing issues there in the weeks before
the blast, "but I don't believe the units were in a dilapidated state."
Gower also said he disagreed with the probe's focus on managers at the time of
the blast, rather than decisions made regarding maintenance, repairs and
upgrades in the years before the blast when BP was cutting budgets.
"I agree that the report looks at a snapshot in time instead of looking at
what occurred over a long period of time," he said.
Gower worked at the Texas City plant in the 1980s, when it was owned by Amoco,
and again in 1999-2000 after BP had acquired Amoco. He acknow- ledged that BP
in 1999 ordered budget cuts of 25 percent by 2001.
Under questioning from Coon, who represents four plaintiffs suing BP in the
case, Gower said it wasn't clear to him that there had been a history of
underinvestment at the plant, nor did he recall any discussion of whether
enough money was available to keep the refinery's units in good working order.
Cuts included reductions in training, maintenance supervisors, safety programs
and pro- ject engineers, documents presented to the jury showed.
"There were programs that disappeared. I didn't know what they were," Gower
said.
BP lawyers have yet to question Gower.
Link of blast, cuts disputed
Upcoming witnesses include W.E. "Sonny" Sanders, international
representative of the United Steelworkers, and videotaped testimony from John
Manzoni, former head of BP's refining division who resigned to be CEO of a
Canadian oil and gas producer earlier this year.
Until now, BP has consistently settled blast-related lawsuits. Of about 3,000
filed, at least 1,350 have been settled, including all related to deaths.
Remaining cases largely involve injuries and property damage.
The plaintiffs in the trial contend that BP valued profits over safety by
cutting budgets for maintenance, repairs, replacements and training in the
years leading up to the explosion. BP acknowledges having imposed budget cuts
but disputes any link between those reductions and the blast.
kristen.hays@chron.com
xxxxxxxxxxxxxxxxxxxxxxxx
Anchorage Daily News
September 13, 2007
http://www.adn.com/front/story/9298834p-9213425c.html
Ruling
may disperse Shell's drilling fleet over the horizon
With no Beaufort project, contract workers will be let go
By WESLEY LOY
wloy@adn.com
Published: September 13, 2007
Last Modified: September 13, 2007 at 03:16 AM
Shell will start releasing contract workers and soon could disband its
offshore drilling fleet due to a federal court order blocking the oil
company's plans to drill exploratory wells this fall in the Beaufort Sea.
The retrenchment does not mean Shell is abandoning its drilling goals,
company spokesman Curtis Smith said Wednesday.
The Dutch energy giant is moving ahead with offshore seismic testing in the
Beaufort as well as in the Chukchi Sea, he said.
"This is just the first year in a multiyear exploratory program," he said.
"Shell is committed to Alaska."
Several organizations including the North Slope Borough, the Alaska Eskimo
Whaling Commission and environmental groups on Aug. 15 won an indefinite ban
on drilling from the 9th U.S. Circuit Court of Appeals in San Francisco. The
groups are arguing that industrial noise and potential spills could hurt
migratory whales and the Beaufort Sea ecosystem.
The court order idled Shell's two drilling ships, one anchored at Dutch
Harbor and another in western Canada, and now the company will begin a
"staged release of contract personnel," as no drilling appears likely this
year.
For its $200 million exploration program, Shell had recruited and trained
more than 700 people, including 350 Alaskans, Smith said.
The people generally are employed by contractors Shell hired. Smith said he
couldn't specify how many would be let go.
Many of the jobs affected are associated with the drill ship Frontier
Discoverer, now anchored at Dutch Harbor along with five support vessels
including icebreakers, Smith said.
The Discoverer, under long-term contract to Shell, likely will sail away
soon to a drilling job elsewhere in the world, he said.
Shell has asked the San Francisco court to lift its no-drilling order, and
if that happens quickly, the company could reactivate the Frontier
Discoverer or use its other drill ship, the Kulluk, to probe its Sivulliq
prospect, thought to hold hundreds of millions of barrels of oil.
The prospect is west of the Arctic National Wildlife Refuge about 16 miles
offshore.
The seismic testing involves a different set of ships, including the Gilivar,
a seismic vessel operated by Shell contractor WesternGeco. Several support
boats will carry people and equipment to observe and listen for whales and
other marine mammals, Smith said. Aircraft also will be used.
"Shell regrets it must take this action," the company said of the job cuts.
The company said talks are "ongoing" with North Slope residents who question
the effects of drilling on subsistence whale hunts.
Find Wesley Loy online at adn.com/contact/wloy or call 257-4590.
Xxxx
http://www.adn.com/news/politics/fbi/kott/story/9298937p-9213454c.html
Allen
counted on having friend in the Legislature
He testifies that he gave money, favors to oil-tax ally in Juneau
By RICHARD MAUER and LISA DEMER
Anchorage Daily News
Published: September 13, 2007
Last Modified: September 13, 2007 at 04:25 AM
More than a year after he emerged as the central figure in the Alaska
corruption investigation, former Veco chairman Bill Allen at last took the
witness stand Wednesday in the trial of former House speaker Pete Kott and
began recounting his version of the last three decades of oil politics.
Along the way Allen, the government's chief witness, told of the money, jobs
and favors he dispensed to Kott, a man he described as a friend and reliable
ally but who could wind up in prison on Allen's testimony.
As word of Allen's impending visit to the courtroom got around town at
lunchtime, the federal courtroom of U.S. District Judge John Sedwick began
to fill, eventually drawing more than 60 people. Some were lawyers or
paralegals working for other potential defendants or witnesses. The back row
held gray-haired remnants of the liberal Democrats who flexed so much power
in Juneau in the 1970s before oil-friendly Republicans made them largely
irrelevant, while up front sat a conservative talk show host who fought
Veco's efforts a few years back to pay for government out of the Permanent
Fund. Other spectators just wanted a glimpse of history.
But the real business of the day was what Allen told the jury about Kott, a
14-year veteran of the state House from Eagle River. Allen and one of his
vice presidents, Rick Smith, pleaded guilty to bribery and conspiracy and
are hoping to get reduced sentences by cooperating with federal authorities.
Over nearly three hours of testimony that will resume this morning, Allen
talked about overpaying a flooring job done by Kott by more than $7,000 and
of scheming to get at least some of that money to Kott's son so that he
could work on Kott's 2006 campaign, when a poll showed he was in surprising
trouble. Even the poll itself was secretly paid for by Veco, which if true
would be a hidden -- and illegal -- campaign contribution by the company to
Kott.
"Why were you trying to get money to Pete Kott for his son's help in the
campaign?" asked assistant U.S. Attorney James Goeke.
"He was going to run again and he needed his son to help him," Allen said.
"What would his son be doing otherwise?" asked Goeke.
"A job," Allen said. "He can do the floors as good as Pete."
"So back on July 31, 2006, do you know if Mr. Kott was going to be able to
go to work on the campaign and do other work?" continued Goeke.
"He couldn't afford it," said Allen. "He has a family to take care of."
Before announcing he would run again, Kott had been making noises about
retiring and had talked with Allen about work. Some of those conversations
were recorded by the FBI.
In one such, on June 1, 2006, Kott joked with Allen that he wanted to be
warden of the prison Veco was building in Barbados, "especially with all the
women there on the beaches." He said he'd do anything, even pass out beach
towels.
Allen testified that he knew Kott was joking about that. But Kott also said
on the recording that he wanted to be a lobbyist.
"For Veco?" Goeke asked in court Wednesday.
"Yes," Allen answered.
Veco lobbyists made $6,000 to $12,000 a month, Allen testified. And he would
have hired Kott, he said.
But even as he provided the evidence about Kott, and along the way
implicated his own company and its executives in an illegal campaign
contribution scam, Allen never once acknowledged that a specific action by
him or Kott broke the law.
While Allen, 70, has never been shy about appearing at public events and
private fundraisers over the last quarter century as his political power
grew, he has only rarely engaged in public speaking. His speech has been
impaired since 2001 when, riding without a helmet, he crashed his
motorcycle. On the witness stand, he said about a quarter of the part of his
brain that controls speech died after the accident, and, like some stroke
victims, he has trouble picking out words. He also has trouble hearing, and
a court headset he wore while testifying proved balky at times.
At one point, he started to describe what the oil companies wanted most out
of Juneau, then had to pause.
"Wait, I got to find this word," he said. He closed his eyes, put his head
in his hands and worked something over in his mind for what seemed a small
eternity while the courtroom, in silence, waited for him to speak.
"Certainty!" he finally exclaimed. "They wanted certainty." In other words,
they wanted to be sure that taxes would not be raised before they would
agree to build a natural gas pipeline, the thrust of the efforts on the
so-called PPT -- petroleum profits tax -- that tied the 2006 Legislature in
knots.
Allen took the industry lead in promoting a low profits tax -- a much bigger
effort than the producers themselves were making. FBI-intercepted telephone
calls and conversations at a hotel suite in Juneau show that Kott and Senate
President Ben Stevens were his two most helpful soldiers.
In one conversation from June 8, 2006, played while Allen was on the stand,
he recalled a discussion he had with the head of Conoco Phillips in Alaska,
Jim Bowles, about the profits tax.
"I said between Pete Kott and Ben ... they won't have, they won't even have
their fingerprints on the (bill)." It seemed Allen was referring to the
"fingerprints" of the producers, but his remarks were ambiguous enough that
they could have been those of Stevens and Kott.
As the tapes were played, Allen testified he had no idea that his phones
were taped or that a secret camera had been placed in his hotel suite in
Juneau by the FBI under a court order.
"If I knew that, I wouldn't have said all this stuff," Allen said, drawing
smiles from the jury and chuckles around the courtroom. He learned he was
the target of the Justice Department's Public Integrity Section on Aug. 30,
2006 -- a day before the FBI executed a series of raids on legislative
offices.
Allen emerged as one of the industry's biggest promoters in the 1980s, when
Veco began a long run as a reliable source of campaign contributions, mainly
for Republicans. At the time, Allen testified, his main political hand was
the former state senator and trooper head Ed Dankworth, sometimes referred
to as the "21st Senator" for his efforts at organizing the Senate into blocs
long after he left the body.
Allen said he and Dankworth had a thorough falling-out after he bought the
Anchorage Times in 1989. One of his biggest financial supporters in his
journalism venture was Chuck Robinson, the long-time executive of the
telephone company ACS, Allen said. Dankworth lobbied for ACS' chief rival,
GCI, and Dankworth refused Allen's pleas to switch.
"If you can't do that, Dankworth, I don't want you to be with me," Allen
recalled telling his onetime friend.
Allen was born in Socorro, N.M., and left for Oregon with his family shortly
after World War II, when he was 8 or 9. He missed several years of school
while his family followed the fruit crops.
"We were pickers, I guess."
He quit school for good as a high school sophomore, then learned to weld, a
skill that brought him to Alaska in 1968. With another oil field worker
named Wayne Velti, who founded VE Construction, he worked the Cook Inlet
rigs for Arco, eventually taking over the company and shortening its name.
In the last few years, it had annual sales of $1 billion and 4,000 employees
worldwide, about half in Alaska, he said. Last week, the company was taken
over by CH2M Hill.
Find Richard Mauer at adn.com/contact/rmaue r or call 257-4345. Find Lisa
Demer at adn.com/contact/ldemer or 257-4390.
ONLINE AUDIO: Listen to surveillance recordings submitted as evidence in the
Pete Kott trial at adn.com/fbi
xxxxxxxxxxxxxxxx
Houston Chronicle
September 13, 2007
http://www.chron.com/disp/story.mpl/business/energy/5130872.html
Fatal
blast deeply affected ex-BP manager, jury told
By JENALIA MORENO
GALVESTON A former plant manager of BP's Texas City refinery was "severely
impacted" by the March 2005 blast that killed 15 and injured scores more,
his former boss testified Wednesday.
That was one of the reasons Don Parus was ordered to take a leave of absence
two months later, Pat Gower, BP's vice president of refining for the U.S.
region, told jurors.
"I was worried about Don's ability to run the site," Gower said.
Four contract workers are suing BP for emotional distress, hearing loss and
other ailments. BP counters that the workers are trying to win a big payoff
for minor injuries that didn't affect their lives.
Parus spent four emotional days on the stand, fighting back tears Tuesday as
he recalled his arrival to the blast site.
"At the time, we were trying to account for all the people. We had found 14.
Sometime after that, we found the 15th," Parus testified. He was not on the
stand Wednesday.
Parus, Gower and two other senior executives were targeted to be fired in an
internal BP investigation of the explosion. One of the four retired, while
Parus, Gower and another remain on the payroll.
When asked about his being investigated, Gower said: "We killed 15 people. I
think the company should look at everybody in management."
An executive with 31 years in refining, Gower said Wednesday when he worked
at the Texas City plant in the 1980s he was "satisfied with the condition of
the plant."
Brent Coon, the attorney representing the four plaintiffs, is expected to
continue his questioning of Gower today when the trial resumes at 1 p.m.
Court is starting later to give Tropical Storm Humberto time to clear out of
the area.
jenalia.moreno@chron.com
xxxxxxxxxxxxxxxxxxx
Anchorage Daily News
September 12, 2007
http://www.adn.com/money/industries/oil/story/9296145p-9210872c.html
BP
claims four North Slope fires in about a month are unrelated
STATE INVESTIGATING: Officials are concerned that a pattern is developing.
By WESLEY LOY
wloy@adn.com
Published: September 12, 2007
Last Modified: September 12, 2007 at 01:21 PM
Four fires have broken out in BP-run oil fields in just over a month, and
state officials said Tuesday they are launching a comprehensive
investigation.
No one was injured in any of the fires, and oil production losses were
negligible. A BP spokesman called the blazes isolated and unrelated
incidents.
But in a press conference staged on short notice Tuesday in Gov. Sarah
Palin's Anchorage office, top state officials said they're troubled by the
string of fires.
"If you had four fires in a row in your house or your business -- and I come
from the business world -- I get concerned about a pattern and you look into
it," said Tom Irwin, the state's natural resources commissioner.
London-based BP runs Prudhoe Bay, the nation's largest oil field, and
several neighboring fields. Since early 2006 the company has come under
intense scrutiny from Congress, regulators and others because of
corrosion-related pipeline leaks and lax maintenance.
Chuck Hamel, a Virginia resident and frequent critic of BP as well as state
regulators, was stoking the fires issue Tuesday, sending a letter to U.S.
Rep. George Miller, a California Democrat and chairman of the House
Education and Labor Committee, charging "safety conditions have drastically
deteriorated" at Prudhoe.
NORTH SLOPE BLAZES
Two of the four fires occurred inside plants within Prudhoe. Another
happened in the Lisburne field to the north, and the fourth was in the small
Badami field to the east.
The most recent came Monday afternoon at Lisburne, where company
firefighters rushed to an oil fire in an outdoor pit near the field's main
production plant.
BP spokesman Daren Beaudo said workers were cleaning a major pipeline with a
tool called a pig when a surge of oil mixed with natural gas and water came
through.
The surge was too much for a holding tank, so the liquid was diverted to a
flare -- basically a long pipe with a constantly burning flame, like a pilot
light, on the end.
The flare ignited the liquid, some of which dropped into a pit below and
continued burning, Beaudo said.
The flare is designed to carry dangerous excess hydrocarbons hundreds of
yards away from the production plant and burn them off harmlessly, and
that's what happened in this case, he said.
He said firefighters snuffed the pit fire in five minutes or so.
"At the end of the day, everything worked as designed," Beaudo said. "Nobody
was injured and there was no impact to the operation."
Another fire on Aug. 6 in the Prudhoe Bay field also resulted in no
injuries, but it was a close call for one worker.
Lubricating oil from a ruptured hose sprayed onto a hot, gas-fired turbine
inside a processing plant called Gathering Center 1, Beaudo said.
A worker inspecting the turbine, which has a safety enclosure, saw the blaze
and ran.
He radioed other workers to activate a fire suppression system, which dumped
a chemical called halon to smother the blaze.
Normally the fire suppression system would work automatically. But it had
been partially switched off because workers were inspecting pipes for
corrosion using X-rays, which could trigger false alarms, BP spokesmen said.
As for the other two fires, a lube oil leak also caused a turbine fire in a
different Prudhoe plant on Aug. 26. And on Aug. 10, a small fire broke out
in a diesel generator that malfunctioned in the Badami field.
STATE HAS QUESTIONS
Irwin said state officials would meet with top BP executives to talk
about the fires and whether BP has problems with its operating procedures.
The state's new Petroleum Systems Integrity Office, created in the wake of
BP's Prudhoe pipeline leaks last year, is helping investigate the fires.
Dave Tyler, state fire marshal, said fires in the North Slope oil fields are
uncommon, though not unheard of.
"Four in a month caught our attention," he said.
Tyler noted, however, that the oil fields have extensive systems for
preventing or controlling fires, and they worked well during the recent
string to keep damage to a minimum.
He said BP has received no fire-related fines or violation notices since he
became fire marshal in April.
BP's Beaudo said the company and its workers are well-equipped and trained
to handle fires.
"These are isolated, distinct events and not part of a pattern," Beaudo
said.
The company is investigating each fire, and "we look forward to meeting with
the administration to discuss its concerns," BP said in a written statement
issued after the Anchorage press conference.
Find Wesley Loy online at adn.com/contact/wloy or call 257-4590.
A look at the four fires
Monday, Lisburne field
Oil from a pipeline that was being cleaned was ignited by a natural gas
flare and spilled into an outdoor pit. Firefighters put it out.
Aug. 26, Prudhoe Bay field
Lubricating oil sprayed onto a hot turbine and caught fire at Flow Station
3. A worker put it out with a fire extinguisher.
Aug. 10, Badami field
A small fire broke out in a diesel generator.
Aug. 6, Prudhoe Bay field
Lubricating oil from a ruptured hose hit a turbine and caught fire at
Gathering Center 1. Workers activated a fire suppression system that had
been switched off for maintenance.
Source: BP
A look at the four fires
Xxx
http://www.adn.com/front/story/9297385p-9212215c.html
Shell
may disband Alaska drilling fleet in wake of ruling
By WESLEY LOY
wloy@adn.com
Published: September 12, 2007
Last Modified: September 12, 2007 at 04:13 PM
Shell will start releasing contract workers and soon could disband its
offshore drilling fleet due to a federal court order blocking the oil
company’s plans to drill exploratory wells this fall in the Beaufort Sea.
The retrenchment does not mean Shell is abandoning its drilling goals, Shell
spokesman Curtis Smith said today.
The Dutch energy giant is moving ahead with offshore seismic testing in the
Beaufort as well as the Chukchi Sea, he said.
“This is just the first year in a multiyear exploratory program,” he said.
“Shell is committed to Alaska.”
Several organizations including the North Slope Borough, the Alaska Eskimo
Whaling Commission and environmental groups on Aug. 15 won an indefinite ban
on drilling from the 9th U.S. Circuit Court of Appeals in San Francisco. The
groups is arguing industrial noise and potential spills could hurt migratory
whales and the Beaufort Sea ecosystem.
The court order idled Shell’s two drilling ships, one anchored at Dutch
Harbor and another in western Canada, and now the company will begin a
“staged release of contract personnel” as no drilling appears likely this
year.
For its $200 million exploration program, Shell had recruited and trained
more than 700 people, including 350 Alaskans, Smith said.
The people generally are employed by contractors Shell hired. Smith said he
couldn’t specify how many would be let go.
Many of the jobs affected are associated with the drill ship Frontier
Discoverer, now anchored at Dutch Harbor along with five support vessels
including icebreakers, Smith said.
The Discoverer, under long-term contract to Shell, likely will sail away
soon to another drilling job elsewhere in the world, he said.
Shell has asked the San Francisco court to lift its no-drilling order, and
if that happens quickly, the company could reactivate the Frontier
Discoverer or use its other drill ship, the Kulluk, to probe its Sivulliq
prospect, thought to hold hundreds of millions of barrels of oil.
The prospect is west of the Arctic National Wildlife Refuge about 16 miles
offshore.
The seismic testing involves a different set of ships, including the Gilivar,
a seismic vessel operated by Shell contractor WesternGeco. Several support
boats will carry people and equipment to observe and listen for whales and
other marine mammals, Smith said. Aircraft also will be used.
“Shell regrets it must take this action,” the company said of the job cuts.
The company said talks are “ongoing” with North Slope residents who question
the effects of drilling on subsistence whale hunts.
Find Wesley Loy online at adn.com/contact/wloy or call 257-4590.
Xxx
http://www.adn.com/news/alaska/crime/story/9296169p-9210891c.html
Grand
jury indicts Wade for fraud and identity theft
NO BAIL: He remains a ''person of interest'' in Schloss' disappearance.
By JULIA O'MALLEY
jomalley@adn.com
Published: September 12, 2007
Last Modified: September 12, 2007 at 02:59 AM
A federal grand jury indicted Joshua Wade Tuesday afternoon on bank fraud
and identity theft charges, accusing him of using an ATM card to take money
from the account of Mindy Schloss, who vanished in early August and is
presumed dead.
Wade is a police "person of interest" in Schloss' disappearance and death
but he has not been charged with that.
The grand jury charged Wade with two counts of financial institution fraud,
one count of fraud with an access device, and a count of aggravated identity
theft.
In a hearing earlier Tuesday, federal magistrate Matthew Jamin ordered Wade
held without bail pending trial.
Jamin rejected a defense argument to release Wade to a third-party
custodian. He found the prosecution's concern that Wade would flee if he
were released persuasive. Wade has a history of missing hearings, Jamin
said.
While police were looking for him in connection with the ATM thefts, Wade
hid at a friend's house and said he planned to run away to the Mat-Su area,
according to testimony offered at the two-day court hearing.
Assistant U.S. attorney Thomas Bradley argued that Wade is also a danger to
the community. He was acquitted of killing a woman in 2000. He served time
for evidence tampering in connection with that crime. He also has a history
of domestic violence.
The case is not a simple bank fraud, Bradley said.
"Mindy Schloss has been missing for over a month now," he said.
Defense attorney Mary Geddes argued that Wade could be released to a
third-party custodian if one came forward. Though there has been speculation
in the media that he is involved with Schloss' disappearance, prosecutors
didn't present any evidence he is dangerous, she said.
To support the fraud accusations, assistant U.S. attorney Crandon Randell
introduced still photos from cameras at two Anchorage ATM machines taken
Aug. 5 and Aug. 6, days after Schloss vanished. In them, a man the FBI says
is Wade withdraws money from her account. The man wears a quilted jacket, a
gray backpack, a striped baseball cap and a bandana pulled up over his face
or around his neck.
Clothing matching that was found at Wade's house. An ATM receipt from
Schloss' bank account was found in the jacket pocket.
Wade will be held by U.S. marshals at the Anchorage jail, Bradley said.
Find Julia O'Malley online at adn.com/contact/jomalley or call 257-4591.
xxxxxxxxxxxxxxxx
Houston Chronicle
September 12, 2007
http://www.chron.com/disp/story.mpl/business/energy/5127531.html
Suggestions for flare at BP plant date to 1977
Reports, e-mail revealed at trial detail managers' requests
By KRISTEN HAYS
Copyright 2007 Houston Chronicle
GALVESTON Plant managers, both before and after BP acquired the Texas City
refinery in 1998, thought a flare to burn off excess flammable vapors should
have been added to a unit involved in the deadly March 2005 blast.
That's according to internal reports and e-mails presented Tuesday to jurors
hearing the first civil trial in the blast that killed 15 and injured scores
more.
Investigators with the U.S. Chemical Safety and Hazard Investigation Board
have said that such a flare could have prevented the explosion.
On Tuesday, jurors saw memorandums and e-mails dating back to 1977, 1985 and
1994 when Amoco owned the plant and in 1999 and later, after BP acquired
Amoco.
The documents chronicled management suggestions of adding a flare to a unit
that boosts octane in gasoline so excess liquids and vapors otherwise
released into the air from a blowdown stack would be routed to the flare and
burned off.
But nothing came of those suggestions. The explosion happened when the stack
overfilled with flammable hydrocarbons that vented and ignited.
"These were all warning signs that indicated there was a problem?"
plaintiff's lawyer Brent Coon asked former Texas City plant manager Don
Parus in his fourth and last day on the witness stand.
"Put together, it is a series of signs, yes," Parus replied, having noted he
was unaware of such assessments of the state of the plant.
Planned for 2009
Coon also displayed an undated 10-year plan of capital projects that
suggested installing a blowdown system and vent to a flare in 2009 for $5.5
million. That cost was more than double the $2.4 million price tag in a
similar internal Amoco document from the mid-1990s.
"What would have happened if this had been done?" Coon asked.
"The event would have been different," Parus replied, not going so far as to
say deaths or injuries would have been prevented.
Today Coon intends to question Parus' former boss, Pat Gower. Both are among
four senior executives targeted to be fired by an internal BP investigation
into the blast that was completed in February. One of the four retired last
year, while Parus, Gower and another remain on the payroll.
Parus, who has been on paid leave since May 2005, was concerned enough about
the plant's safety culture that he commissioned a survey of workers in late
2004 that elicited highly critical assessments.
In the weeks before the blast, he and other site managers were conducting
meetings to discuss the results and plan improvements. That effort wasn't
fast enough to make an impact, and Parus didn't shut down any units for
further evaluation.
Recalling the scene
Earlier Tuesday, Parus, a father of six, fought back tears as he
recalled his arrival to the grim scene of the explosion a few hours after it
sent tremors felt as far as five miles away.
"At the time, we were trying to account for all the people. We had found 14.
Sometime after that, we found the 15th," Parus told jurors between sips of
water.
Parus said he did not know any of the contractors who died. But he met some
of their families at "three or four" funerals he attended after checking
with them first on whether he would be welcome. Other managers did the same
for most other funerals.
Within three hours of the explosion, Patricia Wright, a top public relations
executive for BP, sent an e-mail to BP executives in the U.S. and London
that noted Parus was giving a statement to the media and that more coverage
of the tragedy was expected the next day.
"Then I believe it will essentially go away due to the holiday weekend,"
Wright wrote, referring to Easter Sunday.
Parus didn't receive the e-mail.
"I recall attending a funeral service on Easter Sunday, sir," he told Coon.
Jurors saw another e-mail sent by John Manzoni, then head of BP's refining
division, to another executive four days after the explosion. It noted how
Manzoni spent a day in Texas City with then-BP CEO John Browne "at the cost
of a precious day of my leave."
Coon asked if Parus knew Manzoni had interrupted a Colorado ski vacation to
go to Texas City. Parus said he did not, and he read about Manzoni's comment
in the e-mail when it was reported in a newspaper.
BP lawyer Ronnie Krist sought to prevent jurors from seeing those e-mails,
noting they were presented "to create bias" and had nothing to do with the
cases involving four plaintiffs Coon represents in the trial. State District
Judge Susan Criss ruled jurors could see them.
Manzoni resigned from BP earlier this year to become CEO of Calgary,
Alberta-based oil and gas producer Talisman Energy.
Put on leave
Parus said he learned six weeks after the blast that he was being put on
leave to help with investigations into the disaster, but he did not
participate in the internal probe.
He said he still doesn't know if he'll return to work, and BP lawyer James
Galbraith gave him no clues during brief questioning Tuesday.
When Galbraith asked about his feelings regarding the state of the plant at
that time, Parus said with finality, "I've never been able to get past 1:18
in the afternoon that day, sir. My clock's kind of stuck there now."
kristen.hays@chron.com
xxxxxxxxxxxxxxxxxxx
Wall Street Journal
September 12, 2007
Alaska
Oficials Want BP To Explain Recent North Slope Fires
DOW JONES NEWSWIRES
September 11, 2007 10:36 p.m.
NEW YORK (AP)--Alaska officials said Tuesday that BP PLC (BP) must address
the causes of four recent North Slope oil production facility fires,
reprising concerns about maintenance that led to last year's partial shut
down of Prudhoe Bay, the nation's largest oil field.
Gov. Sarah Palin called the fires - all within the last 34 days and at
different fields and facilities - "above and beyond anything that is
acceptable."
The most recent fire occurred Monday, said Resources Commissioner Tom Irwin.
There were no injuries, but the extent of damage was not immediately known.
"Their history recently hasn't been too good," Irwin said. "We want to have
answers to these questions as to what's going on in the North Slope."
Meanwhile, two investigators from the newly formed Petroleum Systems
Integrity Office are en route to the North Slope to investigate, said
coordinator Jonne Slemons.
"It becomes a bit more urgent that it's happening over and over again,"
Slemons said. "It does bring to mind the question: Is there a broad
cause-and-effect situation going on here?"
The state fire marshal's office also was investigating.
BP spokesman Steve Rinehart said the fires do not reflect a systemic
problem.
"These are distinct events and not part of any kind of a pattern," Rinehart
said. "We have a big operation and fires are regrettable, but they do happen
in oil fields.
"We are prepared for them," Rinehart said. "We have a very sophisticated,
multilayered safety system in place."
Slemons said the administration hopes to meet with BP officials, including
BP Exploration Alaska Inc. President Doug Suttles and Technical Director
Tony Brock, within the next few days.
Rinehart said while the notice is short, the company routinely tries to
accommodate such requests.
BP has been beset with problems in North America for nearly two years.
An explosion in 2005 at BP's Texas City refinery killed 15 people and
injured more than 170 others. An internal report by London-based BP this
year said there was a culture at the plant that seemed to ignore risk,
tolerated noncompliance and accepted incompetence.
In March 2006, more than 200,000 gallons of oil leaked at Alaska's Prudhoe
Bay field due to corrosion.
Five months later, after another leak, BP partially shut down the nation's
largest oil field, which it operates on behalf of itself, ConocoPhillips
(COP) and Exxon Mobil Corp. (XOM).
BP is currently replacing 16 miles of corroded pipeline. It plans to have
the work done by the end of next year at a cost of about $250 million.
Prudhoe Bay is responsible for nearly half of the North Slope 800,000 barrel
per day production, or about 8% of the nation's daily output.
Slemons said BP has been cooperative and open through its recent problems,
and the state isn't pursuing fines.
"BP's response to contain the fires has been quick," she said. "We are much
more interested in the overall operating process and management process that
have led us to the point."
Xxx
BP Official:
Texas Refinery Upgrades May Have Prevented Blast
DOW JONES NEWSWIRES
September 12, 2007 3:47 p.m.
GALVESTON, Texas (AP)--Upgrading technology and replacing equipment could
have minimized or even prevented the deadly 2005 explosion at BP PLC's (BP)
Texas City refinery, a company official testified Wednesday in a lawsuit
filed by workers injured in the blast.
As the first civil trial stemming from the explosion resumed Wednesday,
jurors saw a videotaped deposition in which Paul Maslin, BP's technology
vice president for refining, talked about how safety could have been
improved.
He said much of the computer technology in Texas City was from the 1980s and
needed to be updated. He also the refinery should have had technology that
could have automatically shut down systems in an emergency.
Maslin also said he disagreed with BP when, in 1999 or 2000, it called for a
25% budget cut throughout the company. At the time, Maslin was working at
BP's Coryton Refinery in Essex, England.
"I said I was unable to do that at Coryton. I did not think it was a
sensible, safe thing to do," said Coryton, who added he was essentially
demoted after he spoke up.
Pat Gower, BP's U.S. refining vice president, was set to testify Wednesday
afternoon.
On Tuesday, Don Parus, the refinery's former manager, in his fourth and
final day on the stand, was grilled by an attorney for four workers suing BP
for injuries they attribute to the blast. Attorney Brent Coon asked him
about concerns going back 30 years that related to equipment involved in the
accident.
The explosion at the plant, located about 40 miles southeast of Houston,
occurred after a piece of equipment called a blowdown drum overfilled with
highly flammable liquid hydrocarbons.
The excess liquid and vapor hydrocarbons were then vented from the drum and
ignited as the isomerization unit - a device that boosts the octane in
gasoline - started up. Alarms and gauges that were supposed to warn of the
overfilled equipment didn't work properly.
The blast killed 15 people and injured more than 170 others.
A federal agency has since recommended blowdown drums be eliminated from all
U.S. refineries in favor of safer alternatives such as flare systems, which
can burn off releases.
Coon showed jurors a memo from 1977 that said Amoco, the owner of the Texas
City plant at the time, would no longer permit new blowdown drums that
vented directly to the atmosphere, and that existing drums would be
connected to a flare system. Amoco merged with BP in 1998.
"I'm not sure what the company knew after the merger," said Parus when asked
if BP knew of these concerns. Parus, hired by Amoco in 1979, stayed on when
BP took over. He is now on paid administrative leave.
An April 2005 BP email showed the isomerization unit had at least 14
incidents, such as fires and leaks, from 1981 through 2005.
Coon showed jurors records from Amoco and BP that indicated the blowdown
drum was in bad condition or needed repairs in 1977, '81, '85 and '90. In
1997, the blowdown drum was replaced, but six years later inspectors found
the drum's internal condition was "so bad" that inspectors looking at it
feared for their lives, Coon said.
The U.S. Chemical Safety and Hazard Investigation Board, one of several
agencies that probed the accident, found BP fostered bad management at the
plant and that cost-cutting moves by BP were factors in the explosion.
An internal report by London-based BP released in May said there was a
culture at the plant that seemed to ignore risk, tolerated noncompliance and
accepted incompetence.
The trial, which began last week, could last up to two months.
About 1,350 of the thousands of lawsuits filed since the accident have been
settled.
The blast has cost the company at least $2 billion in compensation payouts,
repairs and lost profit.
xxxxxxxxxxxxxxxxx
Houston Chronicle
September 11, 2007
http://www.chron.com/disp/story.mpl/front/5124355.html
BP
manager's efforts receive some sympathy
Plaintiffs' lawyer tries to portray him as concerned but 'an ostrich' on
safety
By KRISTEN HAYS
Copyright 2007 Houston Chronicle
GALVESTON The first BP Texas City refining executive to testify before a
jury in a trial stemming from the deadly March 2005 explosion has been
portrayed as both a concerned manager trying in vain to alert higher-ups to
potential safety hazards and a company man who didn't do enough.
Don Parus, 52, on Monday finished his third day answering questions from
Brent Coon, who represents four plaintiffs suing BP for emotional distress,
hearing loss and other ailments in the first bundle of cases to go to trial
since the blast.
Lawyers for the company that put the former Texas City refinery manager on
paid leave six weeks after the blast killed 15 people have yet to question
him.
At times, Coon has appeared sympathetic, drawing out Parus' efforts to
improve safety upon assuming refinery manager duties in 2004, a year in
which three workers died. Parus did some digging and found out 22 people had
died at the plant in 30 years a 23rd death came later and commissioned a
survey of workers to assess the safety culture.
Other times, including Monday, Coon sought to illustrate that Parus fell
short of curing a sick safety culture and didn't familiarize himself enough
with company policies to know that a flimsy trailer in which the 15 people
died was too close to the unit that exploded.
"Do you see yourself as being an ostrich, sir?" Coon later asked.
"I don't know what you mean by that, sir," Parus replied.
His testimony is slated to continue today.
Safety survey
The plaintiffs contend that BP put profits over safety by shrinking
budgets for maintenance, repairs, upgrades and training for years before the
blast, laying the foundation of a preventable tragedy.
BP, which has settled at least 1,350 of about 3,000 blast-related lawsuits,
counters that the four plaintiffs are trying to squeeze a big payoff for
minor injuries that didn't interrupt their jobs or lives.
The 2004 safety survey elicited harsh responses from workers resigned to a
lax safety culture, including, "we do not reward people for intervening and
being responsible for safety. We reward production and cost-reduction."
Parus called such comments "painful," but said they became a catalyst for
safety improvements.
The survey results were given in January 2005 to refinery leadership, which
held off-site meetings to develop a plan to address the concerns. That
effort was under way when the blast occurred.
Parus also testified Monday that even though BP had cut budgets at the plant
in the years before the blast, and rejected his year-end 2004 request for
more money for improvements, that doesn't mean necessary repairs and
replacements didn't happen.
He said a budget is a plan that can be changed. In early 2005, the Texas
City plant was "tens of millions of dollars over budget" because unexpected
issues arose during "turnarounds," or planned unit shutdowns for repairs and
maintenance.
He didn't order any unit shutdowns other than those already scheduled. All
refineries have planned turnarounds of various units for maintenance and
repairs.
The U.S. Chemical Safety and Hazard Investigation Board concluded after a
two-year investigation that the budget in the years before the blast at the
plant paved the way for the blast. BP disputes that assertion, saying the
company has found no link between cost cuts and the explosion.
Trailers too close
Parus said BP failed to recognize the risk of placing portable trailers
too close to an octane-boosting unit in its Texas City refinery.
The 15 contractors who died were in a trailer 121 feet away from that unit
where the explosion originated. But he also acknowledged he was unaware of a
company policy that prohibited trailers from being closer than 300 feet to
processing units.
"Post incident has a different flavor to this," Parus said. "It's hugely
different. Before March 23, I didn't get involved in policy, I left that to
the organization. I relied on my organization for that. I did not read and
fully understand the whole policy around trailer siting."
BP removed 200 trailers from the refinery after the blast and placed 800
workers who used them off-site.
The company also formulated a policy in December 2005 that specified safe
distances, such as 500 feet from a vent stack used for hydrocarbons or 330
feet from any elevated main flare used to relieve pressure.
Last June, the American Petroleum Institute, which is the oil industry's
trade group and cannot enforce its suggested standards, issued new distance
guidelines.
It suggests that companies conduct detailed blast analyses for anything
closer than 1,930 feet, and allows some to be closer, depending on the size
of the processing unit.
Coon didn't bring up BP's post-blast action regarding trailers or the new
API standard.
Returning to work?
Also Monday, Parus told jurors he has little hope of returning to work,
given what he called the company's "minimal" communication with him since he
was put on leave with an annual salary of $279,000.
He didn't learn of an internal investigation, which targeted him and four
other senior executives to be fired for failing in their management duties,
until it was reported in the media earlier this year.
However, Parus said the report, led by BP group vice president Wilhelm
Bonse-Geuking, was "incomplete" because the probe focused on managers and
executives employed by the company and the plant at the time of the
explosion, rather than those who made cost-cutting decisions that affected
equipment integrity and training in the years before the blast.
"It looked only at people who were on the ground at the moment," Parus said
of the report.
BP didn't fire anyone targeted in the report. One retired last year, while
the other three, including Parus, remain employed. Coon said Monday that
some of those and Bonse-Geuking himself are expected to testify in the
coming days, either live or by videotape.
kristen.hays@chron.com
xxxxxxxxxxxxxxxxxxxxx
Anchorage Daily News
September 11, 2007
http://www.adn.com/news/politics/fbi/kott/story/9294506p-9208246c.html
Bribery trial features Kott's telephone calls
By LISA DEMER
ldemer@adn.com
Published: September 11, 2007
Last Modified: September 11, 2007 at 04:27 AM
In a series of secretly recorded telephone calls, former state Rep. Pete
Kott joked with Veco executives about drinking and women, but assured them
he was serious about one thing: getting a gas pipeline.
"I'm going to get this f-----g gas line done so I can get out of here," Kott
told former Veco chief executive Bill Allen in a Jan. 10, 2006, cell phone
conversation.
Testimony began Monday in Kott's public corruption trial.
Jurors heard recordings of nine telephone calls and watched one videotaped
meeting between Allen and former Veco vice president Rick Smith.
In his opening statement, prosecutor Nicholas Marsh told jurors that Kott
betrayed the public trust and sold his legislative office to oil field
services company Veco. In return for money and job promises, he pushed an
oil tax favored by the industry.
Kott even says on one of the tapes, "I sold my soul to the devil," Marsh
said.
Kott's own words will be used against him, Marsh said. It's the same tactic
prosecutors used to convict former Rep. Tom Anderson in July of seven
federal corruption charges.
But the defense told jurors the government twisted the facts. Kott was just
a blue collar Republican working hard to get what most Alaskans wanted, a
gas pipeline, said Jim Wendt, one of Kott's defense lawyers.
There's nothing illegal about working with lobbyists or others toward a
shared goal, and that's all Kott was doing, Wendt said. "If he is guilty of
anything, he is guilty of working to get a pipeline."
Marsh warned jurors they would hear "downright offensive" language. But
Wendt said it was just "down-to-earth talk."
An FBI agent from Cincinnati, Steve Dunphy, who monitored and recorded some
of the action in Suite 604 of Juneau's Baranof hotel, testified all
afternoon about various recordings. Dunphy said he volunteered after a
request for help with the Alaska investigation went out agencywide.
The listening began with a wiretap on Smith's cell phone in September 2005
and branched out from there to wiretaps on Allen's cell and home phones, and
then the bug planted in the Baranof suite, Dunphy testified.
In various phone calls played for the jury, Kott's familiarity with Allen
and Smith is remarkable. He calls them Uncle Bill and Uncle Rick. He sounds
tipsy at times. Several times, Kott brings up the idea of working as warden
at a prison in Barbados that Veco was building.
"I just wanna be a warden," Kott tells Smith in a Sept. 29, 2005, telephone
call.
Wendt told jurors in his opening statement that the Barbados prison gig was
a running joke with Kott, that he had heard about topless women on beaches
there. But Marsh told jurors that even if Kott was kidding about the
warden's post, he clearly wanted a job with Veco when his work in the
Legislature was done.
As the 2006 legislative session got under way, Kott fretted to Allen on the
phone that things weren't going well and Allen needed to get to Juneau.
Allen made it clear that he thought little of House Speaker John Harris, who
won the post in 2005 after Kott was ousted in an internal coup.
"About the only ones that I can trust is you and ol' Ben Stevens," Allen
tells Kott in a Jan. 10, 2006 call. Stevens is the former state Senate
president. He hasn't been charged.
In one lengthy call between Allen and Smith on Feb. 20, 2006, Allen goes on
a tirade about Veco's new young lobbyist, Kris Knauss. Allen was angry that
Knauss was using Allen's own well-cultivated influence with Kott as if it
were his own, turning it to his advantage with Gov. Frank Murkowski's chief
of staff, Jim Clark.
"Well f---. I put more money into Pete Kott than he's ever even thought
about," Allen sputtered at one point.
In a March 4, 2006, videotaped conversation in Suite 604, Allen and Smith
said they would do whatever they needed to get the pipeline and an oil tax
favored by the industry through the Legislature. Smith said they may need to
"get dirty."
The room is dimly lit and it's hard to make out their faces. But their
voices are clear.
"They got dirty and they crossed the line," Marsh told jurors.
Later in the conversation -- in a part not played in court but discussed by
lawyers and the judge -- the topic turned to a faltering effort at the time
to sell Veco to an Australian firm. Allen was upset because former Veco
president Pete Leathard had apparently boasted to the Australians that Veco
was in the business of bribing state legislators.
U.S. District Judge John Sedwick agreed with prosecutors that only a portion
of the conversation needed to be played for jurors.
In the same conversation, Allen told Smith that Veco's clients need to know
what it's doing in Juneau to pressure legislators. He refers to "the big
wheels" with BP and Exxon and more.
The case against Kott is the first to go to trial involving Veco, a company
that was hugely influential in Juneau for many years. Allen and Smith have
both pleaded guilty to bribery and other charges and resigned their
positions with Veco.
As of Friday, Veco no longer exists. It's been sold to the Colorado-based
engineering firm CH2M Hill.
Kott, a former house speaker from Eagle River who served 14 years in the
Legislature, is being tried on charges of bribery, conspiracy, extortion and
wire fraud.
Several dozen people gathered in the federal courtroom for opening
statements, including defense lawyers, prosecutors, FBI agents and news
reporters, but the crowd cleared out by the afternoon. Whistleblower Ray
Metcalfe stayed.
Marsh told jurors that Kott, who ran a hardwood flooring business, is
accused of accepting money or things of value three times from Veco
executives, plus the promise of a job. The specific accusations, as laid out
by Marsh:
• Kott, in need of cash during his 2006 campaign, sent Allen a fake bill for
an extra $7,993 in flooring work.
• Veco paid $2,750 for a political poll by David Dittman to see how Kott was
faring with voters during the campaign. Kott lost in the primary.
• Kott accepted $1,000 from Allen to reimburse Kott for a contribution he
made to then-Gov. Frank Murkowski's re-election bid.
All of that is misconstrued or overblown, Wendt told jurors. Kott received
no personal benefit from any of it, the defense lawyer said. He didn't even
know about the poll beforehand.
The only thing Kott did wrong was accept the $1,000, but that was just to
reimburse him for the contribution, Wendt said.
Find Lisa Demer online at adn.com/contact/ldemer or call 257-4390.
The Alaska political corruption investigation
The trial of former Eagle River Rep. Pete Kott is part of a broad
investigation into public corruption focused on state and federal officials,
lobbyists and others. The investigation is being led by the FBI and
Department of Justice and has resulted in charges against four former state
legislators, two former executives of the Veco Corp., and a lobbyist for a
private prison company.
Kott is charged with bribery, conspiracy, extortion and wire fraud for
taking money and the promise of a job from Veco executives for supporting an
oil tax measure favored by the petroleum industry.
xxxxxxxxxxxxxxxx
Wall Street Journal
September 11, 2007
2nd UPDATE:
BP Plant
Repairs Not Swayed By Pft Concerns-Ex-Mgr
DOW JONES NEWSWIRES
September 10, 2007 6:58 p.m.
(Updates with testimony from plant manager about trailers at refinery)
GALVESTON, Texas (AP)--The former manager of BP PLC's (BP.LN) Texas City
plant where 15 people were killed in a 2005 explosion denied in testimony
Monday that repairs were delayed because of concerns over how profits would be
affected.
"The production of profits did not control our schedule," Don Parus said
during the first civil trial stemming from a blast that also injured more than
170 people.
Brent Coon, an attorney for four workers suing for injuries they attribute to
the blast, tried to portray Parus' comments as a contrast to comments by
workers interviewed for a study two months before the blast. The study, called
the Telos Report, told of various safety problems at the plant.
On a large projection screen, Coon displayed sections of the report with
quotes from employees who said production and cost reductions were rewarded at
the refinery, not safety.
Other comments in the report included:
- The equipment is in dangerous condition and this is not taken seriously.
- We are not using our money to protect ourselves from catastrophe.
- They want us to be safe but I don't feel like they are truly into safety.
"Most interviewees at production level say that the pressure for production,
time pressure, and understaffing are the major causes of accidents at Texas
City," one section of the report concluded.
The explosion at the plant, located about 40 miles southeast of Houston,
occurred after a piece of equipment called a blowdown drum overfilled with
highly flammable liquid hydrocarbons.
The excess liquid and vapor hydrocarbons were then vented from the drum and
ignited as the isomerization unit - a device that boosts the octane in
gasoline - started up. Alarms and gauges that were supposed to warn of the
overfilled equipment did not work properly.
Parus was asked by Coon if he agreed with a description of the isomerization
unit as "a piece of junk" that should have been repaired.
When Parus refused to describe the unit this way, Coon tried to compare him to
an ostrich, asking him if he had his head stuck in the sand the last 2 1/2
years.
Parus, who is on paid administrative leave, said he was surprised by many
employee comments in the Telos Report, which he had requested. But he said
many of the comments in the report were workers' opinions of what they saw at
the refinery.
"It's what the people perceive to be real. We can argue what perception and
reality are," he said.
Parus, in his third day of testimony, also denied that budget concerns would
prevent him from fixing units if they were seriously in disrepair. He added
that he once went $20 million over budget to pay for unscheduled maintenance.
"If you find something that needs to be fixed, you fix it," he said. "The
budget doesn't control me."
Parus also said that before the accident, BP did not recognize the risk of
placing trailers around the isomerization unit. All 15 deaths in the blast
happened in the two trailers closest to the blast site. Since the explosion,
BP has removed all temporary structures from the refinery.
Parus was set to resume testifying Tuesday.
The U.S. Chemical Safety and Hazard Investigation Board, one of several
agencies that probed the accident, found BP fostered bad management at the
plant and that cost-cutting moves by BP were factors in the explosion.
An internal report by BP released in May said there was a culture at the plant
that seemed to ignore risk, tolerated noncompliance and accepted incompetence.
A fifth lawsuit that was also set to be tried, filed by the estate of a
contract worker whose suicide was attributed to trauma from the accident, was
settled just before the trial began last week. The trial could last up to two
months.
About 1,350 of the thousands of lawsuits filed since the accident have been
settled.
The blast has cost the company at least $2 billion in compensation payouts,
repairs and lost profit.
Xxx
US Lawmakers Ask
BP Not To Drill In Canadian Flathead Basin
DOW JONES NEWSWIRES
September 10, 2007 8:51 p.m.
BILLINGS, Montana (AP)--A pair of U.S. senators urged executives from the
energy company BP PLC (BP) not to drill for natural gas on the Canadian side
of the Flathead River basin, out of concerns that polluted water could flow
into Montana.
Max Baucus and Jon Tester, both Montana Democrats, met separately with a group
of executives that included BP America President Bob Malone and BP Canada
President Randy McLeod.
BP plans to seek a permit next year in southern British Columbia to drill up
to six exploratory wells in a region that abuts the Montana border. The
company hopes to extract coal-bed methane, a type of natural gas, from the
Crowsnest Coal Field, a 190-square mile (492.1-sq. kilometer) area that
includes rivers draining into the U.S.
The two senators said the development could put at risk waters flowing into
Glacier National Park and other parts of northwest Montana. Large volumes of
poor-quality water are discharged during coal-bed methane extraction.
"I made very clear to them that we're just not going to let this happen,"
Baucus said following the meeting. "They said they would do nothing to
potentially threaten the basin for 10 years. I don't care if it's one year or
a hundred years, we don't want it."
Baucus also said he asked the company to seek an independent environmental
review of the project.
BP spokeswoman Anita Perry said the exploratory wells would not be in the
Flathead basin but in the neighboring Elk River Valley. She declined to
comment on the outcome of Monday's meeting, saying she had not yet spoken to
the executives involved.
"Whether we go into the Flathead or not, we need to have some more collection
of information on the hydrology, the fish habitat, those type of things,"
Perry said. "We need to take this one step at a time."
xxxxxxxxxxxxxxxxxxxxx
Anchorage Daily News
September 9, 2007
http://www.adn.com/money/industries/oil/story/9289810p-9204273c.html
Vibration
hits pipeline at rebuilt pump station
CRIBBING: Wooden
blocks are a temporary fix, Alyeska says.
By WESLEY LOY
wloy@adn.com
Published: September 9, 2007
Last Modified: September 9, 2007 at 04:02 AM
The operator of the trans-Alaska oil pipeline is trying to figure out how to
tame potentially dangerous vibration in a newly rebuilt pump station south of
Delta Junction.
As a temporary measure, workers have wedged blocks of wood underneath shaky
piping to add extra stiffness.
The use of wood supports might seem like a pretty crude technique for the
pipeline, considered an engineering marvel and a vital asset for the nation's
energy security.
But a spokesman for Alyeska Pipeline Service Co., the oil company consortium
that runs the line, said wooden supports -- known as cribbing -- are commonplace
in the industry. And he stressed the piping is safe to operate even without the
cribbing.
The vibration is one of a host of nagging problems that have plagued Alyeska's
campaign to rebuild four key pump stations along the 800-mile pipeline, which
began moving Prudhoe Bay oil 30 years ago.
Alyeska began its overhaul in 2004 and aimed to finish in two years on a $250
million budget. But the project remains far from complete and costs have swollen
to more than $400 million.
Chuck Hamel, a Virginia resident and longtime Alyeska critic, last month exposed
problems with power failures, welding records and other issues in a letter to
congressmen.
Hamel said the pipeline modernization project "is in total disarray," an
assertion Alyeska as well as state Natural Resources Commissioner Tom Irwin have
said is not accurate.
Pump Station 9, south of Delta Junction, is the only station where installation
of new pumps, motors and controls is complete.
Alyeska began using the new equipment to pump oil in early February, and company
executives have told regulators the revamped station generally has run smoothly
and reliably -- enough so that Alyeska intends to mothball the old pumps next
month.
But one glitch that cropped up at the pump station was vibration that, if left
unchecked, could someday cause metal fatigue and ruptures in steel piping that
carries hundreds of thousands of barrels of oil a day.
The vibration is not in the main, 48-inch pipe that crosses the rugged Alaska
landscape to the tanker port at Valdez.
Rather, it's in newly installed piping that runs into and out of huge modules
housing the pumps.
As a test to try to stop the shakes, Alyeska built rough ground supports
underneath the pipes using wood blocks.
"That's a temporary fix just to try to take the vibration out," said Jerry
Brossia, a top official at the Joint Pipeline Office, an Anchorage umbrella
agency for federal and state regulators who oversee Alaska pipelines.
Brossia and Alyeska spokesman Mike Heatwole said the cribbing will stay in place
until experts can figure out a permanent cure for the vibration, believed to be
caused by oil rushing through elbows and turns in the piping.
Alyeska has hired an outside expert, structural engineer Jim Loftis of
Fairbanks, to help devise a solution.
The U.S. Department of Transportation, which regulates pipelines, also has
enlisted experts from the Oak Ridge National Laboratory in Tennessee, Brossia
said.
Cribbing often is used to support piping in preparation for repairs or other
operations, Heatwole said. For instance, after a powerful Interior earthquake in
2002, Alyeska put railroad ties underneath the pipeline for stability pending
damage repairs.
According to Heatwole, the pump station and its pipes are safe to operate with
or without the cribbing, which Alyeska could remove before winter depending on
what permanent measures are taken.
"We're on a pretty fast track to get this taken care of," he said.
Four companies own Alyeska and the pipeline: BP with a 47 percent share, Conoco
Phillips with 28 percent, Exxon Mobil with 20 percent, and Chevron and Koch
Industries with the remainder.
Find Wesley Loy online at adn.com/contact/wloy or call 257-4590.
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Petroleum News
September 8, 2007
http://www.petroleumnews.com/pntruncate/449411038.shtml
Pearce
sets record straight
Federal
coordinator for Alaska gas line clarifies, corrects statements quoted in press
Kay Cashman
Petroleum News
Sept. 5 news reports carried statements from Drue Pearce, the federal
coordinator for Alaska gas pipeline projects, that were incorrect, Pearce's
communication director Jennifer Thompson told Petroleum News Sept. 6. At the top
of the list of erroneous information was Shell being identified as an Alaska
North Slope producer AND an opponent of Alaska Gov. Sarah Palin's Alaska Gasline
Inducement Act, neither of which is true. BP, not Shell, should have been
identified in that context, Thompson said.
Passed this past spring, AGIA initiates an application process and contains
specific mandates for any entity interested in constructing a gas pipeline from
the North Slope to market.
Shell was mentioned by Pearce as an offshore Alaska oil and gas explorer,
Thompson said, and a possible future user of an Alaska gas pipeline.
Pearce was also quoted as saying a Chinese oil company, Spain's Repsol and
Canada's BG Group were three companies that have expressed interest in building
an Alaska gas pipeline, which Thompson said was true, but Pearce, she said, does
not have any inside information that suggests these companies are still
interested. Pearce was referring to "rumors flying about in Alaska," Thompson
said. "Those three are among the names she heard as potentially being
interested."
Pearce has heard "Enbridge, for sure, was not applying under AGIA," Thompson
said.
Canada-based pipeline companies Enbridge and TransCanada have both said publicly
they would not be submitting a proposal under AGIA. Thompson said Pearce had not
heard that TransCanada was out of the running and included it, MidAmerican and
the Alaska Gasline Port Authority in her public statements as entities expected
to submit gas line proposals to the state.
LNG, maybe to Asia
Thompson said that Pearce had heard the unnamed Chinese oil company, Repsol
and BG Group, which is Anadarko's partner in the gas-prone Brooks Range
Foothills, were looking at an "all-Alaska route ... an LNG project," involving a
pipeline from the North Slope to a gasification terminal in Valdez. It was
Pearce's understanding that "two non-compliant applications from two of the
North Slope producers" and applications from MidAmerican and TransCanada were
going to be for an Alaska Highway route, taking the gas to Lower 48 markets via
Canada.
News reports said some of the expected gas line license applications "could
allow gas to be exported to Asia." Pearce reportedly said that when Congress
passed the Alaska Natural Gas Pipeline Act in 2004 to spur development of the
pipeline that lawmakers intended the gas for U.S. markets, but that nothing in
the act prohibited gas from being exported. (The same bill set up the Office of
the Federal Coordinator for Alaska Natural Gas Transportation Projects. Pearce's
title as head of this office is federal coordinator. The office hung its shingle
in December 2006 when Pearce took office.)
Thompson said that statement was true neither the federal act nor AGIA
prohibits Alaska gas being shipped overseas.
Alaska Commissioner of Revenue Pat Galvin told Petroleum News that AGIA does
"not reference what markets are targeted."
"The market, and potential legal restrictions to access it, will be a factor in
the evaluation of likelihood of success" evaluated under AGIA, Galvin said.
One news report said that from Valdez LNG "could be transported to any
regasification terminal in the world, but the primary focus would be on the
Pacific Rim," noting that getting approval to build regasification LNG terminals
on the U.S. West Coast has been impossible for many applicants because of local
opposition.
Thompson said one thing Pearce said that did not appear in the news reports
Petroleum News mentioned, was that Anadarko Petroleum planned to drill the first
exploration well purposely targeting commercial quantities of natural gas this
coming winter.
Applications under AGIA are due Nov. 30.
Xxxx
http://www.petroleumnews.com/pntruncate/539997478.shtml
August ANS
down 9% on field maintenance
North Slope production
averages 658,022 bpd for month; both Milne Point, Alpine down temporarily for
planned maintenance
Kristen Nelson
For Petroleum News
Alaska North Slope crude oil production averaged 658,022 barrels per day in
August, down 9.2 percent from a July average of 724,564 bpd, driven by planned
maintenance at the Milne Point and Alpine fields and a partial one-day
maintenance shutdown of the trans-Alaska oil pipeline.
The largest July-to-August production decline, 52.4 percent, was at the BP
Exploration (Alaska)-operated Endicott field where production was curtailed
through Aug. 12 due to a turnaround which began in late July. The Alaska
Department of Revenue said in July that one compressor train at Endicott was
expected to be out of service until the end of August, reducing production by
some 13,000 bpd. Production from the field was in the 5,000-7,000 bpd range
through Aug. 12, remained in the 20,000-bpd range for another week and then
fluctuated between 20,000 and 50,000 bpd for the remainder of the month.
Endicott averaged 21,363 bpd in August compared to a July average of 44,866 bpd.
Since corrosion issues forced shutdown of some Prudhoe Bay pipelines a year ago,
production figures from Endicott have also included 33,000 bpd from Prudhoe Bay
flow station 2. Revenue said in July that planned maintenance at FS 2 from July
28-Aug. 8 was expected to reduce production by approximately 33,000 bpd.
Maintenance cuts production
Revenue said there was a partial one-day planned maintenance shutdown of the
trans-Alaska oil pipeline Aug. 25, with ANS flow reduced to 305,000 bpd.
BP's Milne Point field was down for planned maintenance Aug. 23, with production
reduced approximately 35,000 bpd, the department said. Production at Milne
averaged 26,046 bpd in August, down 31.7 percent from a July average of 38,154.
Production began to fall at the field Aug. 20 and there was no production Aug.
24-28. Production began at 561 bpd Aug. 29 and had reached 20,104 bpd by Aug.
31. Milne Point field includes Schrader Bluff heavy oil production.
The ConocoPhillips Alaska-operated Alpine field also saw planned maintenance in
August. Production began to drop Aug. 24 and was nominal through Aug. 28; the
field was back up to 128,499 bpd by the end of the month. The August average at
Alpine (which includes production from the Fiord and Nanuq satellites) was
106,045 bpd, down 13.4 percent from a July average of 122,463 bpd.
Lisburne production up
Production was down 11.3 percent at the ConocoPhillips-operated Kuparuk
River field, averaging 139,691 bpd in August compared to 157,550 bpd in July.
Kuparuk includes satellite production from West Sak, Tabasco, Tarn, Meltwater
and Palm.
The BP-operated Northstar field averaged 37,401 bpd in August, down 2.5 percent
from a July average of 38,372 bpd.
Prudhoe Bay, also operated by BP, averaged 300,308 bpd in August, down 2.3
percent from a July average of 307,382 bpd. Prudhoe Bay production includes
western satellites Midnight Sun, Aurora, Polaris, Borealis and Orion.
BP-operated Lisburne had the only July-to-August production increase, averaging
27,168 bpd in August, up 11.4 percent from a July average of 15,777 bpd.
The August temperature at pump station 1 on the North Slope averaged 47.2
degrees Fahrenheit compared to a five-year average of 44.6 degrees F.
Cook Inlet crude oil production averaged 14,727 bpd in August, down 3.8 percent
from a July average of 15,306 bpd.
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Anchorage Daily News
September 8, 2007
http://www.adn.com/money/industries/oil/story/9286030p-9200500c.html
Pioneer
starts drilling at Stariski
ALONG COOK
INLET: Company wants to see if field still has potential.
The Associated Press
Published: September 7, 2007
Last Modified: September 8, 2007 at 02:03 AM
KENAI -- Pioneer Natural Resources Alaska Inc. wants to see if a 40-year-old
oil discovery still has promise.
The Anchorage company has begun drilling an appraisal well from an onshore
location near Stariski, which is along Cook Inlet.
The field, which the company says has the potential to produce 50 million
barrels of oil, was discovered by Pennzoil in 1967.
The independent exploration and production company expects the drilling to
last up to 70 days, plus another 60 days for testing, said Tadd Owens, Pioneer
Alaska's director of government and public affairs.
"The gross resource potential is 30 million to 50 million barrels of oil," he
said. "Pending the success of our appraisal well, we expect approximately 12
horizontal directional wells for development."
Only onshore drilling is being considered at this time. The tentative site
development schedule calls for permitting in 2008, facility construction in
2008-2009, and development drilling in 2009 and 2010. Oil production would
begin in about three years, Owens said.
Conoco Phillips drilled a well at the site in 2003. Subsequently, Pioneer
became the operator and 100 percent working-interest owner of the Cosmopolitan
Unit, though Conoco Phillips retains a small royalty share, Owens said.
Pioneer's drilling will involve a well off initial drilling by Conoco Phillips
and will test the known reservoir of oil.
Pioneer is evaluating trucking options as well as the feasibility of building
a pipeline to ship the oil.
While oil is the prime target, there will be some residual gas produced as
well, which Pioneer will pump into the Kenai-Kachemak pipeline. However, the
volumes won't be enough to materially affect the local gas market, Owens said.
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http://www.adn.com/money/story/9286088p-9200549c.html
Oil firm
Veco is history
SIGN COMES DOWN:
Company was linked to corruption probe.
By SEAN COCKERHAM
scockerham@adn.com
Published: September 8, 2007
Last Modified: September 8, 2007 at 01:51 AM
Colorado-based CH2M Hill on Friday took over scandal-ridden Veco Corp., the
Anchorage oil field services and construction company whose former executives
pleaded guilty this spring to bribing state legislators.
CH2M Hill decided not to keep the name Veco for what is now a part of the
Colorado firm's energy systems group, and cranes removed Veco signs from the
company's East 36th Avenue offices Friday afternoon
The former Veco businesses will generally operate under the CH2M Hill name .
"It's a new day, a new future," said CH2M Hill spokesman John Corsi.
Veco had been one of the largest companies in Alaska with about 2,000
employees in the state and a similar number in operations that span the globe.
Corsi said the purchase includes all core operations, people and projects from
the former Veco. CH2M Hill said it did not have a breakdown Friday on what was
not included in the sale. But Corsi described the assets left on the table as
minimal.
"The short answer is essentially all the operational assets are coming, such
as the North Slope, Kenai Peninsula, the fabrication shops, Calgary,
Bellingham and so on," Corsi said in an e-mail. "There are some non-core
businesses that aren't included. However, the last couple days have been so
busy getting the deal done, I just don't have those details right now."
Corsi said the Veco assets were valued at $463 million. The final tally of the
sale will come in at slightly less than that, he said.
One former Veco operation not part of the sale is the Voice of the Times, the
Web site successor to the conservative half-page editorial section that
appeared in the Daily News for 15 years. The site will continue as part of a
holding company owned by the Allen family but hopes to become a financially
self-sufficient operation, according to Voice of the Times editor Tom Brennan.
Veco's former chief executive Bill Allen and former vice president Rick Smith
pleaded guilty to federal conspiracy and bribery in the ongoing political
corruption investigation in Alaska. Allen, who helped build Veco starting in
1969, admitted to bribing state lawmakers for their votes or influence on
legislation important to the oil industry.
Tammy Kerrigan, Allen's daughter, took over as Veco chairwoman in May after
her father pleaded guilty and stepped down from his corporate posts.
"The Allen family is pleased that Veco's legacy of hard work, client service
and professional excellence will continue with this acquisition," Kerrigan
said in a news release. She is leaving the company. Garry Higdem, a CH2M Hill
executive, will lead the former Veco.
CH2M Hill, based in the Denver suburb of Englewood, is an employee-owned
company. It has about 19,000 workers engaged in engineering, construction,
transportation and environmental services projects around the world. Projects
include managing expansion of the Panama Canal and venue construction for the
2012 London Olympic games. The company had revenues of about $4.5 billion last
year.
Corsi said buying Veco fits in with his company's strategic plan by making it
a bigger global player in energy industries. He said CH2M Hill has long been
interested in Veco.
"The people are great, the reputation is great, they have an outstanding track
record for client service," he said.
He said CH2M Hill will keep the former Veco's operations going pretty much as
they have been. There are no shake-ups in management or elsewhere in the
company planned., Corsi said.
Veco is heavily involved in oil field services and construction on the North
Slope, and also has projects in the Lower 48, Canada, Barbados, Russia's
Sakhalin Island and the Middle East. The company had annual revenue reaching
$1 billion, according to Veco executives.
BP, which operates Prudhoe Bay, is one of Veco's major customers.
"They do a good job supporting oil production and we're looking forward to
continuing our strong relationship," said Daren Beaudo, a spokesman for BP
Alaska.
Corsi said Veco's existing contracts are expected to continue under CH2M Hill.
That includes a contract with the National Science Foundation to provide
logistics and support for polar research. The FBI is investigating the award
of that contract and is looking into connections between Veco and U.S. Sen.
Ted Stevens. Then-Veco chief executive Allen in 2000 oversaw renovations to
Stevens' Girdwood home, the scene of a July 30 FBI raid.
Find Sean Cockerham online at adn.com/contact/scockerham
Xxxxx
http://www.adn.com/news/alaska/wildlife/bears/polar_bears/story/9286663p-9200531c.html
Alaska
polar bears called doomed
Loss of habitat
expected to decimate world population within 50 years
By TOM KIZZIA
tkizzia@adn.com
Published: September 8, 2007
Last Modified: September 8, 2007 at 03:11 AM
Polar bears will be gone from Alaska within 50 years, government scientists
predicted Friday.
Shrinking sea ice will leave only a remnant surviving population of the
world's polar bears in the islands of the Canadian Arctic by mid-century,
according to a breathtaking new study by the U.S. Geological Survey.
Two-thirds of the world's polar bears, including those along the coasts of
Alaska and Russia, will have disappeared.
The loss of summer sea-ice habitat will be so profound for bear populations
that regional efforts to protect them, such as restricting subsistence hunting
or Arctic oil and gas development, will not be able to prevent their
disappearance, the government scientists said.
Moreover, the bears' doom is irreversible, the study said. Even a dramatic
effort to reduce greenhouse gas emissions would not be enough to halt the
near-term warming trend and save the coastal bears. The species might manage
to survive in its remnant outposts if long-term warming trends are reversed,
scientists said.
"Things could be turned around so that they don't disappear completely," said
Steve Amstrup, the biological study team leader for the USGS. On the other
hand, Amstrup said, climate-warming models chosen for the study tended to be
conservative, so the bears might disappear faster than predicted.
"As the sea ice goes, so goes the polar bear," Amstrup said.
'THREATENED' SPECIES?
The new set of USGS studies, provided to Congress Friday, were undertaken
to aid Interior Secretary Dirk Kempthorne's decision whether to designate
polar bears a "threatened" species under the Endangered Species Act. A
decision is due by next January.
The State of Alaska, fearing consequences for subsistence hunting and oil
production, has strenuously opposed a federal threatened-species listing,
arguing, among other things, that bear populations have been stable and that
too much uncertainty surrounds projections of global warming trends.
State Fish and Game commissioner Denby Lloyd said Friday it was too soon to
analyze all the new data to see how they might affect the state's position.
The new studies were introduced in a national teleconference by USGS director
Mark Myers, who knows well the potential impact of an endangered-species
listing on Alaska. He was head of the state's oil and gas division under Gov.
Frank Murkowski.
"The other factors are not a significant stressor to the polar bear," Myers
said, responding to a question about subsistence hunting and oil development.
"Loss of sea ice is the controlling factor."
ON THINNING ICE
Of the variety of stresses affecting polar bear survival, Amstrup said, 84
percent have been pegged to loss of sea ice habitat.
The picture of doom is even more dire than the one painted by
environmentalists when they sued the federal government over polar bears in
2005, prompting the endangered-species review by Kempthorne.
"This is not a reason to despair or give up," said Deborah Williams, president
of Alaska Conservation Solutions, an Anchorage-based organization focused on
global warming. "Our generation has the ability to write a death sentence for
the polar bear, or to take action to assure that the species survives."
Williams said an Endangered Species Act listing would focus new attention on
greenhouse gas emissions -- especially those with a shorter life span, such as
methane and soot -- and could also help protect any handful of Alaska bears
trying to adapt to living on land.
The new study notes that more polar bears are likely to be seen on land as the
ice melts, increasing contact with humans in the short term.
Scientists think there are 20,000 to 25,000 polar bears in the world.
One-fifth or so live in Alaska and nearby on the coast of the Beaufort and
Chukchi seas.
The bears are considered marine mammals because they depend on sea ice for
hunting their prey: seals breathing through holes or along the edges of
open-water leads.
Polar bears have been known to live as long as 30 years, Amstrup said. That
means today's young bears may be part of the last generation in Alaska.
While older bears will probably scrape along, scientists expect to see cubs
and young adults die off and reproduction rates decline. Already, studies have
reported shrinking weight and rising mortality of cubs. There have also been
reports of polar bears drowning.
In their comments Friday, Amstrup and Myers addressed several challenges
raised since the U.S. Fish and Wildlife Service undertook its review last
December.
BEARS WON'T SURVIVE ON LAND
Amstrup rebutted the idea that polar bears could survive by adapting to
land-based hunting. He said studies have shown the bears to be very
inefficient hunters of land animals, which in any case do not provide the kind
of rich nutrition polar bears seek.
He said the fossil record of polar bears goes back no more than 50,000 years,
meaning they would not have had to adapt in the past to any period warmer than
the present. If the bears go back more than 200,000 years, however -- and
there is some genetic evidence of this, Amstrup said -- then they may have
found a way in the past to adapt to an even warmer spell.
Amstrup said bear population trends have sometimes been misunderstood. The
numbers have trended upward since the 1960s, he said, as overhunting was
stopped internationally and better data became available. But the healthy
trend has now been reversed by the new and overwhelming factor of habitat
loss.
Time will tell how accurate those predictions of continued warming and sea ice
loss will be.
One of the new studies, looking at Beaufort Sea bear populations, examined sea
ice in the years 2001-2005. If conditions remain similar to 2001-2003,
relatively cold years, the bear population will grow slowly, the study said.
If conditions resemble the warm years of 2004-2005, they will "decline
precipitously." If conditions toggle back and forth, numbers will decline
slowly.
But broadly accepted long-term projections call for the atmosphere to grow
progressively warmer than it is now, researchers say. The USGS studies
rejected a number of climate models, drawing from the 10 models that had
proven most accurate when measured against actual shrinkage in recent years,
the scientists said.
"The sea ice in 2007 already has declined below the level projected for
mid-century by the four most conservative models in our ensemble," says the
main USGS study.
Consensus models project a 40 percent shrinkage of summer sea ice in the
Beaufort Sea by 2050 compared to the 1980s, the National Oceanic and
Atmospheric Administration said this week.
By that time, the new USGS studies project, the last polar bears on earth will
be hiding out in Canada's northern archipelago and along the northwest coast
of Greenland.
Contact reporter Tom Kizzia at tkizzia@adn.com.
A study by the U.S. Geological Survey predicts a grim future for polar bears:
• Predicted shrinkage of polar sea ice will result in loss of roughly
two-thirds of the world's polar bear populations in the next 50 years.
• Polar bears now living off Alaska coasts -- in the Chukchi and Beaufort seas
-- will disappear completely.
• Curbing subsistence hunting and development in the Arctic wouldn't be enough
to change the bears' fate.
• Gases already in the atmosphere will keep warming the globe, so even a halt
to emissions won't save the polar bears.
U.S. Geological Survey predictions
Xxxxxxxxxxxx
http://www.adn.com/opinion/compass/v-printer/story/9274522p-9189317c.html
NORTH SLOPE
BOROUGH HAS CAUSE TO OPPOSE BEAUFORT DRILLING
COMPASS: Points of view from the
community
EDWARD ITTA
Edward Itta is mayor of the North Slope Borough.
September 3, 2007
BARROW
In an Aug. 26 commentary, Dan Fagan urges Gov. Sarah Palin to take a difficult
stance on Beaufort Sea drilling. He's really asking her to take the easiest
position, and he backs it up with simplistic reasoning.
It's easy for Mr. Fagan to rage about anyone who dares to question one out of
the hundreds of active development projects on the Slope -- he won't have to
live here with the consequences. His culture is not fundamentally tied to the
health of local wildlife species, so a possible diversion of the bowhead whale
migration doesn't scare him the way it scares us.
Fagan's attack on the North Slope Borough ignores our basic position. Without
oil in the pipeline we have no economy, so why would we want to stop
development? Like all Alaskans, we depend on it. As oil infrastructure has
spread across the central Arctic, we have partnered with industry to protect
subsistence resources while exploration and production move forward. A close
working relationship with industry has made litigation unnecessary; that's why
we have not filed a lawsuit over a major project in a very long time. In this
respect, we are different from the environmental plaintiffs in the Shell
offshore case. The borough's participation in this lawsuit is newsworthy
precisely because it is so rare.
Why then have we decided to oppose this project? Because the federal Minerals
Management Service failed in its preparation for the largest deployment of
drilling rigs, icebreakers, seismic vessels and other ships in Arctic history.
MMS is charged with protecting the public from unintended consequences of
offshore development. The agency is supposed to assess potential impacts on
wildlife, habitat and human activity. In this case, Shell's first planned
drill site sits in the midst of the bowhead whale migration route. Recent
studies indicate that impacts from underwater noise on migrating bowheads,
especially mothers with calves, are greater than previously believed. Shell's
activities are scheduled to occur when bowhead mothers and calves are most
likely to be in the area.
This is obviously of great concern to subsistence whalers who have spent
decades managing the bowhead hunt to sustain a healthy population. It also
worries MMS scientists, whose analysis led them to express unanimous concern
over the project's noise impacts on bowheads. They came to similar conclusions
about the risks of excessive noise to beluga whales, seals and other species
in the area.
None of these scientific concerns showed up in the agency's final document.
Rather than listen to its own experts, MMS based its decision on a
half-hearted analysis that reduced an important policy decision to an exercise
in politics.
The borough rarely stands in opposition to North Slope oil and gas projects.
Our planning commission routinely approves hundreds of oil company development
permits every year. We have a very strong preference for onshore activity
because it is safer, but I recognize that federal policy encourages offshore
exploration.
At the same time, our whalers often feel that agencies treat subsistence like
a recreational hobby instead of the cornerstone of an ancient and,
fortunately, still vibrant culture. Is it too much to ask that MMS follow the
law and act on the best available research to protect our wildlife resources
at the same time as it encourages development? I don't think so.
If science is no longer the standard by which the government judges potential
environmental risks, then agencies should admit it. And when science no longer
drives the risk assessment of our nation's development policy, then the
Inupiat way of life is threatened along with the animals impacted by these
decisions.
In her response to the federal court's decision, Gov. Palin said she remains
committed to developing the state's resources "in a manner that protects our
way of life."
I completely agree, and I thank the governor for that perspective.
xxxxxxxxxxxxxxxxxxxx
Wall Street Journal
September 8, 2007
ExxonMobil CEO:
Mackenzie Pipeline Costs Could Top C$16.2 Bln
DOW JONES NEWSWIRES
September 7, 2007 5:31 p.m.
CALGARY (Dow Jones)--Costs for the troubled Mackenzie gas pipeline could top
the last cost estimate of C$16.2 billion, ExxonMobil Corp.'s (XOM) chief
executive warned Friday.
Speaking to reporters at a Calgary industry event, Rex Tillerson said the
length of the regulatory process made cost estimates for the pipeline little
more than guesses based on other projects.
"It could be C$16 billion or C$14 billion or C$20 billion," Tillerson said.
"All we can say is that it's large, it's larger than we previously thought."
Meanwhile, rapid cost inflation has been hiking up project costs while the
pipeline has been in regulatory limbo, he added.
"We're seeing what happens on other projects...(there's) a bit of
extrapolation from those more detailed cost estimates," he said.
The project, first discussed in the 1970s, aims to bring gas from the
Mackenzie delta at the northern tip of the Northwest Territories to Alberta,
where it would connect to existing pipelines. The push to revive the project
started gathering support in 2004, but public hearings only began in January
2006, while the startup date has been pushed back three years to 2014.
Imperial Oil (IMO) is the project operator, and the other partners are Royal
Dutch Shell PLC (RDSB.LN), ConocoPhillips (COP) and the Aboriginal Pipeline
Group.
The proposed route crosses several First Nations territories, and complaints
from several groups that they haven't been consulted properly have also slowed
proceedings.
Tillerson has been one of the more vocal critics of the project's costs -
which were previously estimated around C$7.5 billion - questioning the
pipeline's viability without some sort of federal intervention.
After the regulatory proceedings, the Mackenzie consortium will have to do a
"thorough update" of costs and "see how we are from an economic standpoint,"
he said.
He denied, however, that ExxonMobil was shelving the project.
The company is also involved in a US$25 billion pipeline project to bring 4.5
billion cubic feet a day of natural gas from Alaska to the lower 48 states.
Tillerson said: "You tell me what [the cost] might be today but it's not US$25
billion anymore."
-By Hyun Young Lee, Dow Jones Newswires; 613-237-0669;
hyunyoung.lee@dowjones.com
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Anchorage Daily News
September 7, 2007
http://www.adn.com/money/industries/oil/pipeline/story/9284217p-9198724c.html
Pipeline
called viable despite drop in gas use
BP REPORT:
Consumption of natural gas declines in
U.S., increases worldwide.
By WESLEY LOY
wloy@adn.com
Published: September 7, 2007
Last Modified: September 7, 2007 at 01:50 AM
U.S. natural gas consumption has declined for two consecutive years, but that
doesn't necessarily mean chances for an Alaska gas pipeline are diminished, a BP
economist said Thursday.
While nothing is guaranteed, the long-term outlook is that the country -- the
world's biggest natural gas user -- will need to tap all available sources,
including Lower 48 production, imports as well as Arctic gas, said economist
Mark Finley.
Finley, of Washington, D.C., has been traveling the world briefing reporters,
industry groups and others on the annual "BP Statistical Review of World
Energy."
The review is a respected, data-packed guide to supply and demand for major
energy sources including oil and gas, coal, and nuclear and hydroelectric power.
BP, which runs the largest U.S. oil field at Prudhoe Bay, has produced the
review for 56 years.
Among the report's findings for 2006:
• World oil consumption grew by less than 1 percent, the weakest growth since
2001. The lower demand was largely in response to high crude oil prices peaking
well above $70 a barrel.
• World natural gas consumption grew by 2.5 percent, close to the 10-year
average, but U.S. gas consumption declined for the second year in a row.
• U.S. gas production rose by 2.3 percent, the strongest gain since 2001. The
growth was due to recovery from hurricane-related outages in the Lower 48, as
well as more rigs drilling for gas, Finley said.
Alaska politicians again are trying to entice oil companies or other firms to
build a pipeline to carry the North Slope's vast gas reserves. The gas has been
stuck in the ground since its discovery more than 30 years ago.
The most likely option, many energy companies say, is a pipeline costing $20
billion or more that would run southeast off the Slope into Canada to as far as
Chicago.
But the staggering scale, cost and risk of such a project have long precluded it
from happening, despite the best efforts of a succession of governors and
occasional spikes in gas prices. Gov. Sarah Palin has invited potential builders
to submit proposals by Nov. 30 to build a line and lock up a package of
financial incentives from the state, but whether this plan will go anywhere or
fizzle remains an open question.
A key factor, of course, is market demand for gas.
Alaska gas has competition from alternative energy sources that industrial users
and power utilities can switch to, Finley said.
One major competitor is coal, of which North America has a great deal.
Coal is a highly polluting fuel and carries antipollution costs in some
countries, but technological advances could clean it up. And recently, coal
demand has surged due to bargain prices.
"The lesson of the past few years is, cheap beats dirty," Finley said.
Another worry for Alaska gas pipeline backers has been the threat of rising
imports in the form of liquefied natural gas, or LNG. Energy companies are
building, or have proposed, numerous North American ports for receiving LNG
shipments.
But while LNG shipments globally rose by a strong 11.8 percent in 2006, U.S.
imports declined slightly, Finley said.
The apparent weakness in the U.S. gas market could be temporary. For one thing,
weather is a big factor for gas demand, and last year's warm weather helped
demand, Finley said.
Find Wesley Loy online at adn.com/contact/wloy or call 257-4590.
Xxxxx
http://www.adn.com/news/politics/story/9283323p-9197836c.html
Palin oil
tax gets cold shoulder
PPT: No special
session needed, says the resource
association head.
The Associated Press
Published: September 7, 2007
Last Modified: September 7, 2007 at 02:41 AM
FAIRBANKS -- The head of the Alaska Oil and Gas Association presented Gov. Sarah
Palin with a long list of concerns regarding her new oil tax proposal.
Marilyn Crockett said this week that the proposal could decrease investment in
the state by raising the tax burden on companies.
Crockett also said it would replace a tax that isn't broken and has not yet had
a chance to work.
"The industry does not want to have a special session," she told members of the
Alaska Support Industry Alliance at a luncheon in Fairbanks.
Other members of the oil and gas association, which include Exxon Mobil, BP and
Conoco Phillips, also expressed their reservations about Palin's proposal.
"We agree with the governor's approach to stay with a PPT-based tax structure;
however, we are concerned that the tax rates proposed will make every single
project look less attractive for us to reinvest," Kevin Mitchell, vice president
of finance and administration for Conoco Phillips, wrote in an e-mail to the
Fairbanks Daily News-Miner.
Palin this week restated her intention to call a special legislative session
next month to revisit the oil production tax passed last summer. She also
presented an outline for a new tax that would increase the tax rate.
Palin said the current petroleum profits tax, or PPT, "isn't working as
promised."
Revenue Commissioner Pat Galvin has said that revenues from the PPT will likely
come in a little short of expectations in the fiscal year that just ended and
very short of expectations next year.
Instead of bringing in an additional $1 billion over the old tax system, the PPT
will likely bring in about $250 million more in fiscal year 2008, according to
department figures.
Crockett pointed to fiscal year 2007, in which the new tax is expected to add
about $1 billion in state revenues over the old tax.
"Is PPT working? I would say that it is," she said.
Galvin said Wednesday that cost increases faced by the companies explain the
reduced revenue estimates.
Capital costs are now expected to be about 50 percent higher in fiscal year 2007
than was thought when the PPT was passed, and about 100 percent higher in fiscal
year 2008, he said.
The PPT allows companies to deduct operating and capital costs and receive
credits on certain capital costs.
Crockett encouraged the state to look at how to encourage companies to invest in
the state and keep production levels up, ensuring future tax revenues as well as
revenues from royalties and property and corporate taxes.
"What we need to be focusing on is keeping that pipeline full," she said.
Oil production has dropped from a peak of more than 2 million barrels a day to
less than 800,000 barrels a day, she said, and maintaining production levels
will require significant new investment.
xxxx
http://www.adn.com/news/politics/fbi/kott/story/9283304p-9197813c.html
Pete Kott
jury selection continues
ALASKA DIGEST
Published: September 7, 2007
Last Modified: September 7, 2007 at 02:05 AM
ANCHORAGE -- Jury selection in the corruption trial of former state Rep. Pete
Kott will stretch into a third day.
U.S. District Judge John Sedwick said Thursday that he expected a jury would be
picked this morning.
Each of 80 potential jurors were questioned individually Wednesday and Thursday
on publicity about the bribery case, and whether they were influenced or biased
by it. Most only recalled vague information and almost none were excluded
because of it. Medical issues and work hardships allowed some to go home.
By Thursday afternoon, prospective jurors were being questioned as a group about
matters such as whether they or someone close to them worked in law enforcement,
and whether they had previously served on a jury. When court ended for the day,
the pool had been whittled to 62 potential jurors.
One of those released was the husband of a prosecution witness. Two others said
they felt they couldn't be impartial because of relatives in law enforcement.
One woman still in the jury pool told the judge she and her husband were close
to former state Senate President Ben Stevens and his family. But she said she
believed she could put that aside. Stevens is not a witness in the case, but his
name may come up.
Prosecutors allege Stevens, Kott and others were part of a conspiracy to push
oil field services company Veco's interests in the Legislature. Stevens has not
been charged.
Once it gets started, the trial is expected to take two or three weeks.
-- Anchorage Daily News
Xxxx
http://www.adn.com/news/environment/story/9283283p-9197790c.html
Dire sea
ice predictions confirmed by observations
IT'S SHRINKING: Observations on the ground back computer models.
By DAN JOLING
The Associated Press
Published: September 7, 2007
Last Modified: September 7, 2007 at 02:02 AM
Computer predictions of a dramatic decline of sea ice in regions of the Arctic
are confirmed by actual observations, according to scientists for the National
Oceanic and Atmospheric Administration.
The Seattle-based researchers reviewed 20 computer scenarios of the effects of
warming on sea ice used by the Intergovernmental Panel on Climate Change in its
assessment report released this year.
The researchers compared those models with sea ice observations from 1979
through 1999, rejecting about half because they did not match what satellites
showed, oceanographer James Overland said.
But using the most reliable models, the NOAA scientists reached the same unhappy
conclusion: By 2050, summer sea ice in the Beaufort Sea off Alaska's north coast
likely will have diminished by 40 percent compared to the 1980s. The same is
likely for the East Siberian-Chukchi Sea region off northwest Alaska and Russia.
In contrast, Canada's Baffin Bay and Labrador showed little predicted change.
There was less confidence for winter ice, but the models also predict a sea ice
loss of more than 40 percent for the Bering Sea off Alaska's west coast, the Sea
of Okhotsk east of Siberia and the Barents Sea north of Norway.
A 40 percent loss of summer sea ice off Alaska in the Beaufort Sea could have
profound effects on marine mammals dependent on the sea ice such as polar bears,
now under consideration by the U.S. Fish and Wildlife Service for "threatened"
status under the Endangered Species Act because of changes in the animals'
habitat from global warming.
Overland, an oceanographer at NOAA's Pacific Marine Environmental Laboratory in
Seattle, and Muyin Wang, a meteorologist at NOAA's Joint Institute for the Study
of the Atmosphere and Ocean at the University of Washington in Seattle, reviewed
20 computer models provided through the IPCC. Their research paper will be
published Saturday in Geophysical Research Letters, a publication of the
American Geophysical Union.
In the 1980s, sea ice receded 30 to 50 miles each summer off the north coast of
Alaska, Overland said.
"Now we're talking about 300 to 500 miles north of Alaska," he said of
projections for 2050.
That's far past the edge of the highly productive waters over the relatively
shallow continental shelf off Alaska's north coast, considered important habitat
for polar bears and their main prey, ringed seals, plus other ice-dependent
mammals such as walrus.
Kassie Siegel of the Center for Biological Diversity, who wrote the petition
seeking federal protection for polar bears, said NOAA's retrospective of sea ice
projections does not even take into account sea ice figures for this summer
recorded by the National Snow and Ice Data Center. As of Tuesday, the center's
measurement of sea ice stood at 1.70 million square miles, far below the
previous record low for summer ice of 2.05 million square miles recorded Sept.
20, 2005.
The situation is dire for polar bears, Siegel said.
"They're going to drown, they're going to starve, they're going to resort to
cannibalism, they're going to become extinct," she said.
As ice recedes, many bears will get stuck on land in summer, where they have
virtually no sustainable food source, Siegel said. Some will try and fail to
swim to sea ice, she said. Bears that stay on sea ice will find water beyond the
continental shelf to be less productive. Females trying to den on land will face
a long swim.
"It's absolutely horrifying from the polar bear perspective," she said.
Less sea ice also will mean a changing ecosystem for commercial fishermen and
marine mammals in the Bering Sea, Overland said.
With sea ice present, much of the nutrients produced in the ocean feed simple
plankton that bloom and sink to the ocean floor, providing rich habitat for
crabs, clams and the mammals that feed off them, including gray whales and
walrus.
"If you don't have the ice around, the productivity stays up closer to the
surface of the ocean," Overland said. "You actually have a change in the whole
ecosystem from one that depends on the animals that live on the bottom to one
that depends on the animals that live in the water column. So you have winners
and losers."
That could mean short-term gains for salmon and pollock, he said. But it also
could mean that fishermen will have to travel farther north to fish in Alaska's
productive waters, and warm-water predators might move north.
Overland said sea ice computer models have performed well accounting for how ice
melts from global warming and for the albedo effect -- accelerated warming due
to the presence of dark water that absorbs most of the sun's radiation, warming
the ocean and making it harder for water to freeze, in contrast to ice, which
reflects most of the sun's radiation.
The models do not do as well accounting for wind and cloud patterns and other
factors that may have contributed to recent warming, Overland said.
But the contribution to warming by greenhouse gas emissions likely is set, he
said. Emissions stay in the atmosphere for 40 to 50 years before being absorbed
by the ocean. The amount put out in the last 20 years and the carbon dioxide put
out in the next 20 will be around to influence the half-century mark, Overland
said.
"I'm afraid to say, a lot of the images we are going to see in the next 30 to 40
years are pretty much already established," he said.
xxxxxxxxxxxxxxxxx
Houston Chronicle
September 7, 2007
http://www.chron.com/disp/story.mpl/business/energy/5113433.html
Former
BP plant boss acknowledges safety worries before blast
By BRAD HEM
Copyright 2007 Houston Chronicle
The manager at BP's Texas City refinery at the time of a deadly 2005 explosion
testified today that he was concerned enough about safety before the disaster
to launch his own investigation of previous worker deaths, but did not believe
there was a need to shut down operations.
"There was no indication prior to the incident that required shutdown of the
facility," Don Parus, 55, said from the witness stand in a Galveston district
court.
He said he included money for upgrades in his 2005 budget, but that the
company reduced his budget.
Four former workers at the refinery are suing BP for injuries and emotional
distress they say they suffered as a result of the March 23, 2005, explosion
that killed 15 workers and injured scores more.
The trial now before state District Judge Susan Criss is the first to emerge
from the blast. BP has settled at least 1,350 of about 3,000 explosion-related
lawsuits, but the company's lawyers told jurors that they didn't settle the
cases on trial now because of weaknesses in the plaintiffs' claims.
The plaintiffs' lawyer, Brent Coon, who has taken the lead in organizing the
vast litigation, countered that BP put profits over safety by cutting budgets,
training and personnel in the years before the blast.
Parus has been on paid administrative leave from BP since the blast. His
testimony during the second day of the trial marks the first time he has
spoken at length in public about the incident and his role.
An internal BP investigation of the explosion completed in February
recommended that Parus and three other senior executives be fired, but he
remains on the payroll.
Three deaths in 2004, including two men who died from hot water burns in
September that year, prompted Parus, then new to overseeing the refinery, to
investigate on his own how many people had died at the facility in the
previous 30 years.
He was surprised both to find 22 deaths in 30 years and that the body count
wasn't widely known.
"It was shocking that all employees didn't know, not just management," said
Parus, who became emotional when he spoke of visiting one of the burned men in
the hospital before he died.
Parus then commissioned a workplace safety consultant, Telos Group, to study
in more depth the safety culture at the refinery. A survey of 1,100 found many
workers believed each day at work could be their last.
"We have never seen a site where the notion of 'I could die today' was so real
for so many hourly people," the report said.
Parus shared the results with supervisors in Chicago, where BP's U.S.
operations are based, and at company headquarters in London, he said.
He also included money for upgrades in his 2005 spending request, but his
budget was reduced, he testified.
Testimony began Wednesday with two witnesses' descriptions of the gruesome
scene after the 2005 blast.
The explosion occurred after a piece of equipment overfilled with flammable
liquid hydrocarbons. Alarms and gauges designed to warn of the problem failed,
and vented vapor ignited during startup of a unit that boosts octane in
gasoline.
brad.hem@chron.com
xxxxxxxxxxxxxxxxxx
Wall Street Journal
September 7, 2007
Ex-BP Refinery
Manager:Didn't Expect Danger, Despite Warnings
DOW JONES NEWSWIRES
September 6, 2007 4:02 p.m.
GALVESTON, Texas (AP)--The former manager of the U.S.'s third-largest
refinery said he did not expect danger before a deadly blast there, even
though two reports he had requested warned of hazards and workers indicated
they feared for their lives.
The blast in 2005 at the London-based BP PLC's (BP) plant in Texas City killed
15 people and injured more than 170.
Testifying on Thursday during the first civil trial related to the blast,
former plant manager Don Parus said a report three years before the blast
concluded there was a major underinvestment in infrastructure at the Texas
City site.
The second study, called the Telos Report, came just two months before the
blast and told of various safety problems at the plant and a lack of resources
and management awareness to deal with them. In the report, many workers
indicated they feared for their lives.
Parus said his 2005 budget request to fix problems he saw, including rusted
pipes and towers, was reduced even though the refinery was so successful it
was essentially "printing money out there." The plant's monthly profit
approached $100 million.
"With the concerns and fears people expressed in the Telos Report, was there
any recommendation given to shut down any units?" asked Brent Coon, an
attorney for four contract workers suing BP for back injuries, hearing loss
and other ailments they say were caused by the blast.
"I had the ability to do that. I did not do that. I had no reason to make that
decision," said Parus, who has been on administrative leave from BP since
shortly after the blast.
Parus said after three worker deaths at the refinery in 2004, when he became
plant manager, he researched the number of deaths there the previous 30 years.
He said he was shocked to find there had been 22, or about one every 18
months.
BP's attorneys have told jurors the London-based oil giant never placed
profits over safety at the plant and that the company never did anything
intentionally that resulted in the accident.
The explosion at the plant occurred after a piece of equipment called a
blowdown drum overfilled with highly flammable liquid hydrocarbons, and the
excess chamicals ignited. Alarms and gauges that were supposed to warn of the
overfilled equipment did not work properly.
The U.S. Chemical Safety and Hazard Investigation Board, one of several
agencies that investigated the accident, found BP fostered bad management at
the plant and that cost-cutting moves by BP were factors in the explosion.
An internal report by BP released in May said there was a culture at the plant
that seemed to ignore risk, tolerated noncompliance and accepted incompetence.
A fifth lawsuit that was also set to be tried, filed by the estate of a
contract worker whose suicide was attributed to trauma from the accident, was
settled before opening statements.
About 1,350 of the thousands of lawsuits filed since the accident have been
settled.
The blast has cost the company at least $2 billion in compensation payouts,
repairs and lost profit.
The trial, which began Wednesday, could last up to two months.
xxxxxxxxxxxxxxx
National Public Radio
September 6, 2007
http://www.npr.org/templates/story/story.php?storyId=14194568
Exploring for Oil in the Arctic's 'Great Frontier'
by Steve Inskeep
Enlarge Tracy Wahl, NPR
http://media.npr.org/news/images/2007/sept/06/arctic_ship540.jpg
Shell's drill ship Frontier Discoverer, anchored in Dutch Harbor, Alaska.
The vessel carries an oil derrick 190 feet high taller than the Statue of
Liberty.
Take a Journey to the Arctic with Steve Inskeep
http://www.npr.org/programs/morning/features/2007/sep/arctic/slideshow/index.html
More in the Series
Sep. 5, 2007
Arctic Businesses Learn to Adapt to Climate Change
http://www.npr.org/templates/story/story.php?storyId=14154041
Sep. 4, 2007
Nations Jostle for a Share of the Arctic
http://www.npr.org/templates/story/story.php?storyId=14092469
Morning Edition, September 6, 2007 · These days, the frontiers of oil
exploration include the waters north of Alaska. Nobody knows how much energy
is hidden beneath the Arctic waves. But oil companies want to find out.
A federal court blocked Royal Dutch Shell proposal to drill for oil in the
Beaufort Sea, above Alaska's northern coast. But the company is still
trying. And its story tells you a lot about the forces shaping the Arctic's
future.
This summer, Shell assembled an entire fleet in an Alaskan harbor.
Crews were performing maintenance on a drill ship. It carries an oil derrick
190 feet high. That means it steams around with a tower taller than the
Statue of Liberty, from its toes to its torch.
"This is the Frontier Discoverer. I would call it the state-of-the-art
drilling rig, one of the very few that are capable of working in the Arctic
today," says Vince Roes, who works on the ship, which has a reinforced hull.
Shell knows the Beaufort Sea because the company found oil in the same place
two decades ago. The people on the drill ship then included Rick Fox, who
now leads Shell's Alaska operation.
"I remember as a young man, standing out there and watching all the crystals
of ice in the air, when the sun was out," Fox says. "It was just like
zillions of lights, and dry, cold. I remember how peaceful it was. At times
it was so still and quiet, especially when there was ice on the water. It is
an amazing place, it is an amazing place.
Shell concluded the opportunity wasn't amazing enough and it never
exploited the offshore oil that it found years ago.
Today, the technology is better, the price of oil is higher, new oil
reserves are less available. And Shell has reconsidered the Alaskan Arctic.
"We think it's a great frontier ...." Fox says. "The belief is that about 25
percent of the world's remaining reserves are in the Arctic. And I think
it's a major play for us."
Even the climate seemed to be cooperating with that major play. Polar ice
retreated this summer from the spot where Shell plans to explore for oil.
Shell would hardly need its reinforced hulls, or rented Russian icebreakers.
Which brings to mind a cartoon reprinted last month in the Anchorage Daily
News. A man stands on an oil platform in Arctic waters.
"Now that fossil fuel use has melted the ice cap," he says, "we can drill
for more fossil fuel!"
When Fox spotted that cartoon, he laughed and showed it to a colleague.
"You know, we were working out on the ice this past winter," Fox says.
"Maybe there is a trend and less ice, but you still have years when I was
15 miles offshore on a snow machine and it was some big ice."
The Shell manager does acknowledge that Arctic summers are getting longer.
Oil company ships have more time to explore before the winter ice returns.
But Shell did not get to drill this summer. The effects of climate change
are more complicated than they might seem.
"The melting of the Arctic ice cap presents additional problems," says
Deborah Williams, who leads a group called Alaska Conservation Solutions.
"You will have greater storms," she says. "You will have more conflict with
endangered species, and you will have more conflict, I believe, with the
people of the North, particularly the Inupiat people, who are already facing
hardships associated with the global warming and the melting of the Arctic
icecap."
Those conflicts with local people and animals help to explain why Shell's
fleet did not reach the Beaufort Sea. It was blocked by a creature Fox
noticed when he was drilling in that sea years ago.
"I remember seeing whales as well, and the beauty of that animal, just
passing through that clear, clear blue water," Fox says.
Local people have hunted those whales for centuries. Whaling captains joined
a lawsuit seeking to prevent Shell's drilling. A court stopped all activity
while deciding if it should order a full environmental study.
It was by no means a given that local people would oppose an oil project.
Many take a pragmatic approach to the industry, as you could see at a picnic
in Barrow, Alaska.
The picnic was sponsored by BP, one of the major oil companies here. BP was
celebrating 30 years of the Trans-Alaska pipeline which brought jobs and
money to the region.
Yet when Shell proposed offshore drilling, the local government joined the
lawsuit against it. One of their lawyers says drilling noise, or an oil
spill, could harm whales already stressed by global warming.
You sense the ambivalence of some Alaskans when you meet Ron Brower. He's a
tribal elder, who was greeted at the picnic by an oil company vice
president.
Brower has actually done work for a Shell contractor. Yet he says the
climate is changing too rapidly to understand the possible problems with
offshore drilling.
"Any oil spill would be disastrous to our natural food resources in the
Arctic," Brower says.
Shell has never stopped working to ease such concerns. The company even
ordered construction of a special ship. Crew members would stand by on this
high-tech bridge, or control center, waiting to clean any spill.
Shell staffed that ship by hiring Alaskans, including Roland Rufus Iqtakluk
Warrior. He's a whale hunter himself, and he says his neighbors oppose
offshore drilling.
"They just don't want it to happen, don't want to compromise our hunting
grounds," he says.
Even though he works for Shell, Warrior says his job puts him in a position
to "hear and see what's happening and be able to bring up concerns from
where I come from."
He's telling his employers about the importance of whale hunting. He's had
time, since the federal court order left Shell's cleanup crew waiting at
anchor.
That same order left Shell's Fox trying to figure out the next step.
"I am somewhat disappointed with the way this is turning out so far, and
hopeful that we'll still find resolution, because we're still in the
conversation," he says.
Shell remains eager to explore Arctic waters. And in this, it's not alone.
There's not exactly a rush for Arctic oil not yet.
But from Canada to Norway to Russia, companies are buying leases, or even
starting to drill, for the wealth of the changing Arctic.
This series was produced by Tracy Wahl.
Related NPR Stories
Aug. 17, 2007
Researchers: Arctic Sea Ice Hits Record Low
http://www.npr.org/templates/story/story.php?storyId=12881944
June 8, 2007
Alaska's Residents Grapple with Changing Climate
http://www.npr.org/templates/story/story.php?storyId=10865980
Sep. 19, 2006
An Oil-Fueled Boomtown in Canada's Subarctic
http://www.npr.org/templates/story/story.php?storyId=6098557
April 2, 2004
Alaskan Oil Drilling Debate Moves Offshore
http://www.npr.org/templates/story/story.php?storyId=1806816
xxxxxxxxxxxxxxxxxxxx
Fairbanks News Miner
September 6, 2007
http://newsminer.com/2007/09/06/8747
Oil
companies, associations express displeasure with tax proposal
By Stefan Milkowski
smilkowski@newsminer.com
Published September 6, 2007
The head of the Alaska Oil and Gas Association on Wednesday presented a long
list of concerns regarding Gov. Sarah Palin’s new oil tax proposal.
Marilyn Crockett said the proposal could decrease investment in the state by
raising the tax burden on companies and scare companies away by presenting an
unstable investment climate. She also said it would replace a tax that isn’t
broken and has hardly been given a chance to work.
“The industry does not want to have a special session,” she told members of
the Alaska Support Industry Alliance at a luncheon in Fairbanks.
Other members of the oil and gas association, which include ExxonMobil, BP and
ConocoPhillips, some of the largest producers on the North Slope, also
expressed their reservations about Palin’s proposal.
“We agree with the governor’s approach to stay with a PPT-based tax structure,
however, we are concerned that the tax rates proposed will make every single
project look less attractive for us to re-invest,” Kevin Mitchell, vice
president of finance and administration for ConocoPhillips, wrote in an e-mail
to the News-Miner.
On Tuesday, Palin restated her intention to call a special legislative session
next month to revisit the oil production tax passed last summer, and she
presented an outline for a new tax that would increase the tax rate.
Palin said the current petroleum profits tax, or PPT, “isn’t working as
promised.”
According to Revenue Commissioner Pat Galvin, revenues from the PPT will
likely come in a little short of expectations in the fiscal year that just
ended and very short of expectations next year. Instead of bringing in an
additional $1 billion over the old tax system, the PPT will likely bring in
about $250 million more in fiscal year 2008, according to department figures.
Crockett pointed to fiscal year 2007, in which the new tax is expected to add
about $1 billion in state revenues over the old tax.
“Is PPT working? I would say that it is,” she said.
Overall, she said, the state should be looking at how to encourage companies
to invest in the state and keep production levels up, ensuring future tax
revenues as well as revenues from royalties and property and corporate taxes.
“What we need to be focusing on is keeping that pipeline full,” she said,
“half-full at this point.”
Oil production has dropped from a peak of more than 2 million barrels a day to
less than 800,000 barrels a day, she said, and maintaining production levels
will require significant new investment.
On Wednesday, Galvin pointed to cost increases faced by the companies in
explaining the reduced revenue estimates.
Capital costs are now expected to be about 50 percent higher in fiscal year
2007 than was thought when PPT was passed, and about 100 percent higher in
fiscal year 2008, he said.
PPT allows companies to deduct operating and capital costs and receive credits
on certain capital costs.
Galvin acknowledged that by switching to a tax based on net company profits,
the state had accepted the risk that revenues could drop if costs increased.
He said the administration wanted to revisit the tax not to fill the revenue
gap but because the projected revenues were so far off.
“It calls into question whether legislators would have made the same choice,”
he said.
Contact staff writer Stefan Milkowski at 459-7577.
xxxxxxxxxxxxxxxxxxxxxxx
Houston Chronicle
September 6, 2007
http://www.chron.com/disp/story.mpl/business/energy/5111640.html
Testimony details gruesome BP blast scene
Witnesses tell
of finding bodies as civil trial gets under way
By BRAD HEM and KRISTEN HAYS
Copyright 2007 Houston Chronicle
GALVESTON A pipe foreman and an emergency responder recalled gruesome scenes
after the 2005 explosion at BP's Texas City refinery as testimony began
Wednesday in the first blast-related civil suit to go to trial.
Pipe foreman Lance Emord, a contractor for Altair Strickland, saw two bodies
on his way to a lunchroom to retrieve lunch kits workers left behind when they
fled after the explosion. Two guards stopped him on his way in.
"They asked us if we had a weak stomach," Emord said in a choked voice. "We
went into the lunchroom to get the lunch kits, and there were dead bodies in
there."
Beaumont lawyer Brent Coon, who represents the four plaintiffs in the cases on
trial in state district court in Galveston, told jurors before testimony began
Wednesday that they would hear that London-based BP put profits before
disaster prevention and ignored repeated warnings about the possibilities of
an explosion at the refinery.
"They calculated the risk of killing people by putting a number on their
heads," Coon told the eight-woman, four-man panel.
BP lawyers said the company accepted responsibility for the accident but also
said that workers at the refinery failed to follow safety procedures.
BP lawyer Ronnie Krist said that regardless of fault, neither the company nor
the jury is obligated to enrich the plaintiffs, whom Krist said are trying to
capitalize on the disaster.
"To many people, it's a tragedy," he said. "To others, it's an opportunity."
The trial involves claims by four contractors who were on the site the day of
the explosion. Another case that had been bound for trial along with theirs
settled late Tuesday, after the jury had been seated. That case was filed on
behalf of the estate of a contractor who fatally shot himself six weeks after
the explosion.
Finding bodies
In testimony Wednesday, David Nash, a Marathon Oil Corp. worker who
volunteers on that company's fire brigade, said he found two bodies while
looking for survivors and clearing debris near trailers destroyed by the
blast. The 15 contractors who died were in a trailer 121 feet from the
explosion. Scores more were injured.
Emord and Nash have legal claims against BP separate from those in this trial.
Coon's firm also represents them.
In his opening statement, Coon said jurors will determine whether BP was
negligent and how much it should pay the plaintiffs for emotional distress,
hearing loss and back problems he says they suffered because of the blast.
Making the company pay "is the only message they understand," Coon said.
BP lawyers disputed Coon's assertions, telling jurors that the oil giant took
steps to improve safety before and after the explosion on March 23, 2005. They
also sought to portray the plaintiffs as seeking a big payoff from minor
injuries because they were at the refinery on the day of the blast.
BP attorney Kenneth Tekell said weaknesses in their claims prevented BP from
settling with these plaintiffs before the trial. It has settled at least 1,350
of about 3,000 claims, including all involving the fatalities.
Plaintiff Scott Kilbert, 48, alleges in the suit that he has had back problems
since the blast, but Tekell said Kilbert hasn't missed work because of the
injury and hasn't needed surgery.
Plaintiff Roland Bocardo, 41, had a documented back injury at a previous job
in 2002, and hurt his back in a 2004 car wreck and again loading material in
February 2005 all before the March 2005 blast, Tekell said.
Plaintiffs David and Nara Wilson, both 44, had no visible wounds or noticeable
pain immediately after the blast and returned to work the next day, Tekell
said. A month later, a chiropractor blamed David Wilson's back pain on the
explosion, Tekell said.
They now build furniture, which the couple had planned to do upon retirement,
the lawyer said.
"This might be an opportunity for BP to sponsor their future in the furniture
business," Tekell said.
Ex-manager to testify
The explosion occurred after a piece of equipment overfilled with
flammable liquid hydrocarbons. Alarms and gauges designed to warn of the
problem failed, and vented vapor ignited during startup of a unit that boosts
octane in gasoline.
The trial is scheduled to resume today with testimony from Don Parus, former
manager of the plant.
An internal investigation of the blast praised Parus' investigations of
previous deaths at the plant and his efforts to speak to management about the
plant's safety record.
But the report said he focused on personal safety, such as prevention of slips
and falls, rather than process safety, which involves the operation of
equipment and handling of hazardous materials.
The U.S. Chemical Safety and Hazard Investigation Board and an independent
panel led by former Secretary of State James A. Baker III also concluded that
managers at the refinery failed to recognize the importance of process safety.
In the case that settled Tuesday, Robert Kwok, who represents the estate of
Rene Cardona Sr., said he believes the settlement will provide for Cardona's
two young sons.
"BP continued to increase their offer to a point where it reached a level
where it was in the best interests of the boys to settle the case," Kwok said.
"We believe the offer to be fair and generous, and Rene's sons will be
financially secure."
No settlement details
As with most previous settlements related to the blast, details were not
disclosed.
BP spokesman Neil Chapman said BP was pleased to reach the settlement,
reiterating that the company has worked hard to resolve cases rather than
"resort to legal proceedings."
The Texas City plant is BP's largest refinery, with a capacity of 460,000
barrels a day. The plant has been operating at about half its capacity since
Hurricane Rita blew ashore in September 2005. The company aims to restore it
to full capacity by year's end.
brad.hem@chron.com
kristen.hays@chron.com
Kristen Hays reported from Houston.
xxxxxxxxxxxxxxxxxx
Wall Street Journal
September 6, 2007
Chinese, Others
Interested In Alaska Gas Project - Official
DOW JONES NEWSWIRES
September 5, 2007 5:19 p.m.
By Ian Talley
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--A Chinese oil company is one of several foreign
companies expressing an interest in building a major Alaska natural gas
transportation project, a U.S. federal government official said Wednesday.
The multi-billion-dollar Alaska natural gas pipeline project is intended to
transport trillions of cubic feet of gas from the Alaskan North Slope to the
lower 48 states, but some of the expected license application proposals could
allow gas to be exported to Asia, the official said.
Drue Pearce, recently appointed U.S. Federal Coordinator for the Alaska
Natural Gas Transportation Projects, said Spain's Repsol YPF SA (REP), BG
Group PLC (BRG) and a Chinese company had joined TransCanada Corp. (TRP), the
Alaskan Gasline Port Authority and Mid-America Pipeline Co. in expressing an
interest in submitting an application to the Alaskan state government. She
declined to identify the Chinese company.
She said several of the proposals plan for a pipeline from the North Slope to
a gassification terminal in Valdez, Alaska. From there, gas could be
transported to any regassification terminal in the world, but the primary
focus would be on the Pacific rim. Approval to build LNG terminals on the West
Coast of the U.S. has faced tough opposition.
As oil and gas supplies in the lower 48 states wane and the country
increasingly seeks to wean itself form its dependence on imports from
politically unstable areas of the world, natural gas from northern Alaska and
Canada is being offered as a "clean energy" alternative. Gas reserves - the
North Slope is estimated to hold around 35 trillion cubic meters of discovered
resources and 170trillion cubic feet of undiscovered natural gas - have been
stranded in the region because of the long distance to the market and the cost
of transportation.
The Alaska pipeline project, originally started in the early 1970s, has faced
a mountain of regulatory, regional, environmental and bureaucratic hurdles.
Approval for the project would require filing permits with several dozen
federal and state agencies, not to mention obtaining cross-border agreements
with Canada.
Earlier this year, Alaska Gov. Sarah Palin pulled a proposal approved by her
predecessor that would have piped gas along the Trans-Alaska Pipeline route to
Fairbanks and then to the Alaska-Canada Highway on to Midwestern markets.
In February 2006, then-Gov. Frank Murkowski, BP PLC (BP), Exxon Mobil Corp. (XOM)
and ConocoPhillips (COP) had agreed on a $25 billion gas pipeline project that
would have delivered 4.5 billion cubic feet of natural gas a day - roughly 7%
of U.S. demand - and would take about a decade to complete.
Instead, Palin proposed an incentive program called the Alaska Gasline
Inducement Act, or AGIA, that offers around $500 million to help pay for
regulatory filing costs, if the companies agreed to a set of principles
outlined by her government.
Bids are due by Nov. 30. Pearce said the state hopes to select the most
competitive bid by February. The legislature would still need to approve the
winning application before a company could start the filing process with the
Federal Energy Regulatory Commission, which could take several years.
Producers, such as Royal Dutch Shell PLC (RDSA), Exxon and ConocoPhillips,
don't support the AGIA program, and Pearce said she had heard that they
wouldn't submit an application for a license.
The federal coordinator said that the "All Alaska" line - which would ship
volumes in the form of liquefied natural gas - would transport only around 1
billion cubic feet a day.
In 2004, Congress passed the Alaska Natural Gas Pipeline Act to spur
development of the project. Pearce said that although Congress intended the
gas for U.S. markets to ease expected energy shortfalls, nothing in the act
would prohibit the natural gas from being exported.
The project isn't expected to be online until 2018, at the earliest, though
some oil company executives believe the start-up could be delayed into the
early 2020s.
-By Ian Talley, Dow Jones Newswires; 202-862-9285;
ian.talley@dowjones.com
xxxxxxxxxxxxxxxxxxxxx
KTUU News
September 5, 2007
http://www.ktuu.com/Global/story.asp?S=7026558
Channel 2 News interview with BP
Alaska President Doug Suttles
Featured Video
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BP Alaska
President Doug Suttles talks taxes
by John Tracy
Tuesday, Sept. 4, 2007
ANCHORAGE, Alaska -- BP Exploration (Alaska) Inc. President Doug Suttles
answered questions from Channel 2 News about Gov. Sarah Palin's proposal of a
new oil tax regime that would effectively be a hybrid tax on net production
and gross profits.
Channel 2 News: How is this hybrid net and gross profits tax proposal going to
sit with the industry do you think?
BP Alaska President Suttles: I think what we all need to be worried about just
now is the future for Alaska. I mean, the big issue we all face is decline,
and what we need is a structure here that is going to focus investment.
I think the biggest concern at the moment is the net structure did encourage
investment but the [tax] rate was already too high, and this looks like an
increase - and the issue is competitiveness. We need to attract capital in all
the areas of the industry.
Channel 2 News: Do you think the state's current Petroleum Profits Tax at 22.5
percent is a fair tax, and do you plan on encouraging lawmakers to keep it?
BP Alaska President Suttles: Well, I think that's right. I think our job in
this is to get our view of the story out and make sure people understand the
decision they face, and that we have a good and thoughtful debate.
Just to put this in perspective, the tax rate, I think, with this new
structure, would have us almost 50 percent higher than places like the Gulf of
Mexico or Alberta, Canada; and at least 25 percent higher than places like
Texas, Oklahoma and Louisiana.
So, Alaska needs to attract new dollars to offset decline.
Channel 2 News: One reason the governor stated for taking another look at the
state's tax structure is the cloud of corruption under which the original vote
was taken.
Clearly, two VECO Corp. executives were exerting influence on the vote,
admitting to bribing lawmakers.
Isn't going back and at least re-affirming with a majority of the Legislature
that the original bill is truly their intent a responsible thing to do?
BP Alaska President Suttles: I think we have to respect the governor's wishes
here if she wants the Legislature to readdress [the PPT] and I respect her
right to ask that.
I think what's important now is that we have a good and thoughtful debate.
This is going to be about Alaska's future. Like I said before, we've got to
encourage investment in this state and we need to make sure the tax structure
will do that.
Channel 2 News: Another concern for critics of the PPT was the types of
deductions the industry might take, including deductions for the repair and
replacement of poorly-maintained pipelines, including the corroded feeder
lines BP replaced at Prudhoe Bay.
Alaska Department of Revenue Commissioner Patrick Galvin today said the state
has yet to determine exactly how much BP deducted from its tax bill for
replacing those lines, and that is part of the problem with the PPT.
Can you tell us how much BP deducted for replacing those lines, and how the
company justifies those deductions?
BP Alaska President Doug Suttles: Of course, all we can speak to now is last
year's tax filing. Last year, our severance taxes went from $180 million to
over $500 million, so almost tripling, and that was inside of $2 billion in
total government payments BP made.
I think there are ways to solve questions around what deductions are fair and
reasonable. There are good opportunities to do that through things like the
joint interest billings that occur between the various owners of [Prudhoe Bay
oil field].
I think there are ways to address those concerns that the state has enough
transparency into what deductions are being taken.
Channel 2 News: Can you tell us, though; do you have a figure that you know
that BP did deduct from its taxes for those repairs?
BP Alaska President Doug Suttles: You know, I don't have that on the tip of my
tongue. Last year, the deductions were all predominantly in response to the
spill in making sure we got production back on. Most of the expense for
replacing those lines has been incurred this year and will be incurred next
year, and those filings have yet to occur. So I just don't have that number in
front of me.
Channel 2 News: BP and the other producers have said they won't be submitting
a gas pipeline proposal under the requirements of the Alaska Gasline
Inducement Act, but will you submit a plan anyway, so the public and lawmakers
will have something to measure against whatever plan the state adopts under
AGIA?
BP Alaska President Doug Suttles: Well, I think that's a really good question,
and I think what we're doing right now is try to find a way to get this gas
moving. We're completely aligned with the state and the governor wanting to
find a way.
We had certain issues with AGIA and right now we are working with our partners
to see if there is some way we can put a proposal forward so that the state
can get it moving.
So, it's a little early to say but I can tell you we're working hard looking
for opportunities to do that.
Contact John Tracy at
jtracy@ktuu.com
xxxxxxxxxxxxxxxxxxxxxx
Anchorage Daily News
September 5, 2007
http://www.adn.com/money/industries/oil/story/9278161p-9192976c.html
Palin
offers oil tax plan for session in Juneau
STARTS OCT. 18:
She wants some committee hearings outside capital.
By TOM KIZZIA and SEAN COCKERHAM
Anchorage Daily News
Published: September 5, 2007
Last Modified: September 5, 2007 at 02:15 AM
Gov. Sarah Palin will call lawmakers to Juneau for a special session next
month, where she will ask them to increase oil taxes by adopting a new hybrid
system combining gross-production and net-profits taxes.
The tax proposal, announced in Anchorage on Tuesday, would raise the current
tax on oil field profits from 22.5 percent to 25 percent. It would also create
a floor of a 10 percent tax on gross production that would kick in on the
state's oldest "legacy" fields if future profits shrink.
The special session begins Oct. 18 and can last up to 30 days.
Other changes, if adopted by the Legislature, would do away with retroactive
deductions on investments from previous years and investments made to catch up
on deferred maintenance. Credits would be available to encourage investment in
new fields.
Palin also called for changing job classifications for state tax auditors,
raising salaries to bring more expertise to the state.
A simple tax on gross oil production, which Palin favored at first, would
"risk the viability of future fields," the governor said in announcing her
hybrid plan.
"We want to make sure the golden goose is fed and not killed," she said.
State officials have dubbed the new plan Alaska's Clear and Equitable Share,
or ACES.
MIXED REACTIONS
Palin originally wanted to hold the session somewhere on the road system.
In agreeing to go to Juneau, she said she wants to see committee hearings
outside the capital. Legislative leaders would have to agree to such hearings.
The governor's plan got a favorable reception from House Speaker John Harris,
R-Valdez, who attended Tuesday's event. He said legislators would probably
feel compelled to make some changes, given the cloud of corruption over the
original tax. Palin's plan seems to offer change but not a huge overhaul, he
said.
Harris said he hopes to begin committee hearings on the road system at the
start of October, after a specific bill has been drawn up.
But Senate President Lyda Green, R-Wasilla, was less enthusiastic. She said it
seems too soon to reconsider last year's tax changes. She also didn't like the
idea of splitting the special session between Juneau and the road system.
Rep. Harry Crawford, D-Anchorage, said he was disappointed, calling the plan
not much more than a warmed-over version of the existing net-profits tax.
Democrats called last week for a simple, predictable tax like a
gross-production tax.
Oil industry reaction was negative.
Increasing tax rates will reduce investment here, said BP Alaska president
Doug Suttles. The state should be focused on offsetting the decline of oil
production, he said. "We have to call on every Alaskan to think really hard
about the future."
Both the increased tax and the notion of changing taxes for a third time in
three years -- former Gov. Frank Murkowski imposed a smaller tax increase
through regulation before the PPT was passed -- make for "a pretty jittery
investment climate" in Alaska, said Marilyn Crockett, executive director of
the Alaska Oil and Gas Association.
PALIN GIVES IN
The Legislature passed the latest oil-profits tax in August 2006. It was
designed to allow oil companies to deduct operating and capital expenses
before calculating taxes. That plan was presented by Murkowski as a way to
promote investment. The Petroleum Profits Tax, or PPT, replaced the
discredited "ELF" tax on production that was riddled with exceptions.
Legislators argued over what percentage of net profits should be taxed. After
much wrangling, they settled on a 22.5 percent tax rate.
Some legislators, including many Democrats, had argued for a tax on gross
production instead of net profits. Palin herself favored a gross tax during
her 2006 election campaign.
In recent weeks, Palin said, analysis by state officials showed that a simple
gross system would either mean less revenue for the state or hurt the oil
industry's investment climate.
"I was dragged kicking and screaming, with a little bit of gnashing of teeth,
even, away from the pure simple gross system," Palin said Tuesday.
Palin said the tax has to be revisited because the original version was
tainted by corruption. Several legislators have been accused by federal
prosecutors of selling their votes on the oil tax in 2006. Two of them, former
Reps. Pete Kott of Eagle River and Bruce Weyhrauch of Juneau, are scheduled to
stand trial in federal court starting today.
Palin also said the tax is not performing as predicted because industry
expense deductions are coming in much higher than expected.
Administration officials said that, in fiscal year 2007, the new PPT brought
in $1 billion more than the old tax -- but $200 million less than was
predicted when the PPT was passed. Unless the tax is changed, rising
deductions from the industry will bring $800 million less than predicted for
the next fiscal year, said Revenue Commissioner Pat Galvin.
"I'm not sure how disappointed we should be with getting a billion dollars
more," Green said after the governor's announcement. "We really need to kind
of hold on and review it some more."
TIME TO MAKE A MOVE
But Palin said it is important to act now to make sure Alaska gets an
equitable share of the oil's value.
"There are those who would say we should do nothing and that we should
continue the PPT experiment. Doing nothing is not an option," Palin said.
The proposed new tax would bring in $700 million more this year than the PPT
tax, according to state officials. But Democrats complained that's still $100
million less than was promised by a tax that was passed with undue pressure
being exerted by lawmakers now accused of corruption.
Palin's earlier statement about holding the special oil tax session on the
road system met resistance. Many legislators said they preferred to work in
Juneau, where their offices and staff could be at close hand.
"It's kind of a hybrid plan there, also," Palin said of her call for hearings
away from Juneau.
Contact reporter Tom Kizzia at tkizzia@adn.com and Sean Cockerham at
scockerham@adn.com
.
The tax and the session
Palin's "hybrid" proposal for new oil tax:
Alaska's Clear and Equitable Share
• Establishes minimum gross production tax for major "legacy" fields.
• Raises net profit tax on North Slope fields from 22.5 percent to 25 percent.
• Eliminates some deductions, such as catching up on deferred maintenance.
Plan for legislative session is a hybrid too
• Special session begins in Juneau on Oct. 18, lasts up to 30 days.
• Commitee hearings on new bill to be held outside Juneau, probably before
session.
Xxxx
http://www.adn.com/news/alaska/ap_alaska/story/9276886p-9191705c.html
BP
dislikes call for higher taxes in Alaska
By STEVE QUINN, Associated Press Writer
Published: September 4, 2007
Last Modified: September 4, 2007 at 06:30 PM
JUNEAU, Alaska (AP) - The oil industry never liked the 22.5 percent net
profits tax the state passed last year, and now Gov. Sarah Palin wants that
raised to 25 percent.
It's part of a restructuring plan of the state's oil production tax Palin
announced Tuesday, but one that doesn't sit well with the state's largest
operator, London-based BP PLC.
Doug Suttles, president for BP Exploration (Alaska) Inc., said the state needs
to be mindful that too much change would discourage multimillion dollar
investments.
Those investments are crucial to extending the life of North Slope production
- already in a 6 percent annual decline - by several decades.
"The big enemy in Alaska is production decline," he said. "The only way to
offset it is investment, not just for exploration of new fields but existing
fields and new technology."
Palin stressed she is not anti-oil - indeed, her husband Todd just returned to
his blue-collar production job for BP on the North Slope after a year's leave-
but believes the year-old tax needs to be restructured.
She wants lawmakers during a special session to start Oct. 18 in Juneau to fix
a system she has called a failure and tainted by the federal corruption
charges against former lawmakers in connection with the tax.
Palin's announcement comes as two former lawmakers begin their federal trial
Wednesday on corruption charges.
These bribery and extortion trials are linked to the passage of the oil tax
and they have helped thrust the state's political credibility into the
national spotlight.
Palin noted the upcoming trial during her Tuesday news conference in
Anchorage, but still stressed the need to fix a tax that she said "isn't
working as promised."
Recent projections for the current Petroleum Profits Tax have the state
falling $800 million short of what was predicted by former Gov. Frank
Murkowski's administration last year.
That's nearly enough to fund the state's entire public education budget for
the current school year.
Palin says she wants a tax that is fair to the state, but also provides the
industry with the right incentives for future the exploration and production.
"We must receive appropriate value for our oil," she said. "It must be a clear
and equitable share."
But some lawmakers and industry leaders are skeptical, saying it's too soon
revisit the tax lawmakers passed just last year.
Senate President Lyda Green, R-Wasilla, stood firm on her long-standing belief
that a special session is not necessary to rewrite the state's Petroleum
Profits Tax.
"There is nothing that we are going to be doing that can't wait until the
regular session next year," she said. "It's way too early right now to say
whether (PPT) is right or whether it isn't right."
Nevertheless, lawmakers will report next month to the capital. Palin earlier
announced the special session, but on Tuesday explained the scope of what she
wants lawmakers to consider and the venue for the session, which can last up
to a month.
The current tax has a base rate of 22.5 percent on oil company profits, but
also affords the companies various deductions and credits.
Palin said she wants lawmakers to replace the current net profits tax plan
with what she calls a hybrid of a net and gross profits tax.
She is calling it Alaska's Clear and Equitable Share, or ACES. Some of those
changes include:
- Raising the tax rate from 22.5 percent to 25 percent on net profits, a
figure some lawmakers pushed for last year.
- Not allowing deductions on facility repairs deemed to be from poor or
negligent maintenance.
- A 10 percent gross-based floor tax on some of the older or "legacy" fields
such as those in the North Slope.
- Eliminate some deductions, including those for retroactive investments,
known as "claw backs."
"What the governor is trying to do here is get a better return for the state
and create an environment that encourages more investment, and for that I
applaud her," said House Speaker John Harris, R-Valdez.
"I do believe once we get the bill in a few weeks, we will want some expert
advice as to what the effects of the bill will be on the budget, on revenue
and on investment," he said.
But House Minority Leader Beth Kerttula, D-Juneau, isn't convinced that
Palin's plan will achieve the stated mission.
Kerttula said the changes don't go far enough to keep the tax laws simple and
understandable.
"Right off the bat, I've got some grave concerns," she said. "We still don't
have much of a picture as to what deductions are going to be allowed."
Senate Minority Leader Gene Therriault, R-North Pole, said he would like to
see more details of Palin's plan.
"This is more than rounding off the edges," Therriault said. "There is a lot
of detail we have yet to see.
"If they are true to their word and have run the numbers with good data, then
what they proposed could ultimately result in a fair take for the state."
Palin has not formally proposed the changes in a bill just yet; she expects to
do that in a few weeks.
Palin had earlier said she wanted the special session to be held on the
state's road system, in places like Anchorage or Fairbanks, to allow the
public greater access than in Juneau, the state capital that is only
accessible by boat or airplane.
However, she deferred to the wishes of lawmakers to keep the session in
Juneau, but has asked legislative leaders to consider holding committee
hearings elsewhere.
xxxxx
http://www.adn.com/opinion/view/story/9278183p-9193002c.html
Build
trust on oil taxes
Lawmakers should
heed call for hearings on road system
Published: September 5, 2007
Last Modified: September 5, 2007 at 12:36 AM
Take it on the road, lawmakers. Share a little, Juneau.
Gov. Sarah Palin has called the special session on oil taxes for Juneau,
despite being inclined to meet closer to where most Alaskans live.
She also has urged lawmakers to hold committee hearings and take public
testimony on the road system.
That's a good idea, especially given the context of this special session.
This session aims to make sure that Alaska gets a fair return on the oil
wealth that Alaskans own. This session is necessary to restore Alaskans' faith
that their government can do that job with honesty and competence. The current
tax regime carries the baggage of the current corruption scandal. This session
must clear the air.
Tuesday, Gov. Palin stressed the message that the oil is ours. So is the
government. That's why as many Alaskans as possible should have as good a look
as possible at the work of the administration and lawmakers. While the
Legislature will convene in Juneau, there's no reason that committee meetings
can't be held in Anchorage, Fairbanks, Kenai, Wasilla and/or Palmer.
Yes, there are logistical problems. But those are well worth the trouble for
the governor and lawmakers to come to the people. Lawmakers needn't wait for
the governor's plan to hold hearings; oil tax bills already in various
committees can provide vehicles for debate and testimony.
Gov. Palin's proposal will no doubt drive the session, and her tax bill likely
won't be ready until early October. But she and Revenue Commissioner Pat
Galvin on Tuesday outlined the highlights of their proposal. There's substance
to debate now, and to compare with the other tax revisions in the works.
Gov. Palin knows that her first job is not an oil tax proposal, as important
as that is. Her first job is to restore Alaskans' trust in their government.
That's the first job of lawmakers too. And that's better done face to face.
BOTTOM LINE: Lawmakers, governor need to take special session to wider
audience of Alaskans before they take it to Juneau.
Xxxx
http://www.adn.com/news/alaska/crime/story/9278150p-9192978c.html
Wade has
little to say as he makes first court appearance
NURSE: Now that he's locked up, police hope others feel free to talk.
By MEGAN HOLLAND
mholland@adn.com
Published: September 5, 2007
Last Modified: September 5, 2007 at 02:21 AM
Joshua Wade is a danger to the community and the circumstances around his
federal bank fraud charges are "very ominous," a federal prosecutor said
Tuesday in Wade's first court appearance since his dramatic capture over the
weekend.
"If the circumstances underlying the charged conduct in this complaint are
proven, or the missing person is found dead, then Mr. Wade is looking at
prosecution for kidnapping and murder," said assistant U.S. attorney Crandon
Randell.
Wade, 27, spoke little during the 15-minute court proceeding -- a hearing on
federal charges of bank fraud that essentially will keep him in jail while
authorities continue their investigation into the disappearance of Mindy
Schloss.
A mix of those who support Wade and those who want to see him behind bars
gathered in the courtroom for the brief hearing.
Greg "Bubba" Wade, the prisoner's father, sat in the front row behind his son.
A big man, he stretched his arms over the chairs next to him, revealing
tattoos on his upper arms. He didn't say anything.
Joshua Wade's friend Christina Greaser and her mother, Tina Greaser, sat in
the next row. Christina Greaser, who says she has been close to him for three
years, turned Wade over to authorities. She has said she believes in him and
did it for his own good after he had been on the lam for five days.
On the other side of the courtroom sat FBI agents, police detectives and other
federal prosecutors.
Anchorage Police Department homicide detective Pam Perrenoud, leading the
investigation into Schloss' disappearance, watched the proceeding intently.
Wade has not been charged with harming Schloss, a 52-year-old nurse who
vanished in early August and is presumed dead. But police and the FBI say he
used her bank card in the days after she was last seen, and that makes Wade, a
27-year-old man best known for being acquitted in 2003 of a sensational murder
and rape, "a person of interest" in Schloss' disappearance.
Anchorage police Lt. Dave Koch said Tuesday that Wade revealed little to
investigators who questioned him after his capture on Sunday.
Police appear to be banking on Wade's having told someone about whatever
happened to Schloss. Koch said investigators hope a friend or acquaintance
will call with information.
Because Wade is now locked up, people who have been afraid to talk to police
may now feel free to come forward, Koch said.
"I think someone knows," he said.
After the slaying of Della Brown in 2000, Wade bragged that he had killed her
and brought friends to see the body. His defense attorneys were able to
convince a jury that he had just happened to find Brown dead and lied about
killing her to impress people.
In Tuesday's proceeding at the federal courthouse downtown, Randell brought up
Wade's prior criminal history, including the allegations of murder, rape and
robbery from the Brown case. He told Magistrate John Roberts that Wade may
flee if let out of jail, given his history.
In answer to questions by Roberts, Wade said he had no money, so a federal
public defender was appointed.
Roberts scheduled Wade's bail review for Monday during a preliminary hearing
at which the prosecution will have to present enough of its fraud case against
Wade to justify proceeding to trial.
Find Megan Holland online at adn.com/contact/mholland or call 257-4343.
Xxxx
http://www.adn.com/news/politics/fbi/kott/story/9278921p-9192979c.html
Kott
wants a lid put on mixup over medication given to him
TRANSCRIPT: Judge makes the exchange with lobbyist public.
By RICHARD MAUER
rmauer@adn.com
Published: September 5, 2007
Last Modified: September 5, 2007 at 03:50 AM
Former Alaska House Speaker Pete Kott is asking the judge in his political
corruption case to prevent the jury from hearing evidence that ex-Veco chief
executive Bill Allen supplied him with pills -- and that the results were not
exactly as planned.
According to a transcript of an intercepted telephone call between Allen and
Kott on May 31, 2006, Allen gave Kott pills for sleeping and for sex. Kott got
them mixed up and complained he was up all night while his "old lady" slept
beside him.
The remarkable transcript was prepared by the FBI and filed in court by Kott's
attorneys to show U.S. District Judge John Sedwick what they didn't want the
jury to see. The document was filed under seal Tuesday by Kott's attorneys,
but quickly placed in the public file by Sedwick, who ruled there was no
reason to keep it secret.
"Man, I've been having a hard time sleeping," Kott complained to Allen.
"So that worked pretty good," Allen said, laughing.
"Which ones are which?" said Kott.
"Goddamn it, I told you now, just use the white ones ... to sleep," Allen
reminded him. "And the the goddamn, ah, brown or whatever they are, that's for
(explicit language for sex), and the other one is for sleeping."
"Yeah, I thought I was taking the sleeping pill. Took the wrong one. Still got
the white one," Kott said.
"You're something else," Allen said, laughing. "You're something else, Pete."
Jury selection in the bribery, extortion, fraud and conspiracy trial of Kott
and codefendant Bruce Weyhrauch, a former state representative from Juneau, is
scheduled to begin today.
But on Tuesday, after Sedwick handed the defendants two victories on other
requests to exclude evidence, federal prosecutors said they may seek a
rehearing or an appeal, which could put the case in limbo. They will make
their argument during a conference at 8 this morning, before prospective
jurors begin filing into the courtroom.
Sedwick ruled Tuesday that the government could not claim that Kott and
Weyhrauch were required to disclose to fellow legislators or the public that
both were seeking employment from Veco while they were voting on bills in
which Veco had an interest. Alaska law has no such disclosure requirement, he
said, though he also noted state law forbids legislators from voting when they
face certain kinds of conflicts of interest.
Sedwick also threw out a request by federal prosecutors to bring in evidence
of bad conduct by Kott as far back as 1999, when he began storing material at
a Veco warehouse for his flooring business. The government also said Kott
improperly received $12,000 in equipment from Bill Allen or Veco in 2002, a
$5,000 payment in 2004, and a $1,000 payment made by Veco in 2003 to a Florida
beauty pageant corporation to benefit one of Kott's relatives, as requested by
Kott. The Eagle River Republican was speaker of the House in 2003 and 2004.
Sedwick said those allegations happened too far in the past to be relevant to
the charges, which "mainly focused on legislative activities which took place
in 2006."
One of Weyhrauch's attorneys, Doug Pope, said the rulings were significant
victories for the defense. But the government may seek to overturn Sedwick's
ruling on disclosure, it said in a filing Tuesday.
Bill Allen and former Veco vice president Rick Smith are expected to be key
government witnesses. Both have pleaded guilty to bribing legislators and are
cooperating with the government.
The evidence of Allen's pill dispensing to Kott was recorded on a wiretap of
Allen's cell phone while the Legislature was in special session over oil
taxes. Kott's lawyers say the conversation, and another between Kott and Smith
about the "Corrupt Bastards Club," would be prejudicial.
"The use of sleeping pills and sexual enhancement pills will undoubtedly
negatively impact the jury's opinion of Kott, particularly if he was taking
those pills without a proper prescription," his attorneys argued. "It creates
an impression of general law-breaking behavior. The evidence could also be
used to suggest Kott is a person who pops pills, which is a very negative
attack on character."
They go on to say: "The part of the conversation relating to accidentally
taking the sexual enhancement pills is quite lewd. The tone and content of
these conversations will likely impact the jury's opinion in a very negative
way."
Three pages of Kott's May 29, 2006, conversation with Smith, also on a tapped
cell phone, concern Kott's efforts to obtain 20 Veco hats embroidered or
printed with "CBC." The letters refer to the Corrupt Bastards Club, an
informal group of legislators who received large contributions or employment
from Veco.
"Hey. How many of them hats you want CBC on the back?" Kott asked Smith.
After trying to figure out what Kott was talking about, it finally clicked,
and Smith said 15 or 20.
"We gotta figure out who the club is," Smith said.
"Yeah," said Kott.
"Gotta get with Hawker," he said, referring to Rep. Mike Hawker, R-Anchorage.
"Yeah, I know," said Kott. "Yeah, the 20 might be a lot."
"Well, I mean, but then, you know, we need some for Bill (Allen) and, you
know, and s--- like that," Smith said.
Hawker said Tuesday he had no idea why Smith was referring to him, but he knew
about the "club."
"There was nothing nefarious involved," Hawker said. He was among a group of
legislators, including Kott, and others who were joking one night in the bar
at the Baranof Hotel in Juneau. A newspaper column had questioned whether
campaign contributions from Veco to lawmakers created undue influence over the
state's political process.
The joke was they were all part of some kind of "corrupt bastards club,"
Hawker said, and part of the joke was some of them were writing an increase in
state oil taxes.
"At the time it was just gallows humor at best," Hawker said.
Find Richard Mauer online at adn.com/contact/rmauer or call 257-4345. Reporter
Sean Cockerham contributed to this story.
xxxxxxxxxxxxxxxxxxxxx
Houston Chronicle
September 5, 2007
http://www.chron.com/disp/story.mpl/business/5108913.html
Deal
reached on one of four BP blast suits
By KRISTEN HAYS
Copyright 2007 Houston Chronicle
A lawsuit on behalf of the estate of a contractor who fatally shot himself six
weeks after the March 2005 explosion at BP's Texas City refinery has been
settled hours before it was to go to trial alongside three other cases today
in Galveston.
Robert Kwok, who represents the estate of Rene Cardona Sr., said today that
both sides reached an accord Tuesday night after a jury of four men and eight
women had been seated to hear the cases. During jury selection, he had
introduced Cardona's 11- and 6-year-old sons to prospective jurors, including
those who were chosen.
"BP continued to increase their offer to a point where it reached a level
where it was in the best interests of the boys to settle the case," Kwok said.
"We believe the offer to be fair and generous, and Rene's sons will be
financially secure."
The amount of the settlement, like most of the 1,350 of about 3,000 lawsuits
so far resolved, was not disclosed.
Three other lawsuits involving four adult plaintiffs remain in the first trial
to emerge from the tragedy unless more last-minute settlements are reached.
Opening statements are slated for today.
Lawyers on both sides chose the panel and four female alternates for the six-
to eight-week trial on Tuesday, the third day of jury selection. While some
other lawsuits have had trial dates, none had proceeded so far as to select a
jury until now.
However, settlements remained possible, though attorneys declined comment on
talks that continued after the panel was seated. Last month state District
Judge Susan Criss, who presides over blast-related litigation in Galveston,
ordered both sides to participate in mediation to exhaust efforts to settle.
After the panel was chosen Tuesday, she advised attorneys on both sides
without elaboration to "work on that stuff you were intending to work on."
Brent Coon, who represents the four plaintiffs in the cases on trial and has
taken the lead in organizing the vast litigation, said he was pleased with the
panel.
"We think we have a very fair panel that can sit and listen to all the
evidence and render a fair verdict," he said.
BP lawyer Kenneth Tekell declined comment Tuesday.
Kwok told the jury pool last week that Cardona, 26, of Baytown, lost 15
co-workers in the blast and was laid off from his contractor job as an
electrical maintenance operator. Kwok said he shot himself in the head hours
after he received his first unemployment check for $9.
An autopsy showed Cardona had cocaine and alcohol in his system when he died,
and Kwok told the panel that the sides disagreed on whether he used those
substances before the explosion.
BP has consistently said the company is working hard to settle all cases. The
blast killed 15 people and injured scores more, with tremors felt as far as
five miles from the plant.
"We have worked awfully hard not to have to stand before you today," BP lawyer
James Galbraith told the pool of more than 200 prospective jurors without
acknowledging specific settlements. Some in the pool noted they knew the
company has settled lawsuits.
"Very early on, BP stood up and said, 'We accept responsibility for the
explosion.' What we said was, we accept responsibility for what we caused,"
Galbraith said.
"We're here because we have a dispute with these particular claimants about
the nature and extent of any injuries."
The plaintiffs are Scott Kilbert, 48, of Bellville; Nara and David Wilson,
both 44, of Santa Fe; and Rolando Bocardo, 41, of Baytown. All were
contractors.
On Tuesday, a woman asked if the plaintiffs had been offered any money, and
Galbraith said he couldn't divulge anything about such negotiations. A few
minutes later, the same woman stood up and said, "I am definitely biased in
this case." She was not chosen for the panel.
Others didn't make the cut after saying they distrust BP or knew someone hurt
in the blast. One man said he was close to a relative of someone who was
injured and who, he had heard, sued BP and got a $750,000 settlement for what
he considered a flimsy claim.
"For someone who doesn't have that much evidence to get paid that much,
someone has to be covering something up," the man said.
A slew of prospective jurors who last week criticized Cardona or the others
seeking compensation for mental anguish also were not chosen.
BP has settled all cases involving deaths from the explosion.
Remaining cases largely involve blast-related injuries and property damage.
Coon had said Kilbert, the Wilsons and Bocardo suffer from post-traumatic
stress disorder and hearing loss.
The explosion occurred after a piece of equipment overfilled with flammable
liquid hydrocarbons. Alarms and gauges designed to warn of the problem failed,
and vented vapor ignited during startup of a unit that boosts octane in
gasoline.
The pool included people who saw the smoke or felt the tremors from the blast.
It also includes two safety officers at the plant and numerous people who work
at refineries or know people who do, including BP's.
The blast prompted several investigations that examined BP's safety practices.
The U.S. Chemical Safety and Hazard Investigation Board's two-year probe
concluded that budget cuts imposed in the years before the explosion laid the
foundation for the tragedy. BP disputes that assertion.
The company is implementing safety-improvement recommendations of a panel led
by former Secretary of State James A. Baker III, which found that BP gained
false confidence about process safety, or proper equipment operations and
handling of hazardous materials, while focusing more on personal safety, or
prevention of slips and falls. The panel said it found no evidence that BP
intentionally ignored operational safety.
The Texas City plant is BP's largest refinery, with a capacity of 460,000
barrels a day. The plant has been operating at about half its capacity since
Hurricane Rita blew ashore in September 2005. The company aims to restore it
to full capacity by year's end.
kristen.hays@chron.com
xxxxxx
http://www.chron.com/disp/story.mpl/business/5108188.html
Jury
chosen to hear BP blast trial
Cases first
among thousands to reach courtroom, but settlements still sought
By KRISTEN HAYS
Copyright 2007 Houston Chronicle
A Galveston jury of eight women and four men will decide the outcome of the
first trial to emerge from thousands of lawsuits related to the March 2005
explosion at BP's Texas City refinery unless last-minute settlements are
reached.
Lawyers on both sides chose the panel Tuesday, the third day of jury
selection, to hear the trial involving five plaintiffs in four lawsuits. Four
women were chosen to be alternates in the six- to eight-week trial scheduled
to begin today with opening statements.
BP has settled at least 1,350 of about 3,000 blast-related lawsuits. While
some had trial dates, none had proceeded so far as to select a jury until
Tuesday.
However, settlements remained possible as attorneys privately continued
negotiations, about which they declined comment. Last month state District
Judge Susan Criss, who presides over blast-related litigation in Galveston,
ordered both sides to participate in mediation to exhaust efforts to settle.
After the panel was chosen Tuesday, she advised attorneys on both sides
without elaboration to "work on that stuff you were intending to work on."
Brent Coon, who represents four of the five plaintiffs and has taken the lead
in organizing the vast litigation, said he was pleased with the panel.
"We think we have a very fair panel that can sit and listen to all the
evidence and render a fair verdict," he said.
BP lawyer Kenneth Tekell declined comment.
Striving for settlements
BP has consistently said the company is working hard to settle all cases.
The blast killed 15 people and injured scores more, with tremors felt as far
as five miles from the plant.
The cases before Criss involve four adults and the estate of a fifth who
fatally shot himself in the head six weeks after the blast.
"We have worked awfully hard not to have to stand before you today," BP lawyer
James Galbraith told the pool of more than 200 prospective jurors without
acknowledging specific settlements. Some in the pool noted they knew the
company has settled lawsuits.
"Very early on, BP stood up and said, 'We accept responsibility for the
explosion.' What we said was, we accept responsibility for what we caused,"
Galbraith said.
"We're here because we have a dispute with these particular claimants about
the nature and extent of any injuries."
The plaintiffs in the lawsuits are the estate of Rene Cardona Sr., 26, of
Baytown, who killed himself; Scott Kilbert, 48, of Bellville; Nara and David
Wilson, both 44, of Santa Fe; and Rolando Bocardo, 41, of Baytown. All were
contractors.
On Tuesday, a woman asked if the plaintiffs had been offered any money, and
Galbraith said he couldn't divulge anything about such negotiations. A few
minutes later, the same woman stood up and said, "I am definitely biased in
this case." She was not chosen for the panel.
Others didn't make the cut after saying they distrust BP or knew someone hurt
in the blast. One man said he was close to a relative of someone who was
injured and who, he had heard, sued BP and got a $750,000 settlement for what
he considered a flimsy claim.
"For someone who doesn't have that much evidence to get paid that much,
someone has to be covering something up," the man said.
A slew of prospective jurors who last week criticized the plaintiff who
committed suicide or the others seeking compensation for mental anguish also
were not chosen.
BP has settled all cases involving deaths from the explosion.
Remaining cases largely involve blast-related injuries and property damage.
Dispute over drugs
Robert Kwok, who represents Cardona's 11- and 6-year-old sons, said last
week Cardona was laid off after his 15 co-workers died in the explosion and
killed himself hours after receiving his first unemployment check for $9.
An autopsy showed he had cocaine and alcohol in his system, and Kwok said the
sides disagree on whether he was a user of those substances before the
explosion.
Kwok declined comment on the panel on Tuesday.
Coon had said Kilbert, the Wilsons and Bocardo suffer from post-traumatic
stress disorder and hearing loss.
The explosion occurred after a piece of equipment overfilled with flammable
liquid hydrocarbons. Alarms and gauges designed to warn of the problem failed,
and vented vapor ignited during startup of a unit that boosts octane in
gasoline.
The pool included people who saw the smoke or felt the tremors from the blast.
It also includes two safety officers at the plant and numerous people who work
at refineries or know people who do, including BP's.
The blast prompted several investigations that examined BP's safety practices.
The U.S. Chemical Safety and Hazard Investigation Board's two-year probe
concluded that budget cuts imposed in the years before the explosion laid the
foundation for the tragedy. BP disputes that assertion.
Safety improvements
The company is implementing safety-improvement recommendations of a panel
led by former Secretary of State James A. Baker III, which found that BP
gained false confidence about process safety, or proper equipment operations
and handling of hazardous materials, while focusing more on personal safety,
or prevention of slips and falls. The panel said it found no evidence that BP
intentionally ignored operational safety.
The Texas City plant is BP's largest refinery, with a capacity of 460,000
barrels a day. The plant has been operating at about half its capacity since
Hurricane Rita blew ashore in September 2005. The company aims to restore it
to full capacity by year's end.
kristen.hays@chron.com
xxxxxxxxxxxxxxxxxxxxxx
Wall Street Journal
September 5, 2007
Jury Chosen In
Trial Stemming From `05 BP Texas Plant Blast
DOW JONES NEWSWIRES
September 4, 2007 5:03 p.m.
GALVESTON, Texas (AP)--After three days of intense questioning, a jury was
selected Tuesday in the first civil trial stemming from the deadly 2005
explosion at BP PLC's Texas City plant that killed 15 people and injured more
than 170 others.
The 12-person jury is made up of eight women and four men. Four alternates
were chosen for a trial that could last two months.
The jury was selected after three days of questioning from a pool of more than
200 people to decide the fate of five lawsuits filed against BP.
Many who were questioned said they couldn't render a fair decision because
they thought BP and the oil industry cared more about profits than safety.
Others said they couldn't award money for any mental anguish the plaintiffs
might have suffered because people assume some risk working in the
petrochemical industry.
About 1,350 of the thousands of lawsuits filed since the accident have been
settled.
BP attorney Jim Galbraith said the London-based oil giant is fighting the five
suits set to go to trial because the plaintiffs want more money than the law
allows. The lawsuits, barring settlements, would be the first tried in the
accident.
The plaintiffs want punitive damages for gross negligence, and BP has said the
accident wasn't the result of gross negligence.
"March 23, 2005, is without a doubt the worst day of (BP's) presence in our
community," Galbraith told the jury pool. "It was definitely a tragedy. It was
an explosion that nobody saw coming."
Galbraith told potential jurors BP has never denied responsibility for the
accident and has worked hard to make sure it doesn't happen again.
The U.S. Chemical Safety and Hazard Investigation Board, one of several
agencies that probed the accident, found BP fostered bad management at the
plant and that cost-cutting moves by BP were factors in the explosion.
An internal report by BP released in May said there was a culture at the plant
that seemed to ignore risk, tolerated noncompliance, and accepted
incompetence.
Originally, seven lawsuits were to be tried, but two were settled before jury
selection began.
The plaintiffs in the five lawsuits are:
-The 6- and 11-year-old sons of Rene Cardona Sr., 26, from Baytown, a contract
worker for engineering and construction company Contech Control Services who
committed suicide six weeks after the blast. One lawsuit was filed on behalf
of the sons, whose lawyers attribute Cardona's suicide to the trauma of the
accident.
-Nara and David Wilson, both 44, from Santa Fe, Texas. The couple, who filed
separate suits, worked for mechanical contracting company Altair Strickland.
-Scott Kilbert, 48, from Bellville, an instrumentation supervisor for
construction company JE Merit.
-Rolando Bocardo, 41, from Baytown, an instrument fitter for JE Merit.
Attorneys for the Wilsons, Kilbert and Bocardo said their clients have
suffered a variety of injuries, including back problems, hearing loss and post
traumatic stress disorder.
The blast has cost the company at least $2 billion in compensation payouts,
repairs and lost profit.
The Texas City explosion occurred when part of the plant's isomerization unit,
which boosts the level of octane in gasoline, overfilled with highly flammable
liquid hydrocarbons. A geyser-like release of flammable liquid and vapor
ignited as the unit started up.
Alarms and gauges that should have warned of the overfilling equipment failed
to work at the plant about 40 miles southeast of Houston.
xxxxxxxxxxxxxxxx
Anchorage Daily News
September 4, 2007
http://www.adn.com/news/government/story/9276451p-9191251c.html
PART III of a series
Commute, job
work for Palin
Published: September 4, 2007
Last Modified: September 4, 2007 at 04:20 AM
Gov. Sarah Palin recently sat down with Daily News reporter Tom Kizzia to talk
about some of the issues of her first year in office. It had been just a year
since she swept to her first big electoral victory, in Alaska's 2006
Republican primary. Polls have shown her with a positive rating of more than
80 percent.
Gov. Palin's comments on political corruption, oil taxes and the gas pipeline
project appeared Sunday and Monday. Following are excerpts of the conversation
on a few other topics, including the proposed Pebble Mine in southwest Alaska,
her future political aspirations and what having a governor-mom has meant to
her children: Track, Bristol, Willow and Piper.
The interview took place in Palin's downtown Anchorage office. The governor
had driven to Anchorage that morning from her family's home in Wasilla -- a
commute she once described as wearisome when she was working for the Alaska
Oil and Gas Commission.
ADN: You're commuting in the summer when you're here?
PALIN: Today I commuted in, yes. Tomorrow I will commute to Kenai. I will
commute to wherever I need to be.
ADN: But not it a jet, apparently.
PALIN: But not in a jet, and I'm so thankful that happened the way it
happened, and that it finally sold. Now I'm flying commercial. Or driving
myself.
ADN: Driving your Jetta? I remember in the primary you said you were driving
the Jetta instead of the jet.
PALIN: Bristol has the Jetta. I'm driving a state rig right now.
ADN: We're going to start with a really tough question. What does it feel like
to be called the most popular politician in America?
PALIN: Well, I haven't heard that one. I have heard that my poll numbers for
governors are high. And I think, well, that's because I'm a relatively new
governor. I think poll numbers are reflective of Alaskans' and I think even
Americans' desire for change and of not doing business as usual. And I think
that's what we represent. So that's humbling. Yeah.
ADN: There's even talk out there of your being a potential vice presidential
nominee. Have you ever actually imagined running for federal office?
PALIN: Um, haven't really contemplated that. And I am very realistic. I know
that the state of Alaska could be and should be contributing to the United
States much more so than we are today. We could be helping the United States.
I think I can help do that as governor.
ADN: How about in the future, could you imagine running, say, for Congress?
PALIN: That would all depend on the kids' situation, how they were doing and
if they blessed such a move, but today, I'm not contemplating that, no.
ADN: Anything within this term of office?
PALIN: Something very, very, very drastic would have had to have happened to
get me to think along those lines because, again, I feel that I certainly have
a responsibility and an obligation that I will be fulfilling. That is putting
my name on the dotted line to serve as governor for four years; that's what I
believe I should be doing.
ADN: So how has it been, being governor, for your family? Has it been tough
for the family?
PALIN: I think, big picture, not real tough because the kids and Todd, we've
always had to have flexible schedules, very adaptable. Because I don't know if
people are aware, but being mayor and manager of the city of Wasilla for those
six years was quite taxing also, time-wise, and it took a huge commitment to
get the job done there also. So the kids have grown up with busy parents and
have had to be flexible. And growing up with that, this has always been part
of their environment, so that hasn't been tough.
What has been tough is just a few individual incidents, Tom, that would not
have happened had I not been elected governor that the kids have had to go
through, which has been, I think, kind of unfortunate, but it must go with the
territory.
ADN: Where somebody says something to them ...
PALIN: Yeah, says like, you know, your mom sucks as our governor. So here's
what I'm going to do to you next time I see you, something like that coming
around in an e-mail to one of the girls.
With Track, with hockey, he tendered his rights to get to play for the Alaska
Avalanche, ready to go play juniors there and some kid telling him oh, it's
political. It's just because, you know, your mom is governor. Just little tiny
things and just a couple of incidents, again, wouldn't have happened had I not
been elected, but overall, it's been very good for the family.
Good in the sense of uplifting. They know it is an adventure. They know that
we are being productive. They are a part of this and I think, all and all,
this first year has been very, very good.
ADN: When you were out in Bristol Bay this summer, did you hear people talking
about the Pebble Mine?
PALIN: I did.
ADN: What is your current thinking on the Pebble Mine? Especially I am
thinking of what you've said about the state needing to establish credibility
nationally. There has been criticism of the previous administration for having
partially dismantled some of the regulatory process that people are now
looking to to make sure that Pebble can be done without harm to the fisheries.
PALIN: Right. Pebble is not going to be permitted if it is going to harm the
fisheries, and when I was out in Bristol Bay, I heard both sides. I heard both
sides the minute I walked into my mother-in-law's house in Bristol Bay.
You know, we have family split on the issue and that is fascinating, but
Pebble Mine will not be permitted on our watch if it adversely impacts the
world's richest salmon spawning grounds, a renewable resource that has
sustained western Alaska for generations. ... But we can't go in there with a
preconceived notion that Pebble Mine should or shouldn't be permitted.
They have not applied for all of their permits. The (Environmental Impact
Statement) has not been presented. I will not judge the project and I will not
ask DNR or DEC or any of the overseeing agencies to judge it until all of the
information is in.
ADN: And are you comfortable with the regulatory structure that you have
inherited? Is it up to the job to make these decisions?
PALIN: I am because we have the right people in place with Larry Hartig, with
Tom Irwin, with Marty Rutherford, with Talis Colberg, with these cabinet
members who are in charge of decisions like this in these overseeing agencies.
They are in these positions, Tom, for the right reason and they are going to
make sure that Alaska's best interest is met here with a project even like
Pebble.
They are not going to do it as political favors for anybody, either for or
against a project like Pebble. They are not going to let politics get in the
way of the science involved in a decision that has to be made on Pebble, or
the economics or anything else. I have faith in these agencies that they will
be able to make the right decisions.
Contact reporter Tom Kizzia at
tkizzia@adn.com.
Palin's comments have been lightly edited for space and repetition.
Xxxx
http://www.adn.com/news/politics/fbi/kott/story/9276466p-9191272c.html
Prosecutors direct new allegations against Kott
UNLAWFUL GIFTS: Prosecutors say Kott started
accepting benefits from Veco officials in 1999.
By RICHARD MAUER
rmauer@adn.com
Published: September 4, 2007
Last Modified: September 4, 2007 at 03:01 AM
As federal prosecutors prepare to begin their case this week against two
former state legislators, they have unveiled new allegations that one, Rep.
Pete Kott, had been taking unlawful gifts and benefits from Veco officials
since 1999.
Kott, a former House speaker who ran a flooring business on the side, stored
equipment from 1999 to 2006 at a warehouse owned by the oil-field service
company, the government said in a recently unsealed motion. The government
also alleged that Kott received $12,000 in equipment from Veco or its former
chairman, Bill Allen, in 2002, and that Allen gave him $5,000 in 2004. The
next year, Kott took possession of tools and other items that Veco bought in a
charity auction, prosecutors said.
Those alleged actions were in addition to conduct charged in the seven-count
indictment returned by a federal grand jury in Anchorage in May against Kott,
an Eagle River Republican, and former Rep. Bruce Weyhrauch, a Juneau
Republican. Most of the alleged illegal activity in the indictment took place
between September 2005 and August 2006.
Both men have pleaded not guilty to bribery, extortion, fraud and conspiracy.
Their trial begins Wednesday in Anchorage before U.S. District Judge John
Sedwick.
In the days leading up to the trial, the two defendants have also been firing
back at the government, challenging some of the legal theories of the
prosecutors. They are disputing the government's assertions that the two men
had a duty to disclose they were seeking work from Veco or Bill Allen at the
same time they were voting on issues affecting Veco.
Kott also asked the judge to prevent the government from bringing up alleged
prior "bad acts" that weren't specifically charged in the indictment.
Allen and former Veco vice president Rick Smith are expected to be key
government witnesses. They have pleaded guilty to bribing legislators and hope
to get their sentences reduced by cooperating with the authorities.
In disclosing that they intended to bring up Kott's earlier conduct to the
jury, government prosecutors said they expected Allen and Smith to testify "to
the general scheme to provide Kott with things of value in exchange for
securing Kott's agreement to take officials acts to benefit Allen, Smith and
Veco."
In one instance, Kott's attorneys said in a court filing last week that Kott
was only joking when he asked Veco for help in getting him a job at a prison
the company was building in Barbados.
"These Barbados comments are made in jest, and that intent is clear from the
context of the conversations, which involved drinking and joking," they said.
And Kott's talk of working as a lobbyist for Veco -- a discussion he held
while still in office -- were "off-hand, brief, and are absolutely devoid of
any details or even specific requests to be Veco's lobbyist or a specific
promise to be hired as Veco's lobbyist," his lawyers said.
Weyhrauch, a lawyer, is accused of selling his votes for a 2006 oil-industry
tax bill in return for a promise of legal work after the regular legislative
session. The government said Weyhrauch should have disclosed his negotiations
for work with Allen and Smith.
But Weyhrauch's attorneys said he had no duty to disclose under state law or
House rules.
Kott's lawyers said as much and asserted that it's the normal House practice
to require members to vote even if they have a conflict of interest. That
negates the need for disclosure, they said.
Government lawyers said that position is nonsense.
"Each member of the Alaska State Legislature has an inherent duty to the
public of the State of Alaska to conduct their dealings free of conflicts of
interest," prosecutors said in a memorandum filed Saturday. "The existence of
this duty is intrinsic to a public official's obligation to conduct his or her
affairs free of improper influences." State law requires legislators to not
only avoid conflicts of interest, but even the appearance of a conflict, they
wrote.
Weyhrauch appeared to understand that duty, the prosecutors said, because he
disclosed other conflicts even if he failed to disclose his job solicitation
from Veco.
Find Richard Mauer online at adn.com/contact/rmauer or call 257-4345.
xxxxxxxxxxxxxxxxxxxxxxxxxx
Anchorage Daily News
September 3, 2007
http://www.adn.com/news/politics/story/9274493p-9189289c.html
Part II of 3 part series
Palin's oil
agenda includes credits as well as tax
Published: September 3, 2007
Last Modified: September 3, 2007 at 02:31 AM
Gov. Sarah Palin has called a special session of the Legislature to reconsider
the state's new Petroleum Profits Tax, or PPT, passed in the waning days of
the administration of her predecessor, Frank Murkowski.
She has cited two reasons for taking a second look at the tax.
One, federal indictments allege some of the legislators' votes were bought
with money or promises of work from the oil field services company Veco.
Two, the tax hasn't been performing as promised, according to the state
Department of Revenue. The PPT is expected to bring in $250 million more this
year than the tax it replaced -- but that would be $800 million less than the
amount predicted when the tax passed a year ago.
Daily News reporter Tom Kizzia recently talked with Palin about why she thinks
the predictions went so far wrong, new developments in the gas pipeline
project and what she wants to see the Legislature do when it convenes Oct. 18.
A formal announcement of the administration's position on the PPT is due
tomorrow. Palin's comments have been lightly edited for space and repetition.
The unedited audio is available on adn.com.
ADN: On the PPT, your analysis this month showed revenues coming in far less
than anticipated because of the companies' costs they are deducting. Way off
from what they were saying just 12 months ago. How could the predictions have
been so far wrong?
PALIN: Major over-promised. Eight hundred million dollars ... We are not going
to look at this as, well, it's water under the bridge, what the projections
were and what reality is today. No, we have to find out what was missing when
the Legislature and the public were promised the success of PPT: 'Oh, this is
going to be so good for the state of Alaska because it is going to bring in X
amount of money.' Was some information not provided the public and the
Legislature at the time? Or truly did conditions economically change to such a
degree that no expert could have predicted the increased cost of labor and
steel and operations on the North Slope?
That is what the Department of Revenue is trying to find out and we are not
going to just let it go with an assumption that no expert could have ever
predicted these increased costs. Because we don't buy that.
And here again, this ties back into what was the motivation of the
administration when they proposed it? What was the motivation of the
administration when they proposed a rate? The governor proposes a rate. He
leaves for the weekend, meets with oil industry executives, comes back from
the weekend meetings and kind of kowtows to what appears to be their pressure
for a lower rate.
We still need answers to that, but while we are seeking those answers, just as
importantly, even more importantly is seeking a solution now to the problem
that we face. The problem that we face is that PPT isn't working as promised,
obviously.
Not only are the revenues not what we had anticipated or been told they would
be, but also the investment climate isn't what (it) was promised to be, the
credits that were involved in PPT where it was supposed to induce new
investment that would lead to actual new development in the state. The
explorers aren't excited about it. They are not buying up those credits. There
is not a market for it.
So that aspect of PPT which is more complicated and not discussed so much in
the public, we have to get in there and figure out a better way of creating
that investment environment for the new explorers, for new companies to come
in, not just BP, Conoco Phillips and Exxon to be here, but the new to come in.
ADN: When you talk about the previous administration's motivations, are you
suggesting that it is worth looking to see whether there was something other
than ideology or kowtowing? You first raised it in the context of criminal
investigations and looking at, you know, the kind of influence-peddling that
has gone on in other parts of the Capitol.
PALIN: You know, hard for me to speculate on that because, again, there hasn't
been an investigation along those lines, so I don't know. But it does appear
to be some political motivation there and some desperation for that gas line
that had been promised Alaskans.
It seemed to be the administration was of the mind-set (to do) whatever it
took to keep the oil companies at the table, to get them to agree to a deal on
someday building a gas line, which of course, to this administration makes no
sense because we know that building a gas line, a pipe, infrastructure to flow
a resource to the rest of the United States, doesn't have to be built by an
oil company. There are gas line companies across the globe that could bid on
this project and build a line.
ADN: So the gas line project would have no bearing on the special session
looking at oil taxes in October?
PALIN: Gas line and oil taxes are two totally separate issues, and I think the
problem that the prior administration had was the two being enmeshed and the
public being confused ... It should never have been jumbled together. We are
trying to keep them separate.
ADN: Has the reception in the market this summer for the gas line project
given you any reason for optimism? (Critics) looked at the extension of your
deadline and said the state is probably not getting much enthusiasm.
PALIN: We got new interest saying, 'Hey, you guys are serious about building a
line and you are ready to have skin in the game. ... Okay, we will take you
seriously now. Give us some time to get our proposals together.' That was the
reason for the extension. It was a smart, prudent thing to do. It is funny,
though, that the naysayers who say, 'You extended the (dead)line, that is not
a good sign,' they are the same ones who were saying throughout AGIA (Palin's
Alaska Gasline Inducement Act), 'You are not flexible enough. There is no way
you are going to get any bid on that. You are too stringent in all of your
criteria.'
So, hey, OK, we are going to be flexible here. Not on the must-haves ... As
long as we can make that promised deadline to get a chosen partner in front of
the Legislature to consider, I didn't have a problem with extending the
deadline to receive more proposals.
ADN: If any of the North Slope producers comes in with a nonconforming
proposal, is that something you can negotiate?
PALIN: You know, it's tough to even consider that, Tom, because the producers
-- we get such mixed messages from -- especially BP and Exxon. Conoco Phillips
has been pretty consistent in saying, 'We do want to participate, we want to
find a way to partner with Alaska.'
ADN: If it was noncompliant, where does that put the state? The oil companies
do have a big role to play in this eventually.
PALIN: Well, they have a big role, but again, remember, they are not the only
game in town and if they can't comply with the must-haves that are in Alaska's
best interest, it is not going to work and they already know that.
ADN: Back to the oil taxes. You talked about a gross production tax during the
campaign. Are you going to push for one now?
PALIN: We are still evaluating, still creating the models ... and the
recommendation to be presented on September 4. ... I think keeping it simple,
keeping it transparent, not getting gamed is going to be certainly the
criteria that has got to be weighed heaviest.
ADN: Critics have been saying for several administrations that we need to have
more auditors, better auditors, I guess better-paid auditors. Can't the
administration simply reclassify these jobs and come up with some more money
to hire them?
PALIN: Well, that is one thing that we can do, but remember these
multinational corporations making billions of dollars quarterly have a heck of
a lot more resources than the State of Alaska has and many of those resources
go toward, as any capitalist would be doing, maximizing their profit,
minimizing their risk and minimizing their costs and expense to do business.
They pay people to do that. It would be very, very tough for the State of
Alaska to match them. It would be an impossible dollar-for-dollar match, match
them on auditing. So we have to make sure that the formula that is adopted
doesn't leave room for that kind of competition because we will lose in that
kind of competition.
ADN: Well, even a gross production tax would require, I would assume, some
incentives for exploration and development of marginal fields.
PALIN: It has to.
ADN: And there is a lot of opportunity there for gaming the system, I think.
PALIN: Well, OK, neither system, obviously, is simple and a gross ... really
will evolve into more of a hybrid also to allow for the incentivizing, the
credits to be provided for new investment. That's the ideal. ...
It is going to be facts and figures and very, very hard data that shows what
is going to be best for Alaska and I will tell you, Tom, if it is going to be
proven at the end of the day on September 3rd that a gross tax just wouldn't
work for the State of Alaska because we couldn't find what those right
incentives are to induce new investment, if gross wouldn't work, I would be
the first one to say you know, I thought having a gross and keeping it real
simple was the best thing for Alaska, but look at what the numbers tell us, so
we can't go there.
I will be the first one to say that. I will, you know, spend the political
capital or whatever it takes, but I am not going to let politics there get in
the way of doing the right thing for Alaska. And it is our future. Oil taxes
and the gas line, these are the future of Alaska because we are talking about
nonrenewable resources here and once the resource is gone, it's gone.
We have to make sure we are receiving the appropriate value for that oil today
and with that value that we receive, we have to prudently invest that money
and we have to save for the future or we are in a world of hurt in the future
of Alaska.
ADN: The special session -- do you know where it is going to be yet?
PALIN: No ... If there is an insistence on the legislators' part that they
just have to take that vote in Juneau, that is the only way they are going to
be successful if they are down there in Juneau casting a yes or no vote on PPT
or gross in the building in Juneau, then so be it.
I am not going to fight them on that. It is not worth a battle on that, but we
had better be able to incorporate hearings around the state on such an
important issue so that more people can access their lawmakers and physically
be there and see what is going on and give input and interact with their
lawmakers.
We better be able to do that ... I certainly hope we don't get a lot of
push-back on an idea like that. If they have got to cast the vote in Juneau,
that is fine, but we have got to make sure that we are having hearings around
the state.
ADN: During the 30 days?
PALIN: Yes.
ADN: Or prior to the 30 days?
PALIN: Yes, ideally even prior to. See, I would hope that ideas like that
though, Tom, could come from the Legislature. You know, I feel like, OK,
sometimes I receive this message from the Legislature saying hey, Sarah, hands
off. You don't tell us how to do our business. There is a separation of powers
and I can accept that and I say I respect that separation of powers, but at
the same time then, legislators, when you recognize that the public isn't real
pleased with state government, that includes the executive branch and the
legislative branch, then we better start doing things differently.
We better start doing things right. What are your innovative ideas on how we
can do things right and how we can start building trust by the public? One
idea I think that they should embrace is having some meetings around the
state.
--------------------------------------------------------------------------------
Contact reporter Tom Kizzia at tkizzia@adn.com.
PART TWO OF THREE
TOMORROW: Palin on the Pebble mine, whether she'll run for higher office
and the effect of her election on her family.
Xxxxx
PART I of III
http://www.adn.com/news/politics/story/9272372p-9187130c.html
Palin
foresees positive changes in politics
Published: September 2, 2007
Last Modified: September 2, 2007 at 09:45 AM
On Aug. 22, 2006, Sarah Palin shocked the Republican Party establishment with
a crushing primary victory over incumbent Gov. Frank Murkowski and former
state Sen. John Binkley. She went on to win the governor's race in November by
a comfortable margin and, according to polls, has grown even more popular with
Alaskans during her first year in office.
A year after that primary victory, Gov. Palin sat down with Daily News
reporter Tom Kizzia to talk about some of the biggest issues of her first nine
months in office, including the ongoing federal corruption investigation and
next month's special session to reconsider the state's new oil tax.
Featured today: Her thoughts on the political corruption investigation and the
changes to the system she says will be necessary to chart a different course
for the state. The governor's comments have been lightly edited for space and
repetition. The complete audio is available on adn.com.
ADN: How do you feel about how the FBI investigations are going now? You had a
lot to say in May when the indictments came out. Now the investigation is
veering toward the congressional delegation and could affect how Alaska does
business. ... Does that make you uneasy?
PALIN: I am not scared of the changes that I believe are inevitable in terms
of leadership that has represented the state of Alaska for all of these years
because the change is inevitable.
Whether the FBI reveals something that leads to change, or just the changes in
power in Congress ... or individuals maybe choosing not to run for
re-election, age even of our politicians playing a part in this, change is
coming to Alaska.
So I am not afraid of that and I don't want Alaskans to be afraid of what is
coming. ... There are many positives that are going to result from change if
we are in the right mind-set. ...
My interpretation of it is that Alaska has got to change its image. ... We
need to be taken seriously so that we are given more credence and more
authority here and we are provided more opportunities to develop our state.
The only way that we are going to be able to gain the trust of the rest of the
United States ... is to prove that we can do things right and honestly and
transparently and Sen. Stevens knows that has been my message.
ADN: Transparency in government. Are you talking about self-sufficiency as
well?
PALIN: I go back again to remembering when we became a state where we struck
the deals with the federal government as we asked to be let into the union and
the promise on our part was that we would be as self-sufficient as possible.
We wouldn't solely be reliant on the federal government to pay our bills, to
provide services and build our projects here, and we become self-sufficient by
developing our resources because we are so wealthy in terms of the resource
that we have here, but into -- a large part here, we are not allowed to
develop those resources and I think a lot of that has to do with others who
are making decisions for us, looking at us like, 'We don't believe that their
oversight is going to be strong enough for the environment.'
Now, of course, they are saying, 'We believe that there is corruption up
there, so we can't trust Alaska to know how to do the right thing.' All of
these things that are kind of elements right now in play, we have to be more
responsible and more sensible than ever. This state government, our
administration, has to prove to the rest of the United States that we can do
things right.
ADN: Well, talk about dependence on the federal government, I think a lot of
Alaskans have probably asked themselves why these investigations had to be
carried out by the federal Justice Department.
PALIN: Yes.
ADN: Is the state capable of policing political corruption here or is it too
tied up in its own system? Can voters have any confidence that any future
transgressions can be handled by the state?
PALIN: That's a great question, and I am one of those who had asked why did it
take the feds to come in here over the last couple of years and start digging
into the issues that had been speculated about and rumored about?
Why couldn't the state police each other? Why couldn't the Legislature and
legislators police one another? Why couldn't APOC (the Alaska Public Offices
Commission) -- why didn't they have an investigator? All these tools that we
are missing in the state's toolbox to clean up what was rumored to be
corruption and undue influence, and I still don't have the answer as to why it
was that the state had to rely on the feds again to come in and clean things
up. But what we have done to change that though, with APOC, we funded them an
investigator.
They need to have one with oversight of the oil industry. We just funded a
five million-dollar new office, the PSIO office (Petroleum Systems Integrity
Office) where we will have an integrity office overseeing the regulatory
environment, even, of oil and gas development in the state. ...
We are going to put our money where our mouth is that we are going to be able
to prove that our commitment is to do things right.
ADN: Is the investigator going to do it for APOC? Or does more change need to
be made there in the election supervision?
PALIN: Well, an investigator is a good first step. Greater communication with
APOC will be able to tell us what else is missing. And then those things that
make sense to this administration to add to the toolbox.
We have got to go above and beyond with oversight. We have to make sure that
the public is going to be able to trust that state government is making
decisions in the people's best interest and we have got a lot of ground to
make up.
ADN: Payoffs to legislators goes beyond just campaign finance investigations.
That takes some serious digging for the Department of Law or the State
Troopers or whomever. It would go beyond APOC.
PALIN: Well, right, and that obviously is why the FBI and Department of
Justice, other entities with much greater resources than any state agency, had
to come in. But also, I think the FBI's role in this and Department of Justice
is an indication that the problems are greater than just maybe a local
legislator pocketing a few thousand dollars to change a vote on something.
Evidently, it is more serious than what has been revealed thus far. Of course,
not being privy to all of the information, I can't prejudge what any kind of
outcome is going to be when more of the trials begin and I can't assume that
the period of indictments is over. I think that there will probably be more.
ADN: In May, Attorney General (Talis) Colberg said the state was going to
pursue its own investigation of things related, issues related to those Veco
confessions. Is that still going ahead?
PALIN: Well, to the degree that we cannot step on the FBI's toes or get in the
way of their investigation, our focus has been on what kind of undue influence
was either impacting or coming from the administration? They are the ones who
proposed the new oil tax regime, remember? And nobody is really asking well,
what did Jim Clark (Murkowski's chief of staff) have to do with this? What did
Murkowski have to do with all of this?
It's been our role and some of my assistants' roles who were here before to
start getting in there and figuring out what was the motivation behind these
proposals to change an oil tax. That is still being gathered. ...
ADN: Have the feds been looking at the previous administration's motives?
PALIN: I can't tell. We can't tell.
ADN: You can't say or you can't ...
PALIN: I can't prove that they have been doing that, except that they have
conducted some interviews. They have interviewed, for instance, Joe Balash, my
assistant on the oil and gas issues and Joe had been working for a legislator
in the past and it sounds to me like the questions may have had to do with
what was the administration's role. But that's something that we, you know,
again, I am not privy to and we haven't heard or seen publicly what aspect of
the administration's past actions are being questioned.
ADN: Some Alaskans have, you know, defended Ted Stevens and Lisa Murkowski in
particular, saying it is only natural in a small state for a politician to
have prominent friends and even enter business relations with them. What do
you think? Where should public figures, political figures draw the line?
PALIN: Well, maybe that is commonplace in a former smaller world of
politicians in Alaska, but that is not commonplace in my world to be
presented, you know, maybe amazing or even outlandish investment opportunities
that turn us into rich individuals. ...
I am not buddies with Bob Penney. I don't go to that Kenai classic fishery
thing, you know, I don't go hunting and fishing with Bill Allen. That's not my
world. So my perspective is, I guess this new leadership team, we wouldn't be
tempted to become part of that world because that is not where we came from.
I'm not enticed at all or excited about the idea of hooking up with some of
the characters in the past that now are in trouble.
ADN: Do you think if they had adhered to a brighter line that they could have
avoided some of this trouble?
PALIN: I think everyone has that individual and personal ethical compass
within and I think that maybe in the past, some individuals, their compass was
way off kilter and decisions were made based on a real skewed idea of what
ethical activity would be. I am not claiming holier than thou and I am not
saying that the people who I hire and surround myself with, that any of us are
perfect.
All of us make mistakes ... but as long as I am confident that moral compass
is right on target and we are not going to be tempted to do anything for self
gain then I think that is what is going to best for the progress that we need
here in Alaska. I can't say that was the case in the past in Alaskan politics.
Obviously it wasn't or we wouldn't have high-ranking CEOs pleading guilty to
bribery.
ADN: But I think you are also talking about the activities in the gray area --
the business relationships with, you know, a senator or congressman or a state
legislator. Between someone with interests in the public process and the
people running the public process.
PALIN: Right. Well, that's why I think we need more real and normal and
hardworking and blue-collar Alaskans to want to run for office and serve in
these positions that are making decisions.
Again, I will personalize this. I am not from that other world. My dad as a
school teacher wasn't a mover and shaker developer making big bucks in the
state of Alaska off of property development. My husband isn't that way. I am
not raising my kids to be that way.
... If you want to be in public service, it is being willing to serve Alaskans
for the right reasons. It is having to have a servant's heart when you come
into these positions. It's not to get rich.
TOMORROW: Palin on the Petroleum Profits Tax and the oil industry.
Contact reporter Tom Kizzia at
tkizzia@adn.com.
Xxxxx
http://www.adn.com/money/story/9272324p-9187100c.html
A look
over governor's shoulder
OIL TAX OPTIONS: Palin
set to show us her hand this week.
TIM BRADNER
ECONOMY
Published: September 2, 2007
Last Modified: September 2, 2007 at 03:23 AM
Gov. Sarah Palin is to roll out her ideas for changing the state's oil and gas
production tax on Tuesday, setting the stage for what may be a contentious
special session of the Legislature the governor has called for Oct. 18.
We won't know until Tuesday what Palin will propose but it is likely to
involve either changes to the new net profits oil production tax -- the
Petroleum Production Tax, or PPT -- or a variation on the old tax based on
gross revenue.
A lot of political talk is developing around the PPT. I want to set some
things straight. There are advantages and disadvantages with both tax systems,
and changes must be thought through clearly and carefully.
The current tax on industry profits is different from the previous tax on
gross revenue mainly in that operating and capital costs may be deducted. Both
taxes start with determining the value of the oil as it comes out of the
ground (the market price minus costs for shipping oil by tanker and
pipelines). The old tax was applied at that point, as a percentage of the
gross revenue. The new PPT allows production costs to be deducted to arrive at
a net profit. The tax is then applied as a percentage of that number. The PPT
is not a true profits tax because not all costs, like corporate overhead, are
allowed as deductions.
There are some additional features. The old tax was adjusted by something
called the "economic limit factor," an incentive that lowered the tax rate on
higher-cost fields but this incentive had become obsolete and dysfunctional.
The new tax junks the ELF but incorporates an "investment tax credit" intended
to spur exploration and development of existing fields. This tax credit is
somewhat of a side issue because the core of the current debate is over the
merits of a gross revenue vs. net profits tax.
In early August the Revenue Department released a report that claimed the PPT
is not working as intended because deductible costs were much higher than
expected. The tax is bringing in more revenue, but about $800 million less
than predicted when the Legislature debated changing the tax last year. The
department acknowledged that its analysis was based on projections, not real
numbers, but that point gets lost.
It was interesting to me that the department used an oil price of $55 per
barrel in its estimate for revenue under the PPT (a figure from its spring oil
price forecast. It's a fine point, but if actual oil prices were used, or a
trend of prices for the first three months of the fiscal year, the revenue
estimate would be much higher.
The important question, however, is whether we have enough information, based
on real numbers and not estimates, to make intelligent decisions on the tax.
We don't.
One advantage of the gross revenue approach is that it is simpler and easier
to work with than a net profits tax. The disadvantage is that without some
added incentive like the ELF, a gross tax hits all fields, large and small, at
the same tax rate. This would kill off heavy-oil development, which is
important to our future oil production, unless there is some new version of
the ELF. The problem with a special incentive formula is that it can get
outdated, as the ELF did.
The advantage of the net profits tax is that it automatically adjusts for
high-cost fields and needs no ELF-type formula. The disadvantage is that it is
more complex and difficult to administer. I think the auditing issue is a red
herring, however. If the state is having trouble hiring auditors the Revenue
Department could contract with a top-notch accounting firm to assist. I
haven't heard this discussed. The new law also gives the state access to
intercompany audits done by partners in oil fields owned by more than one
company, which is the case with most of the big producing fields. This is a
big advantage for the state.
Some oil producers are neutral as to whether the tax is on gross or net
revenues as long as there is some way to help high-cost places like heavy-oil
fields. The total state take of taxes is important to them, too.
Most governments of producing nations around the world successfully use some
variation of a net profits tax, and we could too. Legislators will have to
weigh the pros and cons of all this.
--------------------------------------------------------------------------------
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.
xxxxxxxxxxxxxxxxxxxxxxxxxx
Houston Chronicle
September 1, 2007
http://www.chron.com/disp/story.mpl/business/5100529.html
Jury pool
hears of worker's suicide
Panel won't be
chosen until next week for suit on 2005 BP blast
By KRISTEN HAYS
Copyright 2007 Houston Chronicle
GALVESTON The suicide of a former BP contractor who survived the deadly 2005
Texas City refinery explosion drew largely unsympathetic responses from
prospective civil-trial jurors questioned Friday.
The man's sons are among plaintiffs in a trial scheduled to begin next week in a
Galveston courtroom.
Lawyers have yet to choose 12 jurors and four alternates from a pool of more
than 200, so jury selection will continue Tuesday, likely pushing opening
statements to Wednesday. Barring last-minute settlements, the lawsuits will be
the first stemming from the blast to go to trial.
Robert Kwok, who represents Rene Cardona Sr.'s 11- and 6-year-old sons, said
Friday that Cardona was distraught after the blast that killed 15 of his
co-workers and injured scores more. The 26-year-old electrical maintenance
operator from Baytown was laid off from his job after the tragedy and fatally
shot himself in the head six weeks later, hours after receiving his first
unemployment check. It was for $9.
"$7, here," a man in the pool said when Kwok asked if anyone else had ever
gotten an unemployment check that small.
But some prospective jurors were critical when Kwok revealed that Cardona had
cocaine in his system and a blood-alcohol level of 0.2 when he shot himself.
That blood-alcohol level far exceeds the legal limit of 0.08 for driving, but
Cardona was in his living room when he pulled the trigger.
One man said he had "abandoned his kids," while another said BP shouldn't be
blamed because "a man was defeated by his personal demons."
Kwok said there is conflicting evidence of whether Cardona used drugs and
alcohol before the explosion.
"Our experts are going to say the explosion was a factor" in Cardona's death,
while BP's lawyers are expected "to say everything in the world was a factor
also," Kwok said.
James Galbraith, one of BP's lawyers, began questioning that was to continue
Tuesday. He found that some members of the pool already think badly of BP.
"I've worked in management, I've seen the shortcuts they take," a man in the
pool told him. The plaintiffs allege BP valued profits over safety.
BP, which has set aside $1.6 billion to resolve blast-related litigation, has
settled at least 1,350 of 3,000 lawsuits, including all stemming from the deaths
caused by the explosion. Cases that remain pending largely involve blast-related
injuries and property damage.
The other plaintiffs
In addition to Cardona's sons, the plaintiffs in the cases to go to trial
next week are Scott Kilbert, 48, of Bellville; Nara and David Wilson, both 44,
of Santa Fe; and Rolando Bocardo, 41, of Baytown. Their lawyer, Brent Coon of
Beaumont, said they suffer from post-traumatic stress disorder, hearing loss,
and some have herniated discs. All were contractors for BP.
Earlier Friday, Coon compared responsible refinery operations to responsible gun
ownership.
He displayed a photograph of a pile of guns to the pool, asking if they believed
guns were inherently dangerous. Several raised their hands to indicate they did
not.
"You won't have an accident if you know how to use it right," a woman in the
pool said.
Coon also asked if anyone thought explosions are inevitable at refineries. No
one raised a hand.
The explosion occurred when a refining unit started up and ignited excess
flammable liquid and vapors in equipment nearby. Alarms and gauges failed to
warn of the excesses.
The 15 workers who died were in a trailer 121 feet away from the blast, which
was felt as far as five miles away.
In earlier questioning, about half of the prospective jurors raised their hands
when Coon asked if they saw the smoke or felt the tremors from the March 23,
2005, blast.
Several investigations of the blast examined BP's safety practices as well as
funding and training levels. The U.S. Chemical Safety and Hazard Investigation
Board concluded that budget cuts imposed in the years before the explosion paved
the way to the tragedy. The board released its final report days before the
two-year anniversary of the blast this year.
Cost cutting
BP, which acquired the Texas City plant with its acquisition of Amoco in
1998, has acknowledged cutting costs and staff in the late 1990s and early this
decade to combat low oil prices and refining margins. But the company has
steadfastly maintained it found no link between those cuts and the 2005 blast.
No federal action
The Justice Department has been investigating events surrounding and leading
to the blast for more than a year, but no indictments or settlements have
emerged.
A panel led by former Secretary of State James A. Baker III found in a report
issued in January that the company gained false confidence about process safety,
or proper equipment operations and handling of hazardous materials, because BP
had focused more on personal safety, such as prevention of slips and falls. But
the panel said it found no evidence that BP intentionally ignored operational
safety.
BP is implementing the panel's safety recommendations, including the April
appointment of an independent monitor to oversee improvements. The company is
spending $1.2 billion on its five U.S. refineries for five years, starting this
year.
kristen.hays@chron.com
xxxx
http://www.chron.com/disp/story.mpl/business/energy/5098879.html
Lawyer
compares safe handling of guns, refineries
By KRISTEN HAYS
Copyright 2007 Houston Chronicle
GALVESTON A lawyer representing people hurt in the deadly 2005 blast at BP's
Texas City refinery today compared responsible refinery operations to
responsible gun ownership.
During the second day of jury selection for a Galveston civil trial, Beaumont
lawyer Brent Coon displayed a photograph of a pile of guns to more than 200
members of a jury pool, asking if they believed guns were inherently dangerous.
Several raised their hands to indicate they did not.
"You won't have an accident if you know how to use it right," a woman in the
pool said.
Coon represents four of six plaintiffs whose cases are being tried together in a
Galveston state district court. Opening statements are scheduled for Tuesday,
but may be delayed by the prolonged jury questioning.
The gun analogy came after Coon asked if anyone thought explosions are
inevitable at refineries. No one raised a hand.
"We believe you can run a refinery safely, and you can run it without
explosions," Coon said.
Coon raised the ire of BP lawyers when he sought to illustrate what he called
"frivolous defenses" by displaying a photo of Enron's tilted-E logo. BP attorney
James Galbraith objected that the tactic equated to guilt by association, and
said, "I don't appreciate it."
"We're not trying to say BP is Enron,"Coon said when the image was removed.
BP's lawyers began questioning jurors later today.
BP, which has set aside $1.6 billion to resolve blast-related litigation, has
settled at least 1,350 of 3,000 lawsuits, including all stemming from the deaths
caused by the explosion. With most, financial terms have not been disclosed.
Cases that remain pending largely involve blast-related injuries and property
damage.
Barring last-minute settlements, the lawsuits now before state District Judge
Susan Criss would be the first to go trial since the blast.
The plaintiffs are: the 11- and 6-year-old sons of Rene Cardona Sr., 26, of
Baytown, who fatally shot himself in the head six weeks after 15 of his
co-workers died in the blast; Scott Kilbert, 48, of Bellville; Nara and David
Wilson, both 44, of Santa Fe; and Rolando Bocardo, 41, of Baytown. Coon said
Kilbert, the Wilsons and Bocardo all suffer from post-traumatic stress disorder,
hearing loss, and some have herniated discs.
The disaster occurred when a refining unit started up and ignited excess
flammable liquid and vapors in equipment nearby. Alarms and gauges failed to
warn of the excesses.
The 15 workers who died were in a trailer 121 feet away from the blast, which
was felt as far as five miles away.
In earlier questioning, about half of the prospective jurors raised their hands
when Coon asked if they saw the black, billowing smoke or felt the tremors from
the explosion on March 23, 2005.
Several investigations of the blast examined BP's safety practices as well as
funding and training levels. The U.S. Chemical Safety and Hazard Investigation
Board concluded that budget cuts imposed in the years before the explosion paved
the way to the tragedy. The board released its final report days before the
two-year anniversary of the blast this year.
BP, which acquired the Texas City plant with its acquisition of Amoco in 1998,
has acknowledged cutting costs and staff in the late 1990s and early this decade
to offset losses from low oil prices and refining margins. But the company has
steadfastly maintained it found no link between those cuts and the 2005 blast.
The Justice Department has been investigating events surrounding and leading to
the blast for more than a year, but no indictments or settlements have emerged.
BP acknowledged that probe in March last year.
A panel led by former Secretary of State James A. Baker III found in a report
issued in January that the company gained false confidence about process safety,
or proper equipment operations and handling of hazardous materials, because BP
had focused more on personal safety, such as prevention of slips and falls. But
the panel said it found no evidence that BP intentionally ignored operational
safety.
BP is implementing the panel's safety recommendations, including the April
appointment of an independent monitor to oversee improvements. The company is
spending $1.2 billion on its five U.S. refineries for five years, starting this
year.
kristen.hays@chron.com
