The Obama administration on Tuesday lifted its ban on deepwater drilling seven weeks ahead of schedule, saying new rules cut the risk of a repeat of the BP oil spill, the worst ever to hit the United States.
Restarting deepwater drilling could be slow, however, as oil companies will need to comply with the new regulatory regime and demonstrate they can adequately respond to blowouts before drilling can resume, the Interior Department said.
“The oil and gas industry will be operating under tighter rules, stronger oversight, and in a regulatory environment that will remain dynamic as we continue to build on the reforms we have already implemented,” Interior Secretary Ken Salazar said in a statement.
The Obama administration is lifting the controversial drilling ban as his Democrats prepare for a tough mid-term election in November, amid concerns over the economy and unemployment.
The ban drew sharp protests from Gulf of Mexico lawmakers and a court challenge from companies that complained the moratorium cost jobs and stalled an industry with a relatively good record.
While the reopening of the prized, deep Gulf waters will be good news for drillers such as Transocean Ltd and explorers like Royal Dutch Shell, analysts warn it will take months or years to return to the pace of activity prior to the Macondo disaster on April 20.
We all knew it was bound to happen sooner or later. Someone must be blamed for the oil spill, and BP’s CEO Tony Hayward fell on that particular sword today.
Hayward will be replaced by American Robert Dudley effective Oct. 1.
Hayward will receive a year’s salary amounting to $1.6 million but further details of his severance package were not disclosed.
In a cliched twist, Hayward will be nominated him as a non-executive director of Russian oil and gas venture TNK-BP, the oil industry’s way of saying: “You’re banished to Siberia”.
BP has reported a second-quarter loss of $17.2 billion. Robert Dudley is a long-time BP employee with more than 30 years in the oil business. A chemical engineer by training, Dudley was put in charge of the day-to-day leadership of the Gulf Coast clean-up operation in June.
But, don’t worry. It’s not over yet. There’s still plenty of blame to go around, and Hayward won’t be taking that walk of shame alone.
Senate Majority leader Harry Reid will unveil an energy bill that will make offshore drilling safer and convert trucks to run on domestic natural gas.
The full Senate could begin consideration of Reid’s bill on Tuesday and Democrats would like to pass it by the early part of the following week.
With time running short ahead of a month-long recess starting Aug 6, Democrats abandoned efforts last week to put climate-control measures in the bill. Reid said then that he had no Republican votes for items such as carbon caps and mandates requiring utilities to generate some of their power from alternatives sources such as wind and solar.
Democrats would like to revisit climate control in September, but for now, they will compromise with the hope of passing the bill quickly.
If Republicans pick up seats, as expected, the effort to put a price on carbon and cut emissions could be stalled for years, which would also hamper the Obama Administration’s efforts to take a lead role at the world climate talks.
The natural gas trucks incentives could cost the government $4.1 billion, compared to the $19 billion price tag for an earlier bill. The energy efficiency measure known as Home Star will include $5 billion in incentives for plugging window leaks and insulating attics.
To pay for these measures, lawmakers may consider raising taxes on the oil and gas industry.
Morning in the Gulf of Mexico dawned with a healthy dose of cautious optimism, something that the Gulf hasn’t boasted in 88 days.
BP has successfully capped the oil leak of the Deepwater Horizon well.
BP is still conducting pressure tests to make sure the cap will hold, but so far, it looks like it will. BP is giving the cap another day before they declare the cap a success. Relief wells are still being dug to access the oil still in the well.
Building pressure indicates that the cap is holding. However, BP has cautioned that the leak may only be halted for 48 hours.
While there is no longer any oil leaking into the Gulf, there is still a massive clean up that needs to take place. Several different methods are being implemented in handling the oil that has already escaped.
BP CEO Tony Hayward met with officials from the Abu Dhabi Investment Authority (ADIA) during a routine visit.
Speculation of a stake purchase by a Middle East or Asian sovereign wealth fund gains ground, if BP wants to prevent a takeover after the financial beating they are taking from the oil spill in the Gulf of Mexico. Some say Saudi investors are seeking 10 to 15 percent of BP.
Hayward said he was merely there to meet with investors.
BP has committed a $20 billion fund for the clean up and costs have already reached $3 billion. Analysts say BP’s stock may have found the floor. BP rose 9% in New York trade and reached their highest point since June 21st in London.
Tar balls have reached Texas, which means every gulf state has been touched by the disaster.
Who’s really to blame for our slow response to the oil spill?
Watching the drama unfold in the gulf-states has been at the very least heartbreaking. More so because much of what will happen to Louisiana in the wake of this disaster will affect many of my friends and family living in Southern Louisiana. We have a need to blame people, companies, executives, and administrations for the failures along the way that have led up to the largest ecological disaster in our Nation’s History. I don’t by mush stock in the whole eco terrorism conservancy theory that acts like President Obama drug his feet on purpose in the days following with the “It’s not my fault, it’s your mess, clean it up” attitude. Certainly his vibrato about trying to find out whose ass to kick made him appear to be a tough guy (all be it in a George W. Bush kind of way).
I think the blame for a slow response rests solely on the American people. Where was the outcry for support and help. When the world needs rescuing we fire up the phone lines and rush to help out. While there has been no hurricane (yet) or no earthquake, make no mistake, the damage from this disaster has ruined the livelihoods for thousands of families in the region. Distinct and unique cultures that thrive on the swamps, marches and bayous are now at a greater risk of cultural extinction as families will be forced to give up their way of life to move into the big cities and away from the coasts just to find a job.
As a society we have developed a chronic problem with blame shifting and failing to accept reality as we get handed it. A person is not fat; they have a thyroid problem or an eating disorder. Children who do poorly in school despite testing well are not lazy; they’re just under achieving. Men do not bald; they are follicly challenged. This nation has some tough days ahead, that is for sure. What we need going forward is a blunt, real look at the overall economic health and stability of our nation. If we get a bit of sobriety in our system, then maybe, just maybe we can begin to get our priorities straight again, look to healing the hurts and needs of our people and make progress on repairing our economy and nation once again. That is something all sides of Congress in Washington and local government’s alike can at least agree on.
Justin Murff is the Vice President & General Manager of Biz Television Network.
BP announced they have spent $2 billion on the oil clean up so far. This includes “spill response, containment, relief well drilling, grants to the Gulf states, claims paid and federal costs”.
The stock has lost about half its value after April 19. BP created a $20 billion escrow account after pressure from the US government. It might not be enough.
Estimates for cleaning up the spill range from $11 billion to $100 billion.
BP started drilling two relief wells on May 2nd, but they are expected to be completed until August.
BP owns 65% of the well that’s spilling 60,000 barrels of oil into the Gulf. Anadarko Petroleum, which owns 25% of the well, has been attempting to distance itself from BP, accusing its rival of reckless behavior.
As BP celebrates the successful cutting of the pipe, bonds have fallen sharply as markets consider BP more likely to default. The downfall began after the “top kill” plan failed to stop the oil leaking in the Gulf of Mexico. BP bonds have continued to fall, even though the shares recovered on Wednesday.
The rating agency, Fitch, cut BP’s credit rating and threatens continued downgrades as the cost of the leak gets higher. Fitch cut BP’s rating by one notch, from AA+ to AA, though that’s still one of the highest investment credit ratings.
The real trouble is that bond markets are pricing BP’s debts at levels with “junk” rated companies. The US is asking BP to reserve money for clean-up costs.
BP has said it would pay for the construction of six sand barriers off the coast of Louisiana to protect wetlands. BP would also like to start collecting the oil from the surface to try and use it.
Bad news for any conservative that wants a smaller government. The Obama administration announced plans to split up the Interior Department agency that oversees offshore drilling. Confirmed on Twitter, one agency will inspect oil rigs and enforce safety, while the other will oversee leases and royalties. The current agency in charge of all this is the Minerals Management Service. Critics say the MMS having control of these attributes of the industry is a conflict of interest.
No word yet on how many new government jobs it will create, but it sure isn’t going to get rid of any. This move is motivated, obviously, by the oil leak in the Gulf of Mexico. More reforms are expected to be on the way.
British Petroleum attempted to lower a dome over the spill over the past week. The attempt failed. BP will try again, using a smaller dome. Oil execs met on the Hill today in a Congressional hearing. They passed the blame along as angry protestors shouted in the background. The rig was owned and operated by drilling firm Transocean and leased by BP.
The head of BP America told the Senate he believed a safety device called a blowout protector had been modified.
Transocean said there was no reason to believe the blowout protector was at fault. He put the blame on the failure of a cement oil-well casing, built by Halliburton. Plenty of blame to go around, it seems.