Current Savers Blog

-Kees Willemse is professor of off-shore engineering, Delft University.  The opinions expressed are his own.-

The news that a huge metal cap has been successfully placed over several of the leaking oil vents at the Deepwater Horizon site marks a potential turning point in the Gulf of Mexico crisis.

It is already estimated that each day some 10-15,000 barrels of the oil that are spilling out into the ocean are being captured and diverted to ships on the sea surface.

Despite this engineering success, a complete end to the oil leakage is unlikely until new relief oil wells are completed — a drilling process that could take most of the summer, and potentially into the autumn.  This is because the newly installed metal cap is unlikely, even in the best case scenario, to stop all of the oil spilling out.

In advance of the completion of the relief wells, a potentially major new complicating factor is the arrival of the hurricane season last week.

The National Oceanic and Atmospheric Administration is already predicting between 8 and 14 hurricanes this season, with perhaps a similar number of smaller storms, any of which could complicate (or indeed force a postponement) of the ongoing mitigation and clean-up activities in and around Deepwater Horizon.

Although the leakage will therefore continue for weeks to come, and the clean-up operations will take even longer, it is already clear that the disaster will herald a transformation in the oil industry by:

•       Signaling a new re-regulatory era, especially in the U.S., including the new six month moratorium on offshore drilling announced last month by President Barack Obama. Authorities around the North Sea are also reasserting their positions.

•       This will be paralleled by movement by the industry towards a new paradigm which, as is explored later in this article, may potentially require companies to adopt new operating models and much better engineering expertise of how to manage and mitigate disasters when they occur, especially in hard-to-reach oil in deep waters.  As BP CEO Tony Hayward has asserted, “After the Exxon Valdez spill in 1989, the industry created the Marine Spill Response Corporation to contain oil on the sea surface…The issue now will be to create the same sub-sea response capability”.

The crisis is now officially the worst U.S. spill in history, with between 500,000 to 800,000 barrels estimated to have leaked out into the Gulf of Mexico as of May 31.

While still dwarfed by the largest ever off-shore leakage of oil (an estimated 3,300,000 barrels in 1979) at Ixtoc-1 in the Gulf of Mexico’s Bay of Campeche, Deepwater Horizon is now at least twice as large a spillage as the 260,000 barrels estimated to have polluted the shores and caused major environmental damage in Alaska following the Exxon Valdez disaster in 1989, although it should be realised that the crude oil of that vessel was considerably worse for the local environment.

Hence, the reason why Obama re-asserted last week that Deepwater Horizon will be the “worst environmental disaster of its kind” in US history.

With U.S. mid-term congressional elections fast approaching in November, a regulatory clampdown upon the oil drilling industry appears likely.  However, re-examining the regulatory framework is just one part of what is now needed.

In addition, much more emphasis should also be placed upon enhancing safety technology, and engineering expertise and preparedness of how to manage and mitigate disasters when they do occur, especially in hard-to-reach oil in deep waters.

On the safety technology side, we will need, in particular, to improve blow-out preventer technologies.  It is also likely that more than one of these blow-out devices will be needed at major sites in the future.  Had a second blow-out preventor been in place at Deepwater Horizon, it is possible that the current disaster could have been completely averted.

What is also badly needed is better management and mitigation preparation for sub-sea disasters.  Much of the equipment that was used in the various attempts to stem the oil flow was hastely designed on the spot and whilst the well was blurting out the oil in huge quantities.

Hence, the reason why BP CEO Tony Hayward candidly asserted that his firm “did not have the tools you would want in your tool kit” to respond faster to the crisis.

That the necessary expertise and preparedness has been lacking is reflected in the fact, for instance, that workers have needed to experiment with new technologies and devices such as the five-storey, 100 tonne containment dome which unsuccessfully was used to act as a giant funnel, collecting and piping the oil to the sea surface.

Before Deepwater Horizon, this procedure had only been used at much shallower depths with much lower pressures.  There is now an urgent need for ‘before-the-event’ development and experimentation of this, and other techniques, in much deeper waters.

Meeting these ambitions head-on will require, in the words of Hayward, nothing less than a “paradigm change” in the oil industry.

At a minimum, this will require all key industry parties (including exploration and production companies and drilling contractors, but also the engineers and researchers of the major universities with offshore expertise) to work together more closely to reduce the safety risks.

However, it may also require a transformation in the oil industry business model which some assert has become excessively reliant on outsourcing important work to contractors.

For instance, while BP was in overall control of the Deepwater Horizon platform, responsibility for safety was shared with Transocean (which owned and operated the rig), Halliburton (which cemented the wall), and Cameron International (which manufactured the blow-out preventor).

Reducing the risk of accidents in the future could involve moving towards a different model with less sub-contractors, or at least one company tasked with overall responsibility for safety.

Whether such an operating model transformation happens or not, this new safety reform agenda can only be cost-effectively achieved if the oil industry prioritises it.  It is likely that the global public will settle for nothing less in the post-Deepwater Horizon world.

Picture credit: A dead crab sits among the oil from the Deepwater Horizon oil spill on a beach in Grand Terre Island, Louisiana June 9, 2010. British energy giant BP’s stock price plunged to a 14-year low in U.S. trading on Wednesday amid concerns over its ability to meet mounting costs of the giant Gulf of Mexico oil spill. REUTERS/Lee Celano

Republicans may be coming around to former Vice President Al Gore’s way of thinking. Not on climate change, but on the “lockbox.”

During his failed 2000 presidential bid, Gore talked about setting aside Social Security tax surpluses and putting them in a kind of  ”lockbox”  to keep them off limits for other government spending and tax cuts. NBC’s “Saturday Night Live” comedy show made great fun of the Democrat’s comment.

Now Senate Republicans have revived the idea.

Not for Social Security, but for the oil spill clean up fund. Democrats are proposing to increase the oil spill clean up fund tax to 41 cents a barrel from 8 cents a barrel. The increase is part of a bill being considered by the Senate to help the long-term unemployed, offer relief to cash-strapped states and extend some expired business tax breaks.

Democrats said the tax increase is needed to make sure enough money is in the fund to deal with future oil spills. Not all companies have pockets as deep as BP Plc, which has promised to pay for damages caused by the deep water leak in the Gulf of Mexico, Senator Dick Durbin argued during Senate debate on the bill.

The tax increase will ensure taxpayers are not stuck with the tab in case of a future spill caused by a company that is not quite so flush with cash as BP, he said.

Republicans cried foul. They accused Democrats of raising the tax to offset some of the $126 billion cost of the bill.

Democrats are “stealing the money” and using it for other purposes, said Republican Senator David Vitter.

Republicans proposed an amendment that would stop the oil  tax increase from being used to offset the cost of the bill.

Senator John Cornyn said it was not a “lockbox.” But the principle is the same. The amendment would wall off the $15 billion to be raised by the higher oil tax from any use other than cleaning up oil spills or bringing down the debt.

The argument is over accounting concepts that often are difficult to grasp and explain, as Gore found out in 2000.

Gore lost to George W. Bush and the rest is history. The Social Security surpluses have helped mask the cost of tax cuts and government spending and the nation’s debt has more than doubled from $5.6 trillion in 2000 to $13 trillion today.

Photo credit:  Reuters/Lee Celano (An oiled Brown Pelican flaps its wings on a piling near Grand Isle, Louisiana)

Global miner Rio Tinto enters the spotlight this week as one of its uranium mines in Australia leaks toxins into a river leading to the wetlands of the Kakadu National Park, a bi-weekly analysis of companies in the news by ASSET4 data providers shows.

Here is a breakdown of the companies that made headlines May 22 to June 4 for winning or losing credibility based on environment-related activity.

Company selections were made by Christopher Greenwald, director of data content at ASSET4, a Thomson Reuters business that provides investment research on the environmental, social and governance performance of major global corporations. These ratings are not recommendations to buy or sell.

Here are the recent hits and misses:

Rio Tinto PLC / Rio Tinto Ltd.

Rio Tinto PLC has recently faced controversies concerning the impacts of two of its subsidiaries on their surrounding communities. Reports have emerged that a uranium mine operated by Energy Resources of Australia, which is owned by Rio Tinto, has been leaking high levels of uranium, sulphate and radium into a river flowing into the world-heritage wetlands of the Kakadu National Park in Northern Australia. Rio Tinto-owned Kennecott Minerals has also recently faced protests against a planned nickel and copper mine in Northern Michigan on Lake Superior, which local Indian tribes as well and the National Wildlife Federation have claimed will lead to sulpheric acid pollution as well as the destruction of a site considered sacred by native Americans.

Areva

Areva recently revealed that it was ending shipments of nuclear waste to Russia. The company had come under increasing pressure as a result of a documentary on the TV station ARTE last October that highlighted the shipments. Greenpeace, which claims to have criticized the shipments since they began 25 years ago, had also recently focused criticism on the company, sending boats to intercept the shipments. Greenpeace argued that the company has failed to prove that all of the nuclear waste sent to Russia for enrichment was eventually returned to France and consequently has been in violation of Russian environmental law and European regulations.

Syngenta

Citizens Energy Group of Indianapolis is considering joining a class action law suit filed by 16 local water authorities in four mid-Western states filed against Syngenta to pay for the costs associated with cleaning the company’s Atrazine weed killer from local water supplies. The case against the company has gained heightened attention following a study in February by University of Washington researchers that linked exposure to Atrazine in water supplies to an increase in birth defects.

Coca-Cola

Bowing to increasing pressure from local farmers and the surrounding community, the government of the Guntar district in the Indian state of Andhra Pradesh has reversed a decision to allow the Coca Cola’s Indian subsidiary, Hindustan Coca Cola Beverages, to access water from the main water canal of the district. Coca-Cola has come under increasing criticism and protests from local farmers in India for its water use in communities already constrained for adequate clean water resources. The company’s reputation has also been damaged as a result of a March order by state officials in Kerala to pay $47 million to compensate for pollution and groundwater depletion, a charge that the company has denied.

Pepsico

While also under pressure from local communities for its use of local water resources, Pepsico recently announced that it had obtained a positive water balance in India through a variety of conservation initiatives. Pepsico’s CEO Indra Nooyi has indicated that the company would strive to attain a positive water balance in other countries which face water scarcity. NGOs nonetheless have argued that the primary issue remains the water balance in local communities where Pepsico is operating, rather than for the country as a whole.

Sears Holdings

Sears recently announced a program to freely recycle and dispose of old appliances when customers agree to purchase new, energy efficient models. In combining a marketing campaign with the recycling initiative, Sears claims to safely remove dangerous chemicals from old appliances to ensure safe disposal and encourages consumers to purchase energy star certified models offered by the retailed.

Johnson Controls

Johnson Controls, which provides energy efficiency solutions for commercial buildings, recently published the results of its “Energy Efficiency Indicator Survey,” that for the first time included results from managers outside of the United States. The study revealed that among C-level managers globally, energy efficiency was of greatest importance for managers in China and India in making building investment decisions. Underscoring the link between energy efficiency and cost savings, the survey also revealed that managers in India and China expressed the highest levels of belief that energy prices will rise in the future.

A copy of the Study is available here: http://www.johnsoncontrols.com/publish/u s/en/news.html

PG&E (NYSE PCG), Southern California Edison (NYSE EIX), Public Service Electric & Gas Co (NYSE PEG), Florida Power & Light (NYSE FPL), and San Diego Gas & Electric (NYSE: SRE) made up the top 5 U.S. utilities with the highest levels of annual solar power capacity according to a recent study by the Solar Electric Power Association. Although the rankings revealed that investments in solar power continues to diversify throughout a wider range of utilities across the U.S., California utilities continue to make up 5 of the top 10 utilities with the highest levels of solar installations nationally.

A copy of the survey is available here: http://www.solarelectricpower.org/

Photo shows the wetlands of the Kakadu National Park in far-north Australia in August, 2001. REUTERS/Ho New

By now, almost everybody — with the possible exception of Republican Senate candidate Carly Fiorina — realizes there’s a difference between climate and weather. Fiorina, running in the California primary and ultimately aiming to unseat Democrat Barbara Boxer, paid for and appeared in a campaign ad slamming the sitting senator for being “worried about the weather” when there are serious concerns like terrorism to deal with.

Take a look here:

A few problems with this ad earned it the not-so-coveted beyond-false “Pants on Fire” rating from Politifact, a Pulitzer-prize winning journalism website that checks on the truthfulness of political advertising. First off, Boxer didn’t say she was worried about the weather. She said that climate change was “one of the very important national security issues” — a position in line with the Pentagon and the CIA. The site also found that it’s not an either/or thing, that focusing on climate change doesn’t necessarily mean neglecting national security. They took a look at Boxer’s record and found she has supported at least six bills against terrorism.

“Fiorina casts climate change as something you need to pack an umbrella for, or that prompts you to curse at the TV weatherman — which strikes us as not only a trivialization of climate change but also a failure to distinguish between two well-established scientific specialties,” Politifact said. “She also ignores Boxer’s lengthy record supporting bills against terrorism. So we have to light up the meter (the site’s Truth-o-Meter): Pants on Fire!”

Not surprisingly, Boxer’s campaign fired back in a press release, saying that, “during Fiorina’s tenure at HP, the company sold millions of dollars worth of high tech gear to intermediary shell companies selling to Iran, despite trade sanctions against Iran, a country that the U.S. State Department has named as a State Sponsor of Terror.”

Should be an interesting race. The California primary is on June 8.

Photo credits: REUTERS/Fred Prouser (Carly Fiorina at ”Jobs, Jobs, Jobs” panel Beverly Hills, California April 26, 2010. REUTERS/Fred Prouser)

REUTERS/Kevin Lamarque (Barbara Boxer listens at a fund raiser, San Francisco May 25, 2010. REUTERS/Kevin Lamarque)

Did you know companies could negotiate lower interest rates by convincing their lenders it pays to be sustainable?

Implementing a sustainability strategy can mean stronger sales, stronger cash flow and reductions in costs, says Dr. Matthew Kiernan, founder and chief executive of Inflection Point Capital Management and author of Investing in a Sustainable World.

Companies must take the lead in telling their financiers how an improvement in environmental performance can bolster their bottom lines, he told the Green Employers 2010 Conference in Toronto this week.

Institutional investors are the slowest of all industrial sectors to wake up to the need for sustainability, Kiernan says.

We asked Kiernan about sustainable investment and the potential impact of the climate bill currently under consideration by the U.S. Senate. Here are his answers.

Q: What are the next steps people have to take to get financiers to take the environment into account when lending money?

Q: What can companies do to get their lenders to take environmental concerns as seriously as they do?

Q: How could the proposed U.S. climate change bill affect how banks lend money?

Q: Could the bill force financiers to account for environmental considerations in their loans or investments?

– David Rockefeller, Jr. is a philanthropist and CEO of Around the Americas and Chairman of Sailors for the Sea. Any views expressed here are his own. –

When the Ocean Watch set sail from Seattle last May at the launch of our Around the Americas expedition, our greatest challenge was to make Americans start thinking about health of oceans. For too long, we have been taking our rich seafood supplies and scenic seascapes for granted.

One year and 28,000 miles later, and now with the massive BP oil spill, much has changed.

While I’d love to say that our expedition is responsible for finally turning around the slow drip of public concern for ocean health into a steady flow, I am fairly certain that the continuous flow of oil spilling into the Gulf of Mexico is, unfortunately, driving home what the captain and crew of Ocean Watch have been saying all along.

The fact that our oceans are not too big for one person to damage is becoming clearer with each passing day. In just one month, we have witnessed the largest oil spill in the history of the U.S., with the full repercussions yet to be seen.

We know our Gulf seafood supply of shrimp, oysters and blue crab will likely be damaged for generations to come, to say nothing of the sea turtles, sea birds and other wildlife that are already suffering.

Coastal tourism and fragile wetlands are also in limbo.

But perhaps the most daunting realization for most Americans is that we shouldn’t make the threats facing our oceans any less real by making light of them.

We need to acknowledge the challenges we face in order to reverse them. This is why educating the public has been the mission of Around the Americas and what our founding partner, Sailors for the Sea, was created to do.

Our expedition has taken us through the Northwest Passage, around Cape Horn, past the vast fisheries spotting the Chilean coast and along the coral reefs of the Galapagos Islands. As we return to the West Coast of the U.S., we’ve seen that three major threats span the oceans of North and South America – pollution, acidification and overfishing.

The truth is there are more sources of damaging pollution flowing into our oceans than escaped oil. Pollutants run into our waterways everyday from our city streets, farms, industrial sites, faulty septic systems and construction sites.

Together, the pollutants that flow from land to sea are the largest source of water contamination in the United States.

Run-off pollution can’t be skimmed from the surface of the water or diluted with dispersant chemicals. Run-off pollution, as well as excess carbon absorbed from emissions in the air, is actually changing the PH of our oceans, causing them to acidify, damaging wildlife, bleaching coral reefs and creating “deadzones” where no sea creatures can live.

There were 305 dead zones in 1995. Today there are over 400. This kind of pollution happens every day, all over the world. The only way to stop it is to change the way we do things on land.

Overfishing is another top challenge facing our oceans. Our love of seafood has placed a major strain on the ocean ecosystem; worldwide seafood demand is projected to increase over 60 percent by 2025.

Meanwhile, an estimated 90 percent of big fish have already been fished out of the sea and some predict that our natural stocks of all seafood could collapse in less than 40 years.

Fish farming holds promise for meeting our growing demands, but finding and enforcing sustainable practices has proven to be another challenge.

In Chile, we had an opportunity to talk to local scientists and environmentalists about the country’s unstable Salmon farming industry.

At its height in 2008, Chile produced 403,000 tons of farmed fish and the sector had created an estimated 55,000 jobs.

But an outbreak of a virus called ISA – caused by overcrowding and unsanitary conditions in some of Chile’s Salmon farms – has put a damper on production.

Since the outbreak began, as many as 17,000 jobs have been lost in Chile and production was reduced more than 80 percent to 90,000 tons in 2009.

The Chilean government and companies like Mariscope Chilena are taking steps to rehabilitate the industry, including enforcing new sustainability measures that will scale back the use of antibiotics and other chemicals and also reduce the number of Salmon that escape and pose a threat to natural seafood supplies.

But there are also measures that can be taken by citizens like you and me to ensure that our love of seafood doesn’t damage the environment. We can educate ourselves about whether the fish on our plates have been sustainably raised and caught. We can take advantage of safe seafood eating guides from organizations like the Monterey Bay Aquarium and the Blue Ocean Institute to help us make better decisions.

It is easy to look at a disaster like the Gulf coast oil spill and feel both righteous anger and helplessness, but the fact is that the responsibility for cleaning up our oceans does not lay solely with BP; it lies with all of us.

Bryan Walsh of Time got it right in a recent article when he says that this latest oil spill is “…a chance for something worthwhile to rise out of the muck still bubbling from the floor of the Gulf of Mexico.”

Our hope is that long after the geyser is sealed and the oil cleaned up, concern for our oceans and a commitment to living sustainably will continue to flow from people, politicians and corporations all Around the Americas.

But we should start now.

_________________________________

Photo shows oil floating on the surface in Pass A Loutre near Venice, Louisiana May 26, 2010. REUTERS/Sean Gardner

– John Hofmeister is founder and CEO of Citizens for Affordable Energy, former president of Shell Oil Company and author of Why We Hate the Oil Companies: Straight Talk from an Energy Insider. Any views expressed here are his own. –

How bad, really, was the Minerals Management Service (MMS)?

The quick answer is no one will ever know.

Despite all the accusations of a “cozy” relationship with industry, the recent termination of President Obama’s appointee who served less than a year, as well as the re-organization by the Interior Department suggest that any sleaze has been swept aside by political calculations in the rush to assert that the administration is on top of things in Washington.

I must admit I was surprised to hear of this cozy relationship, since my experience with the MMS was exactly the opposite.

During my term as Shell’s president, my company experienced the frustration and huge costs of being turned down repeatedly by MMS for licenses to drill in the Beaufort Sea off the coast of Alaska because the professional regulators were not satisfied with the environmental plans that had been submitted to support test drilling operations.

They said conditions in the Arctic warranted extra review and consideration.

No amount of argument, debate or revision satisfied them over the next few years; rather, it got more difficult every year, with tougher conditions placed on the prospective drilling efforts.

Even in the face of climbing gas prices, as well as urgent warnings from Congress and the administration in 2006 and 2007 about energy dependence, the permit writers would not budge.

As disappointing as it was to waste literally tens of millions of dollars preparing to work off the North Slope, pending the permit, I had to admire their tenaciousness.

After the point was moot due to the return of winter ice, I decided to visit with the regulators to see what I could learn.

Around a Washington table, which I was assured had never hosted a company president before, I heard straight talk from the MMS staff about what they required and how Shell fell short. It was a valuable lesson, not forgotten.

What’s unfortunately overlooked in the midst of the current scandal and reorganization is the work of hundreds of staff and managers who served their country day in and day out as professional regulators of a critical American industry – and the importance of their task in the face of looming energy crisis.

In recent years the United States has been struggling to increase its domestic production of natural resources to combat our insidious dependence on foreign imports from nations that don’t like us.

MMS staff have been encouraged and motivated to do their jobs, to regulate and inspect industry according to long established policies and protocols, and help relieve our national energy insecurity.

Energy bills in 2005, 2006, 2007 and 2008 promoted and encouraged more energy production in our country. Congressional hearing after Congressional hearing lamented our dependence on imports.

Imagine you work for an organization to which you have dedicated your professional best for years.  You read the papers, listen to your bosses and have a role to play in permitting your nation to produce more energy while regulating how it is produced. You’re showing signs of success.

Domestic production has increased over the past two years.

Then, in the midst of a dire recession, as energy demand sinks, a well blows out in the Gulf of Mexico.

Suddenly, your new bosses of just over a year, the cabinet secretary and the president of the nation, who you don’t know at all, condemn your work and that of your colleagues in front of the entire nation, calling your integrity, ethics and service into question, based on allegations and facts that had nothing to do with you.

Were there instances of irresponsibility, misplaced trust, individual failings, and immature judgments over drugs, sex and other temptations?

The Inspector General of the Interior Department in 2007 says there were. I have no reason to doubt the report.

How extensive and penetrating were such behaviors? We’ll never know.

Is this the first, or last, government agency to employ individuals not worthy of their station? Certainly not.

Is this the only large organization that houses individuals who get too close to their peers, cross the line, get caught and dealt with? Hardly.

Every organization I know, from universities to corporations to major nonprofits, have had employees who did not meet their responsibilities. Do their leaders trash the whole company, university, organization or an entire department on such basis? Not if they understand how leaders lead.

I’m naturally appalled at companies that cajole federal regulators to lighten up if conditions are not met.

On the other hand, I’m just as appalled if political leadership takes advantage of past wrongdoings of a few to make themselves look powerful to the public at the expense of their powerless and hardworking staff.

Does BP’s now-familiar yellow-and-green sunflower logo need an update? Joe Daley thinks so. As the founder of a website that acts as a clearinghouse for logo designers around the world, Daley reckons the British oil giant’s corporate icon should reflect the spreading oil spill in the Gulf of Mexico. So Daley’s launched an online contest to find an appropriate replacement logo.

These kinds of logo competitions are nothing new; that’s how the website works to match designers with businesses, with the businesses paying the prize to the winning design. Daley himself put up the $200 in prize money for the BP logo redesign contest — BP has nothing to do with it — to raise awareness of the spill.

The idea evolved after he was chatting online with several designers about the BP oil spill, and a couple of them asked, “What spill?” “That’s when I decided to get it out in a more creative way,” Daley said by telephone from Columbus, Ohio.

BP’s conduct before and after the April 20 Deepwater Horizon blowout prompted the move, Daley said. “I’ve been in business for 12 years, and I know mistakes happen … but with the violations they’ve had and not having a backup plan … I’m not very forgiving.”

He offered some basic guidelines for designers, listing the “top three things to communicate through our logo design: #1 Oil spill disaster – Toxic; #2 Death of wildlife; #3 Incompetence.” Target audience? “The World.”

The designers — some 6,000 use the site, Daley said — came through with some vivid ideas, putting red devil horns on the sunflower, reshaping the logo to mimic a biohazard icon and adding dripping black oil to the image.

The competition closes on June 12 at 10 p.m. EDT. Logo designers and the general public can vote to pick the winner.

Picture credit: All images from logomyway.com