Monday PM May 24th, 2010

BP officials say that if their high-stakes attempt to plug the leaking Gulf of Mexico well by injecting heavy drilling mud into it fails they will likely try to cap it with a small containment dome. BP Chief Operating Officer Doug Suttles says engineers are working furiously to prepare to launch the massive "top kill" maneuver. But Suttles says it's not a guaranteed success and crews are already working on a backup plan to fit a small dome atop the leaking well and then pump the oil to the surface.

"If it is not successful, what we would immediately move to do is a job, an operation we call the LMRP cap. LMRP stands for Lower Marine Riser Package. And what this is, is we'd actually cut away the riser that's bent over from the top of the LMRP. There's a piece of pipe sticking up from that. We would than put over the top of that piece of pipe a new containment device and capture the flow and take it up to the surface and the drillship Enterprise."

Suttles says the company is doing everything it can to plug the seabed gusher but understands everybody is frustrated. He appeared on all three network morning talks shows with the same message: BP knows frustration is growing that it hasn't been able to cap the gusher in more than a month. Suttles said on ANC's Good Morning America that BP's next shot at stopping the blown-out well this week stands a very good chance of success. But he said the global oil company has more plans in case the latest efforts fails, like several before it. BP plans to try to stop the breach Wednesday with heavy mud and cement, a maneuver called a "top kill."

The chief executive of BP walked the oil-stained sands of a closed Louisiana beach as workers in white coveralls and yellow boots tended to equipment being used to keep away crude gushing into the Gulf of Mexico. CEO Tony Hayward talked with the workers at Fourchon Beach while the crews tended to booms meant to soak up the oil from the Deepwater Horizon disaster. Reporters were kept at a distance.

The amount of oil siphoned by the mile-long tube inserted into the leaking well has fallen again. BP spokesman John Curry told the Associated Press that the tube collected some 47,040 gallons of oil on Sunday. BP says that the siphon collected 57,120 gallons on Saturday and 92,400 gallons on Friday. The company, which leased the rig and is responsible for the cleanup, has said that the amount of oil that the tube siphons will vary widely. BP said in a news release that the mile-long tube is "a new technology, and both its continued operation and its effectiveness in capturing the oil and gas remain uncertain."

An AP investigation has found government reports about dozens of offshore oil wells where cementing failed, as it may have in the Gulf of Mexico disaster. The review of federal accident and incident reports implicates cementing at least 34 times since 1978. Many of the reports identify the cause simply as "poor cement job." Yet federal regulators give drillers a free hand in this crucial safety step. Much tougher government standards exist on cementing work for roads, bridges and buildings. Federal regulators do not regulate what type of cement is used. Instead, they leave it up to oil and gas companies, and recommend they simply follow guidelines of a petroleum trade group. Investigators are focusing on cementing as one likely cause of the Deepwater Horizon explosion.

BP says it will spend up to $500 million to research the effects of the growing oil spill on the marine and shoreline environment. The company, which leased the rig and is responsible for the cleanup, says that the ten-year research program will study the effects of the oil. It also will study chemical dispersants used to break up oil on the seabed and along the shore. The program also aims to study the impact of the dispersant on the oil and ways to improve technology to detect oil and clean up the ooze. BP Chief Executive Tony Hayward says the research into the month-long spill "will be a key part of the process of restoration, and for improving the industry response capability for the future."

With oil pushing at least 12 miles into Louisiana's marshes and two major pelican rookeries now coated in crude, Governor Bobby Jindal says the state is working on chain of sand berms that would skirt the state's coastline. Jindal visited one of the affected nesting grounds Sunday. Jindal and officials from several coastal parishes say the berms would close the door on the oil still pouring from a deepwater gusher about 50 miles off the Louisiana coast. The berms would be made with sandbags. The U.S. Army Corps of Engineers also is considering a broader plan that would use dredging to build sand berms across more of the barrier islands. A survey of leading economic forecasters predicts the pace of U.S. growth will pick up in the year ahead as consumers and businesses accelerate spending.

The White House says the Justice Department has been gathering information about the oil spill. Press Secretary Robert Gibbs isn't saying whether the department has opened a criminal investigation. He would only tell CBS' Face the Nation that department representatives have been to the Gulf as part of the response to the BP oil leak. The head of the Senate's Environmental Committee, Democrat Barbara Boxer of California, has asked the Justice Department to determine whether BP made false and misleading claims about its ability to prevent a serious oil spill. The White House is asking Congress for $10 million for the Justice Department to pay unspecified litigation costs.

U.S. Secretary of Homeland Security Janet Napolitano says federal officials are working to hold BP responsible for cleaning up the growing Gulf of Mexico oil spill. Napolitano says that she's heartsick about damage to Grand Isle, south of New Orleans, where thick oil has been washing up. She says the government will stay on BP until the cleanup gets done the right way. Interior Secretary Ken Salazar says federal officials are not standing on the sidelines. He said thousands of people are working to stop the gushing oil and protect the coast line. Napolitano, Salazar, and other state and federal officials viewed the damage from the air.

There will be no quick decision from a federal judicial panel on whether to consolidate more than 130 lawsuits filed over the Gulf oil spill. The U.S. Judicial Panel on Multidistrict Litigation rejected requests from attorneys to issue a ruling this month. The panel says it will consider the oil spill cases in July. Potential class-action lawsuits claiming economic damages began appearing in Gulf Coast states soon after the Deepwater Horizon drilling rig sank a month ago. Plaintiffs include fishermen, the seafood industry, property owners, restaurants, tourism businesses and others. Many plaintiff attorneys want the cases consolidated before a New Orleans federal judge. BP favors a Houston court.

Congress is getting ready to quadruple--to 32 cents a barrel--a tax on oil used to help finance cleanups. The increase would raise nearly $11 billion over the next decade. The tax is levied on oil produced in the U.S. or imported from foreign countries. The revenue goes to a fund managed by the Coast Guard to help pay to clean up spills in waterways.

The average price of regular gasoline in the United States has dropped 9.25 cents over a two-week period to $2.83. That's according to the national Lundberg survey of fuel prices. Analyst Trilby Lundberg says the average price for a gallon of mid-grade was $2.97. Premium was at $3.08. Jackson, Mississippi, had the lowest average price among cities surveyed at $2.62 a gallon for regular. San Francisco was highest at $3.10.

The assessment being released today by the National Association for Business Economics is more bullish than the last survey in February. The panel of forecasters boosted its expectations for growth in 2010 to 3.2 percent real gross domestic product, up from 3.1 percent in its February outlook. It also pegged the 2011 growth rate at 3.2 percent. Household spending, while still lagging the overall economy, is expected to grow significantly this year. The economists also expect higher operating rates and rising corporate profits will boost companies' spending on equipment and software, while retailers restock inventory. Unemployment is forecast to decline to 9.4 percent by year's end and 8.5 percent by the end of 2011. The NABE's president says the economy is in "reasonably good shape," but she says forecasters are extremely concerned about the impact of large federal deficits in the future.

Home sales surpassed expectations for April as government incentives provided a temporary boost to the housing market. The National Association of Realtors says sales of previously owned homes rose 7.6 percent to a seasonally adjusted annual rate of 5.77 million. That was the best showing in five months and better than the 5.63 million units economists had expected. The federal government provided a big boost to home sales this spring by offering first-time buyers a tax credit of up to $8,000. Homeowners looking to upgrade could qualify for a credit of up to $6,500. The deadline for getting a signed sales contract was April 30th.

Afederal revision of flood maps in 17 Texas coastal counties based on information from Hurricane Ike could lead to costly insurance increases for some homeowners. The Houston Chronicle reports that hurricane levees completed in the 1980s are unlikely to meet new certification standards without upgrades. The newspaper reports that the Federal Emergency Management Agency won't include the levees on new flood maps if they aren't certified within two years after storm surge figures from Ike are ready sometime this fall. If the levees aren't on flood maps, many homes will required by lenders to carry costly flood insurance for the first time. Some residents say that would force them to leave.

The Texas Rangers have sought bankruptcy protection in hopes of getting their $575 million sale to a team of investors cleared by midsummer. The 21-page filing, made in U.S. bankruptcy court in Texas, includes a list of unsecured creditors headed by Alex Rodriguez, who's owed $24.9 million in deferred compensation dating to his days with the team. Other players on the list include Michael Young, Kevin Millwood and Vicente Padilla. The team called the filing a "voluntary" plan that will fully pay the club's debt tied up in Tom Hicks' financially strapped ownership group. Hicks has agreed to sell assets to the new ownership group led by Pittsburgh attorney Chuck Greenberg and team President Nolan Ryan. The team says the sale proceeds will be enough to satisfy all the Hicks Sports Group debt guaranteed by the rangers. Commissioner Bud Selig said the proposed deal "serves the best interests of the team, its fans, MLB and all other parties involved." The filing is not the first in baseball.

A former Russian prime minister says that charges of embezzlement against imprisoned tycoon Mikhail Khodorkovsky are absurd and that the trial is politically motivated. Mikhail Kasyanov says that it would have been impossible for Khodorkovsky to have embezzled more than $25 billion worth of oil that prosecutors are accusing him of while he headed the Yukos oil company. Kasyanov testified in a Moscow court in a new trial against the tycoon, who along with a business partner faces charges of embezzling some 350 million tons of oil over a period of six years. Khodorkovsky, once Russia's richest man, is currently serving eight years in prison for tax evasion--charges widely seen as punishment for challenging then-President Vladimir Putin.

IBM says it is buying AT&T's Sterling Commerce unit, which makes business software, for $1.4 billion. The deal announced would be IBM's largest acquisition since it bought Cognos in 2008. AT&T, then known as SBC Communications, paid $3.9 billion for Sterling in 2000, near the peak of the Internet bubble. The unit, which is based in Dublin, Ohio, has little connection to AT&T's main telecommunications business. IBM is based in Armonk, New York, while AT&T is based in Dallas.

Tomorrow, the Conference Board releases consumer confidence for May. Later in the week, the government issues a revision of first-quarter growth, seen coming in at 3.3 percent. Also due this week, new home sales, personal income and spending and weekly jobless claims.


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