Wednesday PM April 28th, 2010

Crews poised for surface oil burn; work continues on plugging leak and drilling relief well at site of sunken drilling rig in Gulf of Mexico…ConocoPhillips pulls out of Saudi Arabian gas filed project…


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BP says crews are poised to start setting fire to oil leaking from the site of an exploded drilling rig in the Gulf of Mexico. The effort is meant to protect environmentally sensitive areas on the coast. The Coast Guard’s Rear Admiral Mary Landry says she has approved the burn plan.

“It is important to remember that this burn will occur within a very small area at sea, within 500 feet of fire-resistant booms. We continue to manage the risks associated with the use of these options so as not to impede the work that is ongoing in the subsurface area, anything that poses a threat to persons or marine life or impedes the offshore production of a third of our nation’s energy source.”

A 500-foot boom will be used to corral several thousand gallons of the thickest oil on the surface. It will then be towed it to a remote area, set on fire and allowed to burn for about an hour. The slick was about 20 miles east of the mouth of the Mississippi River. Doug Suttles, chief operating officer of BP Exploration and Production, says he expects the burns to start later in the day. He says efforts to stem the flow of oil from the seabed continues, at the so-called B.O.P., or blowout preventer.

“We continue with those efforts as we reported over this past several days. They are becoming more complex, as we have to design interventions which were not originally anticipated in the design of the B.O.P. But as I stated yesterday, we will maintain those efforts until either we’ve stopped the flow of oil or actually we’ve exhausted every potential opportunity.”

Work continues on a subsea oil collection system.

“As reported yesterday, we have built a containment chamber. That work is now complete, and our current activities are working on designing, engineering and fabricating the equipment necessary to connect the chamber to the drill ship. As previously reported, we anticipate that those activities will take somewhere between two and four weeks to complete.”

In addition to the surface oil burn and subsea oil collection, BP expects to begin drilling a relief well at the site by Friday.

BP says its cost of containing an oil spill in the Gulf of Mexico is $6 million a day. And that doesn’t include the Coast Guard’s expenses. Industry officials say replacing the Deepwater Horizon rig, which exploded last week, would cost up to $700 million. The company says it will spend $100 million to drill a relief well. Oil continues to spill undersea at about 42,000 gallons a day. Robot submarines haven’t been able to cap the well.

View photos on Flickr

ConocoPhillips says it’s backing out of plans to develop a $10 billion gas field project in the United Arab Emirates. The Houston-based company said it’s a “difficult decision” to pull out of the project with the Abu Dhabi National Oil Company but gave no reason for the move. Plans had called for ConocoPhillips to have a 40 percent stake in the development project for the Shah gas field about 110 miles southwest of the city of Abu Dhabi. The site aims to process one billion cubic feet of gas per day. ConocoPhillips’ move comes a week after it pulled out of a multibillion-dollar project refinery project in Saudi Arabia.

A coalition of groups that oppose the construction of a wind farm in Nantucket Sound say they will sue “immediately” to stop the project. The announcement came after the Obama administration gave approval to a 130-turbine wind farm in Nantucket Sound. Massachusetts Environmental Affairs Secretary Ian Bowles calls the first offshore wind farm “the shot heard around the world for clean energy.” U.S. Interior Secretary Ken Salazar announced his approval of the 130-turbine project. It could be generating power to Cape Cod by 2012. Salazar says the project, which would be the nation’s first offshore wind farm, is a key to the country’s push toward more renewable energy. But opponents say it will endanger marine life and commerce. Audra Parker of the Alliance to Protect Nantucket Sound says she can’t stand by while public lands and “marred forever.” Other groups who say they’ll sue include the Animal Welfare Institute and the Industrial Wind Action Group. A Wampanoag tribe also is expected to sue.

Unemployment rates fell or remained level in three-quarters of the 372 largest metropolitan areas, a sign that the economic recovery is widespread. The Labor Department says the jobless rate dropped in 69 percent of metro areas last month, rose in 24 percent and remained the same in the rest. That’s an improvement from February, when the unemployment rate decreased in 51 percent of metro areas and increased in one-third. The report follows other recent encouraging news about jobs. Employers added 162,000 jobs in March, the government said earlier this month, the most significant gain in three years. Still, the growth wasn’t enough to bring down the unemployment rate, which remained at 9.7 percent for the third straight month.

Hewlett-Packard has agreed to acquire struggling smart phone maker Palm for nearly $1 billion in cash. HP pay $5.70 for every Palm common share. When debt is included, the deal values palm at $1.2 billion. The transaction is expected to close by the end of July. HP said Palm’s Webos operating system will help it participate more aggressively in the fast-growing market for smart phones and connected mobile devices.

Texas Instruments is ramping up a second phase of expansion at a factory near its Dallas headquarters. The chip maker said it has already acquired manufacturing tools from Germany’s Qimonda for the Richardson plant, but did not disclose financial details. TI said the expansion will double the plant’s capacity to produce chips that go into products such as cell phones, computers and telecommunications equipment. When completed, the factory should be able to generate annual revenues of about $2 billion, the company said. TI had overall revenue of $10.43 billion last year.

Bondholders who have been fighting over control of Six Flags have agreed on a revised Chapter 11 reorganization plan for the theme park operator. Under the agreement, holders of junior notes issued by holding company Six Flags will assume control of the New York company. Holders of senior secured notes issued by Six Flags’ operating subsidiary would have received about 93 percent of the equity in the reorganized company under an earlier proposal. Under the new plan, they will be paid $470 million in cash by the Six Flags note holders to satisfy their claims. Thomas Lauria, an attorney for the Six Flags note holders, says all other creditors will be paid in full by the group, which put together a financing package to offer an alternative reorganization plan.

The Federal Reserve is sounding a more confident note that the economy is strengthening and pledges to hold rates at record lows to make sure it gains even more traction. Wrapping up a two-day meeting, the Fed in a 9-1 decision retained its pledge to hold rates at historic lows for an “extended period.” Doing so will help energize the recovery. The Fed offers a more upbeat view of the economy, even as it notes that risks remain. The Fed says the job market is “beginning to improve” and notes that consumer spending has “picked up.” Both observations were brighter than when the Fed last met in mid-March.

The federal government wants to save taxpayers billions of dollars by cutting spending on crop insurance. Farmers pay premiums for insurance to cover part of their losses when there’s bad weather and crops fail. But the government subsidizes the program to keep it affordable. Last year, it paid crop insurers $3.8 billion. At the same time, the companies posted profits of more than 26 percent. Agriculture Secretary Tom Vilsack says crop insurance gives farmers an important safety net, but it’s costing taxpayers too much. His agency has proposed cutting spending on crop insurance by about $7 billion over ten years. Insurers say they might have to cut services and jobs if the USDA cuts too deep.

Most Americans are paying about $3 a gallon for gas. The residents of McGrath, Alaska, saw their gas prices jump by that amount in one night. The price at the only pump in the remote town 415 miles northwest of Anchorage went from $6 a gallon Friday to $9.20 the next day. Crowley Petroleum Distribution says it was forced to raise the price because the winter nearly drained the town’s supply, and the only option was to fly in more fuel. The cost increase is the difference between flying the gasoline and shipping it on a barge. Crowley says it won’t be able to send a barge until June at the earliest. Some of McGrath’s estimated 400 residents have formed an anti-Crowley Facebook page and are trying to boycott the company while city officials look for ways to get cheaper fuel.

The long-delayed cartoon featuring financial lessons from billionaire Warren Buffett will finally debut this weekend at Berkshire Hathaway’s annual meeting and online. Buffett says that he hopes the series will teach kids good financial habits early on, so they won’t have to learn the lessons later through expensive experiences. Buffett told the Associated Press that he hopes the cartoons will help kids “become more financially savvy” and start thinking about saving sooner than they might have. The series comes from Andy Heyward, who has been creating humorous cartoons for Berkshire’s annual meetings since the 1980s. The sale of Heyward’s company delayed the cartoon’s release, which was originally scheduled for fall 2006.


,strong>Valero Energy says it lost money for the fourth straight quarter as motorists, airlines and trucking companies burned less fuel. San Antonio-based Valero is America’s largest independent oil refiner. It reported a loss of $113 million in the first three months of the year. That compares with profit of $309 million in the same period a year ago. Revenue rose 47.4 percent to $19.6 million, compared with the first quarter of 2009. Operating costs climbed to $19.7 million from $12.7 million. Analysts expected revenue of nearly $18 billion.

Royal Dutch Shell has reported a 57 percent increase in net profit for the first quarter, crediting higher oil prices, growth, and cost-cutting. Net profit was $5.48 billion, up from $3.49 billion in the same period a year ago. Revenues were $86.0 billion from $52.2 billion. Notably, oil production increased six percent from the first quarter of 2009 to 3.59 million barrels of oil. Chief Executive Peter Voser says that the company is not relying on an improving economy, and refining margins and gas prices remain weak.

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