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Fracking a ‘Dirty Bomb’

TMI also can’t explain why the thyroid cancer rate for the four counties flanking Indian Point Nuclear Power Plant in New York was 66% above the national rate in 2001-2005. Other, more subtle sources may also be contributing to hiked thyroid cancer rates, like leaking nuclear power plants and hydraulic fracturing, both of which contaminate air, soil and groundwater with radiation and other nasty chemicals. Indeed, remarking on this, Mangano (who recently co-authored a controversial study with toxicologist Janette Sherman suggesting a link between Fukushima fallout and US cancer deaths numbering from 14,000 to 20,000) said:

From 1970-1993, Indian Point released 17.50 curies of airborne I-131 and particulates…. [That] amount exceeded the official total of 14.20 curies released from the 1979 Three Mile Island accident. In 2007, officials that operate the Indian Point plant reported levels of I-131 in the local air, water, and milk, each of which is a potential vector for ingestion. Iodine-131, or I-131, is a radioactive isotope produced by nuclear fission

Radiation isn’t released into the environment only via nuclear plants and bombs. Geologist Tracy Bank found that fracking mobilizes rock-bound uranium, posing a further radiation risk to our groundwater. She presented her findings at the American Geological Society meeting in Denver last November.

Because of some 65 hazardous chemicals used in fracking operations, former industry insider, James Northrup, calls it a “dirty bomb.” With 30 years of experience as an independent oil and gas producer, he explains: The volume of fluid in a hydrofrack can exceed three million gallons, or almost 24 million pounds of fluid, about the same weight as 7,500 automobiles. The fracking fluid contains chemicals that would be illegal to use in warfare under the rules of the Geneva Convention. This all adds up to a massive explosion of a ‘dirty bomb’ underground.

US gas price fell from $3.88 per thousand cubic feet when the deal was struck to as little as $1.91 in April, before recovering slightly to now hover around $2.75. Today's mildly-improved US gas price is well below its peak of $14 per thousand cubic feet in 2005

hile protests in the US have largely failed to curb the shale gas industry's development, the plummeting gas price is now doing the job for them. The number of shale gas rigs operating in the US has tumbled by 44 per cent in the past year to stand at about 300 now, according to industry estimates.

Hydrocarbon producers such as Chesapeake and BHP are furiously switching their fracking resources from gas to oil, which is unlikely to suffer the same depression in its price as gas as the US has the infrastructure in place to export much of the additional oil it produces from shale. As a result, the number of shale oil rigs has leapt by 35 per cent to about 860 in the past year.

as an expected flurry of LNG export terminals begin to come onstream in about three years, fracking companies will have a valuable further outlet for their gas – the relatively lucrative European and Asian markets.

The information released yesterday by the EPA was limited to raw sampling data: The agency did not interpret the findings or make any attempt to identify the source of the pollution. From the start of its investigation, the EPA has been careful to consider all possible causes of the contamination and to distance its inquiry from the controversy around hydraulic fracturing. Still, the chemical compounds the EPA detected are consistent with those produced from drilling processes, including one -- a solvent called 2-Butoxyethanol (2-BE) -- widely used in the process of hydraulic fracturing. The agency said it had not found contaminants such as nitrates and fertilizers that would have signaled that agricultural activities were to blame.

According to the USGS website, under the undated heading, “Can we cause earthquakes? Is there any way to prevent earthquakes?” the agency notes, “Earthquakes induced by human activity have been documented in a few locations in the United States, Japan, and Canada. The cause was injection of fluids into deep wells for waste disposal and secondary recovery of oil, and the use of reservoirs for water supplies. Most of these earthquakes were minor. The largest and most widely known resulted from fluid injection at the Rocky Mountain Arsenal near Denver, Colorado. In 1967, an earthquake of magnitude 5.5 followed a series of smaller earthquakes. Injection had been discontinued at the site in the previous year once the link between the fluid injection and the earlier series of earthquakes was established.” Note the phrase, “Once the link between the fluid injection and the earlier series of earthquakes was established.” So both the U.S Army and the U.S. Geological Survey over fifty years of research confirm on a federal level that that “fluid injection” introduces subterranean instability and is a contributory factor in inducing increased seismic activity.” How about “causing significant seismic events?”

Fast forward to the present. Overseas, last month Britain’s Cuadrilla Resources announced that it has discovered huge underground deposits of natural gas in Lancashire, up to 200 trillion cubic feet of gas in all. On 2 November a report commissioned by Cuadrilla Resources acknowledged that hydraulic fracturing was responsible for two tremors which hit Lancashire and possibly as many as fifty separate earth tremors overall. The British Geological Survey also linked smaller quakes in the Blackpool area to fracking. BGS Dr. Brian Baptie said, “It seems quite likely that they are related,” noting, “We had a couple of instruments close to the site and they show that both events occurred near the site and at a shallow depth.” But, back to Oklahoma. Austin Holland’s August 2011 report, “Examination of Possibly Induced Seismicity from Hydraulic Fracturing in the Eola Field, Garvin County, Oklahoma” Oklahoma Geological Survey OF1-2011, studied 43 earthquakes that occurred on 18 January, ranging in intensity from 1.0 to 2.8 Md (milliDarcies.) While the report’s conclusions are understandably cautious, it does state, “Our analysis showed that shortly after hydraulic fracturing began small earthquakes started occurring, and more than 50 were identified, of which 43 were large enough to be located.”

Sensitized to the issue, the oil and natural gas industry has been quick to dismiss the charges and deluge the public with a plethora of televisions advertisements about how natural gas from shale deposits is not only America’s future, but provides jobs and energy companies are responsible custodians of the environment. It seems likely that Washington will eventually be forced to address the issue, as the U.S. Army and the USGS have noted a causal link between the forced injection of liquids underground and increased seismic activity. While the Oklahoma quake caused a deal of property damage, had lives been lost, the policy would most certainly have come under increased scrutiny from the legal community. While polluting a local community’s water supply is a local tragedy barely heard inside the Beltway, an earthquake ranging from Oklahoma to Illinois, Kansas, Arkansas, Tennessee and Texas is an issue that might yet shake voters out of their torpor, and national elections are slightly less than a year away.

“In these shale gas plays no well is really economic right now,” the geologist said in a previous e-mail to the same official on March 16. “They are all losing a little money or only making a little bit of money.”

Around the same time the geologist sent the e-mail, Mr. McClendon, Chesapeake’s chief executive, told investors, “It’s time to get bullish on natural gas.”

Aubrey McClendon, whose name is not terribly familiar to people outside of the energy industry, has an enormous financial interest in encouraging customers to become addicted to natural gas so that they will keep buying even if the price shoots up – like it did in the period from 2000-2008. During that time McClendon and his company rode a wave that resulted in growing a company from tiny to huge based on debt-financed investments in leases and drilling rigs designed to produce gas in the midcontinent region of the US. A high portion of the company’s wells were stimulated with hydraulic fracturing.

When the price of natural gas collapsed in 2008, mostly as a result of the contraction in demand caused by the financial crisis and resulting economic recession/depression, McClendon nearly lost control of his company. He had to sell “substantially all” of shares at a dramatically lowered price in order to pay off creditors and meet margin calls.

No U.S. chief executive officer has bought more of his own company’s stock in recent years than McClendon, even as the shares reached all-time highs. His appetite for Chesapeake stock made him “a darling of Wall Street,” Tulsa money manager Jake Dollarhide said. But his purchases were made on margin, meaning he used borrowed money. As the value of the stock fell, McClendon was forced to raise cash to meet margin calls. Recent losses — Chesapeake shares have plummeted 60 percent in the past three weeks — left him unable to fulfill those requirements.Read more: http://newsok.com/market-slide-wipes-out-ceos-chesapeake-holdings/article/3310107#ixzz1QSst9NnL

McClendon responded vigorously to the NY Times’s suggestion that the gas revolution was more mirage than miracle in a lengthy letter to Chesapeake Energy employees that was published on the company’s public Facebook page. (Note: The timing of this letter with regard to the NY Times article is telling. The article appeared in the Sunday edition of the Times on June 26, 2011. The letter to employees included a time stamp indicating that it was released at 8:37 pm on the same day while the Facebook page indicates that it was posted to the world by 11:27 pm. In other words – there is no rest for the weary in the Internet era.)

McClendon’s letter blamed the NY Times article on environmental activists that proclaim a desire to supply all of the US energy needs from wind and solar energy. It also issued a call to action for Chesapeake Energy employees:

We hope that every Chesapeake employee can be part of our public education outreach. At more than 11,000 strong, we are an army of “factivists” – people who have knowledge of the facts and the personal knowledge and ability to spread them. You can do this by talking to your families, friends and others in your spheres of influence (schools, churches, civic organizations, etc) about the kind of company you work for and the integrity of what we do every day for our shareholders, our communities, our states, our nation, our economy and our environment. You don’t have to be an expert to stand up and tell folks that Chesapeake is committed to doing what’s right – and that commitment is expressed every day by you and your colleagues across the company.

You can also get involved by joining Chesapeake Fed PAC, our political action committee. Our opponents are extremely well funded and organized. We need to make sure our voice is heard in Washington, DC and with elected officials who are making decisions that affect our industry, our company and our ability to operate in the many states in which shale gas and oil have been discovered.

After describing how Chesapeake has 125 active drilling rigs and how it has developed a “swat team” with more than 100 employees that works with environmental groups to produce legislation designed to slow the development of new coal fired power plants and to hasten the closure of existing coal plants, Tom Price said the following:

“It’s been said before, but the demand side of the equation is extremely important right now. I mean this really is a zero sum game. I think that there are a number of very progressive utilities out there that recognize the challenges that they are facing with regard to climate change, but the Transport Rule, Clean Air Act and various others.”

I remain convinced that there is a market battle going on between natural gas and nuclear energy.

In the WEO’s central New Policies Scenario, which assumes that recent government commitments are implemented in a cautious manner, primary energy demand increases by one-third between 2010 and 2035, with 90% of the growth in non-OECD economies. China consolidates its position as the world’s largest energy consumer: it consumes nearly 70% more energy than the United States by 2035, even though, by then, per capita demand in China is still less than half the level in the United States. The share of fossil fuels in global primary energy consumption falls from around 81% today to 75% in 2035. Renewables increase from 13% of the mix today to 18% in 2035; the growth in renewables is underpinned by subsidies that rise from $64 billion in 2010 to $250 billion in 2035, support that in some cases cannot be taken for granted in this age of fiscal austerity. By contrast, subsidies for fossil fuels amounted to $409 billion in 2010.

Short-term pressures on oil markets are easing with the economic slowdown and the expected return of Libyan supply. But the average oil price remains high, approaching $120/barrel (in year-2010 dollars) in 2035. Reliance grows on a small number of producers: the increase in output from Middle East and North Africa (MENA) is over 90% of the required growth in world oil output to 2035. If, between 2011 and 2015, investment in the MENA region runs one-third lower than the $100 billion per year required, consumers could face a near-term rise in the oil price to $150/barrel.Oil demand rises from 87 million barrels per day (mb/d) in 2010 to 99 mb/d in 2035, with all the net growth coming from the transport sector in emerging economies. The passenger vehicle fleet doubles to almost 1.7 billion in 2035. Alternative technologies, such as hybrid and electric vehicles that use oil more efficiently or not at all, continue to advance but they take time to penetrate markets.

The use of coal – which met almost half of the increase in global energy demand over the last decade – rises 65% by 2035. Prospects for coal are especially sensitive to energy policies – notably in China, which today accounts for almost half of global demand. More efficient power plants and carbon capture and storage (CCS) technology could boost prospects for coal, but the latter still faces significant regulatory, policy and technical barriers that make its deployment uncertain.Fukushima Daiichi has raised questions about the future role of nuclear power. In the New Policies Scenario, nuclear output rises by over 70% by 2035, only slightly less than projected last year, as most countries with nuclear programmes have reaffirmed their commitment to them. But given the increased uncertainty, that could change. A special Low Nuclear Case examines what would happen if the anticipated contribution of nuclear to future energy supply were to be halved. While providing a boost to renewables, such a slowdown would increase import bills, heighten energy security concerns and make it harder and more expensive to combat climate change.

The future for natural gas is more certain: its share in the energy mix rises and gas use almost catches up with coal consumption, underscoring key findings from a recent WEO Special Report which examined whether the world is entering a “Golden Age of Gas”. One country set to benefit from increased demand for gas is Russia, which is the subject of a special in-depth study in WEO-2011. Key challenges for Russia are to finance a new generation of higher-cost oil and gas fields and to improve its energy efficiency. While Russia remains an important supplier to its traditional markets in Europe, a shift in its fossil fuel exports towards China and the Asia-Pacific gathers momentum. If Russia improved its energy efficiency to the levels of comparable OECD countries, it could reduce its primary energy use by almost one-third, an amount similar to the consumption of the United Kingdom. Potential savings of natural gas alone, at 180 bcm, are close to Russia’s net exports in 2010.

In the New Policies Scenario, cumulative CO2 emissions over the next 25 years amount to three-quarters of the total from the past 110 years, leading to a long-term average temperature rise of 3.5°C. China’s per-capita emissions match the OECD average in 2035. Were the new policies not implemented, we are on an even more dangerous track, to an increase of 6°C.“As each year passes without clear signals to drive investment in clean energy, the “lock-in” of high-carbon infrastructure is making it harder and more expensive to meet our energy security and climate goals,” said Fatih Birol, IEA Chief Economist. The WEO presents a 450 Scenario, which traces an energy path consistent with meeting the globally agreed goal of limiting the temperature rise to 2°C. Four-fifths of the total energy-related CO2 emissions permitted to 2035 in the 450 Scenario are already locked-in by existing capital stock, including power stations, buildings and factories. Without further action by 2017, the energy-related infrastructure then in place would generate all the CO2 emissions allowed in the 450 Scenario up to 2035. Delaying action is a false economy: for every $1 of investment in cleaner technology that is avoided in the power sector before 2020, an additional $4.30 would need to be spent after 2020 to compensate for the increased emissions.

Instead of trying to explain the basis for those statements more fully, I’ll try to encourage people to consider the motives of people on various sides of the discussion. I also want to encourage nuclear energy supporters to look beyond the financial implications to the broader implications of a less reliable and dirtier electrical power system. When the focus is just on the finances, the opposition has an advantage – the potential gains from opposing nuclear energy often are concentrated in the hands of extremely interested parties while the costs are distributed widely enough to be less visible. That imbalance often leads to great passion in the opposition and too much apathy among the supporters. Over at Idaho Samizdat, Dan Yurman has written about the epic battle of political titans who are on opposing sides of the controversy regarding the relicensing and continued operation of the Indian Point Nuclear Power Station. Dan pointed out that there is a large sum of money at stake, but he put it in a way that does not sound too terrible to many people because it spreads out the pain.

In round numbers, if Indian Point is closed, wholesale electricity prices could rise by 12%.

A recent study quoted in a New York Times article put the initial additional cost of electricity without Indian Point at about $1.5 billion per year, which is a substantial sum of money if concentrated into the hands of a few thousand victors who tap the monthly bills of a few million people. Here is a comment that I added to Dan’s post:Dan – thank you for pointing out that the battle is not really a partisan one determined by political party affiliation. By my analysis, the real issue is the desire of natural gas suppliers to sell more gas at ever higher prices driven by a shift in the balance between supply and demand.

They never quite explain what is going to happen as we get closer and closer to the day when even fracking will not squeeze any more hydrocarbons out of the drying sponge that is the readily accessible part of the earth’s crust.The often touted “100 – year” supply of natural gas in the US has a lot of optimistic assumptions built in. First of all, it is only rounded up to 100 years – 2170 trillion cubic feet at the end of 2010 divided by 23 trillion cubic feet per year leaves just 94 years.

Secondly, the 2170 number provided by the Potential Gas Committee report includes all proven, probable, possible and speculative resources, without any analysis of the cost of extraction or moving them to a market. Many of the basins counted have no current pipelines and many of the basins are not large enough for economic recovery of the investment to build the infrastructure without far higher prices.Finally, all bets are off with regard to longevity if we increase the rate of burning up the precious raw materia

BTW – In case your readers are interested in the motives of a group like Riverkeepers, founded and led by Robert F. Kennedy, Jr., here is a link to a video clip of him explaining his support for natural gas.http://atomicinsights.com/2010/11/power-politics-rfk-jr-explains-how-pressure-from-activists-to-enforce-restrictions-on-coal-benefits-natural-gas.html

The organized opposition to the intelligent use of nuclear energy has often painted support for the technology as coming from faceless, money-hungry corporations. That caricature of the support purposely ignores the fact that there are large numbers of intelligent, well educated, responsible, and caring people who know a great deal about the technology and believe that it is the best available solution for many intransigent problems. There are efforts underway today, like the Nuclear Literacy Project and Go Nuclear, that are focused on showcasing the admirable people who like nuclear energy and want it to grow rapidly to serve society’s never ended thirst for reliable power at an affordable price with acceptable environmental impact.

The exaggerated, fanciful accident scenarios painted by the opposition are challenging to disprove.

I just read an excellent post on Yes Vermont Yankee about a coming decision that might help to illuminate the risk to society of continuing to let greedy antinuclear activists and their political friends dominate the discussion. According to Meredith’s post, Entergy must make a decision within just a week or so about whether or not to refuel Vermont Yankee in October. Since the sitting governor is dead set against the plant operating past its current license expiration in the summer of 2012, the $100 million dollar expense of refueling would only result in about 6 months of operation instead of the usual 18 months.Meredith has a novel solution to the dilemma – conserve the fuel currently in the plant by immediately cutting the power output to 25%.

The German government's decision to close all of its existing nuclear reactors by 2022 shows that this shift in sentiment is gaining traction. And it increases the likelihood that the nuclear-powerplant building boom that had seemed at hand will be set back. Without a doubt, this new reality will lead to global energy shortages and much-higher energy costs.But for us as investors, the real issue is this: Which sectors will step up to alleviate the shortfall resulting from the inevitable disappearance of nuclear power?

As the recent development in Germany so clearly illustrates, one key difficulty about major energy decisions is that far too many are political in nature.

Too often, rational scientific analysis and cost-benefit analyses are ignored as hard-line environmentalists push their own agendas. Many of the environmentalists' objections are valid - at least as far as they go. But more and more, those objections seem to include every source of energy that actually works.

Windmills are objectionable because they look ugly and kill birds. Geothermal energy is objectionable because it causes earthquakes. Even solar energy is objectionable because of the vast acreages of land required to house the solar panels

Replacing Nuclear Power Figuring out which energy sources will offset the decline in nuclear power output requires three calculations:

First, a calculation of the cost of an energy source - as it now exists - in its economically most practicable uses. However, much as we may like solar power, we are not about to get solar-powered automobiles; likewise, oil-fueled power stations are inefficient on many grounds.

Second, a calculation that demonstrates whether the cost of that energy source is likely to increase or decline. With oil and hydro-electric power, for instance, the cost is likely to increase: The richest oil wells have been tapped and the best rivers have been dammed. With solar, on the other hand, the cost could decline, given how quickly the technology is advancing.

And third, an estimate that includes our best guess as to whether hard-line environmentalists will win or lose in their attempt to prevent its use.

On nuclear energy, the environmentalists appear to have won - at least for the time being. Their victory probably extends to fusion power, if that ever becomes economical. Conversely, their battles against wind and solar power are futile, as there are no scary disaster scenarios involved.

I regard the German decision to abandon nuclear power as foolish, and it should make us very cautious when investing in large-scale German manufacturers, which may be made uncompetitive by excessive power costs. But as an investor, I think it opens up a number of profit opportunities.

Actions To Take: Environmental concerns have chased investment away from nuclear energy - at least for the time being. For that reason the nuclear build-out that was just starting to gain momentum now is likely to stumble. As investors, we must look for energy sources that will most likely replace lost nuclear power output. They include:

Shale Gas: Potential damage to the environment caused by "fracking," which is the process by which shale gas is extracted, has not impeded this industry's growth. Natural gas has grown increasingly popular, as it is relatively cheap and clean, and readily abundant in the United States. A recent study by the Massachusetts Institute of Technology (MIT) suggests that natural gas will provide 40% of U.S. energy needs in the future, up from 20% today. You might look at Chesapeake Energy Corp. (NYSE:CHK), the largest leaseholder in Pennsylvania's Marcellus Shale, which is trading at a reasonable 9.5 times projected 2012 earnings.

Shale gas. Tar sands. And solar energy. Let's look at each of the three - and identify the best ways to play them

Tar Sands: The Athabasca tar sands in Canada contain more oil than the Middle East. And at an oil price of $100 per barrel, it is highly profitable to extract. Of course, extraction makes a huge mess of the local environment, but environmentalists seem to have lost that battle - reasonably enough, in view of the "energy security" implications of dependence on the Middle East. A play I like here is Cenovus Energy Inc. (NYSE: CVE). It's a purer Athabasca play than Suncor Energy Inc. (NYSE: SU), but it's currently pricey at 16.5 times projected 2012 earnings. Suncor's cheaper at only 11 times projected 2012 earnings - so take your pick

Solar Energy: Of the many new energy sources that have received so much taxpayer money in the last five years, solar is the one with real potential. Unlike with wind farms, where there is almost no opportunity for massive technological improvement or cost reduction, there is great potential upside with solar power: The technology and economics of solar panels and their manufacture is improving steadily. Indeed, solar power seems likely to be competitive as a source of electricity without subsidy sometime around 2016-2020, if energy prices stay high.

There are a number of ways to play this. You can select a solar-panel manufacturer like the Chinese JA Solar Holdings Co. Ltd. (Nasdaq ADR: JASO), or a rectifier producer like Power-One Inc. (Nasdaq: PWER). JA Solar is trading at a startling forward Price/Earnings (P/E) ratio of less than 5.0, mostly likely because of the Chinese accounting scandals, whereas Power-One is also cheap at less than seven times forward earnings and is U.S.-domiciled. Again, take your pick, depending on which risks you are comfortable with.

28,079 Abandoned Wells in Gulf of Mexico In an explosive report at Sky Truth, John Amos reveals from government data that “there are currently 24,486 known permanently abandoned wells in the Gulf of Mexico, and 3,593 ‘temporarily’ abandoned wells, as of October 2011.” [6] TA wells are those temporarily sealed so that future drilling can be re-started. Both TA wells and “permanently abandoned” (PA) wells endure no inspections.

Not only cement, but seals, valves and gaskets can deteriorate over time. A 2000 report by C-FER Technologies to the Dept. of Interior identified several  different points where well leaks can occur, as this image (p. 26) reveals.  To date, no regulations prescribe a maximum time wells may remain inactive before being permanently abandoned. [13] “The most common failure mechanisms (corrosion, deterioration, and malfunction) cause mainly small leaks [up to 49 barrels, or 2,058 gallons]. Corrosion is historically known to cause 85% to 90% of small leaks.” Depending on various factors, C-FER concludes that “Shut-In” wells reach an environmental risk threshhold in six months, TA wells in about 10-12 years, and PA wells in 25 years.  Some of these abandoned wells are 63 years old.

Leaking abandoned wells pose a significant environmental and economic threat. A three-month EcoHearth investigation revealed that a minimum of 2.5 million abandoned wells in the US and 20-30 million worldwide receive no follow up inspections to ensure they are not leaking. Worse: “There is no known technology for securely sealing these tens of millions of abandoned wells. Many—likely hundreds of thousands—are already hemorrhaging oil, brine and greenhouse gases into the environment. Habitats are being fundamentally altered. Aquifers are being destroyed. Some of these abandoned wells are explosive, capable of building-leveling, toxin-spreading detonations. And thanks to primitive capping technologies, virtually all are leaking now—or will be.” [11] Sealed with cement, adds EcoHearth, “Each abandoned well is an environmental disaster waiting to happen. The triggers include accidents, earthquakes, natural erosion, re-pressurization (either spontaneous or precipitated by fracking) and, simply, time.”

Over a year ago, the Dept. of Interior promised to plug the “temporarily abandoned” (TA) wells, and dismantle another 650 production platforms no longer in use. [7] At an estimated decommissioning cost of $1-3 billion [8], none of this work has been started, though Feds have approved 912 permanent abandonment plans and 214 temporary abandonment plans submitted since its September 2010 rule. [9] Over 600 of those abandoned wells belong to BP, reported the Associated Press last year, adding that some of the permanently abandoned wells date back to the 1940s [10].  Amos advises that some of the “temporarily abandoned” wells date back to the 1950s. “Experts say abandoned wells can repressurize, much like a dormant volcano can awaken. And years of exposure to sea water and underground pressure can cause cementing and piping to corrode and weaken,” reports AP.

As far back as 1994, the Government Accountability Office warned that there was no effective strategy in place to inspect abandoned wells, nor were bonds sufficient to cover the cost of abandonment. Lease abandonment costs estimated at “$4.4 billion in current dollars … were covered by only $68 million in bonds.” [12] The GAO concluded that “leaks can occur… causing serious damage to the environment and marine life,” adding that “MMS has not encouraged the development of nonexplosive structure removal technologies that would eliminate or minimize environmental damage.”

The AP noted that none of the 1994 GAO recommendations have been implemented. Abandoned wells remain uninspected and pose a threat which the government continues to ignore. Agency Reorganization The Minerals Management Service (MMS) was renamed the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) last May after MMS drew heavy fire for malfeasance, including allowing exemptions to safety rules it granted to BP. An Office of Inspector General investigation revealed that MMS employees accepted gifts from the oil and gas industry, including sex, drugs and trips, and falsified inspection reports. [14] Not only was nothing was done with the 1994 GAO recommendations to protect the environment from abandoned wells, its 2003 reorganization recommendations [15] were likewise ignored.  In a June 2011 report on agency reorganization in the aftermath of the Gulf oil spill, the GAO reports that “as of December 2010,” the DOI “had not implemented many recommendations we made to address numerous weaknesses and challenges.” [16] Reorganization proceeded.  Effective October 1, 2011, the Dept. of the Interior split BOEMRE into three new federal agencies: the Office of Natural Resources Revenue to collect mineral leasing fees, the Bureau of Safety and Environmental Enforcement (BSEE) and the Bureau of Ocean Energy Management (BOEM) “to carry out the offshore energy management and safety and environmental oversight missions.” The DOI admits:

“The Deepwater Horizon blowout and resulting oil spill shed light on weaknesses in the federal offshore energy regulatory system, including the overly broad mandate and inherently conflicted missions of MMS which was charged with resource management, safety and environmental protection, and revenue collection.” [17] BOEM essentially manages the development of offshore drilling, while BSEE oversees environmental protection, with some eco-protection overlap between the two agencies. [18] Early this month, BSEE Director Michael R. Bromwich spoke at the Global Offshore Safety Summit Conference in Stavanger, Norway, sponsored by the International Regulators Forum. He announced a new position, Chief Environmental Officer of the BOEM:

This person will be empowered, at the national level, to make decisions and final recommendations when leasing and environmental program heads cannot reach agreement. This individual will also be a major participant in setting the scientific agenda for the United States’ oceans.” [19] Bromwich failed to mention anything about the abandoned wells under his purview. Out of sight, out of mind. Cost of the Macondo Blowout

On Monday, the GAO published its final report of a three-part series on the Gulf oil disaster. [20]  Focused on federal financial exposure to oil spill claims, the accountants nevertheless point out that, as of May 2011, BP paid $700 million toward those spill claims out of its $20 billion Trust established to cover that deadly accident. BP and Oxford Economics estimate the total cost for eco-cleanup and compensatory economic damages will run to the “tens of billions of dollars.” [21] On the taxpayer side, the GAO estimates the federal government’s costs will exceed the billion dollar incident cap set by the Oil Pollution Act of 1990 (as amended). As of May 2011, agency costs reached past $626 million. The Oil Spill Liability Trust Fund’s income is generated from an oil barrel tax that is set to expire in 2017, notes GAO.

With Monday’s District Court decision in Louisiana, BP also faces punitive damages on “thousands of thousands of thousands of claims.” U.S. District Judge Carl Barbier denied BP’s appeal that might have killed several hundred thousand claims, among them that clean up workers have still not been fully paid by BP. [22] Meanwhile, destroying the planet for profit continues unabated. It’s time to Occupy the Gulf of Mexico: No more oil drilling in our food source.