Corruption In The Oil Patch
By Andy Carpenter 
Some things leave a mark, some leave a welt and some leave a scar. You can safely put the US Department of Interior’s Mineral Management Service into the “scar” category. As in hee hee hee, ha ha ha… from now on, the words mineral, management and service strung together in series will always evoke a hearty laugh from me. But, that’s just me. Why are the cocaine-sniffing, marijuana-toking, sex-trolling and “gift”-taking members of the Bush administration’s MMS important to you? Well, among a number of energy related tasks, one thing the MMS does is report on staffing levels on oilrigs in the Gulf of Mexico… or “gee-oh-em” in oilrig talk. As you might imagine, these staffing levels are actually an important part of the information that’s used by big oil and natural gas investors. Imagine if this data could be bent by outside sources who buy an MMS staffer with some coke, pot, prostitutes or tickets to an NFL game. And, because the MMS is so corrupt, what are we now supposed to make of its Sept. 7 report on GOM oil rig and platform staffing levels? The MMS claims that companies have evacuated workers from 452 production platforms (63.0%) and 81 rigs (66.9%). It also claims that 95.9% of the GOM’s oil production and 73.1% of its natural gas production were shut-in as a precautionary measure as Hurricane Ike approached the central and western gulf. Can we believe the MMS when it reports that Shell Oil began evacuations from its offshore GOM facility last Sunday? And that on Wednesday, the oil and gas super-major decided on “a full evacuation.” The MMS also reported that Ike forced Anadarko to evacuate all 600 workers from its facilities. It also said that Anadarko shut-in all of its GOM production on Thursday. That included Anadarko’s Independence Hub. This is the Gulf’s largest natural gas processing facility. In fact, at 1 billion cubic feet of natural gas per day, the Independence Hub accounts for 10% of all the natural gas produced in the GOM. So you can see how the MMS reports could influence markets… and why the number of MMS employees who were so easily corrupted for penny-ante payoffs is so disturbing. After all, where do you think energy prices are headed when the MMS reports that giants such as ExxonMobil and ConocoPhillips are shutting down GOM facilities, such as Conoco’s Magnolia platform? Wouldn’t it be great to have someone in your pocket who could influence the markets in the direction you wanted by issuing a small press release with a big headline? You bet it would. Also, you have to wonder what it is about the energy industry and corruption. Could it be that prices are easier to influence than we regular Joes might imagine? Because, there’s a delicious irony that the MMS’s venal shenanigans begin to come to light during the very same week that a federal court okays a $7.2 billion payout to Enron investors.
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You have to think the current crowd on Pennsylvania Avenue – the one that manages the MMS and invited the Enron boys to help set national energy policy – has got to be more than ready to get out of Dodge. Of course, the current crew still needs to get “the hero” Scooter Libby his pardon. But, you can bet that this administration’s bags are packed. And it’s ready to go because, as the Reaganites and Clintonites would tell you, this ain’t a monarchy. Eight years is a long time to keep the lid on all the bad stuff you’ve done or allowed to happen on your watch. So, when I look back at the past eight years… no make that the past 16 years… no, the past 20 years… no, make that the past 28 years… I realize that MMS can only mean one thing. “Make mine scotch… a double, please.” GLOBAL HUNT FINALLY INTENSIFIES Back in 2005, the CIA disbanded the unit dedicated to hunting Osama bin Laden. Today, seven years after 9/11, the man suspected of being the largest mass murderer in American history remains at large. Even more interestingly, word out of Washington is that the hunt for al Qaeda’s leader is once again priority. But, as Peter Bergen, CNN’s national security analyst reports, while it’s a near certainty that bin Laden is living in Pakistan: “American intelligence agencies have nothing of any substance on bin Laden. Given the hundreds of billions of dollars that the ‘war on terror’ has consumed the failure to capture or kill al Qaeda’s leader has been one of its signal failures. “That said, it is worth bearing in mind that finding any one individual can be hard. Think of Mohamed Aideed, the anti-American Somali warlord who was known to be in Mogadishu, the capital city of Somalia in 1993, yet some 20,000 US soldiers deployed there were not able to find him. Think also of Radovan Karadzic, the alleged Bosnian Serb war criminal arrested in July in Belgrade who it took more than a decade to track down after the end of the civil war in the former Yugoslavia, and he was hiding in a relatively small country in Europe, not the badlands of the Afghan-Pakistan border. “And given the fact that bin Laden is not making obvious errors such as talking on phones the signals of which can be intercepted and the fact that no one in his immediate circle will rat him out for the long-advertised cash rewards for his head it is likely that al Qaeda’s leader could evade detection for years or even decades.” You have to figure President Bush still rates catching bin Laden as a top personal priority. Bergen suggests that it’s one reason there have been so many recent missile attacks on suspected al Qaeda and Taliban strongholds within Pakistan’s border. The idea is not to kill bin Laden, who must be well hidden, but to kill so many of his associates… their wives and children… to cause sudden uncertainty and increased communications between terrorists. That extra communications traffic will make it easier for intelligence agencies to monitor. It could lead to more top al Qaeda leaders, and even bin Laden. This is a real departure in US policy. It’s the first real push to capture – more likely kill – bin Laden since he, somehow, evaded US troops and spooks at the battle of Tora Bora in eastern Afghanistan in mid- December 2001. Stay tuned for an October surprise. Have a great weekend. Andy P.S. To let me know what you thought of today's article, send an e-mail to: feedback@investorsdailyedge.com.
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