Read This Blog in 9 Different Languages

Tuesday, September 28, 2010

The U.S. Solar Market Annual Review: 2010 Early Results

RenewableEnergyWorld.com weekly e-newsletter
FREE to you every week. To view an online version of this message, please visit http://www.renewableenergyworld.com/partner/altaterra/2010-09-21/.

Our Online Executive Conferences bring you independent, in-depth information on critical marketplace developments in efficiency, renewable energy, and sustainable business--in a time-efficient 60- to 90-minute interactive format.


Final Call: The U.S. Solar Market Annual Review: 2010 Early Results
When: Thursday, September 30, 2010
11:00 AM-12:30 PM PT / 2:00-3:30 PM ET


Where: Live Online Web Conference and Teleconference


Cost: $74 to $331 (See registration page for details)


Contact: Eric Paul (e.paul@altaterra.net)


Registration Ends this Wednesday, September 30
Register for this event »

Online Conference Details Full Details »



Larry Sherwood, the solar industry’s "best-kept secret," is the author of the single most widely cited source of information about the United States’ solar market--the annual IREC U.S. Solar Market Trends report.

In this online conference, we will be taking a behind-the-scenes preview of 2010 and look into 2011. Mr. Sherwood will provide data and analysis including preliminary installation results and projections by state, customer segment, and technology for the U.S. solar market.

If you do or are considering doing business in the U.S., you can’t afford to miss this opportunity to learn how the U.S. solar market is shaping up this year and what to expect next year.

This presentation and discussion will address key questions facing solar companies today, including:
• How have sales and installations grown in 2010 and what is the outlook for 2011?
• How does the total market break down by state and by segment (residential, commercial, utility)?
• How is project size growing?
• How have the concentrating solar power (CSP/CST) and solar heating and cooling markets developed in 2010 and what can be expected for 2011?
• What are the implementation and market execution bottlenecks, and how are they being addressed?
• Which states had the most installations in 2010? Which states experienced the highest growth rates?
• What are the key factors driving the market for the near future?

The conference will provide an in-depth look at the rapidly-changing nature of the U.S. solar market, including preliminary installation figures for 2010 by state, customer segment, and technology. The conference will also feature a discussion on potential regulatory barriers to accelerated growth and the latest incentives driving state-level growth.

RenewableEnergyWorld.com Editor Jennifer Runyon will draw on her wide knowledge of the solar market industry and trends to frame and contribute to the discussion. The event will be moderated by Jon Guice, managing director of research at AltaTerra.

About the Speaker: Larry Sherwood is widely known as the author of the authoritative annual report, "U.S. Solar Market Trends 2009," with the Interstate Renewable Energy Council. President of Sherwood Associates, a renewable energy consulting firm, Mr. Sherwood has nearly 30 years of experience in renewable energy. His public roles include serving as Project Administrator for the Solar America Board for Codes and Standards, Executive Director of the Small Wind Certification Council, and Editor of the IREC Small Wind Newsletter.

Read Full Details »
Register for this event »




--------------------------------------------------------------------------------

About Online Executive Conferences
Our Online Executive Conferences are designed to provide independent professional education on critical market developments in efficiency, renewable energy, and sustainable business. Recognized experts from the business community, institutions, and government share information and insights in an accessible conference session format that is interactive and non-sponsored. Conferences typically begin with an overview, then move into greater detail and close with a moderated audience question-and-answer (Q&A) period. You may access an online recording, including audio and presentations, shortly after the conference.

These events are co-produced by AltaTerra Research and RenewableEnergyWorld.com.

AltaTerra Research - All rights reserved.
RenewableEnergyWorld.com - All rights reserved.
RenewableEnergyWorld.com - World's #1 Renewable Energy Network for News & Information

You are invited to view this message because you are a registered reader of RenewableEnergyWorld.com.
RenewableEnergyWorld.com - 9 Vose Farm Road - Peterborough, NH 03458 - United States of America

Friday, September 3, 2010

A.O.P: The Secret Investment That's Crushing Gold!

A.O.P: The Secret Investment That's Crushing Gold!
Learn about this special type of investment out there that’s not only beaten gold over the past decade but has practically destroyed every asset class on the market as well. Don’t miss your chance to get in on the biggest payouts yet.
Copied from http://www.stockgumshoe.com/2010/08/a-o-p-the-secret-investment-thats-crushing-gold.html

“Everyone knows gold is a great investment. Since 2000, it’s gone from $275 to $1,250 an ounce.

“But what if I told you there’s a special type of investment out there that’s not only beaten gold over the past decade but has practically destroyed every asset class on the market as well. In terms of average, annualized returns:

“It’s performed 18-times better than the S&P 500

“It’s beaten mutual funds 17 to 1

“It’s beaten utilities 6 to 1

“It’s beaten bonds 3 to 1

“In fact, we couldn’t find a single type of investment that has even come close to this ‘gold-beater.’

“And the next 12-24 months could be the most profitable period to date for this investment.”
Not that gold is necessarily the one thing we should be comparing all other investments to (personally, I’ve always thought of gold as more of a “store of value” savings vehicle than an investment, but it sure has gone up in recent years) … but whatever you compare it to, those are some nice numbers.

So what is this? The folks at Stansberry Research tell us that they call it the “A.O.P.” — here’s how they put it:

“Spawned by a 31-year old snippet of U.S. corporate tax code, the A.O.P. has been generating capital gains AND progressively higher levels of income since the inception.

“But you won’t find this income opportunity through any government agency website… even though it owes its very existence to an act of Congress.

“Plus – and here’s the kicker – the A.O.P. has historically increased shareholder payouts every year no matter what’s going on in the markets.”
And then, as newsletters are wont to do, they brag about the fact that they’ve been behind this “AOP” investment for a long time, letting their shareholders enjoy a nice run:

“We first wrote about the A.O.P. four years ago.

“At the time the economy was booming, the financial markets were still strong, and people were spending money hand over fist.

“Everyone knows what happened next…

“Banks began to fail, the markets collapsed, the economy went into a tailspin…

“But for those who took advantage of the A.O.P., it’s been a much different story…”
So this made me check back in the Gumshoe files … and yes, the S&A Resource Report did teaser this “AOP” investment in their ad campaigns several years ago — I don’t know if it was really four years ago, since I wasn’t publishing then and the Gumshoe had yet to lay the foundation on our virtual edutainment storefront … but I did write about Matt Badiali’s teaser for his newsletter, which was then called the S&A Oil Report, and he was pushing the “AOP” quite hard then.

And from that point, the investments have mostly done quite well — but that’s because they’re roughly flat (not counting dividends) — which, compared to the S&P and other comparables, is pretty good. When I wrote about this sector for the first time back then, in May of 2007 when my inbox was overflowing with A.O.P. stuff, I thought these investments were pretty expensive and would have to come back in to make the yields more competitive and attractive… and they did, taking an outsize hit in late 2008 and early 2009 that made them, in retrospect, insanely cheap.

But I should go ahead and slake your thirst for the “answer”, right? The A.O.P. is their acronym for “American Oil Pension,” and then as now it’s a teaser about investing in Master Limited Partnerships (MLPs), largely those MLPs that make up the majority of the sector, the companies that transport, process and store oil and natural gas.

I’d have to assume, however, that Badiali and his copywriters are teasing out different MLPs than they did three years ago — so let’s dig into the tease a bit, shall we?

If you’re not familiar with the MLP term (and don’t worry, no one else sues AOP — that’s just a copywriter invention to help make this seem mysterious, and bolster Badiali’s case that he’s got the inside info you need on this little-known investment), Master Limited Partnerships are a creation of the Reagan-era tax code, designed to help spur investment in our oil and gas infrastructure and domestic energy production.

There were some bad apples in the bunch in the early years that were essentially just created as tax dodges, but the sector is now largely well-run and well-respected, and the larger MLPs are effective and efficient pipeline operators (for the most part) who benefit from the tax code in a couple ways: first, they don’t have to pay taxes on their corporate income as long as they pass it along to their unitholders (not technically shareholders, since these are partnerships, not corporations); and second, they own assets that for the most part are very long-lived and relatively inexpensive to maintain, and that generally depreciate quite a bit faster than they physically deteriorate, so they generate even more cash than they actually classify as income, meaning that they can disperse even more cash to their unitholders and keep them happy.

I’ve written about MLPs many times before, so this may all be a bit boring — but essentially, they are a way to get high current income and defer taxes on that income until you sell your units, since the fact that the dividends/distributions to unitholders are far higher than the partnership’s reported income means that you’re often getting a “return of capital” as most of your distribution, which just lowers your cost basis in the shares and means you end up paying capital gains taxes on that “return of capital” … but not until you sell the shares and register that gain, so you get to choose when to incur taxes (and I’m not a tax expert so don’t rely on me for the details of this, but I think that inherited MLP shares get a bump up in cost basis, so this is a popular investment among older investors in part as a way to efficiently pass along wealth to future generations without forgoing current income — do remember, I could easily be wrong on that point).

And yes, MLPs are generally probably not very well understood by most investors, so there is perhaps an opportunity for folks to get in on a sector that’s critical and profitable but somewhat small and not dominated by institutions (many institutions can’t own MLPs, and most mutual funds do not although they’re now technically allowed to), but it’s worth noting that MLPs generally trade like other yield-focused investments — they compete with bonds, high dividend stocks, and stuff like Real Estate Investment Trusts for the attention of income-focused investors, so the prices fluctuate in part due to yield expectations for those other sectors. Right now the yields on most investments are so absurdly low that it’s tough to say what’s fair — the REITs and the utilities yield about 4-4.5% (or at least the averages of those, as measured by the big ETFs for those sectors), the ten year US Treasury bond or a 5-year CD yields a bit under 3%, and the closest thing to an index for MLPs (the JP Morgan Alerian Exchange Traded Note) yields about 5.5%. MLPs don’t historically seem to get to yield much less than that before the price falls to get the income levels back up, but we haven’t had many long-lasting low-interest-rate environments like this in the past, where 5 or 6% seems like a terrific yield.

And certainly MLPs have been probably by far the best thing to own for the last decade or so — the compounding high interest and the relative stability of their income stream have helped them to avoid the worst of the crashes (though they’ve had several downward spikes), and I wouldn’t argue with anyone who wanted to dedicate a portion of their portfolio to the sector.

So without further ado, which are the favored “A.O.P.” investments that Matt Badiali is pushing now? Here’s how he hints for us:

“Today, there are TWO A.O.P. businesses that stand head and shoulders above the rest—they regularly send out the biggest paychecks… and have superior streams of revenue.

“I’m very confident and pleased with the results these companies have had to offer investors. Take a look below, and you’ll find a brief description of what I really like about each one:

“A.O.P. Company #1: This Pennsylvania business owns and operates natural gas assets, including five natural gas processing facilities and over 4,000 miles of natural gas gathering pipelines.

“Although they’ve only been around for 3 years, this company has increased its distribution payouts by an incredible 457%.

“Since 2005, they’ve also increased their total revenues by 58% and cash distributions by around 200%.

“To qualify for the August 14, 2010 distribution check, you must enroll by August 3.”
Well, I don’t know how you get the “only been around for three years” and reconcile that with the “since 2005″ numbers in the subsequent paragraph, but maybe they just made a little mistake on the dates — this MLP had only been around for three years in 2005, arguably (this entity was formed in 2001), but they have been in business under various names and corporate structures since the late 19th century … I think this first one must be Penn Virginia Resources (PVR), which does have the natural gas assets described in the tease but which is also has a second major business as an owner of coal properties in Appalachia.

And oddly enough, when you think “Pennsylvania” and natural gas you probably think of the Marcellus Shale, which might get you excited about growth prospects for Penn Virginia … but in actuality, when it comes to natural gas they’re still mostly a Texas/Oklahoma company. That’s possibly going to gradually change over the next several years, since they have made deals with two different Marcellus producers to expand gathering systems in the area over the next several years, most notably a five-year deal with Range Resources that started just recently and that will have them spending a couple hundred million building out gathering pipes for some of Range’s acreage in Pennsylvania. They do think this will be accretive to “distributable cash flow” by next year, which means they shouldn’t have to cut the quarterly distribution to unitholders.

PVR is an interesting MLP, they own primarily gathering and midstream assets on the natural gas side (gathering is what it sounds like, small pipes that connect the wells to bigger pipelines for movement to refineries or storage; midstream is mostly refining and processing, and the separating of natural gas liquids), which means they have to constantly analyze the production in their service areas and expand to new areas as (or if) the area where they’re “gathering” sees production declines, so it’s a bit more complicated than the MLPs who primarily own the big interstate pipelines that primarily, for example, move crude oil from the Gulf Coast to the Northeast.

And if you add on the coal business, you’d think that would provide some additional stability to earnings — you get, at least, more diversity of revenue. The coal business is basically just land ownership — the own the coal, but they don’t produce it, they just collect royalties, so it’s far smaller in terms of revenue than their natural gas business, but that revenue comes in with far higher margins because they don’t actually have to mine the coal.

But even given that, this MLP has an above-average yield, and unlike some MLPs they actually make enough in income to cover their distribution (it’s not just the distribution of depreciation). I haven’t looked at this one for my personal account in a long time, and I don’t want to downplay the relative risk of owning gathering systems in Texas and Oklahoma when fields might decline, but it is impressive that they have an above-average yield for the MLP space (just under 8%) — and like essentially all MLPs, they have been able to continue to increase the distribution amount, though not as aggressively as some. They’ve got a market cap of about a billion dollars, so they’re quite small compared to big guys like Kinder Morgan (KMP) and Enterprise Products Partners (EPD) which are 20 times as large, but they also yield more (the big MLPs generally have yields in the low-6% range) and, since they are smaller, might arguably have more growth potential.

And there’s one more …

“AOP Company #2: This Houston firm is one of the largest A.O.P. businesses in the world. They own 49,100 of oil and gas pipeline throughout the continental U.S.

“If you bought 5,000 shares of this A.O.P. business soon after it first went public in 1998, you would have since collected over $90,000 in distribution payouts.

“You’d have received 47 distribution checks during that time and your initial $5,000 stake would now be worth $155,000 in capital gains. Combined, you’d have made $245,000.

“In order to ensure you receive the next distribution payout, which will likely be paid on August 13, you will want to purchase your shares prior to August 6, 2010.”
Well, what do you know — this one is one of the biggies I mentioned above, Enterprise Products Partners (EPD). I think this is actually the largest of the pipeline MLPs at the moment, their market cap is just under $25 billion, and they do pretty much everything that you think of for “traditional” MLPs — they own gas gathering systems, they own onshore and offshore pipelines for both gas and oil, they do midstream gas processing and marketing of the various products, they own storage facilities and terminals, and they even sell chemicals and feedstocks. So if you’re looking for one of the more diversified MLPs, it’s hard to argue with EPD.

While Enterprise is huge, they are also focused on growing — and growth for MLPs generally means either acquiring small pipeline operators, or building new (or expanding and extending old) gathering and transportation systems. EPD has done quite a bit of acquiring in the past, and they do seem focused on significant oil and gas growth areas, which I would always look for in an MLP to make sure they’ve got some potential to keep adding to their revenue base — in EPD’s case, the expansion focus seems largely to be the southern shale areas, primarily Barnett and Haynesville, and the big Eagle Ford Shale that has everyone excited in South Texas.

But as I said, the yield is not massive — EPD will earn you just a whisper over 6%, and that will eventually be taxable unless you try to finagle holding it in an IRA. And most people don’t recommend holding MLPs in IRAs since a lot of their value is in the tax deferral, which you get with an IRA anyway — as an aside, some MLPs will tell you that holding their units in a Roth IRA isn’t kosher, but I think that’s just for pipeline operators that are entirely FERC-regulated (I know that both Boardwalk Pipeline — which I own — and El Paso Pipeline Partners are ineligible for Roth IRAs, but as far as I know that’s a FERC-specific issue in proving that tax is eventually paid on those distributions).

So there you have it — the two main A.O.P. investments that Badiali appears to be recommending in the MLP space this time around — and no, neither of these was on his list three or four years ago, if you’re curious about those “original” A.O.P. ideas you can always check out my older article here (those four picks from 2006 or 2007 have generally done well, though as a group they’ve probably been similar to the average MLP performance — unless you picked these on downward spikes they’re wealth builders and powerful compounders, not usually rocket stocks), and of course under “related articles” below you’ll see several other MLP-oriented articles, these tend to come up at least once a month or so.

The only general thoughts I’d share as you get started in your research are to look at how the MLPs you like might grow (ie, these days that mostly means they’re either an acquirer, or they’re serving the hot new exploration areas in some way, like shale gas), and make sure they’re generating enough free cash (or EBITDA, depending how you want to measure — it doesn’t have to be actual accounting income) so they don’t have to cut the distribution if things get ugly for a year (as happened in late 2008, precipitating the dips in most of these stocks — and the disappearance of the weakest ones). You might also, if you’re looking more closely, check on how the company’s pipes are regulated and their services priced — many pipelines, especially larger ones, tend to have pricing agreements set by regulators, like other utilities, and they tend to be consistently busy, the smaller or more regional gathering systems may be unregulated and possibly more subject to pricing pressures from time to time.

And, of course, there’s always risk — just ask Enbridge Energy Partners (EEP) about their major spill last week on the pipeline that transports Canadian oil to midwest refineries (though that’s of course quite minor compared to BP’s Gulf disaster, and didn’t seem to hit EEP’s unit price terribly hard, at least not yet).

Finally, I know I have lots of MLP-happy folks in the vast Stock Gumshoe readership, so feel free to share your thoughts about the best or worst MLPs out there, that’s why we’ve got the friendly little comment box below.

Full disclosure: as noted above, I do own shares of Boardwalk Pipeline Partners (BWP), but do not currently own any other Master Limited Partnership units named above (or any others, actually). I will not trade in any mentioned shares for at least three days.

Thursday, September 2, 2010

Chevron Witch Trials: "environmental justice" lawsuit being prosecuted against Chevron, by U.S. attorneys, in Ecuador

Now, before you think too much about silver, let's switch gears and return to a topic that I've discussed in previous OI updates, beginning exactly one year ago. It's what I call the Chevron Witch Trial, a so-called "environmental justice" lawsuit being prosecuted against Chevron, by U.S. attorneys, in Ecuador. Right now, the proposed damage award against Chevron is in the vicinity of $27 billion -- no typo, $27 billion.

Even though we don't hold Chevron in the OI model portfolio, I think the news I'm about to relate is very important to investors. It reflects on the kinds of obstacles that are out there, hindering energy development across this world.

The news in this update also offers a sobering lesson in how "lawfare" can come out of nowhere, let alone make its way through national-level court systems. That is, unscrupulous parties can engage in pure fraud, under color of judicial proceedings, and strike at any large, deep-pocketed resource company. As I'll describe below, this is not just my view. It's the finding of fact by a U.S. federal court.

Going Back to the Texaco Days

Here's a quick summary of what's happened so far. In the early 1990s, a U.S. lawyer from New York, named Steven Donziger, sued the former Texaco company in U.S. federal courts over alleged environmental contamination from oil operations in Ecuador.

Yes, Texaco operated in Ecuador, beginning in the 1960s. But starting in 1977, the Ecuadoreans began a systematic program to nationalize Texaco assets. By the early 1990s, Texaco was entirely out of Ecuador. Oil development in Ecuador, from 1977 through the 1980s and into the 1990s, was controlled by the state-owned oil company, Petro-Ecuador.

When Texaco finally withdrew from Ecuador, it made an agreement with Petro-Ecuador and the Ecuadorean government to remediate a portion of the list of old oil sites. Texaco cleaned up many former oil sites, and the balance of the oil sites were left for Petro-Ecuador to clean up.

Texaco kept up its part of the bargain, cleaned up the sites and even received a "release" of claims from the national government in Quito. But that didn't stop attorney Donziger -- fresh out of Harvard Law School, Class of 1991 -- from suing Texaco.

The "environmental justice" claim is a novel legal concept that they teach at enlightened places like Harvard. In this case, it's along the lines that Texaco's energy development adversely affected the Ecuadorean environment and local residents. After much preliminary litigation, the case was dismissed in the U.S. and re-filed in Ecuador.

Dealing With the Situation In Ecuador

Texaco merged with Chevron in 2001. Chevron then became the named defendant in the Ecuadorean lawsuit, even though Chevron never operated down there.

The details of the Ecuador lawsuit are technically complex, and very voluminous. I'll just summarize and note that the proceedings are ongoing, with hundreds of thousands of pages of exhibits and testimony. Litigating this case has pretty much "been" Mr. Donziger's entire legal career.

The long and short of it is that there are still many areas in Ecuador that are a huge mess from oil operations. But the source of the current environmental problem in Ecuador sure as heck isn't Chevron. Indeed, the problem appears to be the shoddy industrial practices of long-time domestic energy operator Petro-Ecuador.

What's the real problem? Well, for many years Petro-Ecuador has paid over the bulk of its operating capital to the government. Hence Petro-Ecuador has chronically under-invested in maintenance and safe operations.

Indeed, much of the "evidence" in the Ecuador trial displays problems that are recent, if not ongoing. That is, the damage occurred long after Texaco departed the scene, and is objectively and entirely attributable to Petro-Ecuador.

The Fake "Expert"

Well, now we're down in Ecuador, dealing with a species of patriotic emotion known as resource nationalism. It's hard for anyone -- especially an appointed judge -- to point the finger too close to home. After all, even Ecuadorean judges have to eat lunch.

So the judge passed the buck by naming a so-called "expert witness," Richard Cabrera, to advise the court on the scope of damages, injuries, and monetary claims.

Here's where things get really interesting. Turns out that this "expert witness," Mr. Cabrera, is a complete fake. At least, his "expert report" is a complete fake. How do we know?

For some strange reason, New York-licensed attorney Donziger allowed himself to be filmed by a documentary film-maker named Joe Berlinger. Mr. Berlinger was making a movie about environmental issues related to oil development. I suppose that Mr. Donziger wanted to be a movie star or something.

A couple months ago, Chevron obtained the out-takes of the movie -- the stuff that never made it past the cutting room floor. Here's what one of Mr. Berlinger's out-takes shows attorney Donziger saying about how he approaches his dealings with the Ecuadorean justice system:
"Hold on a second, you know, this is Ecuador. . . . You can say whatever you want and at the end of the day, there’s a thousand people around the courthouse, you’re going to get what you want. Sorry, but it’s true. ... Because at the end of the day, this is all for the Court just a bunch of smoke and mirrors and bullshit. It really is. We have enough, to get money, to win."
Whose "Expert" Report?

Oh really? I suppose that's what those pesky Rules of Ethics mean when they refer to an attorney's obligation of "candor towards the tribunal?" It's all "smoke and mirrors and bullshit," right?

Now, based on the movie out-takes, Chevron wants to depose a man in North Carolina named Charles Champ. Who's that? Well, he runs a small company called Champ Science and Engineering. And it turns out that Mr. Champ worked as an "environmental consultant" for attorney Donziger.

Oh, it gets much better. In the out-takes from the Berlinger film, Mr. Champ is shown as he discusses writing the "expert report" that Mr. Cabrera eventually submitted to the court. In other words, the evidence -- on film, no less -- indicates that attorney Donziger's "consultant," Mr. Champ, had a hand in ghost-writing the "expert" report submitted by Mr. Cabrera.

So much for an independent expert report, eh?

Opposing Deposing -- and a White Hot Federal Court Decision

Mr. Champ, as you might imagine, does NOT want to be deposed by Chevron. Must be some issue about either telling the truth, or possibly facing federal criminal charges for perjury. So Mr. Champ went to court in North Carolina to oppose the Chevron subpoena.

Last week, on August 27, the federal court in the Western District of North Carolina held a fact-hearing on the merits of Mr. Champ's objection to being deposed. Here's what the Honorable Dennis Howell, a U.S. Magistrate Judge wrote in his decision:
"As the court stated during the hearing, it was clear from the materials presented that Mr. Champ played a key supporting role in such plaintiffs’ efforts to write the court appointed independent expert’s report for him, masking his own opinions and any documents as those of the expert. Further, the court determined that Mr. Champ’s expertise, which appears to be remediation and the cost of clean up of oil spills, amount to shared expertise on what was likely the ultimate object of the litigation, an award of damages.
So here we have a federal judge, determining that the "expert report" in a $27 billion lawsuit was ghost-written, with the purpose of running up large damage claims against Chevron. Wow.

Somebody is in a LOT of trouble. Having spent many years of my life practicing law, including practice in U.S. federal courts, I have to say that I think this judge is kind of mad at Messrs. Champ and Donziger.

There's more. Indeed, the federal judge was just warming up. He continued:
"(It) is very clear from the words used by plaintiffs’ lawyer (Mr. Donziger) in the meeting - - some few weeks before the expert sitting in the room was in fact appointed by the court - - that Chevron did not know that the expert report was being ghostwritten by experts for the party opponent, that it would be important for no one at the meeting to tell Chevron that such had occurred, and, to the amusement of those in attendance at the meeting, Chevron would not realize what had happened to them with the independent report."
As findings of fact go in a federal court, I have a hard time putting any sort of "happy face" on this decision, towards the plaintiffs and their New York attorney Mr. Donziger.

"Bigger Problems Than An Oil Spill"

Really, how does one get out from behind this eight-ball? Mr. Donziger had better be talking with his malpractice insurance carrier, if not his favorite criminal defense counsel. Because the federal judge wasn't finished. Here goes:
"While this court is unfamiliar with the practices of the Ecuadorian judicial system, the court must believe that the concept of fraud is universal, and that what has blatantly occurred in this matter would in fact be considered fraud by any court. If such conduct does not amount to fraud in a particular country, then that country has bigger problems than an oil spill."
Hmmm... "What has blatantly occurred in this matter would in fact be considered fraud by any court." Can a federal judge be any more clear?

OK, if it's not clear, then maybe the judge made his point towards the end of the decision, when he ruled against any use of "attorney-client privilege" to stay proceedings during any appeal by Mr. Champ:
"(It) appears that any consulting expert privilege has been waived and that the crime-fraud exception prevents assertion of any other privilege by respondent, requiring the disclosures and testimony requested."
The "crime-fraud exception?" You don't really have to know the details of this concept, except maybe for your bar-exam. If you're interested, you can look it up.

The actions and issues in this matter probably rise to the level of an indictable federal offense. Bottom line is that none of this is good for either Mr. Champ, nor attorney Donziger, nor for their lawsuit against Chevron .

Still, despite this measure of justice for Chevron in a U.S. federal court, the California-based company is still in the crosshairs of the Ecuadorean judicial system. There's still $27 billion in play. That's the world in which we live.

And that's all for now. Thanks for reading. Have a good Labor Day weekend.

Byron W. King

P.S. As I mentioned in the article, plaintiffs' attorney Steven Donziger is a graduate of the Harvard Law School, Class of 1991. Coincidentally, one of Mr. Donziger's classmates was none other than Barack H. Obama, now President of the United States. Which goes to show that sometimes you can choose your President of the United States, but you can't choose your classmates.
Special Offer: Renew Your Commitment to Outstanding Investments Today
and Save 50%

Order Processing Center | Attn: Customer Service | P.O. Box 960 | Frederick, MD 21705 USA

Nothing in this post should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice.


We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.


©2010 Agora Financial, LLC. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This Newsletter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web) , in whole or in part, is strictly prohibited without the express written permission of Agora Financial, LLC. 808 Saint Paul Street, Baltimore MD 21202.

Oil platform explodes off La. coast; crew rescued

NEW ORLEANS, La. — An oil platform exploded and caught fire Thursday off the Louisiana coast, the second such disaster in the Gulf of Mexico in less than five months. All 13 crew members were rescued from the water in protective "Gumby suits."

The Coast Guard initially reported that an oil sheen a mile long and 100 feet wide had begun to spread from the site of the blast, about 200 miles west of the site of BP's massive spill. But hours later, Coast Guard Cmdr. Cheri Ben-Iesau said crews were unable to find any spill.

The company that owns the platform, Houston-based Mariner Energy, did not know what caused the blast.

Louisiana Gov. Bobby Jindal said Mariner officials told him there were seven active production wells on the platform, and they were shut down shortly after the fire broke out.

The Coast Guard said Mariner Energy reported the oil sheen. But the company said in a public statement that an initial flyover of the platform did not reveal any spilled oil.

Photos from the scene showed at least five ships floating near the platform. Three of them were shooting great plumes of water onto the machinery. Light smoke could be seen drifting across the deep blue waters of the gulf.

By late afternoon, the fire on the platform was out.

The platform is in about 340 feet of water and about 100 miles south of Louisiana's Vermilion Bay. Its location is considered shallow water, much less than the approximately 5,000 feet where BP's well spewed oil and gas for three months after the April rig explosion.

Responding to any oil spill in shallow water would be much easier than in deep water, where crews depend on remote-operated vehicles access equipment on the sea floor.

A homeland security update obtained by The Associated Press said the platform was producing 58,800 gallons of oil and 900,000 cubic feet of gas per day. The platform can store 4,200 gallons of oil.

White House press secretary Robert Gibbs said the administration has "response assets ready for deployment should we receive reports of pollution in the water."

Crew members were found floating in the water, huddled together in insulated survival outfits called "Gumby suits" for their resemblance to the cartoon character.

"These guys had the presence of mind, used their training to get into those Gumby suits before they entered the water," Coast Guard spokesman Chief Petty Officer John Edwards said.

The crew was being flown to a hospital in Houma. The Coast Guard said one person was injured, but the company said there were no injuries.

A company report said the well was drilled in the third quarter of 2008.

There are about 3,400 platforms operating in the Gulf, according to the American Petroleum Institute. Together they pump about a third of the America's domestic oil, forming the backbone of the country's petroleum industry.

Platforms are vastly different from oil rigs like the Deepwater Horizon. They are usually brought in after wells are already drilled and sealed.

"A production platform is much more stable," said Andy Radford, an API expert on offshore oil drilling. "On a drilling rig, you're actually drilling the well. You're cutting. You're pumping mud down the hole. You have a lot more activity on a drilling rig."

In contrast, platforms are usually placed atop stable wells where the oil is flowing at a predictable pressure, he said. A majority of platforms in the Gulf do not require crews on board.

Many platforms, especially those in shallower water, stand on legs that are drilled into the sea floor. Like a giant octopus, they spread numerous pipelines across the sea floor and can tap into many wells at once.

Platforms do not have blowout preventers, but they are usually equipped with a series of redundant valves that can shut off oil and gas at different points along the pipeline.

Numerous platforms were damaged during hurricanes Katrina and Rita. The storms broke pipelines and oil spilled into the Gulf. But the platforms successfully kept major spills from happening, Radford said.

"Those safety valves did their job," he said.

Federal authorities have cited Mariner Energy and related entities for 10 accidents in the Gulf of Mexico over the last four years, according to safety records from the Bureau of Ocean Energy Management, Regulation and Enforcement.

The accidents range from platform fires to pollution spills and a blowout, according to accident-investigation reports from the agency formerly known as the Minerals Management Service.

In 2007, welding sparks falling onto an oil storage tank caused a flash fire that slightly burned a contract worker. The Minerals Management Service issued a $35,000 fine.

Mariner Energy Inc. focuses on oil and gas exploration and production in the Gulf. In April, Apache Corp., another independent oil company, announced plans to buy Mariner in a cash-and-stock deal valued at $3.9 billion, including the assumption of about $1.2 billion of Mariner's debt. That deal is pending.

On Friday, BP was expected to begin the process of removing the cap and failed blowout preventer, another step toward completion of a relief well that would put a final seal on the well. The Deepwater Horizon exploded April 20, killing 11 people and setting off a three-month leak that totaled 206 million gallons of oil.

___

Associated Press writers Janet McConnaughey in New Orleans, Chris Kahn in New York, Eileen Sullivan, Matthew Daly and Gerry Bodlander in Washington, Garance Burke in Fresno, Calif., and researcher Monika Mathur in New York contributed to this report.