Monthly Archives: August 2010

Cities line up against CenterPoint rate increase

A number of area cities are resisting a proposed $94??million CenterPoint Energy rate hike request that the utility estimates would add about 5 percent to residential utility bills.

The state Public Utility Commission has the final say on the rate request, but votes against it by the governments of cities affected require the PUC to hold hearings, now scheduled for October unless the cities and company reach a settlement before then.

The commission has until Jan. 1 to issue its final order.

Nineteen area cities have voted against the rate increase. Houston has held two hearings for public comment. City officials continue to request and review information from the company and will hear more public comment during a City Council meeting Sept. 29, city spokesman Chris Newport said.

Under the new rates, the city’s own electric bill would increase $7 million for street lights alone, he said.

CenterPoint operates the poles and lines that transmit electricity to more than 2 million Houston-area customers, regardless of what retail company sells them their electricity. The regulated monopoly charges retailers for transmitting power, and they decide how much of it to pass along to customers in the competitive retail electricity market.

CenterPoint’s request would increase monthly bills about 5 percent, or $5.53, for residential consumers using 1,000 kilowatt-hours per month at a retail rate of 11 cents.

The proposed $94 million overall increase includes $76 million for delivering retail power and $18 million for wholesale transmission.

The company says it needs the rate increase to recover its costs.

Since it last changed its rates in 2006, CenterPoint says, it has spent $1.5 billion on new poles and lines to keep up with growth, maintain service and restore power after outages. It has strung more than 1,000 miles of overhead and underground power lines, and added 150,000 customers, spokesman Floyd LeBlanc said.

“So we’ve been spending a lot of money, and Joe and Jane Q. Public don’t think about that,” LeBlanc said.

CenterPoint’s rates have been frozen since a 2006 rate case settlement lowered the base fee it charges to retailers and wholesale customers by $58 million. The settlement called for CenterPoint to file a new rate proposal at the end of four years, which it did June 30.

The rate hike doesn’t account for debt service on bonds the company issued to pay for $643 million in costs it incurred to restore power after Hurricane Ike in 2008. Those expenses are being recovered through a separate monthly charge of $1.04 for 13 years on customer bills, again assuming 1,000 kwh of monthly usage.

The increase also doesn’t include the costs of smart meters and a smart grid that will provide customers and utilities more detailed information about electricity use. A $3.24 monthly surcharge for those upgrades began in February. Next year that charge will drop to $3.05 for four more years.

The surcharge would have continued through 2020, but the company’s recent rate request proposes ending that charge in 2014 because the company received $200 million in federal stimulus funds for the project this year.

A separate rate increase effective today covers fees CenterPoint pays to the Electric Reliability Council of Texas, which operates the state’s transmission grid. The new rate will increase average customer bills for 1,000 kwh by 29 cents a month, according to CenterPoint.

purva.patel@chron.com

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Houston Democrat Gene Green challenges delays on shallow water drilling

A bipartisan group of 37 House members led by Houston Democrat Gene Green and Louisiana Republican Charles Boustany is asking the Obama administration for the second time in three months to issue new permits for shallow water energy exploration in the …  More »

Joint venture to fund Bangladeshi refinery expansion

August 31,2010 –A Saudi investment group has joined a Bangladeshi industrial conglomerate to invest nearly $1 billion in an expansion of Bangladesh’s only refinery…..  More »

Joint venture to fund Bangladeshi refinery expansion

August 31,2010 –A Saudi investment group has joined a Bangladeshi industrial conglomerate to invest nearly $1 billion in an expansion of Bangladesh’s only refinery…..  More »

Joint venture to fund Bangladeshi refinery expansion

August 31,2010 –A Saudi investment group has joined a Bangladeshi industrial conglomerate to invest nearly $1 billion in an expansion of Bangladesh’s only refinery…..  More »

Joint venture to fund Bangladeshi refinery expansion

August 31,2010 –A Saudi investment group has joined a Bangladeshi industrial conglomerate to invest nearly $1 billion in an expansion of Bangladesh’s only refinery…..  More »

MTS Houston to host Gulfstream presentation

August 31,2010 –The next MTS Houston Section luncheon will be held on September 23, 2010, and will feature a presentation by Michael Kologinczak, Senior Engineer with Williams on the Gulfstream Natural Gas System…..  More »

Bayerngas lines up North Sea farm-ins

August 31,2010 –Bayerngas UK is set to acquire interests in two gas field projects in the UK southern North Sea…..  More »

Rule aims to cut down on revolving door between drilling inspectors, industry

The Obama administration just imposed a first-of-its-kind recusal policy on federal drilling regulators in a bid to put greater distance between inspectors and the offshore platforms and rigs they police.  More »

Houston Democrat Gene Green challenges delays on shallow-water drilling

A bipartisan group of 37 House members led by Houston Democrat Gene Green and Louisiana Republican Charles Boustany is asking the Obama administration for the second time in three months to issue new permits for shallow water energy exploration in the Gulf of Mexico.  More »

UH to host oil spill symposium

August 30,2010 –The University of Houston’s Center for Public History and Centers for Energy Management and Policy will hold an oil spill symposium on September 23rd, at the Hilton Hotel on the university’s main campus…..  More »

EPA regulation of greenhouse gases: Survey says ‘yes’

Most voters want the U.S. to regulate greenhouse gases blamed for global warming. They also say the government needs to do more to crack down on companies that pollute, according to a new survey done for the Natural Resources Defense Council’s Action Fund. The poll revealed that 60 percent of voters surveyed over five days […]  More »

Beibu Gulf development clears hurdle

August 30,2010 –Roc Oil (China) and its partners in the Beibu Gulf project joint venture have signed a Supplemental Development Agreement (SDA) with CNOOC for an oilfield program offshore China…..  More »

BP engineer defends decision on cement job

A BP drilling engineer said Friday he doesn’t believe a much-scrutinized decision about the Macondo well’s cement job posed a threat to the safety of the crew aboard the Deepwater Horizon rig.

During testimony before an investigatory panel, Brett Cocales said the fact that the well had been drilled straight figured in the decision to use six devices to center its pipelike production casing instead of 21.

“It’s one of the straightest holes I’ve seen, actually,” Cocales told the joint investigative panel of the Coast Guard and the Interior Department’s Bureau of Ocean Energy Management, Regulation and Enforcement, which held public hearings in Houston all week.

It is investigating the April 20 blowout that killed 11 workers on the Deepwater Horizon and triggered a huge oil spill in the Gulf of Mexico.

The hearings will resume Oct. 4, either in Houston or New Orleans, where the panel took three previous rounds of testimony.

According to earlier testimony, Halliburton Co. workers warned BP engineers five days before the blowout about the potential for a “severe gas flow problem” in the well if the additional centralizers were not added.

But Cocales and several other BP engineers have said they did not see such a warning in any reports.

In an April 16 e-mail, Cocales had downplayed the risk of sticking with the six centralizers already installed, writing “who cares, it’s done, end of story, will probably be fine.”

During testimony Friday he characterized that as an expression of his frustration over days of back-and-forth discussion about the centralizer issue.

“It was about, it’s time to stop debating what the model says,” he told the panel, because his supervisor — John Guide – already had made the decision.

Under questioning by his lawyer, Philip Hilder, Cocales also countered an assertion during testimony earlier in the week by Halliburton cementer Jesse Gagliano, who said he recommended 21 centralizers.

Cocales said that figure was used in a computer model of cementing plans because there were already six centralizers on the rig and BP could only get another 15 out to the rig in short order.

‘Pros and cons’

Hilder also asked Cocales about a comment he made in one of his e-mails about the “risk/reward” balance between going with 21 centralizers versus six.

Congressional investigators have suggested the decision may have been motivated by BP’s desire to finish a well that was weeks behind schedule and millions of dollars over budget.

“It is a term that refers to economics?” Hilder asked.

No, Cocales said. “It’s a term I’ve used for years, saying what are the pros and cons of a decision.”

Fifth Amendment

Also on Friday, a third BP engineer declined to testify. Through his lawyer, Mitch Lansden, drilling engineer Mark Hafle invoked his Fifth Amendment right against self-incrimination.

Two other engineers previously have invoked the Fifth Amendment in declining to appear before the panel.

“Mark Hafle is an honorable and decent man and a fine engineer. He has done nothing wrong,” Lansden said.

“I have advised him to exercise his constitutional rights to decline to answer questions at this particular hearing at this particular time as the most reasonable legal strategy given the number, variety and complexity of ongoing investigations.”

BP said in a statement it is continuing to cooperate in the investigation and that workers’ decisions not to testify were made on their own.

Some observers had expected Cocales to decline to testify as well, but Hilder said his client felt the need to straighten out misconceptions.

‘A risk to testifying’

“His e-mail was liberally used in congressional hearings to put his actions in a negative light,” Hilder said after the hearing.

“I know there’s always a risk to testifying and there was a lot of anxiety before the hearing, but I think the committee heard his explanation,” he said.

Thanks for showing up

Coast Guard Capt. Hung Nguyen, co-chairman of the investigating board, thanked Cocales for testifying.

“You’re a very brave man for showing up today,” Nguyen said.

Sharon Hong contributed to this report.

tom.fowler@chron.com brett.clanton@chron.com

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Temporary cap will be removed

NEW ORLEANS — Engineers will soon start the delicate work of detaching the temporary cap that stopped oil from gushing from BP’s blown-out Gulf of Mexico well and the hulking device that failed to prevent the leak – all while trying to avoid more damage to the environment.

Retired Coast Guard Adm. Thad Allen, the government’s point man for the spill response, said Friday that engineers will remove the cap starting Monday so they can raise the failed blowout preventer. The blowout preventer is considered a key piece of evidence in determining what caused the April rig explosion that unleashed the gushing oil.

The leak was first contained when engineers were able to place a cap atop BP’s well. Workers then pumped mud and cement in through the top in a so-called “static kill” operation that significantly reduced pressure inside the well.

Officials don’t expect oil to leak into the sea again when the cap is removed, but Allen has ordered BP to be ready to collect any leaking crude just in case.

The Department of Justice and other federal investigators are overseeing the work to remove the blowout preventer, Allen said. The 50-foot, 600,000-pound device – which was designed to prevent such a catastrophe – will be taken out of the water with the well pipe still inside to ensure the pipe doesn’t break apart any more than it already has.

Keeping the blowout preventer intact is important because it’s considered an essential piece of evidence in determining what caused the blast aboard the Deepwater Horizon on April 20. The explosion killed 11 workers.

Work to lift the blowout preventer is extremely difficult and delicate – all happening a mile underwater.

A new blowout preventer will be placed atop the well once the one that failed is raised. After that, the goal is to drill the final 50 feet of a relief well beginning Sept. 7, which will take about four days, Allen said.

The relief well has been called the ultimate solution to plugging the well that blew out. Once the relief well is drilled, engineers will be able to pump in mud and cement to permanently plug the well that gushed oil.

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