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Jerry Patterson, commissioner of the land office that oversees oil leases that help fund Texas schools, asked the Texas Railroad Commission to conduct hearings into an alleged 1990s program at Exxon Mobil of plugging abandoned wells with trash, sludge, explosives and cement plugs. The barriers made it impossible for other producers to revive the wells, Patterson said in a statement he gave to Bloomberg News yesterday.

Under Railroad Commission rules, Exxon Mobil could face fines of $10,000 a day per well, Patterson said in the statement, which he plans to release on Monday. He said those penalties could add up to more than $1 billion on wells the company abandoned in 1991 after a disagreement over royalties with the owners, the O’Connor family, a Texas oil dynasty.

Margaret Ross, an Exxon Mobil spokeswoman, said, “The area in which the wells are located has a water table very close to the surface. It was critical that Exxon protect the groundwater by plugging the wells solidly and thoroughly.”

In March, the Texas Supreme Court dismissed lawsuits against Irving, Texas-based Exxon Mobil for damaging the wells, ruling that too much time had passed. O’Connor heirs and Emerald Oil & Gas Co., which took over some of the former Exxon Mobil leases, were plaintiffs in the suits.

‘Flagrant Violations’ Alleged

“Exxon committed irrefutable, intentional and flagrant violations of state rules regulating the oilfield,” Patterson said in the statement. “The senseless waste of our natural resources, the sabotage of a producing oilfield and cover-up by Exxon is a malicious act that must be dealt with by the state of Texas.”

The Railroad Commission in Austin hasn’t decided whether to hold hearings on the well closings, said Ramona Nye, a spokeswoman for the agency. The three commissioners are next scheduled to meet on July 21. Nye confirmed the agency has the authority to fine companies $10,000 a day for improperly plugging an old well.

The 118-year-old commission has been responsible for regulating oil production in the state since the 1930s, when rampant drilling caused a supply glut that collapsed crude prices, according to the Texas State Historical Association.

From the 1950s to the late 1980s, the O’Connors earned more than $40 million in royalties on crude and gas pumped from 121 wells that Exxon Corp., as the company was then known, and a predecessor, Humble Oil & Refining Co., drilled on the family’s land near Corpus Christi, according to court filings.

Royalty Dispute

The relationship between Exxon and the family deteriorated in the late 1980s, when the company’s request for a reduction in the 50 percent royalty rate was rebuffed, court documents showed. Exxon said the field was no longer profitable and began shutting wells, a process that concluded in August 1991, the documents showed.

Two years later, Emerald Oil, a closely held energy company based in Refugio, Texas, agreed to lease from the O’Connors one- third of the area formerly operated by Exxon. When Emerald drilled into the plugged wells to revive production, drill bits collided with cement, severed pipes and explosive charges normally used to perforate rock formations, Patterson said.

Exxon failed to accurately describe the obstacles it dumped into the wells in reports known as W-3s that it filed with the Railroad Commission, Patterson said in a July 15 letter to the Railroad Commission. Those reports gave Emerald a false picture of how difficult and costly it was going to be to resurrect crude output, he said.

“You don’t foul your own nest,” Patterson said. “And that is exactly what Exxon has done.”

Resource Issue

The 62-year-old Patterson, a former U.S. Marine Corps fighter pilot, said he’s trying to maximize royalty payments to the state’s Permanent School Fund by encouraging more petroleum production.

“This isn’t coming from a Birkenstock-wearing environmentalist,” Jim Suydman, a Patterson spokesman, said in a telephone interview. “He’s a gun-toting Republican who wants to make sure the rules are followed and the state’s natural resources are properly developed.”

Exxon Mobil, which pumps more oil than every member of the Organization of Petroleum Exporting Countries except Saudi Arabia and Iran, posted a record $45.2 billion profit in 2008, or more than $6 for every man, woman and child on the planet.

The company has been shifting its exploration and production focus for more than a decade from traditional oil provinces such as Texas and the North Sea to places such as West Africa and Brazil, where the prospective discoveries are larger.

Making his first appearance on Capitol Hill since leaving office, the former Treasury secretary Hank Paulson said it was important at the time not to reveal the extent of officials’ concerns, for fear it would “terrify the American people and lead to an even bigger problem”.

Mr Paulson testified to the House Oversight Committee on the Bush administration’s unpopular $700bn (£426bn) bailout of Wall Street, which was triggered by the failure of Lehman Brothers last September. In the days that followed, a run on some of the safest investment vehicles in the financial markets threatened to make it impossible for people to access their savings.

Paul Kanjorski, a Pennsylvania Democrat, asked Mr Paulson to reveal details of officials’ concerns, which were relayed to Congress in hasty conference calls last year. The calls included discussion of law and order and whether it would be possible to feed the American people, and for how long, according to Mr Kanjorski.

“In a world where information can flow, money can move with the speed of light electronically, I looked at the ripple effect, and looked at when a financial system fails, a whole country’s economic system can fail,” Mr Paulson said. “I believe we could have gone back to the sorts of situations we saw in the Depression. I try not to use hyperbole. It’s impossible to prove now since it didn’t happen.”

The Oversight committee is investigating the takeover of Merrill Lynch by Bank of America, a deal forged in the desperate weekend that Lehman Brothers failed, and which later required government support because of Merrill’s spiralling losses.

One Swiss bank, earlier this year, reported that it was having to relocate some of its stored silver bullion to another site to make room for gold. The Zurich Kantonal bank put this down to the success of its gold ETF.

The website reports another Swiss investment banker despairing “We have the need to store more gold for our clients but are finding it difficult to find secure storage facilities”. Gold storage makes high demands on security which is what is making the gold holding task more difficult. Few banks will divulge exactly where their gold is stored for security reasons.

Another banker reported that his bank still had space but that it is beginning to run out.

Some of the problems are being handled by improving the storage systems in existing space. As one banker commented “A 12.5 kilo gold bar only occupies about the same amount of space as a tetrapak of milk”.

“We can’t even cover our courtrooms anymore,” Worthy said in vehemently disagreeing with the $28-million general fund budget proposed for the prosecutor’s office by Wayne County Executive Robert Ficano. “At some point, if the budget continues to be cut, we’re going to have to start making decisions about what crimes we prosecute.”

“And folks look, AARP knows and the people with me here today know, the president knows, and I know, that the status quo is simply not acceptable,” Biden said at the event on Thursday in Alexandria, Va. “It’s totally unacceptable. And it’s completely unsustainable. Even if we wanted to keep it the way we have it now. It can’t do it financially.”

“We’re going to go bankrupt as a nation,” Biden said.

…

It looks to be a stringy batch of algae. Not bunker oil seeping from an aging, sunken ship. Not a sea monster.

“We got the results back from the lab today,” said Ed Meggert of the Department of Environmental Conservation in Fairbanks. “It was marine algae.”

…

Terry Whitledge is director of the Institute of Marine Science at the University of Alaska Fairbanks. He hasn’t had a chance to look at the DEC’s sample yet, but a friend with the National Oceanic and Atmospheric Administration e-mailed him a picture of the gunk.

Hunters from Wainwright first started noticing the stuff sometime probably early last week. It’s thick and dark and “gooey” and is drifting for miles in the cold Arctic waters, according to Gordon Brower with the North Slope Borough’s Planning and Community Services Department.

Brower and other borough officials, joined by the U.S. Coast Guard, flew out to Wainwright to investigate. The agencies found “globs” of the stuff floating miles offshore Friday and collected samples for testing.

Later, Brower said, the North Slope team in a borough helicopter spotted a long strand of the stuff and followed it for about 15 miles, shooting video from the air.

The next day the floating substance arrived offshore from Barrow, about 90 miles east of Wainwright, and borough officials went out in boats, collected more samples and sent them off for testing too.

Nobody knows for sure what the gunk is, but Petty Officer 1st Class Terry Hasenauer says the Coast Guard is sure what it is not.

“It’s certainly biological,” Hasenauer said. “It’s definitely not an oil product of any kind. It has no characteristics of an oil, or a hazardous substance, for that matter.

“It’s definitely, by the smell and the makeup of it, it’s some sort of naturally occurring organic or otherwise marine organism.”

Something else: No one in Barrow or Wainwright can remember seeing anything like this before, Brower said.

“That’s one of the reasons we went out, because in recent history I don’t think we’ve seen anything like this,” he said. “Maybe inside lakes or in stagnant water or something, but not (in the ocean) that we could recall …

“If it was something we’d seen before, we’d be able to say something about it. But we haven’t …which prompted concerns from the local hunters and whaling captains.”

The stuff is “gooey” and looks dark against the bright white ice floating in the Arctic Ocean, Brower said.

“It’s pitch black when it hits ice and it kind of discolors the ice and hangs off of it,” Brower said. He saw some jellyfish tangled up in the stuff, and someone turned in what was left of a dead goose — just bones and feathers — to the borough’s wildlife department.

“It kind of has an odor; I can’t describe it,” he said.

Hasenauer said he hasn’t heard any reports of waterfowl or marine animals turning up.

Brower said it wouldn’t necessarily surprise him if the substance turns out to be some sort of naturally occurring phenomenon, but the borough is waiting until it gets the analysis back from the samples before officials say anything more than they’re not sure what it is.

“From the air it looks brownish with some sheen, but when you get close and put it up on the ice and in the bucket, it’s kind of blackish stuff … (and) has hairy strands on it.”

Hasenauer said the Coast Guard’s samples are being analyzed in Anchorage. Results may be back sometime next week, he said.

The two Coast Guard experts sent up to overfly the area with the borough said they saw nothing that resembled an oil slick, Hasenauer said.

“We brought back one sample of what they believe to be an algae,” he said, and a big algae bloom is one possibility.

“It’s textbook for us to consider algae because of all the false reports of oil spills we’ve had in the past. It’s one of the things that typically comes up” when a report turns out not to be an oil spill after all.

But, he said, “there’s all types of natural phenomena that it could be.”

Meanwhile, the brownish-blackish gunk is drifting along the coast to the northeast, Brower said.

“This stuff is moving with the current,” he said. “It’s now on beyond Barrow and probably going north at this point. And people are still encountering it out here off Barrow.”

For the most part, the mystery substance seems to have stayed away from shore.

The Treasury Department said Thursday that foreigners actually sold $19.8 billion more long-term U.S. securities than they purchased in May. That compared with net purchases of $11.5 billion in April.

China, the largest foreign holder of U.S. Treasury securities, bucked that trend. Its holdings rose to $801.5 billion, an increase of 5 percent from $763.5 billion in April.

…

Foreigners last sold more long-term U.S. securities than they purchased, $36.8 billion worth, in January.

Japan, the second largest foreign owner of Treasury securities, trimmed its holdings 1.3 percent to $677.2 billion in May, from $685.9 billion in April.

Russia cut holdings even more sharply, reducing them 9.1 percent to $124.5 billion in May from April.

Oil exporting countries, another large holder of Treasury securities, boosted their holdings by 1.8 percent to $192.9 billion.

The extreme measure is the latest in South Africa’s escalating war against armed robbers who target banks and cash delivery vans. The number of cash machines blown up with explosives has risen from 54 in 2006 to 387 in 2007 and nearly 500 last year.

The technology uses cameras to detect people tampering with the card slots. Another machine then ejects pepper spray to stun the culprit while police response teams race to the scene.

But the mechanism backfired in one incident last week when pepper spray was inadvertently inhaled by three technicians who required treatment from paramedics.

Patrick Wadula, spokesman for the Absa bank, which is piloting the scheme, told the Mail & Guardian Online: “During a routine maintenance check at an Absa ATM in Fish Hoek, the pepper spray device was accidentally activated.

“At the time there were no customers using the ATM. However, the spray spread into the shopping centre where the ATMs are situated.”

In conjunction with the police, Absa is using the technology at 11 sites, identified as high-risk by branch managers.

Rarely disclosed publicly, the so-called memorandum of understanding (MOU) gives banks a chance to work out their problems without the glare of outside attention, the paper said.

Financial institutions that fail to address deficiencies can be slapped with harsher penalties that include a publicly announced cease-and-desist order, the newspaper said.

According to the paper, the order was imposed in early May, shortly after shareholders of the bank stripped Chief Executive Kenneth Lewis of his duties as chairman.

The MOU is the most serious procedural action taken against Bank Of America by federal regulators since the financial crisis erupted, the newspaper said.

The report said the MOU surprised some Bank Of America executives who had not expected federal regulators to issue such a formal rebuke. It said the bank responded swiftly with six directors resigning since May 26.

Bank of America faces a series of deadlines, some at the end of July and others in August, the paper said.

Corporate policies prevented him from buying local products, he says, so he joined forces with four other former Sobeys franchisees and formed the independent Hometown Grocers Co-Op.

“We feel that local food, local presence is huge in our market and we wanted to take advantage of that,” Kropf says.

Canadians are increasingly subscribing to the “buy local” and “100 mile diet” philosophies due to concerns over imported food, Kropf adds. “The pressure was always mounting — the more recalls, the more bad press from China or wherever the product was coming from. I know that in our case, our private label pickles are made in Indonesia. I couldn’t believe that.”

As a franchisee for a large grocery chain, Kropf says, corporate policies stipulating that he only buy federally inspected meat prevented him from stocking local products. Most federally inspected meat in Canada comes from large corporations such as Maple Leaf, Cargill and Tyson.

“Most of our beef was Alberta beef. Chicken and pork could be U.S., so to me, that was a concern that, you know, we’ve got all these farmers in our back yard,” Kropf says.

The nine stores have retained their wholesale relationship with Sobeys for items such as dog food, spices and breakfast cereals, but the chilled meat section of Kropf’s store in Elora, Ont., is now stacked high with fresh pork, chicken and beef that comes from no farther than 60 kilometres away.

The stores are located in southern Ontario communities such as Arthur, Durham, Lucknow and Palmerston.