Varney claims “Chavez-like” escrow account will put “private assets” “under the control of politicians”

Varney: Plan amounts to “seizing private assets” and “hav[ing] the White House politicians run the money.” On the June 16 edition of Fox News' Fox & Friends, guest Stuart Varney claimed the plan to create an escrow account with BP money for gulf relief will "[t]ake the money right off BP And put in some kind of escrow account and have the White House politicians run the money. Taking -- I mean there's no better word for it. It is seizing private assets and sticking them under the control of politicians." Varney asked “who knows what they're going to spend that money on?” Varney also called the plan “Hugo Chavez-like, is it not, to seize a private company's assets.”

In fact, the account would reportedly be established through negotiations with BP and under Obama's proposal, would be managed by an independent, third party. A June 16 Bloomberg article reported that BP and the Obama administration were negotiating over the establishment of an escrow account for oil spill damages, but they “have failed” to come to an agreement. Bloomberg reported that the “two sides continue to negotiate over issues including the size of the fund, who would administer it and whether BP shareholders would have to approve the transfer of money required for the account, according to the people, who asked not to be identified describing the private talks.”

Obama: "[T]he account must and will be administered by an independent third party." In his June 15 Oval Office address, Obama demanded BP “set aside whatever resources are required to compensate the workers and business owners who have been harmed as a result of his company's recklessness.” He added: “And this fund will not be controlled by BP. In order to ensure that all legitimate claims are paid out in a fair and timely manner, the account must and will be administered by an independent third party.”

Senators call for account “administered by an independent trustee.” In a June 14 letter to BP, fifty-four Senators called for the account to be “administered by an independent trustee.” From their letter:

[O]n BP to immediately establish a special account of $20 billion, administered by an independent trustee, to be used for payment of economic damages and clean-up costs. Establishment of this account would serve as an act of good faith and as a first step towards ensuring that there will be no delay in payments or attempt to evade responsibility for damages. Although creating this account at this level in no way limits BP's liability, we believe it will do more to improve BP's public image than the costly public relations campaign your company has launched.

Politico: Account would be “administered by an independent third-party panel.” A June 13 Politico article reported that, according to a White House official, “Obama wants BP to set aside funds to pay damage claims, to be 'paid out under fair, efficient, and transparent procedures administered by an independent third-party panel established just for this purpose,' the official said.”

Reuters: “Obama also will call for an independent panel to administer the payments.” A June 13 Reuters article reported that in announcing his proposal, “Obama also will call for an independent panel to administer the payments.” From Reuters:

Obama also will call for an independent panel to administer the payments when he meets Chairman Carl-Henric Svanberg and other BP officials on Wednesday at the White House.

“We want to make sure that money is escrowed for the legitimate claims,” White House adviser David Axelrod told NBC's “Meet the Press,” adding that the money would be independently administered to ensure it is disbursed in a timely fashion.

Fifty-four Democratic Senators want BP to put an initial $20 billion payment into an independently-managed account to cover compensation for victims and for clean up.

Doocy, Varney blame “environmentalists” for deep-water drilling, when increase is actually due to region's large oil reserves

Doocy and Varney agree: “We know why they drill in the deep water, environmentalists pushed them out from the shallow water.” Co-host Steve Doocy claimed “We know why [oil companies] drill in the deep water, environmentalists pushed them out from the shallow water.” Varney agreed, “That's why we're not drilling in Alaska, not drilling in the shallow water. We've been pushed out in the deep water where it's difficult and dangerous.”

In fact, MMS reported that the “remarkable increase” in deep-water drilling due in part to “finding of reservoirs with high production wells.” According to the U.S. Department of the Interior's Minerals Management Service (MMS): “The deepwater portion of Gulf of Mexico has shown a remarkable increase in oil and gas exploration, development and production. In part this is due to the development of new technologies reducing operational costs and risks, as well as the finding of reservoirs with high production wells. ”

MMS report: “Best source of new domestic energy resources lies in the deep water Gulf of Mexico.” In a 2004 report -- titled Deep Water: Where the Energy Is -- the MMS stated that “our best source of new domestic energy resources lies in the deep water Gulf of Mexico and other frontier areas.” MMS reported that due to “declining production” in “near-shore, shallow waters” in the Gulf of Mexico, “energy companies have focused their attention on oil and gas resources in water depths of 1,000 feet and beyond.” MMS estimated that “the deep water regions of the Gulf of Mexico may contain 56 billion barrels of oil equivalent, or enough to meet U.S. demand for 7-1/2 years at current rates.”

MMS report: Deepwater drilling is “America's Offshore Energy Future,” “significant proved reserves” discovered in recent years. In a 2008 report titled "Deepwater Gulf of Mexico 2008: America's Offshore Energy Future," MMS reported:

The deepwater GOM has contributed major additions to the total reserves in the GOM.

Figure 40 shows the proved reserves added each year by water-depth category. Additions from the shallow waters of the GOM declined in recent years but, beginning in 1975, the deepwater area started contributing significant new reserves. Between 1975 and 1983, the majority of these additions were from discoveries in slightly more than 1,000 ft (305 m) of water. It was not until 1985 that major additions came from water depths greater than 1,500 ft (457 m). From 1998 to 2001, significant proved reserves were added in the 5,000- to 7,499-ft (1,524- to 2,286-m) water depth range. The year 2002 saw the first substantial addition from water depths greater than 7,500 ft (2,286 m).

From the MMS report:

NY Times: BP discovery of “giant oil field” in the deep waters of the Gulf of Mexico indicated area was “probably the most promising area in United States-controlled territory.” A September 2, 2009, New York Times article reported that “BP announced on Wednesday the discovery of what it characterized as a giant oil field several miles under the Gulf of Mexico,” which the Times stated “was another indication that the deep waters of the Gulf of Mexico are probably the most promising area in United States-controlled territory to bolster domestic oil production.” The Times further credited BP's deep-water rigs with having “stabilized domestic production after almost two decades of yearly decline.”

Top Chevron official: Deep-water drilling “hugely important,” to “global energy market.” On June 19, 2008, USA Today described deep-water oil fields as the “final frontier” of oil production. The article quoted Stephen Thurston, Chevron's vice president of deepwater exploration and projects, who stated, “The deep water has been, and really truly is, potentially the next wave of hydrocarbons into the global energy market. It's hugely important.” USA Today further reported:

Last year, 130 deepwater projects produced oil, up from 17 a decade earlier, according to Minerals Management Service, the Interior Department agency that leases offshore parcels.

By 2015, Chevron expects deepwater wells to account for one-quarter of offshore oil production vs. 9% today.

Much of the action now is in so-called ultra-deepwater fields beyond 5,000-foot depths. In 2003, Chevron drilled a record-setting well in 10,011 feet of water, and the San Ramon, Calif., oil giant has plans to go even deeper. It's leased two new drill ships from drilling contractor Transocean capable of reaching total well depths of 40,000 feet, including 12,000 feet of water. The first delivery is scheduled next year.

[...]

Almost one-third of the world's deepwater rigs are active in the Gulf. Many are prowling an ancient formation called the Lower Tertiary, which sprawls from Texas and Louisiana far offshore and could hold up to 2.8 billion barrels of hydrocarbons.

Chevron's Tahiti field, which the company announced as a major find in 2002, looks like one of the biggest discoveries in the region, potentially containing 400 million to 500 million barrels of oil. It is scheduled to begin producing 125,000 barrels a day next year.

Transocean issued a report in February 2010 showing “significant quarterly revenue” from its deepwater rigs. A May 27 backgrounder issued by the Council on Foreign Relations reported that in February, Transocean Ltd. -- which owned the Deepwater Horizon rig -- “posted significant quarterly revenue from its ultra-deepwater rigs, while revenue from its shallow-water rigs declined.” CFR further reported that “nearly half Transocean's shallow-water rigs have been idle, while its ultra-deepwater rigs were booked through the end of the year.” CFR credited the surge in deepwater drilling to the fact that it “just started becoming economically profitable and technically feasible on a large scale.”

Oil companies continue to drill in large portions of coastal and shallow waters

Wash. Post reported that shallow-water drilling permits were issued before and after the Deepwater Horizon incident. Contrary to Doocy and Varney's suggestion that oil companies are “not drilling in the shallow water,” a June 3 Washington Post article quoted an Interior Secretary spokesman as explicitly stating that “there is no moratorium on shallow water drilling.” The article explained according to Jim Noe, the general counsel for “Hercules, the largest operator of shallow water jack rigs in the Gulf,” “there are more than 40 rigs drilling in shallow water in the Gulf of Mexico.” Additionally Noe noted that "[o]ver 46,000 wells have been drilled in the Gulf of Mexico offshore in less than 1,000 feet of water since 1949."

MMS: There are 3,417 active shallow-water platforms in the Gulf of Mexico. The “Frequently Asked Questions” section of the MMS website notes that “the only remaining OCS area off-limits is currently the Eastern Gulf of Mexico within 125 miles of Florida, off the coast of Alabama, and a portion of the Central Gulf within 100 miles of Florida.” A map (detail) of active offshore drilling leases shows extensive activity on the coasts of Texas, Louisiana, Mississippi, Alabama, and parts of Florida. Additionally, MMS data shows that there are 3,417 active platforms operating at depths of less than 1,000 feet, whereas there are only 25 active platforms operating at water depths of more than 1,000 feet.