Tuesday, September 19, 2006

Back To The Salt Mines, Baby

The world is waiting with bated breath for the fall of ERHC Energy. And waiting. And waiting. And waiting.

The Houston Chronicle's David Ivanovich, the Washington-based investigative reporter who at my suggestion did the front-page above-the-fold article in February 2005 that nearly doubled the company's share price, has returned with another dramatic headline but a disappointingly insipid story that basically restates everything the New Orlean Times-Picayune reported earlier this year, adding some of the stuff gathered by Harper's Ken Silverstein, and reports once again that no one has any evidence that ERHC Energy ever did anything wrong unless it was to beat ExxonMobil, Chevron and Anadarko out of many billions of barrels of oil by being there first and riding a maelstrom all the way to strong equity positions in the Gulf of Guinea's Joint Development Zone - which ERHC Energy CEO Sir Emerka Offor was largely responsible for creating.

Offor's real error was in not getting out when he was offered a trifle for the company and instead stayed in the game all the way through the phony Sao Tome Attorney General's probe of the company, which halved the share price bur had no effect at all on revenues.

Because Ivanovich is actually a capable investigator, it is profoundly surprising that his editors let him risk his reputation by reporting thrice-reported gossip as a new drama.

What has happened, clearly, is that Exxon and Chevron, Houston power players, conned the paper into publishing a story to keep the ERHC non-scandal alive at a time when it appears that all the FBI and a Washington-based U.S. Atty. has on them is a folder of news clippings marked "William Jefferson."

Ivanovich probably feels like an idiot today, and it will only get worse when no indictments of ERHC are handed down by the Jefferson Federal grand jury.

All of the players except the U.S. Atty. are conveniently ignoring key parts of this story: 1) that whatever the involvement of Phil Nugent, Sr., Noreen Wilson and others with the company, it was a long, long time ago; 2) that Nigeria and Sao Tome have both formally rejected the Sao Tome Atty. General's report on ERHC; 3) that LETH, later known as GEEC and now GEECF, had no relationship with ERHC, and that Nugent and Wilson were investors in LETH and GEEC at least four years after they left ERHC; and 4) that the real story is how oil giants are manipulating the Bush Administration behind the scenes, probably through the husband of Senate Energy Counsel Judy Pensabene, Greg Pensabene, who is Anadarko's VP for Governmental Affairs and with his wife is a close friend and former student of the author of the Sao Tome probe report, a Tulsa law professor whose work was paid for by ERHC's erstwhile partner, Pioneer shareholder George Soros, through donations to the Senior Lawyers Project, which approached the Sao Tome Atty. General, Arlindho Pereira, to do the probe after ERHC walked away with Exxon and Anadarko's multi-billion dollar marbles in three blocks of the Joint Development Zone. The real story is that there is no story, and the majors really need there to be a story and a scandal if they are to capture ERHC's rights without paying good money for them.

Absent that information, the story is yet another example of how Big Oil can call the shots at this nation's major news organizations with complete impunity, whether there are any facts and evidence to back up their smear campaigns or not.
Meanwhile, what's happening with the bribery investigation by Sen. Ted Stevens' Senate Commerce Committee against Exxon, Chevron, Pioneer, Marathon and others in Equatorial Guinea? Complete silence, please, for another few years.

Here's the gossip from the Chronicle, to their shame:

Sept. 18, 2006, 1:28PM
Small Houston oil company at the center of global drama
ERHC's story becomes oddly intertwined with FBI bribery probe

Copyright 2006 Houston Chronicle Washington Bureau

WASHINGTON - Initially, theirs was a tale to rival that of any legendary Texas wildcatter.

A little-known Houston oil company lands a potential blockbuster deal in the crude-rich waters off West Africa and appears poised for a big payoff.

Negotiating the rocky shoals of West African politics and threats of arrest for sedition, ERHC Energy, a tiny company with no experience in offshore drilling, secures the rights from the government of Sao Tome and Principe to explore a stretch of the Gulf of Guinea thought to hold up to 14 billion barrels of crude.

Then the FBI barges in.

And suddenly, this obscure company's story becomes oddly interwoven with one of Washington's biggest scandals, a bribery probe targeting a Louisiana congressman.

Nine years after wading out to Sao Tome to make its fortune, ERHC — with just two employees — has yet to sink a well. Whether it ever will remains uncertain.

ERHC's legal troubles came to light in May, when FBI agents, clad in bulletproof vests carted off 118 boxes of documents from the company's Westheimer offices. The government was investigating possible "things of value" paid to officials in Nigeria and the tiny island-nation of Sao Tome, according to an FBI affidavit filed in U.S. District Court in Houston.

The FBI has not revealed what information sparked the raid or exactly how all the players in this story might be connected.

To ferret out the truth, investigators will likely be examining a bizarre thread linking an elusive Nigerian billionaire, a polygamous Nigerian politician and Rep. William Jefferson, the New Orleans Democrat recently made infamous for allegedly stashing $90,000 in possible bribe money in his freezer.

Stormy relations
ERHC achieved its enviable position — at least in part — by approaching Sao Tome long before most other companies took notice of the former Portuguese colony.

Dealing with a government little acquainted with the world of oil, the company negotiated a highly advantageous deal in 1997.

But the negotiations, and relations with the government, proved stormy. ERHC was forced to renegotiate the terms of its agreement, not once but twice.

At one point, former ERHC Chief Executive Officer Geoffrey Tirman went on Sao Tomean television and accused government officials of corruption, only to have to flee to the airport to avoid charges of sedition.

The company's prospects appeared bleak.

Strategy paid off
Enter Emeka Offor, or "Sir Emeka Offor" as he is styled, a wealthy Nigerian businessman known to have close ties with both Nigeria's late dictator, Gen. Sani Abacha, as well as the country's current vice president and presidential candidate, Atiku Abubakar.

Hoping to interest him in the fate of ERHC, Phil H. Nugent, a Houston energy consultant and major ERHC investor, sought Offor out.

"He had his politics covered," Nugent said in an interview.

Nugent's strategy paid off. Offor proved instrumental in pushing Nigeria and Sao Tome to resolve a long-running border dispute and create an offshore development zone, where international oil companies could bid for the rights to drill.

ERHC's contract with Sao Tome gave it preferential rights in this new Joint Development Zone. In early 2001, as the two countries were creating the joint development area, Offor's company Chrome Energy bought a controlling stake in ERHC.

Despite the company's lack of experience, U.S. producers Pioneer Natural Resources, Devon Energy Corp. and Noble Energy teamed up with the company to explore offshore.

Then, things fell apart.

The company's American partners withdrew.

In November, its independent auditor, Pannell Kerr Forster of Texas, resigned. "No reason for the resignation was specified," ERHC said at the time.

A few weeks later, Sao Tome's then-Attorney General Adelino Pereira called on U.S. officials to investigate ERHC's dealings in the region.

Suggestions of impropriety
"At every stage," the attorney general said in a report, are suggestions ERHC and Offor "may have made improper payments to government officials."

The report cited a $100,000 payment Offor's Chrome made to a company controlled by Sao Tomean President Fradique de Menezes, and the role of Foreign Minister Mateus "Nando" Rita played helping to renegotiate ERHC's contract while also holding 500,000 shares of company stock.

Daniel Keeney, an outside public relations consultant acting as spokesman for the company, said, "We care about perceptions of ERHC Energy, and we have been working to fully understand any concerns expressed about our activities in the Joint Development Zone."

In January, ERHC Chief Executive Ali Memon resigned. Six months later, his successor, Walter Brandhuber, would follow him out the door. Company officials said Brandhuber's departure was not related to the ERHC investigation.

The company's chief financial officer, Franklin Ihekwoaba, also stepped down, acknowledging "he should not have used the designation 'CPA',"as he had been doing on company records.

ERHC was able to rebound, announcing new deals with Swiss firm Addax Petroleumand — in February — with China's Sinopec Corp. to replace its former American partners.

Within weeks of the Sinopec deal, the company's stock price doubled, and things were looking up.

FBI sought documents
On May 4, more than a dozen FBI agents swarmed into the company's Westheimer offices.

Investigators were looking for records pertaining to ERHC's negotiations with Nigerian and Sao Tomean officials, the FBI said in an affidavit.

They wanted any documents referencing Vice President Abubakar, as well as Nigerian President Olusegun Obasanjo and Sao Tomean President de Menezes, and information about stock transfers to a variety of offshore entities.

They also wanted any information about dealings with "Frontier Technology c/o Phil Nugent" at a Bellaire address, court documents show.

Nugent told the Houston Chronicle that he once lived at that address but denied having any knowledge of Frontier.

FBI officials also wanted to see documents regarding "Packard & Packard," presumably Packard, Packard & LaPray, a Beaumont law firm that handled a minority shareholder lawsuit against the company.

The shareholders alleged ERHC's former management violated federal securities laws, filed false information to the Securities and Exchange Commission and used misleading accounting practices.

When Offor was considering buying controlling interest in ERHC, his company contacted the law firm. The shareholders agreed to settle. And the attorneys' fees were paid for in the form of ERHC stock, said Daniel Packard, a partner in the firm.

After raiding ERHC's offices, FBI officials itemized all materials seized. Buried deep in a long list of materials was an intriguing folder labeled "William Jefferson."

Mum on folder
Company officials won't say what was in that folder. And no court documents unsealed to date specify a link between the ERHC investigation and the Jefferson bribery probe.

Indeed, company officials discount any connection.

"At this time, we have not been made aware of any facts to suggest that the U.S. government investigation of ERHC is in any way related to the ongoing investigation of Congressman Jefferson," ERHC spokesman Keeney said.

Both the Justice Department and Jefferson refused to discuss the case.

This much is known:

Jefferson has been on the FBI's radar since March 2005, when an informant accused the eight-term congressman of being part of a possible bribery scheme. The FBI began tailing Jefferson, secretly recording his conversations with the informant about a plan to help a Kentucky telecommunications company known as iGate win contracts in Nigeria and Ghana.

Jefferson has not been charged. But both a former Jefferson staffer and iGate's one-time CEO have pleaded guilty to bribery-related charges.

In secret tapes made by the FBI informant — wearing a wire — Jefferson is heard making plans to pay a $500,000 bribe to Nigerian Vice President Abubakar, according to an FBI affidavit. In July 2005, FBI agents videotaped Jefferson allegedly receiving $100,000 in marked bills from the informant.

Four days later, FBI agents raided Jefferson's Washington apartment and discovered $90,000 hidden in his freezer. The serial numbers on the chilly $100 bills matched those photocopied by the FBI before the sting operation.

Though they also searched the Maryland home of one of Abubakar's four wives, no marked bills were found.

"The vice president has no relationship with Mr. Jefferson, public or personal, other than the usual diplomatic courtesies extending to a high-ranking U.S. official," said Edward Weidenfeld, an attorney for Abubakar in Washington.

Nigeria, Sao Tome visits
None of the documents in the Jefferson probe made public to date mentions ERHC or Offor. But, the FBI affidavit says, "Law enforcement agents have gathered evidence linking Congressman Jefferson to at least seven other schemes in which Congressman Jefferson sought things of value in return for his performance of official acts."

Jefferson, who has served as co-chair of the Africa Trade and Investment Caucus, visited Nigeria and Sao Tome in 2004, a trip paid for in part by iGate and "Leth Energy Inc.," according to PoliticalMoneyLine, an organization that tracks political fundraising and spending.

Two former ERHC executives — one-time president James R. Callender Sr. and former CFO Noreen Wilson — have held positions at LETH, or Life Energy & Technology Holdings Inc., according to SEC and Louisiana state records.

ERHC investor Nugent also did business with the firm, which in August 2004 changed its name to Global Environmental Energy Corp.

Neither Callender nor Wilson could be reached for comment.

Earlier this month, Nigerian authorities revealed that the U.S. Justice Department had requested information on LETH as part of the Jefferson probe.

Sao Tomean officials aren't commenting.

"Nobody spoke about that publicly," said Luis dos Prazeres, executive director of Sao Tome's National Petroleum Agency.

Offor could not be reached. And Abubakar, facing a barrage of criticism at home, did not respond to questions.

His attorney Weidenfeld did assert, "He's had no role with ERHC."

What part Jefferson may have played in the ERHC saga, if any, remains unclear.

"He might have had a meeting here and there," Nugent said. "(Jefferson) was kind of bobbing and weaving on his own."


Thursday, September 14, 2006

Reuters: Danger To African Resources

In a report that eerily echoes ours of a day earlier (see below, "Reuters: Nigerian Output More Greatly Diminished Than Previously Thought; Questions About Chevron"), Reuters U.S. officials and other experts have grown increasingly worried about the future of oil from Nigeria, the Africa petroleum powerhouse of the past decade..

Here is the Reuters report:

West beams security focus on Gulf of Guinea oil
14 Sep 2006 01:05:43 GMT
Source: Reuters

(This story is one of a series issued on Sept. 14 as part of a features package)

By Zoe Eisenstein

LUANDA, Sept 14 (Reuters) - Western experts worried about the security of oil supplies from Africa's Gulf of Guinea have considered several doomsday scenarios, including suicide attacks by determined Islamist militants on offshore oil platforms.

But many analysts say domestic unrest is by far the bigger threat to a region whose oil is growing in strategic importance to the West because of increasing volatility in the Middle East.

Gulf of Guinea producers Nigeria, Angola, Gabon, and Equatorial Guinea and promising newcomer Sao Tome & Principe already supply 16 percent of U.S. energy needs and the figure is projected to rise to 25 percent by 2015.

Their governments are generally weak, and giant Nigeria is grappling with internal unrest over the distribution of oil wealth -- something analysts fear could be exploited by Islamist militants targeting U.S. and other Western interests globally.

"The least threatening is (an) attack on the open ocean to tanker traffic across the Atlantic or some other use of the trans-Atlantic tanker (through hijacking) to attack oil terminals," said Peter Pham, director of Virginia-based Nelson Institute for International and Public Affairs.

"This would require a great investment that we do not see any terrorist group making yet. But this does not mean that some minimal effort should not be made to beef up security and to plan for eventualities," Pham told Reuters.

"Given the weak maritime capacities of the states of the west littoral of Africa, there is not inconsiderable risk to oil installations at sea," he added.

But Pham said the greatest threat was closer to the coast like in Nigeria's delta region where local militants mount cheap but devastating hit-and-run attacks on oil installations.

He said that while the immediate threat derived from local grievances, "it would not take much for transnational terrorists to exploit these".


Analysts and diplomats describe the mix of great wealth and extreme poverty and alienation that characterises oil-producing states as a time bomb.

"(It) is the kind of noxious cocktail that motivated the September 11 hijackers," said Nicholas Shaxson, an Africa expert at the Royal Institute of International Affairs in London.

"There is no coherent threat of this kind in the region right now, but that's not to say that there won't be one day."

Stephen Morrison, director of the Africa programme at Washington's Center for Strategic and International Studies, identified weak government and poverty as the main threats.

"They manifest themselves in terms of piracy, criminality, bunkering syndicates involved in oil theft schemes," he said, referring to organised crude oil theft by criminal syndicates.

Nigeria has responded to growing unrest in its oil-producing delta since 2003 by deploying some 3,000 military personnel from the army, navy and air force to guard key facilities.

This roughly doubled the number of troops in the delta, an inaccessible maze of mangrove-lined creeks and swamps almost the size of England.

As the situation has deteriorated over the past three years, Nigeria has sought help from London and Washington through an ad hoc Gulf of Guinea Security Conference.

Nigeria's "shopping list" of military hardware to strengthen the existing security structure, has however been rejected by Washington and London, diplomats involved in the talks said.

The Nigerian armed forces still have a poor reputation after decades of military dictatorship, which ended in 1999.


The United States, aware of the strategic importance of the region, and as part of its own declared war on terror since the Sept. 11 attacks, has been weighing other options.

Defence officials in Washington said last month the Pentagon was considering creating a separate U.S. military command for Africa. A Pentagon official said this would not mean putting U.S. troops in Africa but "would streamline the focus and give appropriate undivided attention to the continent".

The small Gulf of Guinea archipelago of Sao Tome & Principe -- where U.S. and other companies are searching for oil amid high expectations of a new African bonanza -- has said it wants more assistance from the United States to protect its security as a future oil producer.

The United States has helped with feasibility studies for a deepwater port and a new airport and many analysts expect Washington to locate a major military base there in the future.

Intelligence experts say the U.S. military views Sao Tome as a future Diego Garcia for western Africa. Diego Garcia is a key U.S. military base in the Indian Ocean which played a critical role in the invasions of Afghanistan and Iraq.

However, no formal negotiations have been reported so far.

U.S. officials stress that fostering democracy and economic well-being in Gulf of Guinea states has to come before increased American military presence to secure oil supplies.

"You can provide security but without democracy this won't be a stable region," said Cindy Courville, who has been nominated as the first U.S. envoy to the African Union.

(Additional reporting by Pascal Fletcher in Dakar, Thomas Ashby in Lagos and Christopher Thompson)

For The Record: Interim CEO Luca Issues Update

In a thoughtful gesture to investors who have not heard much from ERHC Energy officials since the departure of CEO Walter Brandhuber, interim CEO Nicolae Luca has issued a press release that offers soem reassurance that events are more or less proceeding as planned. The upbeat statement was issued Sept. 12, but we just found it last night:

ERHC Energy's Interim CEO Issues Update

DNicolae Luca, interim CEO of ERHC Energy Inc. issued an update after the market closed on Monday, September 11, 2006. He said the company continues to develop relationships with its consortium partners in the Joint Development Zone Blocks, Addax Petroleum and Sinopec Corp.

In September 2006, ERHC representatives will participate in meetings of the Operating Committee and the Technical Committee for each of the Blocks. He said the company remains positive about the progress being made.
ownload this press release as an Adobe PDF document.

(PRWEB) September 12, 2006 -- The following update from Nicolae Luca, interim CEO of ERHC Energy Inc. (OTCBB: ERHE), was issued after the market closed on Monday, September 11, 2006.

"I want to take this opportunity to update the ERHC Energy family on the company’s activities over the past month. We appreciate the encouragement that the interim management has received from shareholders during the past month. Several of you have called in to express support and to offer useful suggestions on the management of your company. We are much obliged.

"We’ve had a number of shareholders ask about the timeline for appointing a new chief executive officer. We understand the desire among shareholders to get new leadership in place and want to assure you that we share that desire.

"ERHC Energy is a unique company and we are looking for individuals with an entrepreneurial spirit, international mindset, negotiating skills and the ability to manage complex relationships. We have been encouraged by the quality of candidates that have come to our attention and we greatly appreciate the involvement of our shareholders in recommending several candidates. When we have identified the right persons, we will introduce the new management team.

"In the meantime, our normal business operations continue unabated under the guidance of interim management. You will recall, for instance, that we presented the financial report for the third quarter on time. Similarly, in other respects, ERHC Energy continues to meet its day-to-day obligations. As our public disclosures attest, the company has strengthened its financial standing through receipts accruing from the participation arrangements entered into with consortium partners on the JDZ interests.

"Our last quarter’s financial report confirmed that ERHC’s general and administrative costs rose in the first six months of the year. This was due in part to increased activity with regard to management and exploitation of the JDZ interests. Legal costs arising from the U.S. government investigations of the Company also played a major role. ERHC Energy’s management continues to monitor these costs closely and to apply cost-control measures. Our fiscal year ends on September 30, 2006 and we have begun work on the year-end financial report, which is due in December 2006.

"We continue to develop our relationships with our consortium partners in the JDZ Blocks, Addax Petroleum and Sinopec Corp. In September 2006, ERHC representatives will participate in meetings of the Operating Committee and the Technical Committee for each of the Blocks. We remain positive about the progress being made. According to Addax Petroleum, which has been designated the operator of Block 4 of the JDZ and has a participating interest in JDZ Blocks 2 and 3, seismic data acquired over each of the Blocks is presently being analyzed to delineate potential drilling locations. There are many contingencies that affect when exploratory drilling may commence. That is not unusual in operations of this nature and we will look to the operators to make the relevant announcements when the time is right.

"In September 2006, representatives of ERHC will also participate in Management Committee meetings between the consortium partners and the Joint Development Authority (JDA). For those not familiar with the organization, the JDA is the authority set up by the governments of Nigeria and Sao Tome & Principe to manage the resources, including oil and gas, in the JDZ.

"In advance of these meetings, I traveled to Nigeria for a courtesy visit with representatives of the JDA to introduce ERHC’s interim leadership. The meetings were positive and cordial. Our visit coincided with changes in the leadership of the JDA. In August 2006, the JDA announced the appointment of Ado Yakubu Wanka as the chairman of the JDA’s board for the next year. The JDA’s board is made up of four members, two each from Nigeria and Sao Tome & Principe. Each year, the chairmanship rotates between the two countries.

"Looking ahead, ERHC’s long-term plan is to utilize cash flow from operations to implement a focused acquisition strategy, targeting a diversified portfolio of production and development projects and low- to medium-risk exploration properties. We intend to identify, acquire and explore prospects in which we discern a competitive advantage.

"Again, thank you for your continued support and patience. We value our shareholders and remain committed to maintaining regular communication with all of our shareholders regarding ERHC’s activities and opportunities."

Wednesday, September 13, 2006

19 Wounded, 5 Critical, In One-Man Rampage At Montreal's Dawson College

A lone guman who terrorized the 10,000-student campus of Dawson College in downrtown Montreal is "neutralized," MSNBC reported moments ago, quoting police sources. CNN says as many as three gunment may have been involved and that they believe two gunmen are dead while police search for a third in a shopping mall across from the college. CNN cites college officials as its source.


CNN now says four are dead in the shooting that wounded 13 at Dawson College in downtown Montreal. Another account from the Toronto Star says one person - the shooter, a man garbed in camouflage and wearing a Mohawk haircut - died and 11 were wounded.

Here is the latest from CNN:

SWAT hunts college gunmen
At least four people are dead and 13 wounded after a shooting at college in downtown Montreal. The college initially said two gunmen were killed, but police only confirmed one dead shooter. A SWAT team was in the college because "we believe there might be other suspects inside," a police spokesman said.

UPDATE 2:25AM EST 9/14

When the dust cleared, there were 19 woounded and one dead shooter, the New York Times reports this morning:

September 14, 2006
Gunman Kills Woman in Montreal; 19 Are Injured
MONTREAL, Sept. 13 — A man wearing a long black coat and carrying a semiautomatic rifle shot and killed a woman and wounded 19 other people, at least five critically, at the downtown campus of a junior college on Wednesday. The man himself died after exchanging shots with the police.

The shooting Wednesday at Dawson College brought chaos and fear to the core of Canada’s second largest city as major thoroughfares were closed, office towers were evacuated and subway service was disrupted. It also evoked bitter memories of a shooting in 1989 at another downtown college where 14 women died before the gunman killed himself.

In the Dawson case, the police said an autopsy would determine whether the assailant was killed by the police or by his own weapon.

The Montreal police said it received the first call about the shooting at 12:41 p.m. Several witnesses reported seeing the man start shooting students near an entrance without a word or provocation.

As the police arrived, witnesses said, he entered the building, continuing to fire randomly as he made his way toward a crowded cafeteria. Video recorded with a camera phone showed the gunman exchanging fire with the police inside the college.

Dawson has an enrollment of about 10,000 students, most of them teenagers. About half were believed to have been on campus at the time.

Despite the early arrival of the police, the college and the neighborhood — an affluent, largely English-speaking district — fell into confusion with herds of people fleeing along streets and pouring out of a nearby shopping mall. Like much of downtown Montreal, the college is connected to a network of underground walkways that also feeds into the subway system. In what appeared to be a bid to prevent the escape of the gunman, a major subway line was closed temporarily.

Reuters: Nigerian Output More Greatly Diminished Than Previously Thought; Questions About Chevron

An important story from Reuters spells out the vast extent of the loss of production suffered by Nigeria as the result of attacks on pipelines, vessels and flow stations owned by Royal Dutch Shell and others, Reuters said Tuesday.

The news deserves some speculation, and I'd like to offer some guesses about it.

The concealed numbers may have already had far-reaching consequences, I think, including a vote in Congress to open more of the Gulf of Mexico to drilling.

While the much lower numbers offered for public consumption appeared to be credible, it is likely that insiders in both the U.S. and Nigerian governments have known the real numbers all along, and taken steps to reduce U.S. exposure to what may be a chronic issue of long duration.

The story may also underlie a recent decision by Chevron to take a wild swing at the potential reserves it recently discovered in the Gulf of Mexico. The company's policy, which ERHC Energy investors learned about rather painfully when the company made a substantial find in Block 1, has been to cautiously state the potential of a strike and to give as little away as possible; it known for playing its cards very close to its vest.

Why then, did Chevron seem to suddenly reverse course, or at least policy, and publicly boost an estimate of the GoM find that ranged wildly across 12 billion barrels in guessing reserves of three to 15 billion barrels?

That very un-Chevron-like move may be setting some investors up for bad news that the company hopes will be overshadowed by the news of the GoM find. Indeed, the stock market's reaction to the find - a $1.76 rise in CVX share price - was not much different than to a $1 rise in the price of oil, while Devon Energy - a partner in the find - got a $7 boost (and had far fewer shares outstanding, too).

Chevron is not the central target of the attacks by militants on industry infrastructure, at least for now. It is better sited for safe production in the Gulf of Guinea than Shell, ExxonMobil and some other competitors, but not all. It seems all along to have a done a far better job of community relations than its competitors. So if the company was fudging on the find for reasons other than to help President George Bush and the Republicans overcome resistance to offshore drilling, what bad news could it be hiding?

If, as Reuters says, the volume of daily lost production is 870,000 barrels, Chevron's share of that has had to add up all through this saga beside those of Shell and others to yield a credible figure. If its figure now turns out to be not credible, how far off were Chevron's public statements about its losses? And what would the SEC do about such concealment to all of the firms that lied?

But I don't expect that this is really the nub of the issue. Chevron hasn't burped out those fantastic numbers of gain share price or new investors. It's my suspicion that a report is circulating around Washington that would shake a lot of assumptions about Nigeria's oil production capacity in the near future.

That would be consistent with CIA director Porter Goss'es dire predictions of a shattered Nigerian federation lying only a year or two ahead. The company may soon come within range of ERHC Energy's political influence, too, as the campaigns for president of Nigeria to replace Olusegun Obasanjo advance and loosen the reins of power while other leaders seek to grab them. That would be disastrous for Chevron, ExxonMobil and Anadarko.

Asd I often have, I urge investors to stay focused on political developments in Nigeria that may presage events ahead. Any development that indicates the placement of Sir Emeka Offor in the political pantheon needs to be studied with special care.

Here is the Reuters story:

VIENNA, Sept 12 (Reuters) - Nigerian officials estimate that Africa's biggest oil producer is losing between 800,000 and 872,000 barrels per day, more than a quarter of its output, because of militant attacks and pipeline leaks.

The figures, provided this week by Minister of State for Petroleum Edmund Daukoru and officials from Nigerian National Petroleum Corporation, are far above previous estimates given by Nigeria and top foreign operator Royal Dutch Shell.

"About 250,000 bpd is shut for operational issues," Aminu Baba-Kusa, head of oil marketing at state oil company NNPC, told Reuters on Tuesday. "Some are technical, at some they have pipeline vandalism, pipeline bursts."

On top of that, about 600,000 bpd of Shell output in Nigeria is offline, he said, speaking on the sidelines of an energy conference in Vienna.

The supply loss in Nigeria, the eighth-largest oil exporter, is one of the main drivers of oil's record run in 2006. Crude is trading around $65 a barrel in New York, down from a record $78.40 in July.

Baba-Kusa was elaborating on comments made by Daukoru on Monday shortly before a meeting of the Organization of the Petroleum Exporting Countries.

Daukoru put the amount of Nigerian oil shut in at 872,000 bpd. A third Nigerian official estimated on Tuesday about 800,000 bpd was offline.
When I say 800,000 barrels per day I mean ball park," NNPC group managing director Funsho Kupolokun said.


While the figures were higher than previous estimates, Shell and other firms that produce Nigeria's oil reported no fresh disruptions to output on Tuesday.

Shell said it was still losing 477,000 bpd in Nigeria. Its Forcados terminal and EA platform have been shut since militant attacks in February, wiping out that amount of Shell-operated output.

Chevron Corp. (CVX.N: Quote, Profile, Research) said it had no Nigerian production shut down except for about 70,000 bpd it had yet to restart since unrest in 2003 hit supplies.

Agip, a unit of Italian energy firm ENI (ENI.MI: Quote, Profile, Research), is losing another 50,000 barrels daily. Exxon Mobil Corp. (XOM.N: Quote, Profile, Research) said it was pumping at normal levels in Nigeria.

Government officials and oil companies working in the West African country often give different estimates of how much production is offline and when it will return.

Daukoru on Monday said output from Forcados and EA will restart within three to six months. Shell has not given a specific timeframe.

"For quite some months, the installations were not used," Shell Chief Executive Jeroen van der Veer said in Vienna asked when the fields will reopen.
"So you have to be testing, checking....Is all the equipment there? Does it work? You can't immediately produce at your old levels."

New offshore fields have partly filled the gap left by shut onshore sites, enabling Nigeria to pump about 2.3 million bpd in August according to Reuters estimates.

But violence in Nigeria's oil-producing delta ahead of April's elections may hinder oil output for months to come, keeping the heat under prices, analysts say.

"Nigeria has been a very important source of upside risk for the market because of the repeated supply disruptions," said Kevin Rosser of consultant Control Risks, whose clients include companies working in Nigeria.

"This is likely to last into the middle of next year."

Monday, September 11, 2006

Eulogy: On The Soul Of My Father

An American Passage
by Joseph P. Shea

MONROE, N.Y., Sept. 9, 2006 -- Good morning. On behalf of my father and each member of the Shea Family, our thanks to you for being here this morning at a time which, with the passing of his brother Billy's beloved wife, Lorraine Shea, and indeed even the great matriarch of the Snee Family that gave that beautiful land to this church, that surely marks the passage of the generations.

From the era of our beloved father to this one a great deal of history has taken place, and at the time of every such passage it is appropriate and necessary that those whose lives have spanned so much of modern history speak to us about what they have seen.

From the beginning of his life near the turn of the century past, to our time, at the beginning of another, history has borne us forward from the rutted roads and open pastures of a bucolic farm to the urgent bustle and relentless energy of our own Monroe, a place that as many others are, is in the throes of constant change and facing the heat of constant challenge. And it is not different anywhere in the developed world.

That is why, when I was asked to speak this morning about my father's lifelong love of politics, I thought that the real job was to speak of what politics meant to him. As we commonly know it, politics is the fine art of reaching the compromises that make progress on any front possible despite our differences of opinion and character. And he was more than adept at that, having demonstrated it with the victory of his brother in 1954 by 64 votes in a hard-fought race for the municipal bench in Manhattan, where most of a century had passed in which the only Republican elected was his own father. But politics is part of a larger dimension, which is patriotism, and I have to tell you that patriotism infused every fiber of my father's being.

And it was not the popular fairy-tale version of patriotism that is pressed upon us from every corner today, but the deep, abiding kind that emerges from the long life of a man who not only loved but was his country. John S. Shea, Jr. soaked up the very roots of our great nation from the umbilical cord of his mother, whose family fled England long before the Revolution to escape religious persecution, and from the very seed of his forefathers, who fought for freedom and independence in Ireland before they fought here for a new version of those ideals in the Civil War, Spanish-American War, World War I, World War II and Korea. His life, if it could ever be distilled into one single essence, would shine with love and hope for his country.

But in this temporal world, he speaks to us from a higher, native ground, and I now think it was him who inspired the words that came to me one night, "Foremost, seek clarity; first, search for the truth." For in truth, his patriotism took the form of an icy cold clarity that tried always to gaze into the often terrible face of truth. I was constantly after him to speak to me about the world as he saw it, about the past as he saw it, about our nation and its leadership as he saw it. And frankly, he saw it with an unforgiving eagle's eye never dwelled on discontent, nor dissension, nor partisanship, but always looked cooly beyond our immediate time and place to summon the visage of history itself so that he might see how time was steadily and slowly remaking it. He saw out from those cherished and well-protected roots and his observations were impeccable.

I'm afraid my comments this moning would be meaningless if I did not tell you some of what he saw. I think like the battlements of Jericho he saw this nation under siege from within and without. I think he feared that the fierce rock hammer of Satan himself was being slammed with infinite force against its battlements, and that the rage of a terrible enemy was arrayed against us outside our walls. You and I look around ourselves in this beautiful setting and perhps see no sign of that political catastrophe he believed was coming. He spoke often about "the man on horseback" he feared would bring an end to our democracy and replace it with the very tyranny his ancestors fought to escape.

We are profoundly honored today to have with us my beloved cousin, Lt. Col. Michael Kies of the United States Marine Corps, who can attest to you the truth of the rage and chaos that has overtaken much of the Middle East, where he pledged his life to bring order and sanity to a region gone mad in the torment of rapid change. My father sharply rejected the war in Iraq as an enterprise built upon the lies of a President whose personal search for revenge against Saddam had led him into errors of a Biblical proportion. I could not agree with him, but I could not argue from a moral plane against his observations, either.

While he was a strategist who told me he was once ordered by the President to devise a nuclear battle plan to strike against North Korean forces that had massed on the South Korean border when American forces were engaging almost all of our ready forces during a Tet offensive in Vietnam, he had a moral sense that informed his view of that and other conflicts, while our time, and perhaps myself, look at today's war as a strategic necessity whose morality is ill-made. That is a very typical difference of our generations.

Today we often pretend to a morality in politics we do not possess, while those who are truly moral are silent or shouted down. We adopt a strategy that has no moral content or merely a moral pretext and find ourself adrift and confused when the strategy threatens to falter or fail. In fact, I have deeply felt that what saved us from a nuclear war at that time was not the decision of the North Koreans to pull back after the President's warning, but his prayers for divine intercession, the same that guided George Washington up Orange Turnpike in the summer of 1776.

My father would not be shouted down. And he would warn us that Americans of our time need to gain a deeper insight into who we are and where we are going. He was an enemy of waste and self-indulgence and endless words. He would urge us to revisit, and not to abandon but to honor the democratic process. He would ask us to find a way to embrace our differences and love our country with our meaningful actions as one people under God. He would warn us as did George Washington - who passed this very place on those rutted roads of long ago - that we must never allow our nation to become the pawn in a war of competing partisan ideologies, but to always put God and our country first, our family next, and our party somewhere in upper echelon of other priorities. He would tell you that America is not about a fevered calculation of our interests; it is instead history's greatest idea, and one always worth fighting for.

I will share with you one more reckless insight. In his last months he had descended into an angry dementia that would erupt without warning, even as his blindness grew deeper than ever before. But in other times of the day, he was silent and calm and listened, and sometimes spoke with surprising clarity. I wondered as I prepared these words overnight whether he had not subsumed his identity to that spitting, screeching, storming eagle of the mountaintop that flies too far above us to be seen or heard. He sees beyond the battlements, beyond our shores and time, to a history relentlessly advancing upon our nation with intentions we cannot know. But he would tell us to be still, to be ready, to be watchful, to engage with passion in the great debates of our day, to be well-informed and to think deeply not only for ourselves but for our country, and to always care very much for one another. For me, and perhaps for my brothers and sister and beloved Mother, is the message of his life. In the words of Ralph Waldo Emerson's great essay, "On Politics," he is "the Republican at home."

Together, let us promise that we will fulfill his great vision for all of us. I leave you with his favorite and inimitable words: "Ah has spoken."

Joe Shea is Editor-in-Chief of The American Reporter. He delivered this eulogy for his father at Sacred Heart Catholic Church Chapel in Monroe, N.Y., on Sept. 9, 2006.

Tuesday, September 05, 2006

In Memoriam + John S. Shea, Jr. + 1909 - 2006

John S. Shea, Jr., my father and a lifelong resident of Monroe, died Sept. 5 at 6:10 a.m. at Arden Hill Hospital in Goshen after a brief hospitalization for pneumonia. He was 95.

The son of the then-Sheriff of New York County, John S. Shea, and Mary [Alcok] Olcott, he was born in New York City on January 30, 1909.

John was the loving husband of Nina D. Shea of Monroe, who survives him. They were married in New York City on November 30, 1936.

He is also survived buy his daughter, Mary Ann Kies of Long Beach, Calif., William P. Shea of Monroe, Ga., Joseph P. Shea of Bradenton, Fla., and Patrick O'Farrell Shea of Falls Church, Va., and many grandchildren, great grandchildren, nieces and nephews. His eldest son, John S. Shea III, preceded him in death.

John was a career Federal civil servant who began his career with the New York City Division of Elections, the Internal Revenue Service, the state Dept. of Corrections and the United States Air Force, where he served as Deputy Comptroller of the 32nd Air Division during the Cuban Missile Crisis and also as a Single Integrated Operations Plan officer at Misawa AFB on the Japanese island of Hokkaido during the Vietnam War, where he prepared nuclear battle plans for the defense of the United States. He also served with Military Manpower Command of the United States Army after his retirement from the Air Force, and finally as Director of Internal Audit for the U.S. Customs House in New York City, where his father was Paymaster in 1892.

He will be remembered with love and laughter by his family and many friends as an unfailing pillar of strength and a man of great good humor whose quips, stories and advice sustained all of them through difficult times. He was also an astute investor who was working on Wall Street as a courier of stocks and bonds during the Great Crash of 1929. He served in the latter stages of Wiorld War II in the U.S. Army, and during the Occupation of Germany. He was campaign manager for his brother William S. Shea when the late State Supreme Court Justice won election to the bench in Manhattan in 1954 by 64 votes in what was the only Republican victory in Manhattan since John's father was elected Sheriff of New York in 1909. After his father's death, he also served as District Leader in the East Side Republican Club of Manhattan, from which Mayor John Lindsay later emerged. Despite his many accomplishments, he possessed a simple humility, and his deep faith in God was well known to his family. He took great pride in his family's Revolutionary War-era home on Rye Hill Road, which his father purchased from New York Herald Tribune publisher Whitney Reid in 1909. He was living there with his beloved wife Nina at the time of his passing.

Friends may call on Wednesday and Thursday, Sept. 7 and 8, during the hours of 2 to 4 and 7 to 9 p.m. at Smith, Seaman & Quackenbush at 117 Maple Ave. in Monroe.

A Mass of Christian Burial will be offered at Sacred Heart Roman Catholic Church, where he was a lifelong parishioner. Burial will be at the family plot at St. Anastasia Church in Harriman, N.Y.

Chevron Has 'Significant' Find In Gulf Of Mexico

A find that may presage a field as large as that in Alaska's oil regions has been made by Chevron, Devon and Statoil ASA of Norway, the Wall Street Journal, Associated Press and New York Times reported this morning.

The find may amount to half of all the known U.S. reserves, the financial industry press is saying.

Chevron and Devon officials estimate that the recent discoveries in the Gulf of Mexico's lower-tertiary formations hold more than three billion barrels' and perhaps as much as 15 billion barrels' worth of oil and gas reserves. If the industry succeeds in finding 15 billion barrels of oil, it would boost the nation's current reserves of 29.3 billion barrels by 50%.

With our significant holdings in Chevron, it was good news for our family. My father had the wisdom to see Chevron's potential a number of years ago and has reaped benefits ever since. Regrettably, he passed away this morning, at the age of 95, at 6:10 a.m. before we learned of the latest news. I will probably not be posting much this week as a result.

Chevron (CVX) is up $1.63 to $66.47 at 3:36 p.m. EST, and Devon (DVN) is up $7.93 to 72.09, a 12.41 percent gain.

Here is the New York Times' version:

Promising New Oil Find in Gulf of Mexico
Published: September 5, 2006
Filed at 9:24 a.m. ET

OSLO, Norway (AP) -- Tests of a deep-water well in the Gulf of Mexico could indicate a significant oil discovery, three companies announced Tuesday, in the first project to tap into a region that reportedly could boost U.S. oil and gas reserves by as much as 50 percent.

The Jack 2 well was drilled by U.S. oil company Chevron Corp., with partners Statoil ASA of Norway and Devon Energy Corp. of Oklahoma City.

''Test results are very encouraging and may indicate a significant discovery. The full magnitude of the field's potential is still being defined,'' Statoil said in a statement.

During the test, the Jack 2 well sustained a flow rate of more than 6,000 barrels of oil per day, Statoil said.

The Wall Street Journal reported Monday that the region where the well is located could become the nation's biggest new domestic source of oil since the discovery of Alaska's North Slope more than a generation ago.

The Journal said Chevron and Devon officials estimate that recent discoveries in the Gulf of Mexico's lower-tertiary formations hold up to 15 billion barrels' worth of oil and gas reserves, a total that would boost the nation's current reserves by 50 percent.

The well was drilled in the Walker Ridge area of the Gulf, about 270 miles southwest of New Orleans and 175 miles off the coast. It followed up a discovery made by Chevron in 2004.

''This area is one of the new and promising deep-water areas in the Gulf of Mexico,'' said Oivind Reinertsen, senior vice president of Statoil's Gulf of Mexico assets in Houston.

''The Jack 2 well test data are encouraging and may form the basis of future development projects in Walker Ridge,'' he said.

In a separate statement, San Ramon, Calif.-based Chevron said the well set a variety of records, including the deepest well successfully tested in the Gulf of Mexico. Chevron said it was drilled to a total depth of 28,175 feet in waters that are 7,000 feet deep.

Chevron has a 50 percent stake in the field, while Statoil and Devon own 25 percent each.


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