Shell Tries to Calm Fears on Drilling in Alaska

The forbidding ice-clogged region is believed to hold vast reserves of oil, potentially enough to fuel 25 million cars for 35 years. And with production in Alaska’s North Slope in steep decline, the oil industry is eager to tap new offshore wells.

Shell has led the way, working for five years to convince regulators, environmentalists, Native Alaskans and several courts that it could manage the process safely, protect polar bears and other wildlife, safeguard air quality for residents and respond quickly to any spill in the region. But BP’s Deepwater Horizon disaster a year ago put a chill on new offshore drilling.

Shell’s renewed application will pose a test for President Obama, who promised to put safety first after the BP spill. But he has also reiterated his support for offshore drilling amid voter worries about rising gasoline prices.

Environmental groups say a spill in the Arctic’s inaccessible waters could be even more catastrophic than the Gulf of Mexico accident. Republicans, meanwhile, are threatening to excoriate the president for turning his back on energy security if he says no to Shell.

“Americans are reeling from staggering prices at the pump,” said Representative Cory Gardner, a Colorado Republican on the House Energy and Commerce Committee. “So the president has to justify to the American people why we are not replacing Saudi Arabian oil imports with U.S.-produced oil.”

Whatever the administration decides, it will anger somebody. “If the Obama administration approves drilling in the Arctic, it will demonstrate that they have learned nothing from the gulf spill,” said Brendan Cummings, senior counsel at the Center for Biological Diversity, which is suing to stop Shell.

Administration officials say only that they will thoroughly review Shell’s new proposal. “We need to continue to take a cautious approach in the Arctic that is guided by science and the voices of North Slope communities,” said Kendra Barkoff, a spokeswoman for the Interior Department, which oversees most of the process.

The politics extend as far as Alaska’s remotest villages, where support from Native Alaskans, or at least their acquiescence, is essential to win several permits. With that in mind, Pete Slaiby, Shell’s top executive in Alaska, was glad-handing last week in Savoonga, a village on an island in the Bering Sea. He passed out raffle tickets, bought a trinket and congratulated the Yupik hunters for harpooning two bowhead whales.

One hunter waved a copy of the movie “An Inconvenient Truth,” and launched into an attack on oil as a cause for the warming temperatures that are melting the Arctic ice. Other hunters pressed Mr. Slaiby on concerns that the migrating walruses they depend on for food would suffer from the noise if drilling operations began north of here.

Mr. Slaiby said Shell was concerned about climate change too, and promised that the company would take painstaking precautions to protect wildlife. “We won’t be successful here if we deprive people of their subsistence,” he said. “If the oil companies are doing well and the people living around them are not, it’s a recipe for disaster.”

Shell has already spent $3.7 billion on the 10-year offshore leases and preparations for exploration, although the company has yet to drill a single hole. Shell will formally present its new proposal — to drill up to 10 wells over the next two years in remote waters north of Alaska, in the Chukchi and Beaufort seas — in the next few days. If the plan is approved within nine months or so, exploration could begin next year.

Just as in the past, executives realize they need to fight the battle on multiple regulatory and legal fronts. “It’s like holding a bunch of pins in your hand, and trying to make sure not one drops,” said Brian Malnak, Shell’s vice president of government affairs.

Perhaps the toughest hurdle this year will be convincing the government that Shell could protect the Arctic from a devastating spill. An Interior Department agency recently estimated that a “hypothetical” blowout of an oil well in the Chukchi Sea could release 1.4 million barrels of crude over a 39-day period before a relief well could be drilled. A leak of that magnitude would severely test the capacity of the boats, barges, skimmers and a spill containment tanker that Shell plans to deploy around its rigs, although the company promises to add whatever equipment regulators find necessary.

Shell is proposing to use two drill ships, each capable of drilling a relief well for the other in case of the kind of blowout that destroyed the Deepwater Horizon rig. The company is also promising to add more testing and an extra set of shears to its blowout preventers and to keep emergency capping systems near drilling sites to capture any potential leaks.

Alaska once accounted for a third of the nation’s oil production, but its fields are now in steep decline. The decrease in production threatens the continued safe use of the Trans-Alaska Pipeline System, also known as TAPS, which requires a steady flow of oil to avert corrosion and spills.

The Alaskan Arctic potentially holds 27 billion barrels of oil. “If we could open the Arctic to oil exploration,” said Alaska’s governor, Sean Parnell, “we can fill that TAPS line in a way to preserve it for another 50 to 100 years.” Major production from the Arctic would probably be a decade away, however.

Environmentalists contend that the risks of drilling are too great. They warn that hurricane-force winds, high seas, and frigid cold and ice would make cleaning up a spill far more difficult than in the gulf, and they say that oil operations could disturb migration and reproduction of marine mammals.

“We believe there need to be more spill drills, more testing, more inspections of the drill rig and blowout preventer before they begin,” said Marilyn Heiman, director of the United States Arctic Program of the Pew Environment Group.

In his presentation in Savoonga, Mr. Slaiby said Shell and other companies had safely drilled in?Alaska’s Arctic waters in the 1980s and 1990s, without a spill or major damage to wildlife. And he noted that the wells Shell intended to drill here were far shallower than BP’s ill-fated Macondo well, making the possibility of a blowout more remote.

“We’ve never told people that what we do doesn’t entail risk,” Mr. Slaiby said, “but the risks are different from the Gulf of Mexico.”

 

With Deal, J.&J. Tries to Change Discussion

The $21.3 billion deal for Synthes, a Swiss-American medical device maker, would make Johnson & Johnson the largest player in the market for surgical tools and implants to treat trauma patients, and would make it a more powerful competitor in the $37 billion worldwide market for orthopedic medical devices.

Synthes is a leading maker of screws, plates and surgical tools used to stabilize traumatic injuries. The deal is a move aimed at appealing to investors who have been troubled by Johnson & Johnson’s failure to quickly resolve significant and apparently systemic problems in the company’s consumer products division, which have tarnished once-golden brands like Tylenol.

Johnson & Johnson’s chief executive, William C. Weldon, championed the new deal in an interview on Wednesday, citing what he hoped would be cooperation between the company’s existing orthopedic and spinal implant division, DePuy, and Synthes. “We’ve got the opportunity to create the most innovative and comprehensive orthopedic business in the world,” Mr. Weldon said.

Trauma products are more profitable and less vulnerable than other kinds of medical devices to changes in broad economic trends, he said. The combination of Johnson & Johnson’s global presence and Synthes’s products, he said, created a new opening in emerging markets for the combined company.

Many Wall Street analysts praised the deal, even as some groused that it would not immediately add to earnings.

“J.& J. will be able to offer hospitals an inescapable breadth and depth of products that will offer one-stop shopping in reconstructive implants and trauma repair,” said Rick Wise, an analyst at Leerink Swann. “You are going to have to do business with J.& J.”

Johnson & Johnson is offering 159 Swiss francs (about $181) a share for Synthes — of which 55.65 francs is cash and 103.35 francs is Johnson & Johnson common stock. Derrick Sung, an analyst at Sanford C. Bernstein, said some investors were disappointed that the company was not planning to make use of its stockpile of foreign cash for the deal.

“It’s dilutive, at least for the first year,” he said. “There was an expectation that it would be accretive in the first year.”

At the annual shareholder meeting on Thursday, some investors are expected to raise concerns about Mr. Weldon’s management and his compensation. “I don’t think they would have done the deal if they didn’t need a distraction,” said Erik Gordon, an assistant business professor at the University of Michigan who has been a frequent critic of Mr. Weldon’s leadership.

The company stands at a crossroads as Mr. Weldon nears the end of his tenure. Even as Johnson & Johnson plans to use the Synthes acquisition to improve its position in the device sector and its performance, the company must still resolve major manufacturing problems in its consumer division and work to regain consumer trust. During a conference call with investors on Wednesday morning, some analysts asked whether the company was equipped to handle both a substantial acquisition and significant remediation.

Some investors fault a lack of management oversight for major problems, like last year’s manufacturing lapses at the company’s McNeil Consumer Healthcare unit, which was responsible for the recalls of nearly 300 million items in 2010, including for popular brands like Motrin and Rolaids. McNeil closed its Fort Washington, Pa., manufacturing plant to overhaul it, and is now operating under a consent decree with federal regulators.

Johnson & Johnson bought Pfizer’s consumer business, including brands like Listerine, for $16.6 billion in 2006, and some analysts have speculated that the unwieldy acquisition, along with cost-cutting measures, may have contributed to the problems that developed at McNeil.

 

With Deal, J.&J. Tries to Change Discussion

The $21.3 billion deal for Synthes, a Swiss-American medical device maker, would make Johnson & Johnson the largest player in the market for surgical tools and implants to treat trauma patients, and would make it a more powerful competitor in the $37 billion worldwide market for orthopedic medical devices.

Synthes is a leading maker of screws, plates and surgical tools used to stabilize traumatic injuries. The deal is a move aimed at appealing to investors who have been troubled by Johnson & Johnson’s failure to quickly resolve significant and apparently systemic problems in the company’s consumer products division, which have tarnished once-golden brands like Tylenol.

Johnson & Johnson’s chief executive, William C. Weldon, championed the new deal in an interview on Wednesday, citing what he hoped would be cooperation between the company’s existing orthopedic and spinal implant division, DePuy, and Synthes. “We’ve got the opportunity to create the most innovative and comprehensive orthopedic business in the world,” Mr. Weldon said.

Trauma products are more profitable and less vulnerable than other kinds of medical devices to changes in broad economic trends, he said. The combination of Johnson & Johnson’s global presence and Synthes’s products, he said, created a new opening in emerging markets for the combined company.

Many Wall Street analysts praised the deal, even as some groused that it would not immediately add to earnings.

“J.& J. will be able to offer hospitals an inescapable breadth and depth of products that will offer one-stop shopping in reconstructive implants and trauma repair,” said Rick Wise, an analyst at Leerink Swann. “You are going to have to do business with J.& J.”

Johnson & Johnson is offering 159 Swiss francs (about $181) a share for Synthes — of which 55.65 francs is cash and 103.35 francs is Johnson & Johnson common stock. Derrick Sung, an analyst at Sanford C. Bernstein, said some investors were disappointed that the company was not planning to make use of its stockpile of foreign cash for the deal.

“It’s dilutive, at least for the first year,” he said. “There was an expectation that it would be accretive in the first year.”

At the annual shareholder meeting on Thursday, some investors are expected to raise concerns about Mr. Weldon’s management and his compensation. “I don’t think they would have done the deal if they didn’t need a distraction,” said Erik Gordon, an assistant business professor at the University of Michigan who has been a frequent critic of Mr. Weldon’s leadership.

The company stands at a crossroads as Mr. Weldon nears the end of his tenure. Even as Johnson & Johnson plans to use the Synthes acquisition to improve its position in the device sector and its performance, the company must still resolve major manufacturing problems in its consumer division and work to regain consumer trust. During a conference call with investors on Wednesday morning, some analysts asked whether the company was equipped to handle both a substantial acquisition and significant remediation.

Some investors fault a lack of management oversight for major problems, like last year’s manufacturing lapses at the company’s McNeil Consumer Healthcare unit, which was responsible for the recalls of nearly 300 million items in 2010, including for popular brands like Motrin and Rolaids. McNeil closed its Fort Washington, Pa., manufacturing plant to overhaul it, and is now operating under a consent decree with federal regulators.

Johnson & Johnson bought Pfizer’s consumer business, including brands like Listerine, for $16.6 billion in 2006, and some analysts have speculated that the unwieldy acquisition, along with cost-cutting measures, may have contributed to the problems that developed at McNeil.

 

Syria Tries to Defend Its Record to United Nations

Ambassador Bashar Jaafari, the Syrian envoy, repeated the government’s claim that the unrest at home was the work of as yet unidentified foreign agitators trying to undermine Syria’s stability and that armed infiltrators were responsible for the shooting of protesters.

“This unrest and riots in some of their aspects have hidden agendas,” Mr. Jaafari told reporters. “Some armed groups take advantage of the demonstrations; they get within the demonstrators and start shooting on the military men and the security forces. This is why there are many casualties.”

Mr. Jaafari also defended President Bashar Assad’s record, saying that more political reforms were coming on the heels of Mr. Assad’s decision to lift the emergency law.

“President Assad is a reformer himself, and he should be given the chance to fulfill his mission in reforming the political life in the country,” he said.

Government opponents openly mock both assertions. Syrians, not foreign agitators, are demanding basic freedoms that have been denied them for the 40 years in which the Assad family has run the country, they say. Although Mr. Assad, 45, promised reform when he inherited the presidency from his father 11 years ago, he has put none in place — instead, they say, the government has strangled any nascent reform movement by jailing its leaders for years.

But efforts by the Security Council to issue the mildest of statements criticizing Syria was postponed until at least Wednesday afternoon. Several member states — Russia, China and Lebanon — seemed firmly opposed, diplomats said, although the ambassadors of China and Lebanon would only note that further discussion was scheduled.

Russia has been adamant that the use of force in Libya far exceeds the Security Council resolution that authorized efforts to protect Libyan civilians; statements by its senior leaders indicate that Russia will not contemplate anything similar elsewhere in the restive region. Diplomats from other countries also noted certain differences over military actions in Libya.

While the Libyan leader, Col. Muammar el-Qaddafi, threatened to search from alley to alley to root out opposition, Mr. Assad has spoken of reform in Syria and blamed outsiders for the unrest. That stance is influencing some members, diplomats said, although not all.

“The outrageous use of violence to quell protests must come to an end — and now,” the United States Ambassador, Susan E. Rice, told reporters. “The Syrian government’s actions to repeal the decade’s old emergency law and allow for peaceful demonstrations were clearly not serious, given the continued violent repression against protesters.”

Ms. Rice repeated the Obama administration’s contention that Iran was helping Syria to suppress the demonstrations.

Ban Ki-moon, the United Nations secretary general, reiterated his demand for an international investigation into the hundreds of deaths in Syria.

“I condemn, utterly, the continuing violence against peaceful demonstrators, most particularly the use of tanks and live fire that have killed and injured hundreds of people,” Mr. Ban said.

Mr. Jaafari belittled the idea of any investigation other than one already initiated by the Syrian government.

Other world leaders also weighed in on Tuesday.

In Britain, the foreign minister, William Hague, said the European Union was considering sanctions against Syria. “Its government can still choose to bring about the radical reform which alone can bring about peace and stability,” he told the House of Commons. “Or it can choose ever more violent repression.”

 

From Poland, Satellite TV Tries to Pierce the Belarus Media Muzzle

But if you want to see Belsat’s nerve center, you have to head to neighboring Poland, to a cramped office in downtown Warsaw.

There, for 17 hours a day, a team of nearly three dozen Poles and Belarussians broadcast into a country whose media are tightly controlled by the government of President Aleksandr G. Lukashenko.

Recent crackdowns in Belarus stemming from demonstrations against Mr. Lukashenko’s grip on power have created even more hurdles for journalists.

Belsat’s operation here has sought to help overcome that, using 120 freelancers inside Belarus who each day send news to Warsaw by phone or the Internet. Many of them have been detained, arrested or fined.

“They are not allowed to work as journalists,” said Alaksei Dzikavitski, Belsat TV’s editorial director for news. “The authorities refuse to accredit them because they work for Belsat TV.”

For Agnieszka Romaszewska-Guzy, the founder and director of Belsat TV, which made its first broadcast in December 2007, it is natural that her operation would find a home in Poland. As the daughter of leading Polish dissidents in the Communist era, she said she believed that Poles had something to give to their neighbors seeking freedom.

“We struggled for that freedom, but you do not get it if you do not do something to make it happen,” said Ms. Romaszewska-Guzy, 48, a former historian.

Her father, Zbigniew Romaszewski, was one of the founders in 1976 of KOR, the independent labor self-defense committee. He later founded the Helsinki Committee in Poland, a human rights movement. In the early 1980s he was a leading member of Solidarity, the trade union movement.

During martial law, which was imposed in 1981, Mr. Romaszewski was jailed for two years and his wife, Zofia, for a year. Ms. Romaszewska-Guzy herself was in jail for six months, and her husband, Jaroslaw Guzy, then a student leader, was imprisoned for a year.

“I suppose we are a criminal family,” Ms. Romaszewska-Guzy said.

These days, the Polish government is one of the most active supporters of the democratic opposition in Belarus. And Poland’s Foreign Ministry provides an annual stipend to Belsat TV of nearly $6 million, the bulk of its annual budget of about $9 million. The Swedish government is providing a grant of about $3 million over a three-year period that ends in 2013.

That support led at least in part to accusations by Mr. Lukashenko’s government last month that Poland was trying to destabilize Belarus. Poland denies that claim. Ms. Romaszewska-Guzy said that the role played by Western radio stations like Radio Free Europe, France International and the BBC in providing independent news to Poles during the Communist era gave Poles an alternative view of the news. Now, she says, Belarussians should have that opportunity, too.

“It’s about giving something back — in this case providing independent news to Belarus,” she said. “After all, the underground opposition in Poland during the 1970s and later under martial law depended so much on news from international broadcasting stations.”

“I suppose what we are doing inside Belarus is a kind of modern samizdat,” said Ms. Romaszewska-Guzy, referring to how information under the former Communist governments in the Soviet Union and Eastern Europe was disseminated on smudgy carbon-copied pages.

So when freelancers from Belarus offer to work for Belsat TV, Ms. Romaszewska-Guzy plays down the glamour of such a job and plays up the risks.

“Our contributors know what they are letting themselves in for,” she said. “I tell them that it is their choice, their fate, their own responsibility. I tell them that I cannot guarantee their security. It is Lukashenko who is responsible.”

At Belsat’s makeshift studios, which are inside the headquarters of Polish Television, Mr. Dzikavitski says that apart from the challenges inside Belarus, the channel needs cameras and transmission equipment, in addition to money for programming and training.

But despite the budget restraints and the conditions in which Belsat’s journalists work — they cannot attend official events or seek information from the authorities — it broadcasts the news every day.

Ms. Romaszewska-Guzy said the continued actions of the Belarus security forces, which have cracked down on the opposition leaders as well as teachers, lawyers and journalists, underscored the need for timely news delivered to Belarussians.

“The repression, instead of stopping us, forced us to change strategy,” she said. “We decided to try and respond in real time to what was happening in Belarus.”

Belsat TV is now watched by nearly 761,000 people, or about 10 percent of the population, according to the Polish Zerkalo-Info Research Center.

“People want the truth,” Ms. Romaszewska-Guzy said. “It is what we wanted when we lived under Communism.”