Archive for July, 2010

Company ramps up effort to clean Mich. river spill (AP)

Wednesday, July 28th, 2010 | Finance News

BATTLE CREEK, Mich. – Michigan's governor on Wednesday sharply criticized attempts to contain a large oil spill making its way down the Kalamazoo River after the company responsible for the spill said it had redoubled its efforts to clean up the mess.

Gov. Jennifer Granholm called on the federal government for more help, saying resources being marshaled by the federal Environmental Protection Agency and Enbridge Inc. are "wholly inadequate." Enbridge has been working to clean up the spill since it said its pipeline in southern Michigan on Monday leaked more than 800,000 gallons of oil into Talmadge Creek, which runs into the Kalamazoo River.

Earlier Wednesday, Enbridge had said it was doubling the number of workers sent to help contain and clean the large spill. The EPA also was bringing in additional contractors, saying it's working to ensure a swift and effective cleanup of the spill that it believes may be more than 1 million gallons.

"EPA and other federal and state agencies mobilized immediately in response to this spill and have taken a series of steps to minimize the damage this spill does to the river and surrounding communities," EPA Administrator Lisa Jackson said.

The company did not immediately respond to Granholm's statements.

Granholm warned of a "tragedy of historic proportions" if the oil reaches Lake Michigan — still roughly 80 miles away from where oil has been seen — as a state official who conducted a flyover reported oil had spread past a key point in the river upstream of Kalamazoo and was entering a PCB-laden Superfund site.

"The new resources that have been provided so far are wholly inadequate," Granholm told reporters on an evening conference call.

Shortly after Granholm spoke to the media, a news conference that was to include the company, EPA and other officials was postponed because of what Enbridge spokesman Kevin O'Connor called scheduling conflicts. Another briefing has not yet been scheduled.

The Calgary, Alberta-based company had about 200 employees and contractors working on the spill on Tuesday. The EPA also was bringing in additional contractors, likely pushing the overall work force on the spill Wednesday over 400 people. The spill near Marshall had killed fish and coated wildlife as it made its way westward about 35 miles downstream past Battle Creek, a city of 52,000 residents about 110 miles west of Detroit.

The spill was a drop in the bucket compared to the massive spill in the Gulf of Mexico, but it is still quite large and government and company officials have vowed not to let the Gulf spill diminish from their cleanup efforts in Michigan.

An 800,000 gallon spill would be enough to fill enough 1 gallon jugs, lined side by side, to stretch for nearly 70 miles. It would also fill a wall-in football field, including the end zones, with a 14-foot-high pool of oil.

Granholm has declared a state of disaster for Calhoun County and potentially affected areas along the river, and President Barack Obama called Granholm to offer federal support.

"The Gulf spill has raised awareness about oil spills and the damage they can do and helped make people more interested," said Dave Petroelje, west Michigan director of the environmental group Clean Water Action.

Tom Sands, deputy state director for emergency management and homeland security, said during the conference call with Granholm, that he had seen oil past a dam at Morrow Lake, which is a few miles downstream from Battle Creek and upstream of Kalamazoo, the largest city in the region. State officials previously said they didn't believe the oil would spread past that dam. They also had said they didn't believe the oil could make it to Lake Michigan, where coastal communities are heavily dependent on summer tourism.

"Some of the oil has gone over the dam," Sands said. "It was a very light sheen at that point."

An oily reflective sheen could be seen in patches along the Kalamazoo, and the affected area still had a strong odor, although not as strong as on Tuesday.

Anil Kulkarni, a mechanical engineering professor at Penn State University, said containing and cleaning the spill quickly was vital to the river's ecology. Snails, frogs, muskrats and even birds eat, live and nest on or near the riverbank.

"The river banks are nearby. It has more potential to inflict damage because of the proximity to land. Anything that comes in contact with oil is going to be affected badly. It prevents the natural life of species, whether it's collecting food or anything else."

Enbridge CEO Patrick D. Daniel said Wednesday the company has made "significant progress," though he had no update on a possible cause, cost or length of cleanup.

"We still have a long way to go in terms of cleanup," he said. Enbridge said it hasn't had trouble securing booms needed to work on the spill, a possible concern because of the resources already committed to the cleanup in the Gulf.

Enbridge affiliates have previously been cited for skirting environmental regulations in the Great Lakes region.

Houston-based Enbridge Energy Co. spilled almost 19,000 gallons of crude oil onto Wisconsin's Nemadji River in 2003. Another 189,000 gallons of oil spilled at the company's terminal two miles from Lake Superior. Most of that was contained.

In 2007, two spills released about 200,000 gallons of crude in northern Wisconsin as Enbridge was expanding a 320-mile pipeline. The company also was accused of violating Wisconsin permits designed to protect water quality during work in and around wetlands, rivers and streams, the Wisconsin Department of Natural Resources said. The violations came during construction of a 321-mile, $2 billion oil pipeline across that state. Enbridge agreed to pay $1.1 million in 2009.

The leak in the 30-inch pipeline, which was built in 1969 and carries about 8 million gallons of oil daily from Griffith, Ind., to Sarnia, Ontario, was detected early Monday. Calhoun County officials said they weren't concerned about the municipal water systems supplying Marshall and Battle Creek, but that water would be tested.

Enbridge estimated that about 819,000 gallons of oil spilled into Talmadge Creek. But state officials said they were told during a company briefing Tuesday that an estimated 877,000 gallons spilled. The EPA said Wednesday night it believes more than 1 million gallons of oil may have leaked into the river.

The river already faced major pollution issues. An 80-mile segment of the river that begins at Morrow Lake and five miles of a tributary, Portage Creek, have unsafe levels of PCBs and were placed on the federal Superfund list of high-priority hazardous waste sites in 1990. The Kalamazoo site also includes four landfills and several defunct paper mills.


Associated Press Writers David Runk and Corey Williams in Detroit contributed to this report.

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Visa beats expectations but debit law looms (Reuters)

Wednesday, July 28th, 2010 | Finance News

NEW YORK (Reuters) – Visa Inc (V.N), the world's largest credit and debit card processing network, posted higher-than-expected quarterly profit on Wednesday, but analysts said new processing fee regulations could cut into future profits.

The company's shares edged higher in after-market trading following the results and then edged lower. Visa's Chief Financial Officer said he believes the economy is recovering and thinks the chance of another recession is low, but added the recovery may be protracted.

The San Francisco-based company said its revenues increased 23 percent from a year earlier, to $2.0 billion, as consumers increased their willingness to travel and started spending more on their credit and debit cards after a severe recession.

But on a conference call with investors, attention focused on a new law expected to limit debit processing fees, known as the Dodd Frank law.

The law "will reshape the U.S. debit landscape," Chief Executive Joseph Saunders told analysts on a conference call on Wednesday.

Visa dominates the U.S. debit processing market and is more exposed than its rival MasterCard Inc (MA.N) to a cutback in debit processing fees. Concerns about the impact of the law have weighed on Visa's shares for weeks.

Saunders would not quantify the law's impact on Visa's future revenues, despite repeated analyst questions during the call. The Federal Reserve still has to determine exactly how fees will be imposed and any rules will not be implemented for some time, he said.

The law was signed last week.

"Our business should not begin to feel the effects of the legislation until this time next year," Saunders said. "I expect the impact will be modest and contained to our fourth fiscal quarter" of 2011.

Those comments did not completely reassure investors and analysts, who are also concerned the law could open the door to more damaging regulation of credit card processing fees. Merchants have long protested the fees, which they pay to banks and networks every time a consumer pays for an item with a credit or debit card.

Earning strong profits in the coming quarters may not help credit card processors.

"It could be fuel to the fire" for lawmakers and critics, said Michael Nix, a portfolio manager at Greenwood Capital Associates, which owns Visa shares.

By continuing to beat market expectations despite a shaky economic recovery, Visa may give lawmakers cause to say "these guys shouldn't be making so much money on the back of consumers and merchants. That's basically what they're saying" already, Nix said.


Visa offered some positive signs for the economy, although executives expected to see more "bumps" in the recovery from a severe global recession.

"Overall, our view is that we are in recovery. What we're seeing on balance suggests ... (a) lower probability of a double dip than what we might have suspected a quarter ago," Chief Financial Officer Byron Pollitt said. "But we also believe that the recovery is going to be protracted."

Payment volume growth on Visa credit and debit cards rose 13 percent to $745 billion in the quarter ended in March from a year earlier, boosting revenue in the latest quarter. Cross border volume growth was 17 percent for the quarter ended in June, indicating that more consumers are spending money on traveling to different countries.

"The underlying volume trends are improving ... That's a good indicator of the health of the global consumer," said Mayank Tandon, an analyst at boutique investment bank Signal Hill.

Visa reported net income of $729 million, or 97 cents per share, for the third quarter ended June 30.

That was down slightly from Visa's year-earlier net income of $729 million, or 97 cents per share, which included proceeds from the sale of the company's stake in VisaNet do Brasil. Excluding the impact of that sale, Visa earned 67 cents per share a year earlier.

Analysts on average had expected Visa to report earnings of 93 cents per share, according to Thomson Reuters I/B/E/S.

Visa shares closed down 1.87 percent on Wednesday, at $75.18.

(Reporting by Maria Aspan; editing by Andre Grenon)

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Kokomo GM plant reassessing business operations (AP)

Wednesday, July 28th, 2010 | Finance News

KOKOMO, Ind. – A company spokesman says General Motors Co. is reassessing operations at a plant in Kokomo.

GM spokesman Kevin Nadrowski says officials at the Kokomo Integrated Circuit Fab plant met with 375 workers Wednesday to say they're "assessing the business model at the plant based on recent business developments."

Nadrowski wouldn't comment when asked if GM is considering closing the plant, which makes auto electronics.

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