From The Houston Chronicle/The Associated Press

June 30, 2006

SAN RAMON, Calif. — Oil giant Chevron Corp. said Friday it is now the sole owner of U.S. rights to the Texaco brand of gas after a licensing agreement with Royal Dutch Shell PL expired.

Chevron acquired Texaco in 2001, but was required to license the Texaco retail brand to Shell for the sale of gas in the United States through June 2006. The companies have shared those rights since July 2004.

Starting July 1, only Texaco stations supplied by Chevron are allowed to carry the Texaco brand, Chevron said. The company has 1,800 retail locations in the United States with the Texaco brand.

Chevron fell 34 cents to $62.11 in early trading on the New York Stock Exchange.

© 2006 The Associated Press

Pure Energy: Norway Out?
From StockHouse Editorials
By Luke Burgess

How we might lose 4% of global oil production

When the drilling for Norwegian oil began back in 1965 there was a great deal of doubt surrounding the belief that much crude lay resting beneath the icy waters of the North Sea.

British Petroleum’s chief geologist at the time was one of the biggest skeptics around. In fact, he actually declared that if any oil was ever found, he’d drink it.

And for the next few years he managed to avoid that awful-sounding task. Oil companies drilled dry hole after dry hole. A total of 30 ‘unproduceable’ wells were drilled.

By 1969, Phillips Petroleum, along with everyone else, was on the verge of throwing in the towel. But the company’s executives in Oklahoma gave the green light for one last well.

It was a good move.

On their last stab at striking oil, Phillips’s Ocean Viking rig discovered the Ekofisk field — a simply massive find that put the North Sea on the global oil map forever.

Since first striking oil in 1969, Norway has transformed itself from one of Europe’s poorest nations to one of the richest countries in the world.

Through the decades the Nordic country has successfully managed to ramp oil production and has now become the world’s third largest crude exporter, behind Saudi Arabia and Russia.

Norway exports nearly all of its crude oil today. The country only consumes 257 thousand barrels a day, a mere 1.28% of the consumption in the U.S. and 0.32% of the world’s total consumption.

Recently, Norway has struggled to sustain production levels. Just about this time last year the country’s production fell to 2.65 million barrels per day, an 11-year low, due to production halts and to technical problems on a number of fields.

Today Norway faces further production problems with fields that are experiencing declining output. But get this — because of one threatening menace, there’s a chance that crude production could be halted all together.

How much are we talking?

Over 3 million barrels a day!

That’s over 4% of the world’s daily production!

Just image what that would do to oil prices. I haven’t devised any involved formulas or complex equations to prove what a 4% loss in daily production would do to crude prices, but I’m sure it would easily push oil prices over the $85 per barrel mark.

So how exactly might Norway’s production be halted? I tell ya…

Last Wednesday the Norwegian Oil and Petrochemical Workers Union (NOPEF) initiated an oil service worker strike.

The strike began after wage talks with the Norwegian Oil Industry Association collapsed. NOPEF rejected an offer that would have increased workers` salary, giving them a raise of about $6,110 over a two-year period.

So far the strike has taken out 87 workers on 22 installations across the Norwegian Continental Shelf, including on the seven trillion cubic foot Snoehvit project operated by Statoil ASA, a project already hit by several cost overruns and delays. The strike among members of the oil services branch has already closed operation on two oil rigs and there’s word that more worker may be pulled this week.

It might seem that losing 87 of the 2,600 total oil service employees isn’t going to be enough pull the entire Norwegian oil industry to a grinding halt. But get this — NOPEF hasn’t completely tossed out the idea to lock out all oil service employees.

A full on strike would quickly affect development well work and well maintenance, both of which are necessary to either maintain or increase production on reservoirs. And for the future of the Norwegian oil industry…that’s bad.

Now, this is unlikely and I expect the industry to give in to the union’s demands. The industry certainly does not want to lose out on any piece of the revenue — over three million barrels per day of production with a street value of over 200 million bucks. $200 million a day? That’s brining in the bacon!

But if, on an outside chance, the union does decide to go ahead with a total strike and production halts, crude futures will skyrocket.

This is not the first time the Norwegian oil industry’s has scuffled with the labor union. In 2004, the two were butting head again resulting in a four-month mobile drilling rig strike.

This loss of production forced the International Energy Agency to revise down Norway’s total output for both 2004 and 2005 by 45,000 barrels a day. In fact, the production loss added to a decline in production from a peak year between 2000 and 2001.

Depending on which platforms are affected, a complete lockout could start to hit production in only days.

Among the installations that could be affected include several of ConocoPhillip’s Ekofisk platforms, Norsk Hydro’s Hiedrun and Oseberg platforms, and Statoil’s Snorre and Statfjord platforms. The strike would hit other major oil operators such as ExxonMobil (NYSE: XOM, BullBoards), Chevron (NYSE: CXV, BullBoards), and Royal Dutch Shell (all of which have drilling programs scheduled for 2006 and 2007) as well as affect units of Baker Hughes, Schlumberger, Oceaneering International, Halliburton, Weatherford International.

Like I mentioned before, a complete lockout is unlikely…but you never know how things will turn out, until they do. In general, however, oil-union strikes, a tight rig market, and a dwindling number of major-field discoveries will certainly accelerate the inevitable decline in global crude production.

Luke Burgess is an author and editor of Energy and Capital (www.energyandcapital.com) and Gold World (www.goldworld.com). Both letters offer technical analysis on resource markets.

This is not a current news report: It is a news release from 2003 being added to our online searchable news archive under the category of “Shell Litigation”

U.S. Department of the Interior
Minerals Management Service
Office of Public Affairs

NEWS RELEASE

FOR RELEASE: August 5, 2003 CONTACT: Nicolette Humphries    (202) 208-3985 

Shell to Pay $49 Million in Settlement Agreement with Minerals Management Service

The Minerals Management Service has reached a $49 million settlement agreement with Shell Oil Company on unauthorized flaring or venting of large volumes of natural gas at its Auger platform and other facilities in the Gulf of Mexico.  The settlement agreement, which is the largest in MMS’s history, was forged in cooperation with the Department of Interior’s Office of the Inspector General, the United States Attorney’s Office for the Western District of Louisiana, and the Department of Justice.

 “A settlement of this size sends a clear message to industry that MMS is serious about compliance with its regulations,” said MMS Director Johnnie Burton.  “MMS continues to ensure the American people receive the royalties that are due from production of their natural gas, and works to conserve our nation’s resources and to ensure safe and pollution-free offshore operations.”

In August 1998, MMS discovered that Shell had continuously flared or vented between one and six million cubic feet of natural gas per day from the oil tanks at their Auger platform.  The flaring and venting had occurred since the start of production in April 1994, without permission as required by MMS regulations.  Shell also violated MMS regulations when it failed to maintain proper field records of the flaring or venting at the platform and did not report the continuously flared or vented volumes on Oil and Gas Operations Reports. 

In a letter dated September 18, 1998, MMS cited Shell for flaring or venting, reporting and record keeping violations, and ordered the company to pay royalties on the flared or vented gas.  On September 28, 1998, MMS issued Shell a Notice of Non-Compliance and Civil Penalty for Knowing or Willful submission of false, inaccurate or misleading data for four years of reports related to Auger. Following an administrative investigation, Shell agreed to correct its reports on other platforms in the Gulf of Mexico and to install the necessary equipment on the Auger platform to recover the gas that would otherwise be flared or vented. Shell has corrected its reports on 19 leases or units, some dating back to 1975.  Shell completed the equipment installation on Auger in July 1999, ending the continuous, high-volume flaring or venting from the oil tanks.  Shell has also developed a comprehensive reporting process to eliminate reporting problems throughout the Gulf of Mexico.

MMS is the federal agency in the U.S. Department of the Interior that manages the nation’s oil, natural gas, and other mineral resources on the Outer Continental Shelf in federal offshore waters.  The agency also collects, accounts for, and disburses mineral revenues from federal and American Indian leases.  These revenues totaled over $6 billion in 2002 and nearly $127 billion since the agency was created in 1982.  Annually, nearly $1 billion from those revenues go into the Land and Water Conservation Fund for the acquisition and development of state and federal park and recreation lands.

-MMS-

MMS Internet website address: http://www.mms.gov

http://www.mms.gov/ooc/press/2003/press0805.htm

From Upstreamonline
By Russell Searancke

Malaysian energy giant Petronas will build a 480-kilometre gas pipeline as part of the Sabah Oil and Gas Terminal (SOGT) integrated project.

The project, which Petronas said it was undertaking with its production sharing contract partners, involves the construction of a subsea pipeline from offshore Sabah to a new onshore oil and gas processing terminal in Kimanis, Sabah, with a storage capacity of 300,000 barrels per day of oil, and an onshore gas terminal.

The processed gas from the terminal would be transported via the 480-kilometre gas pipeline to be built from Kimanis to the Petronas LNG Complex in Bintulu, Sarawak.

Offshore Sabah has become Malaysia’s hot spot for deep-water oil exploration. Production from Murhpy Oil’s Kikeh field is expected on stream in the third quarter of 2007, followed by Shell’s Gumusut-Kakap and Malikai projects by 2010 and 2012 respectively, said Petronas.

Royal Dutch Shell Plc .com: Call for inquiry into oil rig safety regulator

Terry Macalister
Friday June 30, 2006
From The Guardian

Members of the Scottish parliament are calling for an inquiry into North Sea safety regulators, alleging they have failed to properly monitor the operations of Shell.

The move comes ahead of a report being published by Aberdeen’s sheriff court into an accident on Shell’s Brent Bravo platform in 2003 when two men died.

It follows revelations in this newspaper that a senior Shell consultant, Bill Campbell, told the oil company as far back as 1999 that employees had been falsifying maintenance documents relating to North Sea platforms. Shell rejects the allegations of tampering with paperwork.

Mr Campbell also told the Guardian that operations were still potentially unsafe and he feared another disaster. Shell said his claims could not be substantiated.

Frances Curran and fellow Scots Socialist MSPs have called on the executive to “examine the role of the Health & Safety Executive [HSE] in this matter and consider why it apparently failed to act”. The MSPs claim “considerations of profit were allowed to supersede those of safety, not just on one-off occasions but continually and that the concerns of workers, expressed to the Oil Industry Liaison Committee, were ignored by both the industry and the UK government.”

The HSE dismissed the allegations. “We served eight improvement notices on Shell between 2000 and 2002,” said a spokesman. Shell says critics such as Mr Campbell had not paid credit to the huge strides made in improving safety and in particular, reducing the number of temporary and unauthorised repairs.

A report written after the Brent Bravo accident, at the behest of the HSE, uncovered a backlog of 472 temporary repairs of which 214 were “unapproved”. Shell said the “unapproved” repairs were in the middle of gaining authorisation and the HSE says they were indeed “not recorded by Shell” but were not necessarily unsafe nor outside HSE rules.

A new internal document from the HSE, obtained by this newspaper, does appear to contradict Shell’s claim that safety had been improving in the North Sea, since 1999 and certainly after 2003.

An email obtained under the Freedom of Information Act and dated May 31 2005 from Ray Paterson, an offshore divisional inspector for the HSE in Aberdeen, to a team leader, Tom McLaren, says: “I would like to raise the issue of significant high levels and apparent increase (certainly not reduction) of maintenance backlog (out of compliance) on most Mature Assets (North ) Installations.” The Mature Assets are a reference to the Brent, Eider, Tern and Dunlin platforms run by Shell.

Mr Campbell, who worked for Shell for 24 years, told the Guardian last week he had brought his concerns to the attention of directors as far back as 1999 and again in 2004. “I am sorry to have to go public on this but if the current safety regime demonstrated by the Brent Bravo [fatal accidents] case study has failed and if improvements are not undertaken another major accident is inevitable,” he said.

Shell defended the North Sea safety regime last night. “We have an effective regulator in the HSE in that it is professional and carries out a high level of inspections and safety case reviews.”

From Houston Business Journal

Stacy Methvin has been appointed president and CEO of Shell Chemical LP, effective July 1.

In addition to her new role, Methvin will continue to have responsibility for Base Chemicals Americas and Global C4s and C5s.

Methvin takes over the leadership position from Fran Keeth, executive vice president-chemicals.

She will continue to report to Keeth from her Houston base.

Methvin began her career with Shell in 1979 as a geological engineer in the exploration and production offices in New Orleans. Since then she has held several managerial positions in E&P before taking up an assignment as president of Shell Deer Park Refining Co. in 1998, followed by president of Shell Pipeline Co. LP in 2002. She joined the chemicals leadership team as vice president of Base Chemicals Americas and Global C4s and C5s in January 2005.

Shell Chemical is an operating company that owns and operates all of the Shell chemicals companies businesses and assets in the United States.

By: Lorna Siggins in Castlebar, Co Mayo, Irish Times
Published: Jun 30, 2006

“Bertie Ahern and his backbenchers are split, aren’t they? Mary Harney and Michael McDowell are split, aren’t they? They’re together for years, we are only new into this, and if they think there’s a split, let them come on to the land with their pipe again!”

The speaker, Rossport farmer Willie Corduff, was in jovial mood yesterday outside Mayo County Council’s offices in Castlebar. A year ago, he and four colleagues were sent to jail for contempt of court over their opposition to the Corrib gas onshore pipeline.

A year later, little had changed in his view. “Shell is determined to go ahead with this pipeline and it doesn’t want compromise,” Mr Corduff said.

This was echoed by colleagues Vincent and Philip McGrath. The three were in Castlebar to present a letter to the council. Signed by several dozen Erris residents and Shell to Sea supporters, it called for a response to unanswered questions on water quality as a result of Shell’s activities at the Bellanaboy terminal site.

Brendan Philbin, also jailed last year for 94 days, joined the trio at a wreath-laying ceremony at Fenian Michael Davitt’s grave in Straide. Retired schoolteacher Micheal O Seighin was represented by his wife CaitlIn.

Vincent McGrath said Shell’s new deputy chief executive, Terry Nolan, had made it clear the firm was committed to the existing route at a private breakfast for western TDs hosted by Chambers Ireland in Dublin on Wednesday. Shell had issued a statement seeking “face-to-face dialogue through the mediation process”.

But it is understood the firm is not happy with progress at mediation.

A spokesman denied this week it had accused the Government mediator, Peter Cassells, of having “gone native” in briefings with local Mayo politicians.

By: Michael Harrison Business Editor,
The Independent - United Kingdom
Published: Jun 30, 2006

Thousands of rural households that rely on LPG for cooking and heating are being overcharged by a handful of dominant suppliers, including two giant oil companies, the Competition Commission ruled yesterday.

Unveiling plans for a shake-up in the market, the commission said that prices were higher than they needed to be because the big four LPG firms - Shell, BP, Calor and Flogas, which control 90 per cent of the market -discouraged competition and made it difficult for households to switch to other suppliers.

BP is also under investigation in the US for allegedly fixing the price of propane used by millions of Americans for cooking and heating in trailers and rural homes. A former BP energy trader has already pleaded guilty to federal charges of conspiracy to manipulate prices.

About 150,000 UK homes, mainly in rural areas, have to use LPG for cooking and heating because they do not have access to mains gas. In 2003, the latest year for which the commission has figures, the average LPG bill was pounds 800 - more than double the amount typically charged by British Gas.

After a year-long investigation, the commission has announced measures to increase competition and bring down prices. Key among these is that customers will henceforth be allowed to switch supplier without having to have a new tank installed. At present, they have to pay the upfront costs of one tank being replaced by another.

The commission also intends to outlaw the use of lengthy fixed-term contracts and notice periods which tend to be found only in the UK.

FROM THE FINANCIAL TIMES (LEX COLUMN)

Published: June 30 2006 03:00 | Last updated: June 30 2006 03:00

BP’s sunflower is wilting. Having splashed its decidedly organic logo all over the place in the past year or so, right now BP could probably use its old one: a shield.

An allegation of price-fixing in the US propane market follows other public relations disasters for BP’s American operations. The worst was a fatal explosion at its Texas City refinery in March 2005, but it also faces a criminal investigation into pipeline leaks in Alaska.

The timing is bad. The oil industry’s vast cash flows make it a tempting target for US politicians (and lawyers) when the country is fretful about energy shortages. There has already been an unsuccessful attempt to uncover price-gouging in the US gasoline market. BP, a foreign corporation, is the country’s largest producer of natural gas. Propane’s use as a heating fuel for 7m households will make it easy for critics to juxtapose images of grannies shivering in their homesteads with those of faceless commodity traders.

That said, proving manipulation in the highly volatile propane market will be difficult. The allegations against BP centre on February 2004, when the propane price spiked and appeared to disconnect from heating oil and crude oil prices, which it usually tracks. But prices also spiked much higher exactly a year before that. Similar movements occurred in the winters of 1996-97 and 2000-01.

For BP’s shareholders, there are two considerations. One is that the company must redouble its efforts to reduce exposure to such claims in its US operations, which accountfor 38 per cent of group capital employed.

The second is that, barring a meltdown on the scale of Royal Dutch Shell’s reserves scandal in 2004, high oil and gas prices, while inviting hostility, will remain the main factor moving BP’s share price.

Copyright The Financial Times Limited 2006

FROM THE FINANCIAL TIMES
By Alistair Darling and David Miliband

Published: June 30 2006 03:00 | Last updated: June 30 2006 03:00

Yesterday the government made a critical decision on Britain’s contribution to tackling climate change. The decision reflects three principles: our ambition to be world leaders in creating a low-carbon economy and to balance environmental and economic objectives; our commitment to do this through collective action at a European level; and our determination to use market mechanisms to enable businesses to find the cheapest way possible of meeting our objectives.

Our ambition to reduce emissions is balanced alongside the need to enable Britain’s economy to do business. We faced a clear choice over our contribution to the European Union’s emissions trading scheme - the most innovative attempt to reduce carbon emissions in the world. In March we began a consultation on how far we should reduce our emissions, setting out a range from 3m-8m tonnes of carbon a year.

We could have taken the easy option. In the first phase, we set tighter limits than other countries. While they struggle to meet their international obligations to reduce carbon emissions under the Kyoto treaty, our emissions of greenhouse gases are projected to fall by 23-25 per cent by 2010, nearly double the target set by Kyoto.

However, the human suffering that will result in the next 100 years from climate change could be greater than the suffering yet seen in this world. We owe it to humanity in the future to act. Across the globe, we have to be far more ambitious. That is why we have decided to adopt a carbon cap that will reduce emissions by 8m tonnes - the most ambitious figure within the range discussed. This is roughly equivalent to the carbon emissions produced by 4.5m households each year. It is a significant step towards our long-term objective of a 60 per cent reduction by 2050.

We have also decided to auction 7 per cent of our carbon allowances. The final amount raised by the auction cannot be determined in advance, as it depends on the price of carbon, but it will be substantial. We believe there is an opportunity for the UK not just to invest in renewable energy, other non-nuclear low-carbon technologies and energy efficiency, but also to build successful businesses in these fields. We will establish a new environmental transformation fund to help grasp this opportunity. The final details of the fund will be announced in the spending review for implementation, like the emissions trading scheme, in 2008.

Our decisions on emissions trading give business a framework in which long-term clean and greener investment decisions can be made. They highlight not only the level of our ambition, but the distinctive means by which we can achieve our objectives.

It is clear we must act within European institutions. The EU could be as important to the environment in the next 50 years as it has been to European peace and economic growth in the past 50. By negotiating as one block, the EU is a powerful driver of change. By creating an emissions trading scheme across Europe, we can create a framework that gives member states the confidence to act together. By enabling member states to buy project credits from outside the EU we are providing financial investment to help developing countries develop low-carbon economies and bind them into a global climate change policy framework. That is why we will support the European Commission in its efforts to enforce tough caps on member states.

But while governments and international institutions must specify the outcomes we seek in relation to carbon, we must allow businesses to find the most innovative ways of achieving these cuts. Indeed, when the Corporate Leaders Group, which represents businesses such as Shell and Tesco, met the prime minister recently, it argued that business could gain a first-mover advantage in new global markets for low-carbon technology. That is why we believe the best way to cut carbon emissions is through market mechanisms such as the emissions trading scheme.

In the twentieth century, social democrats demonstrated that greater ambition in tackling social justice must be pursued through two principles: collective action through the state and international action; and individual freedom through markets. In the 21st century, the social justice challenge is the environment - the potential human suffering we will cause to other countries and to future generations. The same combination of more ambitious goals delivered through collective action and markets will be needed. It is one we are determined to apply.

David Miliband is environment secretary and Alistair Darling trade and industry secretary

Copyright The Financial Times Limited 2006