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Royal Dutch Shell Plc .com: Shell under fire over North Sea rig safety

FROM REUTERS

Fri Jun 23, 2006 10:07am ET
By Tom Bergin

LONDON, June 23 (Reuters) – Oil workers’ unions have demanded a safety investigation of Royal Dutch Shell Plc’s (RDSa.L: Quote, Profile, Research) facilities in the North Sea, following allegations Shell deferred maintenance and falsified maintenance reports.

The Oil Industry Liaison Committee (OILC) and Amicus, trade unions that represent offshore workers, said Shell’s shortcomings showed the need for tougher regulation in the mature oil province — which could boost costs for operators.

The claims are an embarrassment for Shell, which is still struggling to rebuild investor confidence after a reserves overbooking scandal in 2004 and big cost overruns on key projects in 2005.

Jake Molloy, general secretary of the OILC, said he had written to members of parliament asking that the Department of Trade and Industry and safety regulator the Health and Safety Executive conduct investigations.

“The problem with Shell in the UK is lack of investment.. it’s time they (the DTI) did see for themselves just how bad the integrity of these installations has suffered over the last six or seven years,” Molloy told Reuters in a telephone interview.

Last week the BBC reported claims from former Shell employee Bill Campbell that a safety audit he led in 1999 showed staff had violated operating procedures and falsified maintenance records for safety critical equipment.

Campbell repeated the claims to a number of UK newspapers and said Shell staff had operated an informal policy known as TFA (Touch Fuck All) that discouraged maintenance work.

“Directives such as TFA encourages a behaviour of non compliance – The Brent TFA acronym is a potential reputation liability,” a copy of a presentation of the report seen by Reuters said. 

“SAFETY A PRIORITY”

Shell said safety was its foremost priority at all times. A spokesman said the Anglo-Dutch company commissioned Campbell’s report to see how it could improve safety. He added that improvement areas were identified and that an action plan was developed and implemented.

“A follow-up audit commissioned by Shell a year later confirmed that progress was being made,” the spokesman said.

“We absolutely reject any suggestion that we would compromise safety offshore.”

Campbell subsequently left Shell but in October 2003, after two men were killed in an accident on Shell’s Brent Bravo platform, he forwarded a copy of his 1999 report to investigators, Molloy said.

Campbell was not available for comment.

Following the deaths, the HSE asked Shell to perform a safety review. A spokesman for the HSE said the regulator had been unhappy with the findings and Shell agreed to improvements.

In May 2005, HSE inspector Ray Paterson told a colleague in an email, a copy of which was seen by Reuters, that:”The Focussed Asset Integrity Reviews (FAITs) recently undertaken by Shell has shown up similar safety related issues, if not more so, than those shown up by the Platform Safety Management Reviews (PMSRs) undertaken by Bill Campbell’s team in 1999. i.e. not much has physically changed.”

However, the HSE spokesman added on Friday that “the inspectors are seeing continued improvements” now.

Shell Expro was fined 900,000 pounds ($1.65 million) last year for the 2003 Brent Bravo deaths.

INDUSTRY-WIDE PROBLEM

Molloy said safety was a problem across the UK industry because the big oil firms were reluctant to invest in ageing equipment operating on declining North Sea fields, while their focus shifts to more prospective sites such as West Africa.

In another email dated May 2005, the HSE’s Paterson echoed these worries.

“I would like you 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 .. some positive action is required in this area,” he told another inspector.

“It is Shell today but we believe other operators will be found wanting,” trade union Amicus said in a statement.

The controversy follows investigations into British rival BP Plc (BP.L: Quote, Profile, Research) over safety violations at U.S. refineries — including an explosion that killed 15 workers in Texas — and pipeline leaks in Alaska.

Shell and BP have led the industry in trying to cultivate a greener image in recent years, an effort that has seen hundreds of millions of dollars spent on glitzy advertising campaigns.

Shell’s North Sea unit, Shell Expro, is part owned by U.S. oil major Exxon Mobil Corp (XOM.N: Quote, Profile, Research).

© Reuters 2006. All Rights Reserved.

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