Posts from ‘January, 2010’

U.S. Supreme Court Decision on Mac’s Shell Service v. Shell Oil Products Case could affect “tens of thousands” of US leases

WASHINGTON (CN) – The Supreme Court heard arguments Tuesday over whether Shell Oil terminated a contract with franchise gas stations — in violation of a Petroleum Market Practices Act — when it raised fees.

John Donovan

For several years, Shell Oil Products, a division of Royal Dutch Shell Plc, was complicit in a sleazy fraud perpetrated on customers at an oil lube chain in Illinois.

I published an article on the subject in August 2007.

USA consumer fraud involving Pennzoil and Shell Oil Products

As a result of Shell being legally compelled to supply me with Shell internal communications, we now know about the frantic activity that was going on inside Shell at the time in relation to my article about the scam. (Some information has been redacted from the emails by Shell on claimed legal grounds)

Internal communications never meant for public consumption are of course a much better guide to the real dna of a multinational corporation than its global advertising or PR propaganda, including sham business principles designed to deceive investors.

The Shell internal emails in this case show that advice was sought and given on ‘weathering’ the attention of Mr Donovan.

Extract: “On ‘weathering’ the situation: exactly so -- best thing is for us to keep our heads down, not be drawn into responding to D’s allegations (which would play into his hands) or making public statements on it. Unless there is a significant takeup by US media, NGO or lawyers on behalf of customers, Donovan will sooner rather than later turn his attention to other existing (eg North Sea safety etc) or new issues. However, he won’t forget about it -- he is always looking for linkages so he can present these as supposedly reflecting a pattern of improper behaviour, rather than being isolated (and usually inaccurate, misinterpreted or exaggerated) incidents.”

Shell arranged “monitoring of media (especially The Chicago Times and The Chicago Sun-Times”

Shell “assembled an issues team that has had daily telecons so everyone stays updated.”Revealed in same email: “We continue to monitor his website. We have assigned one of our attorneys to monitor, and have given instructions to other employees not to visit the site. We will continue to hold meetings regularly…” Goes on to say: “any Shell response would be likely to give D credibility and trigger interest by eg the media.” Confirms: “US Downstream are running this, linked to the Lubes COB in Shell Centre.

Email on 6 September 2007 says: “…our legal counsel continues to monitor the website for any potential updates/new articles that Donovan could post.

It is notable that although our articles are characterized in the Shell internal emails as being “usually inaccurate, misinterpreted or exaggerated”, there is no denial that the fundamental facts in the relevant case -- Shell complicity in a long term consumer fraud -- are true. Hence the concern about lawyers picking up the story from the media and bringing a class action against Shell.

Shell management tactics in dealing with the events brought to its attention by a loyal, diligent and honest employee and its response to my article, demonstrate once again that the pledges of honesty, integrity and openness proclaimed in Shell’s business principles are nothing more than a confidence trick.

The Pennzoil story was brought to us by an insider who worked for the company for over 25 years. Like so many other disillusioned Shell employees, he was shattered by the discovery that Shell is not the ethical company it claims to be.  We have numerous Shell internal emails supplied by the whistle blower. They provide evidence that monetary considerations take priority over employee safety and mere ethical considerations, such as drivers being deliberately cheated by fraudulent activity.

The Shell internal emails supplied to us by the whistle blower also mention improper activity at Jiffy Lube outlets, a Shell Oil subsidiary.

FINANCIAL CHRONICLE Mumbai

Labour issues hold up Essar’s deal with Shell

By Yassir A Pitalwalla   Jan 19 2010, Mumbai

Royal Dutch Shell has for the second time extended its exclusive negotiations with Essar Energy Holdings on the sale of three of its European refineries. The two sides still have to settle issues relating to personnel, pensions and health, and safety and environment liabilities.

The exclusive talk period was first extended in November and is believed to have ended in December.

David Williams, spokesperson for Royal Dutch Shell, confirmed to Financial Chronicle that the exclusive negotiations were still on but declined to give details. An Essar spokesperson gave the same response.

An industry official said Ruia family members and senior executives, including Essar Oil’s managing director Naresh Nayyar, are negotiating with Royal Dutch Shell. He said some issues had already been settled. But pensions, human resource deployment and contracts and potential liabilities with respect to health safety and environment are still unresolved issues.

Pension issues had slowed down the Tata bid for Jaguar Land Rover and Corus. British pension schemes tend to have unfunded liabilities that may require topping up on a periodic basis in line with the law, according to experts. Health, safety and environment regulations have also become key issues.

One of the three refineries on sale is at Stanlow in the UK. On November 20, Graham Daley of UNITE, Britain’s largest trade union and the one officially recognised at the refinery, wrote to Nayyar saying that Essar would inherit an existing trade union recognition dispute with Shell.

Daley said UNITE wanted to meet Nayyar before a sale agreement was signed. “I have been involved in transfers between European business and Indian business in the past, and great difficulties could have been avoided if we had met before the sale had been completed.”

His letter further said, “In one particular instance the purchasers of the business were unaware of the costs of providing occupational pension schemes, and of complying with our stringent health and safety standards. Had they known they would have negotiated a lower price for the business.”

The three refineries have a combined capacity of 26 million tonnes per annum (mtpa) along with associated infrastructure, though the utilisation is between 20 and 23 million tonnes.

SOURCE ARTICLE

Jan. 19 (Bloomberg) — Royal Dutch Shell Plc, Europe’s second-largest oil company, faces shareholder scrutiny of the investment risks at its Canadian oil-sands projects as environmental groups object to development plans.

A coalition of 142 shareholders have requested a review of the risks, in a resolution to be addressed at Shell’s annual meeting in May, according to FairPensions, which is coordinating the investor campaign. A statement from FairPensions cited a likely increase in carbon costs and potential damage to Shell’s reputation from environmental degradation as some of the risks.

Shell expects the resolution to be on the agenda for the May 18 meeting, it said today in an e-mailed statement. The shareholders behind the request represent about 0.15 percent of the outstanding shares, while oil sands represent 8.4 percent of Shell’s proven reserves. Shell will have until the shareholders’ meeting in 2011 to complete its review, the coalition said.

Energy companies have begun to extract heavy oil from tar sands in countries such as Canada and Venezuela as advances in technology and higher crude prices make production feasible. Some have faced protests from environmental activists over the release of greenhouse gases from such projects. In September, Greenpeace forced Shell to suspend 155,000 barrels of daily production at the Muskeg River Mine in Alberta after 25 demonstrators evaded guards to chain themselves to equipment.

Boost Emissions

Greenpeace has said it takes three to five times more energy to extract oil from sands than it does to produce conventional crude. Planned tar-sands projects in Alberta will increase greenhouse-gas output to as much as 140 million tons a year by 2020, about the same as Belgium’s current emissions, according to the organization.

Shell Chief Executive Officer Peter Voser told a Calgary audience on Sept. 11 that the sands emit only 5 to 15 percent more carbon dioxide than conventional oil production projects.

Shell is betting on multibillion-dollar oil-sands ventures in Canada and other so-called unconventional projects such as a gas-to-liquids plant in Qatar to boost output, which has fallen for six years. Higher costs and lower crude prices last year limited development of oil sands, which are more expensive to exploit than conventional deposits, Voser said in October.

Shell, based in The Hague, has delayed an application for regulatory approval for its Carmon Creek oil-sands development in Canada, having already postponed the second-phase expansion of its Canadian Athabasca project because of rising construction costs.

The International Energy Agency said in its World Energy Outlook in November that “oil-sands projects in Canada account for the bulk of the suspended oil capacity” resulting from the global economic slowdown.

To contact the reporter on this story: Fred Pals in Amsterdam at fpals@bloomberg.net

Last Updated: January 19, 2010 07:41 EST

Movement for the Emancipation of the Niger Delta denied involvement in the abduction of the contractors.

Lagos, Nigeria (CNN) — Four Shell contractors — three Britons and a Colombian — have been released after being kidnapped a week ago, a police spokeswoman said Tuesday.

The abductions in the oil-rich Niger Delta happened last Tuesday when attackers ambushed a bus in which the four were traveling, according to Rita Inoma, a police spokeswoman in Port Harcourt, Nigeria.

The former hostages were doing well, Inoma said.

It was unclear where the hostages had been held and what prompted their release.

The ambush last week killed a police constable and wounded a driver, Inoma said.

The bus was traveling from Port Harcourt, which is southeast of here, the Nigerian capital, to Afam, Nigeria, Inoma said.

The Movement for the Emancipation of the Niger Delta (MEND), which is known for its kidnappings of oil workers in the region, had announced after the abduction that it had no involvement in the kidnappings of the Shell contractors.

The militant group has demanded a fairer distribution of the country’s oil wealth and for the release of its members imprisoned by the government.

CNN’s Christian Purefoy contributed to this report.

The speed with which cost savings and efficiencies introduced in the program can filter through to Shell’s financial performance will determine whether the company can return to profit growth early in the first half of the year, or if that recovery will be delayed to the third or fourth quarter as some analysts fear.

culturemap HOUSTON

A big change may be in store for the first downtown skyscraper developed by the legendary Gerald D. Hines — the 50-story One Shell Plaza in the center of Houston. There’s credible market intelligence indicating that Shell Oil — the namesake tenant of the landmark building — could be moving out, or at least shrinking its presence significantly.

“Shell is clearly talking about downsizing its downtown offices,” says Sanford Criner, executive vice president of the CB Richard Ellis real estate firm.

Houston is the U.S. headquarters of the European energy firm – Royal Dutch Shell, which is based in The Hague. Its Houston workforce totaled 13,000 people last year. A few months ago, Shell announced that it was laying off thousands globally and a significant number of Shell jobs reportedly have been moving from Houston to low-cost labor markets in India and the Philippines.

It’s More Than a Building

One Shell Plaza is a historic place. When it opened in 1971, it was the tallest building in the city and gave notice to the world that Houston was destined to be an important international city with a legitimate claim as Energy Capital of the World.

The Shell skyscraper also launched Gerald Hines toward a career as the premier developer of high-rise office buildings.  Hines Interests, founded in 1957, had been busy in suburban Houston in the 1960s, developing small office buildings on Richmond Avenue and warehouses around town. With One Shell Plaza, Hines stepped into the big leagues. Hines shaped the Houston skyline with its tallest building — the 75-story JP Morgan Chase Tower — and amazing buildings like Pennzoil Place, Bank of America Center and more. Of course, Hines also developed the Galleria, the First Colony master-planned community, and hundreds of other projects around the world. But downtown Houston is the most visible canvas for Hines’ masterworks.

In downtown Houston, Hines also proved that quality architecture could be an excellent investment. Companies like Pennzoil paid top-dollar rents to be in a noteworthy tower with great design. And it all started with One Shell Plaza, a travertine-wrapped tower designed by Skidmore, Owing & Merrill. (Architecture buffs note that Wilson, Morris, Crain & Anderson served as associate architects on the project and Bricker + Cannady handled a massive renovation of the building in the 1990s.)

One Shell Plaza, located at 910 Louisiana, also made the street one of the preferred addresses in downtown. Other developers and corporate tenants wanted to be there. The Shell building is a classic that is still getting accolades. One Shell Plaza, along with its sister property, the 26-story Two Shell Plaza, recently received LEED Gold Certification, recognizing their achievement in sustainability and energy efficiency.

Moving On

Shell, the largest tenant in the 1.6 million square-foot building, couldn’t move out immediately even if it wanted to. Its space is subject to long-term leases and the company might have to find others to sublease its space to avoid a large financial hit.

The Reliant Energy Plaza, 1000 Main St., has been mentioned as a possible location for a downsized Shell. Reliant Energy Plaza has an advanced “trading center” wired with extensive electricity and broadband capacity for dense banks of computers that might be appealing to Shell.

It may be awhile before we hear a definitive word about Shell’s downtown presence. A contraction by Shell would weaken the downtown office market, which is facing higher vacancies and lower rents in the future.

Even if Shell left and One Shell Plaza had to be renamed, it would take a long time for the new name to stick in the local vocabulary. A lot of people still call Hines’ 64-story Williams Tower by the Galleria by its original name – Transco Tower. Letting go of the Shell Plaza name won’t be easy, either.

Even the Cops Grooved With It

A few decades ago, the Houston Police Department employed some officers who had a sore spot against guys with long hair and other suspected hippies. Anytime, you could get pulled over because having long hair and a mustache was “probable cause” for HPD to make a traffic stop. I was in the passenger seat late one night when my slightly shaggy brother-in-law got pulled over in the Montrose area. Even though we were doing nothing wrong, the policeman gave him general hassle, scrutiny and in-depth questioning.

“You expect me to believe you work at One Shell Plaza?” the cop asked my brother-in-law. To prove it, my brother-in-law dug out his Shell Plaza ID badge and the policeman immediately waved us on and we drove away free.

No other office building in Houston had the cachet that even the ordinary patrolmen on-the-beat respected. The common man knew the One Shell Plaza and was proud of it. It was Houston’s tallest and best office tower.
If you lived in Houston in 1971, then you know One Shell Plaza was a big deal. And it still is — with, or without Shell.

Ralph Bivins, former president of the National Association of Real Estate Editors, is editor-in-chief of RealtyNewsReport.com.

SOURCE ARTICLE

Interactive Investor

Oil heavyweight Shell (RDSB) has come under attack from a hoard of investors demanding greater clarification surrounding its investment in Canada’s controversial tar sands.

The Anglo-Dutch group has been called upon to include a special review of the risks associated with its Alberta oil sands operations in its upcoming May annual general meeting, after mounting pressure from a coalition of investors.

Up to 142 investors, including Co-Operative Asset Management and UNISON Staff Pension Scheme, have teamed up with responsible investment organisation FairPensions, to demand Shell addresses its concerns.

The FTSE 100 major will face a barrage of questions regarding environmental and human rights problems, and will be asked to justify the financial wisdom behind the investment. At present, tar sands account for less than 2.5% of the group’s total oil and gas production but have proved a costly investment.

Earlier this year, chief executive Peter Voser was forced to defend his tar sands investment after it was revealed that they lost the company $42 million within the first three months of the year. Shell has always insisted that its decision to enter the area is driven by the need to find new sources of oil and Voser maintained that it took a long-term view on the projects, spanning 30-40 years and was unaffected by short-term volatility.

However, Niall O’Shea, head of responsible investing at the Co-Operative Asset Management, believes Voser has not provided sufficient answers to his army of investors. “Given Shell’s level of commitment to oil sands there is a greater obligation to shareholders to reassure how it would cope under a number of scenarios.”

O’Shea lists the cost of carbon capture and storage, sustained high oil prices and the cost of cleaning up the locality as questions Shell must answer and urges the group to be “more rigorous and transparent with their investors”.

Shell has been one of the first companies to embark on developing oil reserves in the region, along with fellow heavyweights BP (BP-) and Total.

FairPensions argues that tar sands cause more climate change damage than that of conventional oil due to the much higher degree of greenhouse gas emissions emitted. While Canada is already on course to miss its Kyoto protocol targets, the expansion of oil sands could make “all but impossible any efforts to cut emissions on 1990 levels”.

FairPensions chief executive Catherine Howarth commented: “All are united in registering concern with the risks involved in Canadian oil sands, and this reflects rising public concern not just with oil sands but with companies’ impact on climate change. We expect that Shell’s 2010 AGM could prove a watershed in the history of corporate accountability.”

Shell played down the furore, pointing out that the coalition of investors campaigning for the resolution, accounts for just 0.15% of its total outstanding shares.

Lawrence Poole, North American analyst at IHS Global Insight, said: “Concerning the investor backlash, the most important point to make is that it appears to be limited in both scope and scale. Quite simply, for Shell, Canada’s tar sands are about two things, namely access to resource and supply diversification. But some shareholders are worried about the risks associated with important and valid issues like emerging carbon reduction policy, environmental impact and cleanup costs, and so-on.

“It is the continued uncertainty over these unanswered questions, rather than the principle of tar sands investment in the first place, that I think is driving some investors to be vocal about risk.

“Risk assessment is important, especially in the context of sustainable and responsible investment, but at the end of the day, it’s hard to argue with at 200 billion barrels of bitumen reserves lying in close proximity to the world’s largest oil consuming market.”

However, executive director of Greenpeace UK, John Sauven, warned that the “exploitation of the tar sands if an environmental scandal on a massive scale and is set to become a campaign battleground for years to come.”

Shell’s share price was up 0.4% to 1,787p.

FROM A SHELL STANLOW INSIDER

I write to make people aware of an incident which happened recently at Stanlow refinery. A hydrogen sulphide leak had developed and an operator, using BA equipment, went onto the unit to investigate. While he was on the unit the BA set developed a problem and he hastily made an exit from the unit. Following the incident the operator submitted a safety report highlighting the failure of the set.

Shortly after the event the operator received a phone call at home from one of my colleagues who tried to persuade him to change his statement about the incident, and to say that the BA set had failed during the pre-use checks. By saying this he was told that the HSE would not need to be involved! The person who contacted the operator was Stuart Warburton, manager of fire and security department.

It concerns me that a man in such a position should demonstrate such disregard for the health, safety and ultimately lives of people who work for him either directly or indirectly.

It seems to be a sign of the times that people are prepared to try and prevent a true and thorough investigation by the HSE, which could prevent a future fatality, just to prevent both themselves and their department from looking bad. I would urge people who work for this man day to day or during emergency situations to think carefully about the value he seems to put on human lives.

Updated 20 Jan 10 with information from a different insider source…

The incident is genuine but don’t think the details of the phone call are correct. The operator was contacted but only for detail of the failure for the report.