Royal Dutch Shell Plc  .com Rotating Header Image

What happens if Statoil is involved in major Arctic Ocean blowout?

Comment by former Shell employee on the article: Shell, Statoil to Conduct Seismic Studies in Chukchi Sea

It is my understanding that Statoil, which just received permission from a Federal court to proceed with seismic exploration studies in the Chukchi Sea, was at one time wholly owned by the Norwegian government. Today it is a privatized company but the Norwegian government still holds a majority of the stock in the company. It is my understanding as well that Statoil is the last of the three Norwegian oil/gas production companies established by Norwegian government policy in the early 1970’s to develop their oil and gas resources in their sector of the North Sea. As such it is the ‘flagship’ oil company of Norway and responsible for the development of Norwegian oil and gas resources, which are quite substantial.

My question is this: If Statoil were to be involved in a major blowout incident in the Arctic that was beyond the capacity of the company to deal with financially, is the Norwegian government, the majority shareholder, on the hook for the balance of any cleanup costs? I bet nobody has an answer for that question.

Shell is a completely independent company. Statoil is not. It seems to me that if Statoil is ever involved in a major incident, like BP’s or some of Shell’s past incidents, there is the possibility of a serious diplomatic ‘dustup’ over cleanup costs and the manner in which the company deals with the situation.

And how would the Norwegian government deal with a situation where an incident and the subsequent financial burden of cleanup threatened the long term financial stability of that country’s ‘flagship’ oil company?

It seems to me the US government is sailing into uncharted diplomatic waters when it allows state-controlled oil companies to explore and produce in US territorial waters. There are issues here that need to be resolved. It is also readily apparent that the Dept. of the Interior and MMS are in over their heads on these matters. Perhaps it is time to seek some competent and professional assistance from the US State Dept.

I would presume however, that when it comes to operating in the cold, difficult environment of the Arctic it is Statoil that has far greater technical and managerial competence than Shell Oil USA, which has never operated a production project in the Arctic, and is mostly a Gulf of Mexico based company. In fact, it is a good bet Statoil’s competence exceeds that of BP and Exxon. So, perhaps Statoil is actually the preferred operating company in US Arctic waters. Shell, et al, could probably learn a thing or two from Statoil.

It also seems to me that the only oil companies that should be allowed to operate in Arctic regions are the ‘majors’, simply because only they have the financial where-with-all to deal with a major accident and its aftermath.

And it also seems that the oil industry should be required to establish an ‘incident/accident’ fund of several billion dollars, similar to that being contemplated in the Gulf of Mexico (to great public fanfare). All operators would contribute to this fund. This fund would insure that there would be readily available financial resources to react immediately to a major ‘Arctic environment incident’. The oil industry has never operated accident/incident free anywhere in the world, and they most certainly haven’t been able to do so in the Alaskan Arctic. There will be a major offshore incident if production is allowed in the Arctic. So, it seems that a ‘damage control’ plan should be established and funded prior to development, and prior to the ‘incident’. If these companies have billions to spend on leases they most certainly have the cash to contribute to the establishment of such a contingency fund.

RELATED ARTICLES

Statoil rewrites the rulebook: Sept 2007

Statoil wants to drill off Greenland: 25 November, 2009

forum magazine – Statoil’s clean sweep on safety

Another article on Statoil. Maybe the WWF would be interested in this and perhaps lobby for the imposition of Norwegian safety standards in the Arctic offshore! They have the ear of the White House, so why not raise the issue?

Why Norway’s offshore drilling is safer: 3 May 2010

This recent Guardian article on oil rig safety issues also mentions Statoil: BP threatened with legal case over safety of all its oil rigs

Norway’s offshore oil drilling safety record: 4 May 2010

For Big Oil, the N-word is “nationalize”: 27 May 2010

The real driving force in the Norwegian oil industry for safety, the environment, etc. is the Petroleum Safety Authority. I have included a link to their web site. They have their regulations on-line. PETROLEUM SAFETY AUTHORITY NORWAY

I have attached a link to an article in off-shore technology about BP’s proposed development of the Liberty Field in Alaska. It is interesting because of the use of extreme extended reach drilling technology. The cost of building a gravel island directly above the field was prohibitive. BP didn’t even consider some sort of man-made platform.

BP slows down plans for Liberty oil field: 6 July 2010

Six lessons from the BP oil spill: 10 July 2010

BP America, BPXA may be fined $500m for repeated violations: 1 April 2009

Poisoning the Well: Jan 1997

Frontier Discoverer (The Frontier Discoverer was originally built as a log carrier and was converted in 1975 to a Sonat Offshore Drilling Discoverer Class turret moored drillship.)


Comments are closed.

%d bloggers like this: