The Washington Post

Oil giant BP has agreed to pay a record $50.6 million fine for safety violations at a Texas oil refinery where a 2005 explosion killed 15 workers.

Although the fine pales in comparison with the billions of dollars BP has committed to pay for damages caused by the oil spill at its well in the Gulf of Mexico, it is the largest penalty in the history of the federal Occupational Safety and Health Administration.

Under the agreement, BP will also invest $500 million between now and 2016 to upgrade safety conditions for workers at the refinery in Texas City, about 40 miles southeast of Houston.

“The size of the penalty rightly reflects BP’s disregard for workplace safety and shows that we will enforce the law so workers can return home safe at the end of their day,” Labor Secretary Hilda L. Solis said.

Scott Dean, a BP spokesman, disputed the assertion that the company has a disregard for safe working conditions. He said OSHA and BP “have agreed to put our differences aside and move forward collaboratively” to enhance workplace safety at the refinery.

OSHA officials have blamed the explosion in Texas City on a piece of equipment that overfilled with highly flammable liquid hydrocarbons. Alarms and gauges that were supposed to warn of the overfill did not work properly.

Also Thursday, BP said officials were conducting tests to determine whether further work is needed to seal the well in the gulf.

A final decision was expected Friday on whether to drill a relief well to allow for a “bottom kill” procedure, in which mud and cement are pumped from deep underground to seal the well permanently.

– Associated Press

SOURCE ARTICLE

Another leaked internal email from the Corrib Gas Project supplied by the “Celtic Tiger 5″ group of dissident Shell employees. Ancient but revealing.

From: McGoldrick John
Sent: 07 January 2000 16:39
To: Adlam, John; Easey John; Simpson Mike; Steen Rosemary
Subject: RE: Corrib – Design Basis for Commerciality Review

Seems to be a problem with table 3.4  low reserves case is higher than base. I’m also very nervous about being specific on paper about landfall or pipeline routes ( see 7.4.1.) Can we avoid this? I work on the assumption that whatever is distributed will become public ( at the very least BGE will get a copy).-  Rapellez  “Dublin est un village”

John

San Francisco Chronicle

Friday, August 13, 2010

By Edward Klump – Aug 12, 2010 9:05 PM

From a former Shell employee…

This follows up on my article… What happens if Statoil is involved in major Arctic Ocean blowout?

I am absolutely certain that senior level Statoil management is fully aware of the potential ‘political consequences’ if any of their exploration or production operations in US Arctic waters were to suffer from a major ‘environmental incident’. The BP fiasco has sensitized the entire industry to that issue. I am also certain that the Norwegian government is likewise aware of the potential consequences.

(I am also certain that the Dept. of Interior and MMS are in over their little heads and clueless about how to deal with such a situation.)

So, it it my guess that discussions between Norwegian governmental representatives and Statoil representatives about Statoil operational policies in US waters have already taken place. And it is my guess the decision has already been made at Statoil to follow the far more rigid ‘Norwegian standards’ for operational and environmental safety when operating in US waters. This decision is not only a ‘good’ business decision, but politically wise as well. Statoil clearly cannot afford to be involved in any sort of ‘incident’ of note.

By following such a policy Statoil will actually set the industry ‘standard’ for operational safety in US Arctic waters. Given that this is most probably the case, it seems reasonable to me that this ‘Norwegian standard’ should become the ‘de facto’ norm for operating in US Arctic waters (why not in all US waters?).

If Statoil cannot afford to be involved in an ‘Arctic incident’ for obvious economic and political reasons, then it seems to me the same holds true for Shell USA (Royal Dutch Shell). Not after BP’s fiasco in the Gulf of Mexico.

(Any bets on whether BP will be allowed to drill in the US far offshore Arctic in our lifetimes? After their bungling in the Gulf of Mexico they are going to have a hard enough time getting permits to drill and develop the Liberty field in the near offshore.)

Of course, Shell USA will not operate to those same ‘Norwegian safety standards’ as Statoil will because they have no requirement to do so. Those standards are more rigid than US standards and more expensive to follow. And besides Shell USA is (was) a US oil company. Right? But expense is clearly not the issue here. If Statoil can afford to operate this way why can’t Shell USA (Royal Dutch Shell)? What is the issue here? Can someone at Shell or the Dept. of the Interior explain this to me? My poor feeble mind just doesn’t get it.

Shell’ Arctic Drill Ship

Noble Drilling has apparently acquired Frontier Drilling for about the price as Shell paid for their Chukchi leases. The acquisition was apparently effective at the end of June. Frontier (now Noble) and Shell are joint venture partners in the construction of two new drill ships specifically designed to operate in Arctic waters, and both are under contract to Shell for at least five years. These ships are the Bully I and Bully II, and both are supposedly state of the art ships. The Bully I is supposed to go into service this year followed by Bully II next year. Maybe Shell can think about using one of these modern rigs to drill their Chukchi Arctic exploration wells now that they have a years delay in the program. Frontier also owns the refurbished Japanese log carrier they were going to use to drill those wells. Just a thought.

MORE CORRIB GAS PROJECT INTERNAL EMAILS SUPPLIED BY A MEMBER OF THE “CELTIC TIGER 5″ – A CLAIMED GROUP OF DISSIDENT SHELL EMPLOYEES

From: Grant David
Sent: 29 September 1999 13:58
To: Jones Ifor
Subject: RE: Corrib Well Fluid Analysis

Lambo

Due to the very short half-life of radon, it needs to be measured ideally within about 4 days of the sample being taken.  The samples currently held by Core Lab will therefore be of no further use in determining radon levels.

Because of this problem, we made arrangements to measure the radon levels offshore at the time of sampling.  The level measured was 26.9 Beq/m3 (“normal” formation radon concentrations are quoted by the lab as being in the range 10 – 100 Beq/m3).

Unfortunately, only one measurement was made.  There is nothing we can do about this now but we have taken steps to ensure that at least three measurements are made on the Shannon well if it is tested.

Hope this is of use.  Please call me if you need any further information.

Regards

David Grant

**************************************************

From: Simpson Mike
Sent: 10 October 2000 11:25
To: Adlam, John; Hamilton, Peter; O’Cathain, Brian
Subject: KDR present/BGE HoT

John/Peter – see KDR present, Peter – see attached HoT for tariff calculation and confirmation of our telecon re BGE meeting on Thursday 12th Oct as follows;

Include terminal metering, odourisation etc into the Link budget (acknowledging that Lambo has included this in the terminal EPC tender) – BGE will own and pay 15% ,  we transfer 85% of the capital cost to tariff.  Also encourage BGE to include AGI/Letdown station at Galway in the Ringmain costs – ie removing capital completely (Gerry Keane indicated off the record that this was what they intended to do).

Also since the difference between 26 and 30” in now only £4.5 mm – I would work on the basis that it is 30” , it gives a lot more linepack and if we can get BGE to pay their 15% so much the better.  If we decide on a 26” then we can substitute the lower cost at a later date.  You might enquire (subtly!) when we need to fix the diameter.

Regards

Mike
__________________________
Mike Simpson
Commercial Manager
Enterprise Energy Ireland Limited
4th Floor
Embassy House
Herbert Park Lane
Ballsbridge
Dublin 4
Tel:    01 665 2218
Fax:    01 665 2219
Registered in Ireland No. 316588

The anchor is lying on its back imbedded in the seabed with the crown end of the shank submerged.

LATEST LEAKED SHELL INTERNAL EMAIL FROM ILL-FATED CORRIB GAS PROJECT IN IRELAND

From:     Scott, Hugh H SUKEP-EPE-T-WM
Sent:    31 July 2006 11:02
To:    Gillespie, Colynn M SUKEP-EPT-IT-ED; Read, St.John MS SEPIL-EPE-T-IP
Subject:additional debris on seabed

Colynn, St John,

We have dropped an anchor (15mT in weight with about 1 1/2ft of chain) while recovering at the P3 location. The anchor cannot be recovered by the rig and we thus forced to leave it behind.

The coords of anchor are:
138m from well centre at Easting 367,634, Northing 6,023,998

Can you mark up the survey drawings and inform the relevant parties of the new obstacle on the seabed. The next time a suitable vessel is in the field we should try to move/recover the anchor as it will interfere with future anchor patterns for a rig returning to location.

Attached photos of the anchor design for the records to aid with future recovering/moving. The anchor is lying on its back imbedded in the seabed with the crown end of the shank submerged.

THE WALL STREET JOURNAL

AUGUST 10, 2010

By Jessica Hodgson and Jan Hromadko Of DOW JONES NEWSWIRES

LONDON (Dow Jones)–Royal Dutch Shell PLC (RDSB) and Exxon Mobil Corp.’s (XOM) jointly-owned gas storage business in Germany is proving a tough sell to both corporate and financial investors, according to people who have looked at the assets.

Though the assets in themselves–storage facilities for natural gas–are high quality, the contracts associated with them are the worst of all worlds: they aren’t long enough for the infrastructure funds who typically look at assets like this, and paradoxically are too long for strategic investors like European energy companies, dampening enthusiasm at both ends of the market.

The oil majors accepted a first round of bids for BEB Erdgas und Erdoel GmbH at the end of July. They could still attract valuations of between EUR600 million to EUR700 million, although some estimates are about half that and interest has not been as broad as anticipated, these people say.

“Everyone was excited about these assets originally, but many people have fallen away,” said one person who reviewed the teaser documents but decided against bidding.

BEB operates three underground facilities with capacity to store 2.8 billion cubic meters of natural gas, although the biggest of the three is not for sale.

The company derives revenue from fees paid to store gas–usually utilities build up stocks in the summer and draw them down in the winter. The bulk of BEB’s storage contracts expire in three to five years, rather than the decade or more infrastructure funds prefer because the longer-tem contracts offer more certain income.

“These are high quality assets,” a person at one fund that looked at the teaser document said. “The difficulty is that some of these contracts come up for renewal quite soon so there’s some risk there.”

Another person, who saw the original teaser, said that even relatively short-term contracts are a deterrent to strategic investors that would want the bulk of storage capacity for their own use.

“The contracts are too long-term to run the assets according to our needs,” said a person at one of Germany’s largest gas storage operators that had looked at the BEB assets, but decided not to make an offer.

Another potential bidder said financial investors are put off by the intention of Shell and Exxon to retain the management and administrative team associated with the assets after the divestment. As the management of the assets requires specialist knowledge, this poses an added problem, the person said.

UBS AG (UBS), which is running the auction for Shell and Exxon, is aware of the challenge associated with selling this asset, people say. UBS’s advisers on the deal have repeatedly declined to talk about the process.

Theoretically, the assets could be attractive to a very broad range of bidders, people from gas and energy giants like Germany’s E.ON AG (EOAN) and EWE AG, Russia’s OAO Gazprom (GAZP.RS), and Dutch Gasunie, to investment funds focusing on infrastructure. UBS targeted in particular the latter, people say.

Shell and Exxon didn’t immediately respond to requests for comment Tuesday.

E.ON, EWE, Gazprom and Gasunie declined to comment.

-By Jessica Hodgson and Jan Hromadko; Dow Jones Newswires; +44207 8429373; jessica.hodgson@dowjones.com (Marietta Cauchi, Jeffrey Sparshott, Eyk Henning and Maaike Noordhuis contributed to this report.)

WSJ ARTICLE

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.)

Alaska Public Radio Network

Mon, August 9, 2010

Alexandra Gutierrez, KUCB – Unalaska

Both Shell and Statoil have received approval from the National Marine Fisheries Service to conduct seismic studies in the Chukchi Sea thanks to a new decision by a federal court. The oil companies had previously been prohibited from doing any work there because of a court order that blocked drilling. U.S. District Judge Ralph Beistline had issued that order in July, but revised it to allow research work. Beistline amended the Shell order and the Stat Oil ruling last week.

Phil Dyer is the stakeholder manager for Shell.  He says the research Shell will be doing will help them find off-shore deposits of oil and gas.

Both Senator Mark Begich and Governor Sean Parnell advocated for Shell and Statoil. After Beistline’s order was issued, Begich met with officials from the National Oceanic and Atmospheric Administration and the Bureau of Ocean Energy Management to see if the issuance of exploration permits could be expedited. Parnell expressed concern over the number of jobs affected by the exploration hold-ups, something which Dyer stressed as well.

Dyer says Shell hoped to have all the necessary documents to move forward with research by last Friday. Stat Oil could not be reached for comment.

SOURCE ARTICLE