THE WALL STREET JOURNAL

SEPTEMBER 27, 2010

DOHA (Zawya Dow Jones)–The first phase of Royal Dutch Shell’s (RDSA) $18 billion Pearl gas-to-liquids, or GTL, project in Qatar will start up in the first quarter of next year, with both production facilities fully operational in the first half of 2012, a company executive said Monday.

“We’ll finish the construction process for phase 1 by the end of the year and then we’ll start up the first train,” Qatar Shell Commercial Manager Krey Stirland said on the sidelines of an energy conference in the Qatari capital, Doha.

When fully operational the GTL plant will produce around 140,000 barrels a day of gas-to-liquid products like naptha, kerosene and paraffin.

-By Alex Delmar-Morgan, Dow Jones Newswires; +974 659 9818; alex.delmar-morgan@dowjones.com

Copyright (c) 2010 Dow Jones & Co.

WSJ SOURCE ARTICLE

Royal Dutch Shell Plc and partners are investing $2 billion in a program to end natural gas flaring in Nigeria, Africa’s biggest oil producer, after the projects were delayed because of funding and security problems.

Non-Executive Chairman and former CEO of Nokia, Jorma Ollila is currently also the non-executive Chairman of Royal Dutch Shell Plc. Lucky Shell.

From Addendum #1 to Riding The Dragon

Explosions & Fires: 1992-2002
Sampling of Incidents at Shell Group Companies & Joint Ventures

Information about the book can be found on Amazon

Related comments from a former employee of Shell Oil USA

Something on the ‘drins’, etc., from the book ‘Riding the Dragon’.

http://gcmonitor.org/article.php?id=148

I found this story to be very interesting, because I remember the internal reaction at Shell to that incident. Shell management lies to everyone, most especially their own employees.

http://gcmonitor.org/article.php?id=283

You might want to attach this link for those who would like a review of the book ‘Riding the Dragon’.

http://shellfacts.com/article.php?id=262

Apparently  the book is available on line as a FREE pdf file download at…

http://www.shellfacts.com

By Stephen Bierman – Sep 24, 2010

When you consider what Shell is proposing to use in the harsh Arctic environment to drill its exploration wells (the refurbished but antiquated Frontier Discoverer, with the obsolete and beat-up Kulluk as a backup rig), one wonders whether Shell USA management truly understands the nature of the environment they are going to be operating in.

From a former employee of Shell Oil USA

Attached is a link to an article about the ODECO Ocean Ranger (right), a large modern semi-submersible rig that sank during a storm. It was drilling a well for Mobil (now ExxonMobil) in the Hibernia oil field, offshore Nova Scotia, Canada.

(Ocean Ranger vanishes off Canada)

This case is interesting because there are parallels with the problems BP had with its production platform ‘Thunder Horse’, which almost sank in a hurricane that is was supposedly designed to withstand.

‘A design flaw (porthole too low) and poor worker training were the cause of the sinking of the Ocean Ranger. Poor worker training was essentially the cause of the Deep Water Horizon disaster. And a design flaw, a valve installed backwards, almost sank BP’s Thunder Horse production platform in the hurricane. All three incidents/accidents were avoidable if oil company and rig company management had been doing their jobs.’

Did I ever mention ‘Murphy’s Law’ to you?

The Ocean Ranger and Thunder Horse were ultra-modern rigs. When you consider what Shell is proposing to use in the harsh Arctic environment to drill its exploration wells (the refurbished but antiquated Frontier Discoverer, with the obsolete and beat-up Kulluk as a backup rig), one wonders whether Shell USA management truly understands the nature of the environment they are going to be operating in. There appears to be a real question of competency with Shell management in this regard.

The Kulluk was not moved from Canada to Alaska until early September. That means if Shell had been drilling, and had encountered a problem, there would not have been a backup rig for support. Furthermore, it appears the rig is in need of additional work before it is really serviceable again.

It is also interesting to note the extended period of time it actually took to develop the Hibernia field. It did not go into production until 1997. The problem was with the design of a suitable production platform that would withstand the rigors of the sub-Arctic environment it would be operating in. The resulting production platform design is an engineering marvel. Shell will likewise have to develop an ‘engineering marvel’ for a production platform if it ever hopes to exploit the oil and gas reserves in the shallow offshore Arctic seas.

The nature of the Arctic environment is such that there are going to be serious environment incidents if oil and gas is allowed to be exploited. How serious those ‘incidents’ will be is a matter of how closely regulated the industry is in both US and Canadian waters. An incident and environment disaster in US waters can become a Canadian environmental disaster simply due to ocean current flow patterns, etc.

http://members.tele2.nl/the_sims/rig/o-ranger.htm

It would seem to me that the American and Canadian governments need to get together to best decide how they are going to regulate oil and gas exploration in an extremely sensitive and environment both nations share. Maybe they should set up a joint regulatory agency with real ‘regulatory teeth’. An agency with environmental and worker and health safety authority, as well as regulatory authority over drilling and production operations. Something like what the Norwegians have. I think the Canadians are ahead of the Americans in that regard, but not by much. I do think the Canadian regulatory agencies are much more insulated from ‘political pressure’ and ‘industry influence’ than their American counterparts, however.

You might want to bring people’s attention to this list of ‘rig incidents’. It illustrates how common ‘rig incidents’ really are: http://members.tele2.nl/the_sims/rig/losses.htm

Some of your readers may also get a kick out of this story. It is about the rig that drilled into a salt mine. What a cock-up.

http://members.tele2.nl/the_sims/rig/lakepeigneur.htm

I found this History Channel production on the Texaco salt mine fiasco. Enjoy. It has some interesting footage.

http://www.youtube.com/watch?v=_feWtkSucvE

“I suppose Cable’s experience of this murky world came while enjoying his comfortable existence as a well paid employee of Shell.”

Comment from the Daily Telegraph article: Emotional Anti-Business Secretary should be an odd man out of a job

THE SYDNEY MORNING HERALD

Shell ‘softened’ damning environmental report to break lease

Saffron Howden Friday September 24, 2010

SHELL abandoned an old petrol station in Sydney knowing it was contaminated, then told its health risk assessors to change their report to ”soften” their findings, the Supreme Court has heard.

Yesterday Shell Australia was found to have deceived and misled the new owner of the Cabramatta land, Haissam Assafiri, and to owe him more than $1 million. In his judgment, Justice Robert McDougall said the petrochemical company did not remediate the Hume Highway site, which was a petrol station for 30 years, to the level required under its final ”demolition” lease in 2007. Instead, Shell left a concrete slab that was too ”severely deteriorated” to contain the polluted soil.

Even if the slab had been an appropriate way of ”capping” the soil, it would not stop pollution spreading through groundwater, he said.

Internal Shell emails show the company would save money by vacating the site early, which it owned until 1996 but then leased back through an investment firm.

One internal email referred to a potential saving of “approx $600k!!” for Shell if it met the earlier deadline to clean the land for a future ”best use” scenario.

An August 2005 environmental assessment report found that potentially dangerous chemicals could move off the land.

”The report suggested that this could affect workers undertaking excavation near the site and, perhaps, residential properties to the east of the site,” Justice McDougall said.

But when Shell engaged the consultants URS to carry out an environmental risk assessment at the site in 2007, it ”made a substantial contribution to the final form of that report”.

One Shell employee wrote to URS: ”The way this paragraph is worded gives the impression that groundwater contamination in that area of the site has occurred … If you are to include this section, might want to soften it a little …”

Justice McDougall found Mr Assafiri, who sub-leased the land for between the late 1990s and 2005 and then bought the property in 2006 expecting it to be remediated by Shell, was entitled to damages of more than $1 million for misleading or deceptive conduct and breach of contract.

Shell said it may appeal.

SOURCE ARTICLE

Shell, Exxon Shift Away From Refining, Eye Output, JPMorgan Says

By Fred Pals – Sep 23, 2010 10:12 AM GMT+0100

Three years to drill a relief well. I suspected as much. I knew it would take at least a year, perhaps a year and a half, under best conditions. People don’t realize that. So, a blow out in the Arctic will gush free for at least one year. Imagine that.

The Kulluk (above) is a refurbished old rust bucket rescued from mothballed oblivion in Northern Canada, and one that no drilling contractor wanted to invest a dime in.

Comment from a former employee of Shell Oil USA on the Calgary Herald article…

Regulators warn drilling oil-spill relief well off Canada’s Arctic coast would take three years

Three years to drill a relief well. I suspected as much. I knew it would take at least a year, perhaps a year and a half, under best conditions. People don’t realize that. So, a blow out in the Arctic will gush free for at least one year. Imagine that.

This estimate comes from Canadian sources which are more realistic than the politically motivated ‘opinions’ of the MMS and Shell.

Shell and the DOI are deluding themselves and the public by requiring that a second drill-ship be on hand to drill a relief well if there should be a blowout on one of Shell’s wells. Shell most probably couldn’t drill that relief well before the ice closed in and forced the rigs off location. That means such a runaway well would flow oil and gas for about 8 months, at the very least.

And Shell’s designated backup rig to do that drilling, the Kulluk, is a refurbished old rust bucket rescued from mothballed oblivion in Northern Canada, and one that no drilling contractor wanted to invest a dime in.

Shell does not have the resources to contain the sort of spill or clean up afterwards. The environment damage would be vast and take many, many decades for nature to undo.

People do not realize that a relief well could take over a year to drill, and that it could be at least a year before a runaway well could be killed.

I sent you an article a while back about BP plans to develop a small field just offshore in Alaska. They were going to drill 14,000+meter extended reach wells from an existing gravel island to develop this field (whose name escapes at the moment). However, the State of Alaska is so paranoid about the consequences of a blowout in the wake of the BP Deep Water Horizon fiasco, they are seriously considering requiring BP to simultaneously drill a potential relief well that could quickly kill a blowout if one occurred.

Maybe DOI should require to do that for the Arctic drilling program. Such a well could be completed and kill a runaway well within a few weeks, instead of years.

Because Shell owned these rigs and was saving ‘a bundle’ in drilling costs, they could easily afford to do this.

Just a thought. The WWF might make that suggestion as well to Federal authorities.