Posts from ‘June, 2011’

By Anna Shiryaevskaya and Caroline Connan – Jun 16, 2011 5:53 PM GMT+0100

OAO Gazprom, Russia’s gas export monopoly, is seeking liquefied natural-gas deals outside of Russia that may involve asset swaps.

“We are looking at new projects,” Deputy Chief Executive Officer Alexander Medvedev said today in an interview at the St. Petersburg International Economic Forum. “In possible asset swap deals we will be interested to include existing LNG assets that our potential partners have.”

Medvedev declined to identify possible partners, though he said that talks with Royal Dutch Shell Plc include an “LNG element.”

Gazprom, which leads Russia’s sole LNG project known as Sakhalin-2, with Shell, Mitsui & Co. and Mitsubishi Corp., wants to expand in markets such as Asia where demand is growing at a faster rate. The Moscow-based producer is targeting production of as much as 25 billion cubic meters of LNG outside Russia, according to a presentation to investors on Gazprom’s website.

Shell may offer assets in Asia to Gazprom to support expansion of the Sakhalin-2, people with knowledge of the negotiations said in February. The Hague-based company may gain access to offshore blocks in Russia’s east, they said at the time.

Gazprom is considering expanding the Sakhalin-2 LNG plant and is looking at ways to increase the resource base needed to support a third production line, or train, Medvedev said today. At the same time, the company is also studying plans to build an LNG plant near the city of Vladivostok, he said.

Most of the gas from Sakhalin-2 goes to Japan, the world’s biggest LNG consumer, where a March earthquake and tsunami have knocked nuclear power offline.

“Japan is now analyzing what the consequences of this catastrophe are, also in view of demand recovery from industries,” Medvedev said.

Japan may need as much as 20 million tons of additional LNG, Medvedev said. “And this is a very serious volume that doesn’t yet exist on the market, you have yet to produce it.”

To contact the reporters on this story: Anna Shiryaevskaya in St. Petersbrug via Moscow at 7729 or ashiryaevska@bloomberg.net Caroline Connan in St. Petersburg via London at cconnan@bloomberg.net;

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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16 June 2011

Shell UK ignored safety warnings from staff before an explosion at a gas terminal in 2008, a court has heard.

The company has admitted seven safety and pollution offences following the explosion and fire at the Bacton terminal in Norfolk.

Shell UK was back at Norwich Crown Court on Thursday for a sentencing hearing expected to last two days.

The prosecution has been brought by the Environment Agency and the Health and Safety Executive.

‘Sleepwalking’

Shell has admitted breaching two Health and Safety Regulations and five areas of environmental legislation, including pollution prevention and control.

The court heard the Bacton terminal was one of three gas terminals in the UK.

The prosecution said that safety breaches had taken place at the plant over a number of years, and that Shell had been “sleepwalking” and ignoring warnings from staff.

The explosion at the plant in February 2008 led to concrete and metal being blown up to 100m (328ft).

No-one was seriously hurt as staff had gone to their offices to prepare for a shift change.

It is estimated that as a result of dealing with the explosion, 850 tonnes of water, foam and a dangerous substance called North Sea Concentrate ended up in the sea.

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EMAIL CORRESPONDENCE WITH SHELL CONCLUDING ON 16 JUNE 2011

It is our normal practice to publish our email correspondence with Shell.

In this instance, for legal reasons, we will provide a record of recent emails, but mainly in an abridged form.

They mostly concern allegations of a sexual nature relating to a senior Shell executive.

On 26 May I sent an email to a senior Shell executive advising of serious allegations of his alleged improper relationship with some female Shell employees.

I stated:

“If you categorically deny each of the allegations in an unequivocal manner, then I would accept that denial and take no further action.”

There was no response, so on 1 June I sent two further emails enclosing a draft of an article we intended to publish the following day. The second email highlighted the alleged “serial infidelity involving Shell staff.” I repeated the promise indicated above, of no further action on our part in the event of a categorical denial.

On 2 June, we published the article entitled: Serious allegations against a Senior Shell Executive

There was still no response.

On 6 June, we published a follow-up article entitled: Sex scandal allegations against a Shell executive

It contained an email on the matter, which I sent to Mr Michiel Brandjes that same day, 6 June, asking if “your colleague” (the subject of the allegations) had, as I assumed, forwarded on to Mr Brandjes the emails I had sent containing the allegations. Mr Brandjes is the Company Secretary and General Counsel Corporate of Royal Dutch Shell Plc.

On 9 June, I received a response from Mr Brandjes saying:

I am in receipt of your email dated 6 June, thank you.

I do not possess any emails containing information on the allegations you reference in your email below.

Later the same day, 9 June, I resent to the senior Shell executive all previous emails to him on the subject, and issued in mild terms what amounted to an ultimatum and deadline implying that if he did not voluntarily supply the emails to Mr Brandjes, then I would do so.

The following day, 10 June, I received an email from Mr Brandjes stating:

I confirm that the emails you refer to have been forwarded to me. The company will now review these emails as appropriate.

So I did not need to supply them.

On 14 June, I sent an email to Mr Brandjes offering the prospect of further information, which had been supplied to us overnight by a Shell insider.

Later the same day, I forwarded on to Mr Brandjes an email I received purportedly from Shell IT Security. Attached was a security update package with a password, explanation and instructions on installation. I advised Mr Brandjes that the email was “some kind of malicious fake.” Mr Brandjes replied that afternoon, saying he would forward it to Shell IT Security.

The same day, out of the blue, I received an email from Jill Davis, Media, Issues and Crisis Manager for Shell Oil Company HQ in Houston. Jill Davis later confirmed that her email was authentic and I published the information she supplied.

Motiva refutes assertion of sole-source supply for Port Arthur refinery

On 15 June I advised Mr Brandjes that we had received further insider information overnight concerning the allegations. I pointed out that (1) Shell had not taken up the prospect of receiving further information and (2) almost three weeks had passed and the relevant senior Shell executive had not issued a denial of which we were aware.

Mr Brandjes requested an additional day to reply, to which I agreed.

It was not needed, we received the following response later that same day. The relevant Shell executives name has been redacted.  The space denoting the redacted name bears no relationship to the length of the name.

From: michiel.brandjes@shell.com
Date: 15 June 2011 17:24:32 GMT+01:00
To: john@shellnews.net
Subject: Code of Conduct

Dear Mr Donovan,

We have no indication that Mr.               noticed or received your email of three weeks ago. When you (re)sent the emails last week, they were forwarded to me, which I confirmed to yourself.

The follow up of the unsubstantiated allegations in the email you have forwarded did not lead us to conclude that there has been a breach of the Code of Conduct of the Company and Mr.                      categorically denies the allegations.

Clearly, if we are presented with credible evidence we will investigate further and any person who has any concerns about breaches of the Code of Conduct should report these via the Shell Global Helpline (www.shell.com).

Please note that the Company reserves its rights with respect to anything you publish that is prejudicial or untrue or harmful. Although the Company does not speak on behalf of Mr.                   , the safe assumption is that the same applies for Mr.               .

Best Regards,
Michiel Brandjes
Company Secretary and General Counsel Corporate
Royal Dutch Shell plc

Registered office: Shell Centre London SE1 7NA UK
Place of registration and number: England 4366849
Correspondence address: PO Box 162, 2501 AN  The Hague,
The Netherlands

We had sought a categorical denial from the outset and it has now been supplied to our satisfaction.

In relation to the Shell Whistleblowers Helpline, last time we investigated it turned out that although a specialist, supposedly independent firm paid by Shell, investigates allegations, Shell senior executives still retain ultimate control over the end process, making it all rather meaningless, unless the intent is to present so many hurdles that employees give up. Perhaps it has changed.

With regard to legal threats, if Shell is keen to face us in the libel courts again, lets deal with issues of Shell management misdeeds, rather than allegations against a single individual. There are so many subjects e.g. IT property theft, industrial espionage, fraud, price-fixing, contract tender rigging, plus corruption, spying, human rights abuses and pollution in Nigeria. These are not allegations, but fact, supported by evidence. Or perhaps Shell would like to deal in open court with its Nazi past? It made threats in that regard in March of this year.

By James Paton – Jun 15, 2011 10:30 AM GMT+0100

Australia should introduce a cap- and-trade system to reduce greenhouse-gas emissions and act “earlier rather than later” to tackle climate change, Royal Dutch Shell Plc (RDSA) said.

“The clock is ticking,” Ann Pickard, chairman of Shell’s operations in Australia, said today in a speech in Sydney, according to an e-mailed copy of her presentation. “I do think that it’s in our interest for Australia to be an example to the rest of the world.”

Australia, which has about A$200 billion ($214 billion) of proposed liquefied natural gas projects targeting Asian demand for the fuel, also needs “well thought-out policies on labor and immigration” to deliver a skilled work force, she said. A surging Australian dollar has made labor “even more important to solve,” she said.

Shell, Europe’s largest oil company, expects to invest about $30 billion during the next five years on oil and gas developments in Australia, it said in May. The company plans to pioneer the use of floating LNG technology to develop the Prelude project off northwest Australia and is Chevron Corp. (CVX)’s partner in the proposed Gorgon LNG project.

To contact the reporter on this story: James Paton in Sydney jpaton4@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net.

SOURCE ARTICLE

Comment posted on Shell Blog by “Outsider” on Jun 15th, 2011 at 4:46 pm

Jill Davis, Media, Issues and Crisis Manager for Shell Oil Company has confirmed the authenticity of this Motiva Statement – June 14, 2011

A Dow Jones Newswire article published Friday, June 10, 2011 (below), discussed the future source of crude oil supplies for Motiva Enterprise’s Port Arthur, Texas, facility.  The article referenced a source who indicated that Saudi Arabia will be the sole supplier of crude oil for the expanded facility.  In response to this assertion, Motiva reiterates that no sole-source supply arrangements have been made for the Port Arthur refinery.  The company will continue reviewing its various supply options for a cost-efficient source of crude.

Article:

HOUSTON -(Dow Jones)- Saudi Arabia will be the sole supplier of crude oil to Motiva Enterprises LLC’s refinery in Texas after the facility finishes expanding its capacity to 600,000 barrels a day next year, a person familiar with the matter said Friday.

(END) Dow Jones Newswires

Jill Davis
Media, Issues and Crisis Manager
Shell Oil Company
910 Louisiana
One Shell Plaza #4444B
Houston, TX 78002
832-xxx-xxxx mobile
713-xxx-xxx office
713-xxx-xxx Shell Media Line
www.shell.us

From pages 10, 11 & 12 of “Royal Dutch Shell and its sustainability troubles” – Background report to the Erratum of Shell’s Annual Report 2010

The report is made on behalf of Milieudefensie (Friends of the Earth Netherlands)
Author: Albert ten Kate: May 2011.

The gas flares of Nigeria

Below the surface, crude oil is often found mixed with natural gas. The natural gas must be separated from the oil during extraction. Technically the gas can easily be captured and utilized. In Nigeria, however, the associated gas is primitively flared in the open air. Rushing for oil exports in the 1960s and 1970s, Shell and the Nigerian government only built oil pipelines. They didn’t care about infrastructure to utilize the valuable natural gas: just burn it. There are currently approximately 100 continuously burning gas flares in the Niger Delta and just offshore, some of which have been burning since the early 1960s.

Based on satellite data, the World Bank estimates that the amount of gas flared by Nigeria has reduced from 21.3 billion m3 in 2005 to 15.2 billion m3 in 2009, a decrease by 29%. In 2010, Nigeria represented 11% of global gas flares. Only one country flared more gas than Nigeria: Russia. In 2009, Russia flared about three times more gas than Nigeria. However, it produced about 4.5 times more oil than Nigeria. Per litre of oil produced, Nigeria exceeded Russia in flaring gas.

Mainly due to the flaring and venting of gas, the greenhouse gas emissions of crude oil production in Nigeria are among the world’s highest. A recent study, at the request of the European Commission, refers to two different studies that have calculated the emissions of Nigerian oil production. The first study puts the oil production emissions at 16.8 grams of CO2 per megajoule, the second one is quoted as putting the emissions at 21.1 grams. The study at the request of the European Commission, puts the most likely average emissions of conventional oil production for the European market at 4.8 grams of CO2 per megajoule. So, oil production in Nigeria is considered to cause 3.5 to 4.4 times more greenhouse gases than average conventional oil production.

Greenhouse gases are not the only reported problems with respect to gas flares:

− The United Nations Development Programme has declared that gas flares destroy natural resources and local livelihoods, alienate people from their land, and “adversely affect human development conditions”.

− In November 2005, a federal high court in Benin ordered Shell to stop gas flaring near the village of Iwherekan, after the community had applied for an order enforcing or securing the enforcement of their fundamental right to life and dignity of human person. The judge ruled that gas flaring is a “gross violation” of the constitutionally-guaranteed rights to life and dignity, which include the right to a “clean poison-free, pollution-free healthy environment”.

Shell appealed and the case is still pending.

− The Nigerian Gas Association (NGA) has estimated that Nigeria has lost about USD 72 billion in revenues (about USD 2.5 billion annually) in the period 1970-2006 period due to not selling, but burning the gas.

− In a report published in 2005, the Climate Justice Programme and Environmental Rights Action/ Friends of the Earth Nigeria have calculated the yearly health impacts from gas flares in one of the Niger Delta states: Bayelsa. The particulate matter and benzene emissions from gas flaring at the 17 onshore flowstations in Bayelsa state would likely cause, each year, at least: 49 premature deaths, 4,960 respiratory illnesses among children, 120,000 asthma attacks and 8 additional cases of cancer. SPDC declares, however, that there is no evidence to support the argument that flaring damages the health of local communities.

− The federal government of Nigeria states that heat stress and acid rain from gas flaring continue to degrade the ecosystem.

− Local communities have reported numerous other impacts of the gas flares, such as: the eyes may turn red; there is never any darkness; corrugated roofs corrode more quickly; there is constant noise from the gas flares; the walls of houses crack due to ground vibrations caused by the gas flares.

Shell’s Nigerian flares: mystifying messages

Estimating from what is stated in Shell’s Sustainability report 2010, SPDC (government share 55%, Shell share 30%) must have released about 7 million tonnes of greenhouse gases (measured in CO2 equivalents) through gas flaring during the year 2010. This is equivalent to the annual greenhouse gas emissions of about 3 million cars driven on roads in Europe.

Shell states that in the period 2002-2010 SPDC’s flaring has decreased by about 50%.43 The company mentions two reasons for this:

− Since 2000, SPDC has spent over USD 3 billion on installing associated gas gathering infrastructure at 32 flowstations. These projects reduced continuous flaring by more than 30%. This 30% result was already achieved in 2005. There has been little progress from 2006 onwards.

− The rest of the decrease is a result of reduced production since 2006 in Nigeria and, to a lesser extent, the installation of gas gathering equipment in 2010.

In 2007, SPDC promised “to shut down production from any fields where there is no prospect of a solution for gathering the associated gas by 2009”. In May 2009, SPDC stated that it would need to invest another USD 3 billion to gather some 85% of the total associated gas produced in its operations. Wikileaks revealed a statement in October 2009 by the Shell Executive Vice President (EVP) for Shell Companies in Africa, Ms. Ann Pickard. She stated that the SPDC-flares could be out by 2011. SPDC would have to spend USD 4 billion to do this, but the Nigerian government would also have to fund its part and that was a risk. Shell would shut in oil production in fields where it is uneconomic to end gas flaring. In 2011, Shell stated that it still needed funding from partners to execute projects that would bring flaring down by 90%. In a letter dated 31 December 2008, the government directed SPDC and other oil companies to continue with production (and therefore flaring) until instructed otherwise. During this process of oil extraction the oil fields will be running out of oil, making investments in gas gathering infrastructure less economically attractive. Thus, gas might be flared to the bitter end of oil operations.

In May 2010, SPDC announced that it was working on a series of projects totalling investments of more than USD 2 billion. The Managing Director of SPDC, Mutiu Sunmonu, said: “SPDC is pleased to be able to restart work on delayed projects and begin new ones to further reduce gas flaring in our operations to the lowest practical volume. Security and funding conditions permitting, we have a real chance to progress our flaring reduction plans through these key projects.” SPDC did not provide for a time-line as to when the facilities would be fully functioning, and how much associated gas would be gathered. By mid January 2011, three additional associated gas gathering sites had been completed.

As of this moment, it is not clear how the gas flare picture of SPDC will evolve in the near future. In 2010, Shell’s flaring rose by 32% compared to 2009. This was mainly due to increased oil production in Nigeria and the start of its oil production at the Majnoon field in Iraq.54 In 2010, Shells oil production in Nigeria rose to 302,000 barrels of oil per day, up from 231,000 barrels of oil per day in 2009.

Whenever the security situation allows SPDC to produce more oil, its gas flaring might increase again. On the other hand, the series of projects SPDC is working on at present might decrease gas flaring to some extent.

Over the years, SPDC has been spreading mystifying messages with regard to its flaring operations. The company has never shown a breakdown of flowstations where gas is flared. It has also never publicised a detailed plan to achieve a flare-out status. Like with oil spills, the company has never made a serious effort to get the facts clear with regard to the damages communities in the Niger Delta have suffered and still suffer.

Meanwhile, the Nigerian government may be busy with some deadlines to end gas flares, as it has been since the 1980s. Experience shows that these efforts can’t be taken too seriously.

Further extracts from this section of the report will be published in the coming days.

THE COMPLETE 73 PAGE REPORT (with reference sources)

LIVE VERSION OF SCREENSHOT

* De-bottlenecking to boost capacity after project

* $5 billion expansion to be complete by Q1 ’12

By Erwin Seba

HOUSTON, June 13 (Reuters) – Motiva Enterprises LLC is already preparing to expand the capacity of its Port Arthur, Texas, refinery beyond 600,000 barrels per day (bpd), which the plant will reach early next year when a giant construction project is completed, according to refinery sources.

A Motiva spokeswoman declined to comment on the refinery’s long-term plans.

Motiva has also begun tying in units built in the past four years as part of that $5 billion capital project to boost the refinery’s capacity beyond the current 285,000 bpd, the sources said.

The additional increase in capacity is expected to come from improving the efficiency of the expanded refinery, the sources said.

“They’ll likely reach 650,000 with de-bottlenecking,” one of the sources said.

(Reuters) – The Gulf of Mexico remains a “very strategically important” area for Royal Dutch Shell’s (RDSa.L) Americas arm both in terms of exploration and the company’s consideration of buying more assets, Marvin Odum, president of Shell Oil Co, said on Monday.

We’ve been growing our business there, mostly through exploration,” Odum said at the Reuters Global Energy and Climate Summit. “If something becomes available, I guarantee we’ll be looking at it.”

Odum also said it was an opportune time to acquire more dry shale gas acreage despite low natural gas prices, as more drilling can help find “sweet spots” to improve Shell’s overall portfolio.

Odum said he expects “imminent” approval from federal regulators for a drilling permit in the company’s Appomattox field in the deepwater Gulf, and the company’s Perdido oil and gas platform is producing about 40 percent of its capacity of 100,000 barrels per day of oil from five wells.

(Reporting by Kristen Hays; Editing by Matthew Lewis)

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