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Shell’s North Sea Reputation sunk by severe corrosion

“The drip, drip, drip of negative information has been every bit as corrosive to the company’s reputation as the oil leaking from its pipe. It was not until a week after the oil was first spotted that the company apologised.”

By John Donovan

We have printed below extensive articles published over three pages of The Sunday Times on 21 August 2011.

It was this development which sparked a number of other major news stories published the following day.

The Sunday Times approached us for our help, which we were pleased to provide over a number of days. We put the newspaper into contact with our Shell related sources, including Bill Campbell. We provided a considerable volume of information from our extensive files. We also supplied documents referred to in the article, including the letter the HSE offshore division sent to Shell on 18 July 2011, which we now put into the public domain. This was kindly supplied to us by the HSE press office.

This is what a retired Shell North Sea Platform expert said about the HSE letter:

After reading the 18th July 2011 HSE letter to Shell regarding Brent C I am totally shocked at the content.  The cumulative number of denials of a slack safety regime are issued almost every week for one misdemeanour or another somewhere within Shell operations over many years.  Notwithstanding the assurances given that safety is always the number one priority, always the first consideration in anything done, total commitment to safety,  we learn from our mistakes  etc etc.  The HSE finally put the boot in,  great, now what about the other platforms.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

This report reveals a very different  state of affairs from that we are assured,  confirming what the  Legal and Public affairs Departments, various Directors, Vice Presidents and Managers say is just very HOT AIR.  I trust that the Shareholders and public make their displeasure known and the responsible Directors,  Vice Presidents and Managers are subjected to disciplinary procedures for gross misconduct and bringing the Shell name into disrepute.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

What a shambles!

As regular visitors to this website will be aware, Mr Campbell has previously expressed his concern about the relationship between Shell and some HSE officials. In this connection, it is relevant to note that an investigation in the USA found that Shell had a corrupt relationship with federal oversight officials. We later supplied a US government department at its request with Shell internal documents leaked to us by our insider sources in relation to another corruption investigation. 

The Sunday Times Scotland Front-page lead story: 21 August 2011

Shell had oil rig safety warning

Mark Macaskill

AN internal investigation by Shell eight years ago raised serious concerns about safety in the Gannet oilfield, where the company has been battling to contain the worst spill in British waters for a decade.

Documents obtained by The Sunday Times reveal that dozens’ of unapproved repairs were carried out on Shell’s Gannet Alpha platform. The audit in 2003 also showed 317 fire and gas sensors were unreliable.

The concerns were gathered by Shell after the Brent Bravo tragedy that year killed two oil workers. Issues relating to that platform and Shell’s other North Sea installations, including Gannet Alpha, were notified to Scottish authorities investigating the tragedy.

Details of the audit are contained in papers held by Bill Campbell, a former senior Shell employee, who has raised concerns about the company’s health and safety record.

Last night, Shell said efforts to turn off a valve that had been leaking oil over the past 10 days had been successful. The cause of the leak 300ft below the surface was not known. The section of pipeline had been inspected in October last year. An estimated 214 tons of oil escaped.

The incident has dealt a blow to British companies keen to expand the industry by drill off Greenland, despite protests from environmentalists.

Charles Hendry, the energy minister, has said such operations are “entirely legitimate” as long as they adhere to Britain’s “robust'” safety regulations.

Shell has been at the forefront of plans to drill in the Arctic’s Beaufort and Chukchi seas. Since January the company’s North Sea operations have been hit by the death of a maintenance worker, a series of gas leaks, equipment collapsing off a platform into the sea and a 15,000-hour repair backlog.

Shell is also under pressure to deal with safety issues on another of its North Sea platforms, Brent Charlie. A Health and Safety Executive (HSE) inspection in May found parts of the installation were “suffering from severe corrosion·”

The agency warned Shell last month there was a risk of injury from plant equipment. It also found that the redundant plant equipment “did not appear to be inspected or maintained”. Shell was given until last Thursday to respond with a plan.

The latest spill is the largest in British waters since 2000, when about 344 tons of oil escaped in Conoco’s North Sea Hutton field.

Last week, Campbell said more leaks and equipment failures are likely as platforms, many from the 1970s, get older. “In my view, Shell hasn’t invested enough money over the last 10 years in maintaining its facilities,” he said. “More has been done recently but it’s too little, too late.”

Richard Lochhead, the rural affairs and environment minister, has written to Chris Huhne, the UK government’s climate change secretary, calling for greater transparency in the reporting of oil incidents.

The HSE recently warned that only one in 30 of Britain’s North Sea oil platforms was in good condition and expressed concern that companies were neglecting workers safety.

(Continued on page 2)

More than 96% of installations in the North Sea were found to require improvements during inspections over the past three years, with 20% showing “major failings”.

Ministers have pledged to hold an inquiry into the Gannet spill but environmental bodies said the remit should be expanded. “It is important that the inquiry examines the management of the incident both by Shell and the various public agencies, said Stuart Housden, from RSPB Scotland.

He added: “The inquiry should also investigate the readiness of UK and Scottish agencies to predict, monitor and minimise any environmental impacts.”

Conservationists have warned that the oil leak poses a threat to seabirds, including kittiwakes, puffins, guillemots and razorbills. An operation to lay concrete mats on the pipeline where the leak occurred in order to secure it to the seabed is continuing.

Shell said safety was a “foremost priority” and that the company had invested more than £600m in recent years to upgrade North Sea facilities.

A company spokesman said: “We constantly inspect, monitor and review all our assets. At present we do not know what caused the leak from the Gannet Alpha flowline. This will be the subject of a full investigation, together with the authorities. “Work continues to progress on the Brent Charlie platform about which Shell is in regular liaison with the regulatory authorities, including the HSE.”

The Gannet Alpha leak was spotted during a routine North Sea helicopter flight.

Page 17 (Whole page)

ON THE BRINK

Gannet leaked hundreds of tons of oil into the environment. So how serious is the North. Sea drilling industry about updating its rigs- and how long before another disaster, ask Gillian Bowditch and Mark Macaskill

It was a routine flight from Aberdeen, but as the Bristow helicopter ferried oil workers across the North Sea, one passenger noticed something unusual. On the surface of the water, just a few miles from the Gannet Alpha platform, was a large oily sheen.

The alarm was raised with air-traffic control. Within the hour, Shell, the rig’s owner, warned the Department of Environment and Climate Change that a leak had been detected more than 100 miles off Scotland’s northeast coast.

Ministers were not unduly concerned – Shell was confident that it was just another one of the hundreds of minor spills that are reported in the North Sea every year. It gave assurances that the situation was under control. Within days, however, it became apparent that the spill was far more serious than Shell wanted to publicly admit.

Privately, department officials were forced to concede that the leak was “substantial”, as Shell sought to minimise negative coverage by strangling the flow of information to the national media and environmental bodies.

Last night, Shell confirmed that, 10 days after it was first detected, the leak had been completely stopped. The company’s problems, however, will not stop with the release of oil into the North Sea.

The incident, the worst leak in British waters since 2000, is a huge embarrassment for the company not least because, despite millions of pounds of investment in its North Sea operations, it failed to spot the leak. Alex Salmond, the first minister, has been criticised for playing down the significance of the spill and accused of being too close to the oil industry.

Ever since BP’s Deepwater Horizon spill in April last year, which killed 11 and resulted in 4.9m barrels of oil flooding into the Gulf of Mexico – the biggest disaster in the history of the industry — environmental campaigners have stepped up their targeting of the oil sector. In the aftermath of Deepwater, Shell’s chief executive Peter Voser claimed the BP blowout could never have happened to his company.

“The risk-management practices of some companies in the Gulf of Mexico do lag behind the standards set by other companies,” Voser told analysts in February. ‘We at Shell have been applying the best of the North Sea standards to our worldwide operations for many years.” It is a quote that may come back to haunt him.

The company estimates that during the Gannet leak, 1,600 barrels of oil or 218 tons – more than triple the amount of oil discharged into UK waters in the whole of 2009 – has spilled into the North Sea from a pipe 300ft below the surface.

The leak could not have come at a worse time for Shell, as it attempts to persuade regulators to allow it to carry out drilling in the sensitive waters around the Arctic.

But the questions it raises go far beyond Shell and, the safety of its drilling activities. Conservationists want to ask how safe is the North Sea oil industry? Is a large scale environmental disaster lurking around the corner and is the SNP government too close to the industry for Scotland’s good?

IT was only on Friday August 12, after the oil industry journal Upstream ran a short article on the leak based on its own sources that Shell issued a press release stating that it had stemmed the leak “significantly”. Even then, the company was unable to provide information on the size and cause of the leak. Early last week, a second leak was discovered.

It wasn’t until Friday, nine days after oil was first found, that Shell was finally able to close off the vital valves. The task of removing the residual 660 tons of oil in the depressurised flow-line would take some time the company said.

The drip, drip, drip of negative information has been every bit as corrosive to the company’s reputation as the oil leaking from its pipe. It was not until a week after the oil was first spotted that the company apologised.

Glen Cayley, a technical director of Shell’s exploration and production activities in Europe, said: “This is a significant spill in the context of annual amounts of oil spilled in the North Sea. We care about the environment and we regret that the spill happened. We have taken it very seriously and responded promptly to it.”

The oil sector is arguably Scotland’s most important industry’. Tax revenues from oil and gas production were £9.3 billion in 2010/11 and are expected to rise to £13.4 billion this year.

About 196,000 people are employed by oil and gas companies in Scotland, 45% of the UK total, and the industry satisfies about two-thirds of the UK’s primary energy demand. But UK oil production is in decline. The North sea produces about 2.3m barrels a day, half of what it produced at its peak 12 years ago, and the industry is waging a constant battle over the economics of extracting the North Sea’s remaining “blackgold”.

Although four-fifths of North Sea production is controlled by 14 companies, traditional, global oil and gas companies, such as Shell, which made profits of £5 billion in the past quarter, are gradually reducing their presence and investments in the region. The big companies see their futures in the larger fields of Russia, the Middle East and North Africa. In their place, smaller, lesser-known firms are exploiting the remaining North Sea resources.

“It used to be a good field if it was 100m barrels,” says one oil industry expert. “Now 25m barrels is considered a significant field, and even smaller fields are being developed. There is a constant battle to keep platforms profitable in the face of declining asset integrity.”

As a result, many North Sea oil platforms are working way beyond their envisaged lifespan.

When they were built, most were expected to last 20 years, but according to figures from the oil specialist Det Norske Veritas and the Energy Department, 44 North Sea platforms – more than 15% of the total – are more than 4O years old. According to the Health and safety Executive (HSE), it is “evident that this proportion is steadily increasing, particularly as the rates of platform decommissioning and new installations are relatively low.'”

John Bradbury, of the specialist publication Petroleum Review, says: “For operators today, keeping corrosion at bay – or at least within safe limits – while continuing to eke out tail-end production at an economically viable level is a constant battle. Corrosion control and monitoring is made harder still in an environment where cost is paramount and resources are limited.”

Despite its size and profitability, Shell’s safety record is by no means exemplary. The North Sea spill came just weeks after the company admitted liability for a massive oil spillage in Ogoniland, Nigeria. Shell says the vast majority of spills in the Niger Delta are due to sabotage, but it faces substantial legal claims.

Closer to home, Shell’s North Sea Brent field platforms – Alpha, Bravo, Charlie and Delta – were temporarily shut down in January after “metal fatigue” led to a chunk of protective railing falling into the sea.

Just days before the Gannet spill, leaked HSE documents showed that the government agency feared “catastrophic consequences” on Shell’s ageing Brent Charlie platform. The scale of along-running series of gas leaks meant that ignition was “almost inevitable,” according to the document, leading to fears of another disaster on the scale of Occidental’s Piper Alpha, when 168 men were killed in an explosion in 1988.

One report, dated July 18, revealed that Shell was facing a 15,000-hour maintenance backlog on technical equipment. This is on top of extensive work being carried out to overcome leaks of hydro- carbon gas and hydrogen sulphide, known as glugs, that have led to the shutdown of Brent Charlie and the loss of the output of 30,000 barrels of oil a day.

According to Upstream, the July 18 document, sent by the HSE to Shell after an inspection on May 30 and 31, also reveals that inspectors found that areas of the platform were corroding.

Corrosion is a sensitive issue for Shell. A 2006 report into the deaths of two workers after a gas leak on Brent Bravo in 2003 ruled that the deaths could have been avoided if Shell had repaired a corroded pipe properly.

Bill Campbell, a former senior manager with Shell, told BBC Scotland’s investigative programme Frontline Scotland at the time that the company faked safety reports and ignored vital maintenance to allow it to carry on producing oil at all costs, an allegation Shell denies.

Shell is working towards reopening 35-year-old Brent Charlie early next year, but has pledged that production will not resume until all necessary work is complete. At a press conference earlier this year, Voser said: “Do we make mistakes? Yes, we do make mistakes, but we learn from and we avoid them in the future.”

Yesterday, a spokesman for Shell said safety was the company’s “fore-most priority at all times”. Shell also insists that the Gannet spill does not undermine its efforts to drill in Arctic waters, where environmentalists warn it will be virtually impossible to contain a large spill in winter.

“We have taken significant steps to make sure we can operate safely and responsibly in the Arctic. We recognise oil-spill prevention and response capability as a critical element of all plans to develop oil and gas resources in the Arctic and we have developed advanced technology to locate, contain and remove oil in various ice conditions which we test regularly.”

Oil company insiders believe environmental activists have overstated the impact of the Gannet leak, which, while significant in UK terms, is tiny compared with Deepwater Horizon or even the 85,000 tonnes of crude oil that leaked into the sea off Shetland in 1993, when the oil tanker, Braer, ran aground.

Richard Lochhead, Holyrood’s environment minister, said little tangible damage has been done to wildlife from the Gannet spill. But there are fears that the SNP’s love affair with oil – a key plank in its independence campaign – may mean it is too§ close to the industry.

Alex Salmond is quick to throw his tuppence-worth into stories where there is no discernible direct Scottish interest,” says Murdo Fraser, deputy leader of the Scottish Conservatives. “He was quick to comment on the riots the other week and yet here we have a major situation occurring in Scotland, which potentially has serious consequences, and the first minister has been remarkably reluctant to make any public comment on the matter.”

The Royal Society for the Protection of Birds wants a full inquiry.

Stuart Housden, its director, believes an inquiry should look beyond the causes and the ability of government agencies to predict, monitor and minimise the environmental impact to the “question of whether our North Sea Oil infrastructure is sufficiently robust to meet the high standards required” and whether maintenance is adequate.

THE SUNDAY TIMES

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