Posts under ‘Business Week’

December 22, 2011, 11:33 AM EST

By Joe Carroll and Juan Pablo Spinetto

Dec. 22 (Bloomberg) — Chevron Corp., the operator of the Brazilian offshore well that triggered oil leaks, and rig owner Transocean Ltd. will defend executives threatened with criminal indictments in the South American nation.

Chevron learned that Brazil’s federal police intend to indict employees involved in the drilling that led to the Nov. 7 leaks from seafloor fissures near the $3.6 billion Frade development, Kurt Glaubitz, a spokesman for the San Ramon, California-based company, said in a statement late yesterday. Transocean, in a separate statement late yesterday, said it will “vigorously defend the company and its collaborators.”

Chevron, the second-largest U.S. energy company by market value, has been fined 50 million reais ($26.9 million) and ordered to halt all drilling and crude production off Brazil’s coast after discovering the leaks last month. Chevron estimated the volume of the seeps at 3,000 barrels during the eight days it took for the company to locate and halt the leaks.

Chevron and other offshore oil explorers are facing increased scrutiny of their drilling practices in the wake of BP Plc’s 2010 blowout of a well in the Gulf of Mexico that killed 11 workers and led to the worst U.S. offshore crude spill.

In Brazil, the concerns have been compounded as the coastal city Rio de Janeiro prepares to host the 2014 World Cup and the Olympic Games two years later. Chevron’s Frade oil field is about 230 miles (370 kilometers) northeast of Rio in a region of the Atlantic Ocean known as the Campos Basin.

Employees Indicted

Chevron underestimated the amount of pressure at an oil deposit it was exploring, and crude leaked from the reservoir for about eight days, George Buck, president of Chevron’s Brazilian subsidiary, said on Nov. 20. Buck was among 17 Chevron and Transocean employees targeted for indictments, the Folha de S. Paulo newspaper reported yesterday. Glaubitz declined to identify the employees targeted for indictment. George wasn’t available to comment, the spokesman said.

Anthony Dovkants, a spokesman for Vernier, Switzerland- based Transocean, said in an e-mailed statement that the allegations were without merit.

Chevron rose 47 cents to $105.90 at 10:30 a.m. in New York trading. Transocean rose 1.3 percent to $40.39.

BP has booked more than $40 billion in losses related to last year’s Gulf disaster that sank Transocean’s Deepwater Horizon rig and spilled an estimated 4.9 million barrels of crude. The London-based oil producer also faces hundreds of lawsuits by fishermen, hoteliers and property owners in coastal areas where crude washed ashore.

Other Oil Spills

ConocoPhillips, the third-largest U.S. oil company, said yesterday it’s taking responsibility for two oil spills in China’s Bohai Bay in June and is setting up compensation funds to support environmental research and affected communities.

Royal Dutch Shell Plc, Europe’s largest oil company, shut its 200,000 barrel-a-day Bonga field off Nigeria after a leak during a tanker loading caused what may be the country’s worst offshore spill in more than a decade. The Bonga deep-water discovery produces almost 10 percent of Nigeria’s crude.

Exxon Mobil Corp. of Irving, Texas, is the biggest U.S. energy company by market value.

–Editors: Jasmina Kelemen, Tina Davis

To contact the reporters on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net; Juan Pablo Spinetto in Rio de Janeiro at jspinetto@bloomberg.net

To contact the editor responsible for this story: Tina Davis at tinadavis@bloomberg.net

SOURCE ARTICLE

December 21, 2011, 5:39 AM EST

By Eduard Gismatullin

Dec. 21 (Bloomberg) — Royal Dutch Shell Plc, Europe’s largest oil company, shut its 200,000 barrel-a-day Bonga field off Nigeria after oil leaked during a tanker loading.

An export line from the field’s floating production, storage and offloading vessel was the likely cause of the leak, estimated at less than 40,000 barrels of crude, Shell said in a statement today. The oil flow has been halted.

“We are sorry this leak has happened,” Mutiu Sunmonu, the company’s Nigerian chairman, said in the statement. “It is important to stress that this was not a well-control incident of any sort, and to make clear that no-one has been injured.”

Shell, the largest foreign oil producer in Nigeria, has been operating in the African nation since 1937 and has been criticized by the local population and international institutions for numerous spills in the country at its onshore fields. Bonga, Nigeria’s first deepwater discovery, lies 120 kilometers (75 miles) off the coast and produces almost 10 percent of the country’s crude.

Shell planned to export five cargoes of 1 million barrels each of Bonga crude every month from December to February, according to loading programs obtained by Bloomberg News.

Shell’s shares pared gains in London trading and were up 0.8 percent at 2,296.5 pence at 8:45 a.m. local time.

The company yesterday said a drilling operation will stop for weeks in the Gulf of Mexico after spilling 319 barrels of drilling fluid.

–With assistance from Sherry Su in London. Editors: Will Kennedy, Stephen Cunningham

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net

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

SOURCE ARTICLE

December 16, 2011, 5:06 PM EST

By Jim Snyder

Dec. 16 (Bloomberg) — Royal Dutch Shell Plc won conditional U.S. approval for a plan to drill as many as six exploration wells in Alaska’s Chukchi Sea next year, the Bureau of Ocean Energy Management said.

Final approval requires Shell to meet safety and environmental-protection measures, according to an e-mailed statement today from the Interior Department bureau. Shell will have to stop drilling 38 days before ice appears in the Arctic, to avoid an end-of-the season spill when cleanup is difficult, the agency said. The U.S. projects ice will form by Nov. 1.

“We will continue to work closely with agencies across the federal government to ensure that Shell complies with the conditions we have imposed on its exploration plan,” Tommy Beaudreau, bureau director, said in the statement.

Shell, which has invested about $4 billion in the Arctic leases since 2005, hasn’t drilled any wells in the region while opponents won delays with appeals and lawsuits. Environmental organizations and Alaskan native groups have said it would take too long for equipment to reach the remote and icy region during an oil spill.

Shell acquired its leases to the Chukchi Sea in 2008.

The Interior Department’s Bureau of Safety and Environmental Enforcement must approve Shell’s oil-spill response plan before drilling can start, according to the statement.

The company needs permits from the Environmental Protection Agency, the U.S. Fish and Wildlife Service and the National Marine Fisheries Service, according to the statement.

–With assistance from Katarzyna Klimasinska in Washington. Editors: Steve Geimann, Larry Liebert

To contact the reporter on this story: Jim Snyder in Washington at jsnyder24@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net

SOURCE ARTICLE

December 16, 2011, 3:11 PM EST

By Paul Burkhardt

Dec. 16 (Bloomberg) — Gulf Coast gasoline rose for a fifth straight session as Royal Dutch Shell Plc and Delek US Holdings Inc. reported refinery problems in Texas and Louisiana.

Shell reported an “operations upset” at the Norco, Louisiana, refinery when furnaces were swapped yesterday, according to a filing with the National Response Center. Delek had emissions at its Tyler, Texas, plant, according to a filing with state regulators.

Conventional, 87-octane gasoline’s discount on the Gulf Coast narrowed 0.50 cent to 3.75 cents a gallon versus futures on the New York Mercantile Exchange at 2:41 p.m., according to data compiled by Bloomberg. It’s the highest level since Nov. 9. Prompt delivery rose 0.93 cents to $2.4545 a gallon.

Sunoco Inc. shut a hydrotreater at its Philadelphia refinery for maintenance, according to a person familiar with operations at the plant. The work on Unit 859, a distillate hydrotreater, is unplanned, said the person, who declined to be identified because the person is not authorized to speak for the refinery.

The premium for ultra-low-sulfur diesel in New York Harbor slipped 0.12 cent to 2.88 cents a gallon versus heating oil futures traded on the New York Mercantile Exchange at 1:56 p.m. The differential rose 1 cent a gallon yesterday.

–With assistance from Paul Gordon in Hong Kong. Editors: Margot Habiby, Charlotte Porter

To contact the reporter on this story: Paul Burkhardt in New York at pburkhardt@bloomberg.net.

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.

SOURCE ARTICLE

By Paul Burkhardt

Dec. 16, 2011 (Bloomberg) — Royal Dutch Shell Plc plans to seek binding commitments to transport oil on its proposed Westward Ho pipeline after receiving enough interest from shippers, the company said in a statement.

Shell plans to conduct an open season for commitments in early 2012 to ship on the 30-inch line that would run from St. James, Louisiana, to the Port Neches/Nederland, Texas, area, the company said.

The Westward Ho line, which would ship around 600,000 barrels a day, may be completed and commissioned by early 2015, according to Shell.

–Editors: David Marino, Charlotte Porter

To contact the reporter on this story: Paul Burkhardt in New York at pburkhardt@bloomberg.net.

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.

SOURCE ARTICLE

The Associated Press December 15, 2011, 5:46PM ET

By DAN JOLING

ANCHORAGE, Alaska

Pollution emitted from drilling ships and support vessels in Arctic waters would be regulated by the Interior Department instead of the Environmental Protection Agency under language inserted into a spending bill by U.S. Sen. Lisa Murkowski.

The Alaska Republican announced the move Thursday and said it will address systemic problems in the EPA permitting process for offshore oil and natural gas exploration.

A subsidiary of Royal Dutch Shell hopes to drill exploratory wells in the Chukchi and Beaufort seas next summer on leases purchased in 2008. Shell’s drilling has been thwarted so far by challenges that include appeals of air permits granted by the EPA.

Murkowski said in her announcement that the language inserted into the spending bill is one of the most important steps Congress can take to ensure that responsible development is allowed to go forward in the Beaufort and Chukchi seas. Shell, Murkowski said, has invested $4 billion in preparing for Arctic exploratory drilling and has waited more than five years for valid EPA operating permits.

The Interior Department, she said, processes air permits within months.

“Transferring air quality authority from the EPA to Interior could place Alaska’s Arctic leases on a level playing field with the Gulf of Mexico and provide a level of predictability — without compromising environmental protections — for those companies willing to invest in the production of America’s energy,” she said in a prepared statement.

A Murkowski spokesman said the language was not intended only to help Shell but also other companies that want to drill on Alaska’s outer continental shelf.

“The EPA process is broken, is Sen. Murkowski’s point,” Robert Dillon told The Associated Press by phone from Washington, D.C.

Colin O’Brien, an attorney for environmental law firm Earthjustice, which is representing Alaska Native and conservation groups in an appeal of Shell’s latest EPA air permit, said there have been other attempts to limit the agency but not to shift its authority wholesale to the Interior Department.

“This is a brazen giveaway to Big Oil that ignores the impact of Arctic oil and gas activities to the detriment of nearby communities and the environment,” he said from Juneau.

Interior’s regulations do not address air pollution at the source and excludes support vessels that may account for 96 percent of an operation’s emissions, he said.

“From start to finish, there’s less analysis, less control, and Clean Air Act protections are almost completely eviscerated,” he said.

Rebecca Noblin, an attorney for the Center for Biological Diversity in Anchorage, said by e-mail that Murkowski’s tactic will significantly decrease oversight of air emissions.

“The fact is, Senator Murkowski is upset that the EPA actually requires Shell to comply with the Clean Air Act,” Noblin said. “What she dubs `streamlining’ is no more than an attempt to put air permitting in the hands of a department known for rubber stamping dangerous drilling projects. Our senator would rather pollute Alaska’s air and threaten our health than say no to the oil companies.”

The issue for Shell is not the process, she said, but following the law.

“If they just complied with the Clean Air Act, they would get their Clean Air Act permits,” she said.

Shell Alaska spokesman Curtis Smith said the company has worked closely with the EPA on its air permits and believes they will be validated by the appeals board. He accused organizations such as Noblin’s of leaning on hyperbole and misstatements to make a case against Arctic drilling.

“Not only do Shell’s proposed air emissions meet the Arctic standard, we are setting the bar,” he said in a statement. “Shell has committed hundreds-of-millions of dollars to modifying exhaust systems on both drill ships and committed to use ultra-low sulfur fuel on our support vessels. We stand by the EPA’s expert conclusion that our operations will not adversely impact the local air shed or local stakeholders.”

Dillon said the oversight change language is in both an omnibus spending bill and stand-alone House appropriations bill and still must be approved by the Senate.

The other two members of the Alaska congressional delegation issued statements lauding the proposed change.

“This is a game changer for development in the Arctic,” said Rep. Don Young. He said he had worked with colleagues on the same issue.

“After over five years of waiting on air permits and seeing billions of dollars spent while waiting on permits, I am as confident as ever that we will finally see production taking place in both the Beaufort and Chukchi seas.”

Sen. Mark Begich, D-Alaska, said he had pushed for the change with the White House and the Senate Democratic leadership.

“This is an issue of fairness and is long-overdue,” Begich said. “Companies with projects in the Arctic are at a competitive disadvantage under the EPA. It’s time to move all air permitting under the Interior Department.”

SOURCE ARTICLE

December 16, 2011, 2:21 AM EST

By James Paton

Dec. 16 (Bloomberg) — Arrow Energy Ltd., the natural gas producer owned by Royal Dutch Shell Plc and PetroChina Co., won approval from Australia’s Foreign Investment Review Board to buy Bow Energy Ltd. for A$535 million ($534 million).

The transaction was also cleared by Chinese authorities, Brisbane-based Bow said today in a statement. The decisions follow approval earlier this month by the Australian Competition & Consumer Commission.

Arrow, seeking additional resources for a liquefied natural gas venture in Queensland state, agreed in September to increase its takeover offer to A$1.52 a share in cash from A$1.48. The accord was 72 percent more than Bow’s price of 88.5 cents in Sydney before Arrow made its initial offer Aug. 22.

Brisbane-based Bow was valued at between A$1.14 and A$1.53 a share by independent analyst Grant Samuel, the company said Nov. 17. Samuel found the deal “highly attractive,” given the uncertain economic and market conditions, the premium given to shareholders and the “remote prospect of Bow shares trading above A$1.52 per share in the foreseeable future,” Bow said.

Arrow, also based in Brisbane, plans the fourth LNG venture in Queensland to meet rising Asian demand, following approvals for more than $50 billion in developments led by BG Group Plc, Santos Ltd. and ConocoPhillips. The acquisition may allow Arrow to expand output at the venture’s first two units by as much as 15 percent, it said in September.

Bow expects the transaction to be completed Jan. 11, it said last month.

–Editor: Keith Gosman,

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

To contact the editor responsible for this story: Andrew Hobbs at ahobbs4@bloomberg.net

SOURCE ARTICLE

December 08, 2011, 10:58 AM EST

By Wael Mahdi

Dec. 8 (Bloomberg) — China National Petroleum Corp. will rely on help from Royal Dutch Shell Plc and Exxon Mobil Corp. amongst others to develop its shale gas resources.

CNPC is working with Shell on a project in central China to develop shale gas, its president Zhou Jiping told reporters today in Doha, Qatar. The company has already made shale gas discoveries and it needs more time to develop them, he said.

“The tectonic movement in China is even stronger than in the U.S., and it’s making the structure more complex,” he said. China has more potential gas resources than the U.S., according to his estimates.

Chinese gas shale development will be more complex than in the U.S. because of a different geological formation, he said.

–Editors: Stephen Cunningham, Alex Devine.

To contact the reporter on this story: Wael Mahdi in Cairo at wmahdi@bloomberg.net

To contact the editor responsible for this story: Stephen Cunningham at scunningha10@bloomberg.net

SOURCE ARTICLE

December 07, 2011, 8:58 AM EST

By Robert Tuttle and Anthony DiPaola

Dec. 7 (Bloomberg) — BP Plc and Royal Dutch Shell Plc, Europe’s biggest oil companies, aim to resume exploration in Libya, whose new government seeks to stabilize relations with foreign companies following the ouster of Muammar Qaddafi.

Both companies are evaluating whether to resume drilling at wells begun in the North African state before the outbreak of hostilities at the start of this year, BP Chief Executive Officer Robert Dudley and Shell head Peter Voser said yesterday in Doha, Qatar’s capital.

Libya, the holder of Africa’s biggest oil reserves, is restoring production after output dropped to 45,000 barrels a day, from 1.6 million barrels, after a rebellion against Qaddafi broke out in February. The loss of Libyan exports contributed to a 20 percent increase in London oil prices earlier this year.

“There is a real interest that we can deploy technology and our people and raise production,” ConocoPhillips CEO James J. Mulva said in an interview, referring to the transitional government’s plan to bring oil companies back to Libya. “We feel we can restore production and hopefully this gives us the opportunity to do even more.”

International oil companies need access to new crude and natural gas deposits to meet global demand, which is expected to grow over the next two decades, according to Dudley, Voser and Exxon Mobil Corp. CEO Rex Tillerson. The three executives were in Doha this week for the World Petroleum Congress.

Production Recovery

Repsol YPF SA, Spain’s biggest oil company, is raising output and is now pumping 200,000 barrels a day in Libya, CEO Antonio Brufau Niubo told reporters. It has a production capacity of 340,000 barrels a day, he said.

Libya’s crude output had recovered to 840,000 barrels a day by the end of last month, the state-run National Oil Corp said Nov. 30. Production may increase to 1.3 million by June, former Oil Minister Ali Tarhouni said Nov. 25, less than a week after stepping down from the interim cabinet.

OPEC Secretary General Abdalla el-Badri said Dec. 4 he expected Libya to be pumping about 950,000 barrels of oil a day by the end of this month, rising to 1.3 million barrels a day in the first quarter and to 1.5 million in the second quarter. Iran’s Oil Minister Rostam Qasemi said Dec. 5 it would take about a year for Libya to return to full production.

New Wells

BP, which signed an exploration agreement with Libya in May 2007, stopped exploration in February when the revolt broke out. The company was “on the verge” of starting to drill two onshore and offshore wells in Libya, and has now been asked by the government to return to the country, Dudley said.

“We will make a decision when it’s the right time to ensure the safety of our employees,” he said.

Shell had been drilling two wells in Libya before the unrest and was considering a restart, according to Voser.

ConocoPhillips and its partners had been producing about 350,000 barrels a day from Libya’s Waha field before violence against the Qaddafi regime broke out, CEO Mulva said. The company’s share of production was 50,000 barrels a day.

Libyan authorities “indicated that they are going to honor the contracts” that oil companies had with the previous regime, he said.

Total SA is in discussions with the new Libyan government to drill wells offshore there, said Stephane Michele, the company’s director of exploration and production for Qatar. The French company had drilled two exploration wells before unrest started and aims to resume its offshore exploration program there, Michele said in an interview yesterday.

International Sanctions

Libyan oil output, which rose as high as 3.4 million barrels a day in the early 1970s, stagnated in the 1980s and 1990s as international companies pulled out and the country was subjected to sanctions. Production remained at 1 million to 2 million barrels a day, according to BP Plc statistics compiled by Bloomberg.

A turnaround in its relations with the west came between 2002 and 2005 when Qaddafi abandoned a nuclear-arms development effort, pledged to destroy a chemical weapons stockpile and renounced terrorism. The move led to an easing of sanctions and improved ties with the U.S. and European nations.

Libya attracted investment from international oil companies including Eni SpA, BP, ConocoPhillips, Total and Repsol as the country sought to raise production capacity to 3 million barrels a day. In 2009, Libya approved a 12.1 billion-dinar ($9.8 billion) plan to develop and upgrade 24 oil fields.

–With assistance from Eduard Gismatullin in London and Wael Mahdi in Cairo. Editors: John Buckley, Raj Rajendran

To contact the reporters on this story: Robert Tuttle in Doha at rtuttle@bloomberg.net; Anthony DiPaola in Dubai at adipaola@bloomberg.net

To contact the editors responsible for this story: Stephen Voss at sev@bloomberg.net

SOURCE ARTICLE

The big question is: Can Shell keep riding this tiger? What prevents PetroChina’s parent, CNPC, from exploiting the Western producer for what it wants and then tossing it aside or perhaps even taking it over?