Royal Dutch Shell plc .com Rotating Header Image

Posts under ‘Oil Spill’

Inspection report on spill pipeline ‘overdue by three years’

THE PRESS AND JOURNAL: PAGE 6. MONDAY, February 20, 2012

BY ROSS DAVIDSON

An inspection report on the safety of a pipeline at the centre of the UK’s biggest oil leak in a decade was overdue by three years, officials revealed.

Operator Shell was supposed to assess the integrity of pipelines at Gannet Alpha every four years, but the Health and Safety Executive (HSE) said the audit had not been carried out since 2004.

HSE has issued SheIl with two improvement notices after the firm did not keep the report up-to-date.

More than 200 tonnes of light crude spewed into the North Sea in August last year from a leak in a pipeline serving the Gannet Alpha, 112 miles east of Aberdeen.

Shell was accused of playing down the incident after it estimated 120 barrels had been spilled – but later revised it to l,300 barrels.

The operator is still awaiting the outcome of an investigation into the spill and could face prosecution over the incident

Earlier this month, the oil giant had to deal with further problems at the platform after it was evacuated when gas started seeping out underwater.

About 50 people were taken off the platform, leaving 28 essential staff on-board.

Richard Dixon, director of WWF Scotland, described Shell’s approach to health and safety as “shocking”.

He said: “Despite being responsible for Britain’s worst oil spill in a decade, Shell is once again giving people reason to worry about the safety of its operations.

“It prompts one to ask just how many other oil companies are not on the ball when it comes to health and safety?

“Shell’s failure to keep safety plans up-to-date is really quite shocking for a company with such a global profile,”

A spokesman for Shell UK said the improvement notices did not mean the external investigation, being conducted by HSE and the Department of Energy and Climate Change, had concluded.

He said: “Shell is confident that it can promptly meet the requirements laid down in these improvement notices.

“Shell continues to work closely with the regulatory authorities in their ongoing investigation into the Gannet incident.

“We aim to learn from past mistakes and make whatever changes are necessary to ensure they are not repeated.”

RELATED ARTICLES

SCOTTISH OIL RIGS IN DIRE STRAITS

Mr Campbell insisted it is only a matter of time before there is another major tragedy in the North Sea. He said: “According to public domain data there were 85 gas releases and 443 dangerous occurrences last year. If you are getting 85 gas leaks that’s one and a half, or two, leaks a week. The probability of an undesirable event is very high.”

CLICK ON IMAGE TO ENLARGE

Shell’s North Sea Reputation sunk by severe corrosion

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

Shell had oil rig safety warning

“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.”

ON THE BRINK (Extracts)

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.

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.

Shell’s Gannet Alpha leak pipeline audit three years overdue

An audit of a pipeline which leaked more than 200 tonnes of oil into the North Sea was three years overdue, an investigation by the Health and Safety Executive has shown.

20 February 2012

An audit of a pipeline which leaked more than 200 tonnes of oil into the North Sea was three years overdue, an investigation by the Health and Safety Executive has shown.

The incident at Shell’s Gannet Alpha oil platform, 113 miles (180km) off Aberdeen, happened in August last year.

The HSE said an audit of the safety management system due in 2008 had not been carried out before the accident.

The leak was discovered about 300ft (91m) below the surface.

A joint investigation into the leak by the UK’s regulatory authorities is currently ongoing.

Shell said it was confident requirements laid down in the notices could be met and the final report by the HSE was awaited.

SOURCE ARTICLE

RELATED ARTICLES

Shell Gannet Alpha platform evacuated over gas leak

9 February 2012

Nearly 50 workers had to be evacuated from a North Sea oil platform after natural gas began seeping out beneath it, it has emerged.

Shell said staff were taken off the Gannet Alpha installation on Monday as a precaution. Production was shut down.

The oil giant said the incident was not linked to last August’s leak of more than 200 tonnes of oil from a pipeline beneath the Gannet Alpha.

The Health and Safety Executive is investigating.

The Gannet Alpha oil platform is 113 miles (180km) off Aberdeen.

SOURCE ARTICLE

Never Say Never Again

John

An incomplete but nonetheless informative summary of historic catastrophic offshore events…might be of interest to your readers…

LINK TO FILE: NeverSayNeverAgain

Shell accused of ‘moral bankruptcy’

Shell has been accused of “moral bankruptcy” by unions after unveiling a 54% rise in full-year profits less than a month after shutting its final salary pension scheme to new employees in Britain.

The oil company reported global annual earnings of $28.6bn (£18bn) – more than £2m an hour – while paying out $10.5bn to shareholders during 2011 and promising to raise dividend levels further in the coming months.

Peter Voser, Shell’s chief executive, said “there is more [good profit] to come” as he outlined a new programme of increased global investment as well as cuts that he said would provide even better returns for investors.

“We have worked hard to generate a strong pipeline of investment opportunities for Shell … All of this is supported by efficiency gains from our continuous improvement programmes,” Voser said.

But Europe’s largest oil group was attacked for displaying “predatory capitalism” by Len McCluskey, leader of the Unite union. “Shell reminds us of the moral bankruptcy of the corporate elite. The company is needlessly closing its final salary scheme while posting colossal profits,” he said. “Rather than provide security to its future staff and still make a profit, it has chosen greed. Shell is not alone: Unilever is needlessly slashing its employees’ pension benefits when there is no financial reason for doing so.”

Shell, which has also upset staff by unveiling plans to shut its major research and development centre at Stanlow in Cheshire after disposing of its refinery there, said it was surprised by the attack.

A spokesman pointed out that most government and private pension schemes paid in Britain were supported by Shell, which provides 12% of all dividends from the FTSE 100 index of leading firms.

The Anglo-Dutch group is riding high on the back of surging oil prices – which were more than $30 per barrel higher last year than in 2010 – and booming demand for gas, but says it is making most of its money outside Britain and makes barely 1p per litre out of petrol sales.

Voser pointed out that two thirds of the UK pump price went straight to the government as tax. He blamed near record prices for forecourt diesel on global crude market conditions and said Shell’s UK retail operations continued to come under “very heavy competitive pressures”.

Shell would continue to invest in the North Sea in oil projects such as those it has west of Shetland, but said there was a need for the right “tax structures to keep the oil and gas industry alive here”.

The company was doing “our bit for balancing the books” of the Treasury through paying a heavy tax burden, it said, while denying that its recent sale of the Stanlow refinery to an Indian group had any impact on the wider refining and distribution problems that have recently hit the south-east of England.

Shares in Shell rose 11% last year while arch-rivals such as BP saw no growth at all but on Thursday the Anglo-Dutch group’s stock market valuation fell slightly as the City was disappointed by the financial performance in the last quarter of the year.

Shell reported three-monthly earnings of $6.5bn, which was up on the same period last year but down quite heavily on the third quarter.

Total oil and gas production in the fourth quarter was lower, at 3.3m barrels of oil equivalent per day compared with 3.49m barrels a year ago. Shell said it would increase annual production to 3.7m barrels by 2014, helped by a $100bn investment plan which started in 2010.

The company said it would put much of its drilling efforts into the US and it now claims to have become the biggest driller – but not producer – in the deepwater Gulf of Mexico where BP used to reign supreme. Since the government moratorium on drilling in the Gulf, imposed following BP’s Deepwater Horizon spill, was lifted, Shell has obtained permission to drill five wells during 2012.

The company said it was treading carefully, meanwhile, in the Middle East in the wake of the Arab spring, but hopes to reveal soon how its exploration programme has been going in Saudi Arabia and when it plans to get back to similar work in Libya.

Shale hopes

Shell is hoping to turn the “shale gas revolution” sweeping north America into an export earner but also expects to see the controversial new energy source taking off in Europe once an “emotional” debate dies down.

The Anglo Dutch oil company is looking at possible plans to ship surplus quantities of the fuel, as liquefied natural gas or “gas-to-liquid” processed fuel, from the US.

Natural gas prices in north America have fallen to a 10-year low due to the discovery that gas can be extracted from shale rock using a technique known as hydraulic fracturing or “fracking”. It uses an assortment of chemicals to release gas with tiny explosions and has upset environmentalists and some politicians.

Peter Voser, chief executive of Shell, said $6bn would be spent worldwide on different kinds of shale gas operation, half of this in the US. The heavily populated nature of Europe versus the US made it more difficult to “frack” this side of the Atlantic, Voser conceded, but he said governments should “not take fast and emotional decisions” to restrict shale extraction. Shell expects Poland and even Germany to proceed with shale gas exploitation but it is also looking at operations in Ukraine and China.

SOURCE ARTICLE

Shell Earnings Decline on Lower Gas Prices


By Eduard Gismatullin – Feb 2, 2012 8:02 AM GMT

Royal Dutch Shell Plc (RDSA), Europe’s biggest oil company, expects to raise its dividend this year for the first time since 2009 as new projects generate more cash.

Shell plans net capital investment of $30 billion, with cashflow from operations in 2012-2015 expected to be as much as 50 percent higher than in the 2008 to 2011 period.

Chief Executive Officer Peter Voser said growth will be driven by more than 60 new projects, unlocking potential resources of more than 20 billion barrels of oil equivalent. That’s on top of 14 projects started in 2009-11, including Qatar’s Pearl gas-to-liquids venture.

“Our improving financial position creates an opportunity to increase both our dividends and investment levels,” Voser said today in a statement.

Net income fell to $6.5 billion in the fourth quarter from $6.79 billion a year earlier, The Hague-based Shell said. Excluding one-time items and inventory changes, profit missed analyst estimates.

Shell is the first of Europe’s biggest oil companies to report earnings. It will be followed by BP Plc on Feb. 7 and Total SA on Feb. 10. Exxon Mobil Corp., the world’s largest energy company by market value, reported fourth-quarter sales that fell short of analysts’ estimates earlier this week.

Shell posted adjusted earnings of $4.8 billion, compared with the $5.2 billion median estimate of 15 analysts surveyed by Bloomberg.

‘Substantial Undershoot’

“The overall result represents a substantial undershoot against a consensus which just three weeks ago was above $7 billion,” said Stuart Joyner, an analyst at Investec Bank Plc.

U.K. front-month natural gas prices are down about 20 percent since reaching a 2011 high of 67.80 pence per therm on Nov. 7. Milder weather in Europe and maintenance curbed Shell’s production by about 100,000 barrels of oil equivalent in the quarter, according to Sanford C. Bernstein & Co.

Shell will increase production to about 4 million barrels of oil equivalent a day in 2017-2018. Last March, it said daily output would rise to 3.5 million barrels this year and 3.7 million barrels by 2014.

Output fell 5.5 percent to 3.305 million barrels a day in the fourth quarter from the year-earlier period.

Profit was also curbed by maintenance at rigs in the Gulf of Mexico and the North Sea. Shell shut the Bonga field in Nigeria after an offshore oil spill, the nation’s worst in more than a decade. A fire disrupted shipments from Shell’s Pulau Bukom plant in Singapore, the company’s biggest.

Shell made a loss of $278 million from its refining and marketing operations, compared with a profit of $482 million a year earlier. Crude-processing fell 17 percent as sales dropped.

Refining margins from processing oil into fuels such as gasoline and diesel on the U.S. Gulf coast fell 22 percent to $7.16 a barrel in the fourth quarter from a year earlier, according to BP Plc data.

Of the 31 analysts that cover Shell, 21 recommend buying the shares, nine have ‘hold’ ratings, and one advises investors to sell the stock.

Shell plans to increase the dividend by 2.4 percent to 43 cents in the first quarter from 42 cents announced in the fourth quarter.

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

Call for Norwegian Government Pension Fund disinvestment in Shell

An eminent group of scientists and professionals have sent a collective communication to the Norwegian Government Pension Fund recommending disinvestment in the oil giant Royal Dutch Shell on ethical grounds.

By John Donovan

An eminent group of scientists and professionals have sent a collective communication to the Norwegian Government Pension Fund recommending disinvestment in the oil giant Royal Dutch Shell on ethical grounds.

The pension fund has already dis-invested in several mining and forestry companies “known to cause severe environmental and human rights related harm in their operations.”

If the campaign is successful, which focuses on Shell’s horrendous track record in Nigeria, Royal Dutch Shell would be the first oil and gas company the fund would exclude from its portfolio.

The joint recommendation, sent last Friday, is printed below.

January 27, 2012                                          via email: postmottak@etikkradet.no

Professor dr. juris Ola Mestad, Chairman
Council on Ethics
Norway Government Pension Fund
Etikkrådet for Statens pensjonsfond utland
Postboks 8008 Dep
0030 Oslo, Norway

RE: Recommendation that the Norway Pension Fund exclude holdings in Royal Dutch Shell due to the severe environmental and social harm caused by Shell’s long-term negligence in the Niger Delta, Nigeria

Dear Chairman Mestad,

We, the undersigned conservation scientists and professionals from around the world, write to you today asking you to take action on a matter of significant importance regarding corporate social responsibility and ethical investment.

We are aware of the laudable ethical standards your Council on Ethics has established with which to screen all investments made by the Norway Pension Fund, in particular its environmental standards.  We commend you for the previous divestments the Fund has made in mining and forestry companies known to cause severe environmental and human rights related harm in their operations.

We note that Section 2 of your Guidelines for the observation and exclusion of companies from the Government Pension Fund Global’s investment universe states, (inter alia):

3) The Ministry of Finance may, on the advice of the Council of Ethics, exclude companies from the investment universe of the Fund if there is an unacceptable risk that the company contributes to or is responsible for: a) serious or systematic human rights violations, such as murder, torture,
deprivation of liberty, forced labour, the worst forms of child labour and other
child exploitation;
b) serious violations of the rights of individuals in situations of war or conflict;
c) severe environmental damage; d) gross corruption; e) other particularly serious violations of fundamental ethical norms.

(4) In assessing whether a company shall be excluded in accordance with paragraph 3, the Ministry may among other things consider the probability of future norm violations; the severity and extent of the violations; the connection between the norm violations and the company in which the Fund is invested; whether the company is doing what can reasonably be expected to reduce the risk of future norm violations within a reasonable time frame; the company’s guidelines for, and work on, safeguarding good corporate governance, the environment and social conditions; and whether the company is making a positive contribution for those affected, presently or in the past, by the company’s behaviour.

Chairman Mestad, Jan. 27, 2012

Page 2.

In this regard, some members of our group and associates have worked for years on the impacts of oil production in the Niger Delta, and we conclude that Shell has for decades caused severe environmental and social harm in the region.  Evidence of this includes, but is not limited to, a history of repeated oil spills at Bomu Manifold, Korokoro flow station and Ejama-Ebubu in the minority Ogoni region of the Niger Delta (See Ogoniland Environmental Assessment, UNEP 2011).  Further, Shell is well aware of the damage it continues to cause, and has not taken necessary action to remedy the continuing problems. We feel Shell’s long-term negligent behavior in the Niger Delta satisfies the Fund’s standards for exclusion as set forth in Paragraphs 3 and 4 of your Ethical Guidelines referenced above.

Although Shell is clearly required by Nigerian law (as well as its own corporate policies) to conduct its oil and gas production, transportation, refining, and export operations with best available international standards, it has knowingly and consistently violated this requirement in Nigeria for decades.    Shell is required to meet these high standards in oil infrastructure integrity, spill prevention, prevention of third party damage, monitoring and maintenance of facilities, spill response, spill restoration, and financial compensation.   However, Shell repeatedly ignores such requirements for regular inspection and maintenance of oil facilities, upgrading pipelines and production facilities to best available standards, and prompt and effective response to oil spills (See Double Standards: International Standards to Prevent and Control Pipeline Oil Spills, Compared with Shell Practices in Nigeria, Steiner, 2008/2010).

To begin to address these issues, some of the signatories to this letter organized and conducted the first preliminary environmental damage assessment of oil impacts across the Niger Delta in 2006, in collaboration with many Nigeria scientists and communities, and found the Delta to be one of the most severely oil-impacted ecosystems in the world (Niger Delta Natural Resource Damage Assessment and Restoration Project – Phase I Scoping Report, Nigeria Conservation Foundation and IUCN/CEESP, 2006).   The 2006 study estimated that the average volume of oil spilled in the Niger Delta each year equaled that spilled by the Exxon Valdez in Alaska in 1989 – officially reported to be about 220,000 barrels.  It is our conclusion that most of this environmental injury in the Niger Delta is due to the largest and oldest petroleum producer in the there– Royal Dutch Shell.

In 2006 our group recommended to the United Nations Environment Programme (UNEP) that it conduct a comprehensive environmental damage assessment of oil impacts in the Delta.  Subsequently, UNEP did conduct an assessment of oil contamination in Ogoniland (part of Shell’s operating area in the Delta), and published its final Ogoniland Environmental Assessment last year (UNEP, 2011).  The UNEP report agreed with our 2006 assessment, confirming that the region has been continuously and severely damaged by oil.   Again, this is Shell’s operating area.

Chairman Mestad, Jan. 27, 2012

Page 3.

It is evident to our group, and many others working and living in the Niger Delta, that Shell has consistently violated its legal and ethical obligations in Nigeria, it is well aware of this continuing problem, it knows how to correct the problems, and yet continues to operate negligently and with impunity.

And it is clear that Shell’s behavior in the Delta does not constitute isolated and infrequent accidents.  Rather, the company’s willful negligence has continued over several decades.  Mr. Chairman, we feel it is time the international community takes a strong stand against such ongoing corporate malfeasance.

Thus, we were delighted to see the Council’s Annual Report 2009 state the following:

The Council is also going to investigate more closely the Fund’s investments in coal mines in light of the many accidents in this industry, and is as well as looking into oil pollution in the Niger Delta in light of the many oil spills in the region over a prolonged period and the impact this may have on the environment and human health (emphasis added).

Clearly, it would be unethical for the Norway Fund to continue “profiting” from its investments in Shell, while Shell is “profiting” from its continuing negligence regarding the environment and people of the Niger Delta.

We applaud your investigation of environmental and social injury caused by oil operations in the Niger Delta. By way of this letter, we respectfully encourage the Council on Ethics to recommend full divestment and exclusion of all holdings of the Norway Government Pension Fund in Royal Dutch Shell, Plc. and its subsidiaries, due to the consistent and severe environmental and social harm caused by Shell’s negligent oil and gas operations in the Niger Delta, Nigeria.

We recognize that this would be the Fund’s first exclusion of holdings in the petroleum sector, and as such, feel this would send a powerful message to the petroleum sector globally.  We also feel divestment by the Norway Fund will provide strong motivation for Shell to improve its environmental and social performance in Nigeria and globally.  Such action would similarly motivate other companies operating in the Delta in which the Fund is invested.

Please do not hesitate to contact any of us if you need other information.  We would also invite the Council on Ethics to conduct a fact-finding mission to the Delta if you so desire.

We look forward to your decision on this important issue.

Chairman Mestad, Jan. 27, 2012

Page 4.

Respectfully (in alphabetical order),

Gordon Abiama, Director, Africa Centre for Geoclassical Economics, Yenagoa, Bayelsa State, Niger Delta, NIGERIA

Pastor Innocent Adjenughure, Executive Director, Institute for Dispute Resolution, Niger Delta Study Group on Extractive Sector (NIDESGES), Delta State, NIGERIA

Ben Amunwa, Researcher, Platform, London, UK

Nnimmo Bassey, Environmental Rights Action (ERA), NIGERIA

Dr. Grazia Borrini-Feyerabend, President, Paul K. Feyerabend Foundation, SWITZERLAND

Dr. Bram Büscher, Associate Professor of Environment and Sustainable       Development, International Institute of Social Studies, Erasmus University NETHERLANDS

Dr. Crystal Fortwangler, Anthropologist, USA

Ken Henshaw, Programmes Manager, Social Action, NIGERIA

I. Herbert, Sustainable Environment and Economic Resources (SEERs), USA

Janet Howitt, Environmental Safety Group, Gibraltar, UK

Kira L. Johnson MSc, Conservation Biologist, USA

Sandra Kloff, Consultant, Marine and Coastal Management, NETHERLANDS

Ronald Leger, CANADA

Janaki Lenin, Writer, INDIA

Father Père Félicien Mavoungou, Commission épiscopale Justice et Paix Brazzaville, REPUBLIC OF CONGO

Akpobari Celestine Nkabari, Ogoni Solidarity Forum-NIGERIA and Social Action, NIGERIA

Chairman Mestad, Jan. 27, 2012

Page 5.

(Signatures continued)

Abiri Oluwatosin Niyi, Sustainable Nigeria, NIGERIA

Faith Nwadishi, Publish What You Pay/Koyenum Immalah Foundation, NIGERIA

Legborsi Saro Pyagbara, International Advocacy Officer, The Movement for the Survival of the Ogoni People (MOSOP) NIGERIA

Alfredo Quarto, Executive Director, Mangrove Action Project, USA

Dr. Kristin Reed, author of Crude Existence, USA

Geert Ritsema, International Affairs Coordinator, Friends of the Earth, NETHERLANDS

Paul Siegel, Conservationist, Dakar, SENEGAL

Richard Steiner, Professor, University of Alaska (ret.) Oasis Earth, Anchorage Alaska, USA

Dr. Makere Stewart-Harawira, Associate Professor University of Alberta, Edmonton, CANADA

Rev. David Ugolor, African Network for Environmental and Economic Justice (ANEEJ), NIGERIA

Dr. Geert van Vliet, Economist, CIRAD, FRANCE

Weirt Wiertsema, Senior Policy Advisor, Both Ends, NETHERLANDS

Nicholas Winer, Just Conservation, SPAIN

Nigeria to Ask for Compensation From Shell on Bonga Spill

By Vincent Nwanma – Jan 29, 2012 10:36 PM GMT

Jan. 29 (Bloomberg)– Nigeria will “soon” ask for compensation for an oil spill from Royal Dutch Shell Plc (RDSA), Europe’s largest oil company, President Goodluck Jonathan said.

A spill last month from the 200,000 barrel-a-day Bonga field off Nigeria, which produces nearly 10 percent of Nigeria’s crude, led Shell to stop production from the facility, the company said on Dec. 21. The export line at Bonga leaked almost 40,000 barrels of crude during a tanker loading, according to Shell estimates, making it Nigeria’s worst offshore spill in more than a decade.

Nigeria will be asking for compensations “with a view to reaching an amicable solution to the problem,” Jonathan said in a meeting with Ban Ki-Moon, the United Nations secretary- general, on the sidelines of the 18th African Union Ordinary Session of the heads of state and governments in Addis Ababa, the Ethiopian capital, according to a statement e-mailed today.

A phone call by Bloomberg to Shell’s office in Lagos, Nigeria, after hours was unanswered, and there was no answer at the mobile phone number of a company spokesman

To contact the reporter on this story: Vincent Nwanma in Lagos at vnwanma@bloomberg.net

To contact the editor responsible for this story: Dulue Mbachu at dmbachu@bloomberg.net

SOURCE ARTICLE

Shell’s Arctic Drilling Plan Clears Hurdle

By CLIFFORD KRAUSS: January 13, 2012

A Royal Dutch Shell vessel surveying for oil reserves in the Arctic in preparation for drilling. Photo: Shell Oil

Royal Dutch Shell has been on a six-year crusade to drill in Arctic waters off Alaska’s coast, and has spent about $4 billion on the effort so far without drilling a single well.

But the company took one more bureaucratic baby step forward this week toward drilling in the Chukchi Sea later this year. An appeals board of the Environmental Protection Agency on Thursday rejected four challenges brought by Alaska Native entities and environmental groups like Earthjustice to block Clean Air Act permits covering airborne emissions from industrial operations.

Opponents argued that nitrogen dioxide emissions from drilling would pollute the air of Native communities, but the appeals board concluded that the evidence presented was not robust enough to support the claim.

Nonetheless, Shell faces more hurdles, including a possible appeal of the decision to the federal courts.

But since delays in the air-permitting process was a principal reason Shell did not drill last year, Shell executives have expressed cautious satisfaction with the new ruling..

Four weeks ago the company received conditional federal approval to drill six exploratory wells in Arctic waters, but environmentalists say they will press on with their appeals. They argue a spill in freezing waters would be a disaster for endangered wildlife and challenging to clean up because of the region’s harsh climate, ice cover on the water, strong winds and long seasonal darkness.

“We look forward to continued progress on the permitting front and remain committed to working with regulators and stakeholders to achieve all of the permits necessary to drill in 2012,” Shell said in an optimistic statement late Thursday.

Eric Jorgensen, an Earthjustice lawyer, said: “We’re disappointed. The E.P.A. cut corners in issuing the permit and we don’t believe it complies with the Clean Air Act.”

As for an appeal, he said, “We’re looking at all options.”

SOURCE ARTICLE

Shell leader expects Arctic offshore drilling this year

By Emily Pickrell, HOUSTON CHRONICLE

Published Thursday, January 12, 2012

Shell Oil Co. expects to clear remaining regulatory hurdles and begin drilling later this year in the Chukchi Sea near Alaska, company President Marvin Odum said at a scientific conference on Thursday.

Shell received conditional federal approval last month to drill six exploratory wells in the Arctic offshore region but still must secure permits for individual wells.

Among the requirements for Shell to obtain those permits will be selling regulators on its plan for responding to spills or other accidents at the sites.

Odum said Shell is mindful of the 2010 Deepwater Horizon disaster in the Gulf of Mexico, and the wide criticism BP and others involved received for the conditions leading to the accident and their response.

“We will have every piece of response in Alaska available on a one-hour notice,” Odum said in a keynote address at the ninth conference of the Academy of Medicine, Engineering and Science of Texas.

“The access to the equipment will provide for a much different response than what the world watched in the Gulf of Mexico.”

Environmentalists who oppose the drilling contend that no proven technology exists for cleaning up a spill in the slushy Arctic environment.

The area about 70 miles off the Alaska coast is more remote than the Gulf, and winter ice causes additional challenges.

Odum noted, however, that the drilling will be in about 150 feet of water – far shallower than the well under a mile of water that blew out in the Deepwater Horizon disaster.

He said that Shell is also working with Norwegian experts on how best to clean up any potential spills in colder climates.

On another subject, Odum predicted that Shell will soon get into the gas-to-liquids business in the U.S., with plants similar to its $20 billion Pearl plant in Qatar, which converts natural gas to liquid transportation fuel.

“With very low natural gas prices, we have a market that still has to import much of its liquid fuels,” Odum said. “It is high time to do something like that in the U.S.”

A view of the wind

In another panel Thursday, Shell Wind Energy President Richard Williams presented an optimistic view of the opportunities in wind.

“Everyone asks us if a wind farm makes money,” Williams said. “The answer is yes.”

The cost of turbine construction has decreased about 30 percent, and installation costs have gone down about 10 percent, Williams said, while improvements in safety and additional technical education programs have made it easier to find and train employees to run wind farms.

Odum emphasized, however, that while Shell is continuing to explore opportunities in renewable energy, growing demand will mean continued reliance on oil and natural gas.

“Thirty percent of global energy could come from alternatives to oil and gas, but at the same time, the world will need twice as much energy as today,” Odum said.

emily.pickrell@chron.com

SOURCE ARTICLE