Posts Tagged ‘Gulf of Mexico’

By NATALIYA VASILYEVA, AP Business Writer: 23 December 2011

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MOSCOW (AP) — The sinking of a floating oil rig that left more than 50 crew dead or missing is intensifying fears that Russian companies searching for oil in remote areas are unprepared for emergencies — and could cause a disastrous spill in the pristine waters of the Arctic.

Only four months ago, Russian energy giant Gazprom sent Russia’s first oil platform to the environmentally sensitive region, and industry experts and environmentalists warned it is unfit for the harsh conditions and is too far from rescue crews to be reached quickly in case of an accident. They are demanding Russia put Arctic oil projects on hold.

Russia is the world’s largest oil producer, but it extracts most of its oil onshore, with no more than 2 percent of its production coming from mature offshore fields in the warm Black and Caspian seas and relatively new fields just off Sakhalin Island in the far east.

As Russia’s core oil fields in Eastern Siberia are depleted, companies are looking north. The government hopes that up to 80 million tons of oil will be produced annually in the Arctic by 2030.

Russia is trying to assert jurisdiction over parts of the Arctic, which is believed to hold up to a quarter of the Earth’s undiscovered oil and gas. By speeding up the Arctic oil project, the government is strengthening its bid.

The Kolskaya floating oil rig that capsized and sank in the Sea of Okhotsk on Dec. 18 had done exploratory drilling for Gazprom Neft Shelf, a subsidiary of Gazprom. It was being towed back to an eastern Russian port in a fierce storm when a strong wave broke some of its equipment and portholes, and it capsized in the choppy water.

Gazprom is now pioneering the oil development of Russia’s sector of the Arctic and was the first Russian company to dispatch a drilling rig to the Pechora Sea in northwest Russia.

Russian oil companies have never operated in weather conditions as harsh as those found in the ice-bound Arctic, where ice ridges are meters (yards) deep and storms are frequent. The Kolskaya accident has reinforced fears that they are unprepared to meet the challenges.

“This tragedy has once again reminded us of how high the risks of offshore accidents are,” said Alexei Knizhnikov, an oil and gas policy officer with the World Wildlife Fund.

WWF, Greenpeace and five regional Russian environmental organizations signed a petition on Thursday calling for a parliamentary investigation and urging the government to suspend the oil projects for now.

The petition accuses government agencies of failing to enforce environmental and safety regulations and says that current laws are inadequate for dealing with the magnitude of risk in the Arctic.

Environmentalists first raised their concerns when Gazprom announced in August that it was sending its platform to the Arctic for exploratory drilling in the Pechora oil field, which holds some 6.6 million tons of oil.

The platform’s underwater section was built in Russia in the 1990s, while its upper part comes from a platform built in Scotland in 1982 and decommissioned from the North Sea in 2002.

Gazprom insists the Prirazlomnaya platform, billed as the first to be ice resistant, is safe and contains no old equipment except for its frame.

“We’ve done our best to implement the latest technology and regulations to prevent any accidents,” Vladimir Vovk, chief of Gazprom’s department for the management of equipment and technologies in developing marine fields, said at a news conference in September.

Environmentalists question both the state of the equipment and the platform’s design. Because the Prirazlomnaya is situated hundreds of kilometers (miles) offshore, it is designed to store huge quantities of oil until tankers can arrive to collect it. The platform’s storage tanks can hold up to 120,000 tons (840,000 barrels).

Unlike the Kolskaya, which was carrying no oil when it sank, the Arctic platform could potentially cause a disastrous spill if it capsized in icy, rough seas.

The distance from shore would also complicate any rescue or cleanup mission. The nearest port of any size is in Murmansk, some 1,000 kilometers (600 miles) away.

Even in warmer, more hospitable waters, accidents at oil platforms have been disastrous.

A giant oil slick was approaching the coast of Nigeria on Friday after what Royal Dutch Shell said was a spill during the transfer of oil from its floating platform in the offshore field to a waiting tanker. The spill came less than a week after Shell received approval from the U.S. government to drill exploratory wells off Alaska’s northwest coast, in the Chukchi Sea near Russian waters.

In the Gulf of Mexico, the 2010 explosion of the BP-operated Deepwater Horizon rig killed 11 workers and led to more than 200 million gallons (4.8 million barrels) of oil spewing from a well deep beneath the sea.

Russia’s parliament gave preliminary approval in September to a bill intended to tighten regulations on oil companies working in the Arctic.

Yekaterina Khmelyova, an environment law officer at the WWF, said the bill does not do enough to hold the oil companies publicly accountable or to guarantee a full assessment of the environmental risks. She said environmentalists and the business community are working on a new draft that among other things would provide for the creation of clean-up funds.

Oil industry experts also have expressed doubts about Gazprom’s expertise in offshore drilling in the Arctic as well as the platform’s design.

They have questioned the economic justifications for the project. The oil in the Pechora field is of low quality and the project will be loss-making without tax breaks, said Valery Nesterov, a senior analyst with the Moscow-based investment bank Troika Dialog. For state-controlled Gazprom, the Arctic project appears to be more of strategic importance than about any immediate economic benefits, he said.

“This is clearly a strategic task that the company is executing,” Nesterov said. “It looks like Russia is not going to give up that strategy since the interests of ship yards, machinery producers and, possibly, the military are involved.”

Four years ago, Russia staked its claim to supremacy in the Arctic by planting a titanium flag on the ocean floor and arguing that an underwater ridge connected the country directly to the North Pole. The United States does not recognize the Russian assertion and has its own claims, along with Denmark, Norway and Canada.

Russia, Canada and Denmark are planning to their respective file claims to the ridge to the United Nations.

In past years, Russian ship yards and machinery producers have been able to stay afloat largely thanks to large orders coming from state-owned plants and government-sponsored projects. A large-scale oil and gas development of the Arctic is likely to give a welcome boost to both industries.

Copyright © 2011 The Associated Press. All rights reserved.

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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

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John

Oops these sort of things only happen to BP!

Our dear friend Mr Voser will no doubt be miffed that in the Gulf even a well designed to his`Utopian‘ Shell standards can dare to leak.  The report today on your website states that Shell wasn’t involved in the Deepwater Horizon spill last year in the Gulf of Mexico.

But the Deepwater Nautilus rig it is currently using has the exact same design and is considered a “sister” rig of the Deepwater Horizon.

This so called sister rig that Shell is using will by implication have the same design flaws as the Deepwater Horizon. Nothing has been done by the Industry as far as I am aware to remedy this situation.

Some examples

• the unwillingness of the operators to isolate all power supplies during a gas leak, mentioned in the previous Congressional report – because this by implication isolates the dynamic positioning thrusters and means that the emergency disconnect needs to be operated as the vessel drifts from the riser – has not been tackled by the Regulator with the implication that gas released from a well kick will enter areas where sources of ignition exist on Deepwater Nautilus as it did on Deepwater Horizon
• the technical investigation found that there was insufficient geographic separation of the air inlets to non hazardous areas from the moon pool or drilling facilities such as the mud treatment skid
• In 7,200 feet of water even if the BOP operates perfectly if gas from a kick has reached the surface before it is detected and is not directed overboard via the surge diverter (as was the case with Depwater Horizon) there is still sufficient gas escaping from the riser at the surface to ingress into the ventilation ducts of power generation modules et al
• the design of the gas detection systems on Deepwater Horizon were medieval when compared to North Sea standards
• Depwater Horizon, and by implication Nautilus, did not have what we in the North sea would recognise as a safe haven or Temporary Refuge and in general protection of safety critical systems from explosion overpressure’s was completely inadequate including escape routes to lifeboats.

To quote the latest report covered on your web-site from the New York Times re lessons learned from Deepwater Horizon.

The search for new oil and gas reserves must be part of a balanced energy policy. But the enduring lesson of the Deepwater Horizon is that complacency can easily lead to disaster. The cost of the Deepwater Horizon blowout has been huge in both lost income and natural resource damage. The ultimate tally to BP and its partners could run as high as $40 billion, with civil penalties. The inescapable bottom line is that if industry wants to keep drilling, it needs to commit fully to doing things differently. As do the regulators.

In my book it is incredibly complacent that a quarter of  century after the lessons were learned on Piper Alpha to prevent as far as was reasonably practicable gas from being ignited on the limited confines of an offshore installation Shell and others continue to use vessels which are intrinsically dangerous due to the lack of mitigation against this major accident event although they are now perfectly aware that these hazards exist. A commitment to doing things differently would be to adopt at least some of the salutary lessons learned from the deaths of 167 souls all those years ago.

Bill Campbell

RELATED ARTICLES

A Look at Deepwater Horizon: Were the Risks For Those On Board Reasonable?

Shell’s North Sea Reputation sunk by severe corrosion

Deepwater Horizon Regulatory Failures

BILL CAMPBELL REFERENCE TO THE PIPER ALPHA DISASTER

EXTRACT FROM “PAYING FOR THE PIPER“

Violation of this court order, Shell warned, could result in the families and survivors concerned being ‘subject to bodily imprisonment: Faced with such legal harassment, even case-hardened lawyers involved in the proceedings reeled in disbelief

(SEE: Shell’s North Sea history of safety violations, blackmail and blacklisting)

By Eduard Gismatullin – Dec 20, 2011 3:23 PM GMT

Royal Dutch Shell Plc (RDSA), Europe’s largest oil company, said a rig will stay shut for weeks after spilling 319 barrels of drilling fluid into the Gulf of Mexico.

The company suspended work at the Appomattox discovery, which leaked synthetic and biodegradable drilling mud from a booster line, Shell said. The leak was isolated, stopped and remedial action has been approved by the regulator, it said. The company temporarily abandoned the well.

Drilling will resume when Shell and relevant government agencies “are confident that the necessary repairs have been made and the operations can continue safely, which is likely to be in a matter of weeks,” Jonathan French, a London-based spokesman at the company, said in an emailed statement.

The Anglo-Dutch company was drilling the development well following approval from the U.S. government of its two exploration plans in May, the first since BP Plc’s spill in the Gulf of Mexico in 2010. Shell holds 80 percent of the Appomattox prospect with Nexen Inc. (NXY) of Canada holding the rest.

Shell and Nexen announced the discovery in the deepwater eastern part of the Gulf in March 2010. The partners have partly appraised the field and estimate that it holds more than 250 million barrels of resources, according to Nexen estimates.

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

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By DANIEL GILBERT

HOUSTON—Royal Dutch Shell PLC on Monday said it had temporarily abandoned a deepwater well in the Gulf of Mexico after it spilled 319 barrels of fluid used to drill the well.

A company spokeswoman said the leak on its Deepwater Nautilus rig occurred Sunday while drilling the well in about 7,200 feet of water southeast of New Orleans.

Shell has stopped the leak and will temporarily abandon the well while it makes repairs, said spokeswoman Kelly op de Weegh. She didn’t have an estimate of how long the repairs would take.

The company said federal regulators have approved its plan, which involves removing underwater pipeline that connects the rig to the blowout preventer on the seafloor.

Shell wasn’t involved in the Deepwater Horizon spill last year in the Gulf of Mexico, but the Deepwater Nautilus rig it is using has the exact same design and is considered a “sister” rig of the Deepwater Horizon.

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(Reuters) – The U.S. Coast Guard was investigating a 13,000-gallon spill from an oil rig leased to Shell, operating about 26 miles southeast of last year’s BP Plc Macondo oil well disaster, a Coast Guard spokesman said on Monday.

The spill of either drilling fluid or oil mixed with drilling fluid was reported Sunday by Transocean Ltd’s Deepwater Nautilus rig, which was drilling a well at Shell’s Appomattox discovery.

“Shell can confirm it has a loss of 319 barrels of drilling fluid,” Shell spokeswoman Kelly op de Weegh said by email.

The leak was from a booster line, which provides additional drilling fluid and is separate from the well, she said.

“The leak was isolated, stopped and remedial action has been approved by BSEE (the U.S. Bureau of Safety and Environmental Enforcement), which includes temporarily abandoning the well, and making appropriate repairs,” op de Weegh said.

The Coast Guard was attempting to determine what material was spilled, Coast Guard spokesman Steve Lehmann said.

“An overflight from New Orleans spotted a very light sheen in the vicinity,” Lehmann said.

He did not estimate the sheen’s size.

The initial report filed with the U.S. National Response Center described the leak as a discharge of base oil mixed with synthetic-based (drilling) mud with an oil content of 180 barrels.

“Everything’s pretty up in the air as to what the actual substance is and what the cause of it is, but that’s what we’re going off of right now,” said Coast Guard spokesman Lehmann, referring to the report.

“The ‘oil’ referenced in the report is referring to the synthetic fluid,” op de Weegh, the Shell spokeswoman, said. “The remaining amount in that discharge is water-based.”

The BP Macondo well blew out in April 2010, killing 11 workers, sinking the Transocean Deepwater Horizon drilling rig and spilling nearly 5 million barrels of oil into the Gulf.

(Reporting by Bruce Nichols; editing by Erwin Seba, Gary Hill)

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First Posted: December 19, 2011

NEW ORLEANS — Royal Dutch Shell says it has shut down an offshore drilling rig off the coast of Alabama following a leak of drilling fluid.

Shell says 319 barrels of the synthetic and biodegradable fluid leaked from a booster line. The Coast Guard says the leak was reported Sunday and that the line was connected to a vessel supplying the drilling fluid.

The Southern Environmental Law Center says the drilling is part of an exploration plan challenged in federal court by several environmental groups.

Shell says the incident had nothing to do with the wellbore at the site, located in the Gulf’s Mississippi Canyon region where the 2010 BP oil spill occurred. Shell says the federal Bureau of Safety and Environmental Enforcement approved a plan to temporarily stop drilling and make repairs.

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A version of this editorial appeared in print on December 19, 2011, on page A28 of the New York edition

The latest investigative report on the Deepwater Horizon disaster in the Gulf of Mexico, released Wednesday, is an important reminder of industry’s past carelessness and a summons to vigilance in the future. It could not have been more timely, coming just as the Interior Department was concluding its first auction of new drilling leases in the gulf since the spill.

The report was prepared by the National Academy of Engineering and the National Research Council. It concluded — as had an earlier study by a presidential commission — that the explosion resulted from a series of poor decisions by BP and others, including a major miscalculation involving the ability of the well to withstand sudden increases in pressure. The study criticized both the industry and federal regulators for “misplaced trust” in the ability of blowout preventers to seal off wells in an emergency, and called for industry to redesign these devices to make them more reliable in the future.

More broadly, the report said that industry was far more focused on drilling and profits than it was on the need for preparedness and oversight. It said “the lack of a strong safety culture” was not unique to BP but was shared by its contractors and its regulators in the Interior Department’s former Minerals Management Service.

Since the disaster, the Interior Department has put in place a whole new regime of safety regulations that companies must follow. The minerals service has been renamed and reorganized, and its inspection capabilities have been beefed up. Its new leaders have vowed that its mission will be to protect the public and the environment, not the industry it is charged with regulating.

Donald Winter, a former Navy secretary who directed the new study, said that because of these and other improvements, drilling in the gulf could safely proceed “at this point in time.” But he warned, rightly, against overconfidence, especially now that drilling in the gulf has resumed and the Interior Department has started leasing new tracts that will lead to further exploration.

The search for new oil and gas reserves must be part of a balanced energy policy. But the enduring lesson of the Deepwater Horizon is that complacency can easily lead to disaster. The cost of the Deepwater Horizon blowout has been huge in both lost income and natural resource damage. The ultimate tally to BP and its partners could run as high as $40 billion, with civil penalties. The inescapable bottom line is that if industry wants to keep drilling, it needs to commit fully and completely to doing things differently. As do the regulators.

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.

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By Lisa Demer, McClatchy Newspapers December 16, 2011 11:05 AM

NEW ORLEANS — Standing in front of a brightly coloured, 3-D image of the geology far below the floor of the Chukchi Sea, Steve Phelps pointed to the “giant opportunity” that has prompted Shell to pour billions of dollars into the Alaska Arctic.

“Burger — that’s the name you are going to get to know,” Phelps recently told reporters gathered here to learn about the huge oil company’s plans and promises for Alaska.

Phelps is Shell’s Alaska exploration manager, a geologist whose job it is to find big oil. The Burger field, part of a Shell naming theme that revolved around junk food, has been eyed by various oil companies for years. But it’s more than 110 kilometres offshore in the Chukchi Sea — between Siberia and the northwest coast of Alaska — and until recently was thought to be too expensive to develop. Now Shell — for the second time — holds the leases.

Armed with promising new seismic science, a sort of undersea sonogram of the Earth’s belly, the Dutch company says Burger is a signature find. It’s the spark for ramping up controversial efforts to drill off the northernmost coast of the U.S. in some of the most extreme conditions on Earth.

“This is the stuff that most of the world was finding in the 1930s, the 1950s, the 1960s, in places like Saudi Arabia and the Middle East, Nigeria,” Phelps said. “This one potential resource far outweighs any single field we’ve got in the Americas’ portfolio.”

More than in the Gulf of Mexico, where drilling rigs checker the ocean and Shell led the way into deepwater zones that produce more oil than anyone predicted.

More than in Brazil, where Shell is the second-biggest oil producer after the state energy company.

More than in Canada, where Shell is investing billions to extract thick, sticky crude from tarsands.

As a result, Shell is at the centre of a classic Alaska development battle, gearing up to explore for oil as it confronts ever-higher regulatory hurdles and court challenges by environmentalists who say a big Arctic oil spill would be a disaster.

So far, Shell has spent nearly $4 billion on leases, groundwork and specialized equipment, including a new icebreaker being built in Louisiana.

At stake are billions in oil income and the reputation of a corporation that promotes a culture of safety but has been tarnished by troubles overseas.

In a sense, Shell is an old Alaska hand. Back in the 1960s, the company was the first to produce oil in Cook Inlet waters, where it had to engineer platforms able to withstand harsh winters and severe tides. Some of those platforms still produce today. But Shell sold those interests in the late 1990s, after their heyday.

Shell was an early explorer off Alaska’s northern coast in the Arctic, but walked away from those leases in the 1990s. The company missed out on Prudhoe Bay, the most productive oilfield in the U.S.

So to many Alaskans today, Shell is an unknown quantity.

What can Alaskans expect from Royal Dutch Shell? After more than 100 years of oil exploration around the world, what is its reputation and record?

Technology has advanced over the decades to lessen the risk of drilling in the Arctic, Shell scientists say. And, they say, blowouts are unlikely here.

“The Arctic wells are really straightforward wells with few challenges on executing them,” said Williams, the chief well scientist for Shell. “They are in shallow water. They are at low pressure, and they have what we call a margin. It gives you a lot of room to operate.”