JULY 6, 2011

The Shell-operated Brent Charlie platform 125 miles north-east of Lerwick is to shut down from next Friday on the orders of oil industry regulators amid continuing concerns about safety.

No oil has been pumped ashore from the installation, the hub for the Brent pipeline that comes into Sullom Voe, since January and gas production, which goes through the FLAGS pipeline to St Fergus on the north-east coast of Scotland, has been restricted to one well.

But now the Health and Safety Executive (HSE) has served Shell with a legally-enforceable prohibition notice which means the operator will have to cease production entirely. An HSE spokesman declined to give details of the “safety issues” it was concerned about for legal reasons.

Separately, Shell has been asked to resubmit its safety case – a requirement for all oil and gas installations since legislation was introduced following Lord Cullen’s report into the Piper Alpha disaster of 23 years ago – after carrying out revisions.

The fact of the Brent Charlie shut down emerged after The Guardian newspaper obtained details of oil and gas leaks in the North Sea in 2009 and 2010 about which operators are obliged to inform the HSE.

Among those were seven from Brent Charlie, including the release of 4.6 tonnes of gas on 26th April 2010, which was classified as a “major” incident, meaning that if the gas had ignited many workers on the platform could have been killed.

The platform was built in the 1970s and began operating in November 1976, and is therefore among the oldest in the North Sea, but the Brent field underwent a £1.3 billion upgrade in the mid-1990s to extend its operational lifetime.

The HSE spokesman said: “HSE can confirm that a prohibition notice was served on Shell on 1st July over safety issues on the Brent C platform.” He also confirmed the regulator’s demand for Shell to resubmit its safety case for the platform.

The spokesman added: “Hydrocarbon releases are potential major hazard precursor events and the HSE, the regulator, takes them very seriously. HSE investigates all significant and major releases to establish the root cause, assess compliance with legislation and ensure that the dutyholder takes any necessary remedial action. Ensuring a reduction in hydrocarbon releases is a key priority for HSE, but it is not a new issue.

“Trends in hydrocarbon releases are down, but are showing resistance to further reductions. After being challenged by HSE, the industry agreed a target at the start of this year to reduce hydrocarbon releases by 50 per cent over the next three years. HSE expects all dutyholders to have plans in place to make that reduction happen.

“The safety record for the UK offshore industry continues to improve, with the downward trend of hydrocarbon releases being sustained in provisional figures for 2010/11. Since the tragedy of Piper Alpha, when 167 died 23 years ago today, the industry has had a strong track record which bears good comparison with Norway, who are the other big offshore sector in the North Sea.”

A spokesman for Shell said: “No spill is acceptable and we have made progress. We work closely with regulators and invested over a billion dollars in recent years to upgrade facilities across the North Sea to continue this improvement on our performance.”

SOURCE ARTICLE

Energy Firms Prepare for Ike

With Hurricane Ike on the horizon, energy companies in the U.S. Gulf of Mexico are bringing employees onshore again and preparing to halt production just days after they began restaffing following Hurricane Gustav.

Crude-oil and natural-gas producers were in the middle of restoring operations after Gustav, which forced the shut-in of virtually all output before the hurricane made landfall Sept. 1 just southwest of New Orleans.

Oil-output volumes stayed flat on Monday compared with the previous day, with about 20% of U.S. Gulf output restored, according to the U.S. Minerals Management Service. Gas output continued growing, though, with 36% of capacity back on line.

Hurricane Ike is on a projected path to strike the southern Texas coastline not far from Corpus Christi and its cluster of oil refineries Saturday, according to the National Hurricane Center.

It is too early to say where exactly Ike will make landfall, and the five-day forecast track shows that it could strike anywhere from northern Mexico to Mississippi. Forecasters said that Ike — a Category 1 storm over Cuba on Monday — could regain strength after it enters the warm waters of the Gulf on Tuesday night.

At this point, any of the 717 manned platforms in the Gulf of Mexico could be vulnerable to the fury of Ike. However, Independence Hub — a key natural-gas production platform that has yet to restart after Gustav — as well as other platforms with significant production volumes in the eastern and central Gulf could be less likely to get a direct hit this time.

Production shutdowns will further stress the U.S. oil supply chain, which continues to strain in the wake of Gustav, and could pressure prices higher. The U.S. Department of Energy said Monday it granted a loan of 250,000 barrels of crude toMarathon Oil Corp. for Midwest refineries that had to cut rates due to pipeline disruptions.

Light, sweet crude oil for October delivery settled 11 cents, or 0.1%, higher at $106.34 a barrel on Monday. A stronger dollar weighed on oil futures, which earlier in the day traded as high as $109.89 on Ike concerns.

Mandatory evacuations and widespread power outages hobbled refineries in Louisiana but left the processing hubs in Texas unscathed.

Now, those refineries near Houston, which include Exxon Mobil Corp.’s Baytown plant — the largest refinery in the U.S. — are up to bat. ExxonMobil said Baytown and its Beaumont, Texas, refinery are taking preliminary precautions ahead of Ike.

Royal Dutch Shell PLC, operator of the largest oil platform in the Gulf in terms of production, evacuated 150 employees Sunday and plans to remove the remaining 500 by Wednesday, when it will also completely shut output. Other players in the area, such as BP PLC, Anadarko Corp. and ConocoPhillips, began evacuating nonessential workers.

Exxon Mobil said the restoration of its operations in the Gulf will wind down as Hurricane Ike approaches. The oil giant was in the process of restarting production and assessing damage to its platforms after Hurricane Gustav.

Apache Corp., another large Gulf producer, began evacuating personnel from its operations in the eastern Gulf of Mexico, which are currently shut in, and won’t resume production before Ike moves through the area, the company said.

–Brian Baskin contributed to this article.

Write to Isabel Ordonez at Isabel.ordonez@dowjones.com

http://online.wsj.com/article/SB122088186183509943.html

Royal Dutch Shell yesterday said it had evacuated about 150 people from its offshore facilities, leaving a further 500 personnel in place: “We will continue to bring personnel back to shore, with the intention of completing a full evacuation of personnel from Shell-operated facilities on Wednesday, in advance of Ike.

Royal Dutch Shell PLC, operator of the Gulf’s biggest platform in terms of production, over the weekend said it wouldn’t redeploy all personnel evacuated from offshore facilities “because of the possibility that Hurricane Ike might enter the [Gulf of Mexico] next week and require another evacuation.”

HOUSTON (Reuters) – Shell Oil Co said it stopped returning workers to offshore platforms in the Gulf of Mexico on Saturday due to Hurricane Ike’s threat to pass through oil and natural gas production areas next week.