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The Wall Street Journal: Exxon Reports Small Oil Spill At Russian Project

EXTRACT:  In May, a Russian government agency said Russian companies should gain control over both the Exxon-led project, known as Sakhalin-1, and a project called Sakhalin-2, led by Royal Dutch Shell PLC.

THE ARTICLE 

By JEFFREY BALL
July 25, 2006; Page A2

Exxon Mobil Corp. said it spilled a small amount of oil at a huge project on an island off the Russian coast.

Exxon, the world’s biggest publicly traded oil company by market value, said it has recovered about 30 barrels of oil from the weekend spill and expects to recover a roughly equal amount through a cleanup that is under way. That pales in comparison to the 1989 Valdez disaster in Alaska, which spilled more than 240,000 barrels of oil. But it is an unwelcome development for Exxon, which faces friction with Russia over the Sakhalin project.

The project pulls oil from underwater fields off Sakhalin Island. The oil goes into an Exxon pipeline on the island and then is refined for distribution within Russia. Exxon of Irving, Texas, discovered the spill Saturday morning at a “metering station” along the Exxon pipeline, said Bob Davis, a company spokesman. The metering facility is essentially a loop off the main pipeline at which some of the oil flowing through the pipeline is tested. Exxon is investigating whether a pump at the metering station may have failed.

The company shut down Sakhalin production when it discovered the spill. It resumed production late Sunday after closing off the loop. Repairs to the loop are under way. Exxon believes it will recover an additional roughly 30 barrels of oil when it finishes excavating dirt and sand in the area, Mr. Davis said. The spill didn’t go beyond the site of the oil project and didn’t contaminate water, he said.

Exxon said it had about 350 spills around the world in 2005, about half the number in 2000. That number includes spills of more than one barrel of fluid.

In May, a Russian government agency said Russian companies should gain control over both the Exxon-led project, known as Sakhalin-1, and a project called Sakhalin-2, led by Royal Dutch Shell PLC.

In 4 p.m. New York Stock Exchange composite trading, Exxon shares rose $1.43 to $65.36 apiece.

Write to Jeffrey Ball at [email protected]

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