Oil industry tries to prove it can drill responsibly

May 17, 2011 11:02 am by Sheila McNulty

The big question for months has been what would happen if there was a significant spill in the deepwater outside the Gulf of Mexico. Following BP’s Macondo disaster, the industry worked together to build two spill response systems for this area. But nobody said what would happen if a deepwater disaster unfolded in the waters offshore Ghana or Brazil.

Now the industry has gathered together to address that question. Nine of the world’s biggest oil and gas companies – BG Group, BP, Chevron, ConocoPhillips, ExxonMobil, Petrobras, Shell, Statoil and Total have launched the Subsea Well Response Project (SWRP), an initiative designed to enhance the industry’s capability to respond to subsea well control incidents.

Continue reading: “Oil industry tries to prove it can drill responsibly”

Tags: BP, Chevron, ConocoPhillips, ExxonMobil, Gulf oil spill, Macondo, Petrobras, Shell
Posted in Corporate news, Energy headlines, Oil, Politics | Permalink

US public will pay for lack of coherent energy policy

May 13, 2011 4:54 pm by Sheila McNulty

While the lack of a coherent national energy policy is nothing new for the US, Standard & Poor’s ratings service says in a new report that Washington’s current inability to definitively establish long-lasting energy policies and regulations distinguishes today’s situation from earlier eras. I quote:

Making resource decisions and committing a utility’s balance sheet to support those decisions has never been more complicated or littered with more potential pitfalls, and diminishing credit quality is a result.

Clear policy direction and consistent application by all branches of government of the various policies, ideally with maximum flexibility and abundant time for implementation, would benefit utility bondholders by promoting credit stability.

Continue reading: “US public will pay for lack of coherent energy policy”

Tags: Electricity market reform, regulation
Posted in Coal, Gas, Oil, Politics, Power, Renewables | Permalink

Big Oil pleads its case, but is anyone listening?

May 12, 2011 6:23 pm by Sheila McNulty

There is no doubt it is hard to feel sorry for Big Oil. It pulls in billions of dollars in profits whenever oil prices go up, and yet higher oil prices result in higher petrol prices for the public.

So whenever these companies are doing well, the public is doing worse. And that, inevitably, leads to talk about punitive taxes (or at least a loss of tax breaks) for the oil industry.

That time has come once again. A few weeks ago, the world’s biggest oil companies reported massive profits just as petrol moved up and beyond, in some cases, $4 a gallon. That is a big deal in the US, where people often commute long distances to work, particularly in sprawling cities like Houston, Chicago, Los Angelos, and other highly populated areas. And it is particularly important now when the economy has not fully recovered, unemployment remains high and the public at large is still having economic difficulties.

Continue reading: “Big Oil pleads its case, but is anyone listening?”

Tags: Chevron, ExxonMobil, Shell
Posted in Corporate news, Energy headlines, Oil, Politics | Permalink

Rising petrol prices: good for the oil industry, but bad for its PR

May 10, 2011 10:30 am by Sheila McNulty

The rise in US crude oil prices has been pushing petrol up toward $4 a gallon – a level analysts note has historically led to a drop in consumer demand. The current national average price of petrol is just under there, according to the Daily Fuel Gauge Report by AAA, America’s largest motoring and leisure travel membership organization.

John Felmy, economist at the American Petroleum Institute, the national industry trade association, said the last time crude oil prices were hitting these levels – in 2008 – consumer demand for petrol began dropping around the $2.80 per gallon level. The bigger declines were when gasoline rose above $3.75 a gallon, he said.

Continue reading: “Rising petrol prices: good for the oil industry, but bad for its PR”

Tags: ExxonMobil, petrol
Posted in Corporate news, Energy headlines, Oil, Politics | Permalink

Spill containment only for the Gulf of Mexico?

April 22, 2011 10:48 pm by Sheila McNulty

A year after the Macondo disaster, the industry has pulled together in the US and built not one, but two spill containment systems. These systems are really state-of-the-art and aimed at containing a massive spill in the deep water.

The first one, the Containment Response System, cost $1bn and is designed to be trucked to anywhere along the Gulf of Mexico, loaded onto a vessel, shipped out to a drill site and dispatched under water to contain oil spilling from a runaway well.

The system, complete with capture vessels, was developed by ExxonMobil, Royal Dutch Shell, Chevron and ConocoPhillips. It took several months to build and testing has shown it can operate in 8,000 feet of water, capturing 60,000 barrels of fluid per day at pressures of 15,000 pounds per square inch. A more comprehensive system, which can operate in 10,000 feet of water, and capture 100,000 barrels of fluid a day, will be available by the middle of next year.

Continue reading: “Spill containment only for the Gulf of Mexico?”

Tags: Deepwater drilling, ExxonMobil, Gulf oil spill, Macondo
Posted in Corporate news, Energy headlines, Oil, Politics | Permalink

A year after Macondo, oil industry returns to normal

April 19, 2011 11:56 am by Sheila McNulty

What a difference a year makes. Or does it?

Activity in the Gulf of Mexico remains slow following the Macondo disaster – but it is moving again. And despite all the talk about how the US risked driving away the industry by tightening up processes and procedures, just about everyone is still here.

Seahawk Drilling was forced into bankruptcy and Plains Exploration & Production is moving to exit the deepwater, but, for the most part, it is the same people, working for the same companies (BP was even among the first companies to get permission to resume drilling in the deepwater), using the same technology. Even the much maligned blowout preventer that got jammed and failed in the Macondo disaster is still here as the last line of defence.

And the gulf coast economy has remained pretty resilient. Michael Hecht, chief executive of the Greater New Orleans economic development agency, said the local economy received a boost from BP’s spill response effort that gave work to fishermen and tour boat workers who had lost jobs with the spill. That false economy is only now ending in some places, leaving the real economic cost still to be seen.

Continue reading: “A year after Macondo, oil industry returns to normal”

Tags: BP oil spill, Deepwater drilling, Deepwater Horizon, Macondo
Posted in Energy headlines, Oil, Politics | Permalink

ConocoPhillips’ chief gets huge pay rise for shrinking

April 5, 2011 3:32 pm by Sheila McNulty

ConocoPhillips’ shrink-to-grow strategy is doing more than benefitting the company and its shareholders. It turns out the architect of the programme, Jim Mulva, Conoco’s chief executive (pictured), got a 25 per cent increase in total compensation to $17.9m in 2010.

While it is difficult for an outsider to put a dollar amount on Mr Mulva’s value, the turnround he has staged since the economic downturn exposed weaknesses in his acquisition spree is worth noting.

In early 2009, the US’ third biggest oil and gas company by production and market capitalisation, disclosed a 2008 fourth-quarter net loss of $31.8bn; a $34bn writedown; 1,300 in job losses; and a $2.8bn cut in capital spending.

Continue reading: “ConocoPhillips’ chief gets huge pay rise for shrinking”

Tags: ConocoPhillips, Jim Mulva, Lukoil
Posted in Corporate news, Gas, Oil | Permalink

Drilling depends on funding the regulators

March 31, 2011 2:03 am by Sheila McNulty

President Barack Obama is calling on oil companies to increase production in the US, accusing them of sitting on tens of millions of unused and unexplored acres of leases on public land waiting to be tapped. But this must be put in context.

It would be one thing to make this accusation if companies were simply able to lease acreage and set to work exploring, drilling and producing. But the reality is not so. Even before the Macondo accident in the Gulf of Mexico, regulators have long forced oil and gas companies to go through a variety of hoops before producing on a lease. In some cases, they did approve permits without proper scrutiny, but there were many others, such as in Wyoming, where they forced the industry to go above and beyond before granting permission to drill.

Continue reading: “Drilling depends on funding the regulators”

Tags: Deepwater drilling, Macondo, Shell
Posted in Oil, Politics | Permalink

Blowout preventers are no guarantee against disaster

March 28, 2011 12:17 pm by Sheila McNulty

The oil and gas industry has been afraid there might be repercussions from the recent investigation that found Macondo’s blowout preventer failed to close because a section of drill pipe had buckled during the accident and blocked efforts to seal it off.

Gary Luquette, Chevron’s president for North America exploration and production, said the industry would learn from the report. But he hopes it will not lead regulators to stop the permitting process just when companies have started to see progress. He explained:

The best way to deal with a blowout is never to have one. In this case, the pipe was blown up the hole because of a loss of control situation. If you have complete loss of control, you can’t imagine a BOP that can be designed for that.

Continue reading: “Blowout preventers are no guarantee against disaster”

Tags: BOEMRE, BP oil spill, Chevron, Deepwater drilling, Deepwater Horizon, Gulf oil spill, Macondo, Shell
Posted in Oil | Permalink

Effectiveness of blowout preventers questioned

March 24, 2011 1:42 am by Sheila McNulty

It turns out the reason why the blowout preventer on BP’s Macondo well failed to close was because a section of drill pipe had buckled inside the well during the accident and blocked efforts to seal it off. This is according to Det Norske Veritas, a consultancy hired by the US interior department to investigate why the blowout preventer failed.

Cameron International, the maker of the blowout preventer, responded: