Tag: Oil

Sheila McNulty

The weekend oil spill by ExxonMobil  into Yellowstone River gives environmentalists more ammunition in their long-running battle against granting the oil industry increased access to US oil resources.

While only the final investigation will prove whether Exxon failed to do some maintenance or take other measures that could have prevented the spill, one thing is certain: the US continues to have an unacceptable number of spills on both oil and natural gas pipelines.

Indeed, one of the key reasons raised by environmentalists to block the Keystone XL pipeline from bringing oil sands fuel from Canada’s tar sands across the US to Texas is the high number of spills on the first stage of that pipeline – the Keystone - in its first year of operation. The company says they are not significant. And Exxon might well be able to contain this spill so that it is not a massive environmental disaster.

But why does it seem regulators tend to wait until disaster strikes before taking appropriate action? There had long been signs that the Gulf of Mexico offshore was not being sufficiently regulated, yet the issue of permits continued at a rapid pace until Macondo struck.

The bottom line is that the US has had a number of red flags this past year on the need to improve pipeline safety. Perhaps the biggest of these was the fatal explosion of a gas pipeline in a California residential area.

But, less than a year later, Exxon is the latest to suffer a spill. Its reaction:

No cause has been identified for the release of oil from the pipeline, which met all regulatory requirements and has undergone inspection most recently in December. A field audit of the pipeline’s integrity management program was undertaken by US Department of Transportation Pipeline and Hazardous Materials Safety Administration in June.

So if regulators just inspected the pipeline, the question is whether they missed something? 

Ray LaHood, US secretary of transportation, late last year sent Congress proposed legislation to provide stronger oversight of the nation’s pipelines and increased  penalties for violations of pipeline safety rules.

Congressman Fred Upton, chairman of the House Energy and Commerce Committee, in June signalled his committment to updating and improving US pipeline safety:

Pipeline safety is a serious matter of protecting human life and our environment.  Our nation’s nearly half a million miles of pipeline infrastructure play a critical role in delivering vital energy supplies to southwest Michigan and the rest of the country.  Disasters like last summer’s Enbridge pipeline rupture underscore the unacceptable costs of failure and the need for meaningful updates to our current pipeline safety laws.

Representative Ed Markey, the top Democrat on the Natural Resources Committee and a senior member of the Energy and Commerce Committee, called on Tuesday for investigative hearings to be held into the Exxon spill and related safety and environmental issues:

 

ExxonMobil has turned parts of the Yellowstone River black with their spilled oil. Just as BP was held to account for their accident in the Gulf of Mexico, ExxonMobil should appear before Congress so that we can examine the holes in oil pipeline safety that led to this incident and how we might prevent another spill in the future. Several aspects of pipeline safety regulations may need review based on this disaster.

Mr Markey noted that Exxon had said that the pipeline had been examined within the five-year increments as required by law. He said that timeline may need to be reduced, in light of this accident and the others over the last few years. 

On top of that, higher penalties would help pay for better enforcement.  Surely, given all its budget issues, Congress can see the benefit of this?

David Blair

It was not a bluff. When Centrica warned a month ago that it might choose to leave one of Britain’s biggest gas fields off-line because of the higher taxes levied on UK energy companies, some thought this was an empty threat.

However, South Morecambe gas field has become available after a period of routine maintenance – and Centrica chose to leave it dormant on Wednesday morning.

Kiran Stacey

Fifty years after its creation, Opec’s carefully-worded announcements are now pored over like statements from the Kremlin at the height of the Soviet era. Nuanced phrasing and tone are studied for a sense of what member countries might do in terms of production.

So when Abdalla El-Badri, the secretary general said today, “Prices are moving $70-$80 a barrel. [This] is comfortable at this time,” the world took notice.

And among certain circles, it is not just opacity that makes Opec like the Kremlin, it is the menace it holds too. Here’s an excerpt from Foreign Policy magazine, for example, in an article entitled How to Ruin Opec’s 50th Birthday:

Masa Serdarevic

Nothing like the words “Arctic” and “oil drilling” to get the environmental campaigners excited.

Add banks to the mix, and you have the perfect mix for a modern day witch-hunt.

The latest targets are Cairn Energy and the Royal Bank of Scotland. In a joint press release,  PLATFORM, Friends of the Earth Scotland and the World Development Movement on Tuesday said they “condemn [the] link between public money and Cairn’s Arctic drilling – RBS provided loan to oil company one month before it acquired rig for arctic drilling.”

The amount in question is a reported $100m lent by RBS – majority owned by UK taxpayers – last December.

The (first) problem with their point, however, is that RBS is a corporate broker to Cairn -so the $100m is likely to be just a fraction of the total it lent to the oil company last year. There seems to be no evidence to show that this particular $100m and the Arctic drilling are linked.

Secondly, the environmentalists’ outrage at taxpayer money financing oil drilling bizarrely stops with the Arctic. Drilling in Rajasthan – where Cairn in fact gets most of its oil – doesn’t seem to be a problem. Yet why is it less acceptable to drill near barely-populated frozen landmass than in the middle of India, where actual people may be affected by the drilling operations?

Maybe because polar bears are much cuter than people?

Sheila McNulty

ExxonMobil said earlier this week it was giving up its attempt to get a stake in the Jubilee field that has been touted as a game-changer for Ghana. The share purchase agreement with Kosmos Energy had emerged last October, but it was met with fierce opposition by the Ghanaian government, which had been left out of the $4bn venture.

The US’ biggest oil company declined to explain its decision to terminate the share purchase agreement, noting Exxon does not discuss the details of commercial agreements.

But the reasons for Exxon’s withdraw are clear. Ghana’s interference in attempts to close the deal smack of the interventionist policies of oil-rich countries such as Venezuela. And Exxon has always been one to insist it plays by the rules or does not play at all. It is a policy that has cost the company access to key areas and money in the ground, when nationalization or some other change in policy leads to new rules.  

Masa Serdarevic

Following Bloomberg’s story on Thursday morning that Vedanta Resources is in talks “to purchase assets or take a multibillion-dollar equity stake in Cairn Energy Plc, a UK oil and gas exploration company”, Cairn confirmed the following:  

The board of Cairn Energy PLC (“Cairn”) notes the media speculation and confirms that discussions are taking place with a third party in respect of the disposal of an interest in Cairn India Limited.

The full statement is on the company’s website.

Sheila McNulty

Mergers and acquisitions in the US oil and gas sector shot up in the second quarter, reaching their highest level in more than seven quarters, according to a report released today by PricewaterhouseCoopers (PwC). Michael Collier, US leader of PwC’s energy M&A practice, says a key reason is that the expectations of buyers and sellers have finally aligned. In addition, he cites improved credit markets, increased CEO confidence and stabilized commodity prices.

According to the report, the US oil and gas sector had 142 announced deals in the second quarter – the highest volume seen since the third quarter of 2008, when there were 190. The total value of the deals was $36.9bn, up from $13.7bn in the year-earlier quarter – representing a 169 per cent increase year on year. Here is what Mr Collier said in the report:

Deal activity in the Oil & Gas sector rebounded significantly in the second quarter – and we expect the momentum to continue throughout the second half of the year. As commodity prices and equity markets continue to stabilize, senior managers are showing greater inclination to do transactions today than we’ve seen over the past two years.  At the same time, buyers and sellers are more aligned when it comes to valuations, which is helping to drive the market and to ultimately get deals done.

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