Poor maintenance behind BP oil spill in Alaska

Posted on February 5, 2012 by admin

Misdemeanor cost cutting and profit increase intention of the British Petroleum (BP) were the reasons behind Alaska’s worst ever onshore oil spill in March 2006. Two reports released by the BP Plc, hold the management culture of the company responsible for the accident. These accusations have surfaced after a U.S. congressional committee investigating the effect of oil spill in Alaska found that the draconian cutting in the maintenance cost by the BP led to fissures in a moldy oil pipeline at Prudhoe Bay, oozing at least 200,000 gallons of crude oil in the Arctic tundra area. An aid to the US Congressional Committee investigating the matter said, “The reports speak to the fact that top-down cost cutting was going on without any risk analysis.” To add to this, a case study prepared by CC Technologies, a firm specializing in pipeline corrosion control revealed that poor maintenance practices by BP, particularly not flushing out sediments inside the transport pipeline allowed corrosive bacteria to grow and effect the spill. Even the spokesman of BP, Daren Beaudo, confirmed this. He said, “The sediment was certainly a contributing factor, as well as the slow flow of oil through the pipe.” The incident is now being discussed by linking to 2005 fatal explosion at BP’s refinery in Texas City that killed 15 workers and injured 170 others. The stringent cost cutting measures by the company led to BP Texas not using an apparatus called a pig to unsoil the inside of the transit pipeline since 1998. Accumulation of silt within shielded the bacteria and caused blasts. Alaska state records illustrate BP had identified for years that sediment was building up in the pipelines. Seeing the pressure piling on, BP is about to overhaul its entire top management in the US. The head of American operations is being given more power to ensure proper maintenance and managers are being appointed to make sure that operating units conform to BP’s corporate policies and responsibilities. Image Via:CNN

Industry bigwigs stay away from Oil auction in Nigeria

Posted on February 5, 2012 by admin

Several of the big names in the oil industry failed to turn up at the auction of oil blocks that the Nigerian government undertook yesterday. The outgoing Nigerian government put up for auction nearly 45 oil exploration licenses on Friday, but managed to attract only the small companies and that too for approximately half the total number of blocks. Despite having been courted in advance, several Western oil corporations decided to stay away from the bid, deterred by the political uncertainty and rampant violence in the country. The current government is to vacate office in the favor of a new government, which will step in on 29 May. The investors were worried by the fact that the contracts might not stand in the long term. The timing of the auction is surprising indeed, given that the government will vacate its offices in three weeks. A Nigerian court had passed an order, a day before, asking the government not to sell two of the oil exploration sites and the fact that government has gone ahead is bound to raise some concerns. Majority of the bids were submitted by domestic oil companies. The few foreign bidders were virtual unknowns. Amongst the 11 deep offshore blocks, only two were bought by Yorkshire Energy World – a small UK firm. Of the 11 blocks on the continental shelf, seven were claimed. 11 inland blocks, in areas that are not considered very prospective, received no bids at all. The process also suffered from lack of transparency. Ten investors, mostly belonging to China and India, were granted preferential rights on 20 blocks in return for a promise to invest in the Nigerian infrastructure. These firms include: CNOOC (China), CNPC (China), ONGC Mittal (India), KNOC (Korea), Repsol (Spain) and Centrica (Britain). Analysts say that the decision to grant priority rights to some companies undermined the whole reason of auction and compelled many Western companies to stay away from the entire process. Another reason for lack of foreign interest could be the violence that grips the entire Niger Delta and shows no signs of abating. This month alone, nearly 30 foreigners have been abducted for ransom in the region. Even though there was an evident lack of interest, analysts believe that it could have been worse. Now it only remains to be seen whether President Olusegun Obasanjo, pushes ahead and finalises the deals with successful bidders. This would give him only 18 days to finalize the deals which were six to nine months in the making. Image Read

Democrats to take on Big Oil on Gas price issue

Posted on February 5, 2012 by admin

Democrats in the US Congress have decided to take on big oil companies after the gasoline prices hit a near-record $3.05 per gallon within a week. Picketing in front of an Exxon station near the Capitol Hill, half a dozen senators belonging to the party, vowed to sponsor a legislation to control the oil industries, though the analysts opine that such a bill has scanty effects on oil companies. It is well known that gas prices are getting higher, and American people are concerned about it. Adding to their protest at the station on Massachusetts Avenue, lawmakers have already been look into breaking up the monster companies. The Senate Commerce Committee adopted Sen. Maria Cantwell’s anti-price-gouging bill on Tuesday. Sen. Bernard Sanders is to sponsor bill on a windfall profits tax, pointing to $440 billion in proceeds over the past six years for the nation’s five major oil companies. He said, “I think it’s time to say to these people, ‘Stop ripping off the American people.” The Energy Information Administration of the US federal government earlier predicted unleaded gasoline price as $2.95 a gallon this summer, 11 cents a gallon rise compared to last summer. This week in a press release, it said, “Continuing problems for refineries in the United States and abroad, combined with strong global gasoline demand, have raised our projected average summer gasoline price by 14 cents per gallon.” In a mid-April survey conducted by Washington Post-ABC News, the Americans expressed strong views against the rising gasoline prices. More than two-thirds of U.S. citizens said that gasoline price swell had caused financial suffering for their households whereas 36 percent said that the hardship had been grim. Over the preceding four years congressional outrage on price increases have become a ritual.Even last year, the Republican dominated Congress discussed a $100 discount for consumers, a levy on oil inventories, steps against price scrape and regulatory changes. But most of these washed out at the end of the legislative sessions. This time, Democrats have focused on two-prong strategy on gasoline prices. First one is direct measures like pricing bill and secondly, for increase in fuel efficiency . On Tuesday, Nancy Pelosi, the house chairwoman asked the Energy and Commerce Committee to adopt a bill proposed by Republican Bart Stupak to give the federal government more authority to pursue indictments of price gouging. This bill backed by 100 co-sponsors, aims at preventing unconscionably extreme pricing or instances of gross discrepancy between the prices of crude oil and gasoline and calling for tough penalties, including fines up to $150 million or up to 10 years in imprisonment for executives. It is scheduled for hearing on May 27. But analysts are cynic about efficacy of such a bill. Even last year, on congressional query on price gouging, Federal Trade Commission could barely define it. American Petroleum Institute economist John C. Felmy told at a Senate Committee hearing, “The price-gouging legislation was of grave concern. It is so vaguely written in terms of what is price gouging and has such onerous penalties that we are very concerned that it could have unintended consequences. Gasoline suppliers, uncertain about their ability to raise prices, might just shut down.” Democrats representatives blame a series of oil mergers in past years for giving large companies the market control to drive up price margins. David Sexton, president of Shell Oil Products, disagrees with this view. He said, “I would beg to differ about whether this is a question of industry concentration and instead a factor of supply-and-demand economics.” Democrats are also prepared to bring a bill to mandate a 10-miles-per-gallon boost in fuel efficiency for new vehicles over coming 10 years. But this won’t look potent to lower gasoline prices. Severin Borenstein, director of the University of California Energy Institute told, “This is the usual song and dance that politicians feel the need to go through when prices go up. The increase in mileage standards would not be enough to offset the growth in demand as the economy and population grow.” Image Via:Washington Post

IEA urges OPEC to raise output to ease tight oil, crude supplies

Posted on February 4, 2012 by admin

The International Energy Agency has warned of a summer of worries in global oil and products markets unless the Organization of Petroleum Exporting Countries introduces a substantial output increase shortly. In its closely watched monthly oil-market report, the Organization for Economic Cooperation and Development’s energy-security watchdog raised a serious question over the capacity of refiners and the keenness of OPEC to meet a 1.6 million barrels-a-day jump in oil-product demand in June. The agency also noted that suggestions by OPEC officials that there is no need to boost its production levels ‘appear wide off the mark’. The IEA has said that it was alarmed that the market might struggle to keep up with rising demand for oil products. It has urged oil cartel OPEC to increase its export ceilings to bridge the potential shortfall. Petrol prices could be set for a significant jump in the coming months, after the world’s important energy expert alerted that fuel prices were expected to rise later this year. The Paris-based IEA also raise alarm that continued unrest in Nigeria, the world’s sixth-biggest crude exporter, would also support the price in the coming months. Economists and experts have all the reasons to be worried as any further increase in oil prices could push inflation higher in the coming year. The IEA in its report said it expected global oil demand to fall slightly this year, but added that oil and petrol markets could tighten. The IEA left its 2007 oil demand growth forecast unchanged at 1.8 percent or 1.5 million barrels per day. At the same time it lowered its non-OPEC supply growth forecast for 2007 by 100,000 barrels per day and raised estimated demand for OPEC oil in the third quarter alone by up to 400,000 barrels per day. In the world’s one of the leading exporter of crude oil Nigeria, militant attacks have already closed a quarter of production so far. The IEA anticipated total Nigerian outages had swelled up to 815,000 barrels per day in early May. The IEA has further noted in its report that since the OPEC was ‘apparently unconvinced of the need to review crude production before its scheduled September meeting, steady output at current levels would lead to the group undershooting our calculated range for a call on it crude, and thus tightening stock further.’ Moreover, oil prices shot up above $62 a barrel Friday after the report from the IEA raised concerns about the market’s ability to meet an expected jump in demand for oil-based products. Soon after the report became public fears that world oil prices could soar to record levels of $80 a barrel this year started to emerge in markets. Image Read

Shell Oil on an image makeover bid to press for offshore drilling

Posted on February 4, 2012 by admin

Shell Oil, the Houston-based petro-major has launched a new PR exercise to overcome oil industry’s avaricious image. But under this grab, a political agenda pitching for off shore oil exploration glints with a smile. On Thursday, John Hofmeister president of Shell Oil hosted a party for people from various walks of life in a renowned hotel ballroom of Richmond fortified with the open bar and a buffet table laden with stuffed mushrooms and melt-in-your-mouth beef carvings. The event is seen as an image makeover by the oil giant that was profoundly criticized for hiking its oil prices post-Hurricane Katrina in 2005. Behind this goodwill gesture, there was a hidden agenda. The presence of industry bigwigs, press reporters, socialites along side supportive state politicians and environmentalists were shocked to notice the conversion of the party in to a launch pad furthering the interests of the oil industry. Hofmeister, while welcoming his guests said, “We know for a fact the favorability rating of oil companies today ranges from 10% to 15% favorable. … It’s hard to go much lower. Of 21 major industries, we’re (ranked) 21. That’s not where we want to be.” Before the get-together, Hofmeister in a media interview admitted the need to change the image of his organization after the Katrina furry. After a long deliberation, he choose to implement a stratagem that the United Kingdom unit of multinational Royal Dutch Shell had opted, over new ad campaign or offering consumers special discounts. Even Burson-Marsteller, the Vcirginia based PR agency was hired to make the arrangements. At the venue, Hofmeister deftly handled the most pointed questions, constantly foretelling an image of even-tempered sensibleness. He spoke on need for higher auto fuel economy standards, need for action on climate change and potential of alternative energy sources such as hydrogen. But, his thrust for tapping offshore oil reservoirs and lifting of ban Congressional on it since the Santa Barbara oil spill 25 years ago is criticized by many as persuading public support for controversial proposal by the Interior Department last month for opening a region 50 miles off Virginia’s southern coast to oil drilling. Expressing his agenda in a candid ambience, he said, “The winds of change are upon us. Anyone that doesn’t recognize it is missing the point. The American people have had enough of such extraordinary dependence upon foreign imports. They’ve had enough of not feeling they are included in the debate over alternatives. … There is enormous worry and fear about future supplies, reliable supplies.” Soaring oil prices above $60 a barrel, companies like Shell has stumbled on more cash than cachet in last couple of months. With a huge profit of nearly $7 billion in just three months, the company is well positioned to boost its community relation. But there is a marked tension between Hofmeister’s projections and environmental concerns at a time when gas prices are soaring in the US and environmental hitches like climate change and Alaska oil spill demands new thinking and incremental technological progress. Image Via: USA Today

Russia gets gas pipeline deal; now Europe to dance on its tune

Posted on February 4, 2012 by admin

Russia, Turkmenistan and Kazakhstan have agreed to build a new natural gas pipeline around the Caspian Sea, giving Russia significant control over Central Asia’s massive natural gas reserves. The agreement ensures Russia’s supremacy over Turkmenistan’s gas and gives a major setback to US and European plans to send Central Asian natural gas exports directly to Europe. Agreement is set to sign in September this year and Russian President assured that the deal would increase energy supplies to Europe. The sketch for the new pipeline will draw from the Turkmenistan, through Kazakhstan to Russia and Caspian shore pipeline will have capacity of 10 billion cubic meters per year. The deal represents a victory for Russia, which buys Turkmen gas at below-market prices, increasing Washington, Brussels and Beijing’s, woes, who have all been vying for direct access to Turkmenistan’s gas. U.S. officials have already criticized the growing Russian supremacy around the Caspian Sea oil sources as US Vice President Dick Cheney said new energy routes that bypass Russia as tools for intimidation and blackmail. Russia is getting handsome business out of the deal as at present Russia pays only $100 per cubic meter of gas for Turkmenistan and then resells it to European customers for $250 per cubic meter and further improvements to existing gas pipelines will definitely add millions to Russian authority. For two decades, Turkmenistan was facing isolation from the outer world but now country’s new leader Gurbanguli Berdymukhammedov shows a sign to improve its relation as he hinted to open the possibility to construct U.S.-supported pipeline, along with the prolonged under consideration pipeline projects to Iran, China, Afghanistan, India and Pakistan. Image: jamestown Via: BBC

U.S. gasoline price increases, surge to all time high

Posted on February 3, 2012 by admin

U.S. gasoline prices raised to a record $3.10 a gallon topes all time high $3.07 a gallon in September 2005 after Hurricane Katrina disrupted refinery operations and oil production along the Gulf Coast. The price increased for regular unleaded gasoline 5 cents over the last week and is up 16 cents from a year ago. Stiff increase in gasoline prices are reducing consumer spending, which accounts for about two-thirds of U.S. economic growth. Consumers also fears that gasoline prices can cross the $4 level, but Energy Information Administration (EIA) insures that prices will hang on near $3 a gallon for most of the summer. Oil industries are going through the tough period as rising militant activities including kidnapping, extorting and blowing pipeline on Nigeria’s oil delta, which threat laborer to stop drilling oil in the delta. Largest oil driller of oil in South American region Venezuela also walks out from IMF and WB, and nationalizes its all oil companies, in which American companies were major stockholders, set US on back foot. To get out from the critical condition EIA, urge OPEC to increase oil production this summer, heads of the EIA, Guy Caruso said We do think there will be a need for more OPEC oil The prices hit to all time high on the eve when the US first man ordered government to look for other energy sources to curtail U.S. gasoline consumption. President Bush said Our dependence on oil creates a risk for our economy, because a supply disruption anywhere in the world could drive up American gas prices to even more painful levels President Bush ordered several agencies to finish the work by 2008 that he wants to make lowered the gas emission by the end of his tenure. Nevertheless, market analyst do not agree with the president and quoted that, it is not as easy as president think, it will take time, even after ten year down the line from today, US will lessen its dependency on gasoline only 20 percent. Image: greenpeace Via: CNN

US regulators to slap penalty on BP for Alaska oil leak, BP admits budget a factor

Posted on February 3, 2012 by admin

BP America President Robert Malone has finally acknowledged on Wednesday that budget pressures made life difficult for company workers trying to safely operate BP’s pipelines in Alaska’s giant Prudhoe Bay. However, Malone has stopped short of conceding that cost cutting was to hold directly responsible for the company’s failure to notice the corrosion that caused two pipelines to leak, forcing the company to close down a segment of the nation’s largest oil field and sending crude prices soaring. US lawmakers vehemently condemned BP for withholding corrosion documents about its troubled Alaska oilfield and for not forcing the man who led its corrosion program to co-operate with government investigators. The US Department of Transportation has revealed that a safety regulator is highly expected to fine BP for operating defective pipelines at its Prudhoe Bay field in Alaska. The announcement came as a House of Representatives committee investigating the area’s worst oil spill reported that it had unearthed a ‘mountain’ of evidence that cost-cutting was responsible for undermining the safety of the pipelines. According to reports a penalty could be pronounced in coming months and would be for a ‘small number of probable violations, which carry the maximum fine of $100,000 per day per violation, informed Stacy Gerard, acting assistant administrator of the transportation department’s pipeline and hazardous materials safety administration. The House committee that carried out inquiry into the Alaska spills, which forced a partial shutdown of Prudhoe Bay oil production last summer, has divulged a half dozen e-mails and other documents that explain that anticorrosion programs repeatedly were targeted for cost-cutting, including on the lines that eventually failed. The corrosion caused a leakage and spill on a feeder line in March 2006 followed by another leak in August at a second line. After the second occurrence, the firm shut down the damaged lines, resulting in Prudhoe Bay production being reduced by half. BP is now spending $250 million to replace 16 miles of questionable pipes. Representative Bart Stupak, Democrat of Michigan, chairman of the Energy and Commerce investigations subcommittee went on to say, ‘BP field managers were being asked to choose between saving money and critical maintenance.’ An e-mail read that budgetary constraints would force the end of a program to inject corrosion inhibitor directly into the pipeline system. An October 2001 e-mail called for preventing the function of a pipe corrosion inhibitor since there was not money for a full year’s supply of the chemical. The e-mail, calling for ending use of the inhibitor ‘as soon as possible’ said, ‘We are under huge budget pressure for the last quarter of the year and therefore we have to take some rather disagreeable measures’. Image Read

PetroChina suffers Sudan heat as Fidelity divests shares

Posted on February 3, 2012 by admin

Fidelity Investments Inc. has reduced its stake significantly in PetroChina Co., China’s largest oil producer, by more than 90 percent of American depositary receipts in the middle of calls for the mutual-fund giant to divest from companies linked to Sudan. The divestment came after China comes under increasing criticism for its role in Sudan, where militias fighting in the Darfur region have killed hundreds of thousands in what some political analysts are calling genocide. Human-rights groups are repeatedly say Beijing, which is the biggest foreign investor in Sudanese oil, is not doing enough to stop the fighting. PetroChina, Asia’s biggest oil producer, announced on Wednesday that investors have the freedom to decide whether to hold the stock, after Fidelity Investments cut its stake amid pressure to sell out because of the firm’s relations to Sudan. PetroChina’s president, Jiang Jiemin, told reporters at the company’s annual general meeting in Beijing, ‘Whether to sell or buy our shares is the choice of individual investors’. Fidelity, the world’s biggest mutual-fund company, sold at least 38 percent of the 1.1 billion Hong Kong-listed PetroChina shares held as of December, revealed a regulatory filing on Tuesday. In the meanwhile, energy analysts have argued that Fidelity’s stake cut will not affect PetroChina’s share price in the long term as the company has really good development prospects given oil discoveries and stable production growth. Political issues like Sudan that have affected shareholders’ preferences for a long time are not the main factor. Fidelity in the US has a considerable stake in Petrochina whose parent CNPC is a substantial investor in Sudan’s oil fields. CNPC has joined hands with the Sudanese government to control an oil field in Southern Darfur. However, pressure groups argue that Khartoum uses the majority of its oil revenues to finance spending on arms and militia. Fidelity refused to say whether it has cut its holdings in response to pressure from human rights groups. A spokesman said that the company’s individual fund managers make their own investment decisions. For the past two decades, human-rights groups have mounted extreme pressure on university endowments and public-pension funds to divest their holdings in politically sensitive regions, such as South Africa during apartheid. In recent times, activists have also started to pressure mutual funds over the same kinds of investments, as well as on other issues, such as global warming and gay marriage, citing reasons that the funds should respond to the wishes of investors who put billions of dollars a year under their control. Filings with the SEC also show Fidelity has sold many shares in another Chinese oil firm, Sinopec that has attracted similar criticism. However, as a matter of fact, Securities filings have showed that other big investors in PetroChina include funds of Franklin Templeton Investments and Warren Buffett’s Berkshire Hathaway Inc., and show no recent sales of PetroChina holdings as big as Fidelity’s. In addition to it, other Boston based firm, Wellington Management, has been a big holder in Sinopec but a recent filings show it has cut its stake significantly. The Darfur coalition has targeted China since it considers Beijing’s financial support for Khartoum, combined with its position as a permanent member of the UN Security Council, have been essential in mitigate international pressure over the Darfur issue. Despite of some instances of aggressive defense by Beijing and its state enterprises of the country’s soaring investments in Africa, Chinese interests are in fact working hard behind the scenes to combat the negative perception in the West about their activities on the continent. Image Image 2 Read

Mounting Gas prices leaving customers in a lurch

Posted on February 2, 2012 by admin

Increasing oil prices are forcing consumers to lose the weight of their pockets. Two consumer groups unveiled that in 2006 U.S. families paid $1,000 more on average for gasoline than in 2001, as higher oil prices ate up a hefty portion of the income. The average U.S. household paid $2,277 for gasoline in 2006, up 78% from 2001. Rising gas prices are biting a big piece from the household budget, hard hit consumers are low-income consumers. Increasing oil prices are causing for a significant financial hardship. All sorts of businesses are being affected as Wal-Mart executives this week said higher gasoline prices were hurting sales at the nation’s largest retailer. Big automobiles companies were forced to lock their factories and to reduce their workforce. Swelling oil prices are increasing the energy bills and became a matter of concern for government as it leads to the mounting inflation. In the last eighteen to nineteen months gas prices saw a stiff rise. The nationwide average price of a gallon of regular gasoline was $3.103 Wednesday, up more than a penny from Tuesday and nearly 25 cents higher than a month ago. The price set a record, not adjusted for inflation, for the fourth consecutive day. The inflation-adjusted all-time high was set in March 1981 at $3.223. The whole world is in a worry to tackle the problem, but the crux is that no one forgets to pass the buck. Oil industry representatives said the higher gasoline prices were a result of elevated crude-oil costs set on world markets, strong demand, a decline in imports, environmental mandates for specialty gasoline blends and necessary refinery maintenance. But the problem is more political rather than the any other issue Mighty America blames for recent stiff rises in the gas for Iran’s resolute nature, Nigeria’s fiasco, Chavez for Venezuela and Russian monopoly over majority of natural sources, but America has forgotten that after his intervention in Iraq in 2003 have proven the foundation stone for the rising. Which might have arose the insecurity among the Arab nations. Image: smh Via: wzzm13